Teachers Retirement System of Georgia, comprehensive annual financial report, fiscal year ended June 30, 1996 [June 30, 1996]

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TEACHERS T40O
Al
RETIREMENT
SYSTEM OF GEORGIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
A Component Unit of the State of Georgia Fiscal Year Ended June 30, 1996

TEACHERS
RETIREMENT
SYSTEM OF GEORGIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
A Component Unit of the State of Georgia Fiscal Year Ended June 30, 1996
Gerald S. Gilbert Executive Director Teachers Retirement System of Georgia Two Northside 75, Suite 400 Atlanta, Georgia 30381
(404) 352'6500

INTRODUCTORY SECTION
TABLE OF CONTENTS

INTRODUCTORY SECTION Certificate of Achievement............................................................................................ 3 Board of Trustees.............................................................................................................. 4 Letter of Transmittal....................................................................................................... 5 Administrative Staff and Organization........................................................................... 10 Summary of Plan Provisions............................................................................................ 11

FINANCIAL SECTION Auditor's Opinion............................................................................................................ 14 Balance Sheets.................................................................................................................. 15 Statements of Revenues, Expenses and Changes in Fund Balance............................. 16 Notes to Financial Statements........................................................................................ 18 Required Supplementary Information........................................................................... 24 Administrative Expenses................................................................................................. 27 Schedule of Cash Receipts and Disbursements.............................................................. 28 Investment Summary....................................................................................................... 29

ACTUARIAL SECTION

Actuary's Certification Letter.......................................................................................... 30

Summary of Actuarial Assumptions and Methods..........................

31

Actuarial Valuation Data................................................................................................. 32

STATISTICAL SECTION

Retired Members by Type of Benefit............................................................................. 35

Benefit Expense by Type................................................................................................. 36

Average Monthly Benefit Payments..............................................

37

Participating Employers................................................................................................... 40

Summary of Investment Yields........................................................................................ 42

Detailed Investment Listing............................................................................................ 43

2 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
CERTIFICATE OF ACHIEVEMENT
Certificate of Achievement for Excellence in Financial
Reporting
Presented to
Teachers Retirement System of Georgia
For its Comprehensive Annual Financial Report
for the Fiscal Year Ended June 30, 1995
A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers
Association of the United States and Canada to government units and public employee retirement
systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting.

6-/UNITED STATES' Sf AND

President Executive Director

Teachers Retirement System of Georgia 3

INTRODUCTORY SECTION
BOARD OF TRUSTEES

*Mr. Ernest L. Stroud, Jr. CHAIRMAN
1891 Emerald Drive Jonesboro, Georgia 30236

*Mr. Claude L. Vickers State Auditor
254 Washington Street, S.W. Suite 214
Atlanta, Georgia 30334

*Ms. Linda T. Bohannon VICE CHAIRMAN Teacher
Carrollton Elementary School 401 Stadium Drive
Carrollton, Georgia 30117

Dr. Terrel M. Solana Superintendent
Thomas County Public Schools P.O. Box 2300
Thomasville, Georgia 31799

Mr. Steven N. McCoy Director
Office of Treasury and Fiscal Services 1202 West Tower, Floyd Building 200 Piedmont Avenue Atlanta, Georgia 30334

*Mr. Paul E. Manners Financial and Investment Advisor Paul Manners & Associates, Inc. Three Piedmont Center, Suite 705
3565 Piedmont Road Atlanta, Georgia 30305

Dr. Robert J. Puckett Principal
Coosa Middle School 5041 Alabama Highway Rome, Georgia 30165

*Mr. Robert W. Batten Professor, Actuarial Science Department of Risk Management
and Insurance Georgia State University
P.O. Box 4036 Atlanta, Georgia 30302

Mrs. Mildred R. Blackburn Teacher
Evans Middle School 4318 Washington Road Evans, Georgia 30809

*Dr. John A. Hulsey, Jr. Executive Director
Georgia Retired Teachers Association 615-D Oak Street
Gainesville, Georgia 30501

investment Committee Member

4 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL

Teachers retirement System of Georgia
November 15, 1996
n behalf of the Board of Trustees, I am pleased
Oto present the Comprehensive Annual Finan cial Report of the Teachers Retirement System of Georgia for the fiscal year ended June 30, 1996. Responsibility for both the accuracy of the data, and completeness and fairness of the presentation, in cluding all disclosures, rests with the management of the System. To the best of our knowledge and belief, 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 Sys tem. I trust that you will find this report helpful in understanding your retirement system.
The comprehensive annual financial report is pre sented in four sections: introductory, financial, actu arial and statistical. The introductory section includes this transmittal letter, principal officials, consultants and advisors and a summary of plan provisions. The financial section includes the auditor's report, the System's general purpose financial statements and re quired supplementary information. The actuarial sec tion includes the actuary's certification letter and actuarial assumptions, methods and valuation data. The statistical section includes selected retirement data and investment data presented on a multi-year basis.
Certificate of Achievement The Government Finance Officers Association of
the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Teachers Retirement System of Geor gia for its comprehensive annual financial report for the fiscal year ended June 30, 1995. The Certificate of Achievement is a prestigious national award recogniz ing conformance with the highest standards for prepara tion of state and local government financial reports.
In order to be awarded a Certificate of Achieve ment, a government unit must publish an easily readable and efficiently organized comprehensive annual finan

Gerald S. Gilbert Executive Director
cial report whose contents conform to program stan dards. Such comprehensive annual financial reports must satisfy both generally accepted accounting prin ciples and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. The System has received a Certificate of Achievement for the last eight consecutive years. We believe our current report continues to conform to the Certificate of Achievement Program requirements, and we are submitting it to the GFOA.
Legislation The Georgia General Assembly during its 1996
session passed three pieces of legislation that were signed by the governor that substantially impacted the System. Unless otherwise noted these changes were effective July 1, 1996.
First, the requirement to be eligible for early retire ment of at least 25 years of creditable service and attain ment of age 55 has been changed. A member is now eligible to retire at any age with at least 25 years creitable service. However, the current reductions for early retire ment still apply with the maximum reduction being 35%.
Second, the number of years of membership service required to combine an inactive account with a current account has been lowered from two years to one year. This allows a member who had a previous account with the System and had not withdrawn their contributions to combine it with their current account after returning to service for one year.
Third, a member whose employment is interrupted either voluntarily or involuntarily for certain qualified military service may establish creditable service for up to four years. The member must notify the Board of Trust ees within six months of resuming employment. The member is required to pay the employee contributions and the employer is required to pay the difference be tween what the member pays and the full actuarial cost of the service. The member is required to make the

Teachers Retirement System of Georgia 5

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL

payment within a period of three times the length of the military service or five years, whichever is less.
The Georgia General Assembly during its 1995 session passed the following pieces of legislation that substantially impacted the System. First, the amount of compensation used in computing employee and employer contributions to, and retirement benefits due from, the System shall be subject to Section 401 (a)(17) of the Internal Revenue Code for all persons who became a member of the System on or after July 1,1996. Anyone who was a member of the System prior to July 1,1996 will not be subject to this limitation. Second, the Board of Trustees was granted the authority to invest in corporations or in obligations of corporations of any foriegn country if the corporation has a market capitalization equivalent to $100 million. However, no more than 5 percent of the investment portfolio can be invested in corporations or in obligations of corporations organized in a country other than the United States or Canada, nor shall the Board invest more than 50 percent of these assests in equities.
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 accor dance with management's authorizations and that they are recorded properly to permit the preparation of finan cial statements in accordance with generally accepted accounting principles. Even though there are inherent limitations in any system of internal control, the man agement of the System makes every effort to insure that through systematic reporting and internal reviews, er rors or irregularities are quickly detected and corrected.
ACCOUNTING METHOD -- Financial transac tions of the System are reported on the accrual basis of accounting. Employee and employer contributions are recognized as revenues in the period in which employee services are performed and expenses are recorded when the corresponding liabilities are incurred, regardless of when payment is made.
Investments are carried at cost. The carrying value of investments is subject to adjustment for market declines judged to be other than temporary. Bond premium and discount is amortized on the straight-line basis from the beginning of the fiscal year over the remaining life of the

respective bond. Net realized gains and losses on invest ments are included in investment income. Dividend in come is recognized based on dividends declared.
REVENUES -- The funds necessary to finance retirement benefits are accumulated through the collec tion ofemployee and employer contributions and through income on investments. Contributions and investment income for fiscal year 1996 totaled $3.0 billion. This is an increase of 36.4% over fiscal year 1995. Contribu tions are up 7.5% over the prior fiscal year. Net invest ment earnings rose to $2.1 billion which represents an increase of 46.2% over the prior fiscal year. At June 30, 1996 total assets of the System were $18.1 billion.
EXPENSES -- Recurring benefit payments pre scribed in the System's plan of retirement, refunds of contributions to terminated employees and the cost of administering the System comprise the total expenses. Expenses for fiscal year 1996 totaled $701 million. This is an increase of 9.7 % over fiscal year 1995. This increase in expenses resulted primarily from a growth in the number of retirees and in the amount of the average benefit payment. Revenues of $3.0 billion exceeded expenses of $701 million by approximately $2.3 billion during fiscal year 1996.
FUNDING -- The System's funding policy provides for periodic employer contributions at rates which, ex pressed as percents of annual covered payroll, are sufficient to provide resources to pay benefits when due without being increased for future generations of taxpayers.
A useful indicator of the funded status of a retire ment system is the relation between the assets and the actuarial present value of credited projected benefits. The actuarial present value of credited projected ben efits is a standardized disclosure measure of the accrued pension benefit obligation. It is the amount owed for benefits allocated to employee service before the bal ance sheet date, when total projected benefits (includ ing the effects of projected salary increases) are allocated equally over all years of employee service before and after the balance sheet date.
The System continues to make progress by increas ing the extent to which assets are available to cover credited projected benefits. In fact the unfunded por tion of credited projected benefits has declined from 29.4% in 1986 to 9.1% in 1995.
The ultimate test of the financial soundness of a retirement system is its ability to pay all promised benefits when due. I am proud to say that through the continued wisdom and the support of the General As-

