Employees' Retirement System of Georgia Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2018 A component unit of the State of Georgia Building a Bridge to a More Comfortable Retirement Talmadge Memorial Bridge - Savannah 2018 Our Mission Our mission is to be the guardian of the State of Georgia's retirement plans and promote a dignified retirement for the members, retirees, and their beneficiaries. Our vision is to demonstrate an unwavering commitment to delivering accurate and timely retirement benefits utilizing a knowledgeable staff and state-of-the-art technology to best serve the retirement needs of current and future members. Our Values Our Core Values are: Integrity Customer Service Operational Excellence Continuous Improvement and Innovation E RSGA Serving those who serve Georgia Employees' Retirement System of Georgia Employees' Retirement System of Georgia Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2018 Prepared by the Financial Services Division Building a Bridge to a More Comfortable Retirement Watson Mill Bridge - Comer James A. Potvin Executive Director A component unit of the State of Georgia Table of Contents Introductory Section Boards of Trustees 4 Letter of Transmittal 5 Certificate of Achievement for Excellence in Financial 8 Reporting PPCC Recognition Award for Funding 9 Administrative Staff and Organization 10 Organizational Chart 11 Financial Section Independent Auditors' Report 13 Management's Discussion and Analysis (Unaudited) 15 Basic Financial Statements: Combining Statement of Fiduciary Net Position 23 as of June 30, 2018 Defined Benefit Plans-Combining Statement of 24 Fiduciary Net Position as of June 30, 2018 Combining Statement of Changes in Fiduciary Net 25 Position for the Year Ended June 30, 2018 Defined Benefit Plans-Combining Statement of 26 Changes in Fiduciary Net Position for the Year Ended June 30, 2018 Statement of Net Position-State Employees' 27 Assurance Department Active Members Fund Statement of Revenues, Expenses, and Changes 28 in Net Position-State Employees' Assurance Department Active Members Fund Statement of Cash Flows-State Employees' 29 Assurance Department Active Members Fund Notes to Financial Statements 30 Required Supplementary Information (Unaudited): Defined Benefit Plans: Schedules of Employers' and Nonemployers' 68 Contributions Schedules of Employers' and Nonemployers' 70 Net Pension/OPEB Liability and Related Ratios Schedules of Changes in Employers' and 72 Nonemployers' Net Pension/OPEB Liability Schedule of Investment Returns 78 Schedules of the System's Proportionate Share 79 of the Net OPEB Liability Schedules of the System's Contributions to OPEB 80 Plans Notes to Required Supplementary Information 81 (Unaudited) Additional Information: Statement of Changes in Assets and Liabilities- 85 Survivors Benefit Fund Schedule of Administrative Expenses- 86 Contributions and Expenses Schedule of Investment Expenses 87 Investment Section Investment Overview 89 Pooled Investment Fund/Rates of Return 90 Asset Allocation at Fair Value/Investment Summary 91 Schedule of Fees and Commissions 92 Twenty Largest Equity Holdings 93 Top 10 Fixed Income Holdings 94 Actuarial Section Actuary's Certification Letters 96 Summary of Plan Provisions 108 Summary of Actuarial Assumptions 110 Active Members 121 Member and Employer Contribution Rates 123 Defined Benefit Plans-Schedules of Funding 125 Progress Schedule of Retirees Added to and Removed 127 from Rolls Analysis of Change in Unfunded Accrued 129 Liability (UAL) Solvency Test Results 132 Statistical Section Introduction Additions by Source-Contribution/Investment Income Deductions by Type Changes in Fiduciary Net Position Number of Retirees Average Monthly Payments to Retirees Annual Benefit Withdrawal Statistics Average Monthly Benefit Payment for New Retirees Retired Members by Retirement Type Retired Members by Optional Form of Benefit Top Participatory Employers Schedule of Revenue and Expenses-State 135 136 139 142 144 145 146 147 148 153 155 159 161 Employees' Assurance Department Active Members Fund Schedule of Membership-State Employees' 162 Assurance Department Active Members Fund Statistical Data at June 30, 2018 163 Introductory Section Building a Bridge to a More Comfortable Retirement Suspension Bridge over Tallulah Gorge - Rabun County Boards of Trustees Introductory Section Employees' Retirement System, Legislative Retirement System, Georgia Defined Contribution Plan, and Georgia Military Pension Fund Lonice Barrett Chair Eli P. Niepoky Vice-Chair Harold Reheis Frank F. Thach, Jr. Steven N. McCoy Greg S. Griffin Shawn Ryan Public School Employees Retirement System* State Employees' Assurance Department** Michael Lowe Richard Taylor Mark Butler Georgia Judicial Retirement System* Vacant Ellen S. Golden Ron Mullins Vacant *The PSERS and GJRS boards are comprised of the members of the ERS board and additional members shown under each plan. **SEAD -- ERS Board Members Greg S. Griffin, Steven N. McCoy, Lonice Barrett, and Shawn Ryan serve in addition to the two members shown above. 4 Introductory Section Letter of Transmittal E RSGA Serving those who serve Georgia Employees' Retirement System of Georgia Two Northside 75 Atlanta, GA 30318 December 21, 2018 I am pleased to present the Comprehensive Annual Financial Report of the retirement systems and programs administered by the Employees' Retirement System of Georgia (the System) for the fiscal year ended June 30, 2018. The management of the System is responsible for the accuracy, completeness, and fairness of the presentation, including all disclosures. It is to the best of our knowledge and belief that the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the System. Profile of the System The System was established in 1949 by an Act of the Georgia General Assembly to provide benefits for all State employees. Plans administered by the System include the Employees' Retirement System (ERS), the Legislative Retirement System (LRS) established in 1979, the Public School Employees Retirement System (PSERS) established in 1969, the Georgia Defined Contribution Plan (GDCP) established in 1992, the Georgia Judicial Retirement System (GJRS) established in 1998, and the Georgia Military Pension Fund (GMPF) established in 2002. In addition, the System is responsible for administering a Group Term Life Insurance Plan (SEAD), the 457 Plan established in 1974, and the 401(k) Plan established in 1994. A summary of each plan can be found on pages 30 through 39 of this report. The investments of all plans are pooled together into one fund except for the three defined contribution (DC) plans, which are maintained individually. The ERS, LRS, GDCP, GMPF, 401(k), and 457 plans are governed by a 7-member Board of Trustees (Board) made up of 3 ex-officio members, 1 governor-appointed member, and 3 Board-appointed members. PSERS has the same Board as ERS with 2 additional governorappointed members. GJRS has the same Board as ERS with 3 additional governor-appointed members. 401(k) plan with a total investment balance of $992 million. The 457 plan had 12,882 participants with a total investment balance of $623 million. There are 475 participating employers from around the state in the 457 and 401(k) plans. Legislation In the 2018 session, two Acts were passed by the General Assembly and signed by the Governor, which impact the System: Act 303 allows certain law enforcement members of ERS with at least ten years of service to purchase up to five years of certain non-vested local government law enforcement service, provided such members are not eligible to receive a present or future benefit from the local government, beginning July 1, 2018. Members must pay full actuarial cost for the service. Act 301 is the FY 2019 Appropriations Act and provides funding for an increase in the PSERS multiplier from $15.00 per year of service to $15.25 per year of service, beginning July 1, 2018. Summary of Financial Information The management of the System is charged with the responsibility of maintaining a sound system of internal accounting controls. The objectives of such a system are to provide management with reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations, and that they are recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. The concept of reasonable assurance recognizes that first, the cost of a control should not exceed the benefits likely to be derived, and second, the evaluation of the cost and benefits requires estimates and judgments by management. As of June 30, 2018, the System's defined benefit (DB) plans served a total of 110,007 active members and 71,072 retirees/beneficiaries from 698 employers around the state. There were 65,874 participants in the Even though there are inherent limitations in any system of internal control, the management of the System makes every effort to ensure that through systematic reporting and internal reviews, error or fraud 5 (continued) Introductory Section Letter of Transmittal would be quickly detected and corrected. Please refer to the Management's Discussion and Analysis starting on page 15 of this report for an overview of the financial status of the System, including a summary of the System's Fiduciary Net Position, Changes in Fiduciary Net Position, and Asset Allocations. For fiscal year 2018, the pooled investment fund generated a return of 9.2%. The fund continues to invest in a mix of high-quality bonds and stocks which allows the System to participate in rising markets while controlling the downside risks. This has proven to be a successful strategy for other markets and for the System. For further information on investments of the pooled fund, please refer to the Investment Section on pages 89 through 94 of this report. The objective of the System's pension trust funds is to meet long-term benefit promises through contributions that remain approximately level as a percent of member payroll over time while maintaining an actuarially sound system. Historical information relating to the progress in meeting this objective is presented on pages 125 and 126. The latest actuarial valuations as of June 30, 2017 showed the funded ratio of two of the five defined benefit plans increasing. The following table shows the change in funding percentage for each of the pension systems: ERS PSERS LRS GJRS GMPF FY2016 74.7% 84.4% 126.0% 111.1% 48.2% FY2017 74.7% 83.6% 128.2% 107.9% 50.6% Further information regarding the funding condition of the pension plans can be found in the Actuarial Section of this report, beginning on page 96. Excellence in Financial Reporting For the eighth consecutive year, the Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Employees' Retirement System of Georgia for its comprehensive annual financial report for the fiscal year ended June 30, 2017. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Initiatives Funding Policies At a series of special meetings, the Boards of the various defined benefit systems approved a change to their respective funding policies. For the June 30, 2016 actuarial valuation, the assumed investment rate of return and discount rate were 7.5%. Effective with the June 30, 2017 valuation, the return assumption / discount rate will be reduced by 0.10% (10 basis points) from the immediate prior actuarial valuation, provided the actual rate of return for the fiscal year ending with the current valuation date exceeds the assumed rate of return from the immediate prior actuarial valuation. The reductions will continue until the rate of return assumption reaches 7.0%. The actual rate of return for FY 2017 was 12.4%; therefore, for the June 30, 2017 valuation, the rate of return / discount rate was reduced to 7.4%. Similarly, the actual rate of return for FY 2018 was 9.2%; therefore, the June 30, 2018 valuations will use a new assumption of 7.3%. Communications In early 2018, ERS hired our first dedicated Communications Director, with a goal of expanding our outreach and more effectively broadcasting our most important messaging around the state. The first project we subsequently completed was the launch of a new version of our external website, ers.ga.gov. Besides being more aesthetically pleasing than the prior version, the new website has a much more intuitive organization, features new content, and resides on a platform that is much easier to update and maintain. We will continue to work over the next year to enhance our member education tools and materials on the new site. ERS is also beginning to focus more on working with our employers to reach their employees with information earlier and more frequently. This is 6 (continued) Introductory Section Letter of Transmittal especially important early in their careers with the state, as our members need to take an active role in managing their defined contribution accounts in order to maximize their retirement savings. Finally, ERS is working on the creation of a Branding Guide, which will help us to present a consistent look externally via our various communication platforms. As a spinoff to that project, we are also beginning a comprehensive review of our forms, handbooks, and standard letters for consistency and clarity. Information Technology Behind the scenes, our Applications Development team supported the rollout of the new external website by completing a comprehensive redesign and relaunch of the member portal desktop in the secure area of the website. Though it is not yet apparent to the user that any change occurred (other than some topical changes), the new desktop was a preliminary project that will pave the way for future enhancements to the functionality available through the member portal. The team also enhanced our customer service tools by integrating our CRM module, which had previously been a standalone application, into our PARIS pension administration system. This allows all Member Services staff (not just the Customer Care Group) to access complete call history information for our membership. Other Initiatives Effective January 2018, the Peach State Reserves 401(k) and 457 plans began accepting Roth contributions for the first time. We also enhanced our operational effectiveness by automating calculations related to anti-pension spiking restrictions that were legislated several years ago, as well as calculations for members who transfer from the Teachers Retirement System of Georgia into the current ERS benefits tier, known as GSEPS. Finally, we improved our regression testing process for system enhancements by creating a special website for our Quality Assurance group to utilize. Acknowledgements This report reflects the combined effort of our staff under the Board's leadership. Copies of this report, along with other valuable plan information, can be downloaded from the System's website. I would like to express my 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 and Senate, and the department officials whose support and assistance have helped ERS accomplish its mission over the years. Respectfully submitted, James A. Potvin, Executive Director Employees' Retirement System of Georgia 7 Introductory Section 8 Introductory Section P P CC Public Pension Coordinating Council Recognition Award for Funding 2018 Presented to Employees' Retirement System of Georgia In recognition of meeting professional standards for plan funding as set forth in the Public Pension Standards. Presented by the Public Pension Coordinating Council, a confederation of National Association of State Retirement Administrators (NASRA) National Conference on Public Employee Retirement Systems (NCPERS) National Council on Teacher Retirement (NCTR) Alan H. Winkle Program Administrator 9 Introductory Section Administrative Staff and Organization James A. Potvin Executive Director Angie Surface Deputy Director Charles W. Cary, Jr. CIO - Investment Services Laura L. Lanier Controller Chris Hackett Director Information Technology Nicole Paisant Director Human Resources Susan Anderson Chief Operating Officer Carolyn Kaplan Director Financial Mgmt Quality Assurance Kelly Moody Director Legislative Affairs Danielle Jordan Director Communications Consulting Services Cavanaugh Macdonald Consulting, LLC - Actuary KPMG LLP - Auditor JPMorgan Chase Bank, N. A. - Defined Contribution Custodian Alight Solutions - Defined Contribution Consultant and Administrator Investment Advisors* Albritton Capital Management Baillie Gifford Overseas Limited Barrow, Hanley, Mewhinney & Strauss Cooke & Bieler Fisher Investments Mondrian Investment Partners Limited Sands Capital Management Medical Advisors Harold E. Sours, M.D., Atlanta, GA G. Lee Cross, M.D., Atlanta, GA Douglas Smith, M.D., Smyrna, GA William H. Biggers, M.D., Atlanta, GA Pedro F. Garcia, M.D., Atlanta, GA H. Rudolph Warren, M.D., Dunwoody, GA Quinton Pirkle, M.D., Atlanta, GA Marvin Bittinger, M.D., Gainesville, GA Joseph S. Wilkes, M.D., Sandy Springs, GA *See page 92 in the Investment Section for a summary of fees paid to Investment Advisors. 10 Organizational Chart Board of Trustees Executive Director Executive Support 11 Human Resources Deputy Director Investment Services Division Financial Services Division Information Technology Division Chief Operating Officer Legislative Affairs Communications Financial Management Division Quality Assurance Division Peach State Reserves Office Administration Member Services Division Introductory Section Financial Section Building a Bridge to a More Comfortable Retirement Rail Bridge over Chattahoochee River - Metro Atlanta Financial Section KPMG LLP Suite 2000 303 Peachtree Street, NE Atlanta, GA 30308-3210 Independent Auditors' Report The Board of Trustees Employees' Retirement System of Georgia: Report on the Financial Statements We have audited the accompanying financial statements of the fiduciary activities and the proprietary activity of the Employees' Retirement System of Georgia (the System), a component unit of the State of Georgia, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the System's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the fiduciary activities and proprietary activity of the System as of June 30, 2018, and the respective changes in financial position and where applicable, cash flows thereof, for the year then ended in accordance with U.S. generally accepted accounting principles. Emphasis of Matter As discussed in note 3(h) to the basic financial statements, the System adopted, in 2018, Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the management's discussion and analysis, schedules of employers' and nonemployers' contributions defined benefit plans, schedules of employers' and nonemployers' net pension/OPEB liability and related ratios defined benefit plans, schedules of changes in employers' and nonemployers' net pension/OPEB liability defined benefit plans, schedule of investment returns, schedules of the System's proportionate share of the Net OPEB Liability, and schedules of the System's contributions to OPEB plans on pages 1522 and 6880, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential (continued) 13 Financial Section part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the System's basic financial statements. The Survivors Benefit Fund statement of changes in assets and liabilities and schedule of administrative expenses contributions and expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Survivors Benefit Fund statement of changes in assets and liabilities and schedules of administrative expenses contributions and expenses and investment expenses are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Survivors Benefit Fund statement of changes in assets and liabilities and the schedules of administrative expenses contributions and expenses and investment expeses are fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory, Investment, Actuarial, and Statistical sections have not be subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opion or provide an assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 5, 2018 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 solely 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 effectiveness of the System's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the System's internal control over financial reporting and compliance. Atlanta, GA October 5, 2018 except for the Introductory, Investment, Actuarial, and Statistical sections and the Schedule of Investment Expenses, which are as of December 21, 2018. 14 Management's Discussion and Analysis (Unaudited) June 30, 2018 Financial Section 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, 2018. 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 six other defined benefit pension plans, a defined benefit OPEB plan, three defined contribution plans, and an agency fund, which comprise the fiduciary funds. The System is also responsible for administering an enterprise fund, which comprises the proprietary fund. 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) Superior Court Judges Retirement Fund (SCJRF) District Attorneys Retirement Fund (DARF) The defined benefit OPEB plan consists of the State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB). The defined contribution retirement plans include: Georgia Defined Contribution Plan (GDCP) State of Georgia Employees' Qualified Trust Deferred Compensation Plan (401(k) Plan) State of Georgia Employees' Deferred Compensation Plan (457 Plan) The agency fund consists of the Survivors Benefit Fund (SBF). The enterprise fund consists of the State Employees' Assurance Department Active Members Fund (SEAD-Active). Overview of Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The System administers two categories of funds: fiduciary funds and a proprietary fund. Information related to the financial statements of the funds is presented in the notes to the financial statements. Fiduciary funds are used to account for resources held for the benefit of parties outside of the System. The primary focus of the System's fiduciary funds is the accumulation of resources for and the payment of pension and OPEB benefits. The System maintains four types of fiduciary funds: (1) defined benefit pension trust funds which are used to report resources held in trust for pensions for retirees and beneficiaries covered by ERS, PSERS, LRS, GJRS, GMPF, SCJRF, and DARF (2) a defined benefit OPEB trust fund which is used to report resources held in trust for other postemployment benefits of retirees and beneficiaries of SEAD-OPEB (3) defined contribution pension trust funds which are used to accumulate contributions and earnings in the accounts of participants covered by GDCP, the 401(k) Plan, and the 457 Plan, and (4) an agency fund which is used to report resources held by the SBF in a custodial capacity for other plans. Proprietary funds, which include enterprise and internal services funds, are used to account for the System's activities that are similar to private-sector businesses. The System maintains one proprietary fund, an enterprise fund. The primary focus of the System's enterprise fund is the accumulation of resources for, and payment of, group term life insurance benefits for active members of ERS, LRS, and GJRS covered by SEAD-Active. (continued) 15 Financial Section Management's Discussion and Analysis (Unaudited) The basic financial statements comprise statements for both fiduciary and proprietary funds. The fiduciary fund financial statements include (1) Combining Statement of Fiduciary Net Position (2) Defined Benefit Plans Combining Statement of Fiduciary Net Position (3) Combining Statement of Changes in Fiduciary Net Position, and (4) Defined Benefit Plans Combining Statement of Changes in Fiduciary Net Position. The proprietary fund financial statements include (1) Statement of Net Position (2) Statement of Revenues, Expenses, and Changes in Net Position and (3) Statement of Cash Flows. In addition, the System presents six types of required supplementary schedules, which provide historical trend information about the plan. Four of the schedules are presented from the perspective of the System reporting as the plan and included (1) Schedules of Employers' and Nonemployers' Contributions (2) Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios (3) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability and (4) Schedule of Investment Returns. Two of the schedules are presented from the perspective of the System reporting as the employer for its employees who participate in the State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB) and the Georgia State Employees Postemployment Benefit Fund (State OPEB Fund) and include the (5) Schedules of the System's Proportionate Share of the Net OPEB Liability and (6) Schedules of the System's Contributions to OPEB Plans. The System also includes in this report additional information to supplement the financial statements. The System prepares its financial statements on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles as promulgated by the Governmental Accounting Standards Board (GASB). These statements provide information about the System's overall financial status. Financial Highlights The highlights of the fiduciary funds of the System are as follows: The net position of the fiduciary funds increased by $760.0 million, or 4.4%, from $17.1 billion at June 30, 2017 to $17.9 billion at June 30, 2018. The increase in net position from 2017 to 2018 was primarily due to strong equity returns. For the year ended June 30, 2018, the total additions to net position were $2.4 billion compared to $2.8 billion for the year ended June 30, 2017. For the year ended June 30, 2018, the additions consisted of employer, nonemployer contributing entities (nonemployer), and member contributions totaling $924.6 million, insurance premiums of $3.6 million, net investment income of $1.5 billion, and participant fees of $1.7 million. Net investment income of $1.5 billion in 2018 (comprising interest and dividend income, the change in fair value of investments, and other, reduced by investment expenses) represents a decrease of $391.6 million, or 20.6%, compared to the net investment income of $1.9 billion for the year ended June 30, 2017. The change in net investment income was primarily due to equity returns moderating somewhat in 2018 compared to 2017. The total deductions from net position were $1.7 billion for the year ended June 30, 2018 and $1.6 billion for 2017. For the year ended June 30, 2018, the deductions consisted of benefit payments of $1.6 billion, refunds of $18.5 million, death benefits related to SEAD-OPEB of $36.2 million, and administrative expenses of $16.3 million. The highlights of the proprietary fund of the System are as follows: The net position of the proprietary fund increased by $21.9 million to $289.2 million at June 30, 2018 compared to $267.3 million at June 30, 2017. The increase in net position from 2017 to 2018 was primarily due to strong equity returns. For the year ended June 30, 2018, total operating loss was $2.5 million compared to $3.5 million for the year ended June 30, 2017. The decrease relates primarily to the decrease in the number of active members who received death benefits during the year. Investment income allocated from the pooled investment fund of $24.4 million in 2018 represents a decrease of $5.4 million, or 18.0%, compared to investment income allocated from the pooled investment fund of $29.8 million for the year ended June 30, 2017. The change in investment income allocated from the pooled investment fund was primarily due to equity returns moderating somewhat in 2018 compared to 2017. (continued) 16 Financial Section Management's Discussion and Analysis (Unaudited) Description of the Financial Statements Fiduciary Funds The Combining Statement of Fiduciary Net Position is the statement of financial position presenting information that includes the fiduciary funds' assets and liabilities, with the balance representing the Net Position Restricted for Pensions and OPEB. The investments of the funds in this statement are presented at fair value. This statement is presented on page 23. The Combining Statement of Changes in Fiduciary Net Position reports how the fiduciary funds' net position changed during the fiscal year. The additions include contributions to the retirement plans from employers, nonemployers, and members; group term life insurance premiums; participant fees; and net investment income, which includes interest and dividends and the net increase in the fair value of investments, net of investment expenses. 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 25. The Defined Benefit Plans' Combining Statement of Fiduciary Net Position and the Combining Statement of Changes in Fiduciary Net Position present the financial position and changes in financial position for each of the defined benefit plans administered by the System. These statements are on pages 24 and 26, respectively. Proprietary Funds The Statement of Net Position is the statement of financial position presenting information that includes the assets and liabilities, with the balance representing the net position. This statement is presented on page 27. The Statement of Revenues, Expenses, and Changes in Net Position distinguishes operating revenues and expenses from nonoperating items. Principal operating revenues result from insurance premiums from members, while operating expenses result from death benefit payments and administrative expenses. