Teachers Retirement System of Georgia, comprehensive annual financial report, fiscal year ended June 30, 2001 [Jan. 2002]

TEACHERS
RETIREMENT
SYSTEM OF GEORGIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
A Component Unit of the State of Georgia F i s c a l Y e a r E n d e d J u n e 3 0 , 2001
Jeffrey L. Ezell Executive Director Teachers Retirement System of Georgia Two Northside 75, Suite 400 Atlanta, Georgia 30318
(404) 352-6500 (800) 352-0650 (Within Georgia)
www.trsga.com

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 Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 General Purpose Financial Statements: Statements of Plan Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Statements of Changes in Plan Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Required Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Additional Information - Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . 23
INVESTMENT SECTION Investment Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Time-Weighted Rates of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Asset Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Portfolio Detail Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ACTUARIAL SECTION Actuary's Certification Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Summary of Actuarial Assumptions and Methods . . . . . . . . . . . . . . . . . . . . . . . . 29 Actuarial Valuation Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
STATISTICAL SECTION Participating Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Member Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Benefit Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Revenues and Expenses Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Retired Members by Type of Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
CERTIFICATE OF ACHIEVEMENT
Presented to
Teachers Retirement System of Georgia
For its Comprehensive Annual Financial Report
for the Fiscal Year Ended June 30, 2000
President
Teachers Retirement System of Georgia 3

INTRODUCTORY SECTION
BOARD OF TRUSTEES
*Dr. John A. Hulsey, Jr. CHAIRMAN
Executive Director Georgia Retired Educators Associa

Dr. Virginia J. Dixon Director of Federal Programs Peach County Board of Education P.O. Box 1018523 Vineville Street Fort Valley, Georgia 31030

*Mrs. Carolyn Baldwin Byrd VICE CHAIRMAN
Chairman & Chief Financial Officer Global Tech Financial
2839 Paces Ferry Road, Suite 810 Atlanta, Georgia 30339

*Mr. W. Daniel Ebersole Director
Office of Treasury & Fiscal Services Suite 1202, West Tower, Floyd Bld.
Atlanta, Georgia 30334

Mrs. Paula H. Gerhardt Bibb County Board of Education
Butler Preschool Center 3705 Earl Street
Macon, Georgia 31204

*Dr. Sandra G. Gustavson Associate Dean for Faculty & Research
McFadden Professor Terry College of Business The University of Georgia Athens, Georgia 30602

Dr. Gloria J. Hardiman Instructional Coordinator DeKalb County School System
1995 Wommack Drive Dunwoody, Georgia 30338

*Mr. Russell W. Hinton State Auditor
254 Washington Street, S.W. Suite 214
Atlanta, Georgia 30334

Mrs. Bobby Jean Moore Teacher
Creekland Middle School 170 Russell Road
Lawrenceville, Georgia 30043

4 Teachers Retirement System of Georgia

*Mr. Charles E. Sward Retired Businessman 1837 Cedar Canyon Drive Atlanta, Georgia 30345
*Investment Committee Member

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL

Teachers Retirement
System of Georgia
November 7, 2001
Board of Trustees Teachers Retirement System of Georgia Atlanta, Georgia
O n behalf of the Board of Trustees, I am pleased to present the Comprehensive Annual Financial Report of the Teachers Retirement System of Georgia for the fiscal year ended June 30, 2001. Responsibility for both the accuracy of the data, and completeness and fairness of the presentation, including 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 System. I trust that you will find this report helpful in understanding your retirement system.
The comprehensive annual financial report is presented in five sections: introductory, financial, investment, actuarial 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 auditors' report, the System's financial statements and required supplementary information. The investment section includes a report on investment activity, investment policies, investment results, and various investment schedules. The actuarial section includes the actuary's certification letter and actuarial assumptions, methods and valuation data. The statistical section includes selected retirement data and includes significant data pertaining to the System 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 Georgia for its comprehensive annual financial report for the fiscal year ended June 30, 2000. This was the thirteenth consecutive year that the Teachers Retirement System