6 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
LETTER OF TRANSMITTAE
sembly of the State of Georgia and of Governor Zell Miller the System has been and continues to be funded on an actuarially sound basis thus providing the mem bership the comfort and security they expect from their retirement system.
Other Information INDEPENDENT AUDIT -- The Board of Trust
ees requires an annual examination of the financial statements of the System by independent certified pub lic accountants. The accounting firm of Deloitte & Touche LLP, CPAs, was selected by the Board. The auditor's report on the balance sheets and the related statements of revenues, expenses and changes in finan cial position is included in the financial section of this report.
ACKNOWLEDGEMENTS--The compilation of this report reflects the combined effort of the staff under the leadership of the Board of Trustees. It is intended to provide complete and reliable information as a basis for making management decisions, as a means of determin ing compliance with legal provisions, and as a means for determining responsible stewardship of the assets con tributed by the System's members, their employers, and the State of Georgia.
The report is being mailed to all employer members of the System. They form the link between the System and its membership. Their cooperation contributes sig nificantly to the success of the System.
On behalf of the Board of Trustees, I would like to take this opportunity to express my gratitude to Gover nor Zell Miller, members of the Georgia General Assem bly, the staff, the advisors, and to the many people who have worked so diligently to assure the successful opera tion of the Teachers Retirement System of Georgia.
Sincerely,
Gerald S. Gilbert Executive Director
Teachers Retirement System of Georgia 7

INTRODUCTORY SECTION
YOUR RETIREMENT SYSTEM

Financial Highlights
Employee Contributions Employer Contributions Net Investment Income Benefits Paid to Retired Members Member Withdrawals Interest Credited to Employee
Contributions

1996

June 30,

1995

$ 259,683,000 $ 607,275,000 $ 2,071,585,000 $ 640,615,000 $ 31,778,000

$ 241,113,000 $ 565,118,000 $ 1,416,605,000 $ 584,289,000 $ 31,184,000

$ 124,047,000

$ 115,558,000

% Change + 7.7 + 7.5 +46.2 + 9.6 + 1.9
+ 7.3

Statistical Highlights
Active Membership Members Leaving the System Retired Members Average Monthly Annuity

176,267

8,622

37,326

$

1,430

170,493

9,025

35,714

$

1,363

+ 3.4 - 4.5 + 4.5 + 4.9

8 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
TRS ASSETS
Growth of Total Pension Assets ($'s in billions)

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

Assets at June 30, 1996
Bonds (1)

(1) U.S. Government and Corporate Bonds (2) U.S. Government Obligations

Interest & Dividends Receivable
Other Receivables
Contributions Receivable Mortgages & Real Estate

Teachers Retirement System of Georgia 9

INTRODUCTORY SECTION
ADMINISTRATIVE STAFF AND ORGANIZATION

Gerald S. Gilbert Executive Director

Jeffrey L. Ezell Deputy
Executive Director

Charles W. Cary, Jr. Director
Investment Services Division

Stephen J. Boyers Controller
Accounting & Membership Division

Susan E. Garrett Manager
Refund & Service Division

Dianne J. Rogers Manager
Retirement Division
Consulting Services
Actuary Buck Consultants, Inc. Auditor Deloitte & Touche LLP
Medical Advisors Gordon J. Azar, M.D.
Atlanta, Georgia Arthur S. Booth, Jr.
Atlanta, Georgia Joseph W. Stubbs, M.D.
Albany, Georgia

J. Philip Rogers Manager
Counseling &. Information Division
Investment Advisors
Atlanta Capital Management Co. Greaves Capital Management, Inc. INVESCO MIM, Inc. Montag & Caldwell, Inc. TradeStreet Investment Associates, Inc. Wellington Management Company

10 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
SUMMARY OF PLAN PROVISIONS

Purpose
The Teachers Retirement System ofGeorgia (the System) was established in 1943 by an act of the Georgia General Assembly for the purpose of providing retirement allowances and other benefits for teachers of this state. The System has the power and privileges of a corporation, and the right to bring and defend actions.
The major objectives of the System are (1) to soundly invest retirement funds to insure adequate financing for future benefits due and for other obliga tions of the System, (2) to provide statewide counsel ing services for System members, (3) to accurately account for the status and contributions of all active and inactive members, and (4) to process refunds and monthly benefits due terminated and retired mem bers, respectively.
Administration
The statutes provide that the administration of the System be vested in a ten member Board of Tmstees comprised as follows:
Ex officio members: the State Auditor, the Director of the Office of Treasury and Fiscal
Services,
Governor's appointees: two active members of the System who are class
room teachers and not employees of the Board of Regents, one active member of the System who is a public school administrator, one active member of the System who is not an employee of the Board of Regents, one member to be selected by the Governor,
Board of Regents appointee: one active member of the System who is an em
ployee of the Board of Regents,
Trustee appointees: one member who has retired under the System, and one individual who is a citizen of the state, not a
member of the System and experienced in the investment of money.

A complete listing of the current Board of Tmstees is included on page 4 of this report.
Management of the System is the responsibility of the Executive Director who is appointed by the Board and serves at theirpleasure. Onbehalfofthe Board, the Executive Director is responsible for the proper opera tion of the System, engaging such actuarial and other services as shall be necessary to transact business, setting the compensation ofall individuals engaged by the System and paying expenses necessary for opera tions. A listing of the administrative staff is included on page 10 of this report.
Membership
All personnel in covered positions of the state's public school systems, vocational-technical schools, RESA units and all colleges and universities compris ing the University System of Georgia who are em ployed one-half time or more, except those professors and principal administrators electing to participate in the Board of Regents of the University System of Georgia Optional Retirement Plan, are required to be members ofthe System as a condition ofemployment. Covered positions include teachers, administrators, supervisors, clerks, teacher aides, secretaries, paraprofessionals, public school nurses, employees of the Ag ricultural Extension Service, and county and regional librarians. Public school lunchroom, maintenance, warehouse and transportation managers and supervi sors are eligible for membership. Any individual first employed at age 60 or after may elect not to join the System.
Eligibility
Service Retirement Active members may retire and elect to receive
monthly retirement benefits after one ofthe following conditions: 1) completion of 10 years of creditable service and attainment ofage 60, 2) completion of3 0 years of creditable service, or 3) completion of 25 years of creditable service and attainment of age 55.
Disability Retirement Members are eligible to apply for monthly retire
ment benefits under the disability provision of the law if they are an active member, have at least 9-1/2 years of creditable service, and are permanently disabled.

Teachers Retirement System of Georgia 11

INTRODUCTORY SECTION
SUMMARY OF PLAN PROVISIONS

The Formula
Service Retirement
Any member who has at least 30 years of creditable service or who has at least 10 years of creditable service and has attained age 60 will receive a benefit calculated by using the percentage of salary formula. Simply stated, two percent (2%) is multiplied by the member's years of creditable service established with the System, including partial years (not to exceed 40 years). The product is then multiplied by the average monthly salary for the two highest consecutive years of service. This two year period must include at least two years ofservice. (Please note that any nine (9) or more months of service within a fiscal year constitutes a full year ofservice and a full year ofsalary). In the event the member does not have credit for two years of service within the two years salary period, additional salaried months are included to complete two years of service. The resulting product is the monthly retirement ben efit under the maximum plan of retirement.
Any member who has between 25 and 30 years of creditable service and has attained age 55 will receive a reduced benefit. The benefit will be calculated using the percentage of salary formula explained above. It will then be reduced by the lessor of 1/12 of7% for each month the member is below age 60, or 7 % for each year or fraction thereof the member has less than 30 years of creditable service. The resulting product is the monthly retirement benefit under the maximum plan of retirement.
Disability Retirement
Disability retirement benefits are also calculated using the percentage of salary formula -- two percent (2%) times the years of creditable service times the average monthly salary for the two highest consecutive years of service. As with service retirements, this two yearperiod must include at least two years ofcreditable service, with any nine (9) or more months of service within a fiscal year constituting a full year of service and a full year of salary. The resulting product is the monthly disability retirement benefit under the maxi mum plan. There is no age requirement for disability retirement.

Plan A - A Maximum Plan of Retirement
This plan produces the largest possible monthly benefit payable to the member only during his or her lifetime. Ifthe death ofthe retired member occurs prior to his or her having been paid total retirement benefits equal to the member's accumulated contributions including interest to the System, the balance of the retired member's accumulated contributions (includ ing interest) will be paid in a lump sum to the benefi ciary or beneficiaries designated by the member on the application for retirement. If there are no surviving beneficiaries at the time of the member's death after retirement, any refund of contributions and interest would be made in a lump sum to the deceased member's estate. A member who has selected Plan A, the Maxi mum Plan of retirement, may change beneficiary designations after retirement.
Plan B - Optional Plans of Retirement
Upon retirement a member of the System may elect one of six optional plans under Retirement Plan B. The election ofan optional form ofpayment is made upon application for retirement and it becomes irrevo cable upon distribution of the first benefit check. The six options are as follows:
Option 1 The retiring member accepts a relatively small
reduction from the maximum monthly benefit in order to guarantee to the estate, beneficiary or benefi ciaries named on the retirement application, a lump sum refund of any remaining portion of member contributions and interest that are not used to pay the annuity portion of the monthly benefit during the member's lifetime.
Option 2 This plan offers the retiring member a reduced
monthly benefit, based on the ages of the member and the beneficiary, payable for life. It further provides a guarantee to the beneficiary named on the retirement application that, at the death of the retired member, and if the beneficiary is still living, of the same basic monthly retirement allowance the member received at the date of retirement plus any cost-of-living in creases the member received up to the time of death.

12 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
SUMMARY OF PLAN PROVISIONS

Plan B - Optional Plans of Retirement
(continued):
Option 2 Pop'Up Any member may elect a reduced retirement
allowance to be designated "Option 2 Pop-Up" with the provision that if the beneficiary dies prior to the retiree that the basic benefit payable to the retiree shall increase to an amount as though the retiree had not selected an optional plan of retirement.
Option 3 Thisplanofretirement involves areducedmonthly
benefit which is based on the ages of the member and the beneficiary. The resulting benefit is paid to the retired member for life, with the guarantee to the beneficiary that at the time of the retired member's death, the named beneficiary will receive a payment for life of one-half of the initial monthly benefit received by the member at the time of retirement plus one-half of any cost-of-living increases the member received up to the time of death.
Option 3 Pop-up Any member may elect a reduced retirement
allowance to be designated "Option 3 Pop-Up" with the provision that if the beneficiary dies prior to the retiree that the basic benefit payable to the retiree shall increase to an amount as though the retiree had not selected an optional plan of retirement.