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. This statement is presented on page 28. The Statement of Cash Flows provides relevant information about cash receipts and cash payments during the year. When used in conjunction with related disclosures and information in the other financial statements, the statement provides relevant information about the plan's ability to generate future net cash flows, the plan's ability to meet its obligations as they come due, and presents the reasons for differences between operating income and associated cash receipts and payments. This statement is presented on page 29. Notes to Financial Statements are presented to provide the information necessary for a full understanding of the financial statements. The notes to the financial statements begin on page 30. Required Supplementary Information begins on page 68. The required schedules are discussed as follows: The Schedule of Employers' and Nonemployers' Contributions presents historical trend information for the last 10 consecutive fiscal years about the required contributions and the percent of required contributions actually contributed. The Schedule of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios presents the components of the net pension/OPEB liability as of the fiscal year end and the fiduciary net position as a percentage of the total pension/OPEB liability as of that date. This trend information will be accumulated to display a 10-year presentation. The Schedule of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability presents total net pension/OPEB liability and is measured as total pension/OPEB liability less the amount of the fiduciary net position. This trend information will be accumulated to display a 10-year presentation. The Schedule of Investment Returns presents historical trend information about the annual money-weighted rate of return on plan investments, net of plan investment expense. This trend information will be accumulated to display a 10-year presentation. (continued) 17 Financial Section Management's Discussion and Analysis (Unaudited) Required Supplementary Information (continued) The Schedule of the System's Proportionate Share of the Net OPEB Liability presents historical trend information about the System's proportionate share of the net OPEB liability (asset) for its employees who participate in the SEAD-OPEB plan and the State OPEB Fund. This trend information will be accumulated to display a 10-year presentation. The Schedule of the System's Contributions to OPEB Plans presents historical trend information about the System's contributions for its employees who participate in the SEAD-OPEB plan and the State OPEB Fund. This trend information will be accumulated to display a 10-year presentation. Three of the required schedules above, the Schedules of Employers' and Nonemployers' Contributions, the Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios, and the Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability are applicable to five of the defined benefit pension plans (ERS, PSERS, LRS, GJRS, and GMPF) and the defined benefit OPEB plan (SEAD-OPEB). Notes to Required Supplementary Information are presented to provide the information necessary for a full understanding of the supplementary schedules. The notes to required supplementary information begin on page 81. Additional information is presented, beginning on page 85, and includes the Statement of Changes in Assets and Liabilities for the Survivors Benefit Fund which presents additions to and deductions from the fund, the Schedule of Administrative Expenses Contributions and Expenses which presents the expenses incurred in the administration of the plans and funds, and the contributions from each plan and fund to provide for these expenses, and the Schedule of Investment Expenses which presents the investment advisor, custodial, and miscellaneous fees. (continued) 18 Financial Section Management's Discussion and Analysis (Unaudited) Financial Analysis of the System A summary of the System's net position of the fiduciary funds at June 30, 2018 is as follows (dollars in thousands): Net position Assets: Cash, cash equivalents, and receivables Investments Capital assets, net Net OPEB asset Total assets Deferred outflows of resources 2018 $ 366,532 18,000,993 6,738 501 18,374,764 938 Liabilities: Due to brokers, accounts payable, and insurance premiums payable 30,882 Due to other funds/plans and participating systems 437,628 Net OPEB liability 7,571 Total liabilities 476,081 Deferred inflows of resources 701 Net position, as restated (Note 3(h)) $ 17,898,920 2017 330,585 17,253,626 6,904 372 17,591,487 926 41,428 403,237 8,792 453,457 -- 17,138,956 Amount change Percentage change 35,947) 747,367) (166) 129) 783,277) 12) 10.9) % 4.3) (2.4) 34.7) 4.5) 1.3) (10,546) 34,391) (1,221) 22,624) 701) 759,964) (25.5) 8.5) (13.9) 5.0) 100.0) 4.4) ) A summary of the System's net position of the proprietary fund at June 30, 2018 is as follows (dollars in thousands): Assets: Cash, cash equivalents, and receivables Investments Total assets Liabilities: Accounts payable and other Net position Net position 2018 2017 Amount change Percentage change $ 162 289,087 289,249 127 267,194 267,321 35) 21,893) 21,928) 27.6) % 8.2) 8.2) 42 $ 289,207 35 267,286 7) 21,921) 20.0) 8.2) ) (continued) 19 Management's Discussion and Analysis (Unaudited) The following table presents the investment allocation at June 30, 2018 and 2017: Financial Section Asset allocation at June 30 (in percentages): Equities: Domestic International Private equity Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Governments Corporates Commingled funds Asset allocation at June 30 (in thousands): Equities: Domestic International Private equity Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Governments Corporates Mutual funds Commingled funds 2018 46.3 % 15.6 1.2 18.8 8.2 -- 1.1 8.8 2017 47.8 % 16.1 0.8 14.6 10.9 0.5 1.1 8.2 $ 8,332,421 2,807,854 221,904 $ 8,249,643 2,780,668 134,213 3,374,310 1,475,432 2,516,114 1,882,175 -- 190,353 7,228 1,591,491 $ 18,000,993 76,935 192,589 5,601 1,415,688 $ 17,253,626 The total investment portfolio increased by $747.4 million, or 4.3%, from 2017, which is primarily due to strong equity market returns. Investment performance is calculated using a time-weighted rate of return using the Daily Valuation Method. The time-weighted rate of return for the fiscal year ended June 30, 2018 was 9.2% with a 13.4% return for equities, a 18.5% return for private equity (inception date of October 3, 2013), and a (0.5)% return for fixed income. The five-year annualized rate of return at June 30, 2018 was 8.7%, with an 11.6% return for equities and a 1.8% return for fixed income. (continued) 20 Financial Section Management's Discussion and Analysis (Unaudited) A money-weighted return is weighted by the amount of dollars in the fund at the beginning and end of the performance period. A money-weighted return is highly influenced by the timing of cash flows into and out of the fund and is a better measure of an entity or person who controls the cash flows into or out of the fund. The nondiscretionary cash flows for the plan, primarily contributions and benefit payments, have a considerable impact on the money-weighted returns of the portfolio. The money-weighted rate of return for the fiscal year ended June 30, 2018 was 0.6%, compared to 2.9% for the fiscal year ended June 30, 2017. A summary of the changes in the System's net position of the fiduciary funds for the year ended June 30, 2018 is as follows (dollars in thousands): Changes in net position Additions: Employer contributions Nonemployer contributions Member contributions Participant fees Insurance premiums Net investment income Other Total additions Deductions: Benefit payments Refunds Death benefits Administrative expenses Total deductions Net increase (decrease) in net position 2018 $ 690,516 43,982 190,091 1,744 3,599 1,509,803 15 2,439,750 1,608,691 18,538 36,249 16,308 1,679,786 $ 759,964 2017 657,190 40,960 170,608 1,584 3,793 1,901,409 15 2,775,559 1,574,118 21,849 36,058 16,487 1,648,512 1,127,047 Amount change Percentage change 33,326 3,022 19,483 160 (194) (391,606) -- (335,809) 5.1 % 7.4 11.4 10.1 (5.1) (20.6) -- (12.1) 34,573 (3,311) 191 (179) 31,274 (367,083) 2.2 (15.2) 0.5 (1.1) 1.9 (32.6) Additions The System accumulates resources needed to fund benefit payments through contributions and returns on invested funds. In fiscal year 2018, total contributions increased $55.8 million, or 6.4%, primarily because of an increase in the number of active members coupled with modest overall salary increases. Net investment income decreased by $391.6 million, or 20.6%, due primarily to equity returns moderating somewhat in fiscal year 2018 compared to 2017. Deductions For fiscal year 2018, total deductions increased $31.3 million, or 1.9%, primarily because of an increase of $34.6 million, or 2.2%, in benefit payments. Pension benefit payments increased due to an increase in the number of retirees and beneficiaries receiving benefits in 2018 in addition to cost of living adjustments of 1.5% for LRS members and 2% for JRS members, and a one-time benefit payment of 3% for ERS members. Refunds decreased by $3.3 million, or 15.2%, which was primarily due to a decrease in the number of refunds processed during 2018. (continued) 21 Financial Section Management's Discussion and Analysis (Unaudited) A summary of the changes in the System's net position of the proprietary fund for the year ended June 30, 2018 is as follows (dollars in thousands): Operating revenue: Insurance premiums Total operating revenue Operating expenses: Death benefits Administrative expenses Total operating expenses Total operating loss Nonoperating revenue: Allocation of investment income from pooled investment fund, net Change in net position Changes in net position 2018 2017 Amount change Percentage change $ 540 599 540 599 (59) (9.8) % (59) (9.8) 2,972 76 3,048 (2,508) 4,019 64 4,083 (3,484) (1,047) 12 (1,035) 976 (26.1) 18.8 (25.3) (28.0) 24,429 $ 21,921 29,785 26,301 (5,356) (4,380) (18.0) (16.7) Operating and nonoperating revenue The proprietary fund accumulates resources needed to fund death benefit payments through premiums earned and returns on invested funds. In fiscal year 2018, total premiums earned decreased $59.0 thousand, or 9.8%, primarily due to a decrease in the number of participating members allowed in the plan. Effective January 1, 2009, the plan was closed to new members. Allocation of investment income from the pooled investment fund, net of related expenses, decreased by $5.3 million, or 18%, primarily due to equity returns moderating somewhat in fiscal year 2018 compared to 2017. Operating expenses For fiscal year 2018, death benefits decreased by $1.0 million, or 26.1%, which was primarily due to a decrease in the number of death claims processed during 2018. Administrative expenses increased by $12.0 thousand over the prior year, or 18.8%, primarily due to increased contractual services costs. 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. 22 Combining Statement of Fiduciary Net Position June 30, 2018 (In thousands) Assets Cash and cash equivalents Receivables: Contributions Interest and dividends Due from brokers for securities sold Other Unremitted insurance premiums Total receivables Investments - at fair value: Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Corporates Equities: Domestic International Private equity Mutual funds Commingled funds Equity in pooled investment fund Total investments Capital assets, net Net OPEB asset Total assets Deferred outflows of resources Liabilities Accounts payable and other Due to brokers for securities purchased Insurance premiums payable Due to other funds/plans Due to participating systems Net OPEB Liability Total liabilities Deferred inflows of resources Net position restricted for pensions and OPEB Defined Contribution Plans Agency Fund Defined Benefit Plans $ 33,849 Pooled Investment Fund Georgia Defined Contribution Plan 203,702 16,023 401(k) Plan 21,799 457 Plan 1,164 Survivors Benefit Fund 91 Eliminations 35,364 -- -- 2,135 533 -- 46,365 22 -- -- 921 3,638 502 -- 363 -- -- -- -- -- -- -- -- 545 49 -- -- -- -- -- 38,032 46,387 1,284 4,183 551 -- (533) (533) -- -- -- -- -- -- -- -- 16,096,708 16,096,708 6,738 501 16,175,828 938 3,311,274 1,440,709 190,353 8,317,533 2,806,432 221,904 -- -- -- 16,288,205 -- -- 16,538,294 -- 22,596 -- 605 -- -- 7,571 30,772 701 $ 16,145,293 1,994 2,055 -- -- 16,534,245 -- 16,538,294 -- 63,036 34,723 -- -- -- -- -- -- -- 97,759 115,066 -- -- -- -- 8,208 705 -- 3,280 980,157 -- 992,350 1,018,332 -- -- -- -- 6,680 717 -- 3,948 611,334 -- 622,679 624,394 -- -- -- -- -- -- -- -- -- 148,450 148,450 -- -- 148,541 -- -- -- -- -- -- -- -- -- (16,245,158) (16,245,158) -- (16,245,691) -- 495 -- -- -- -- -- 495 -- 114,571 2,638 -- -- -- -- -- 2,638 -- 1,015,694 1,032 -- -- -- -- -- 1,032 -- 623,362 -- -- -- 148,541 -- -- 148,541 -- -- -- (533) -- (16,245,158) -- (16,245,691) -- Total 276,628 40,425 46,728 22 2,729 -- 89,904 3,374,310 1,475,432 190,353 8,332,421 2,807,854 221,904 7,228 1,591,491 -- 18,000,993 6,738 501 18,374,764 938 28,755 2,055 72 148,541 289,087 7,571 476,081 701 17,898,920 23 Financial Section See accompanying notes to financial statements. Financial Section Defined Benefit Plans Combining Statement of Fiduciary Net Position June 30, 2018 (In thousands) 24 Assets Cash and cash equivalents Receivables: Contributions Interest and dividends Due from brokers for securities sold Other Unremitted insurance premiums Total receivables Investments - at fair value: Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Corporates Equities: Domestic International Private equity Mutual funds Commingled funds Equity in pooled investment fund Total investments Capital assets, net Net OPEB asset Total assets Deferred outflows of resources Liabilities Accounts payable and other Due to brokers for securities purchased Insurance premiums payable Due to other funds/plans Due to participating systems Net OPEB Liability Total liabilities Deferred inflows of resources Net position restricted for pensions and OPEB Defined Benefit Pension Plans Defined Benefit OPEB Plan Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System $ 33,007 105 48 523 Georgia Military Pension Fund Superior Court Judges Retirement Fund District Attorneys Retirement Fund 8 17 3 State Employees' Assurance Department OPEB 138 34,831 -- 28 505 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 2,018 116 1 -- -- -- -- -- -- -- -- -- -- -- -- 533 36,849 116 29 505 -- -- -- 533 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 13,468,340 914,957 34,216 466,307 23,715 -- -- 1,189,173 13,468,340 914,957 34,216 466,307 23,715 -- -- 1,189,173 6,738 -- -- -- -- -- -- -- 501 -- -- -- -- -- -- -- 13,545,435 915,178 34,293 467,335 23,723 17 3 1,189,844 938 -- -- -- -- -- -- -- 20,323 1,040 103 666 70 11 1 382 -- -- -- -- -- -- -- -- 592 -- 1 12 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 7,571 -- -- -- -- -- -- -- 28,486 1,040 104 678 70 11 1 382 701 -- -- -- -- -- -- -- $ 13,517,186 914,138 34,189 466,657 23,653 6 2 1,189,462 Defined Benefit Plans Total 33,849 35,364 -- -- 2,135 533 38,032 -- -- -- -- -- -- -- -- 16,096,708 16,096,708 6,738 501 16,175,828 938 22,596 -- 605 -- -- 7,571 30,772 701 16,145,293 See accompanying notes to financial statements. Combining Statement of Changes in Fiduciary Net Position Year ended June 30, 2018 (In thousands) Defined Contribution Plans Additions: Contributions: Employer Nonemployer Member Participant fees Insurance premiums Administrative expense allotment Defined Benefit Plans Pooled Investment Fund Georgia Defined Contribution Plan $ 647,340 43,982 44,525 -- 3,599 15 14,585 Investment income: Net increase (decrease) in fair value of investments Interest and dividends Other Less investment expenses Allocation of investment income Net investment income (loss) Total additions -- -- -- (9,691) 1,400,431 1,390,740 2,130,201 1,097,281 348,489 -- (8,347) (1,437,423) (2,403) 2,105 -- (58) -- (356) 14,229 401(k) Plan 43,176 -- 110,848 1,744 -- -- 75,052 8 578 (2,967) -- 72,671 228,439 457 Plan 20,133 46,811 520 (583) 46,748 66,881 Deductions: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses Total deductions Net increase in net position Net position restricted for pensions and OPEB: Beginning of year, as restated (Note 3(h)) End of year 1,503,898 8,458 36,249 11,375 1,559,980 570,221 15,575,072 $ 16,145,293 -- 10,080 -- 852 10,932 3,297 64,103 -- -- 3,639 67,742 160,697 40,690 442 41,132 25,749 111,274 114,571 854,997 1,015,694 597,613 623,362 Total 690,516 43,982 190,091 1,744 3,599 15 1,216,741 350,602 1,098 (21,646) (36,992) 1,509,803 2,439,750 1,608,691 18,538 36,249 16,308 1,679,786 759,964 17,138,956 17,898,920 25 Financial Section See accompanying notes to financial statements. Financial Section Defined Benefit Plans Combining Statement of Changes in Fiduciary Net Position Year ended June 30, 2018 (In thousands) 26 Additions: Contributions: Employer Nonemployer Member Participant fees Insurance premiums Administrative expense allotment Investment income: Net increase (decrease) in fair value of investments Interest and dividends Other Less investment expenses Allocation of investment income Net investment income Total additions Employees' Retirement System Defined Benefit Pension Plans Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Military Pension Fund Defined Benefit OPEB Plan Superior Court Judges Retirement Fund District Attorneys Retirement Fund State Employees' Assurance Department OPEB Defined Benefit Plans Total $ 639,302 -- 4,725 2,377 890 12,865 29,276 1,841 -- 37,130 2,162 323 4,910 -- -- -- -- -- -- -- 10 -- 2 -- -- -- -- -- -- -- -- -- (8,518) (387) (15) (187) (6) -- 1,174,531 78,805 2,977 40,064 1,934 -- 1,166,013 78,418 2,962 39,877 1,928 1,855,320 109,856 3,285 51,353 4,305 892 46 647,340 43,982 44,525 3,599 3,599 3 15 (578) (9,691) 102,120 1,400,431 101,542 1,390,740 49 105,141 2,130,201 Deductions: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses Total deductions Net increase in net position 1,413,298 61,820 1,772 24,934 1,138 890 46 1,503,898 7,585 701 22 150 -- 8,458 -- -- -- -- 36,249 36,249 8,056 1,331 283 794 225 2 3 681 11,375 1,428,939 63,852 2,077 25,878 1,363 892 49 36,930 1,559,980 426,381 46,004 1,208 25,475 2,942 68,211 570,221 Net position restricted for pensions and OPEB: Beginning of year, as restated (Note 3(h)) 13,090,805 868,134 32,981 441,182 20,711 6 2 1,121,251 15,575,072 End of year $ 13,517,186 914,138 34,189 466,657 23,653 6 2 1,189,462 16,145,293 See accompanying notes to financial statements. Statement of Net Position State Employees' Assurance Department Active Members Fund June 30, 2018 (In thousands) Financial Section Assets Cash and cash equivalents Receivables: Unremitted insurance premiums Investments - at fair value: Equity share of pooled investment fund Total assets Liabilities Accounts payable and other Total liabilities Total net position See accompanying notes to financial statements. $ 90 72 289,087 289,249 42 42 $ 289,207 27 Financial Section Statement of Revenues, Expenses, and Changes in Net Position State Employees' Assurance Department Active Members Fund Year ended June 30, 2018 (In thousands) Operating revenue: Insurance premiums $ Total operating revenue Operating expenses: Death benefits Administrative expenses Total operating expenses Total operating loss Nonoperating revenues (expenses): Allocation of investment income from pooled investment fund Investment expenses Total nonoperating revenues Change in net position Total net position: Beginning of year End of year $ 540 540 2,972 76 3,048 (2,508) 24,493 (64) 24,429 21,921 267,286 289,207 See accompanying notes to financial statements. 28 Statement of Cash Flows State Employees' Assurance Department Active Members Fund Year ended June 30, 2018 (In thousands) Financial Section Cash flows from operating activities: Insurance premiums received Death benefits paid Administrative fees paid Net cash used in operating activities Cash flows from investing activities: Withdrawals from pooled investment fund Investment expenses paid Net cash provided by investing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Reconciliation of operating loss to net cash used in operating activities: Operating loss Changes in assets and liabilities: Accounts payable and other Net cash used in operating activities See accompanying notes to financial statements. $ 540 (2,972) (69) (2,501) 2,600 (64) 2,536 35 55 $ 90 $ (2,508) 7 $ (2,501) 29 Notes to Financial Statements June 30, 2018 Financial Section (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), comprises 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), Superior Court Judges Retirement Fund (SCJRF), District Attorneys Retirement Fund (DARF), State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB), Georgia Defined Contribution Plan (GDCP), State of Georgia Employees' Qualified Trust Deferred Compensation Plan (401(k) Plan), State of Georgia Employees' Deferred Compensation Plan (457 Plan), Survivors Benefit Fund (SBF), and State Employees' Assurance Department Active Members Fund (SEAD-Active). All significant transactions among the various systems, departments, and funds have been eliminated. The Boards of Trustees, comprising active and retired members, ex officio state employees, and appointees by the Governor, 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 (ERS Board) and has the powers and privileges of a corporation. There were 419 employers and 1 nonemployer contributing entity participating in the plan during 2018. ERS Membership as of June 30, 2018 Total: 169,601 Inactive members and beneficiaries currently receiving benefits Inactive members entitled to benefits but not yet receiving benefits Active plan members 60,406 50,863 58,332 Benefits The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the Old Plan started membership prior to July 1, 1982 and are subject to 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 modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS. 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' (continued) 30 Notes to Financial Statements June 30, 2018 Financial Section 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. Pursuant to The Official Code of Georgia Annotated (O.C.G.A.) 47-2-292, the employer contributions for local tax commissioners and their employees who took office or were employed prior to July 1, 2012 are funded by the State of Georgia on behalf of the local county employer. Pursuant to O.C.G.A. 47-2-290, the employer contribution for certain State Court employees is funded by the state on behalf of the local county employer. Employer and nonemployer contributions as a percentage of covered payroll required for fiscal year 2018 were based on the June 30, 2015 actuarial valuation for the Old Plan, New Plan, and GSEPS, as follows: Employer and nonemployer: Normal Employer paid for member Accrued liability Total Old Plan 1.24 % 4.75 18.70 24.69 % New Plan 5.99 % 18.70 24.69 % GSEPS 2.96 % -- 18.70 21.66 % Members become vested after 10 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. (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, plus two additional trustees, administers PSERS (PSERS Board). There were 184 employers and 1 nonemployer contributing entity participating in the plan during 2018. PSERS Membership as of June 30, 2018 Total: 101,801 Inactive members and beneficiaries currently receiving benefits Inactive members entitled to benefits but not yet receiving benefits Active plan members 34,956 18,492 48,353 (continued) 31 Notes to Financial Statements June 30, 2018 Financial Section Benefits A member may retire and elect to receive normal monthly retirement benefits after completion of 10 years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of 10 years of service. Upon retirement, the member will receive a monthly benefit of $15.00, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Contributions and Vesting Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 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. Employer contributions required for the year ended June 30, 2018 were $780.92 per active member and were based on the June 30, 2015 actuarial valuation. Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. (c) LRS is a single-employer defined benefit pension plan established by the Georgia General Assembly from 19671971, and later reestablished in 1979, for the purpose of providing retirement allowances for all members of the Georgia General Assembly. LRS is administered by the ERS Board. There was one employer in the plan for 2018. LRS Membership as of June 30, 2018 Total: 647 Inactive members and beneficiaries currently receiving benefits Inactive members entitled to benefits but not yet receiving benefits Active plan members 222 267 158 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. 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. (continued) 32 Notes to Financial Statements June 30, 2018 Financial Section There were no employer contributions required for the year ended June 30, 2018 based on the June 30, 2015 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) GJRS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1998 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. The GJRS was also 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 and three additional trustees administer GJRS (GJRS Board). There were 93 employers and 1 nonemployer contributing entity participating in the plan during 2018. GJRS Membership as of June 30, 2018 Total: 946 Inactive members and beneficiaries currently receiving benefits Inactive members entitled to benefits but not yet receiving benefits Active plan members 358 527 61 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% of state-paid salary at retirement for district attorneys and superior court judges and 66% 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. Those who became members prior to July 1, 2012 must also contribute 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. Pursuant to O.C.G.A. 47-23-81, the employer contributions for state court judges and solicitors are funded by the State of Georgia on behalf of the local county employers and pursuant to O.C.G.A. 47-23-82, the employer contributions for juvenile court judges are funded by the state on behalf of local county employers. (continued) 33 Notes to Financial Statements June 30, 2018 Financial Section Employer and nonemployer contributions required for fiscal year 2018 were based on the June 30, 2015 actuarial valuation, as follows: Employer and nonemployer: Normal Accrued liability Total 13.71 % (6.54) 7.17 % Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. (e) 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 (the National Guard). The ERS Board administers the GMPF. Membership As of June 30, 2018, GMPF had 1,076 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. There are no member contributions required. Employer contributions required for the year ended June 30, 2018 were $172.85 per active member and were based on the June 30, 2015 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. (f) 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 (SCJRF Board). The ERS Board and SCJRF Board entered into a contract for ERS to administer the plan effective July 1, 1995. Membership As of June 30, 2018, SCJRF had 12 retirees and beneficiaries currently receiving benefits and no active members. No new members are allowed into SCJRF. (continued) 34 Notes to Financial Statements June 30, 2018 Financial Section 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 Employer contributions are not actuarially determined, but are provided on an as-needed basis to fund current benefits. (g) DARF is a multiple-employer 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 (DARF Board). The ERS Board and DARF Board entered into a contract for ERS to administer the plan effective July 1, 1995. Membership As of June 30, 2018, DARF had four retirees and beneficiaries currently receiving benefits and no active members. No new members are allowed into DARF. 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 Employer contributions are not actuarially determined, but are provided on an as-needed basis to fund current benefits. (h) SEAD-OPEB is a cost-sharing multiple-employer defined benefit other postemployment benefit plan created in 2007 by the Georgia General Assembly to amend Title 47 of the O.C.G.A., 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, and GJRS. Effective July 1, 2009, no newly hired members of any Georgia public retirement system are eligible for term life insurance under SEAD. The SEAD-OPEB trust fund accumulates the premiums received from the aforementioned retirement systems, including interest earned on deposits and investments of such payments from retired and vested inactive members. There were 459 employers and 1 nonemployer contributing entity participating in the plan during 2018. SEAD Membership as of June 30, 2018 Total: 69,633 Retirees and beneficiaries Terminated employees Active plan members 26,032 42,654 947 Employee contribution rates as a percentage of member's salaries were appropriated for the fiscal year ended June 30, 2018 as follows: ERS Old Plan 0.45% and ERS New Plan, LRS, and GJRS 0.23%. ERS 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. (continued) 35 Notes to Financial Statements June 30, 2018 Financial Section Georgia law provides that employee contributions to the plan shall be in an amount established by the Board of Trustees (SEAD Board) not to exceed one-half of 1% of the member's earnable compensation. There were no employer contributions required for the fiscal year ended June 30, 2018. 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 position represents the excess accumulation of investment income and premiums over benefit payments and expenses, and is held as a reserve for payment of death benefits under existing policies. The amount of insurance for a retiree with creditable service prior to April 1, 1964 is the full amount of insurance under SEAD-Active in effect on the date of retirement. The amount of insurance for a service retiree with no creditable service prior to April 1, 1964 is 70% of the amount of insurance under SEAD-Active at age 60 or at termination, if earlier. Life insurance proceeds are paid in a lump sum to the beneficiary upon death of the retiree. Administrative costs for the plan are determined based on the plan's share of overhead costs to accumulate and invest funds, actuarial services, and to process benefit payments to beneficiaries. Administrative fees are financed from the assets of the plan. (i) 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 and do not participate in Social Security. GDCP is administered by the ERS Board. There were 75 employers participating in the plan during 2018. There were 121,878 members as of June 30, 2018. 