Jeffrey L. Ezell Executive Director
of Georgia has achieved this prestigious award. In order to be awarded a Certificate of Achieve-
ment, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.
Legislation The Georgia General Assembly during its 2001
session did not pass any legislation that substantially impacted the System.
The Georgia General Assembly during its 2000 session passed five pieces of legislation that were signed by the Governor that substantially impacted the System. Unless otherwise noted these changes were effective July 1, 1999.
First, the amount of exclusion of retirement income used in the computation of Georgia taxable net income was increased. The current exclusion amount of $13,000 will be increased to $13,500 for taxable year 2000 and to $14,000 for taxable years 2001 and subsequent years.
Second, an active member may establish credit for graduate study which was interrupted solely for a period of active military service begun during a period in which the military draft was in effect. Previously, credit could not be established for the entire period of graduate study if it was interrupted by military service.
Third, the investment authority of public retirement funds was established in the statutes governing the State's retirement systems. Previously, the investment authority
Teachers Retirement System of Georgia 5

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL

was located in statutes which governed the State's domestic life insurance companies. Also, the authority to invest in corporations or in obligations of corporations of a foreign country was increased from 5 percent to 10 percent and the authority to invest in domestic equities was increased from 50 percent to 60 percent. This legislation became effective January 31, 2000.
Fourth, the "Public Retirement Systems Standard Law" was changed to bring it in conformance with Governmental Accounting Standards Board Statements No. 25 and 27 and subsequent applicable statements.
Fifth, the deadline was changed for any vested member of the System who became an employee of an employer normally covered by the Employees' Retirement System of Georgia (ERS) between January 1, 1997 and July 1, 1998 to elect to remain a member of the System. The deadline was extended from September 30, 1998 to September 30, 2000.
Financial Information The management of the System is charged with
the responsibility of maintaining a sound system of internal accounting controls. The objectives of such a system are to provide management with reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and that they are recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Even though there are inherent limitations in any system of internal control, the management of the System makes every effort to insure that through systematic reporting and internal reviews, errors or fraud are quickly detected and corrected.
ACCOUNTING METHOD -- Financial transactions 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. Investment income is recognized as earned by the System.
The investments of the System are reported at fair value.
ADDITIONS -- The funds necessary to finance retirement benefits are accumulated through the col-

lection of employee and employer contributions and through income on investments. Due to increased membership, contributions were up 3.7% to nearly $1.2 billion in fiscal year 2001. However, total additions were a negative $922 million as a result of a net investment loss of $2.1 billion due to the net depreciation in the fair value of investments during fiscal year 2001.
DEDUCTIONS -- Recurring benefit payments prescribed in the System's plan of retirement, refunds of contributions to terminated employees and the cost of administering the System comprise the total deductions. Deductions for fiscal year 2001 totaled $1.2 billion. This is an increase of 14.8% over fiscal year 2000. This increase resulted primarily from the growth in the number of retirees and in the amount of the average benefit payment.
NET ASSETS -- A reduction in the value of common stocks resulted in the System experiencing a decline in assets during the fiscal year ended June 30, 2001. The net assets of the System were $39.7 billion at June 30, 2001, which was a reduction of $2.1 billion from June 30, 2000.
FUNDING -- The System's funding policy provides for periodic employer contributions at rates which, expressed 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 retirement system is the relationship between the assets and the actuarial accrued liabilities. The greater the level of funding, the larger the ratio of assets accumulated to the actuarial accrued liabilities.
The System continues to grow in strenght as evidenced by the ratio of assets accumulated to the actuarial accrued liabilities. In fact, this ratio increased from 97.2% in 1999 to 102.3% in 2000.
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 Assembly of the State of Georgia and the support of Governor Roy Barnes, the System has been and continues to be funded on an actuarially sound basis thus providing the membership the comfort and security they expect from their retirement system.