Option 4 This plan offers the retiring member a specific
monthly amount other than provided for in the other options and stipulated by the retiring member, which will be paid for life following a retiree's death to the living beneficiary. Tie beneficiary would also receive a pro-rata share of any cost-of-living increases the member received up until the time of death. Or the benefit will be divided among the beneficiaries in accordance with the percentage or specific dollar designations made by the member at the time of retirement. One major difference in this plan is that the retiring member may actually elect that following his or her death, a certain amount of money can be paid monthly to a beneficiary rather than apercentage.
Financing the System
The funds to finance the System come from the following sources:
1) Member contributions -- the TRS member con tributes 5% of gross salary,
2) Employer contributions -- current employer con tributions are 11.81% of salary, and
3) Investment income --- the investments of the System are subject to the same limitations imposed upon domestic life insurance companies. Funds may be invested in government bonds, corporate bonds, mortgages, and common and preferred stock.

Teachers Retirement System of Georgia 13

FINANCIAL SECTION
AUDITOR'S OPINION

Deloitte & Touche up________
&
August 21, 1996

Suite 1700 100 Peachtree Street Atlanta, Georgia 30303-1911

Telephone: (404) 220-1500 Facsimile: (404) 220-1583

Board of Trustees Teachers Retirement System of Georgia Atlanta, Georgia

We have audited the accompanying balance sheets of the Teachers Retirement System ofGeorgia (the System) as ofJune 30,1996 IlllllilllM and 1995, and the related statements of revenues, expenses, and changes in fund balances for the years then ended. These financial statements are the responsibility of the System's management. Our responsibility is to express an opinion on these finan cial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial state ments are free of material misstatement. An audit includes examining, on a test basis, evidence sup porting the amounts and disclosures in the financial statements. An audit also includes assessing the ac counting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of the Teachers Retirement System of Georgia as of June 30, 1996 and 1995, and the results of its opera-

tions and the changes in its fund balances for the years then ended, in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The required supplementary infor mation and additional information listed in the table of contents is presented for purposes of additional analysis and is not a required part ofthe basic financial statements. This required supplementary and addi tional information is the responsibility of the System's management. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly presented in all material respects in relation to the basic financial statements taken as a whole.
The introductory and statistical data listed in this forgeoing Table of Contents is presented for purposes of additional analysis and is not a required part of the general purpose financial statements of the System. Such additional information has not been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, accordingly, we express no opinion on it.
(IQjlJUhTAjl. T Dd'a-oUa. Ut
Certified Public Accountants

14 Teachers Retirement System of Georgia

Assets

FINANCIAL SECTION
BALANCE SHEETS
(Thousands of dollars)

CASH INVESTMENTS:
Short-term investments (approximates market) Obligations of the U.S. Government and its agencies, Corporate
and other Bonds (quoted market value $9,243,863 in 1996 and $8,723,703 in 1995) Common stocks (quoted market value $12,831,101 in 1996 and $10,033,833 in 1995) Mortgages and real estate investments
DUE FROM LOCAL BOARDS OF EDUCATION, COLLEGES, AND UNIVERSITIES OF THE UNIVERSITY SYSTEM AND STATE DEPARTMENT OF EDUCATION
INTEREST AND DIVIDENDS RECEIVABLE DUE FROM FULTON COUNTY SCHOOL EMPLOYEES
PENSION FUND
Liabilities and Fund Balance
LIABILITIES FUND BALANCE:
Reserved for employee contributions and interest Reserved for employer contributions and earnings

June 30,

1996

1995

$ 36,392 $ 26,301

216,716

478,296

8,699,432
8,792,332 6,316
17,714,796

7,766,961
7,255,139 8,672
15,509,068

74,768 193,861

70,868 149,445

99,586 $18,119,403

102,687 $15,858,369

$ 1,765 $ 1,303

3,183,299 14,934,339 18,117,638 $18,119,403

2,959,297 12,897,769 15,857,066 $15,858,369

See notes to financial statements.

Teachers Retirement System of Georgia 15

FINANCIAL SECTION
STATEMENTS OF REVENUES, EXPENSES AND
(Thousands of dollars)
Operating Revenues:
Contributions: Employee and employer contributions......................................................................................................................................
Investment income: Dividends, interest and rental income...................................................................................................................................... Net gain on disposal of investment securities................................................................................... ....................................... Less: Broker and investment agent fees...................................................................................................................................... Net investment income.............................................................................................................................................................. Total operating revenues............................................................................................................................................................
Operating Expenses:
Refunds of employee contributions and interest........................................................................................................................... Retirement payments....................................................................................................................................................................... Administrative expenses, net..........................................................................................................................................................
Total operating expenses............................................................................................................................................................
Intrafund Transfers - Increase (Decrease):
W88MWm8888m^MWM81MIIMMmi^lllBIIB8l8IM|i|||M
Interest on employee contributions............................................................................................................................................... Retirements.............................................................................................................. ........................................................................
Net intrafund transfers................................................................................................................................................................ Net income.................................................................................................................................................................................. FUND BALANCE, beginning of year............................................................................................................................................... FUND BALANCE, end of year..........................................................................................................................................................
See notes to financial statements.
16 Teachers Retirement System of Georgia

FINANCIAL SECTION
CHANGES IN FUND BALANCE

Year Ended June 30, 1996

Employee Contributions and Interest

Employer Contributions and Earnings

Total

Year Ended June 30, 1995

Employee Contributions and Interest

Employer Contributions and Earnings

Total

$ 259,683 259,683

$ 607,275
1,003,294 1,091,236 2,094,530
22,945 2,071,585 2,678,860

$ 866,958
1,003,294 1,091,236 2,094,530
22,945 2,071,585 2,938,543

$ 241,113 241,113

$ 565,118
923,470 511,571 1,435,041
18,436 1,416,605 1,981,723

$ 806,231
923,470 511,571 1,435,041
18,436 1,416,605 2,222,836

31,778 31,778

640,615 5,578
646,193

31,778 640,615
5,578 677,971

31,184 31,184

584,289 5,082
589,371

31,184 584,289
5,082 620,555

124,047 (127,950)
(3,903) 224,002 2,959,297
$3,183,299

(124,047) 127,950
3,903 2,036,570 12,897,769
$ 14,934,339

2,260,572 15,857,066
$18,117,638

115,558 (113,081)
2,477 212,406 2,746,891
$2,959,297

(115,558) 113,081
(2,477) 1,389,875 11,507,894
$ 12,897,769

1,602,281 14,254,785
$15,857,066

Teachers Retirement System of Georgia 17

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 1996 and 1995

A. Plan Description:
The Teachers Retirement System ofGeorgia (the System) was created in 1943 by an act of the Georgia Legislature (the Act), to provide retirement benefits for teachers who qualify under the Act. The System is administered as a cost-sharing multiple-employer plan as defined in the Governmental Accounting Stan dards Board (GASB) Statement No. 5. Although the System is a component unit of the State of Georgia's financial reporting entity, it is accountable for its own fiscal matters and presentation of its separate financial statements. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of the System.
In evaluating how to define the System, for financial reporting purposes, the management of the System has considered all potential compotent units. The decision to include a potential compotent unit in the reporting entity is made by applying the criteria set forth by GASB Statement No. 14- The concept underlying the defini tion of the reporting entity is that elected officials are accountable. Based on those criteria, the System has not included any other entities in its reporting entity.
Eligibility and Membership:
All teachers in the State public schools, the Uni versity System ofGeorgia (except those professors and principal administrators electing to participate in an optional retirement plan), and certain other desig nated employees in educational-related work qualify for membership.
As of June 30, 1996, membership data related to the System is as follows:

Retirees and beneficiaries currently receiving benefits
Active plan participants: Vested Non-vested
Total

37,326
70,556 105,711 213,593

Retirement Benefits:
The System provides service retirement, disability retirement, and survivor's benefits. A member is eli

gible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service and attainment of age 55.
Normal retirement (pension) benefits paid to members are equal to 2% ofthe average ofthe member's two consecutive highest paid years of service multi plied by the number ofyears ofcreditable service up to 40 years. Early retirement benefits are reduced by the lessor of 1/12 of 7% for each month the member is below age 60, or by 7 % for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjust ments, based on the CPI, will be made in future years. Retirement benefits are payable monthly for life. Op tions are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.

Death and Disability Benefits:
Retirement benefits also include death and disabil ity benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on the member's creditable service (minimum of 10 years of service) and compensation up to the time of disability.
The death benefit is the amount that would be payable to the member's beneficiary had the member retired on the date of death on either a service retire ment allowance or a disability retirement allowance, whichever is larger. The benefit is based on the member's creditable service (minimum of 10 years of service) and compensation up to the date of death.

Contributions:

The System is funded by members' contributions and employer (local boards of education and Regents of the University System) matching funds.
Contributions required by the annual actuarial valuation to be made for the year ended June 30,1996, are as follows:

Members
Employer: Normal Unfunded accrued liability Expenses

5.00%
6.79% 4.87
.15

Total

11.81%

18 Teachers Retirement System of Georgia

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 1996 and 1995

A. Plan Description:
Contributions (continued):
The required contributions were received by the System. Members become fully vested after ten years of
service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.
The employer contributions to the unfunded accrued liability will liquidate the accrued liability within a period of 30 years on the assumption that the aggregate accmed liability contribution will increase by 3.75% each year.
B. Summary of Significant Accounting Policies and Plan Asset Matters:
Basis of Accounting:
The System's financial statements are prepared on the accrual basis of accounting. Contributions from the employers and the members are recognized as revenue in the period in which the members provide services. Investment income is recognized as earned by the System.
Investments:
Investments are carried at cost. The carrying value of investments is not adjusted for temporary declines in market value since the System has both the ability and intent to hold the securities to maturity or until cost is recovered. Investments which have suffered an other than temporary decline in value are reduced to net realizable value.
Premiums and discounts on U.S. Government and corporate bonds are amortized over the remaining life of the respective bond on a straight-line basis, which is not significantly different from the effective interest method.
Realized gains and losses from securities transac tions are recorded using the average cost method.
Gains and losses relating to the exchange ofbonds of similar quality are deferred as yield adjustments and amortized using the straight-line method from the exchange date to the maturity date of the new bond acquired, which is not significantly different from the

lesser of the maturity date of the bond sold or the bond acquired. At June 30, 1996 and 1995, a deferred gain of $659,576,000 and $634,703,000, respectively, re sulted from bond exchanges and is included as a credit in investments.
No investment in any one organization, except the U.S. Government, represents 5% or more of the net assets available for pension benefits.
There are no investments in, loans to, or leases with parties related to the System.
Real Estate Investments:
An office building which is included in mortgages and real estate investments is owned equally by the System and the Employees' Retirement System of Georgia.The System incurred approximately $470,000 in rental expense for the years endedJune 30,1996 and 1995. The expense is included in administrative expenses. The remainder of the building is leased to outside parties, and this revenue is included in invest ment income.
Use of Estimates:
The preparation offinancial statements in confor mity with generally accepted accounting principles requires management to make estimates and assump tions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and li abilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Standards:
In November 1994, the Governmental Account ing Standards Board (GASB) issued its StatementNo. 25, "Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans." This Statement is effective for periods begin ning after June 15,1996. The System will implement the Statement in the year ending June 30, 1997. Implementation of Statement No. 25 will require the investments of the System to be reported at fair value. Currently investments are reported at cost. In addi tion, StatementNo. 25 requires that plans measure all actuarially determined information in accordance with certain parameters. The impact of the adoption of the Statement on the System's financial position and results of operations has not yet been determined.