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 adopted by the ERS Board. If a terminated member has less than $5,000 credited to his/her account, the ERS Board has the option of requiring a lump-sum distribution to the member. Upon the death of a member, a lump-sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Contributions and Vesting Members are required to contribute 7.5% of their annual salary and vest immediately in the plan upon contribution. There are no employer contributions. Earnings will be credited to each member's account as adopted by the ERS Board. Upon termination of employment, the amount of the member's account is refundable upon request by the member. (j) The 401(k) Plan was established by the State of Georgia Employee Benefit Plan Council in accordance with Georgia Law 1985, as amended, O.C.G.A, Sections 45-18-50 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 (GLC). On July 1, 2005, the Plan became available to employees of Fayette County Board of Education; on July 1, 2006, the Plan became available to employees of Walton County Board of Education; on January 1, 2010, the Plan became available to employees of Henry County Board of Education; and on July 1, 2017, the Plan became available to employees of the Baldwin County Board of Education. Effective July 1, 1998, the State of Georgia Employee's Deferred Compensation Group Trust (the 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. The assets of the 401(k) Plan and the 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 (continued) 36 Notes to Financial Statements June 30, 2018 Financial Section 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. Alight Solutions and JPMorgan Chase hold, administer, and invest the assets of the Master Trust. Contributions and Vesting Participating CSBs, the GLC, and Walton and Henry County Boards of Education offer employer contributions, some matching, some automatic, and some a combination of both, to eligible employees at various rates (limited to a maximum of $270,000 base salary in calendar year 2017 and $275,000 in calendar year 2018). As of January 1, 2009, individual participants may defer up to 80% of eligible compensation, or up to limits prescribed by the IRC (whichever is less). 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 Plan or New Plan, are members of GSEPS. From January 1, 2009 to June 30, 2014, the GSEPS tier included automatic enrollment in the 401(k) Plan at a contribution rate of 1% of salary. Effective July 1, 2014, in accordance with HB764, the employee contribution rate for automatic enrollment increased from 1% to 5%. The state matches 100% of the employee's initial 1% contribution and 50% of contributions above 1% and up to 5%. Therefore, the state will match 3% of salary when an employee contributes at least 5% to the 401(k) Plan. Employee contributions greater than 5% of salary do not receive any additional matching funds. Plan participants who are not employees of the GLC, a CSB, Walton and Henry County Boards of Education, or who are not GSEPS eligible do not receive any employer contributions in their 401(k) Plan. All employer contributions are subject to a vesting schedule, which determines eligibility to receive all or a portion of the employer contribution balance at the time of any distribution from the account after separation from all state service. Vesting is determined based on the following schedule: Less than 1 year 1 2 3 4 5 or more years --% 20 40 60 80 100 For CSB/GLC participants whose services terminated prior to January 1, 2010 but after December 31, 2001, the following vesting schedule applies: Less than 2 years 2 3 4 5 6 or more years --% 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 years --% 20 40 60 80 100 37 (continued) Notes to Financial Statements June 30, 2018 Financial Section 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. Participation As of June 30, 2018, the 401(k) Plan had 65,874 participants with a balance. A total of 470 employers transmitted contributions to the plan during 2018. Distributions The participant may receive the value of his or her vested accounts upon attaining age 59.5, qualifying financial hardship, or 30 days after 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. Employees who die while actively employed and eligible for 401(k) Plan employer matching contributions become fully vested in employer contributions upon death. Distributions are made in installments or in a lump sum. (k) The 457 Plan was established by the State Personnel Board in accordance with Georgia Law 1974, page 198 as amended, O.C.G.A., Sections 45-18-30 through 45-18-36, and Section 457 of the 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 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 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. Alight Solutions and JPMorgan Chase hold, administer, and invest the assets of the Master Trust. Participation As of June 30, 2018, the 457 Plan had 12,882 participants with a balance. A total of 306 employers transmitted contributions to the plan during 2018. Distributions The balance in the employee's account in the 457 Plan is not available to the employee until age 70.5, termination, retirement, death, or unforeseeable emergency, as defined in the 457 Plan. 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) SBF was established under O.C.G.A. 47-2-128(c)(3) within the ERS trust solely for maintaining group term life insurance coverage for members of the plan. All assets of SBF are therefore limited to the payment of benefits and expenses for such coverage and cannot be used to pay pension benefits of ERS. SBF is shown on the financial statements separately as an agency fund to reflect ERS's custodial responsibility and to account for assets held for distribution to SEAD-Active and SEAD-OPEB. SBF may only be used to pay benefits or expenses of SEAD-OPEB or SEAD-Active with authorization by the ERS Board. An actuarial valuation is not prepared, as there are no funding requirements. (continued) 38 Notes to Financial Statements June 30, 2018 Financial Section (m) SEAD-Active is a cost-sharing multiple-employer life insurance plan created in 2007 by the Georgia General Assembly to amend Title 47 of the O.C.G.A., relating to retirement, so as to establish a fund for the provision of term life insurance to active members of ERS, LRS, and GJRS. Effective July 1, 2009, no newly hired members of any Georgia public retirement system are eligible for term life insurance under SEAD. The SEAD-Active fund accumulates the premiums received from the aforementioned retirement systems, including interest earned on deposits and investments of such payments from active members. There were 459 employers and 1 nonemployer contributing entity participating in the plan during 2018. As of June 30, 2018, there were 26,032 active plan members in SEAD-Active. Employee contribution rates as a percentage of member's salaries were appropriated for the fiscal year ended June 30, 2018 as follows: ERS Old Plan 0.05% and ERS New Plan, LRS, and GJRS 0.02%. ERS 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. Georgia law provides that employee contributions to the plan shall be in an amount established by the SEAD Board not to exceed one-half of 1% of the member's earnable compensation. There were no employer contributions required for the fiscal year ended June 30, 2018. 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 position represents the excess accumulation of investment income and premiums over benefit payments and expenses, and is held as a reserve for payment of death benefits under existing policies. The amount of insurance coverage is equal to 18 times monthly earnable compensation frozen at age 60. For members with no creditable service prior to April 1, 1964, the amount decreases from age 60 by a half of 1% per month until age 65, at which point the member will be covered for 70% of the age 60 coverage. Life insurance proceeds are paid in lump sum to the beneficiary upon death of the member. Administrative costs for the plan are determined based on the plan's share of overhead costs to accumulate and invest funds, actuarial services, and to process benefit payments to beneficiaries. Administrative fees are financed from the assets of the plan. (3) Significant Accounting Policies and System Asset Matters (a) Basis of Accounting The System's financial statements are prepared in accordance with U.S. generally accepted accounting principles as applicable to governmental organizations. The System follows the reporting requirements established by GASB. Fiduciary funds include the defined benefit plans and defined contribution plans, which are accounted for on the flow of economic resources measurement focus and the accrual basis of accounting. Contributions to the defined benefit pension plans and OPEB plan are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Contributions to the deferred compensation plans are recognized as received. The SBF is an agency fund and is custodial in nature and does not measure the results of operations. Assets and liabilities are recorded using the accrual basis of accounting. The proprietary fund comprises the SEAD-Active plan. This fund is accounted for on the flow of economic resources measurement focus and uses the accrual basis of accounting. The principal operating revenues are derived from insurance premiums. Operating expenses include the cost of claims and related expenses. (continued) 39 Notes to Financial Statements June 30, 2018 Financial Section (b) Reporting Entity The System is a component unit of the State of Georgia; however, it is accountable for its own fiscal matters and presentation of its separate financial statements. The System has considered potential component units under GASB Statements No. 80, Blending Requirements for Certain Component Units, No. 61, The Financial Reporting Entity's Omnibus An Amendment of GASB Statement No. 14 and No. 34, and No. 39, Determining Whether Certain Organizations are Component Units, and determined there were no component units of the System. (c) Cash and Cash Equivalents Cash and cash equivalents, reported at cost, include cash on deposit at banks and cash on deposit with the investment custodian. (d) Investments Investments are reported at fair value, and in some cases, net asset value (NAV) as a practical expedient to fair value. Equity securities traded on a national or international exchange are valued at the last reported sales price. Investments in private investment companies are valued utilizing the NAVs provided by the underlying private investment companies as a practical expedient. The Pooled Investment Fund (the Fund) applies the practical expedient to its investments in private investment companies on an investment by investment basis, and consistent with the Fund's entire position in a particular investment, unless it is probable that the Fund will sell a portion of an investment at an amount different from the NAV of the investment. Private equity fair value is measured using the valuation of the underlying companies as reported by the general partner. These investments, in the form of limited partnerships, reflect values and related performance on a quarter-lag basis due to the nature of the investments and the time it takes to value them. The estimated fair value of investments without readily determinable market values could differ significantly if a ready market for these assets existed. Fixed income securities are valued based primarily on quoted market prices provided by independent pricing sources. Global foreign exchange holdings are translated using a third-party vendor. 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, foreign currency, 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. The System's policy with regard to the allocation of invested assets is established on a cost basis in compliance with Georgia statute. Plan assets are managed on a total return basis with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension and OPEB plans. The following was the System's adopted asset allocation policy as of June 30, 2018: Asset class Fixed income Equities Alternative investments Cash and cash equivalents Total Target allocation 25%-45% 55%-75% 0%-5% 100% Approximately 18.8% of the investments held in trust for pension and OPEB benefits are invested in debt securities of the U.S. government. The System has no investments in any one organization, other than those issued by the U.S. government and its instrumentalities, that represent 5% or more of the System's net position restricted for pensions and OPEB. (continued) 40 Notes to Financial Statements June 30, 2018 Financial Section For the year ended June 30, 2018, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 0.6%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. (e) Capital Assets Capital assets, including software development costs, are stated at cost less accumulated depreciation and reside in ERS. 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 5 to 40 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 combining statement of changes in fiduciary net position in the period of disposal. (f) 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 position and changes therein. Actual results could differ from those estimates. (g) New Accounting Pronouncements Pronouncements effective for the 2018 financial statements: In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective for fiscal years beginning after June 15, 2017. The Statement addressed accounting and financial reporting for defined benefit OPEB plans that are provided to the employees of state and local governmental employers. See note 3(h) for the impact to the System. In March 2016, the GASB issued Statement No. 81, Irrevocable Split-Interest Agreements, effective for fiscal years beginning after December 15, 2016. The objective of this Statement is to improve accounting and financial reporting for irrevocable split interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. There are no applicable reporting requirements for the System related to this statement. In March 2017, the GASB issued Statement No. 85, Omnibus 2017, effective for fiscal years beginning after June 15, 2017. This Statement addresses practice issues that have been identified during implementation and application of certain GASB Statements. A variety of topics are addressed, including issues related to blending component units, goodwill, fair value measurement, and OPEB. The implementation of Statement No. 85 did not impact the amounts recorded or disclosures presented in the System's financial statements. In May 2017, the GASB issued Statement No. 86, Certain Debt Extinguishment Issues, effective for fiscal years beginning after June 15, 2017. The primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt. There are no applicable reporting requirements for the System related to this Statement. Pronouncements issued, but not yet effective: In November 2016, the GASB issued Statement No. 83, Certain Asset Retirement Obligations, effective for fiscal years beginning after June 15, 2018. This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. The System does not anticipate this statement to impact its financial statements and related reporting. (continued) 41 Notes to Financial Statements June 30, 2018 Financial Section In January 2017, the GASB issued Statement No. 84, Fiduciary Activities, effective for fiscal years beginning after December 15, 2018. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The System is in the process of evaluating the impact of this pronouncement on its financial statements. In June 2017, the GASB issued Statement No. 87, Leases, effective for fiscal years beginning after December 15, 2019, which provides guidance for lease contracts for nonfinancial assets including vehicles, heavy equipment, and buildings but excludes nonexchange transactions, including donated assets, and leases of intangible assets (such as patents and software licenses). The System is in the process of evaluating the impact of this pronouncement on its financial statements. In April 2018, the GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowing and Direct Placements effective for fiscal years beginning after June 15, 2018. The purpose is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The System is in the process of evaluating the impact of this pronouncement on its financial statements. In June 2018, the GASB issued Statement No. 89, Accounting for Interest Costs Incurred before the End of a Construction Period, effective for fiscal years beginning after December 15, 2019, which establishes guidance designed to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period. It also simplifies accounting for interest costs incurred before the end of a construction period. The System is in the process of evaluating the impact of this pronouncement on its financial statements. (continued) 42 Notes to Financial Statements June 30, 2018 Financial Section (h) Change in Accounting Principle In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective for fiscal years beginning after June 15, 2017. This Statement established new financial reporting standards for state and local governmental employers that participate in other postemployment benefit plans that are administered through a trust or similar arrangement. This Statement established standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expenses. As a result, the System has restated beginning net position by approximately $7.5 million. A summary of the changes to beginning net position is as follows (dollars in thousands): Combining Statement of Changes in Fiduciary Net Position: Defined Benefit Plans Net Position - beginning of year as previously reported Recording of SEAD-OPEB net OPEB asset Recording of State OPEB Fund net OPEB liability Recording of contributions made subsequently Net position - beginning of year, as restated Defined Benefit Plans Combining Statement of Changes in Fiduciary Net Position: Employees' Retirement System Net Position - beginning of year as previously reported Recording of SEAD-OPEB net OPEB asset Recording of State OPEB Fund net OPEB liability Recording of contributions made subsequently Net position - beginning of year, as restated $ 15,582,566 372 (8,792) 926 $ 15,575,072 $ 13,098,299 372 (8,792) 926 $ 13,090,805 (continued) 43 Notes to Financial Statements June 30, 2018 Financial Section (4) Investment Program The System maintains sufficient cash to meet its immediate liquidity needs. Cash not immediately needed is invested as directed by the ERS Board. All investments are held by agent custodial banks in the name of the System. State statutes and the System's investment policy authorize the System to invest in a variety of shortterm and long-term securities as follows: (a) Cash and Cash Equivalents Custodial credit risk is the risk that in the event a depository institution or counterparty fails, the System would not be able to recover the value of its deposits or investments. The System does not have a formal policy relating to custodial credit risk. The carrying amount of the System's deposits totaled $276.6 million at June 30, 2018 with actual bank balances of $280.3 million. The System's bank balances of $260.0 million are fully insured through the Federal Deposit Insurance Corporation, an independent agency of the U.S. government. The remaining bank deposits of $20.3 million are uninsured and uncollateralized. The System's noncash investments are held in the System's name and are not exposed to custodial credit risk. Short term securities authorized but not currently used are as follows: 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. U.S. Treasury obligations 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) Investments Fixed income investments, managed by the Division of Investment Services (the Division), are authorized in the following instruments: U.S. and foreign government obligations. At June 30, 2018, the System held U.S. Treasury bonds of approximately $3.4 billion. Obligations unconditionally guaranteed by agencies of the U.S. government. At June 30, 2018, the System did not hold agency bonds. U.S. and foreign corporate obligations. At June 30, 2018, the System held U.S. corporate bonds of approximately $1.5 billion and international corporate bonds of approximately $190 million. Private placements are authorized under the same general restrictions applicable to corporate bonds. At June 30, 2018, the System did not hold private placements. (continued) 44 Notes to Financial Statements June 30, 2018 Financial Section 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 75% 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, in conjunction with independent advisers. Buy/sell decisions are based on securities meeting rating criteria established by the ERS Board, in-house research considering such matters 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 ERS Board before being placed on an approved list. Equity investments are authorized in the following instruments: Domestic equities are those securities considered by O.C.G.A. to be domiciled in the United States. At June 30, 2018, the System held domestic equities of approximately $8.3 billion. International equities, including American Depository Receipts (ADR), are not considered by the O.C.G.A. to be domiciled in the United States. At June 30, 2018, the System held international equities of approximately $1.1 billion and ADRs of approximately $1.7 billion, excluding the 401(k) and 457 plans. Alternative investments are authorized (in statutes) to provide portfolio diversification and to enhance the risk-adjusted rate of return for the retirement fund that benefits the members of the System. By statute, the allocation to alternative investments shall not, in the aggregate, exceed 5% of the System's plan assets at any time. Further, in any calendar year, new commitments to alternative investments shall not, in the aggregate exceed 1.0% of the System's plan assets until the first occurrence that 4.5% of the assets have been invested, at which time there shall be no limit on the percentage of commitments that may be made in any calendar year, subject to compliance with other provisions of the statute. At June 30, 2018, the System held private equity investments of approximately $221.9 million. The 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 investment options that own one or more commingled funds, as authorized by the ERS Board. Participants may also contribute to a self-directed brokerage account that offers investments in various mutual funds and equities. At June 30, 2018, the deferred compensation plans held commingled funds of approximately $1.6 billion, mutual funds of approximately $7.2 million, domestic equities of approximately $14.8 million, and international equities of approximately $1.4 million. Substantially all of the investments of ERS, PSERS, LRS, GJRS, GMPF, SEAD-OPEB, SBF, and SEADActive are pooled into one 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. (continued) 45 Notes to Financial Statements June 30, 2018 Financial Section The units and fair value of each plan's equity in the pooled common investment fund at June 30, 2018 were as follows (dollars in thousands): Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Military Pension Fund State Employees' Assurance Department - OPEB Survivors Benefit Fund Total defined benefit plans State Employees' Assurance Department - Active Total in pooled investment funds Fair value $ 13,468,340 914,957 34,216 466,307 23,715 1,189,173 148,450 16,245,158 289,087 $ 16,534,245 Units 2,722,454 184,947 6,916 94,258 4,794 240,376 30,007 3,283,752 58,435 3,342,187 Fair Value Measurements. The System categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the inputs used in valuation and gives the highest priority to unadjusted quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the hierarchy is based on whether the significant inputs into the valuations are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest level, Level 1, is given to unadjusted quoted prices in active markets and the lowest level, Level 3, to unobservable inputs. The three levels of the fair value hierarchy are as follows: Level 1 Valuations based on unadjusted quoted prices for identical instruments in active markets that the System has the ability to access. Level 2 Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The System also has investments held through limited partnerships for which fair value is estimated using the NAV reported by the general partner as a practical expedient to fair value. Such investments have not been categorized within the fair value hierarchy. In instances where inputs used to measure fair value fall into different levels in the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The System's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each investment. The table on the following page shows the fair value leveling of the System's investments (in thousands). (continued) 46 Notes to Financial Statements June 30, 2018 Financial Section Fair value measures using Investments by fair value level Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Equities: Domestic $ 8,332,421 -- -- International 2,788,248 19,606 -- Obligations: Domestic: U.S. Treasuries 3,374,310 -- -- Corporate bonds -- 1,475,432 -- International: Corporate bonds -- 190,353 -- Mutual funds 7,228 -- -- Commingled funds 80,811 1,510,680 -- Total investments by fair value level $ Investments measured at NAV* Private equity funds Total investments 14,583,018 3,196,071 -- $ Total 8,332,421 2,807,854 3,374,310 1,475,432 190,353 7,228 1,591,491 17,779,089 221,904 18,000,993 *Certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the combining statement of fiduciary net position. Equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Equity securities in Level 2 are valued using prices quoted for similar instruments in active markets. Equity securities classified in Level 3, if any, are valued using third-party valuations not currently observable in the market. Debt securities classified in Level 1 are valued using prices quoted in active markets. Debt securities classified in Level 2 are valued using either a bid evaluation or a matrix pricing technique. Bid evaluations may include market quotations, yields, maturities, call features, and ratings. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices. These securities have nonproprietary information that was readily available to market participants, from multiple independent sources, which are known to be actively involved in the market. Mutual funds and commingled funds classified in Level 1 are valued using prices quoted in active markets for those investment types. Commingled funds classified in Level 2 are valued using observable underlying inputs that are market corroborated. (continued) 47 Notes to Financial Statements June 30, 2018 Financial Section Unfunded commitments, redemption frequency, and redemption notice period relative to the System's alternative investments for which the System utilized NAV or its equivalent relative to the determination of fair value at June 30, 2018 are as follows (in thousands): Private equity funds Investments measured at NAV $ 221,904 Unfunded commitments 213,933 Redemption frequency (if currently eligible) Not eligible Redemption notice period N/A Investments in privately held limited partnerships are valued using the NAV provided by the general partner as of March 31 of each fiscal year, adjusted by the System for cash flows through June 30. The quarterly values of the partnership investments provided from the general partner are reviewed by the System to determine if any adjustments are necessary. The types of partnership strategies held include growth equity, leveraged buyouts, and mezzanine debt. Two of the 15 partnerships held are secondary investments and are in or nearing the wind up phase of the fund. The remaining investments typically have an approximate life of 810 years. These investments are considered illiquid since the nature of these private investments prohibits redemption with the fund; instead, distributions are received from the general partner through liquidation of the underlying assets of the fund. The System currently has no plans to sell any of the investments prior to their liquidation resulting in these assets being carried at the NAV estimated by the general partner and adjusted for second quarter cash flows by the System. Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the System. O.C.G.A. 47-20-84 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. If a bond is subsequently downgraded to a rating below "A," it is placed on a watch list. Obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government are not considered to have credit risk and do not require disclosure of credit quality. 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, 2018 are shown in the chart on the following page (in thousands): (continued) 48 Notes to Financial Statements June 30, 2018 Financial Section Quality Ratings of Fixed Income Investments Held at June 30, 2018 Investment type Domestic obligations: U.S. Treasuries Corporates Total corporates International obligations: Corporates Total corporates Total fixed income investments Standard & Poor's/ Moody's quality rating June 30, 2018 fair value AAA/Aaa AA/Aaa AA/Aa A/Aa AA/A A/A $ 3,374,310 166,156 188,755 151,695 96,524 146,034 726,268 1,475,432 A/Aa A/A 95,951 94,402 190,353 $ 5,040,095 Mutual funds, commingled funds, and various equities 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. At June 30, 2018, 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 position. 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 on the following page quantifies to the fullest extent possible the interest rate risk of the System's fixed income assets (amounts in thousands). (continued) 49 Notes to Financial Statements June 30, 2018 Financial Section Effective Duration of Fixed Income Assets Fixed income type Domestic obligations: U.S. Treasuries Corporates International obligations: Corporates Total Fair value June 30, 2018 Percent of all fixed income assets Effective duration (years) $ 3,374,310 1,475,432 190,353 $ 5,040,095 66.9 % 5.7 29.3 3.8 3.8 0.8 100.0 % 4.9 Foreign Currency Risk: Foreign currency risk is the risk that changes in exchange rates will impact the fair value of an investment. The System's currency risk exposures, or exchange rate risks, primarily reside within the System's international equity investment holdings. The System's foreign exchange risk management policy is to minimize risk and protect the investments from negative impact by hedging foreign currency exposures with foreign exchange instruments when market conditions and circumstances are deemed appropriate. As of June 30, 2018, the System's exposure to foreign currency risk in U.S. dollars, excluding the 401(k) and 457 plans, is highlighted in the table on the following page (amounts in thousands): 50 (continued) Notes to Financial Statements June 30, 2018 Financial Section International Investment Securities at Fair Value as of June 30, 2018 Currency Australian dollar Brazilian real British pound Canadian dollar Czech krone Danish krone Euro Hong Kong dollar Indian rupee Indonesian rupiah Israeli shekel Japanese yen Malaysian ringgit Mexican peso New Taiwan dollar Norwegian krone Philippine peso Polish zloty Singapore dollar South African rand South Korean won Swedish krona Swiss franc Thailand baht Cash/cash equivalents $ -- -- -- -- -- -- 36 -- -- -- -- 16 -- -- -- -- -- -- -- -- -- -- -- -- Equities 46,103 10,568 109,708 38,679 1,062 17,110 299,571 53,522 53,318 5,537 1,816 193,230 14,653 5,847 29,990 2,355 4,220 2,841 23,992 38,495 69,474 31,062 31,121 19,606 Fixed income -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Total holdings subject to foreign currency risk 52 1,103,880 -- Investment securities payable in U.S. dollars -- 1,702,552 190,353 Total international investment securities - at fair value 52 2,806,432 190,353 Total 46,103 10,568 109,708 38,679 1,062 17,110 299,607 53,522 53,318 5,537 1,816 193,246 14,653 5,847 29,990 2,355 4,220 2,841 23,992 38,495 69,474 31,062 31,121 19,606 1,103,932 1,892,905 2,996,837 (5) Securities Lending Program State statutes and ERS Board 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. The System reports the gross loan fee income earned as investment income on the combining statement of changes in fiduciary net position. 