6 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
LETTER OF TRANSMITTAL
Other Information INDEPENDENT AUDIT -- The Board of Trust-
ees requires an annual audit of the financial statements of the System by independent certified public accountants. The accounting firm of Deloitte & Touche LLP was selected by the Board. The independent auditors' report on the statements of plan net assets and the related statements of changes in plan net assets is included in the financial section of this report.
ACKNOWLEDGMENTS -- 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 determining compliance with legal provisions, and as a means for determining responsible stewardship of the assets contributed by the System's members, their employers, and the State of Georgia.
The report is being mailed to all employers who have members covered by the System. They form the link between the System and its membership. Their cooperation contributes significantly 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 Governor Roy Barnes, members of the Georgia General Assembly, the staff, the advisors, and to the many people who have worked so diligently to ensure the successful operation of the Teachers Retirement System of Georgia.
Sincerely,
Jeffrey L. Ezell Executive Director
Teachers Retirement System of Georgia 7

INTRODUCTORY SECTION
YOUR RETIREMENT SYSTEM

Financial Highlights

June 30,

2001

2000

Employee Contributions

$ 369,006,000

Employer Contributions

$ 808,480,000

Net Appreciation (Depreciation) in Fair Value

of Investments

$ (3,394,901,000)

Interest and Dividend Income

$ 1,325,955,000

Benefits Paid to Retired Members

$ 1,153,376,000

Member Withdrawals

$ 58,831,000

Interest Credited to Employee Contributions

$ 163,330,000

$ 355,948,000 $ 779,571,000
$ 1,494,190,000 $ 1,325,886,000 $ 1,011,568,000 $ 44,718,000
$ 157,695,000

% Change + 3.7 + 3.7
- 327.2 + Nil + 14.0 + 31.6
+ 3.6

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

194,172

12,563

50,767

$

1,893

191,908

+ 1.2

9,923

+ 26.6

47,105

+ 7.8

$

1,790

+ 5.8

8 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
THE SYSTEM ASSETS
Growth of Total System Assets ($'s in billions)

Total System Assets at June 30, ($'s in thousands)

1996

1997

1998

Equities

$12,831,101 $16,850,878 $20,685,510

Fixed Income

9,243,863 10,504,465 13,268,987

Receivables

368,215 400,502 426,167

Cash, Short-Term

Securities & Other 259,424 366,353 490,089

Total System Assets $22,702,603 $28,122,198 $34,870,753

1999 $23,093,979
14,807,428 409,188
641,047 $38,951,642

2000 $25,288,274
15,642,757 463,968
415,265 $41,810,264

2001 $22,309,783
16,379,674 434,094
542,501 $39,666,052

Teachers Retirement System of Georgia 9

INTRODUCTORY SECTION
ADMINISTRATIVE STAFF AND ORGANIZATION

Jeffrey L. Ezell Executive Director

Stephen J. Boyers Controller
Financial Services Division

Charles W. Cary, Jr. Director
Investment Services Division

Susan E. Garrett Manager
Member Services 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

M. Cathy Hart Manager
Counseling Division

J. Gregory McQueen Director
Information Technology Division
Investment Advisors
Albritton Capital Management Atlanta Capital Management Banc of America Capital Management Diaz-Verson Capital Investments INVESCO Capital Management Montag & Caldwell Earnest Partners NCM Capital Management Group Synovus Trust

10 Teachers Retirement System of Georgia

INTRODUCTORY SECTION
SUMMARY OF PLAN PROVISIONS

Purpose
The Teachers Retirement System of Georgia (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 obligations of the System, (2) to provide statewide counseling 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 members, respectively.
Administration
The statutes provide that the administration of the System be vested in a ten member Board of Trustees 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 Trustees 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 their pleasure. On behalf of the Board, the Executive Director is responsible for the proper operation of the System, engaging such actuarial and other services as shall be necessary to transact business, setting the compensation of all individuals engaged by the System and paying expenses necessary for operations. 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 comprising the University System of Georgia who are employed 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 of the System as a condition of employment. Covered positions include teachers, administrators, supervisors, clerks, teacher aides, secretaries, paraprofessionals, public school nurses, employees of the Agricultural Extension Service, and county and regional librarians. Public school lunchroom, maintenance, warehouse and transportation managers and supervisors 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 of the following conditions: 1) completion of 10 years of creditable service and attainment of age 60 or 2) completion of 25 years of creditable service.
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
Normal 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 of service. (Please note that any nine (9) or more months of service within a fiscal year constitutes a full year of service and a full year of salary). In the event the member does not have credit for two years of service within the two year salary period, additional salaried months are included to complete two years of service. The resulting product is the monthly retirement benefit under the maximum plan of retirement.
Early Retirement
Any member who has between 25 and 30 years of creditable service 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 of 7% 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 year period must include at least two years of creditable 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 maximum plan. There is no age requirement for disability retirement.