Teachers Retirement System of Georgia 19

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 1996 and 1995

C. Funding Status and Progress:
Presented below is the total pension benefit obli gation of the System. The amount of the total pension benefit obligation is based on a standardized measure ment established by Governmental Accounting Stan dards Board (GASB) StatementNo. 5 that is required to be used for reporting purposes. The standardized measurement is the actuarial present value of credited projected benefits. This pension valuation method reflects the present value ofestimated pension benefits that will be paid in future years as a result of member services performed to date and is adjustedforthe effects ofprojected salary increases and any step-rate benefits. A standardized measure of the pension benefit obliga tion was adopted by the GASB to enable readers ofthe financial statements to (a) assess the System's funding status on a going-concern basis, (b) assess progress made in accumulating sufficient assets to pay benefits when due, and (c) make comparisons among similar retirement systems.
Because the standardized measure is used only for disclosure purposes by the System, the measurement is independent of the actuarial computation made to determine contributions to the System. The actuarial funding method used to determine contributions to the System is explained in Note D.
A variety of significant actuarial assumptions are used to determine the standardized measure of the pension benefit obligation; these assumptions are sum marized below:
The present value of future pension payments was computed by using a discounted rate of 1V1%. This discount rate is equal to the estimated long-term rate of return on current and future investments of the pension plan.
Future pension payments reflect an assumption of a range of salary increases as a result of inflation:

Age

Annual Rate (%)

20

6.00

25

6.00

30

6.50

35

5.75

40

5.25

45

5.00

50

4.75

55

4.25

60

3.75

Future pension payments reflect post-retirement increases of 3%; however, the System is not obligated to make any post-retirement increases.

The standardized measure of the unfunded pen

sion benefit obligation as of June 30, 1995 (the latest

annual actuarial valuation) is as follows (in thousands):

Pension benefit obligation:

Retirees and beneficiaries currently

receiving benefits and terminated

employees entitled to benefits but

not yet receiving them

$6,917,784

Active members:

Accumulated member contribu

tions, including allocated

investment income

2,959,297

Employer-financed vested

4,882,758

Employer-financed nonvested

2,682,768

Total pension benefit obligation

17,442,607

Net assets available for benefits, at cost

($19,592,502 with investments

accounted for at market value)

15,857,066

Unfunded pension benefit obligation $1,585,541

D. Contributions Required and Contributions Made:
Employer and member contributions to the System are determined on an actuarial basis using the entry age normal actuarial cost method. Normal cost is funded on a current basis. The unfunded actuarial accrued liability is funded over a 30-year period. Periodic contributions for both normal cost and the amortization of the unfunded actuarial accrued liability are based on the level percentage of

20 Teachers Retirement System of Georgia

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 1996 and 1995

D. Contributions Required and Contributions Made:
(continued): payroll method. The funding strategy for normal cost and the unfunded actuarial accmed liability should provide sufficient resources to pay member pension benefits on a timely basis.
Total contributions to the System in 1996 amounted to $866,958,000, of which $607,275,000 and $259,683,000 were made by the employers and members, respectively. These contributions consisted of$608,057,000 normal cost (11.79% of annual cov ered payroll), $251,165,000 amortization of the un funded actuarial accmed liability (4-87% of annual covered payroll) and $7,736,000 expenses of adminis tering the System (0.15% of annual covered payroll). Contributions made by the employers and members approximate 11.81% and 5%, respectively, ofcovered payroll for the years ended June 30, 1996 and 1995.
Significant actuarial assumptions used to com pute pension contribution requirements are the same as those used to determine the standardized measure of the pension obligation.
The present value of actuarially determined un funded accmed liability, based on unaudited data provided the actuary by the System, was approxi mately $3.4 billion atJune 30,1995. Contributions for the fiscal year ending June 30, 1996 are based on the actuarial valuation as of June 30, 1994.
E. Investment Program:
The System maintains sufficient cash to meet its immediate liquidity needs. Cash not immediately needed is invested in either short-term or long-term investment securities as directed by management. All investments are held by agent custodial banks in the name of the System.
Cash:
Cash balances are fully insured through the Fed eral Deposit Insurance Corporation, an agency of the U.S. Government. Fiduciary accounts, such as those of the System, are granted $100,000 of insurance cover age per participant in the System. Temporary cash on

hand not committed for a specific purpose is invested overnight.
Investments: The System is authorized by its Board of Tmstees
(through statutes) to invest in a variety of short-term and long-term securities, as follows:
a) Short-Term:
Repurchase and reverse repurchase agreements, whereby the System invests in direct obligations of the U. S. Government or in obligations uncondi tionally guaranteed by the agencies of the U. S. Government or U. S. Corporations. The System may sell or purchase such obligations under agree ments to resell or repurchase the obligations at a date certain in the future, at a specific price which reflects a premium over the purchase or selling price equivalent to a stated rate of interest.
U.S. Treasury obligations with varying terms up to 360 days.
Other short-term securities authorized, but not currently used are:
Commercial paper, with a maturity of 180 days or less. Commercial paper is an unsecured promissory note issued primarily by corpora tions for a specific amount and maturing on a specific day. The System considers for invest ment only commercial paper of the highest quality, rated P-1 and/or A-1 by national credit rating agencies.
Master notes, an overnight security adminis tered by a custodian bank and an obligation of a corporation whose commercial paper is rated P-1 or A-l by national credit rating agencies.
Investments in commercial paper or master notes are limited to no more than $25 million in any one name.
b) Long-Term:
Fixed income investments are authorized in the following instruments:
Corporate bonds with at least an "A" rating by a national rating agency, and limited to no more

Teachers Retirement System of Georgia 21

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 1996 and 1995

E. Investment Program:
Investments (continued): than 5% of total System assets in any one name. Maturities ofthese securities vary up to a period of 40 years to provide the System with flexibility necessary to meet changing market conditions.
Canadian provincial obligations that are issues payable in U.S. dollars and from the provinces of Ontario, Quebec and British Columbia. Quality, call, and diversification requirements ofcorporate bonds are applicable. No more than 10% of the total portfolio can be invested in Canadian obli gations.
Private placements are authorized under the same general restrictions applicable to corporate bonds,
b) Long-Term: (continued):
Mortgage Investments are authorized to the extent that they are secured by first mortgages on im proved real property located in the State having a loan-to-value ratio no higher than 75%. Mort gages as a group cannot exceed 10% of total assets or 1% for any one loan.
U.S. Treasury obligations with varying terms up to 30 years.
Equity securities are also authorized (in statutes) for investment as a complement to the System's fixed-income portfolio and as a long-term inflation hedge. By statute, no more than 50% of the total invested assets may be placed in equities and no more than 5% in any one corporation. Equity holdings in any one corporation may not exceed 5% of the outstanding equity of the issuing corpo ration.
The equity portfolio is managed by the Investment Services Division in conjunction with indepen dent advisor-managers. Buy/sell decisions are based on securities meeting rating criteria estab lished by the Board of Tmstees, in-house research considering such things as yield, growth and sales statistics, and analysis of independent market re search summoned by the managers. Equity trade are approved and executed by the System's staff.

Common stocks eligible for investment are ap proved by the Investment Committee ofthe Board ofTmstees before being placed on an approved list.
The System's investments are categorized below to give an indication of the level of risk assumed by the System at year-end. Category 1 includes in vestments that are insured or registered or for which the securities are held by the System or its agent in the System's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's tmst department or agent in the System's name. Cat egory 3 includes uninsured and unregistered in vestments for which the securities are held by the counterparty, or by its tmst department or agent but not in the System's name (in thousands):

Repurchase agreements

1996 Cateeorv Carrying

1

2 3 Amount

Market Value

$ 216,716 $ - $ - $ 216,716 $ 216,716

U.S. Government

and corporate

obligations

8,699,432

8,699,432 9,243,863

Common stocks 8,792,332

__ 1 8,792,332 12,831,101

$17,708,480 $ - $_j; 17,708,480 22,291,680

Mortgages and real estate

6,316

6,316

Total investments

$17,714,796 $22,297,996

Repurchase agreements

1995 Category Carrying

1

2 3 Amount

Market Value

$ 478,296 $ - $ - $ 478,296 $ 478,296

U.S. Government

and corporate

obligations

7,766,961

7,766,961 8,723,703

Common stocks 7,255,139

__ 2 7,255,139 10,033,833

$15,500,396 $ - $_^ 15,500,396 19,235,832

Mortgages and real estate

8,672

8,672

Total investments

$15,509,068 $19,244,504

22 Teachers Retirement System of Georgia

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 1996 and 1995

E Investments Lending Program:
The System is presently involved in a securities lending program with major brokerage firms. The System lends securities for varying terms and receives a fee based on the loaned securities value. During a loan, the System continues to receive dividends and interest as the owner of the loaned securities. The brokerage firms pledge collateral securities consisting of U.S. government and agency securities, mortgage' backed securities issued by a U .S. Government agency, and U.S. corporate bonds. The collateral value must be equal to at least 102% to 110% of the loaned securities' value, depending on the type of collateral security.
Securities loaned totaled $8,978,073,000 at cost (market value, $9,737,121,000) and $7,923,481,000 at cost (market value, $9,048,958,000) at June 30, 1996 and 1995, respectively. The collateral value was equal to 103.2% and 103.8% of the loaned securities value at June 30, 1996 and 1995, respectively. The loaned securities are classified as Category 1 investments (See Note E) based on the custodial arrange ments for the collateral securities.
Loaned securities are included in the accompany ing balance sheets since the system maintains owner ship. The related collateral securities are not recorded as assets on the System's balance sheets, and a corre sponding liability is not recorded, since the System does not trade or sell the collateral securities.
G. Administrative Expenses:
The System reports its administrative expenses in the financial statements; however, the actual accounting for the expenses is performed in the Expense Fund. A schedule of the changes in the fund balance of the Expense Fund is as follows:

Year Ended June 30,

1996

1995

Salaries and Employee Benefits Other Operating Expenses

$ 4,177,995 2,222,394

Total Administrative Expenses 6,400,389

$ 3,739,839 2,261,132
6,000,971

Less Reimbursement by other State Retirement Systems for services rendered on their behalf

822,108

Net Administrative Expenses 5,578,281

918,864 5,082,107

Operating Transfer from the System

5,578,281 5,082,107

Net Income

0

0

Fund Balance, beginning of year

2,000

2,000

Fund Balance, end of year

$ 2,000 $ 2,000

H. Transfer of Fulton County School Employees Pension Fund:
As ofJuly 1,1988, substantially all members ofthe Fulton County School Employees Pension Fund be came members in the System. The transfer involved 3,990 members at a total cost to the Fulton County School Employees Pension Fund of $168,976,347. The employer's portion of contributions plus accrued interest (maximum 9%) is payable over 32 remaining annual installments.