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, corporate bonds, and equities. The collateral value must be equal to at least 102% to 109% of the loaned securities' value, depending on the type of collateral security. Securities loaned totaled approximately $4.0 billion at fair value at June 30, 2018. The collateral value was equal to 105% of the loaned securities' value at June 30, 2018. The System's lending collateral was held in the System's name by the tri-party custodian. (continued) 51 Notes to Financial Statements June 30, 2018 Financial Section Loaned securities are included in the accompanying combining statement of fiduciary net position since the System maintains ownership. The related collateral securities are not recorded as assets on the System's combining statement of fiduciary net position, 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 and for the year ended June 30, 2018: Capital assets: Land Building Equipment Vehicles Computer software Balance at June 30, 2017 Balance at Additions Disposals June 30, 2018 $ 4,341,787 2,800,000 3,272,212 13,382 14,344,609 24,771,990 8,000 -- 134,905 -- -- 142,905 (13,382) (13,382) 4,349,787 2,800,000 3,407,117 -- 14,344,609 24,901,513 Accumulated depreciation for: Building Equipment Vehicles Computer software (910,000) (2,599,612) (13,382) (14,344,609) (17,867,603) (70,000) (239,211) -- -- (309,211) 13,382 13,382 (980,000) (2,838,823) -- (14,344,609) (18,163,432) Capital assets, net $ 6,904,387 (166,306) 6,738,081 (7) Commitments As of June 30, 2018, the System had committed to fund certain private equity partnerships for a total capital commitment of approximately $427.8 million. Of this amount, approximately $213.9 million remained unfunded and is not recorded on the System's combining statement of fiduciary net position. (8) Net Pension Liability of Employers and Nonemployers - ERS The components of the net pension liability of the participating employers and nonemployers at June 30, 2018 were as follows (dollars in thousands): Total pension liability Plan fiduciary net position $ 17,628,219 13,517,186 Employers' and nonemployers' net pension liability $ 4,111,033 Plan fiduciary net position as a percentage of the total pension liability 76.68% (continued) 52 Notes to Financial Statements June 30, 2018 Financial Section Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% 3.25 - 7.00%, including inflation 7.30%, net of pension plan investment expense, including inflation Postretirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward two years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back seven years for males and set forward three years for females was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the investment rate of return. Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives Total Target allocation 30.00 % 37.20 3.40 1.40 17.80 5.20 5.00 100.00 % Long-term expected real rate of return* (0.50) % 9.00 12.00 13.50 8.00 12.00 10.50 * Rates shown are net of inflation Discount rate: The discount rate used to measure the total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. (continued) 53 Notes to Financial Statements June 30, 2018 Financial Section Sensitivity of the net pension liability to changes in the discount rate: The following presents the net pension liability, calculated using the discount rate of 7.30%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30%) or 1-percentage-point higher (8.30%) than the current rate (dollars in thousands): Employers' and nonemployers' net pension liability 1% Decrease (6.30%) $ 5,847,341 Current discount rate (7.30%) 4,111,033 1% Increase (8.30%) 2,631,654 Actuarial valuation date: June 30, 2017 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2018 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. (9) Net Pension Liability of Employers and Nonemployers PSERS The components of the net pension liability of the participating employers and nonemployers at June 30, 2018 were as follows (dollars in thousands): Total pension liability $ Plan fiduciary net position Employers' and nonemployers' net pension liability $ Plan fiduciary net position as a percentage of the total pension liability 1,072,165 914,138 158,027 85.26% Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: Salary increases Investment rate of return Cost-of-living adjustment n/a 7.30%, net of pension plan investment expense, including inflation 1.5% semi-annually Postretirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward three years for males and two years for females) for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward five years for both males and females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the investment rate of return. Subsequent to the June 30, 2017 measurement date, the PSERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the PSERS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. (continued) 54 Notes to Financial Statements June 30, 2018 Financial Section The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives Total Target allocation 30.00 % 37.20 3.40 1.40 17.80 5.20 5.00 100.00 % Long-term expected real rate of return* (0.50) % 9.00 12.00 13.50 8.00 12.00 10.50 * Rates shown are net of inflation. Discount rate: The discount rate used to measure the total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate: The following presents the net pension liability, calculated using the discount rate of 7.30%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30%) or 1-percentage-point higher (8.30%) than the current rate (dollars in thousands): Employers' and nonemployers' net pension liability 1% Decrease (6.30%) $ 276,775 Current discount rate (7.30%) 158,027 1% Increase (8.30%) 58,149 Actuarial valuation date: June 30, 2017 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2018 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. (10) Net Pension Liability of Employer LRS The components of the net pension liability (asset) of the participating employer at June 30, 2018 were as follows (dollars in thousands): Total pension liability $ Plan fiduciary net position Employer's net pension asset $ Plan fiduciary net position as a percentage of the total pension liability 55 26,304 34,189 (7,885) 129.98% (continued) Notes to Financial Statements June 30, 2018 Financial Section Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return Cost-of-living adjustment 2.75% n/a 7.30%, net of pension plan investment expense, including inflation 1.5% semi-annually Postretirement mortality rates were based on the RP-2000 Combined Mortality Table projected to 2025 with projection scale BB (set forward two years for both males and females) for the period after service retirement. The RP-2000 Employee Mortality table projected to 2025 using projection scale BB was used for deaths in active service. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the investment rate of return. Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives Total Target allocation 30.00 % 37.20 3.40 1.40 17.80 5.20 5.00 100.00 % Long-term expected real rate of return* (0.50) % 9.00 12.00 13.50 8.00 12.00 10.50 * Rates shown are net of inflation. Discount rate: The discount rate used to measure the total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate: The table on the following page presents the net pension liability (asset), calculated using the discount rate of 7.30%, as well as what the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30%) or 1-percentage-point higher (8.30%) than the current rate (dollars in thousands): (continued) 56 Notes to Financial Statements June 30, 2018 Financial Section Employers' and nonemployers' net pension liability (asset) 1% Decrease (6.30%) $ (5,420) Current discount rate (7.30%) (7,885) 1% Increase (8.30%) (9,971) Actuarial valuation date: June 30, 2017 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2018 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. (11) Net Pension Liability of Employers and Nonemployers GJRS The components of the net pension liability (asset) of the participating employers and nonemployers at June 30, 2018 were as follows (dollars in thousands): Total pension liability $ Plan fiduciary net position Employers' and nonemployers' net pension asset $ Plan fiduciary net position as a percentage of the total pension liability 428,624 466,657 (38,033) 108.87% Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% 4.50%, including inflation 7.30%, net of pension plan investment expense, including inflation Mortality rates were based on the RP-2000 Combined Mortality Table projected to 2025 with projection scale BB and set forward two years for both males and females for the period after retirement and for dependent beneficiaries. For the period after disability retirement, the RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB and set back seven years for males and set forward three years for females is used. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the investment rate of return. Subsequent to the June 30, 2017 measurement date, the GJRS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the GJRS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the table on the following page: (continued) 57 Notes to Financial Statements June 30, 2018 Financial Section Asset Class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives Total Target allocation 30.00 % 37.20 3.40 1.40 17.80 5.20 5.00 100.00 % Long-term expected real rate of return* (0.50) % 9.00 12.00 13.50 8.00 12.00 10.50 * Rates shown are net of inflation. Discount rate: The discount rate used to measure the total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate: The following table presents the net pension liability (asset), calculated using the discount rate of 7.30%, as well as what the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30%) or 1-percentage-point higher (8.30%) than the current rate (dollars in thousands): Employers' and nonemployers' net pension liability (asset) 1% Decrease (6.30%) $ 2,446 Current discount rate (7.30%) (38,033) 1% Increase (8.30%) (73,292) Actuarial valuation date: June 30, 2017 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2018 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. (12) Net Pension Liability of Employer GMPF The components of the net pension liability of the participating employer at June 30, 2018 were as follows (dollars in thousands): Total pension liability $ Plan fiduciary net position Employers' net pension liability $ Plan fiduciary net position as a percentage of the total pension liability 43,204 23,653 19,551 54.75% (continued) 58 Notes to Financial Statements June 30, 2018 Financial Section Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% n/a 7.30%, net of pension plan investment expense, including inflation Postretirement mortality rates were based on the RP-2000 Combined Mortality Table projected to 2025 with projection scale BB (set forward two years for both males and females) for the period after service retirement. The RP-2000 Employee Mortality Table projected to 2025 using projection scale BB was used for deaths in active service. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the investment rate of return. Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives Total Target allocation 30.00 % 37.20 3.40 1.40 17.80 5.20 5.00 100.00 % Long-term expected real rate of return* (0.50) % 9.00 12.00 13.50 8.00 12.00 10.50 * Rates shown are net of inflation. Discount rate: The discount rate used to measure the total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate: The table on the following page presents the net pension liability (asset), calculated using the discount rate of 7.30%, as well as what the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30%) or 1-percentage-point higher (8.30%) than the current rate (dollars in thousands): (continued) 59 Notes to Financial Statements June 30, 2018 Financial Section Employers' net pension liability 1% Decrease (6.30%) $ 25,766 Current discount rate (7.30%) 19,551 1% Increase (8.30%) 14,501 Actuarial valuation date: June 30, 2017 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2018 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. (13) Net OPEB Liability of Employers - SEAD-OPEB The components of the net OPEB liability (asset) of the participating employers at June 30, 2018 were as follows (dollars in thousands): Total OPEB liability Plan fiduciary net position $ 918,816 1,189,462 Employers' net OPEB asset $ (270,646) Plan fiduciary net position as a percentage of the total OPEB liability 129.46% Actuarial assumptions: The total OPEB liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases: ERS GJRS LRS Investment rate of return Healthcare cost trend rate 2.75% 3.25% - 7.00% 4.50% n/a 7.30%, net of OPEB plan investment expense, including inflation n/a Postretirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward two years for both males and females for service retirements and dependent beneficiaries. There is a margin for future mortality improvement in the tables used by the plan. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014, with the exception of the investment rate of return. Subsequent to the June 30, 2017 measurement date, the SEAD Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the SEAD Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the table on the following page: (continued) 60 Notes to Financial Statements June 30, 2018 Financial Section Asset Class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives Total Target allocation 30.00 % 37.20 3.40 1.40 17.80 5.20 5.00 100.00 % Long-term expected real rate of return* (0.50) % 9.00 12.00 13.50 8.00 12.00 10.50 * Rates shown are net of inflation. Discount rate: The discount rate used to measure the total OPEB liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Sensitivity of the net OPEB liability to changes in the discount rate: The following table presents the net OPEB asset, calculated using the discount rate of 7.30%, as well as what the net OPEB asset would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30%) or 1-percentage-point higher (8.30%) than the current rate (dollars in thousands): Employers' net OPEB asset 1% Decrease (6.30%) $ (145,823) Current discount rate (7.30%) (270,646) 1% Increase (8.30%) (372,959) Actuarial valuation date: June 30, 2017 is the actuarial valuation date upon which the total OPEB liability is based. An expected total OPEB liability is determined as of June 30, 2018 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. (14) System Employees' Other Postemployment Benefits (OPEB) Certain of the System's employees are members of the State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund and the Georgia State Employees Postretirement Benefit Fund. The notes to the financial statements that follow and required supplementary information on pages 79 and 80 are presented from the perspective of the System as an employer. General Information about the State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB) Plan description: SEAD-OPEB was created in 2007 by the Georgia General Assembly to amend Title 47 of the O.C.G.A., 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, and GJRS. The plan is a cost-sharing multiple-employer defined benefit (continued) 61 Notes to Financial Statements June 30, 2018 Financial Section other postemployment benefit plan as defined in GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than OPEB Plans. The SEAD-OPEB trust fund accumulates the premiums received from the aforementioned retirement plans, including interest earned on deposits and investments of such payments. Benefits provided: The amount of insurance for a retiree with creditable service prior to April 1, 1964 is the full amount of insurance in effect on the date of retirement. The amount of insurance for a service retiree with no creditable service prior to April 1, 1964 is 70% of the amount of insurance in effect at age 60 or at termination, if earlier. Life insurance proceeds are paid in a lump sum to the beneficiary upon death of the retiree. Contributions: Georgia law provides that employee contributions to the plan shall be in an amount established by the SEAD Board not to exceed one-half of 1% of the member's earnable compensation. There were no employer contributions required for the fiscal year ended June 30, 2018. OPEB Liabilities and OPEB Expense related to SEAD-OPEB At June 30, 2018, the System reported an asset of $501 thousand for its proportionate share of the net OPEB asset. The net OPEB asset was measured as of June 30, 2017. The total OPEB asset used to calculate the net OPEB asset was based on an actuarial valuation as of June 30, 2016. An expected total OPEB asset as of June 30, 2017 was determined using standard roll-forward techniques. The System's proportionate share of the net OPEB asset was based on actual member salaries reported to the SEAD-OPEB plan during the fiscal year ended June 30, 2017. At June 30, 2017, the employer's proportionate share was 0.192864%, which was an increase of 0.003037% from its proportionate share measured as of June 30, 2016. For the year ended June 30, 2018, the employer recognized a reduction of OPEB expense of $48 thousand. Actuarial assumptions: The total SEAD-OPEB asset as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increase: Investment rate of return Healthcare cost trend rate 2.75% 3.25 - 7.00%, including inflation 7.50%, net of SEAD-OPEB plan investment expense, including inflation n/a Postretirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. There is a margin for future mortality improvement in the tables used by the plan. The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014. The long-term expected rate of return on SEAD-OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and estimates of arithmetic real rates of return for each major asset class are summarized in the table on the following page: (continued) 62 Notes to Financial Statements June 30, 2018 Financial Section Asset Class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives Total Target allocation 30.00 % 37.20 3.40 1.40 17.80 5.20 5.00 100.00 % Long-term expected real rate of return* (0.50) % 9.00 12.00 13.50 8.00 12.00 10.50 * Rates shown are net of inflation. Discount rate: The discount rate used to measure the total SEAD-OPEB liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employers and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the SEAD-OPEB plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on SEAD-OPEB plan investments was applied to all periods of projected benefit payments to determine the total SEAD-OPEB liability. Sensitivity of the System's proportionate share of the net SEAD-OPEB liability to changes in the discount rate: The following presents the System's proportionate share of the net SEAD-OPEB liability calculated using the discount rate of 7.50%, as well as what the System's proportionate share of the net SEAD-OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands): System's proportionate share of the net OPEB liability (asset) 1% Decrease (6.50%) $ (274) Current discount rate (7.50%) (501) 1% Increase (8.50%) (687) SEAD-OPEB plan fiduciary net position: Detailed information about the SEAD-OPEB plan's fiduciary net position is presented in the Combining Statement of Fiduciary Net Position on page 24 and the Combining Statement of Changes in Fiduciary Net Postion on page 26. General Information about the Georgia State Employees Postemployment Benefit Fund (State OPEB Fund) Plan description: The State OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for employees of State organizations (including technical colleges) and other entities authorized by law to contract with the Department of Community Health (DCH) for inclusion in the plan. Benefits provided: Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from ERS, LRS, GJRS, Teachers Retirement System (TRS) or PSERS. If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare-eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The State OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the State OPEB Fund is permitted. Contributions: As established by the DCH Board of Trustees, the State OPEB Fund is substantially funded on a pay-as-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. (continued) 63 Notes to Financial Statements June 30, 2018 Financial Section Contributions to the State OPEB Fund from the System were $926 thousand for the year ended June 30, 2018. Active employees are not required to contribute to the State OPEB Fund. OPEB Liabilities and OPEB Expense related to State OPEB Fund At June 30, 2018, the System reported a liability of approximately $7.6 million for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2016. An expected total OPEB liability as of June 30, 2017 was determined using standard roll-forward techniques. The System's proportionate share of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2017. At June 30, 2017, the System's proportionate share was 0.185830%, which was a decrease of 0.002001% from its proportionate share measured as of June 30, 2016. For the year ended June 30, 2018, the System's recognized OPEB expense was $292.1 thousand. Actuarial assumptions: The total OPEB liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017: Inflation Salary increase: Investment rate of return 2.75% 3.25 7.00%, including inflation 7.50%, net of State OPEB plan investment expense, including inflation Healthcare trend rate: Pre-Medicare Eligible Medicare Eligible Ultimate trend rate: Pre-Medicare Eligible Medicare Eligible Year of Ultimate trend rate 7.75% 5.75% 5.00% 5.00% 2022 Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB. The RP-2000 Combined Mortality Table projected to 2025 with projection scale BB and set forward 2 years or both males and females is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB and set back 7 years for males and set forward 3 years for females is used for the period after disability retirement. The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014. Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. Additionally, there was a change that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the State OPEB Fund is based on their current or last employer payroll location. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are allocated to the State OPEB Fund irrespective of retirement system affiliation. The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of (continued) 64 Notes to Financial Statements June 30, 2018 Financial Section investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Local Government Investment Pool Target allocation 100% Long-term expected real rate of return 3.88% Discount rate: The discount rate has changed since the prior measurement date from 3.09% to 3.60%. In order to measure the total OPEB liability for the State OPEB Fund, a single equivalent interest rate of 3.60% was used as the discount rate. This is comprised mainly of the yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.56% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2115. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2029. Therefore, the calculated discount rate of 3.60% was applied to all periods of projected benefit payments to determine the total OPEB liability. Sensitivity of the System's proportionate share of the net State OPEB liability to changes in the discount rate: The following presents the System's proportionate share of the net OPEB liability calculated using the discount rate of 3.60%, as well as what the System's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.60%) or 1-percentage-point higher (4.60%) than the current discount rate (dollars in thousands): System's proportionate share of the net OPEB liability 1% Decrease (2.60%) $ 9,054 Current discount rate (3.60%) 7,571 1% Increase (4.60%) 6,387 Sensitivity of the System's proportionate share of the net State OPEB liability to changes in the healthcare cost trend rates: The following presents the System's proportionate share of the net OPEB liability, as well as what the System's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates (dollars in thousands): System's proportionate share of the net OPEB liability 1% Decrease $ 6,258 Current discount rate 7,571 1% Increase 9,234 State OPEB plan fiduciary net position: Detailed information about the State OPEB Benefit plan's fiduciary net position is available in the Comprehensive Annual Financial Report (CAFR) which is publicly available at https:// sao.georgia.gov/comprehensive-annual-financial-reports. (continued) 65 Notes to Financial Statements June 30, 2018 Financial Section Deferred Outflows of Resources and Deferred Inflows of Resources for SEAD-OPEB and State OPEB Fund At June 30, 2018, the System reported deferred outflows of resources and deferred inflows of resources related to SEAD-OPEB and the State OPEB Fund from the following sources (dollars in thousands): Deferred outflows of resources: Differences between expected and actual experience Change of assumptions Net difference between projected and actual earnings on plan investments Changes in proportion and differences between the System's contributions and proportionate share of contributions System's contributions subsequent to the measurement date SEAD-OPEB Plan $ -- -- -- -- -- Total deferred outflows of resources $ -- State OPEB Fund -- -- 33 -- 905 938 Total -- -- 33 -- 905 938 Deferred inflows of resources: Differences between expected and actual experience Change of assumptions Net difference between projected and actual earnings on plan investments Changes in proportion and differences between the System's contributions and proportionate share of contributions System's contributions subsequent to the measurement date SEAD-OPEB Plan $ -- -- 77 4 -- Total deferred intflows of resources $ 81 State OPEB Fund -- 548 -- 72 -- 620 Total -- 548 77 76 -- 701 SEAD-OPEB amounts reported as deferred outflows of resources and deferred inflows of resources related to SEAD-OPEB will be recognized in OPEB expense as follows (dollars in thousands): Year ended June 30: 2019 2020 2021 2022 2023 Thereafter $ (21) (21) (20) (19) -- -- (continued) 66 Notes to Financial Statements June 30, 2018 Financial Section State OPEB Fund employer contributions subsequent to the measurement date of $905,444 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to SEAD-OPEB will be recognized in OPEB expense as follows (dollars in thousands): Year ended June 30: 2019 2020 2021 2022 2023 Thereafter $ (179) (179) (179) (50) -- -- 67 Financial Section Required Supplementary Information (UNAUDITED) Schedules of Employers' and Nonemployers' Contributions - Defined Benefit Plans Year ended June 30, 2018 (In thousands) (continued) 68 Employees' Retirement System1 Public School Employees Retirement System2 Legislative Retirement System3 Year ended 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Actuarially determined contribution (a) $ 282,103 263,064 261,132 273,623 358,376 428,982 517,220 595,124 624,623 650,073 5,529 5,530 7,509 15,884 24,829 27,160 28,461 28,580 26,277 29,276 -- -- -- -- -- -- -- -- -- -- Contributions in relation to the actuarially determined contribution (b) 281,206 263,064 261,132 274,034 358,992 429,752 518,163 595,566 625,281 652,167 5,529 5,530 7,509 15,884 24,829 27,160 28,461 28,580 26,277 29,276 71 75 75 76 128 45 -- -- -- -- Contribution deficiency (excess) (a-b) 897 -- -- (411) (616) (770) (943) (442) (658) (2,094) -- -- -- -- -- -- -- -- -- -- (71) (75) (75) (76) (128) (45) -- -- -- -- Covered payroll (c) 2,674,155 2,571,042 2,486,780 2,414,884 2,335,773 2,335,773 2,353,225 2,390,457 2,565,918 2,635,896 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Contributions as a percentage of covered payroll (b/c) 10.5 % 10.2 10.5 11.3 15.4 18.4 22.0 24.9 24.4 24.7 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Financial Section Required Supplementary Information (UNAUDITED) Schedules of Employers' and Nonemployers' Contributions - Defined Benefit Plans Year ended June 30, 2018 (In thousands) 69 Georgia Judicial Retirement System Georgia Military Pension Fund4 State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund Year Ended 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Actuarially determined contribution (a) $ 1,703 2,600 1,932 2,083 2,279 2,375 4,261 7,623 6,684 6,566 1,323 1,434 1,282 1,521 1,703 1,892 1,893 1,990 2,018 2,377 -- -- -- 12,724 5,009 -- -- -- -- -- Contributions in relation to the actuarially determined contribution (b) 1,703 2,600 1,932 2,083 2,279 2,375 4,261 7,623 6,684 6,566 1,323 1,434 1,282 1,521 1,703 1,892 1,893 1,990 2,018 2,377 -- -- -- 12,724 5,009 -- -- -- -- -- Contribution deficiency (excess) (a-b) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Covered payroll (c) 52,803 51,293 52,331 51,898 52,807 54,787 54,272 57,401 59,695 60,572 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 2,085,902 1,855,185 n/a n/a n/a n/a n/a Contributions as a percentage of covered payroll (b/c) 3.2 % 5.1 3.7 4.0 4.3 4.3 7.9 13.3 11.2 10.8 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 1.0 -- n/a n/a n/a n/a n/a This data, except for annual covered payroll, was provided by the System's actuary. 1 In 2009, an employer group within ERS did not contribute the full actuarially determined contribution. This employer is making additional contributions to repay this shortfall. 