Plan A Maximum Plan of Retirement
This plan produces the largest possible monthly benefit payable to the member only during his or her lifetime. If the death of the retired member occurs prior to his or her having been paid total retirement benefits equal to the member's accumulated contributions including interest, the balance of the retired member's accumulated contributions (including interest) will be paid in a lump sum to the beneficiary 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 Maximum 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 of an optional form of payment is made upon application for retirement and it becomes irrevocable 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 beneficiaries 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 increases 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 This plan of retirement involves a reduced monthly
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 allows the retiring member to select a
specific monthly amount other than provided for in the other options , which will be paid for life following a retiree's death to the living beneficiary. The beneficiary would also receive a pro-rata share of any cost-ofliving 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 a percentage.
Financing the System
The funds to finance the System come from the following sources:
1) Member contributions -- the System member contributes 5% of annual salary,
2) Employer contributions -- current employer contributions are 11.29% of annual salary, and
3) Investment income -- funds may be invested in government bonds, corporate bonds, mortgages, and common and preferred stock.

Teachers Retirement System of Georgia 13

FINANCIAL SECTION
INDEPENDENT AUDITORS' REPORT

Board of Trustees Teachers Retirement System of Georgia

W e have audited the accompanying statements of plan net assets of the Teachers Retirement System of Georgia (the "System") as of June 30, 2001 and 2000, and the related statements of changes in plan net assets 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 financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the plan net assets of the System as of June 30, 2001 and 2000, and the changes in plan net assets for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The required supplementary schedules and additional information listed in the Financial Section of the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. These required supplementary schedules and additional information are 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, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
The Introductory, Investment, Actuarial and Statistical Sections listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the System. Such additional information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it.
September 7, 2001

14 Teachers Retirement System of Georgia

FINANCIAL SECTION
STATEMENTS OF PLAN NET ASSETS
(Thousands of dollars)

ASSETS
CASH
RECEIVABLES: Interest and dividends Due from Fulton County School Employees Pension Fund Employee and employer contributions
Total receivables
INVESTMENTS - at fair value: Short-term Obligations of the U.S. Government and its agencies, corporate, and other bonds Common stocks Mortgage loans and real estate
Total investments
Total assets
LIABILITIES
ACCOUNTS PAYABLE AND OTHER
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS
(A Schedule of Funding Progress is presented on page 22.)

June 30,

2001

2000

$ 1,201 $ 2,841

266,333 71,577 96,184
434,094

284,511 87,138 92,319
463,968

537,554
16,379,674 22,309,783
3,746

408,674
15,642,757 25,288,274
3,750

39,230,757 41,343,455

39,666,052 41,810,264

3,429

2,446

$39,662,623 $41,807,818

See notes to financial statements.

Teachers Retirement System of Georgia 15

FINANCIAL SECTION
STATEMENTS OF CHANGES IN PLAN NET ASSETS
(Thousands of dollars)

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

2001

Year Ended June 30,

2000

$41,807,818

$38,949,441

ADDITIONS: Contributions: Employer Employee
Investment Income: Net appreciation (depreciation) in fair value of investments Interest and dividends
Total Less investment expense
Net investment income (loss)
Total additions
DEDUCTIONS: Retirement payments Refunds of employee contributions Administrative expenses, net
Total deductions
NET INCREASE (DECREASE)
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - End of year

808,480 369,006
(3,394,901) 1,325,955 (2,068,946)
31,026 (2,099,972)
(922,486)
1,153,376 58,831 10,502
1,222,709
(2,145,195)
$39,662,623

779,571 355,948
1,494,190 1,325,886 2,820,076
31,874 2,788,202 3,923,721
1,011,568 44,718 9,058
1,065,344
2,858,377
$41,807,818