Teachers Retirement System of Georgia 23

FINANCIAL SECTION
REQUIRED SUPPLEMENTARY INFORMATION
(Thousands of dollars)

Analysis of Funding Progress

Fiscal Year*

Net Assets Available For Benefits

Pension Benefit Obligation

Percentage Funded

Unfunded Pension Benefit
Obligation

Annual Covered Payroll

Unfunded Pension Benefit Obligation
As A Percent Of Covered Payroll

1986 $ 4,862,266 $ 6,886,990

70.6%

$ 2,024,724 $ 2,555,673

79.2%

1987

5,801,870

7,778,419

74.6

1,976,549

2,791,157

70.8

1988

6,771,409

8,653,433

78.3

1,882,024

3,018,136

62.4

1989

7,999,734

9,789,507

81.7

1,789,773

3,345,474

53.5

1990

9,213,834 10,620,858

86.8

1,407,024

3,619,242

38.9

1991

10,380,391

11,785,099

88.1

1,404,708

3,831,689

36.7

1992

11,611,357

12,773,943

90.9

1,162,586

3,845,372

30.2

1993

12,821,722

13,912,014

92.2

1,090,292

4,107,718

26.5

1994

14,254,785

15,313,743

93.1

1,058,958

4,338,938

24.4

1995

15,857,066

17,442,607

90.9

1,585,541

4,712,292

33.6

* Fiscal year refers to the actuarial valuation performed as of June 30 of that year and determines the funding necessary for the subsequent fiscal year. An actuarial valuation for the fiscal year ended June 30, 1996 is currently in process and was not available for this analysis.

24 Teachers Retirement System of Georgia

FINANCIAL SECTION
REQUIRED SUPPLEMENTARY INFORMATION
(Thousands of dollars)
Revenues by Source

Fiscal Year
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Member Contributions
$ 166,567 179,145 201,804 218,036 230,065 235,949 250,476 264,892 241,113 259,683

Employer Contributions

Dollar Amount

Percentage Of Annual
Covered Payroll

$ 370,643 401,561 461,522 487,662 481,645 463,122 490,552 521,550 565,118 607,275

13.4% 13.4 13.6 13.6 12.6 11.8 11.8 11.8 11.8 11.8

Net Investment
Income
$ 673,024 689,779 738,406 888,918 875,775
1,013,069 970,219
1,198,173 1,416,605 2,071,585

Total
$ 1,210,234 1,270,485 1,401,732 1,594,616 1,587,485 1,712,140 1,711,247 1,984,615 2,222,836 2,938,543

Expenses by Type

Fiscal Year
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Retirement Payments
$ 241,029 268,614 306,506 343,184 384,076 425,196 469,307 515,415 584,289 640,615

Net Administrative
Expenses
$ 3,211 3,555 4,205 4,193 4,654 4,438 4,484 4,792 5,082 5,578

Refund Payments
$ 26,598 28,777 31,672 33,139 32,198 51,540 27,091 31,345 31,184 31,778

Contributions were made in accordance with actuarially determined contribution requirements.

Total
$ 270,838 300,946 342,383 380,516 420,928 481,174 500,882 551,552 620,555 677,971

Teachers Retirement System of Georgia 25

FINANCIAL SECTION
SUPPLEMENTARY INFORMATION
Source of Funds for 1996
Expenditures for 1996
Retirement Payments--94-5% 26 Teachers Retirement System of Georgia

FINANCIAL SECTION
ADMINISTRATIVE EXPENSES

,
, Personal Services: Salaries and wages...................................................................................... Retirement contributions......................................................................... FICA............................................................................................................ Health insurance........................................................................................ Miscellaneous............................................................................................. Total personal services......................................................................
Communications: Postage....................................................................................................... Publications and printing........................................................................... Telecommunications................................................................................. Travel.......................................................................................................... Total communications......................................................................
Professional Services: Computer services...................................................................................... Actuarial services.......................... Audit fees................................................................................................... Legal services............................................................................................... Medical services ........................................................................................ Miscellaneous............................................................................................ Total professional services................................................................
Rentals: Office space................................................................................................. Office equipment........................................................................................ Total rentals......................................................................................
Other Services and Charges: Temporary services.................................................................................... Board member expenses ........................................................................... Repairs and maintenance......................................................................... Supplies and materials............................................................................... Information storage.................................................................................... Courier services.......................................................................................... Miscellaneous............................................................................................. Total other services and charges ..................................................... Total Administrative Expenses................................................................

Year Ended June 30,

1996

1995

$3,074,007 630,302 384,251 54,264 35,171
4,177,995

$2,745,803 563,452 343,223 52,558 34,803
3,739,839

150,055 100,132 139,177 20,565
409,929

134,591 105,015 79,102
16,783
335,491

943,870 49,165 34,000 36,000 68,842 0_
1,131,877

1,050,598 49,559 41,930 36,000 67,589 17,000
1,262,676

469,658 798
470,456

469,658 1,406
471,064

66,783 32,594 29,040 36,431
6,561 5,922 32,801
210,132
6,400,389

72,530 20,411 17,510 23,830
7,326 5,922 44,372
191,901
6,000,971

Less reimbursement by other State Retirement Systems for services rendered on their behalf...............................................................................
Net Administrative Expenses..................................................................

822,108 $5,578,281

918,864 $5,082,107

Teachers Retirement System of Georgia 27

FINANCIAL SECTION
SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS
(Thousands of dollars)

Cash Balance, beginning of year
Receipts: Employee contributions Employer contributions Interest, dividend, and rental income Net gain on disposal of investment securities Investments sold and redeemed
Total cash receipts
Disbursements: Retirement payments Refunds of employee contributions and interest Administrative expenses Investment expenses Investments purchased
Total cash disbursements
Cash Balance, end of year

Year Ended June 30,

1996

1995

$

26,301

$

20,241

258,527 607,632 959,340 1,091,236 105,335,142
108,251,877

243,219 564,069 901,943 511,571 105,315,542
107,536,344

640,615 31,778 5,578 22,945
107,540,870
108,241,786
$ 36,392

584,289 31,184 5,082 18,436
106,891,293
107,530,284
$ 26,301

28 Teachers Retirement System of Georgia

FINANCIAL SECTION
INVESTMENT SUMMARY
(Thousands of dollars)
Schedule of 1996 Investment Activity

Short-term investments Bonds Common stocks Mortgages & Real Estate

Beginning Book Value $ 478,296
7,766,961 7,255,139
8,672
$ 15,509,068

Purchases $102,325,919
937,205 4,277,746
0
$107,540,870

Sales, Payments and Redemptions $102,587,499 4,734 2,740,553 2,356
$105,335,142

Ending Book Value $ 216,716
8,699,432 8,792,332
6,316
$ 17,714,796

Percent of Total Book
Value 1.2%
49.1 49.6
.1
100.0%

Schedule of Investment Book Value - Market Value Comparisons

June 30, 1996

Book Value

Market Value

Short-term investments $ 216,716

Bonds

8,699,432

Common stocks

8,792,332

Mortgages &. Real Estate

6,316

$ 216,716 9,243,863 12,831,101 6,316

Percent of Total Market
Value
1.0% 41.4 57.5
.1

June 30, 1995

Book Value

Market Value

$ 478,296 7,766,961 7,255,139 8,672

$ 478,296 8,723,703 10,033,833 8,672

Percent of Total Market
Value
2.5% 45.4 52.0
.1

$17,714,796

$22,297,996

100.0% $15,509,068

$ 19,244,504

100.0%

Teachers Retirement System of Georgia 29

ACTUARIAL SECTION
ACTUARY'S CERTIFICATION LETTER

, 200 Galleria Parkway, N.W., Suite 1200 Atlanta, Georgia 30339

Consultants

' October 25,1996

Board of Trustees Teachers Retirement System of Georgia Suite 400, Two Northside 75 Atlanta, Georgia 30318
Attention: Mr. Gerald S. Gilbert, Executive Director
Ladies and Gentlemen:
ection 32-2916 of the law governing the opera
Stion of the Teachers 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 forty-eighth valuation of the System prepared as of June 30, 1995. The report indicates that employer contributions at the rate of 11.81% of compensation are sufficient to support the benefits ofthe System as in effect in 1995. 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 reason ableness.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actu ary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experi

ence under the System. The valuation method used in the most recent valuation is the entry age normal cost method. Gains and losses are reflected in the unfunded accrued liability, which is being amortized by regular contributions within a 30-year period.
On the basis of the recommended contribution rates, the Retirement System is being funded in con formity with the minimum funding standards set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. In our opinion the System is operating on an actuarially sound basis and the suffi ciency of the retirement funds to provide the benefits called for by the System may be safely anticipated.
Sincerely yours,
Donald M. Overholser Consulting Actuary

30 Teachers Retirement System of Georgia

ACTUARIAL SECTION
SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS

he laws governing the Teachers Retirement
TSystem of Georgia (the System) provide that at least once every five years, a consulting WWW actuary perform an actuarial study of the mor tality, service and compensation experience of the members and the beneficiaries of the System. The

(2) Employer:
Normal Unfunded accmed liability Expenses

6.79% 4-87%
.15%
11.81%

latest actuarial valuation of the System prepared as of

June 30, 1995 was made on the basis of disability

The employer contributions to the unfunded ac

retirement mortality tables approved by the Board of

cmed liability will liquidate the accmed liability

Trustees on June 20, 1962, interest rate approved by

within a period of 30 years on the assumption that

the Board on November 28, 1990, and active service

the aggregate accmed liability contribution will

tables and service retirement mortality tables approved

increase by 33A% each year.

by the Board on May 22, 1996. The more pertinent facts and significant assump
tions underlying the computations included in the June 30, 1995 report are as follows:

g) Asset Valuation Method-Actuarial Value. For years prior to June 30, 1995, assets were used at book value. For the June 30,1995 valuation, the actuarial value of assets recognizes a portion of the

a) Actuarial Method Used--The actuarial cost method used to determine funding is the entry age normal cost method.
b) InvestmentRetum-7H%perannum,compounded annually.

difference between the market value of the assets and the expected value of assets, based on the assumed valuation rate of return. The amount recognized each year is 20% of the difference between market value and expected value. The actuarial value of assets is limited to a range be

c) Retirement-Age 60.

tween 80% and 120% of market value.

d) Earnings Progression-Salaries are expected to in crease 33A% to 6% annually depending upon the employee's age.
e) Death, Disability and Withdrawal Rates-Death, disability and withdrawal rates for active employ ees and service retirement tables are based upon the System's historical experience. The deathafter-retirement rates are based on the 1983 Group Annuity Mortality Table (set back one year for males).
f) Required Contributions (% of compensation)Cbntributions required by the annual actuarial valuation to be made for the year ended June 30, 1996:

(1) Members

5.00%

h) Service Retirement Benefit-The service benefit (pension) paid to members is an annuity which is owed to them at retirement which will provide a total annual pension equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of cred itable service up to 40 years. It is also assumed that certain cost-of-living adjustments, based upon the CPI, will be made in future years.
i) Actuarially Determined Unfunded Accmed Liabil ity--The present value ofthe actuarially determined unfunded accmed liability, based on unaudited data provided the actuary by the System, was approxi mately $3.4 billion at June 30,1995. The unfunded accmed liability has decreased as a percentage of assets.