2 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 if hired prior to July 1, 2012 and $10 per month, per member, for nine months, if hired after July 1, 2012. 3 The Georgia General Assembly made contributions in some years that were not required. 4 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. Financial Section Required Supplementary Information (UNAUDITED) Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios Defined Benefit Plans (In thousands) (continued) 70 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Employees' Retirement System: Total pension liability $ Plan fiduciary net position Employers' and nonemployers' net pension liability $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll $ Employers' and nonemployers' net pension liability as a percentage of covered payroll 17,628,219 13,517,186 4,111,033 76.68 % 2,635,896 155.96 % 17,159,634 13,098,299 4,061,335 76.33 % 2,565,918 158.28 % 17,103,987 12,373,567 4,730,420 72.34 % 2,390,457 197.89 % 17,019,362 12,967,964 4,051,398 76.20 % 2,353,225 172.16 % 17,042,149 13,291,531 3,750,618 77.99 % 2,335,773 160.57 % Public School Employees Retirement System: Total pension liability $ Plan fiduciary net position Employers' and nonemployers' net pension liability $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll Employers' and nonemployers' net pension liability as a percentage of covered payroll 1,072,165 914,138 158,027 85.26 % n/a n/a 1,013,163 868,134 145,029 85.69 % n/a n/a 992,292 803,775 188,517 81.00 % n/a n/a 946,200 823,150 123,050 87.00 % n/a n/a 930,745 821,733 109,012 88.29 % n/a n/a Legislative Retirement System: Total pension liability $ Plan fiduciary net position Employer's net pension asset $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll Employer's net pension asset as a percentage of covered payroll 26,304 34,189 (7,885) 129.98 % n/a n/a 25,898 32,981 (7,083) 127.35 % n/a n/a 26,142 30,975 (4,833) 118.49 % n/a n/a 25,271 32,359 (7,088) 128.05 % n/a n/a 25,216 32,794 (7,578) 130.05 % n/a n/a Georgia Judicial Retirement System: Total pension liability $ Plan fiduciary net position Employers' and nonemployers' net pension asset $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll $ Employers' and nonemployers' net pension asset as a percentage of covered payroll 428,624 466,657 (38,033) 108.87 % 60,572 (62.79) % 394,736 441,182 (46,446) 111.77 % 59,695 (77.81) % 368,669 403,011 (34,342) 109.32 % 57,401 (59.83) % 357,081 404,852 (47,771) 113.38 % 54,272 (88.02) % 350,443 400,790 (50,347) 114.37 % 54,787 (91.90) % Financial Section Required Supplementary Information (UNAUDITED) Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios Defined Benefit Plans (In thousands) 71 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Georgia Military Pension Fund: Total pension liability $ Plan fiduciary net position Employer's net pension liability $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll Employer's net pension liability as a percentage of covered payroll 43,204 23,653 19,551 54.75 % n/a n/a 40,085 20,711 19,374 51.67 % n/a n/a 36,950 17,717 19,233 47.95 % n/a n/a 33,343 16,712 16,631 50.12 % n/a n/a 31,511 15,251 16,260 48.40 % n/a n/a State Employees' Assurance Department - Retired and Vested Inactive Members Trust Fund: Total OPEB liability $ Plan fiduciary net position Employer's net OPEB asset $ Plan fiduciary net position as a percentage of the total OPEB liability Covered payroll $ Employer's net OPEB asset as a percentage of covered payroll 918,816 1,189,462 (270,646) 129.46 % 1,328,485 (20.37) % 861,346 1,121,251 (259,905) 130.17 % 1,383,860 (18.78) % -- -- -- --% -- --% -- -- -- --% -- --% -- -- -- --% -- --% Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report. Financial Section Required Supplementary Information (UNAUDITED) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands) (continued) 72 Employees' Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions Net change in total pension liability Total pension liability-beginning Total pension liability-end (a) Plan fiduciary net position: Contributions-employer Contributions-nonemployer Contributions-member Administrative expense allotment Net investment income Benefit payments Administrative expense Refunds of contributions Other1 Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-end (b) Net pension liability-end (a)-(b) June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 $ 129,294 1,233,689 31,097 180,655 314,733 (1,413,298) (7,585) 468,585 17,159,634 17,628,219 639,302 12,865 37,130 10 1,166,013 (1,413,298) (8,056) (7,585) (7,494) 418,887 13,098,299 13,517,186 $ 4,111,033 125,910 1,230,175 30,563 72,315 -- (1,394,283) (9,033) 55,647 17,103,987 17,159,634 613,201 12,080 35,863 10 1,475,626 (1,394,283) (8,732) (9,033) -- 724,732 12,373,567 13,098,299 4,061,335 143,043 1,225,650 -- (238) 70,890 (1,347,633) (7,087) 84,625 17,019,362 17,103,987 583,082 12,484 31,961 10 141,292 (1,347,633) (8,506) (7,087) -- (594,397) 12,967,964 12,373,567 4,730,420 145,045 1,227,846 -- (53,950) -- (1,334,278) (7,450) (22,787) 17,042,149 17,019,362 505,668 12,495 33,713 10 474,147 (1,334,278) (7,872) (7,450) -- (323,567) 13,291,531 12,967,964 4,051,398 150,075 1,224,380 -- -- -- (1,305,998) (8,757) 59,700 16,982,449 17,042,149 418,807 10,945 32,423 -- 2,021,748 (1,305,998) (7,440) (8,757) -- 1,161,728 12,129,803 13,291,531 3,750,618 1 The System is a participating employer in the Georgia State Employees Postemployment Benefit Fund and the State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund. Pursuant to the requirements of GASB Statement No. 75, the fiscal year 2018 beginning Fiduciary Net Position was restated by $7,494,507. The restatement of net position was made for reporting purposes to reflect the impact of recording the initial deferred outflows of resources, net OPEB liability, and net OPEB asset. For actuarial purposes, this adjustment is being recognized in fiscal year 2018 and beginning fiduciary net position was not restated. Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report. Financial Section Required Supplementary Information (UNAUDITED) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands) (continued) 73 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Public School Employees Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions Net change in total pension liability Total pension liability-beginning Total pension liability-end (a) Plan fiduciary net position: Contributions-nonemployer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-end (b) Net pension liability-end (a)-(b) $ 13,180 73,643 17,289 (3,943) 21,354 (61,820) (701) 59,002 1,013,163 1,072,165 29,276 2,162 78,418 (61,820) (1,331) (701) 46,004 868,134 914,138 $ 158,027 12,788 72,157 -- (3,665) -- (59,378) (1,031) 20,871 992,292 1,013,163 26,277 2,084 97,715 (59,378) (1,308) (1,031) 64,359 803,775 868,134 145,029 11,952 68,776 -- (9,483) 33,215 (57,903) (465) 46,092 946,200 992,292 28,580 1,925 9,809 (57,903) (1,321) (465) (19,375) 823,150 803,775 188,517 12,088 67,652 -- (6,858) -- (56,972) (455) 15,455 930,745 946,200 28,461 1,800 30,129 (56,972) (1,545) (456) 1,417 821,733 823,150 123,050 11,049 66,143 -- -- -- (56,189) (514) 20,489 910,256 930,745 27,160 1,659 123,799 (56,189) (1,450) (514) 94,465 727,268 821,733 109,012 Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report. Financial Section Required Supplementary Information (UNAUDITED) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands) (continued) 74 Legislative Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions Net change in total pension liability Total pension liability-beginning Total pension liability-end (a) Plan fiduciary net position: Contributions-employer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-end (b) Net pension asset-end (a)-(b) June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 $ 359 1,875 -- (481) 447 (1,772) (22) 406 25,898 26,304 -- 323 2,962 (1,772) (283) (22) 1,208 32,981 34,189 $ (7,885) 357 1,892 -- (655) -- (1,763) (75) (244) 26,142 25,898 -- 327 3,741 (1,763) (224) (75) 2,006 30,975 32,981 (7,083) 331 1,829 -- (465) 938 (1,724) (38) 871 25,271 26,142 -- 328 363 (1,724) (313) (38) (1,384) 32,359 30,975 (4,833) 338 1,824 -- (325) -- (1,756) (26) 55 25,216 25,271 -- 327 1,189 (1,756) (169) (26) (435) 32,794 32,359 (7,088) 344 1,799 -- -- -- (1,801) (30) 312 24,904 25,216 45 282 4,969 (1,801) (152) (30) 3,313 29,481 32,794 (7,578) Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report. Financial Section Required Supplementary Information (UNAUDITED) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands) (continued) 75 Georgia Judicial Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions Net change in total pension liability Total pension liability-beginning Total pension liability-end (a) Plan fiduciary net position: Contributions-employer Contributions-nonemployer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-end (b) Net pension asset-end (a)-(b) June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 $ 13,019 28,666 3,442 6,379 7,466 (24,934) (150) 33,888 394,736 428,624 4,725 1,841 4,910 39,877 (24,934) (794) (150) 25,475 441,182 466,657 $ (38,033) 12,514 26,826 3,419 5,258 -- (21,784) (166) 26,067 368,669 394,736 4,081 2,603 4,906 49,259 (21,784) (728) (166) 38,171 403,011 441,182 (46,446) 12,713 26,058 -- (3,603) (4,308) (19,011) (261) 11,588 357,081 368,669 4,754 2,869 5,507 5,055 (19,011) (754) (261) (1,841) 404,852 403,011 (34,342) 7,751 25,566 -- (7,542) -- (18,365) (772) 6,638 350,443 357,081 2,696 1,564 5,061 14,697 (18,365) (819) (772) 4,062 400,790 404,852 (47,771) 7,584 24,530 -- -- -- (17,441) (22) 14,651 335,792 350,443 1,373 1,002 4,731 60,012 (17,441) (754) (22) 48,901 351,889 400,790 (50,347) Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report. Financial Section Required Supplementary Information (UNAUDITED) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands) (continued) 76 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Georgia Military Pension Fund: Total pension liability: Service cost $ 84 Interest 2,964 Benefit changes -- Differences between expected and actual experience 116 Changes of assumptions 1,093 Benefit payments (1,138) Refunds of contributions -- Net change in total pension liability Total pension liability-beginning Total pension liability-end (a) Plan fiduciary net position: Contributions-employer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Other 3,119 40,085 43,204 2,377 -- 1,928 (1,138) (225) -- -- Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-end (b) Net pension liability-end (a)-(b) 2,942 20,711 23,653 $ 19,551 89 2,732 -- 1,356 -- (1,042) -- 3,135 36,950 40,085 2,018 -- 2,262 (1,042) (244) -- -- 2,994 17,717 20,711 19,374 73 2,465 -- 950 1,082 (963) -- 3,607 33,343 36,950 1,990 -- 240 (963) (262) -- -- 1,005 16,712 17,717 19,233 73 2,330 -- 326 -- (897) -- 1,832 31,511 33,343 1,893 -- 585 (896) (121) -- -- 1,461 15,251 16,712 16,631 73 2,223 -- -- -- (841) -- 1,455 30,056 31,511 1,892 -- 2,179 (841) (110) -- -- 3,120 12,131 15,251 16,260 Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report. Financial Section Required Supplementary Information (UNAUDITED) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands) 77 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund: Total OPEB liability: Service cost $ 3,695 3,959 -- -- -- Interest 63,242 61,076 -- -- -- Benefit changes -- -- -- -- -- Differences between expected and actual experience 4,697 -- -- -- -- Changes of assumptions 22,085 -- -- -- -- Benefit payments (36,249) (36,058) -- -- -- Refunds of contributions -- -- -- -- -- Net change in total OPEB liability Total OPEB liability-beginning Total OPEB liability-end Plan fiduciary net position: Contributions employer Insurance premiums member Net investment income Benefit payments Administrative expense Refunds of contributions Other 57,470 861,346 918,816 28,977 832,369 861,346 -- -- -- -- -- -- -- -- -- -- 1 -- -- -- 3,599 3,793 -- -- -- 101,542 125,550 -- -- -- (36,249) (36,058) -- -- -- (681) (576) -- -- -- -- -- -- -- -- -- -- -- -- -- Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-end (b) 68,211 1,121,251 1,189,462 92,710 1,028,541 1,121,251 -- -- -- -- -- -- -- -- -- Net OPEB asset-end (a)-(b) $ (270,646) (259,905) -- -- -- Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedules and accompanying independent auditors' report. Required Supplementary Information (UNAUDITED) Schedule of Investment Returns Year ended June 30, 2018 Financial Section 2018 2017 Pooled Investment Fund: Annual money-weighted rate of return, net of investment expense 0.6 % 2.9 % Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report. 2016 (7.2) % 2015 (5.3) % 2014 6.0 % 78 Financial Section Required Supplementary Information (UNAUDITED) Schedules of the System's Proportionate Share of the Net OPEB Liability Year ended June 30, 2018 (In thousands) SEAD-OPEB: System's proportionate share of the net OPEB liability (asset) System's proportionate share of the net OPEB liability (asset) System's covered payroll System's proportionate share of the net OPEB liability (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total OPEB liability State OPEB Fund: System's proportion of the net OPEB liability System's proportionate share of the net OPEB liability System's covered payroll System's proportionate share of the net OPEB liability as a percentage of its covered payroll System's fiduciary net position as a percentage of the total OPEB liability June 30, 2018 0.192864 % $ (501) 2,769 (18.09) % 130.17 % 0.185830 % $ 7,571 5,293 143.04 % 17.34 % Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedules and accompanying independent auditors' report. 79 Required Supplementary Information (UNAUDITED) Schedules of the System's Contributions to OPEB Plans Year ended June 30, 2018 (In thousands) Financial Section June 30, 2018 SEAD-OPEB: Contractually required contribution* $ Contributions in relation to the contractually required contribution Contribution deficiency (excess) $ System's covered payroll $ Contributions as a percentage of covered payroll State OPEB Fund: Contractually required contribution $ Contributions in relation to the contractually required contribution Contribution deficiency (excess) System's covered payroll Contributions as a percentage of covered payroll *Employer contributions are not currently required for the SEAD-OPEB plan. Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedules and accompanying independent auditors' report. -- -- -- 2,769 -- % 905 905 -- 5,293 17.10 % 80 Financial Section Notes to Required Supplementary Information (UNAUDITED) Required Supplementary Information Schedules for the System as the Plan: (1) Schedule of Employers' and Nonemployers' Contributions Defined Benefit Plans This schedule presents the required contributions and the percent of required contributions actually contributed. (2) Schedule of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios Defined Benefit Plans The components of the net pension/OPEB liability as of the fiscal year end and the fiduciary net position as a percentage of the total pension/OPEB liability as of that date are presented in this schedule. This trend information will be accumulated to display a 10-year presentation. (3) Schedule of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans Net pension/OPEB liability, which is measured as total pension/OPEB liability less the amount of the fiduciary net position, is presented in this schedule. This trend information will be accumulated to display a 10-year presentation. (4) Schedule of Investment Returns This schedule presents historical trend information about the annual money-weighted rate of return on plan investments, net of plan investment expense. This trend information will be accumulated to display a 10-year presentation. (5) Individual Plan Information This note provides information about changes of benefit terms, changes of assumptions, and methods and assumptions used in calculations of actuarially determined contributions. (a) Employees' Retirement System Changes of benefit terms A new benefit tier was added for members joining the System on and after July 1, 2009. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2016. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2017. Changes of assumptions Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS Board's new funding policy, the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. (b) Public School Employees' Retirement System Changes of benefit terms The member contribution rate was increased from $4 to $10 per month for members joining the System on or after July 1, 2012. The monthly benefit accrual rate was increased from $14.75 to $15.00 per year of creditable service effective July 1, 2017. Changes of assumptions Subsequent to the June 30, 2017 measurement date, the PSERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the PSERS Board's new funding policy, the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. (continued) 81 Financial Section Notes to Required Supplementary Information (UNAUDITED) (c) Legislative Retirement System Changes of benefit terms none Changes of assumptions Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS Board's new funding policy, the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. (d) Georgia JudicialRetirement System Changes of benefit terms Spouses' benefits were changed for members joining the System on and after July 1, 2012. A 2% cost-of-living adjustment was granted to certain retired members and beneficiaries effective July 1, 2018. Changes of assumptions Subsequent to the June 30, 2017 measurement date, the GJRS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the GJRS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. (e) Georgia Military Pension Fund Changes of benefit terms none Changes of assumptions Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS Board's new funding policy, the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. (f) State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB) as a plan Changes of benefit terms none Changes of assumptions Subsequent to the June 30, 2017 measurement date, the SEAD Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the SEAD Board's new funding policy, the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. (continued) 82 Notes to Required Supplementary Information (UNAUDITED) June 30, 2018 Financial Section The following actuarial methods and assumptions were used to determine the most recent contribution rates reported in the schedules of employer and nonemployer contributions calculated as of June 30, three years prior to the end of the first calendar year in which contributions are reported: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Cost of living adjustments ERS Entry age Level dollar, closed 19.4 years 5-year smoothed market 2.75% 3.25-7.00%, including inflation 7.50% net of pension plan investment expense, including inflation n/a PSERS Entry age Level dollar, closed 22.9 years 5-year smoothed market 2.75% n/a 7.50% net of pension plan investment expense, including inflation 1.5% semi-annually LRS Entry age Level dollar, open n/a 5-year smoothed market 2.75% n/a 7.50% net of pension plan investment expense, including inflation 1.5% annually Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Cost of living adjustments GJRS Entry age Level percent of pay, closed 19.5 years 5-year smoothed market 2.75% 4.50%, including inflation 7.50% net of pension plan investment expense, including inflation n/a GMPF Entry age Level dollar, closed 18.2 years 5-year smoothed market 2.75% n/a 7.50% net of pension plan investment expense, including inflation n/a Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases: ERS GJRS LRS Investment rate of return Cost of living adjustments SEAD - OPEB Projected unit credit Level dollar, open n/a Market value of assets 2.75% 3.25-7.00%, including inflation 4.50%, including inflation n/a 7.50% net of pension plan investment expense, including inflation n/a (continued) 83 Notes to Required Supplementary Information (UNAUDITED) June 30, 2018 Financial Section Required Supplementary Information Schedules for the System as a participating employer: (1) Schedules of the System's Proportionate Share of the Net OPEB Liability The information in this schedule presents historical information related to the OPEB liability that is recognized by the System in the current period financial statements. This trend information will be accumulated to display a 10-year presentation. (2) Schedules of the System's Contributions to OPEB Plans This schedule presents the required contributions and the percent of required contributions actually contributed. (3) Individual Plan Information This note provides information about changes of benefit terms, changes of assumptions, and methods and assumptions used in calculations of actuarially determined contributions. (a) SEAD-OPEB Changes of benefit terms none Changes of assumptions On December 17, 2015, the SEAD Board adopted recommended changes to the economic and demographic assumptions utilized by the Plan. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. (b) State OPEB Fund Changes of benefit terms In the June 30, 2010 actuarial valuation, there was a change of benefit terms to require Medicare-eligible recipients to enroll in a Medicare Advantage plan to receive the State subsidy. Changes of assumptions In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll location. In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed. 84 Financial Section Additional Information Statement of Changes in Assets and Liabilities - Survivors Benefit Fund Year ended June 30, 2018 (In thousands) Balance at June 30, 2017 Assets: Cash and cash equivalents $ Equity in pooled investment fund 92 135,951 Total assets 136,043 Additions Deductions -- 1 12,499 -- 12,499 1 Balance at June 30, 2018 91 148,450 148,541 Liablities: Due to other funds/plans Total liabilities 136,043 $ 136,043 12,499 12,499 (1) 148,541 (1) 148,541 See accompanying independent auditors' report. (continued) 85 Financial Section Additional Information Schedule of Administrative Expenses - Contributions and Expenses Year ended June 30, 2018 (In thousands) Contributions from fiduciary funds: Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Military Pension Fund Superior Court Judges Retirement Fund District Attorneys Retirement Fund Georgia Defined Contribution Plan 401(k) Plan 457 Plan State Employees' Assurance Department - OPEB Total fiduciary funds Contributions from proprietary fund: State Employees' Assurance Department Active Members Fund Total contributions Expenses: Personal services: Salaries and fringes Retirement contributions FICA Health insurance Miscellaneous Communications: Postage Publications and printing Telecommunications Travel Professional services: Accounting services Computer services Contracts Actuarial services Medical services Audit fees Legal services 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 2018 8,056 1,331 283 794 225 2 3 852 3,639 442 $ 681 16,308 76 16,384 5,391 1,268 389 1,036 55 8,139 270 14 62 21 367 746 961 3,529 289 152 439 36 6,152 617 650 43 26 3 309 76 2 1,109 16,384 $ -- See accompanying independent auditors' report. 86 Additional Information Schedule of Investment Expenses Year ended June 30, 2018 (with comparative amounts for the year ended June 30, 2017) Financial Section Investment advisory and custodial fees Miscellaneous Total investment expenses 2018 2017 $ 8,100,789 $ 6,753,247 13,609,529 12,584,983 $ 21,710,318 $ 19,338,630 See accompanying independent auditors' report. 87 Investment Section Building a Bridge to a More Comfortable Retirement Butt Memorial Bridge - Augusta Investment Section Investment Overview Annual economic growth as measured by Real GDP rose by 2.9% and the rate of growth strengthened on the back of tax cuts. Broadly speaking, international economies were slowing down at the end of the fiscal year due to a number of issues ranging from Brexit to potential trade wars to a stronger dollar. All in all though, it was a good year for equities with the U.S. stock market up in the midteens and foreign markets up over 7%. We continually emphasize that the pension plan has a long-term investment horizon and that short-term concerns should not drive the investment decisions. The System invests primarily in a mix of liquid, high quality bonds and stocks. In addition, the System continues to build its private markets program in a disciplined manner. These types of investments further diversify the portfolio and allow the System to participate in rising markets while moderating the risks on the downside. A high quality balanced fund has proven to be a successful strategy in a variety of markets over long periods of time. As in previous years, the bias to quality was a primary goal and was successfully met. "Conservation of Capital" and "Conservatism" remain the guiding principles for investment decisions. The Board of Trustees continues to use a diversified portfolio to accomplish these objectives. There were very few weak spots in the U.S. economy during the fiscal year. Nonfarm Payroll growth averaged over 200,000 new jobs per month. You have to go back almost five decades to find initial unemployment claims this low, despite there being over twice as many people employed today than in the late 1960s. Central banks in aggregate are still providing accommodation, but that is largely due to Japan. The U.S. is tightening and the European Central Bank is indicating that it will end their version of QE in the foreseeable future. As expected, this is causing pain for emerging markets and some weaker developed markets. Studies undertaken to evaluate the investment returns of pension funds over very long-time horizons indicate that the asset allocation decision has the largest impact on the fund's returns. Although the returns for the various asset categories vary from year to year, over the long term, equities typically outperform fixed income and cash by a very wide margin. For that reason, the System has generally maintained a significant equity exposure with the remainder of the fund invested in fixed income securities designed to generate income and preserve capital. Returns for one, three, five, ten and twenty year periods are presented in this section. Longer time periods, such as the twenty year period, allow for a more valid evaluation of returns, both in absolute terms and relative to an asset class index, by reducing emphasis on the short-term volatility of markets. The Daily Valuation Method, a time-weighted rate of return, was used to calculate returns in a manner consistent with the CFA Institute's objectives as stated in its publication "Global Investment Performance Standards Handbook," third edition. The return for the S&P 500 was 14.4%. The S&P MidCap 400 and the S&P SmallCap 600 indexes had returns of 13.5% and 20.5%, respectively. Generally speaking, the more defensive and interest sensitive sectors underperformed the market while growth stocks continued their outperformance relative to value stocks. International markets also had strong returns. The MSCI EAFE Index returned 6.8% and the MSCI Emerging Market Index had a return of 8.2%. The dollar was down marginally for the fiscal year. Interest rates increased across the maturity spectrum for the second year in a row. The yield curve also flattened as short-term rates rose faster than long-term yields. The total return on the 10-year Treasury Note was (2.7%) and the 30-year Treasury Bond had a (0.1%) return. The return on short-term Treasury bills was 1.3%. We look at two fixed income indexes to measure the bond market's performance. The Bloomberg Barclays Government / Credit Index had a return of (0.6%). It is a broad index containing corporate and government sponsored bonds as well as Treasuries. The Citigroup Treasury / Sponsored / AAA/AA had a return of (0.6%) and is a broad index containing higher rated corporate bonds as well as Treasuries and Government securities. The spread between corporate bonds and Treasury bonds widened during the year leading to generally better performance in Treasuries. In summary, the investment status of the System is excellent. The high quality of the System's investments is in keeping with the continued policy of "Conservatism" and "Conservation of Capital." Prepared by the Division of Investment Services 89 Investment Section Pooled Investment Fund As of June 30, 2018 (dollar amounts in thousands) Employees' Retirement System (ERS) Public School Employees Retirement System (PSERS) Legislative Retirement System (LRS) Georgia Judicial Retirement System (GJRS) State Employees' Assurance Department (SEAD) - Active State Employees' Assurance Department (SEAD) - OPEB Survivors Benefit Fund (SBF) Georgia Military Pension Fund (GMPF) Total $ 13,468,340 914,957 34,216 466,307 289,087 1,189,173 148,450 23,715 $ 16,534,245 Rates of Return 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 1 Year 3 Year 5 Year 10 Year Equities S&P 1500 MSCI ACWI ex US 20 Year 5.0 4.0 3.0 2.0 1.0 (1.0 ) Fixed Income Barclays Govt/Credit 1 month T bills 1 Year 3 Year 5 Year 10 Year 20 Year 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 1 Year Total Portfolio CPI 3 Year 5 Year 10 Year 20 Year 1 year 3 year 5 year 10 year 20 year Equities 13.4 % 10.4 % 11.6 % 8.5 % 5.9 % S&P 1500 MSCI ACWI Fixed Income Barclay's ex US Govt/Credit 14.5 % 11.9 % 13.4 % 10.3 % 6.9 % 7.3 % 5.1 % 6.0 % 2.5 % -- (0.5)% 1.3 % 1.8 % 3.4 % 4.7 % (0.6)% 1.8 % 2.3 % 3.8 % 4.7 % 1 Month T-Bills Total Portfolio 1.3 % 0.6 % 0.4 % 0.3 % 1.8 % 9.2 % 7.6 % 8.7 % 7.5 % 6.0 % Note: Time-weighted rates of return are calculated using the Daily Valuation Method based on market rates of return. 90 CPI 2.8 % 1.8 % 1.5 % 1.4 % 2.2 % Investment Section Asset Allocation at Fair Value 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2018 2017 2016 2015 2014 Equities Fixed Income Mutual & Commingled Funds Private Equity Investment Summary Asset Allocation as of June 30 (in percentages) Equities Fixed Income Mutual and Commingled Funds Private Equity Total 2018 61.9% 28.1 8.8 1.2 2017 63.9 27.1 8.2 0.8 2016 62.3 29.5 7.6 0.6 2015 65.3 27.2 7.2 0.3 2014 67.2 25.6 7.1 0.1 2013 68.1 25.0 6.9 -- 100% 100 100 100 100 100 Asset Allocation as of June 30 (in millions) Equities Fixed Income Mutual and Commingled Funds Private Equity Total 2018 $ 11,140 5,040 1,599 222 2017 11,030 4,668 1,421 134 2016 10,005 4,733 1,226 94 2015 10,915 4,543 1,204 52 2014 11,372 4,314 1,209 22 2013 10,374 3,811 1,057 -- $ 18,001 17,253 16,058 16,714 16,917 15,242 91 Investment Section Schedule of Fees and Commissions Year ended June 30, 2018 Investment Advisors' Fees: U.S. Equity $ International Equity Fixed Income Investment Commissions: U.S. Equity International Equity Transaction Fees: Miscellaneous:* Total Fees and Commissions $ *Includes capitalized fees not included in total investment expenses shown on page 87. 