See notes to financial statements. 16 Teachers Retirement System of Georgia

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 2001 and 2000

A. Plan Description:
The Teachers Retirement System of Georgia (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 Governmental Accounting Standards Board Statement ("GASB") 25. On October 25, 1996, the Board of Trustees created the Supplemental Retirement Benefit Plan of the Georgia Teachers ("SRBP"). SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code ("IRC 415") as a portion of the System. The purpose of the SRBP is to provide retirement benefits to employees covered by the System whose benefits are otherwise limited by IRC 415. 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 component units. The decision to include a potential component unit in the reporting entity is made by applying the criteria set forth by GASB 14. The concept underlying the definition 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 University System of Georgia (except those professors and principal administrators electing to participate in an optional retirement plan), and certain other designated employees in educational-related work are eligible for membership.

As of June 30, 2001, participation in the System is as follows:

Retirees and beneficiaries currently receiving benefits

50,767

Terminated employees entitled to benefits but not yet receiving benefits

36,503

Active plan members

194,172

Total

281,442

Employers

353

Retirement Benefits:
The System provides service retirement, disability retirement, and survivor's benefits. Title 47 of the Official Code of Georgia assigns the authority to establish and amend the benefit provisions of the System to the State Legislature. A member is eligible 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.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable 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 adjustments, based on the CPI, will be made in future years. Retirement benefits are payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.

Teachers Retirement System of Georgia 17

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 2001 and 2000

A. Plan Description:

Death and Disability Benefits:
Retirement benefits also include death and disability 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 retirement 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 member and employer contributions as adopted and amended by the Board of Trustees.
Contributions required for fiscal year 2001 were based on the June 30, 1999 actuarial valuation as follows:

Member
Employer: Normal Unfunded accrued liability Expenses

5.00%
8.81% 2.33% .15%

Total

11.29%

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. Member contributions with accumulated interest are reported as net assets held in trust designated for that purpose.
SRBP:
Beginning July 1, 1997, all members and retired former members in the System are eligible to participate in this Plan whenever their benefits under the System exceed the limitation on benefits imposed by IRC 415. At June 30, 2001 and 2000,

there were 24 and 21 members, respectively, eligible to participate in this portion of the System. Employer contributions of $119,000 and $176,000 and retirement payments of $177,000 and $118,000 under the SRBP are included in the Statement of Changes in Plan Net Assets for the years ended June 30, 2001 and 2000, respectively.
B. Summary of Significant Accounting B. 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 additions in the period in which the members provide services. Retirement and refund payments are recognized as deductions when due and payable.
Investments:
Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
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 mortgage loans and real estate is owned equally by the System and the Employees' Retirement System of Georgia.The System incurred approximately $624,000 and $613,000 in rental expense for the years ended June 30, 2001 and 2000, respectively, which is included in administrative expenses. The remainder of the building is leased to outside parties, and this rental revenue is included in interest and dividends.
Use of Estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of plan net assets and changes therein. Actual results could differ from

18 Teachers Retirement System of Georgia

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 2001 and 2000

B. Summary of Significant Accounting B. Policies and Plan Asset Matters:
Use of Estimates (continued):
those estimates. The System utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of plan net assets.
New Accounting Pronuncement: Effective July 1, 2001 the System is required to
adopt GASB Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments. This Statement modifies the external financial reporting requirements for public employee retirement systems in two ways. First, it requires that management's discussion and analysis be included as required supplementary information, and second, it provides an option to present a separate column for each defined benefit pension plan and each related postemployment health care plan the System administers in the statements of plan net assets and statements of changes in plan net assets, rather than in separate combining statements.
C. Investment Program:
The System maintains sufficient cash to meet its immediate liquidity needs. Cash not immediately needed is invested in either short-term or long-term investment securities as directed by management. All investments are held by agent custodial banks in the name of the System.
Cash: Cash balances are fully insured through the
Federal Deposit Insurance Corporation, an agency of the U.S. Government. Fiduciary accounts, such as those of the System, are granted $100,000 of insurance coverage per participant in the System. Temporary cash on hand not committed for a specific purpose is invested overnight.