Teachers Retirement System of Georgia 31

ACTUARIAL SECTION
ACTUARIAL VALUATION DATA

Participating Employers and Active Members

Fiscal Year*
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

Members
116,401 121,797 128,861 135,526 140,431 143,336 148,789 156,243 163,121 170,493

Retirant and Beneficiary Data**

Active Members

Annual

Payroll

Average

(000's)

Pay

$2,555,673 2,791,157 3,018,136 3,345,474 3,619,242 3,831,689 3,845,372 4,107,718 4,338,938 4,712,292

$21,956 22,916 23,422 24,685 25,772 26,732 25,844 26,291 26,600 27,639

% Increase
9.8% 4.4 2.2 5.4 4.4 3.7 -3.3 1.7 1.2 3.9

Fiscal Year*
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

Number on Roll
24,370 25,521 26,582 27,743 29,078 30,159 31,435 32,846 34,208 35,714

Additions
2,343 2,018 1,908 2,282 2,251 2,008 2,232 2,394 2,431 2,632

Deletions
944 867 847 1,121 916 927 956 983 1,069 1,126

Annual Allowances
(000's)
$204,112 231,039 259,181 294,861 342,188 386,210 427,116 471,273 517,726 585,639

% Increase In Annual Allowances
14.5% 13.2 12.2 13.8 16.1 12.9 10.6 10.3 9.9 13.1

Average Annual Allowance
$ 9,193 9,821 10,485 11,013 11,782 12,806 13,587 14,348 15,135 16,398

* Fiscal year refers to the actuarial valuation performed as ofJune 30 of that year and determines the funding necessary for the subsequent fiscal year. An actuarial valuation for the fiscal year ended June 30, 1996 is currently in process and was not available for this analysis.
** Valuation data presented exclusive of local system retirees.

32 Teachers Retirement System of Georgia

Solvency Test

ACTUARIAL SECTION
ACTUARIAL VALUATION DATA
(Thousands of dollars)

Fiscal Year*
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

Aggregate Actuarial Accrued Liabilities For

(T)

(2)

(3)

Active Member Contributions

Retirants and
Beneficiaries

Active Members

(Employer Financed Valuation

Portion)

Assets

$1,381,542 1,485,304 1,607,978 1,811,133 1,969,743 2,039,488 1,990,698 2,110,764 1,841,785 2,049,775

$2,309,172 2,633,704 3,026,206 3,373,244 3,868,797 4,267,335 4,728,486 5,224,074 5,920,080 6,739,239

$4,563,703 4,789,215 4,950,936 5,247,496 5,042,668 5,153,902 4,881,442 5,137,467 5,657,800 6,477,662

$ 4,862,266 5,801,870 6,771,409 7,999,734 9,214,546 10,381,125 11,612,185 12,821,722 14,254,785 16,335,944

Portion of Accrued Liabilities Covered by Assets

0)

(2)

(3)

100.0% 100.0% 25.7% 100.0 100.0 35.1 100.0 100.0 43.2 100.0 100.0 53.6 100.0 100.0 66.9 100.0 100.0 79.1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Member and Employer Contribution Rates

Fiscal Year
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Member
6.00% 6.00 6.00 6.00 6.00 6.00 6.00 6.00 5.00 5.00

Employer
13.43% 13.43 13.63 13.63 11.81 11.81 11.81 11.81 11.81 11.81

* Fiscal year refers to the actuarial valuation performed as of June 30 of that year and determines the funding necessary for the subsequent fiscal year. An actuarial valuation for the fiscal year ended June 30, 1996 is currently in process and was not available for this analysis.
For years prior to June 30, 1995, assets were used at book value. For the June 30, 1995 valuation, the actuarial value of assets recognizes a portion ofthe difference between the market value ofassets and the expected value ofassets, based on the assumed valuation rate ofreturn. The amount recognized each year is 20% of the difference between market value and expected value.

Teachers Retirement System of Georgia 33

ACTUARIAL SECTION
ACTUARIAL VALUATION DATA
(Thousands of dollars)
Summary of Actuarial Assets and Unfunded Actuarial Liabilities

Fiscal Year*

Actuarial Accrued Liabilities

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

$ 6,886,990 7,778,419 8,653,433 9,789,507 10,620,858 11,785,099 12,773,943 13,912,014 15,313,743 17,442,607

Actuarial Valuation
Assets
$ 4,862,266 5,801,870 6,771,409 7,999,734 9,214,546 10,381,125 11,612,185 12,821,722 14,254,785 16,335,944

Ratio of Assets to AAL
70.6% 74.6 78.3 81.7 86.8 88.1 90.9 92.2 93.1 93.7

Unfunded AAL

Active Member Payroll

Unfunded AAL as a % of
Active Payroll

$3,078,545 3,165,537 3,195,388 3,300,525 3,053,231 3,094,017 2,870,837 3,005,595 3,156,778 3,435,796

$2,555,673 2,791,157 3,018,136 3,345,474 3,619,242 3,831,689 3,845,372 4,107,718 4,338,938 4,712,292

120.5% 113.4 105.9 98.7 84.4 80.7 74.7
73.2 72.7 72.9

* Fiscal year refers to the actuarial valuation performed as of June 30 of that year and determines the funding necessary for the subsequent fiscal year. An actuarial valuation for the fiscal year ended June 30, 1996 is currently in process and was not available for this analysis.
For years prior to June 30, 1995, assets were used at book value. For the June 30, 1995 valuation, the actuarial value of assets recognizes a portion ofthe difference between the market value ofassets and the expected value ofassets, based on the assumed valuation rate ofreturn. The amount recognized each year is 20% of the difference between market value and expected value.

34 Teachers Retirement System of Georgia

STATISTICAL SECTION
RETIRED MEMBERS BY TYPE OF BENEFIT

Amount of Number of Type of Retirement (1)

Monthly Benefit Retirants A

B

C

D Maximum Opt-1

Option Selected

Opt-2

Opt-3 Opt-4

Opt-2 Pop-Up

Opt-3 Pop-Up

$ 1-250 1,697 462

50 348

837 1,285

9

301

56

33

9

4

251 - 500 4,338 2,975 328 731

304 3,263

58

709

221

31

36

20

501 - 750 3,985 2,692 388 571

334 2,924

109

604

246

28

40

34

751 - 1,000 3,486 2,639 355 415

77 2,532

146

492

219

34

37

26

1,001 - 1,250 4,208 3,592 316 296

4 3,187

220

423

280

' 30

41

27

1,251 - 1,500 4,127 3,648 244 235

0 3,118

193

426

262

47

38

43

1,501 - 1,750 3,829 3,562 125 142

0 3,012

115

311

250

54

33

54

1,751 -2,000 3,200 3,036

74

90

0 2,508

126

224

208

60

21

53

2,001 - 2,250 2,299 2,208

28

63

0 1,787

93

178

156

41

19

25

2,251 - 2,500 1,615 1,561

12

42

0 1,162

74

134

170

44

13

18

2,501 - 2,750 1,215 1,182

7

26

0 841

60

98

140

39

12

25

2,751 -3,000

817 789

8

20

0 555

37

79

101

22

9

14

3,001 - 3,250

638 619

2

17

0 405

35

62

94

29

6

7

3,251 -3,500

488 475

1

12

0 291

33

54

72

20

7

11

3,501 - 3,750

375 368

1

6

0 220

23

40

59

19

6

8

3,751 -4,000

255 251

0

4

0 148

15

24

40

19

3

6

too
'3-
O
<o

188 183

1

4

0 113

12

20

24

12

3

4

4,251 -4,500

183 177

0

6

0 113

13

17

22

8

3

7

4,501 - 4,750

99

96

0

3

0

62

5

10

13

6

0

3

4,751 -5,000

77

76

0

1

0

40

4

11

16

4

0

2

Over 5,000

207 199

1

7

0 106

11

32

35

13

2

8

Totals

37,326 30,790 1,941 3,039 1,556 27,672 1,391 4,249

2,684

593

338

399

(1) Type of Retirement A - Service B - Disability C - Survivor benefit D - Supplemental payments to retirants who belonged to a local retirement system.

Teachers Retirement System of Georgia 35

Fiscal Year(1)

Service

1989

$ 273,412

STATISTICAL SECTION
BENEFIT EXPENSE BY TYPE
(Thousands of dollars)

Type of Retirement

Disability

Survivor Benefit

Supplemental Payments (2)

Lump Sum Death
Settlement

Total

$ 12,015

$ 14,143

$ 6,428

$ 508 $ 306,506

1990

307,105

13,069

16,159

6,137

714

343,184

1991

344,334

14,481

18,365

6,198

698

384,076

1992

382,439

15,858

20,596

6,137

166

425,196

1993

423,078

16,983

23,019

6,031

196

469,307

1994

465,306

18,190

25,210

5,783

926

515,415

1995

528,241

20,642

28,827

5,624

955

584,289

1996

580,371

22,187

31,663

5,458

936

640,615

(1) Data necessary to complete this analysis prior to 1989 is unavailable. (2) Supplemental payments to retirants who belong to a local retirement system.