3,224,045 4,321,890 -- 1,807,655 1,308,484 712,090 20,805,608 32,179,772 92 Investment Section Twenty Largest Equity Holdings As of June 30, 2018 Shares 1,148,546 118,951 170,351 1,870,034 677,570 934,008 1,150,413 696,080 463,180 434,200 660,090 196,890 301,969 1,285,443 2,408,710 507,789 1,262,257 1,737,194 1,227,824 309,852 Company Apple Inc. Amazon.Com Inc. Alphabet Inc. Microsoft Corp. Facebook Inc. JPMorgan Chase & Co. Exxon Mobil Corp. Visa Inc. Berkshire Hathaway Inc. Alibaba Group Holding Ltd. Johnson & Johnson Netflix Inc. UnitedHealth Group Wells Fargo & Co. Bank of America Corp. Chevron Corp. Verizon Communications Inc. Pfizer Inc. Intel Corp. The Home Depot Inc. Top 20 Equities Remaining Equities Total Equities A complete listing is available upon written request, subject to restrictions of O.C.G.A. Section 47-1-14. Fair Value $ 212,607,350 202,192,910 191,334,873 184,404,053 131,665,402 97,323,634 95,173,667 92,195,796 86,452,547 80,557,126 80,095,321 77,068,653 74,085,074 71,264,960 67,901,535 64,199,763 63,504,150 63,025,398 61,035,131 60,452,125 $ 2,056,539,468 9,083,734,529 $ 11,140,273,997 93 Investment Section Top 10 Fixed Income Holdings* As of June 30, 2018 Issuer US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE GENERAL ELECTRIC CO US TREAS. NOTE US TREAS. NOTE Year of Maturity 2024 2027 2025 2025 2023 2027 2021 2022 2024 2019 Interest Rate 2.2500% 2.2500 2.6250 2.5000 1.5000 2.2500 2.1250 2.7000 2.3750 1.1250 Total of 10 Largest ERS & GDCP Fixed-Income Holdings Remaining Fixed-Income Holdings Total ERS and Defined Contribution Fixed Income Securities Par Value $ 313,000,000 210,000,000 200,000,000 200,000,000 195,000,000 192,000,000 153,000,000 141,000,000 133,000,000 125,000,000 Fair Value $ $302,852,540 199,623,900 197,718,000 196,352,000 184,419,300 182,737,920 150,633,090 136,379,430 129,835,930 124,228,750 1,804,780,860 $ 3,235,314,610 $ 5,040,095,470 *A complete listing is available upon written request, subject to restrictions of O.C.G.A. Section 47-1-14. 94 Actuarial Section Building a Bridge to a More Comfortable Retirement Skyline Park - Columbus Actuarial Section ERS April 19, 2018 Board of Trustees Employees' Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318 Attn: Mr. James Potvin, 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, 2017. The report indicates that annual employer contributions at the rate of 19.91% of compensation for Old Plan Members, 24.66% of compensation for New Plan Members, and 21.64% of compensation for GSEPS Members for the fiscal year ending June 30, 2020 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 2017 session of the General Assembly. The valuation reflects the one-time 3% payment to certain retirees and beneficiaries effective July 2017. Since the previous valuation, the Board has amended the funding policy to change the long-term assumed rate of return assumption. Effective with the June 30, 2017 valuation, the assumed rate of return will be reduced by 0.10% (10 basis points) from the immediate prior actuarial valuation, as long as the actual rate of return for the fiscal year ending with the current valuation date exceeds the assumed rate of return from the immediate prior actuarial valuation. The assumed rate of return may not decrease below 7.00% net of 3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com investment expenses. Since the actual rate of return for the year ending June 30, 2017 was greater than 7.50%, the assumed rate of return used in the current valuation was decreased from 7.50% to 7.40%. 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 financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPs). 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 total unfunded accrued liability which is being amortized on a level dollar basis in accordance with the funding policy adopted by the Board. The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports. We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report: Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results (continued) 96 Actuarial Section 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 and the funding policy adopted by the Board. 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. 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. The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate. Sincerely yours, Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Cathy Turcot Principal and Managing Director Ben Mobley, EA, FCA, MAAA Senior Actuary 97 Actuarial Section PSERS April 19, 2018 Board of Trustees Georgia Public School Employees Retirement System Two Northside 75, Suite 300 Atlanta, GA 30318 Attn: Mr. James Potvin, Executive Director Members of the Board: Section 47-4-60 of the law governing the operation of the Georgia Public School Employees Retirement System provides that the employer 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, 2017. Based on a monthly benefit accrual rate of $15.00, which is effective July 1, 2017, the valuation indicates that annual employer contributions of $29,296,000 or $825.03 per active member for the fiscal year ending June 30, 2020 are sufficient to support the benefits of the System. Since the previous valuation, the monthly benefit rate has been increased from $14.75 to $15.00 per year of creditable service with an effective date of July 1, 2017. In addition, the results of the valuation reflect that the Board granted a 2% cost-of-living adjustment (COLA) on July 1, 2017 to certain retired members and beneficiaries rather than the 1.50% anticipated cost-of-living adjustments to retired members on July 1, 2017 and on January 1, 2018. Since the previous valuation, the Board has amended the funding policy to change the long-term assumed rate of return assumption. Effective with the June 30, 2017 valuation, the assumed rate of return will be reduced by 0.10% (10 basis points) from the immediate prior actuarial valuation, as long as the actual rate of return for the fiscal year ending with the current valuation date exceeds the assumed rate of return from the immediate prior actuarial valuation. The assumed rate of return may not decrease below 7.00% net of investment expenses. Since the actual rate of return for the year ending June 30, 2017 was greater than 7.50%, the assumed rate of return used in the current valuation was decreased from 7.50% to 7.40%. 3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com 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 2017 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 financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPs). 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 total unfunded accrued liability which is being amortized as a level dollar per active member in accordance with the funding policy adopted by the Board. The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports. (continued) 98 Actuarial Section We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report: Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results The System is currently being funded in conformity with the minimum funding standard set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law and the funding policy adopted by the Board. In our opinion the System is currently 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 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. The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate. Sincerely yours, Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Cathy Turcot Principal and Managing Director Ben Mobley, EA, FCA, MAAA Senior Actuary 99 Actuarial Section GJRS April 19, 2018 Board of Trustees Georgia Judicial Retirement System Two Northside 75, Suite 300 Atlanta, GA 30318 Attn: Mr. James Potvin, Executive Director Members of the Board: Section 47-23-21 of the law governing the operation of the Georgia Judicial Retirement System provides that the actuary shall make 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, 2017. The report indicates that annual employer contributions at the rate of 9.13% of compensation for the fiscal year ending June 30, 2020 are sufficient to support the benefits of the System. The results of the valuation reflect the 2% cost-of-living adjustment (COLA) granted to certain retirees and beneficiaries effective July 1, 2017. Since the previous valuation, the Board has amended the funding policy to change the long-term assumed rate of return assumption. Effective with the June 30, 2017 valuation, the assumed rate of return will be reduced by 0.10% (10 basis points) from the immediate prior actuarial valuation, as long as the actual rate of return for the fiscal year ending with the current valuation date exceeds the assumed rate of return from the immediate prior actuarial valuation. The assumed rate of return may not decrease below 7.00% net of investment expenses. Since the actual rate of return for the year ending June 30, 2017 was greater than 7.50%, the assumed rate of return used in the current valuation was decreased from 7.50% to 7.40%. 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. 3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com 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 2017 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 financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPs). 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 total unfunded accrued liability which is negative and being amortized as a level percent of payroll in accordance with the funding policy adopted by the Board. The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports. We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report: Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results (continued) 100 Actuarial Section 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 and the funding policy adopted by the Board. 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. 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. The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate. Sincerely yours, Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Cathy Turcot Principal and Managing Director Ben Mobley, EA, FCA, MAAA Senior Actuary 101 Actuarial Section LRS April 19, 2018 Board of Trustees Legislative Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318 Attn: Mr. James Potvin, Executive Director Members of the Board: Section 47-6-22 of the law governing the operation of the Georgia Legislative Retirement System provides that the actuary shall make periodic valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the tables last adopted by the Board of Trustees. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2017. The report indicates that no annual employer contributions for the fiscal year ending June 30, 2020 are required to support the benefits of the System. The results of the valuation reflect that the Board did not grant the anticipated cost-of-living increases (COLAs) to retired members on July 1, 2017 and on January 1, 2018. In addition, the results of the valuation reflect the one-time payment to certain retirees and beneficiaries effective July 2017. Since the previous valuation, the Board has amended the funding policy to change the long-term assumed rate of return assumption. Effective with the June 30, 2017 valuation, the assumed rate of return will be reduced by 0.10% (10 basis points) from the immediate prior actuarial valuation, as long as the actual rate of return for the fiscal year ending with the current valuation date exceeds the assumed rate of return from the immediate prior actuarial valuation. The assumed rate of return may not decrease below 7.00% net of investment expenses. Since the actual rate of return for the year ending June 30, 2017 was greater than 7.50%, the assumed rate of return used in the current valuation was decreased from 7.50% to 7.40%. 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. 3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com 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 2017 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 financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPs). 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 total unfunded accrued liability which is negative and being amortized as a level dollar per active member in accordance with the funding policy adopted by the Board. The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports. We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report: Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results (continued) 102 Actuarial Section 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 and the funding policy adopted by the Board. 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. 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. The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate. Sincerely yours, Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Cathy Turcot Principal and Managing Director Ben Mobley, EA, FCA, MAAA Senior Actuary 103 Actuarial Section GMPF April 19, 2018 Board of Trustees Georgia Military Pension Fund Two Northside 75, Suite 300 Atlanta, GA 30318 Attn: Mr. James Potvin, Executive Director 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, 2017. The report indicates that annual employer contributions of $2,611,590 or $200.32 per active member for the fiscal year ending June 30, 2020 are sufficient to support the benefits of the Fund. Since the previous valuation, the Board has amended the funding policy to change the long-term assumed rate of return assumption. Effective with the June 30, 2017 valuation, the assumed rate of return will be reduced by 0.10% (10 basis points) from the immediate prior actuarial valuation, as long as the actual rate of return for the fiscal year ending with the current valuation date exceeds the assumed rate of return from the immediate prior actuarial valuation. The assumed rate of return may not decrease below 7.00% net of investment expenses. Since the actual rate of return for the year ending June 30, 2017 was greater than 7.50%, the assumed rate of return used in the current valuation was decreased from 7.50% to 7.40%. 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. The valuation takes into account the effect of all amendments to the Fund enacted through the 2017 session of the General Assembly. 3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com 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 financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPs). 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 total unfunded accrued liability which is being amortized as a level dollar per active member in accordance with the funding policy adopted by the Board. The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports. We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report: Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results 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 and the funding policy adopted by the Board. In our opinion the Fund is operating on an actuarially sound basis. (continued) 104 Actuarial Section 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. 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 Fund. 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. The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate. Future actuarial results may differ significantly from the current results presented in this report due to such Sincerely yours, Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Cathy Turcot Principal and Managing Director Ben Mobley, EA, FCA, MAAA Senior Actuary 105 Actuarial Section SEAD Post-Retirement (SEAD-OPEB) April 19, 2018 Board of Trustees Employees' Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318 Attn: Mr. James Potvin, 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). 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, 2017. The report indicates, for post-retirement benefits, there is no employer annual required contribution for the fiscal year ending June 30, 2020. Since the previous valuation, the Board has amended the funding policy to change the long-term assumed rate of return assumption. Effective with the June 30, 2017 valuation, the assumed rate of return will be reduced by 0.10% (10 basis points) from the immediate prior actuarial valuation, as long as the actual rate of return for the fiscal year ending with the current valuation date exceeds the assumed rate of return from the immediate prior actuarial valuation. The assumed rate of return may not decrease below 7.00% net of investment expenses. Since the actual rate of return for the year ending June 30, 2017 was greater than 7.50%, the assumed rate of return used in the current valuation was decreased from 7.50% to 7.40%. 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 3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com sufficiency of the funds to provide the benefits called for by the Plan may be safely anticipated assuming future actuarially determined contributions (ADC) are contributed when due. The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 74 and 75. The necessary disclosure information is provided in separate supplemental reports. 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. 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. 106 (continued) Actuarial Section The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate. Sincerely yours, Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Cathy Turcot Principal and Managing Director Ben Mobley, EA, FCA, MAAA Senior Actuary 107 Actuarial Section Summary of Plan Provisions ERS Please see Notes to Financial Statements, (2)(a), pages 30-31. PSERS Please see Notes to Financial Statements, (2)(b), page 31-32. LRS Please see Notes to Financial Statements, (2)(c), pages 32-33. GJRS Please see Notes to Financial Statements, (2)(d), pages 33-34. GMPF Please see Notes to Financial Statements, (2)(e), page 34. SEAD-OPEB Please see Notes to Financial Statements, (2)(h), pages 35-36. The following Boards are responsible for establishing and maintaining the funding policies of the various defined benefit pension plans administered by the System: Board of Trustees of the Employees' Retirement System: ERS, LRS, and GMPF Board of Trustees of the Public School Employees Retirement System: PSERS Board of Trustees of the Georgia Judicial Retirement System: GJRS The following Board is responsible for establishing and maintaining the funding policy of the defined benefit postemployment life insurance plan administered by the System: Board of Directors of the State Employees' Assurance Department: SEAD-OPEB ERS, PSERS, LRS, GJRS, and GMPF are all subject to the provisions of GASB Statement No. 67, Financial Reporting for Pension Plans, an amendment of GASB Statement No. 25 (GASB 67). All of the plans covered under GASB 67 use the Entry Age Normal actuarial cost method for both funding and financial reporting purposes. This continues a long-standing practice for all of those plans and provides a point of consistency between the funding provisions and the GASB 67 requirements. SEAD-OPEB is subject to the provisions of GASB 74. SEAD-OPEB uses the Entry Age Normal actuarial cost method for both funding and financial reporting purposes. For all of the plans covered under GASB 67, the GASB 67 reports prepared as of June 30, 2018 were largely based on the data, assumptions, and results of the annual funding valuations as of June 30, 2017. The Total Pension Liability (TPL) for each plan, determined using the Entry Age Normal method, was then rolled forward to the June 30, 2018 measurement date. The Net Pension Liability for each plan is equal to the rolled forward TPL less the plan's net position as of June 30, 2018. For the plan covered under GASB 74, the GASB 74 report prepared as of June 30, 2018 was largely based on the data, assumptions, and results of the annual funding valuation as of June 30, 2017. The Total OPEB Liability (TOL) for the plan, determined using the Entry Age Normal method, was then rolled forward to the June 30, 2018 measurement date. The Net OPEB Liability for the plan is equal to the rolled forward TOL less the plan's net position as of June 30, 2018. For the funding valuations as of June 30, 2017, the Actuarial Value of Assets is calculated using a five-year smoothing methodology, whereby excesses and shortfalls of actual investment income over or under the expected investment return will be recognized over the succeeding five-year periods. For the life insurance plan's funding valuation as of June 30, 2017, the Actuarial Value of Assets is equal to the Fair Value of Assets as of June 30, 2017. (continued) 108 Actuarial Section Summary of Plan Provisions For the funding valuations, each plan covered under GASB 67 utilizes a 7.40% assumed rate of return and a 7.40% discount rate for the calculation of the respective plans' liabilities. The Single Equivalent Interest Rate required under GASB 67 has been determined to be 7.30% by the plans' actuaries. The plan covered under GASB 74 utilizes a 7.40% assumed rate of return and a 7.40% discount rate for the calculation of the plan's liabilities. The Single Equivalent Interest Rate required under GASB 74 has been determined to be 7.30% by the plan's actuaries. 109 Actuarial Section Summary of Actuarial Assumptions The laws governing the Employees' Retirement System and the plans it administers require an actuary to perform an annual valuation of the soundness of the plans. In addition, the actuary must perform at least once every five years an actuarial investigation of the mortality, service, and compensation experience of the members and beneficiaries of the System. The latest valuation was performed as of June 30, 2017 based on actuarial assumptions approved by the Board during the last experience study on December 17, 2015. The more pertinent facts and significant assumptions underlying the computations included in the June 30, 2017 reports are as follows: Valuation Date Actuarial Cost Method Amortization Method Amortization Period ERS June 30, 2017 Entry age Level dollar, closed PSERS June 30, 2017 Entry age Level dollar, closed 16.5 years 21.2 years GJRS June 30, 2017 Entry age Level percent of pay, closed 16.1 years LRS June 30, 2017 Entry age Level dollar, open Infinite GMPF June 30, 2017 Entry age Level dollar, closed 16.5 years Actuarial Asset Valuation Method Investment Rate of Return Inflation Rate Projected Salary Increases COLA The actuarial value of assets was based on the total fair value income of investments, with the excess or shortfall of actual investment income over or under the expected investment return smoothed over five years. One-fifth of the excess or shortfall is recognized each year for five years. 7.40% 2.75% 3.25-7.00% None 7.40% 2.75% n/a 1.50% Semi-annually 7.40% 2.75% 4.50% None 7.40% 2.75% n/a 1.50% Semi-annually 7.40% 2.75% n/a None Valuation Date Actuarial Cost Method Amortization Method Amortization Period SEAD-OPEB June 30, 2017 Entry age Level dollar, open Infinite Actuarial Asset Valuation Method Investment Rate of Return Inflation Rate Projected Salary Increases ERS GJRS LRS COLA Market Value of Assets 7.40% 2.75% 3.25-7.00% 4.50% 0.00% n/a (continued) 110 Actuarial Section Summary of Actuarial Assumptions Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability) ERS Representative values of the assumed annual rates of separation other than retirement for non-law enforcement officers are as follows. Special rates of separation apply to law enforcement officers. Annual Rates of Death Annual Rates of Disability Age Men Women Men Women 20 .0320 % .0177 % .05 % .02 % 25 .0349 .0192 .05 .02 30 .0412 .0245 .05 .02 35 .0717 .0441 .05 .02 40 .1001 .0655 .25 .10 45 .1399 .1043 .48 .25 50 .1983 .1555 .70 .45 55 .2810 .2228 1.05 .73 60 .4092 .3058 -- -- 65 .5600 .4304 -- -- Annual Rates of Withdrawal Years of Service 0-4 5-9 10 & over Age Men Women Men Women Men Women 20 35.00 % 30.00 % --% --% --% --% 25 27.50 25.00 15.00 17.50 -- -- 30 23.00 21.50 11.50 12.50 7.50 8.25 35 21.50 19.50 10.00 10.50 6.00 6.00 40 19.50 18.25 9.50 9.50 4.75 5.00 45 18.60 16.50 9.00 8.00 4.00 4.00 50 16.60 15.00 7.25 7.25 4.25 4.25 55 14.50 14.00 7.00 7.00 4.75 4.50 60 14.00 14.50 6.00 6.25 -- -- 65 15.00 17.00 10.00 11.00 -- -- (continued) 111 Actuarial Section Summary of Actuarial Assumptions Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability) PSERS Annual Rates of Death Annual Rates of Disability Age Men Women Both 20 .0320 % .0177 % --% 25 .0349 .0192 -- 30 .0412 .0245 -- 35 .0717 .0441 .0025 40 .1001 .0655 .0110 45 .1399 .1043 .0370 50 .1983 .1555 .0865 55 .2810 .2228 .2250 60 .4092 .3058 .3500 65 .5600 .4304 -- Annual Rates of Withdrawal Years of Service 0-4 5-9 10 & over Age Men Women Men Women Men Women 20 37.00 % 32.00 % --% --% --% --% 25 28.00 28.00 17.00 18.00 -- -- 30 25.00 23.00 15.00 15.00 12.00 10.00 35 23.00 19.00 13.00 13.00 9.00 10.00 40 21.00 17.00 12.00 12.00 7.50 8.00 45 19.00 15.50 11.00 10.00 6.50 7.00 50 17.00 14.00 9.00 8.50 6.50 6.00 55 15.00 12.00 9.00 8.00 6.00 5.50 60 12.00 11.00 7.50 7.50 -- -- (continued) 112 Actuarial Section Summary of Actuarial Assumptions Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability) GJRS Withdrawal Annual Rates of Death Disability Age Both Men Women Both 20 4.0 % .032 % .018 % .03 % 25 4.0 .035 .019 .03 30 4.0 .041 .025 .05 35 4.0 .072 .044 .08 40 6.0 .100 .066 .10 45 4.0 .140 .104 .18 50 3.0 .198 .156 .25 55 2.5 .281 .223 .45 60 2.5 .409 .306 .73 65 2.5 .560 .430 1.18 LRS Annual Rates of Withdrawal Death Age Both Men Women 20 8.0 % .032 % .018 % 25 8.0 .035 .019 30 8.0 .041 .025 35 8.0 .072 .044 40 8.0 .100 .066 45 8.5 .140 .104 50 8.5 .198 .156 55 9.0 .281 .223 60 9.0 .409 .306 65 9.0 .560 .430 GMPF Rates of Withdrawal from Active Service Service Rates 2 or less 3-7 8-9 10-14 15-19 20 or more 13.0 % 17.5 14.0 13.5 8.5 14.5 Age Rates of Death Men Women 25 .0349% .0192% 30 .0412 .0245 35 .0717 .0441 40 .1001 .0655 45 .1339 .1043 50 .1983 .1555 55 .2810 .2228 60 .4092 .3058 (continued) 113 Actuarial Section Summary of Actuarial Assumptions Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability) SEAD-OPEB All Groups ERS GJRS Annual Rates of Death Annual Rates of Disability Annual Rates of Disability Age Men Women Men Women Both 20 .0320 % .0177 % .05 % .02 % .03 % 25 .0349 .0192 .05 .02 .03 30 .0412 .0245 .05 .02 .05 35 .0717 .0441 .05 .02 .08 40 .1001 .0655 .25 .10 .10 45 .1399 .1043 .48 .25 .18 50 .1983 .1555 .70 .45 .25 55 .2810 .2228 1.05 .73 .45 60 .4092 .3058 -- -- .73 65 .5600 .4304 -- -- 1.18 ERS LRS GJRS Annual Rates of Withdrawal Years of Service Annual Rates Annual Rates of Withdrawal of Withdrawal 0-4 5-9 10 & over Age Men Women Men Women Men Women 20 35.00 % 30.00 % --% --% --% --% 25 27.50 25.00 15.00 17.50 -- -- 30 23.00 21.50 11.50 12.50 7.50 8.25 35 21.50 19.50 10.00 10.50 6.00 6.00 40 19.50 18.25 9.50 9.50 4.75 5.00 45 18.60 16.50 9.00 8.00 4.00 4.00 50 16.60 15.00 7.25 7.25 4.25 4.25 55 14.50 14.00 7.00 7.00 4.75 4.50 60 14.00 14.50 6.00 6.25 -- -- 65 15.00 17.00 10.00 11.00 -- -- Both 8.00 % 8.00 8.00 8.00 8.00 8.50 8.50 9.00 9.00 9.00 Both 4.00 % 4.00 4.00 4.00 6.00 4.00 3.00 2.50 2.50 2.50 (continued) 114 Summary of Actuarial Assumptions Annual Rates of Retirement ERS Actuarial Section Early Retirement Old Plan Age 60 or 30 years 34 years More than 34 years Age Men Women Men Women Men Women Men Women 50 2.0 % 2.0 % 7.5 % 6.0 % 100.0 % 100.0 % 90.0 % 100.0 % 52 2.0 2.0 7.5 6.0 100.0 100.0 90.0 100.0 55 3.0 3.5 7.5 10.0 100.0 100.0 75.0 90.0 57 3.5 5.0 10.5 10.0 100.0 100.0 70.0 70.0 60 -- -- 15.0 20.0 97.5 95.0 40.0 55.0 62 -- -- 32.0 40.0 97.5 95.0 40.0 65.0 65 -- -- 35.0 40.0 35.0 40.0 35.0 40.0 67 -- -- 35.0 35.0 35.0 35.0 35.0 35.0 70 -- -- 35.0 35.0 35.0 35.0 35.0 35.0 75 -- -- 100.0 100.0 100.0 100.0 100.0 100.0 New Plan and GSEPS Early Retirement Normal Retirement Age Men 50 7.0 % 52 7.0 55 7.0 57 8.0 60 -- 62 -- 65 -- 67 -- 70 -- 75 -- Women 4.5 % 4.5 6.5 8.0 -- -- -- -- -- -- Men* 70.0 % 70.0 60.0 50.0 25.0 40.0 32.0 32.0 30.0 100.0 Women** 50.0 % 45.0 50.0 40.0 30.0 40.0 35.0 32.0 30.0 100.0 *An additional 10% of active male New Plan and GSEPS members less than age 55 and 20% between ages 55-59, inclusive, are expected to retire in the year in which they attain 30 years of service. **An additional 20% of active female New Plan and GSEPS members less than age 60 are expected to retire in the year in which they attain 30 years of service. (continued) 115 Actuarial Section Summary of Actuarial Assumptions Annual Rates of Retirement PSERS Age Annual Rate of Retirement Age Annual Rate of Retirement 60 13.0 % 68 23.0 % 61 13.0 69 26.0 62 22.0 70 27.0 63 17.5 71 27.0 64 17.0 72 27.0 65 28.0 73 27.0 66 27.0 74 27.0 67 23.0 75 & over 100.0 GJRS Age 60 61 62 63-64 65-69 70-74 75 Annual Rate of Retirement 15.0 % 10.0 12.0 10.0 15.0 25.0 100.0 LRS Age 60 61 62 63 64 65 Annual Rate of Retirment 10.0 % 10.0 15.0 10.0 10.0 12.0 Age 66 67 68 69 70-74 75 Annual Rate of Retirement 12.0 % 15.0 12.0 12.0 20.0 100.0 GMPF Age 60 61 62 63 64 65 & over Annual Rate of Retirement 75.0 % 60.0 70.0 60.0 60.0 100.0 (continued) 116 Summary of Actuarial Assumptions Actuarial Section Annual Rates of Retirement SEAD-OPEB ERS Members Early Retirement Old Plan Age 60 or 30 years 34 years More than 34 years Age Men Women Men Women Men Women Men Women 50 2.0 % 2.0 % 7.5 % 6.0 % 100.0 % 100.0 % 90.0 % 100.0 % 52 2.0 2.0 7.5 6.0 100.0 100.0 90.0 100.0 55 3.0 3.5 7.5 10.0 100.0 100.0 75.0 90.0 57 3.5 5.0 10.5 10.0 100.0 100.0 70.0 70.0 60 -- -- 15.0 20.0 97.5 95.0 40.0 55.0 62 -- -- 32.0 40.0 97.5 95.0 40.0 65.0 65 -- -- 35.0 40.0 35.0 40.0 35.0 40.0 67 -- -- 35.0 35.0 35.0 35.0 35.0 35.0 70 -- -- 35.0 35.0 35.0 35.0 35.0 35.0 75 -- -- 100.0 100.0 100.0 100.0 100.0 100.0 New Plan and GSEPS Early Retirement Normal Retirement Age Men Women Men* Women** 50 7.0 % 4.5 % 70.0 % 50.0 % 52 7.0 4.5 70.0 45.0 55 7.0 6.5 60.0 50.0 57 8.0 8.0 50.0 40.0 60 -- -- 25.0 30.0 62 -- -- 40.0 40.0 65 -- -- 32.0 35.0 67 -- -- 32.0 32.0 70 -- -- 30.0 30.0 75 -- -- 100.0 100.0 *An additional 10% of active male New Plan and GSEPS members less than age 55 and 20% between ages 55-59, inclusive, are expected to retire in the year in which they attain 30 years of service. **An additional 20% of active female New Plan and GSEPS members less than age 60 are expected to retire in the year in which they attain 30 years of service. LRS Members Age 60 61 62 63-64 65-66 Annual Rate of Retirement 10.0 % 10.0 15.0 10.0 12.0 Age 67 68-69 70-74 75 Annual Rate of Retirement 15.0 % 12.0 20.0 100.0 (continued) 117 Summary of Actuarial Assumptions Annual Rates of Retirement SEAD-OPEB GJRS Members Age 60 61 62 63-64 65-66 67 68-69 70-74 75 Annual Rates of Retirement 15.0 % 10.0 12.0 10.0 15.0 15.0 15.0 25.0 100.0 Actuarial Section 118 Actuarial Section Summary of Actuarial Assumptions Annual Rates of Death After Retirement For all plans except PSERS, the RP-2000 Combined Mortality Table (projected to 2025 with projection scale BB and set forward two years for both males and females) is used for the period after retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table (projected to 2025 with projection scale BB and and set back seven years for males and set forward three years for females) is used for the period after disability retirement. For PSERS, the RP-2000 Blue-Collar Mortality Table (projected to 2025 with projection scale BB and set forward three years for males and two years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table (projected to 2025 with projection scale BB and set forward five years for both males and females) is used for the period after disability retirement. For all plans, there is a margin for future mortality improvement in the tables. ERS Age Men 40 0.1127 % 45 0.1609 50 0.2474 55 0.4246 60 0.6985 Women 0.0790 % 0.1230 0.1872 0.2918 0.4923 Age Men Women 65 1.1300 % 0.8994 % 70 1.8697 1.5281 75 3.2147 2.5220 80 5.5160 4.1628 85 9.5631 7.1239 PSERS Age Men 40 0.1476 % 45 0.1974 50 0.3057 55 0.5644 60 0.9575 Women 0.0995 % 0.1484 0.2084 0.2844 0.5014 Age Men Women 65 1.4859 % 0.9774 % 70 2.4262 1.7054 75 3.9830 2.7288 80 6.5238 4.4542 85 10.9551 7.5727 GJRS Age Men 40 0.1127 % 45 0.1609 50 0.2474 55 0.4246 60 0.6985 Women 0.0790 % 0.1230 0.1872 0.2918 0.4923 Age Men Women 65 1.1300 % 0.8994 % 70 1.8697 1.5281 75 3.2147 2.5220 80 5.5160 4.1628 85 9.5631 7.1239 (continued) 119 Summary of Actuarial Assumptions Annual Rates of Death After Retirement LRS Age Men Women 40 0.1127 % 0.0790 % 45 0.1609 0.1230 50 0.2474 0.1872 55 0.4246 0.2918 60 0.6985 0.4923 Actuarial Section Age Men Women 65 1.1300 % 0.8994 % 70 1.8697 1.5281 75 3.2147 2.5220 80 5.5160 4.1628 85 9.5631 7.1239 GMPF Age Men Women 40 0.1127 % 0.0790 % 45 0.1609 0.1230 50 0.2474 0.1872 55 0.4246 0.2918 60 0.6985 0.4923 Age Men Women 65 1.1300 % 0.8994 % 70 1.8697 1.5281 75 3.2147 2.5220 80 5.5160 4.1628 85 9.5631 7.1239 SEAD-OPEB Age Men Women 40 0.1127 % 0.0790 % 45 0.1609 0.1230 50 0.2474 0.1872 55 0.4246 0.2918 60 0.6985 0.4923 Age Men Women 65 1.1300 % 0.8994 % 70 1.8697 1.5281 75 3.2147 2.5220 80 5.5160 4.1628 85 9.5631 7.1239 120 Active Members ERS Actuarial Section Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Members 75,293 71,272 68,566 66,081 63,942 61,550 60,486 60,416 59,766 60,906 Annual Payroll (in thousands) $ 2,809,199 2,674,155 2,571,042 2,486,780 2,414,884 2,335,773 2,315,625 2,352,920 2,384,358 2,546,492 Average Pay $ 37,310 37,520 37,497 37,632 37,767 37,949 38,284 38,945 39,895 41,810 Change 3.0 % 0.6 (0.1) 0.4 0.4 0.5 0.9 1.7 2.4 4.8 PSERS PSERS is not a compensation based plan. Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Members 40,121 40,581 39,962 39,249 38,654 37,361 36,096 35,477 34,866 35,509 GJRS Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Members 482 502 495 507 503 506 513 516 526 527 Annual Payroll (in thousands) $ 51,102 52,083 51,293 52,331 51,898 52,807 53,628 54,272 57,401 59,695 Average Pay $ 106,021 103,751 103,622 103,216 103,177 104,362 104,539 105,178 109,128 113,273 Change 4.7 % (2.1) (0.1) (0.4) (0.0) 1.1 0.2 0.6 3.8 3.8 (continued) 121 Active Members LRS LRS is not a compensation based plan. GMPF GMPF is not a compensation based plan. SEAD-OPEB Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Members 218 218 216 218 220 223 222 218 224 222 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Members 11,623 12,019 13,032 13,776 13,526 13,573 13,469 13,754 13,850 13,037 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Members 75,859 69,745 62,305 55,516 49,261 43,512 39,101 35,189 32,076 29,024 Actuarial Section Note: Payroll data on page 121 for fiscal year 2017 will not equal that which is presented in the Financial section in the Schedules of Employers' and Nonemployers' Contributions on pages 68-69. Valuation data at that time was a snapshot of the valuation date, annualized for new hires, but does not include those who terminated during the year. 122 Actuarial Section Member and Employer Contribution Rates ERS Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Member 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% Employer Rates Old Plan* New Plan 10.41% 10.41% 10.41% 11.63% 14.90% 18.46% 21.96% 24.72% 24.69% 24.69% 10.41% 10.41% 10.41% 11.63% 14.90% 18.46% 21.96% 24.72% 24.69% 24.69% GSEPS 6.54% 6.54% 6.54% 7.42% 11.54% 15.18% 18.87% 21.69% 21.69% 21.66% * Old Plan rate includes an employer pick-up of employee contributions. PSERS Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pre 7/1/12 Member $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year Post 7/1/12 Member $ 90 per year $ 90 per year $ 90 per year $ 90 per year $ 90 per year Employer $ 5,680,000 5,529,000 7,509,000 15,884,000 24,829,000 27,160,000 28,461,000 28,580,000 26,277,000 29,276,000 GJRS Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Member 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% Employer 3.85% 3.85% 3.85% 3.90% 3.90% 4.23% 6.98% 12.19%I) 10.48%I) 7.17%I) (continued) 123 Member and Employer Contribution Rates LRS Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Member 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% Employer $ 71,000 75,000 75,000 75,000 128,000 45,000 0 0 0 0 Actuarial Section GMPF SEAD-OPEB Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Member n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Employer $ 1,323,000 1,434,000 1,282,000 1,521,000 1,703,000 1,892,000 1,893,369 1,989,530 2,017,875 2,377,312 Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Member - Old Plan 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% Member - New Plan, LRS, GJRS 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% Employer 0% 0% 0% 0.61% 0.27% 0% 0% 0% 0% 0% (continued) 124 (continued) 125 Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Actuarial Valuation Date 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Actuarial Value of Plan Assets (a) $ 14,017,346 13,613,606 13,046,193 12,667,557 12,260,595 12,129,804 12,376,120 12,675,649 12,854,518 13,088,185 791,855 769,618 737,406 719,601 710,915 727,268 765,450 805,277 834,554 865,786 30,706 30,303 29,581 29,278 28,990 29,481 30,538 31,635 32,171 32,913 313,315 317,624 320,050 327,483 335,225 351,889 373,560 396,399 418,412 439,828 Actuarial Accrued Liablility (AAL) Entry-Age (b) 15,680,857 15,878,022 16,295,352 16,656,905 16,777,922 16,982,449 16,991,963 17,099,527 17,199,688 17,514,898 770,950 823,232 875,396 885,927 895,324 910,256 924,365 967,409 988,883 1,035,935 24,454 23,523 25,003 25,245 24,966 24,904 24,913 25,690 25,533 25,674 268,516 282,474 281,496 290,486 308,862 335,792 343,428 350,298 376,740 407,607 Unfunded AAL/ (Funded Excess) (b-a) 1,663,511 2,264,416 3,249,159 3,989,348 4,517,327 4,852,645 4,615,843 4,423,878 4,345,170 4,426,713 (20,905) 53,614 137,990 166,326 184,409 182,988 158,915 162,132 154,329 170,149 (6,252) (6,780) (4,578) (4,033) (4,024) (4,577) (5,624) (5,945) (6,638) (7,239) (44,799) (35,150) (38,554) (36,997) (26,363) (16,097) (30,132) (46,101) (41,672) (32,221) Funded Ratio (a/b) 89.4 % 85.7 80.1 76.0 73.1 71.4 72.8 74.1 74.7 74.7 102.7 93.5 84.2 81.2 79.4 79.9 82.8 83.2 84.4 83.6 125.6 128.8 118.3 116.0 116.1 118.4 122.6 123.1 126.0 128.2 116.7 112.4 113.7 112.7 108.5 104.8 108.8 113.2 111.1 107.9 Annual Covered Payroll (c) $ 2,809,199 2,674,155 2,571,042 2,486,780 2,414,884 2,335,773 2,315,625 2,352,920 2,384,358 2,546,492 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 3,778 3,780 3,745 3,780 3,815 3,867 3,850 3,764 3,875 3,830 51,102 52,083 51,293 52,331 51,898 52,807 53,628 54,272 57,401 59,695 Unfunded AAL/ (Funded Excess) as Percentage of Covered Payroll [(b-a)/c] 59.2 % 84.7 126.4 160.4 187.1 207.8 199.3 188.0 182.2 173.8 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a (165.5) (179.4) (122.2) (106.7) (105.5) (118.4) (146.1) (157.9) (171.3) (189.0) (87.7) (67.5) (75.2) (70.7) (50.8) (30.5) (56.2) (84.9) (72.6) (54.0) Schedules of Funding Progress - Defined Benefit Plans (Dollar amounts in thousands) Actuarial Section Schedules of Funding Progress - Defined Benefit Plans (Dollar amounts in thousands) Georgia Military Pension Fund Actuarial Valuation Date 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Actuarial Value of Plan Assets (a) $ 5,269 6,413 7,558 8,702 10,087 12,131 14,264 16,446 18,414 20,604 Actuarial Accrued Liability (AAL) Entry-Age (b) 19,124 21,021 23,773 26,767 28,231 30,056 31,815 35,213 38,211 40,731 Unfunded AAL/ (Funded Excess) (b-a) 13,855 14,608 16,215 18,065 18,144 17,925 17,551 18,767 19,797 20,127 Funded Ratio (a/b) 27.6 % 30.5 31.8 32.5 35.7 40.4 44.8 46.7 48.2 50.6 Annual Covered Payroll (c) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Unfunded AAL/ (Funded Excess) as Percentage of Covered Payroll [(b-a)/c] n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 126 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 on members' salaries, but are simply $4.00 per month, per member for nine months each fiscal year if hired prior to July 1, 2012 and $10 per month, per member for nine months if hired after July 1, 2012. No statistics regarding covered payroll are available. Active and inactive plan member information is maintained by the Georgia Department of Defense. Note: Payroll data on pages 125-126 for fiscal year 2017 will not equal that which is presented in the Financial section in the Schedules of Employers' and Nonemployers' Contributions on pages 68-69. Valuation data at that time was a snapshot of the valuation date, annualized for new hires, but does not include those who terminated during the year. Actuarial Section Schedule of Retirees Added to and Removed from Rolls ERS Actuarial Section Added to Rolls Removed from Rolls Roll End of Year Year Ended 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Number 2,422 2,444 2,665 2,797 2,956 3,664 2,440 2,656 2,572 2,630 Annual Allowances (in thousands) Number $ 82,644 85,329 70,383 69,031 71,464 88,855 51,178 54,003 51,031 45,833 1,017 1,055 1,051 1,170 1,305 1,176 1,059 1,350 1,342 1,420 Annual Allowances (in thousands) $ 21,299 20,194 22,413 25,347 27,696 26,334 22,997 30,927 30,724 32,372 Number 35,579 36,968 38,582 40,209 41,860 44,348 45,729 47,035 48,265 49,475 Annual Allowances (in thousands) $ 997,623 1,062,758 1,110,728 1,154,412 1,198,180 1,260,701 1,288,882 1,311,958 1,332,265 1,345,726 % Increase Average in Annual Annual Allowance Allowances 6.6 % 6.5 4.5 3.9 3.8 5.2 2.2 1.8 1.5 1.0 $ 28,040 28,748 28,789 28,710 28,624 28,427 28,185 27,893 27,603 27,200 PSERS Added to Rolls Removed from Rolls Roll End of Year Year Ended 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Number 899 886 1,001 1,174 1,133 1,298 1,345 1,247 1,363 1,253 Annual Allowances (in thousands) Number $ 4,514 605 5,290 575 4,494 642 3,168 731 3,192 684 3,803 650 3,749 647 3,482 690 3,927 763 4,322 756 Annual Allowances (in thousands) $ 2,371 2,260 2,666 3,072 2,834 2,738 2,604 2,679 2,890 2,927 Number 13,487 13,798 14,157 14,600 15,049 15,697 16,395 16,952 17,552 18,049 Annual Allowances (in thousands) $ 48,805 51,835 53,663 53,759 54,117 55,182 56,327 57,130 58,167 59,562 % Increase in Annual Allowance 4.6 % 6.2 3.5 0.2 0.7 2.0 2.1 1.4 1.8 2.4 Average Annual Allowances $ 3,619 3,757 3,791 3,682 3,596 3,515 3,436 3,370 3,314 3,300 GJRS Added to Rolls Removed from Rolls Roll End of Year Year Ended 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Number 14 29 16 15 22 42 23 21 13 62 Annual Allowances (in thousands) Number $ 902 7 2,238 6 933 10 1,168 2 1,732 8 2,763 13 1,175 9 1,416 11 919 5 5,304 10 Annual Allowances (in thousands) $ 410 191 508 105 405 629 326 561 269 771 Number 178 201 207 220 234 263 277 287 295 347 Annual Allowances (in thousands) $ 9,965 12,012 12,437 13,500 14,827 16,961 17,810 18,665 19,315 23,848 % Increase in Annual Allowance 5.2 % 20.5 3.5 8.5 9.8 14.4 5.0 4.8 3.5 23.5 Average Annual Allowances $ 55,983 59,761 60,082 61,364 63,363 64,490 64,296 65,035 65,475 68,726 (continued) 127 Schedule of Retirees Added to and Removed from Rolls LRS Actuarial Section Added to Rolls Removed from Rolls Roll End of Year Year Ended 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Number 13 10 10 18 10 32 6 13 9 13 Annual Allowances (in thousands) $ 130 117 106 104 66 200 30 87 58 80 Number 11 7 3 10 11 15 7 12 13 6 Annual Allowances (in thousands) $ 100 54 36 86 82 140 61 112 111 74 Number 226 229 236 244 243 260 259 260 256 263 Annual Allowances (in thousands) $ 1,639 1,702 1,772 1,790 1,774 1,834 1,803 1,778 1,725 1,731 % Increase in Annual Allowance 1.9 % 3.8 4.1 1.0 (0.9) 3.4 (1.7) (1.4) (3.0) 0.3 Average Annual Allowances $ 7,252 7,432 7,508 7,336 7,300 7,054 6,961 6,838 6,738 6,582 GMPF Added to Rolls Removed from Rolls Roll End of Year Year Ended 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Number 71 85 92 94 95 83 62 54 79 83 Annual Allowances (in thousands) $ 76 91 100 101 106 87 68 55 82 90 Number 2 3 1 3 3 5 5 6 9 11 Annual Allowances (in thousands) $ 2 4 1 4 3 5 6 5 9 11 Number 304 386 477 568 660 738 795 843 913 985 Annual Allowances (in thousands) $ 334 421 520 617 720 802 864 914 987 1,066 % Increase in Annual Allowance 28.5 % 26.0 23.5 18.7 16.7 11.4 7.7 5.8 8.0 8.0 Average Annual Allowances $ 1,099 1,091 1,090 1,086 1,091 1,087 1,087 1,084 1,081 1,082 SEAD-OPEB is a post-employment life insurance plan which does not have annuity payments. 128 Analysis of Change in Unfunded Accrued Liability (UAL) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Actuarial Section (continued) 129 ERS Interest (7.50) added to $ previous UAL Accrued liability contribution Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Salary increases Method changes Amendments (COLAs) Assumption changes Lawsuit Programming modification Data changes Misc. changes Total $ 325.9 $ (551.0) (48.6) 9.0 39.9 7.8 127.5 0.0 28.9 158.3 0.0 0.0 (16.2) 0.0 81.5 $ 331.8 $ (514.7) 8.5 12.8 43.6 7.8 (0.6) 0.0 28.4 0.0 0.0 0.0 3.6 0.1 (78.7) $ 346.2 $ (419.4) (198.9) 13.9 50.8 10.3 (89.6) 0.0 0.0 80.4 0.0 0.0 14.4 (0.1) (192.0) $ Amount of Increase (Decrease) (in millions) 363.9 $ 338.8 $ 299.2 $ 243.7 $ (321.7) (228.9) 60.4 45.5 9.3 (159.4) 0.0 0.0 0.0 0.0 0.0 (6.0) 0.1 (236.8) $ (239.1) 253.7 20.6 103.7 14.1 (46.8) (128.3) 0.0 0.0 0.0 0.0 18.7 (0.1) 335.3 $ (147.7) 396.3 15.5 93.8 12.1 (74.2) 0.0 (118.8) 0.0 0.0 26.3 12.9 12.6 528.0 $ (122.9) 433.6 16.4 91.4 28.4 49.0 0.0 0.0 0.0 0.0 (28.7) 9.1 20.2 740.2 $ 169.8 $ (89.4) 710.1 49.2 118.4 15.0 (259.2) 0.0 0.0 250.7 0.0 0.0 (2.4) 22.5 984.7 $ 124.8 $ (99.7) 609.1 65.4 107.3 16.7 (296.9) 0.0 (358.6) 0.0 75.9 0.0 270.5 86.4 600.9 $ 78.1 (86.3) 129.3 51.3 103.0 22.9 (22.7) 0.0 188.8 0.0 0.0 0.0 0.0 157.6 622.0 PSERS Interest (7.50) added to previous UAL Amount of Increase (Decrease) (in thousands) $ 11,574.7 $ 12,159.9 $ 11,918.7 $ 13,724.1 $ 13,830.7 $ 12,474.4 $ 10,349.3 $ 4,021.0 $ (1,567.9) $ (2,953.7) Accrued liability contribution (15,278.9) (17,394.7) (17,704.8) (15,915.4) (12,497.7) (4,843.8) 4,022.8 6,403.4 5,026.0 7,267.0 Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Method changes Amendments COLAs Assumption changes Lawsuit Data changes Allotment for expenses Misc. changes Total (3,247.0) (308.6) (879.7) 4,334.7 0.0 15,892.7 (6,786.4) 10,547.5 0.0 0.0 0.0 (29.5) $ 15,819.5 $ 841.0 (643.8) (228.2) 2,798.1 0.0 0.0 (5,492.0) 0.0 0.0 0.0 0.0 157.2 (12,207.0) 414.9 2,618.5 2,875.9 0.0 0.0 (14,772.9) 30,030.0 0.0 0.0 0.0 43.0 (14,071.0) 1,286.7 2,580.8 2,786.0 0.0 0.0 (14,398.9) 0.0 0.0 0.0 0.0 (64.9) 13,868.0 (381.9) 4,772.4 2,757.7 (9,259.0) 0.0 (14,813.1) 0.0 0.0 0.0 0.0 301.7 21,922.0 (1,149.5) 4,974.5 2,783.8 0.0 0.0 (20,664.9) 0.0 0.0 0.0 0.0 2,586.9 24,002.0 (3,000.5) 3,403.6 3,167.0 0.0 0.0 (16,603.6) 0.0 0.0 0.0 2,122.7 872.4 39,729.0 (828.9) 12,375.8 3,047.8 0.0 0.0 (14,121.2) 33,717.7 0.0 (2,192.3) 2,029.0 195.0 (7,802.5) $ 3,216.3 $ (24,072.6) $ 1,421.2 $ 18,083.4 $ 28,335.7 $ 84,376.3 $ 34,015.0 973.7 6,201.3 3,267.7 0.0 0.0 0.0 0.0 2,168.0 24,199.5 433.0 (197.3) 6,623.0 420.3 3,381.4 4,021.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (281.8) 74,519.0 $ 18,477.2 Analysis of Change in Unfunded Accrued Liability (UAL) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Actuarial Section (continued) 130 GJRS Interest (7.50) added to $ previous UAL Accrued liability contribution Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Salary increases Method changes Amendments (COLAs) Assumption changes Data changes Programming modification Misc. changes Total $ (3,125.4) $ 1,245.0 (1,538.9) (339.7) 2,307.0 2,353.1 187.7 0.0 3,345.4 3,615.6 0.0 0.0 1,402.0 9,451.8 $ Amount of Increase (Decrease) (in thousands) (3,457.6) $ (2,259.9) $ (1,207.3) $ (1,977.2) $ (2,774.8) $ (2,891.5) $ (2,636.2) $ (3,360.0) $ (3,585.9) (746.2) 3,754.1 5,803.3 5,187.8 4,710.8 4,079.8 4,592.1 3,596.2 4,498.3 562.3 1,530.2 872.4 1,190.9 209.7 0.0 3,179.6 0.0 0.0 0.0 1,086.9 4,428.2 (5,855.8) 639.6 (370.0) 1,539.1 (8,848.5) 0.0 0.0 (5,030.9) 0.0 0.0 464.1 (6,807.0) 2,138.5 (5,962.8) 1,272.3 (10,382.5) 0.0 0.0 0.0 0.0 0.0 1,110.1 $ (15,968.2) $ (14,035.4) $ 4,949.6 533.8 3,941.4 3,138.0 (4,620.6) (6,827.0) 0.0 0.0 0.0 4,606.4 1,333.8 10,266.0 $ 8,638.5 376.9 2,080.7 442.3 (4,536.5) 0.0 (870.0) 0.0 0.0 1,648.9 917.5 9,404.0 2,076.8 (276.3) 750.1 1,265.9 0.0 0.0 0.0 0.0 0.0 (12,852.1) 16,228.0 560.9 2,290.6 0.0 (10,213.5) 0.0 0.0 (14,826.5) 579.1 0.0 21.3 13,941.0 1,102.3 1,982.9 967.2 (10,561.2) 0.0 (2,359.4) 0.0 4,581.2 0.0 (240.6) 3,164.0 409.3 1,243.3 354.2 (3,432.4) 0.0 1,265.0 0.0 0.0 0.0 (903.4) 10,634.3 $ 1,556.7 $ (3,404.2) $ 9,649.6 $ 3,102.3 LRS Interest (7.50) added to $ previous UAL Accrued liability contribution Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Method changes Amendments No COLAs Assumption changes Data changes Misc. changes Total $ (497.8) $ 250.3 (129.2) 245.9 (257.7) 99.2 0.0 50.4 (458.3) 223.7 0.0 (127.9) (601.5) $ (445.9) $ 338.3 24.1 (66.1) (198.9) 26.8 0.0 51.5 (418.2) 0.0 0.0 (4.7) (693.1) $ Amount of Increase (Decrease) (in thousands) (421.9) $ (343.3) $ (301.8) $ (302.5) $ (343.4) $ (508.5) $ (468.9) $ (426.9) 173.4 161.9 (62.4) 33.9 107.1 (32.5) (21.1) (26.3) (491.6) (50.8) (10.1) 35.1 0.0 0.0 (452.6) 852.3 0.0 46.2 (320.0) $ (576.5) 323.8 (347.5) 135.2 0.0 0.0 (470.8) 0.0 0.0 69.9 (1,047.3) $ 513.9 (29.6) 17.4 144.5 (418.0) (488.1) 0.0 0.0 0.0 71.1 (553.1) $ 829.0 19.1 (84.3) 16.9 0.0 (549.7) 0.0 0.0 0.0 46.4 8.8 $ 906.2 (18.7) 254.5 74.0 0.0 (481.8) 0.0 0.0 0.0 46.9 544.9 $ 1,534.0 339.2 105.1 98.8 0.0 (465.3) 0.0 975.2 114.8 41.6 2,202.4 $ 1,307.4 240.7 (5.7) 0.0 0.0 0.0 0.0 0.0 (1,529.1) (51.7) (528.4) $ 241.7 (2.2) (429.8) 35.9 0.0 0.0 0.0 0.0 0.0 47.4 (560.2) Analysis of Change in Unfunded Accrued Liability (UAL) 2017 2016 2015 2014 2013 2012 2011 GMPF* Interest (7.50) added to previous UAL Amount of Increase (Decrease) (in thousands) $ 1,484.8 $ 1,407.5 $ 1,316.3 $ 1,344.3 $ 1,360.8 $ 1,354.9 $ 1,216.1 Accrued liability contribution (1,747.5) (1,698.6) (1,765.6) (1,775.3) (1,661.5) (1,502.4) (1,173.3) Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Method changes Assumption changes Expense Deficit Misc. changes Total (50.0) (109.2) 11.0 138.9 0.0 537.6 0.0 64.2 59.0 119.3 233.3 165.1 0.0 0.0 0.0 744.4 (203.0) 126.1 120.5 236.9 0.0 985.8 0.0 398.7 $ 329.8 $ 1,030.0 $ 1,215.7 $ (247.0) 88.8 (87.9) 142.6 0.0 0.0 0.0 161.1 (373.4) $ 39.3 80.2 186.4 137.8 (393.0) 0.0 0.0 30.6 (219.4) $ 107.0 68.3 17.9 127.1 0.0 0.0 0.0 (93.6) 79.2 $ 113.8 58.5 205.4 1,469.6 0.0 0.0 37.0 (77.0) 1,850.1 *Note: Data prior to 2011 is not available for GMPF. 131 SEAD-OPEB: Data is not available. Actuarial Section Actuarial Section Solvency Test Results (Dollar amounts in thousands) ERS Actuarial Accrued Liability for: Actuarial Valuation as of 6/30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Member Contributions (1) Retirants & Beneficiaries (2) Active Member (Employer Funded Portion) (3) Valuation Assets $ 616,177 $ 9,756,529 $ 589,012 10,034,939 551,607 10,652,040 503,867 11,058,344 460,861 11,420,011 405,841 11,935,364 385,058 12,108,737 367,462 12,520,321 368,281 12,592,980 368,935 12,729,977 5,308,151 $ 14,017,346 5,254,071 13,613,606 5,091,705 13,046,193 5,094,694 12,667,557 4,897,050 12,260,595 4,641,244 12,129,803 4,498,168 12,376,120 4,211,744 12,675,649 4,238,427 12,854,518 4,415,986 13,088,185 Portion of Aggregate Accrued Liabilities Covered by Assets (1) (2) (3) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 98.2% 99.0% 98.3% 99.2% 99.9% 68.7% 56.9% 36.2% 21.7% 7.8% 0.0% 0.0% 0.0% 0.0% 0.0% PSERS Actuarial Accrued Liability for: Actuarial Valuation as of 6/30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Member Contributions (1) Retirants & Beneficiaries (2) Active Member (Employer Funded Portion) (3) $ 15,285 $ 15,862 16,361 16,627 16,917 17,016 16,995 17,196 17,413 18,077 469,601 $ 506,659 528,808 532,509 537,284 549,796 566,344 585,471 609,807 640,197 286,064 300,711 330,227 336,790 341,123 343,444 341,026 364,742 361,663 377,661 Valuation Assets $ 791,855 769,618 737,406 719,601 710,915 727,268 765,450 805,277 834,554 865,786 Portion of Aggregate Accrued Liabilities Covered by Assets (1) (2) (3) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 82.2% 58.2% 50.6% 45.9% 46.7% 53.4% 55.5% 57.3% 54.9% GJRS Actuarial Accrued Liability for: Actuarial Valuation as of 6/30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Member Contributions (1) Retirants & Beneficiaries (2) Active Member (Employer Funded Portion) (3) Valuation Assets $ 59,838 $ 90,601 $ 61,188 108,923 67,293 117,730 71,047 128,991 73,998 141,880 73,949 162,364 80,007 162,527 84,170 174,147 91,991 180,107 84,841 220,738 118,077 $ 112,363 96,473 90,440 92,984 99,479 100,894 91,981 104,642 102,028 313,315 317,624 320,050 327,483 335,225 351,889 373,560 396,399 418,412 439,828 Portion of Aggregate Accrued Liabilities Covered by Assets (1) (2) (3) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% (continued) 132 Actuarial Section Solvency Test Results (Dollar amounts in thousands) LRS Actuarial Accrued Liability for: Actuarial Valuation as of 6/30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Member Contributions (1) Retirants & Beneficiaries (2) Active Member (Employer Funded Portion) (3) $ 2,853 $ 19,366 $ 2,908 18,465 3,166 19,208 2,921 19,759 3,185 19,200 2,951 19,623 3,430 19,006 3,287 19,873 3,630 19,202 3,543 19,382 2,235 2,150 2,629 2,564 2,581 2,330 2,477 2,530 2,701 2,749 Valuation Assets Portion of Aggregate Accrued Liabilities Covered by Assets (1) (2) (3) $ 30,706 100.0% 100.0% 100.0% 30,303 100.0% 100.0% 100.0% 29,581 100.0% 100.0% 100.0% 29,278 100.0% 100.0% 100.0% 28,990 100.0% 100.0% 100.0% 29,481 100.0% 100.0% 100.0% 30,538 100.0% 100.0% 100.0% 31,635 100.0% 100.0% 100.0% 32,171 100.0% 100.0% 100.0% 32,913 100.0% 100.0% 100.0% GMPF Actuarial Accrued Liability for: Actuarial Valuation as of 6/30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Member Contributions (1) Retirants & Beneficiaries (2) Active Member (Employer Funded Portion) (3) $ 0 $ 9,449 0 12,742 0 14,015 0 15,379 0 17,518 0 19,396 0 21,389 0 24,075 0 26,337 0 28,867 $ 9,675 8,279 9,758 11,388 10,713 10,660 10,426 11,138 11,874 11,864 Valuation Assets $ 5,269 6,413 7,558 8,702 10,087 12,131 14,264 16,446 18,414 20,604 Portion of Aggregate Accrued Liabilities Covered by Assets (1) (2) (3) n/a 55.8% 0.0% n/a 50.3% 0.0% n/a 53.9% 0.0% n/a 56.6% 0.0% n/a 57.6% 0.0% n/a 62.5% 0.0% n/a 66.7% 0.0% n/a 68.3% 0.0% n/a 69.9% 0.0% n/a 71.4% 0.0% SEAD-OPEB Actuarial Accrued Liability for: Actuarial Valuation as of 6/30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Active Member Contributions (1) Retirants & Beneficiaries (2) Active Member (Employer Funded Portion) (3) $ 0 $ 486,569 $ 213,315 0 524,718 208,953 0 516,633 174,368 0 503,327 175,093 0 528,165 176,452 0 586,228 168,558 0 621,502 166,518 0 621,426 148,321 0 652,291 180,078 0 693,118 183,468 Valuation Assets $ 737,114 628,199 680,449 807,893 818,284 907,831 1,037,901 1,046,559 1,028,541 1,121,251 Portion of Aggregate Accrued Liabilities Covered by Assets (1) (2) (3) n/a 100.0% 100.0% n/a 100.0% 49.5% n/a 100.0% 93.9% n/a 100.0% 100.0% n/a 100.0% 100.0% n/a 100.0% 100.0% n/a 100.0% 100.0% n/a 100.0% 100.0% n/a 100.0% 100.0% n/a 100.0% 100.0% (continued) 133 Statistical Section Statistical Section Building a Bridge to a More Comfortable Retirement Sidney Lanier Bridge - Brunswick Statistical Section Introduction The objective of the statistical section is to provide a historical perspective, context and relevant details to assist readers in evaluating the condition of the plans. All nonaccounting data is taken from ERSGA's internal sources except for information which is derived from the actuarial valuations. FY2010 was the first year ERSGA added this information in their Annual Financial Report. Therefore, historical detail may not be complete for some schedules. Statistical information is not presented for SCJRF and DARF as both plans are immaterial, have no active members, and are closed to new members. Fiduciary Funds Financial Trends The following schedules have been included to help the reader understand how the System's financial position has changed over the past 10 years: Additions by Source Deductions by Type Changes in Fiduciary Net Position Operational Trends The following schedules have been included to help the readers understand how the System's financial report relates to the services provided by the System and the activities it performs: Retiree Information Withdrawal (Refund) Data New Retiree Elections Statistical Data as of June 30, 2018 Proprietary Fund Schedule of Revenue and Expenses 10-year Schedule of Membership 135 136 (continued) 2009 2010 2011 ERS Employee Contributions Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ 43,978 281,206 -- (1,726,302) -- $ (1,401,118) 42,052 263,064 -- 1,176,741 -- 1,481,857 39,480 261,132 -- 2,269,270 -- 2,569,882 PSERS Employee Contributions $ Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ 1,472 5,096 -- (97,156) 588 (90,000) 1,483 5,530 -- 66,404 -- 1,451 7,509 -- 128,096 -- 73,417 137,056 GJRS Employee Contributions $ Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ 4,612 1,703 -- (38,164) 175 (31,674) 5,018 3,369 -- 27,378 175 35,940 4,721 1,163 -- 57,330 -- 63,214 LRS Employee Contributions $ Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ 320 71 -- (3,772) 110 (3,271) 318 75 -- 2,610 110 3,113 320 75 -- 5,194 -- 5,589 2012 2013 2014 2015 36,561 274,034 -- 231,782 -- 38,955 358,992 -- 1,495,849 -- 32,423 418,807 10,945 2,021,748 -- 33,713 505,668 12,495 474,147 10 542,377 1,893,796 2,483,923 1,026,033 1,426 15,884 -- 13,554 -- 1,538 24,829 -- 88,067 -- 1,659 -- 27,160 123,799 -- 30,864 114,434 152,618 1,800 -- 28,461 30,129 -- 60,390 4,904 2,083 -- 6,571 -- 13,558 4,408 2,279 -- 42,104 -- 4,731 1,373 1,002 60,012 -- 48,791 67,118 5,061 2,696 1,564 14,697 -- 24,018 323 76 -- 550 -- 949 373 128 -- 3,573 -- 4,074 282 45 -- 4,969 -- 5,296 327 -- -- 1,189 -- 1,516 2016 2017 2018 31,961 583,082 12,484 141,292 10 35,863 613,201 12,080 1,475,626 10 37,130 639,302 12,865 1,166,013 10 768,829 2,136,780 1,855,320 1,925 -- 28,580 9,809 -- 2,084 -- 26,277 97,715 -- 2,162 -- 29,276 78,418 -- 40,314 126,076 109,856 5,507 4,754 2,869 5,055 -- 18,185 4,906 4,081 2,603 49,259 -- 60,849 4,910 4,725 1,841 39,877 -- 51,353 328 327 323 -- -- -- -- -- -- 363 3,741 2,962 -- -- -- 691 4,068 3,285 Statistical Section Additions by Source - Contribution/Investment Income (in thousands) 137 (continued) GMPF Employee Contributions $ Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ SEAD - OPEB Employee Contributions $ Employer Contributions Insurance Premiums Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ Defined Contribution Plan - GDCP Employee Contributions $ Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ 2009 -- 1,323 -- (657) -- 666 -- -- 7,551 (96,424) -- (88,873) 15,608 -- -- (5,294) -- 10,314 2010 -- 1,434 -- 565 -- 1,999 -- -- 6,755 69,340 -- 76,095 16,002 -- -- 10,319 -- 26,321 2011 -- 1,282 -- 1,465 -- 2,747 -- -- 6,437 144,270 -- 150,707 17,656 -- -- 775 -- 18,431 2012 -- 1,521 -- 221 -- 1,742 -- -- 5,532 17,193 -- 22,725 17,171 -- -- 652 -- 17,823 2013 2014 -- 1,703 -- 1,374 -- -- 1,892 -- 2,179 -- 3,077 4,071 -- -- 5,075 108,148 -- -- -- 4,502 154,868 -- 113,223 159,370 16,676 -- -- 137 -- 16,290 -- -- 1,368 -- 16,813 17,658 2015 -- 1,893 -- 585 -- 2,478 -- -- 4,187 37,876 -- 42,063 15,655 -- -- 1,326 -- 16,981 2016 2017 2018 -- 1,990 -- 240 -- 2,230 -- 2,018 -- 2,262 -- 4,280 -- 2,377 -- 1,928 -- 4,305 -- -- 3,931 12,559 -- -- 1 3,793 125,550 -- -- -- 3,599 101,542 -- 16,490 129,344 105,141 14,708 -- -- 5,591 -- 14,921 -- -- (1,056) -- 14,585 -- -- (356) -- 20,299 13,865 14,229 Statistical Section Additions by Source - Contribution/Investment Income (in thousands) Statistical Section Additions by Source - Contribution/Investment Income (in thousands) 138 Defined Contribution Plan - 401(k) Employee Contributions $ Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ Defined Contribution Plan - 457 Employee Contributions $ Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other Total Additions to (Deductions from) Fiduciary Net Position $ 2009 33,432 6,939 -- (50,330) 750 (9,209) 24,087 -- -- (70,066) 626 (45,353) 2010 33,899 15,664 -- 25,283 385 75,231 21,171 -- -- 35,806 468 57,445 2011 38,006 25,442 -- 59,581 446 123,475 20,108 -- -- 70,963 339 91,410 2012 40,331 4,355 -- 3,112 800 48,598 19,551 -- -- 7,785 -- 27,336 2013 44,428 18,279 -- 52,835 948 116,490 18,753 -- -- 55,737 -- 74,490 2014 53,724 21,513 -- 78,583 1,122 154,942 17,623 -- -- 73,746 -- 91,369 2015 64,870 25,615 -- 17,665 -- 109,448 17,445 -- -- 18,991 -- 36,436 2016 79,422 29,982 -- 5,281 1,429 116,114 17,413 -- -- 7,855 -- 25,268 2017 93,608 36,761 -- 88,771 1,584 220,724 18,899 -- -- 59,541 -- 78,440 2018 110,848 43,176 -- 72,671 1,744 228,439 20,133 -- -- 46,748 -- 66,881 Statistical Section Deductions by Type (in thousands) ERS Benefit Payments Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Service Partial Lump-Sum Option $ 889,669 878,482 921,136 964,485 1,007,816 