36 Teachers Retirement System of Georgia

STATISTICAL SECTION
AVERAGE MONTHLY BENEFIT PAYMENTS

Effective Retirement Dates For Fiscal Years Ended June 30,
1987 Average monthly benefit Number of active retirants
1988 Average monthly benefit Number of active retirants
1989 Average monthly benefit Number of active retirants
1990 Average monthly benefit Number of active retirants
1991 Average monthly benefit Number of active retirants
1992 Average monthly benefit Number of active retirants
1993 Average monthly benefit Number of active retirants
1994 Average monthly benefit Number of active retirants
1995 Average monthly benefit Number of active retirants
1996 Average monthly benefit Number of active retirants

10-15

16-20

Years Credited Service

21-25

26-30 Over 30

Total

$332.30 $625.20 $ 906.45

324

264

214

$1,269.34 $1,626.27

428

788

$1,135.52 2,018

$391.57 $654.26 $ 970.99

308

256

225

$1,385.25 $1,720.70

402

717

$1,203.97 1,908

$367.41 $682.37 $1,039.74 $1,374.71 $1,717.99

355

278

306

514

829

$1,213.46 2,282

$430.66 $736.52 $1,016.97 $1,605.79 $1,988.21

394

264

280

519

794

$1,359.81 2,251

$438.05 $710.54 $1,152.16 $1,730.32 $2,096.17

400

298

286

495

529

$1,335.59 2,008

$457.96 $746.44 $1,237.24 $1,807.55 $2,352.46

403

292

345

584

608

$1,485.34 2,232

$482.99 $860.22 $1,250.94 $1,807.85 $2,302.71

452

323

346

617

656

$1,484.97 2,394

$528.76 $821.58 $1,189.11

436

330

353

$1,896.97 $2,461.72

695

617

$1,546.15 2,431

$512.50 $873.54 $1,157.03 $1,941.45 $2,636.03

467

356

387

689

733

$1,621.56 2,632

$519.25 $883.14 $1,209.02

425

376

396

$2,017.10 $2,530.72

830

778

$1,666.52 2,805

Teachers Retirement System of Georgia 37

STATISTICAL SECTION
MEMBER DATA
Retirement Payment Statistics
Number of Retirees
Amount (In millions)
Average Monthly Benefit
38 Teachers Retirement System of Georgia

STATISTICAL SECTION
MEMBER DATA
Member Withdrawal Statistics
Number of Persons
Amount (In millions)
Average Withdrawal
Teachers Retirement System of Georgia 39

STATISTICAL SECTION
PARTICIPATING EMPLOYERS

Universities and Colleges
. Abraham Baldwin Agricultural College
Albany State College Armstrong State College Atlanta Metropolitan College Augusta College Bainbridge College Brunswick College Clayton State College Columbus College Dalton College Darton College DeKalb College East Georgia College Floyd College Fort Valley State College Gainesville College Georgia College Georgia Institute ofTechnology Georgia Southern University Georgia Southwestern College Georgia State University Gordon College Kennesaw State College Macon College Medical College of Georgia Middle Georgia College North Georgia College Savannah State College Skidaway Institute of
Oceanography South Georgia College Southern College
of Technology University of Georgia Valdosta State University Waycross College West Georgia College
School Districts
Appling County Schools Atkinson County Schools Atlanta City Schools Bacon County Schools Baker County Schools Baldwin County Schools Banks County Schools

Barrow County Schools Bartow County Schools Ben Hill County Schools Berrien County Schools Bibb County Schools Bleckley County Schools Brantley County Schools Bremen City Schools Brooks County Schools Bryan County Schools Buford City Schools Bulloch County Schools Burke County Schools Butts County Schools Calhoun City Schools Calhoun County Schools Camden County Schools Candler County Schools Carroll County Schools Carrollton City Schools Cartersville City Schools Catoosa County Schools Charlton County Schools Chatham County Schools Chattahoochee County Schools Chattooga County Schools Cherokee County Schools Chickamauga City Schools Clarke County Schools Clay County Schools Clayton County Schools Clinch County Schools Cobb County Schools Coffee County Schools Colquitt County Schools Columbia County Schools Commerce City Schools Cook County Schools Coweta County Schools Crawford County Schools Crisp County Schools Dade County Schools Dalton City Schools Dawson County Schools Decatur City Schools Decatur County Schools DeKalb County Schools Dodge County Schools Dooly County Schools Dougherty County Schools Douglas County Schools Dublin City Schools Early County Schools Echols County Schools

Effingham County Schools Elbert County Schools Emanuel County Schools Evans County Schools Fannin County Schools Fayette County Schools Floyd County Schools Forsyth County Schools Franklin County Schools Fulton County Schools Gainesville City Schools Georgia Military College Gilmer County Schools Glascock County Schools Glynn County Schools Gordon County Schools Grady County Schools Greene County Schools Griffin-Spalding County Schools Gwinnett County Schools Habersham County Schools Hall County Schools Hancock County Schools Haralson County Schools Harris County Schools Hart County Schools Heard County Schools Henry County Schools Houston County Schools Irwin County Schools Jackson County Schools Jasper County Schools Jeff Davis County Schools Jefferson City Schools Jefferson County Schools Jenkins County Schools Johnson County Schools Jones County Schools Lamar County Schools Lanier County Schools Laurens County Schools Lee County Schools Liberty County Schools Lincoln County Schools Long County Schools Lowndes County Schools Lumpkin County Schools Macon County Schools Madison County Schools Marietta City Schools Marion County Schools McDuffie County Schools McIntosh County Schools Meriwether County Schools

Miller County Schools Mitchell County Schools Monroe County Schools Montgomery County Schools Morgan County Schools Murray County Schools Muscogee County Schools Newton County Schools Oconee County Schools Oglethorpe County Schools Paulding County Schools Peach County Schools Pelham City Schools Pickens County Schools Pierce County Schools Pike County Schools Polk County Schools Pulaski County Schools Putnam County Schools Quitman County Schools Rabun County Schools Randolph County Schools Richmond County Schools Rockdale County Schools Rome City Schools Schley County Schools Screven County Schools Seminole County Schools Social Circle City Schools Stephens County Schools Stewart County Schools Sumter County Schools Talbot County Schools Taliaferro County Schools Tattnall County Schools Taylor County Schools Telfair County Schools Terrell County Schools Thomas County Schools Thomasville City Schools Thomaston-Upson
County Schools Tift County Schools Toombs County Schools Towns County Schools Treutlen County Schools Trion City Schools Troup County Schools Turner County Schools Twiggs County Schools Union County Schools Valdosta City Schools Vidalia City Schools Walker County Schools

40 Teachers Retirement System of Georgia

STATISTICAL SECTION
PARTICIPATING EMPLOYERS

i Walton County Schools Ware County Schools Warren County Schools Washington County Schools
> Wayne County Schools Webster County Schools Wheeler County Schools White County Schools Whitfield County Schools Wilcox County Schools Wilkes County Schools Wilkinson County Schools Worth County Schools
Public Libraries
Athens Regional Library Bamesville-Lamar County
Library Bartow County Library Bartram Trail Regional Library Brooks County Library Brunswick Regional Library Chatham-Effingham-Liberty
Regional Library Chatsworth-Murray County
Library Chattooga County Library Cherokee Regional Library Chestatee Regional Library Clayton County Regional
Library Coastal Plains Regional Library Cobb County Regional Library Conyers-Rockdale Library Cook County Library Dalton Regional Library DeKalb County Public Library Desoto Trail Regional Library Dougherty County Public
Library East Central Georgia Regional
Library Elbert County Library Fitzgerald-Ben Hill County
Library Flint River Regional Library Gwinnett-Forsyth Regional
Library Hart County Library Hawkes Library Henry County Library

Houston County Public Library Irwin County Library Jefferson County Regional
Library Kinchafoonee Regional Library Lake Blackshear Regional
Library Lee County Library Lincoln County Library M.E. Roden Memorial Library Mary Vinson Memorial Library Middle Georgia Regional
Library Moultrie-Colquitt County
Library Mountain Regional Library Newnan-Coweta Public
Library Newton County Library Northeast Georgia Regional
Library Ocmulgee Regional Library Oconee Regional Library Ohoopee Regional Library Okefenokee Regional Library Paulding County Library Piedmont Regional Library Pine Mountain Regional
Library Roddenberry Memorial Library Sara Hightower Regional
Library Satilla Regional Library Screven-Jenkins Regional
Library Sequoyah Regional Library South Georgia Regional Library Southwest Georgia Regional
Library Statesboro Regional Library Thomas County Public Library Thomas Public Library Toccoa-Stephens County Public
Library Troup-HarriS'Coweta Regional
Library Uncle Remus Regional Library Victoria Evans Memorial
Library Warren County Public Library West Georgia Regional Library

Technical Schools
Albany Technical Institute Altamaha Technical Institute Athens AreaTechnical Institute Augusta Technical Institute Ben Hill Irwin Area Vocational
Technical Carroll Technical Institute Chattahoochee Area
Vocational Technical School Columbus Technical Institute CoosaValleyTechnical Institute Flint River Technical Institute Griffin Technical Institute Heart of Georgia Technical
Institute Lanier Technical Institute Macon Technical Institute Middle Georgia Technical
Institute Moultrie Area Technical
Institute North Georgia Technical
Institute North Metro Technical Institute Ogeechee Technical Institute Okefenokee Technical Institute Pickens Technical Institute South Georgia Technical
. Institute Southeastern Technical
Institute Swainsboro Area Vocational
Technical School Thomas Technical Institute Valdosta Area Vocational
Technical School Walker Technical School West Georgia Technical
Institute

Regional Educational Service Agencies
Central Savannah River Area R.ESA
Chattahoochee Flint RESA Coastal Plains RESA First District RESA Griffin RESA Heart of Georgia RESA Metro RESA Middle Georgia RESA North Georgia RESA Northeast Georgia RESA Northwest Georgia RESA Oconee RESA Okefenokee RESA Pioneer RESA Southwest Georgia RESA West Georgia RESA
Other Agencies
Board of Regents of the University System of Georgia
Cooperative Extension Service Department of Human Resources Georgia Association of Educators Georgia Department of
Education Georgia Department of
Technical and Adult Education Georgia High School Association Georgia Public T elecommunications Professional Standards Commission

Teachers Retirement System of Georgia 41

STATISTICAL SECTION
SUMMARY OF INVESTMENT YIELDS
(Millions of dollars)

Cost of investments: Beginning of year................................. End of year............................................ Subtotal............................................
Average cost............................................
Earned income for the year: Dividend and interest income........... Net gain on securities exchanged . . . . Total................................................
Yield (Earned income divided by average cost).................................

1996

Fiscal Year Ended June 30,

1995

1994

1993

1992

$ 15,509 17,715
33,224 $ 16,612

$ 13,933 15,509 29,442
$ 14,721

$ 12,480 13,933 26,413
$ 13,207

$ 11,312 12,480 23,792
$ 11,896

$ 10,091 11,312 21,403
$ 10,702

$ 1,004 1,091
$ 2,095

$ 923 $ 853 $

512

360

$ 1,435 $ 1,213 $

788 $ 746

195

280

983 $ 1,026

12.6%

9.7%

9.2%

8.3%

9.6%

Cost of investments: Beginning of year................................. End of year............................................ Subtotal............................................
Average cost............................................
Earned income for the year: Dividend and interest income........... Net gain on securities exchanged .... Total................................................
Yield (Earned income divided by average cost).................................

1991

Fiscal Year Ended June 30,

1990

1989

1988

1987

$ 8,924 10,091 19,015
$ 9,508

$ 7,720 8,924 16,644
$ 8,322

$ 6,641 7,720 14,361
$ 7,181

$ 5,692 6,641 12,333
$ 6,167

$ 4,887 5,692 10,579
$ 5,290

$ 711 $ 643 $ 556 $ 479 $ 429

175

254

189

219

251

$ 886 $ 897 $ 745 $ 698 $ 680

9.3%

10.8%

10.4%

11.3%

12.9%

42 Teachers Retirement System of Georgia

STATISTICAL SECTION
DETAILED INVESTMENT LISTING

Temporary Investments

Face Amount $ 216,716,000

Issuer
United States Government Obligations (Subject to repurchase agreement due 7'l-96)

U.S. Government, Corporate and Other Bonds

Book Value $ 216,716,000

Face Amount

$

520,000

4,602,950

26,690,688

475,000,000

2,550,000,000

1,800,000,000

600,000,000

855,000,000

820,000,000

665,000,000

1,470,000,000 360,000,000

$ 9,626,813,638

Issuer
Cairo Telephone Company Dow Chemical General Electric U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note

Interest Rate %
8.000 11.250 8.350 6.250 6.875 6.000 6.500 5.875 5.625 6.250 6.875 6.500

Year of Maturity
2001 2000 2004 2023 2025 2026 2005 2005 2006 2001 2006 2001

Book Value

$

520,000

4,602,950

26,690,688

391,503,039

2,306,642,724

1,519,840,282

562,554,262

784,225,670

723,580,520 628,327,332

1,405,452,047 345,492,366

$ 8,699,431,880

Teachers Retirement System of Georgia 43

STATISTICAL SECTION
DETAILED INVESTMENT LISTING
Common Stock Holdings

Shares
4,934,700 1,390,000
852,600 1,167,284 1,757,400 2,199,400 2,431,100 1,519,330 1,898,600
647,300 2,817,400 1,593,200 1,110,700
995,800 1,272,800
999,400 1,149,428
874,600 1,061,000
513,900 2,100,460
266,900 1,173,400
630,754 2,609,000 3,054,400 1,050,000
325,900 3,817,400
400,100 2,311,200
648,100 1,069,700 1,889,900
484,200 617,300

Company
Abbott Laboratories Air Products & Chemicals, Inc. Airtouch Communications ALCO Standard Corp. American Express American General Corp. American Home Products Corp. American International Group, Inc. American Telephone & Telegraph Ameritech Corp. Amoco Corp. AMP, Inc. Anheuser-Busch Cos., Inc. Atlantic Richfield Co. AVNET BankAmerica Corp. Bear Steams Companies, Inc. Bell Atlantic Corp. BellSouth Corp. Boston Scientific Corp. Bristol Myers Squibb Co. British Petroleum PLC Caliber System Inc. Chase Manhattan Corp. Chevron Corp. Chubb Corp. Cisco Systems Inc. Clorox Co. Coca Cola Co. Colgate Palmolive Co. Columbia Healthcare Corp. Consolidated Edison Co. of New York Cooper Industries, Inc. Deluxe Corp. Dow Chemical Co. DTE Energy Holding Co.

Book Value
$ 110,049,296 35,068,922 26,027,292 23,116,919 77,532,811 46,854,051 81,035,445 100,040,581 85,405,898 30,913,047 147,789,070 64,920,243 41,935,589 105,979,007 47,161,404 47,286,099 23,711,232 52,040,917 34,407,449 22,181,762 134,760,940 26,442,034 42,274,916 29,200,012 117,316,704 127,332,911 48,343,450 26,872,155 57,303,520 22,629,657 68,504,793 20,090,588 40,218,785 61,636,920 29,202,583 20,166,383

44 Teachers Retirement System of Georgia

STATISTICAL SECTION
DETAILED INVESTMENT LISTING
Common Stock Holdings (continued)

Shares
1,225,900 497,200 659,800
1,542,800 2,426,926 1,938,300 2,675,300 4,738,700 2,377,645
530,639 459,720 745,000 ' 280,800 1,904,300 528,300 1,132,800 1,874,000 1,273,400 1,083,888 2,112,988 1,134,900 645,100 2,380,600 2,319,549 655,800 1,889,100 1,763,300 800,000 1,605,800 5,776,600 551,900 1,029,260 599,772 361,600 887,900 2,617,900

Company
Dun & Bradstreet Corp. DuPont E. I. DeNemours Duracell International, Inc. Electronic Data Systems Corp. Eli Lilly and Co. Emerson Electric Co. Exxon Corp. Federal National Mortgage Assoc. First Chicago NBD Corp. First Data Corp. First Union Corp. Fluor Corp. EMC Corp. Ford Motor Co. FPL Group Inc. Franklin Resourses Inc. General Electric Co. General Re Corp. Gillette Co. Goodyear Tire and Rubber Co. GTE Corp. Hershey Foods Corp. Hewlett Packard Co. Home Depot IBM International Business Machines Intel Corp. International Flavors and Fragrances International Paper Co. JC Penney Company, Inc. Johnson & Johnson Johnson Controls Kimberly Clark Lockheed Martin Corp. Loews Corp. Lowes Companies, Inc. Lubrizol Corp.

Book Value
$ 62,532,139 27,923,548 30,285,727 60,283,028 83,562,011 89,234,726 127,978,717 102,387,697 74,330,109 39,292,645 20,252,495 36,389,501 20,152,792 62,922,483 20,213,183 47,306,698 75,427,821 145,794,964 40,886,024 74,934,536 41,061,320 35,608,562 120,311,551 93,620,017 60,322,850 79,041,591 70,130,219 28,422,337 75,458,527 96,563,969 29,751,024 62,380,762 45,599,075 22,108,706 26,670,557 83,502,755

Teachers Retirement System of Georgia 45

STATISTICAL SECTION
DETAILED INVESTMENT LISTING
Common Stock Holdings (continued)

Shares
789,900 4,646,200 1,345,900 1,845,200 4,228,100
862,600 1,522,800 1,189,200 1,575,300 2,056,500
500,000 1,281,900 1,160,000 2,797,500 5,816,200 3,723,300
394,800 2,359,100
880,400 2,535,744
692,300 677,500 737,000 2,485,800 1,151,600 937,100 3,286,000 655,800 517,000 1,505,700 1,482,900 1,967,100 481,000 1,202,300 514,500 720,250

Company
Marsh & McLennan Companies., Inc. McDonalds Corp. MCI Communications Medtronic, Inc. Merck & Co., Inc. Microsoft Corp. Minnesota Mining & Manufacturing Co. Mobil Corp. Morton International, Inc. Motorola, Inc. Nokia Corporation Norfolk Southern Corp. Office Depot, Inc. Oracle Corporation PepsiCo, Inc. Pfizer, Inc. Phelps Dodge Corp. Philip Morris Companies., Inc. PPG Industries,Inc. Procter & Gamble Co. Ralston Purina Group Royal Dutch Petroleum Rubbermaid, Inc. SAFECO Corp. Sara Lee Corp. SBC Communications Sobering Plough Corp. Seagate Technology, Inc. Silicon Graphics, Inc. Sprint Corp. Super Valu Stores, Inc. Sysco Corp. Texaco, Inc. Texas Instmments, Inc. Texas Utilities Co. Torchmark Corp.

Book Value
$ 59,592,811 112,355,344 34,411,149 31,465,356 157,904,171 83,215,214 57,068,384 97,787,401 39,871,741 81,370,827 35,755,678 65,256,245 24,840,594 76,707,448 86,019,845 136,507,667 22,898,436 158,668,093 30,364,502 128,780,890 26,679,505 88,455,154 20,078,334 54,934,898 25,316,043 35,537,255 117,922,830 32,870,335 20,897,200 35,902,630 36,050,903 54,061,281 34,583,899 64,421,086 20,206,621 30,957,171

46 Teachers Retirement System of Georgia

STATISTICAL SECTION
DETAILED INVESTMENT LISTING
Common Stock Holdings (continued)

Shares
617,400 400,500 2,281,700 987,600 470,900 750,000 2,151,900 1,744,129 2,095,400 2,485,275 1,264,300 3,002,900

Company
Unilever NY Union Pacific Corp. United Healthcare United Technologies Corp. V.F. Corp. Vodafone Group PLC Wal-Mart Stores, Inc. Walt Disney Co. Warner Lambert Co. Westvaco, Corp. Whirlpool Corp. WMX Technology Common Stock Holdings under $20 million
Total Common Stock Holdings

Book Value
$ 83,173,900 20,998,300 117,061,536 53,348,165 22,432,902 30,154,511 37,511,928 63,808,948 72,547,570 52,446,632 40,862,952 90,100,317
1,599,769,817
$8,792,332,470

Teachers Retirement System of Georgia 47

STATISTICAL SECTION
DETAILED INVESTMENT LISTING

Mortgages

Borrower and Mortgaged Property
American Pioneer (Condominiums, Ponce Inlet, Florida)
Peachtree Georgia Associates (J.C. Penney Building, Atlanta, Georgia)

Interest Rate %
11.125%

Year Last Pmt. Due
2010

7.875

2001

Balance Out standing on Loan
$ 118,229
3,675,164 $ 3,793,393

Real Estate Investments

Description of Property
Beta Building, Two Northside 75 (Constitutes a one-half interest in property)

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

Book Value $ 2,522,905

48 Teachers Retirement System of Georgia

TEACHERS
RETIREMENT
SYSTEM OF GEORGIA
Suite 400 Two Northside 75 Atlanta, Georgia 30381
(404)352^6500