1,051,993 1,076,676 1,092,909 1,130,996 1,146,226 22,011 23,480 30,946 31,963 35,933 24,567 24,391 19,154 19,765 21,624 Disability 135,743 146,031 140,849 143,317 145,152 146,245 147,418 147,706 151,772 152,469 Survivor Benefits 69,735 82,676 75,891 76,973 80,300 83,193 85,794 87,843 91,750 92,979 Total Benefit Payments $ 1,117,158 1,130,669 1,168,822 1,216,738 1,269,201 1,305,998 1,334,278 1,347,633 1,394,283 1,413,298 Net Administrative Expenses 16,809 14,505 14,431 12,051 12,889 7,440 7,872 8,506 8,732 8,056 Refunds 6,597 6,483 7,515 7,767 7,390 8,757 7,450 7,087 9,033 7,585 Total Deductions from Fiduciary Net Position $ 1,140,564 1,151,657 1,190,768 1,236,556 1,289,480 1,322,195 1,349,600 1,363,226 1,412,048 1,428,939 PSERS Benefit Payments Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Service $ 45,159 45,741 46,548 46,911 47,805 48,911 49,704 50,572 52,012 54,257 Disability 5,232 5,402 5,369 5,369 5,328 5,280 5,227 5,172 5,117 5,114 Survivor Benefits 1,806 2,052 2,063 1,903 1,908 1,998 2,041 2,160 2,249 2,449 Total Benefit Payments $ 52,197 53,195 53,980 54,183 55,041 56,189 56,972 57,903 59,378 61,820 Net Administrative Expenses 588 1,956 2,046 2,040 2,021 1,450 1,545 1,321 1,308 1,331 Refunds 261 251 267 349 492 514 456 465 1,031 701 Total Deductions from Fiduciary Net Position $ 53,046 55,402 56,293 56,572 57,554 58,153 58,973 59,689 61,717 63,852 GJRS Benefit Payments Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Service $ 9,453 10,633 11,245 12,608 14,273 15,305 16,084 16,677 19,349 22,239 Disability 112 114 112 113 112 112 112 112 114 117 Survivor Benefits 1,546 1,618 1,654 1,695 1,865 2,024 2,169 2,222 2,321 2,578 Total Benefit Payments $ 11,111 12,365 13,011 14,416 16,250 17,441 18,365 19,011 21,784 24,934 Net Administrative Expenses 175 270 290 310 313 754 819 754 728 794 Refunds 263 139 260 146 105 22 772 261 166 150 Total Deductions from Fiduciary Net Position $ 11,549 12,774 13,561 14,872 16,668 18,217 19,956 20,026 22,678 25,878 139 (continued) Statistical Section Deductions by Type (in thousands) LRS Benefit Payments Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Service $ 1,265 1,308 1,309 1,364 1,376 1,336 1,315 1,294 1,323 1,347 Survivor Benefits 425 436 452 446 448 465 441 429 440 425 Total Benefit Payments $ 1,690 1,744 1,761 1,810 1,824 1,801 1,756 1,724 1,763 1,772 Net Administrative Expenses 110 120 131 110 119 152 169 313 224 283 Refunds 49 47 60 74 88 30 26 38 75 22 Total Deductions from Fiduciary Net Position $ 1,849 1,911 1,952 1,994 2,031 1,983 1,951 2,075 2,062 2,077 GMPF Benefit Payments Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Service* $ 382 489 579 678 772 841 896 963 1,042 1,138 Total Benefit Payments $ 382 489 579 678 772 841 896 963 1,042 1,138 Net Administrative Expenses -- 43 37 34 31 110 121 262 244 225 Total Deductions from Fiduciary Net Position $ 382 532 616 712 803 951 1,017 1,225 1,286 1,363 *The only type of retirement in GMPF is a service retirement. SEAD-OPEB Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Benefit Payments Death Benefits** $ 19,839 23,642 23,060 24,855 28,482 28,891 32,979 33,911 36,058 36,249 Total Benefit Payments $ 19,839 23,642 23,060 24,855 28,482 28,891 32,979 33,911 36,058 36,249 Net Administrative Expenses 203 203 203 203 203 414 428 599 576 681 Total Deductions from Fiduciary Net Position $ 20,042 23,845 23,263 25,058 28,685 29,305 33,407 34,510 36,634 36,930 **The only type of benefit in SEAD-OPEB is a death benefit. (continued) 140 Statistical Section Deductions by Type (in thousands) Defined Contribution Plan - GDCP Benefit Payments Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Periodic Payments Total Benefit Payments Net Administrative Expenses $ 9$ 9 9 9 9 9 11 11 9 9 9 9 -- -- -- 35 -- -- -- -- 310 1,110 1,180 1,138 1,160 991 990 766 785 852 Refunds 10,377 10,613 11,390 12,749 14,415 17,721 22,340 11,911 11,544 10,080 Total Deductions from Fiduciary Net Position $ 10,696 11,732 12,579 13,898 15,584 18,721 23,330 12,712 12,329 10,932 Defined Contribution Plan - 401(k) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Benefit Payments Distributions Total Benefit Payments Net Administrative Expenses Total Deductions from Fiduciary Net Position $ 21,105 $ 21,105 23,618 23,618 42,457 42,457 36,986 36,986 57,351 57,351 43,133 43,133 95,428 95,428 46,508 46,508 55,866 55,866 64,103 64,103 1,028 $ 829 2,054 2,111 2,457 2,300 2,755 2,832 3,096 3,639 22,133 24,447 44,511 39,097 59,808 45,433 98,183 49,340 58,962 67,742 Defined Contribution Plan - 457 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Benefit Payments Distributions Total Benefit Payments Net Administrative Expenses Total Deductions from Fiduciary Net Position $ 37,257 $ 37,257 37,014 37,014 44,773 44,773 41,835 41,835 63,388 63,388 45,807 45,807 50,479 50,479 43,288 43,288 38,872 38,872 40,690 40,690 1,769 $ 2,115 1,064 910 996 812 866 820 789 442 39,026 39,129 45,837 42,745 64,384 46,619 51,345 44,108 39,661 41,132 141 (continued) 142 ERS Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position PSERS Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position GJRS Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position LRS Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position GMPF Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position 2009 2010 2011 2012 2013 2014 2015 2016 2017 $ (1,401,118) 1,481,857 2,569,882 1,140,564 1,151,657 1,190,768 -- -- -- (2,541,682) 330,200 1,379,114 542,377 1,236,556 (12,724) (706,903) 1,893,796 1,289,480 (5,009) 599,307 2,483,923 1,322,195 -- 1,161,728 1,026,033 1,349,600 -- (323,567) 768,829 1,363,226 -- (594,397) 2,136,780 1,412,048 -- 724,732 (90,000) 53,046 -- (143,046) 73,417 55,402 -- 18,015 137,056 56,293 -- 80,763 30,864 56,572 -- (25,708) 114,434 57,554 -- 56,880 152,618 58,153 -- 94,465 60,390 58,973 -- 1,417 40,314 59,689 -- (19,375) 126,076 61,717 -- 64,359 (31,674) 11,549 -- (43,223) 35,940 12,774 -- 23,166 63,214 13,561 -- 49,653 13,558 14,872 -- (1,314) 48,791 16,668 -- 32,123 67,118 18,217 -- 48,901 24,018 19,956 -- 4,062 18,185 20,026 -- (1,841) 60,849 22,678 -- 38,171 (3,271) 1,849 -- (5,120) 3,113 1,911 -- 1,202 5,589 1,952 -- 3,637 949 1,994 -- (1,045) 4,074 2,031 -- 2,043 5,296 1,983 -- 3,313 1,516 1,951 -- (435) 691 2,075 -- (1,384) 4,068 2,062 -- 2,006 666 1,999 2,747 1,742 3,077 4,071 2,478 382 532 616 712 803 951 1,017 -- -- -- -- -- -- -- 284 1,467 2,131 1,030 2,274 3,120 1,461 2,230 1,225 -- 1,005 4,280 1,286 -- 2,994 2018 1,855,320 1,428,939 -- 426,381 109,856 63,852 -- 46,004 51,353 25,878 -- 25,475 3,285 2,077 -- 1,208 4,305 1,363 -- 2,942 Changes in Fiduciary Net Position (in thousands) Statistical Section 143 2009 SEAD - OPEB Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position $ (88,873) 20,042 -- (108,915) Defined Contribution Plan - GDCP Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position 10,314 10,696 -- (382) Defined Contribution Plan - 401(k) Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position (9,209) 22,133 -- (31,342) Defined Contribution Plan - 457 Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position (45,353) 39,026 -- (84,379) 2010 76,095 23,845 -- 52,250 26,321 11,732 -- 14,589 75,231 24,447 -- 50,784 57,445 39,129 -- 18,316 2011 150,707 23,263 -- 127,444 18,431 12,579 -- 5,852 123,475 44,511 -- 78,964 91,410 45,837 -- 45,573 2012 22,725 25,058 12,724 10,391 17,823 13,898 -- 3,925 48,598 39,097 -- 9,501 27,336 42,745 -- (15,409) 2013 113,223 28,685 5,009 89,547 16,813 15,584 -- 1,229 116,490 59,808 -- 56,682 74,490 64,384 -- 10,106 2014 2015 2016 159,370 29,305 5 130,070 42,063 33,407 2 8,658 16,490 34,510 2 (18,018) 17,658 18,721 -- (1,063) 16,981 23,330 -- (6,349) 20,299 12,712 -- 7,587 154,942 45,433 -- 109,509 109,448 98,183 -- 11,265 116,114 49,340 -- 66,774 91,369 46,619 -- 44,750 36,436 51,345 -- (14,909) 25,268 44,108 -- (18,840) 2017 129,344 36,634 -- 92,710 13,865 12,329 -- 1,536 220,724 58,962 -- 161,762 78,440 39,661 -- 38,779 2018 105,141 36,930 -- 68,211 14,229 10,932 -- 3,297 228,439 67,742 -- 160,697 66,881 41,132 -- 25,749 Changes in Fiduciary Net Position (in thousands) Statistical Section Number of Retirees Statistical Section 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 0 PSERS Retirees 10,000 18,492 18,104 17,626 16,994 16,434 15,742 15,106 14,613 13,995 13,804 20,000 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 0 GJRS Retirees 295 290 278 262 235 220 206 201 358 346 50 100 150 200 250 300 350 400 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 210 LRS Retirees 244 244 235 229 220 230 240 250 267 263 257 260 259 259 260 270 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 0 GMPF Retirees 1,076 985 915 844 795 739 660 568 480 386 200 400 600 800 1000 1200 144 Average Monthly Payments to Retirees Statistical Section $2,600 $2,400 $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 ERS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $6,500 GJRS $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $100 $90 $80 $70 $60 $50 $40 $30 $20 GMPF 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $335 $315 $295 $275 $255 $235 $215 $195 $175 PSERS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LRS $650 $600 $550 $500 $450 $400 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 145 Annual Benefit Statistical Section Thousands Thousands $1,500,000 ERS Annual Benefit $1,400,000 $1,300,000 $1,200,000 $1,100,000 $1,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GJRS Annual Benefit $27,000 $22,000 $17,000 $12,000 $7,000 $2,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GMPF Annual Benefit $1,200 $1,000 $800 $600 $400 $200 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Thousands Thousands $70,000 PSERS Annual Benefit $60,000 $50,000 $40,000 $30,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LRS Annual Benefit $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Thousands 146 Withdrawal Statistics Statistical Section ERS Withdrawals 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ERS Average Withdrawal $1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ERS Annual Withdrawal (in thousands) $9,500 $9,000 $8,500 $8,000 $7,500 $7,000 $6,500 $6,000 $5,500 $5,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 PSERS Withdrawals 7,000 6,000 5,000 4,000 3,000 2,000 1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 PSERS Average Withdrawal $250 $240 $230 $220 $210 $200 $190 $180 $170 $160 $150 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GJRS Withdrawals 14 12 10 8 6 4 2 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LRS Withdrawals 14 12 10 8 6 4 2 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GJRS Average Withdrawal $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $14,000 LRS Average Withdrawal $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GJRS Annual Withdrawal (in thousands) $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LRS Annual Withdrawal (in thousands) $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Note: The GMPF Plan does not have a refund feature. 147 Average Monthly Benefit Payment for New Retirees - ERS Statistical Section 2009 Average Monthly Benefit Average Final Average Salary Number of Retirees 2010 Average Monthly Benefit Average Final Average Salary Number of Retirees 2011 Average Monthly Benefit Average Final Average Salary Number of Retirees 2012 Average Monthly Benefit Average Final Average Salary Number of Retirees 2013 Average Monthly Benefit Average Final Average Salary Number of Retirees 2014 Average Monthly Benefit Average Final Average Salary Number of Retirees 2015 Average Monthly Benefit Average Final Average Salary Number of Retirees 2016 Average Monthly Benefit Average Final Average Salary Number of Retirees 2017 Average Monthly Benefit Average Final Average Salary Number of Retirees 2018 Average Monthly Benefit Average Final Average Salary Number of Retirees 10-15 Years of Credited Service 16-20 21-25 26-30 Over 30 Total $717.65 $3,109.07 344 $1,059.22 $3,179.28 320 $1,458.18 $3,483.90 301 $1,910.75 $3,875.27 324 $3,627.21 $4,548.96 949 $2,272.58 $3,891.02 2,238 $694.23 $3,023.45 391 $1,086.00 $3,345.36 324 $1,502.32 $3,555.21 332 $1,849.65 $3,802.65 375 $3,653.29 $4,588.73 981 $2,247.01 $3,900.93 2,403 $734.74 $3,228.07 437 $1,107.16 $3,205.88 322 $1,504.51 $3,478.73 389 $1,995.24 $3,762.88 461 $3,575.54 $4,532.07 885 $2,143.95 $3,825.88 2,494 $729.60 $3,040.00 518 $1,247.16 $3,275.37 385 $1,624.82 $3,388.85 414 $2,125.35 $3,807.26 486 $3,708.26 $4,702.47 776 $2,109.84 $3,775.94 2,578 $836.73 $3,391.36 684 $1,183.19 $3,339.84 453 $1,650.14 $3,411.24 466 $2,120.33 $3,765.16 780 $3,487.96 $4,659.17 1,033 $2,088.46 $3,855.98 3,416 $769.91 $3,309.44 483 $1,232.07 $3,337.66 306 $1,527.47 $3,263.54 311 $2,057.32 $3,718.37 477 $3,242.25 $4,486.34 542 $1,870.02 $3,699.86 2,119 $750.98 $3,269.25 524 $1,224.00 $3,443.88 316 $1,620.88 $3,547.63 341 $2,068.82 $3,750.99 623 $3,074.69 $4,536.68 561 $1,837.97 $3,760.27 2,365 $759.54 $3,189.20 559 $1,224.52 $3,376.84 340 $1,760.28 $3,657.08 330 $2,171.75 $3,935.01 530 $2,996.81 $4,618.83 466 $1,783.98 $3,764.34 2,225 $796.76 $3,479.90 551 $1,204.27 $3,405.67 395 $1,786.30 $3,850.73 359 $2,109.53 $3,813.78 453 $2,870.19 $4,595.25 470 $1,732.36 $3,829.66 2,228 $794.94 $3,505.83 570 $1,318.26 $3,674.56 389 $1,679.64 $3,707.56 306 $2,302.80 $4,154.11 525 $2,879.55 $4,638.01 476 $1,791.49 $3,950.06 2,266 148 (continued) Statistical Section Average Monthly Benefit Payment for New Retirees - PSERS 2009 Average Monthly Benefit Number of Retirees 2010 Average Monthly Benefit Number of Retirees 2011 Average Monthly Benefit Number of Retirees 2012 Average Monthly Benefit Number of Retirees 2013 Average Monthly Benefit Number of Retirees 2014 Average Monthly Benefit Number of Retirees 2015 Average Monthly Benefit Number of Retirees 2016 Average Monthly Benefit Number of Retirees 2017 Average Monthly Benefit Number of Retirees 2018 Average Monthly Benefit Number of Retirees 10-15 Years of Credited Service 16-20 21-25 26-30 Over 30 Total $156.52 391 $224.92 200 $289.93 157 $357.58 91 $460.04 90 $242.89 929 $157.66 448 $224.92 200 $300.93 162 $359.24 76 $464.07 105 $243.41 1,001 $158.67 463 $227.68 200 $297.01 126 $374.01 79 $479.42 114 $245.04 982 $159.25 480 $236.46 182 $303.66 136 $362.36 74 $476.51 87 $238.59 958 $159.34 580 $232.10 255 $300.66 175 $360.75 113 $478.49 133 $245.72 1,256 $154.20 603 $227.41 268 $297.58 147 $345.98 121 $437.20 131 $233.71 1,270 $155.20 568 $225.02 254 $290.82 166 $360.11 105 $471.12 99 $233.25 1,192 $160.28 529 $232.09 273 $298.45 454 $358.11 103 $489.48 103 $242.18 1,162 $153.93 515 $226.90 230 $286.35 126 $348.16 78 $437.62 104 $228.12 1,053 $156.77 508 $228.48 241 $293.26 148 $363.46 91 $480.15 102 $238.68 1,090 Note: PSERS is not a final average pay plan. (continued) 149 Statistical Section Average Monthly Benefit Payment for New Retirees - GJRS 2009 Average Monthly Benefit Average Final Average Salary Number of Retirees 2010 Average Monthly Benefit Average Final Average Salary Number of Retirees 2011 Average Monthly Benefit Average Final Average Salary Number of Retirees 2012 Average Monthly Benefit Average Final Average Salary Number of Retirees 2013 Average Monthly Benefit Average Final Average Salary Number of Retirees 2014 Average Monthly Benefit Average Final Average Salary Number of Retirees 2015 Average Monthly Benefit Average Final Average Salary Number of Retirees 2016 Average Monthly Benefit Average Final Average Salary Number of Retirees 2017 Average Monthly Benefit Average Final Average Salary Number of Retirees 2018 Average Monthly Benefit Average Final Average Salary Number of Retirees 10-15 16-20 Years of Credited Service 21-25 26-30 Over 30 Total $4,874.28 $9,519.58 8 $5,883.17 $8,825.88 5 $7,366.55 $10,071.58 7 $6,630.61 $8,881.08 5 $7,639.64 $10,232.57 2 $6,478.85 $9,506.14 27 $6,337.43 $10,490.01 1 $4,563.90 $7,018.08 5 $7,643.86 $10,490.01 2 $6,422.80 $8,602.74 4 0 $6,242.00 0 $9,150.21 0 12 $4,632.24 $9,211.23 4 $10,170.24 $14,910.13 2 $9,799.81 $13,052.66 2 $8,428.40 $11,264.63 3 0 $7,614.02 0 $11,505.85 0 11 $4,204.95 $7,788.39 5 $6,610.26 $9,887.17 4 $7,565.84 $10,361.29 4 $8,791.96 $11,714.95 7 $7,831.84 $10,490.01 1 $6,915.64 $10,035.77 20 $5,179.20 $9,271.48 8 $5,844.29 $8,344.35 7 $6,170.52 $8,370.72 7 $7,954.14 $10,624.52 5 $6,169.77 $8,864.27 7 $6,132.24 $9,010.27 34 $2,989.92 $6,265.39 6 $4,468.12 $7,772.95 2 $6,496.50 $8,998.48 7 0 $2,703.82 $4,470.15 0 $4,289.57 $7,166.46 0 3 18 $4,010.30 $6,937.39 2 $6,317.44 $9,141.51 5 $7,051.15 $9,751.01 7 $7,589.28 $10,165.12 2 $2,406.28 $3,222.98 1 $6,267.69 $8,905.45 17 0 $6,534.36 $8,121.58 0 $9,655.37 $11,204.04 0 6 2 0 $8,635.31 $7,120.51 0 $11,566.18 $10,211.83 0 1 9 $4,519.89 $9,049.84 10 $6,690.09 $9,833.21 18 $8,737.31 $12,013.62 13 $5,895.46 $7,896.41 4 $8,026.56 $10,750.81 10 $6,964.60 $10,232.13 55 $6,056.07 $11,385.55 3 $7,565.45 $11,096.74 5 $7,700.44 $10,618.33 7 $7,979.26 $10,687.46 2 0 $7,403.36 0 $10,902.57 0 17 (continued) 150 Average Monthly Benefit Payment for New Retirees - LRS Statistical Section 2009 Average Monthly Benefit Number of Retirees 2010 Average Monthly Benefit Number of Retirees 2011 Average Monthly Benefit Number of Retirees 2012 Average Monthly Benefit Number of Retirees 2013 Average Monthly Benefit Number of Retirees 2014 Average Monthly Benefit Number of Retirees 2015 Average Monthly Benefit Number of Retirees 2016 Average Monthly Benefit Number of Retirees 2017 Average Monthly Benefit Number of Retirees 2018 Average Monthly Benefit Number of Retirees 8-14 Years of Credited Service 15-19 20-24 25-29 Over 29 Total $425.39 2 $650.99 1 0 $921.00 $1,203.00 $800.10 0 2 3 8 $372.93 $558.00 0 0 0 $465.47 8 1 0 0 0 9 $341.79 12 $589.12 1 0 $843.26 $934.73 $456.99 0 2 1 16 $363.66 $549.08 0 0 $1,286.43 $548.46 4 2 0 0 1 7 $308.15 14 $568.93 4 $670.94 2 0 $1,166.93 0 3 $497.03 23 $289.25 $480.21 0 0 0 $336.99 3 1 0 0 0 4 $341.03 5 $382.95 1 $642.84 3 0 $1,228.50 0 2 $588.51 11 $322.51 $524.09 0 0 0 $380.11 5 2 0 0 0 7 $362.52 $557.02 $740.79 0 0 $484.34 6 3 2 0 0 11 $323.56 $476.35 $719.16 0 0 $418.44 5 3 1 0 0 9 Note: LRS is not a final average pay plan. (continued) 151 Statistical Section Average Monthly Benefit Payment for New Retirees - GMPF 2009 Average Monthly Benefit Number of Retirees 2010 Average Monthly Benefit Number of Retirees 2011 Average Monthly Benefit Number of Retirees 2012 Average Monthly Benefit Number of Retirees 2013 Average Monthly Benefit Number of Retirees 2014 Average Monthly Benefit Number of Retirees 2015 Average Monthly Benefit Number of Retirees 2016 Average Monthly Benefit Number of Retirees 2017 Average Monthly Benefit Number of Retirees 2018 Average Monthly Benefit Number of Retirees Years of Credited Service 20-25 26-30 Over 30 Total $59.50 20 $87.63 19 $100.00 53 $88.64 92 $63.82 17 $85.83 18 $100.00 56 $90.44 91 $63.16 19 $91.47 17 $100.00 52 $90.40 88 $61.54 13 $90.33 15 $100.00 63 $92.83 90 $59.44 18 $89.55 22 $100.00 42 $88.29 82 $61.11 9 $90.53 19 $100.00 31 $91.02 59 $62.07 15 $94.10 16 $100.00 20 $86.99 51 $66.30 27 $89.29 14 $100.00 30 $85.07 71 $65.00 11 $89.05 21 $100.00 37 $91.09 69 $61.00 10 $87.39 23 $100.00 44 $91.17 77 Note: GMPF is not a final average pay plan. 152 Retired Members by Retirement Type ERS June 30, 2018 Statistical Section Amount of Monthly Benefit $ 1 - 500 501 - 1,000 1,001 - 1,500 1,501 - 2,000 2,001 - 2,500 2,501 - 3,000 3,001 - 3,500 3,501 - 4,000 4,001 - 4,500 4,501 - 5,000 5,001 - 5,500 5,501 - 6,000 over 6,000 Retirement Type Service Disability Survivor 3,811 262 341 8,249 1,043 330 6,736 1,159 235 5,233 944 166 4,123 779 110 3,312 596 71 2,592 429 53 2,144 318 41 1,696 232 24 1,504 179 12 1,178 123 8 797 69 8 1,850 95 11 Totals 43,225 6,228 1,410 PSERS June 30, 2018 Amount of Monthly Benefit $ 1 - 100 101 - 200 201 - 300 301 - 400 401 - 500 over 500 Retirement Type Service Disability Survivor 87 6 231 6,103 36 157 5,029 274 50 2,714 382 6 1,641 289 1 1,288 198 -- Totals 16,862 1,185 445 (continued) 153 Retired Members by Retirement Type GJRS June 30, 2018 Statistical Section Amount of Monthly Benefit $ 1 - 1,000 1,001 - 2,000 2,001 - 3,000 3,001 - 4,000 4,001 - 5,000 5,001 - 6,000 6,001 - 7,000 7,001 - 8,000 over 8,000 Retirement Type Service Disability Survivor 12 -- 1 21 -- 6 30 -- 1 37 -- 1 26 2 1 15 -- -- 35 -- -- 72 -- -- 98 -- -- Totals 346 2 10 LRS June 30, 2018 Amount of Monthly Benefit $ 1 - 250 251 - 500 501 - 750 751 - 1,000 over 1,000 Retirement Type Service Disability Survivor 21 -- -- 119 -- 6 70 -- -- 32 -- -- 19 -- -- Totals 261 0 6 GMPF June 30, 2018 Amount of Monthly Benefit $ 1 - 49 50 - 100 over 100 Retirement Type Service -- 1,076 -- Totals 1,076 154 Retired Members by Optional Form of Benefit ERS June 30, 2018 Statistical Section Amount of Monthly Benefit Maximum Plan Option 1 $ 1 - 500 501 - 1,000 1,001 - 1,500 1,501 - 2,000 2,001 - 2,500 2,501 - 3,000 3,001 - 3,500 3,501 - 4,000 4,001 - 4,500 4,501 - 5,000 over 5,000 1,318 4,158 3,354 2,607 2,044 1,584 1,097 847 612 482 930 399 1,195 1,086 981 726 546 389 266 197 121 273 Form of Benefit Option 2 Option 3 Option 4 Option 5A Option 5B 1,241 415 825 154 62 1,890 646 1,131 389 213 1,376 639 1,006 431 238 918 570 679 303 285 627 462 583 313 257 463 346 646 173 221 323 310 635 153 167 264 210 661 113 142 170 179 629 56 109 135 181 639 52 85 305 440 1,927 95 169 Totals 19,033 6,179 7,712 4,398 9,361 2,232 1,948 Maximum Plan Single life annuity Option 1 Reduced single life annuity with a guarantee of the remainder of the annuity savings fund account (contributions and interest), if any, to be paid upon the retiree's death Option 2 100% joint and survivor annuity with a popup option upon divorce Option 3 50% joint and survivor annuity with a popup option upon divorce Option 4 Various options, including a specified monthly amount payable to a beneficiary upon the retiree's death, several period certain annuities of varying length, and a five-year accelerated benefit Option 5A 100% joint and survivor annuity with a popup option upon divorce or the death of the beneficiary before the retiree Option 5B 50% joint and survivor annuity with a popup option upon divorce or the death of the beneficiary before the retiree 155 (continued) Retired Members by Optional Form of Benefit PSERS June 30, 2018 Statistical Section Amount of Monthly Benefit Form of Benefit Maximum Plan Option AA Option AB Option AC Option AD Option B $ 1 - 100 101 - 200 201 - 300 301 - 400 401 - 500 over 500 1 41 247 7 14 14 4,323 1,116 370 10 122 355 4,378 527 193 5 53 197 2,607 316 71 9 18 81 1,720 127 42 3 7 32 1,382 54 24 4 -- 22 Totals 14,411 2,181 947 38 214 701 Maximum Plan Single life annuity Option AA 100% joint and survivor annuity Option AB 50% joint and survivor annuity Option AC Joint and survivor annuity with a specified monthly amount payable to a beneficiary Option AD Joint and survivor annuity with the amount payable to a beneficiary limited by the age difference between the retiree and the beneficiary Option B Annuity for a guaranteed period of time (5, 10, 15, or 20 years). If retiree outlives guarantee period, there is no benefit due after retiree's death 156 (continued) Retired Members by Optional Form of Benefit GJRS June 30, 2018 Statistical Section Amount of Monthly Benefit Form of Benefit Maximum Plan $ 1 - 1,000 -- 1,001 - 2,000 2 2,001 - 3,000 3 3,001 - 4,000 2 4,001 - 5,000 5 5,001 - 6,000 7 6,001 - 7,000 7 7,001 - 8,000 21 over 8,000 18 Spousal Coverage 13 25 28 36 24 7 28 51 80 Option 1 -- -- -- -- -- 1 -- -- -- Option 2 -- -- -- -- -- -- -- -- -- Option 3 -- -- -- -- -- -- -- -- -- Option 4A Option 4B Option 4C -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Totals 65 292 1 0 0 0 0 0 Maximum Plan Single life annuity Spousal Coverage* Indicates the member paid additional contributions to provide a 50% joint and survivor annuity at retirement Option 1** 100% joint and survivor annuity Option 2** 66 % joint and survivor annuity Option 3** 50% joint and survivor annuity Option 4A** 100% joint and survivor annuity with a popup option upon death of beneficiary before the retiree Option 4B** 66 % joint and survivor annuity with a popup option upon death of beneficiary before the retiree Option 4C** 50% joint and survivor annuity with a popup option upon death of beneficiary before the retiree *Only available if membership start date prior to July 1, 2012 **Only available if membership start date on or after July 1, 2012 157 (continued) Retired Members by Optional Form of Benefit LRS June 30, 2018 Statistical Section Amount of Monthly Benefit $ 1 - 250 251 - 500 501 - 750 751 - 1,000 over 1,000 Form of Benefit Maximum Plan Option B1 Option B2 -- 17 4 44 71 10 38 20 12 8 21 3 6 10 3 Totals 96 139 32 Maximum Plan Single life annuity Option B1 100% joint and survivor annuity Option B2 50% joint and survivor annuity GMPF and SEAD-OPEB June 30, 2018 The GMPF Plan provides a benefit only in one form, a life annuity. All 1,076 current retirees, therefore, have this same form of benefit. The SEAD-OPEB plan provides only a lump sum death benefit to a member's beneficiary(ies). 158 Top Participatory Employers FY10 Statistical Section Member Count % of total plan ERS Department of Corrections Department of Behavioral Health and Developmental Disability Department of Transportation Department of Labor Department of Juvenile Justice Department of Natural Resources Department of Human Resources Department of Driver Services Department of Community Health Department of Revenue 12,527 6,869 4,846 3,867 3,679 2,079 1,942 1,674 1,351 1,154 18.2% 10.0% 7.1% 5.7% 5.4% 3.0% 2.8% 2.4% 2.0% 1.7% Total Top Employers Total ERS Member Count PSERS Gwinnett County Schools Cobb County Schools Dekalb County Schools Clayton County Schools Muscogee County Schools Henry County Schools Cherokee County Schools Forsyth County Schools Richmond County Schools Paulding County Schools 39,988 68,567 3,931 2,471 2,234 1,382 970 909 902 894 877 715 58.3% 9.8% 6.2% 5.6% 3.4% 2.4% 2.3% 2.3% 2.2% 2.2% 1.8% Total Top Employers Total PSERS Member Count GJRS Council of Superior Court Judges Council of State Court Judges Prosecuting Attorney's Council Council of Juvenile Judges 15,285 39,962 203 108 96 71 38.2% 41.0% 21.8% 19.4% 14.4% Total Top Employers Total GJRS Member Count 478 96.6% 495 Data from 9 years prior is unavailable. FY10 data is the first available. Data for SEAD-OPEB is not available. 159 (continued) Top Participatory Employers FY18 Statistical Section Member Count % of total plan ERS Department of Corrections Department of Behavioral Health and Developmental Disabilities Department of Transportation Department of Human Services Department of Juvenile Justice Department of Community Supervision Department of Public Safety Department of Natural Resources Department of Labor Department of Revenue 9,583 4,198 3,873 3,465 3,249 2,090 1,847 1,732 1,069 1,038 15.86% 6.95% 6.41% 5.74% 5.38% 3.46% 3.06% 2.87% 1.77% 1.72% Total Top Employers Total ERS Member Count PSERS Gwinnett County Schools Cobb County Schools Dekalb County Schools Clayton County Schools Chatham County Schools Forsyth County Schools Richmond County Schools Houston County Schools Muscogee County Schools Cherokee County Schools 32,144 60,406 3,429 2,210 2,202 1,293 970 932 820 776 731 714 53.21% 9.81% 6.32% 6.30% 3.70% 2.77% 2.67% 2.35% 2.22% 2.09% 2.04% Total Top Employers Total PSERS Member Count GJRS Council of Superior Courts Council of State Court Judges Council of Juvenile Courts Solicitor General 14,077 34,956 210 127 73 60 40.27% 39.85% 24.10% 13.85% 11.39% Total Top Employers Total GJRS Member Count SEAD-OPEB Department of Corrections Department of Transportation Department of Human Services Department of Behavioral Health and Developmental Disabilities Department of Juvenile Justice Department of Natural Resources Department of Community Supervision Department of Public Safety Department of Labor Department of Community Health 470 527 3,792 2,269 1,646 1,366 1,048 971 932 872 681 426 89.18% 14.57% 8.72% 6.32% 5.25% 4.03% 3.73% 3.58% 3.35% 2.62% 1.64% Total Top Employers Total Active Member Count 14,003 26,032 53.79% 160 Statistical Section Schedule of Revenue and Expenses State Employees' Assurance Department Active Members Fund Year ended June 30, 2018 (In thousands) Operating revenue: Insurance premiums Total operating revenue 2018 $ 540 540 Operating expenses: Death benefits Administrative expenes Total operating expenses Total operating loss 2,972 76 3,048 (2,508) Nonoperating revenues (expenses): Allocation of investment income from pooled investment fund Investment expenses Total nonoperating revenues Change in net position 24,493 (64) 24,429 21,921 Total net position: Beginning of year End of year 267,286 $ 289,207 2017 599 599 4,019 64 4,083 (3,484) 29,847 (62) 29,785 26,301 240,985 267,286 In fiscal year 2017, the System adopted the provisions of GASB Statement No. 74 and revised its accounting methodology with regard to the presentation of SEAD-Active, and began reporting it as a proprietary fund. In previous years it was reported as a fiduciary fund. Additional years will be displayed as they become available. 161 Statistical Section Schedule of Membership State Employees' Assurance Department Active Members Fund Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Covered Lives 69,745 62,305 55,412 49,212 43,127 38,711 35,142 31,869 28,873 26,032 162 Statistical Data at June 30, 2018 System ERS PSERS GJRS LRS GDCP SCJRF Net Position $13.5 billion Employer and Nonemployer Contributions Old Plan: 19.94% New Plan: 24.69% GSEPS 21.66% ($652 mil) Employee Contributions Old Plan: 6% (with 4.75% pickup) New Plan: 1.25% GSEPS: 1.25% ($37 mil) Active Members Old Plan: (0.08%) 47 New Plan: (42.80%) 25,858 GSEPS: (57.12%) 34,501 Total: 60,406 $914 million $467 million $34 million $29.3 million 7.17% ($6.6 million) 0% (None) $36 yr prior July 1, 2012 $90 yr after July 1, 2012 ($2.2 million) 7.5% +2.5% Spousal ($4.9 million) 8.5% (with 4.75% pickup) ($323 thousand) 34,956 527 222 Inactives 58,332 48,353 61 158 Retirees Total: 50,863 Service: 39,013 Beneficiary: 5,790 Disability: 5,442 Inv. Sep.: 467 Law. Enf.: 151 18,492 358 267 $114.6 million None 7.5% ($14.6 million) 13,385 108,493 0 Annual Payment $1.4 billion $62 million $25 million $1.8 million N/A $6 thousand $890 thousand None None None 12 $890 thousand Average Monthly Benefit $2,245 $280 $5,881 $548 N/A $5,558 163 Statistical Section DARF SEAD GMPF $2 thousand $46 thousand None $1.2 billion New Plan: 0.25% $0 Old Plan: 0.50% ($3.6 million) $24 million $2.4 million None None No. Insured: 26,032 13,896 None 947 None 4 $46 thousand $926 No. Insured: 42,654 No. of Claims: 1,120 Average Claim: Amt. Pd: $38.8 mil $34,653 1,076 $1.1 million $91