Investments:
GASB 3 requires governmental entities to categorize investments as an indication of the level of custodial credit risk assumed by the System at yearend. Category 1 includes investments that are insured or registered or for which the securities are held by the System or its agent in the System's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent in the System's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty, or by its trust department or agent but not in the System's name. All of the investment securities held by the System at June 30, 2001 and 2000 are of Category 1 risk level. The System's investments in mortgage loans and real estate are not securities as defined by GASB 3 and are therefore not categorized. The System is authorized by its Board of Trustees (through statutes) to invest in a variety of shortterm and long-term securities, as follows:
a) Short-Term:
Short-Term investments are authorized in the following instruments:
Repurchase and reverse repurchase agreements, whereby the System and a broker exchange cash for direct obligations of the U.S. Government or obligations unconditionally guaranteed by agencies of the U. S. Government or U. S. corporations. The System or broker promises to repay the cash received plus interest at a specific date in the future in exchange for the same securities. The System held repurchase agreements of $537, 554,000 and $408,674,000 at June 30, 2001 and 2000, respectively.
U.S. Treasury obligations with varying terms up to 360 days.
Other short-term securities authorized, but not currently used, are:
Commercial paper, with a maturity of 180
days or less. Commercial paper is an unsecured promissory note issued primarily by corporations for a specific amount and maturing on a specific day. The System consid-

Teachers Retirement System of Georgia 19

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 2001 and 2000

C. Investment Program:
Short-Term (continued):
ers for investment only commercial paper of the highest quality, rated P-1 and/or A-1 by national credit rating agencies.
Master notes, an overnight security admin-
istered by a custodian bank and an obligation of a corporation whose commercial paper is rated P-1 or A-1 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 than 5% of total System assets in any one name. Maturities of these securities vary up to a period of 40 years to provide the System with flexibility necessary to meet changing market conditions. The System held corporate bonds of $12,753,000 and $17,256,000 at June 30, 2001 and 2000, respectively.
U.S. and foreign government obligations with varying terms up to 30 years. Quality and call requirements of corporate bonds are applicable. The System held U.S. government obligations of $16,366,921,000 and $15,625,501,000 at June 30, 2001 and 2000, respectively.
Private placements are authorized under the same general restrictions applicable to corporate bonds.
Mortgage investments are authorized to the extent that they are secured by first mortgages on improved real property located in the State of Georgia having a loan-to-value ratio no higher than 75%. Mortgages as a group cannot exceed 10% of total assets or 1% for any one loan.

Equity securities are also authorized (in statutes) for investment as a complement to the System's fixed-income portfolio and as a long-term inflation hedge. By statute, no more than 60% of the total invested assets may be placed in equities and no more than 10% in any one corporation. Equity holdings in any one corporation may not exceed 5% of the outstanding equity of the issuing corporation.
The equity portfolio is managed by the Investment Services Division (the "Division") in conjunction with independent advisors. Buy/ sell decisions are based on securities meeting rating criteria established by the Board of Trustees, in-house research considering such things as yield, growth and sales statistics, and analysis of independent market research. Equity trades are approved and executed by the Division's staff. Common stocks eligible for investment are approved by the Investment Committee of the Board of Trustees before being placed on an approved list.
D. Investments Lending Program:
State statutes and board of trustees policies permit the System to lend its securities to brokerdealers with a simultaneous agreement to return the collateral for the same securities in the future. The System is presently involved in a securities lending program with major brokerage firms. The System lends equity and fixed income securities for varying terms and receives a fee based on the loaned securities' value. During a loan, the System continues to receive dividends and interest as the owner of the loaned securities. The brokerage firms pledge collateral securities consisting of U.S. Government and agency securities, mortgage-backed securities issued by a U.S. Government agency, and U.S. corporate bonds. The collateral value must be equal to at least 102% to 110% of the loaned securities' value, depending on the type of collateral security.
Securities loaned totaled $16,877,869,597 and $16,202,326,000 at market value at June 30, 2001 and 2000, respectively. The collateral value was

20 Teachers Retirement System of Georgia

FINANCIAL SECTION
NOTES TO FINANCIAL STATEMENTS
Years Ended June 30, 2001 and 2000

D. Investment Program:

(continued):
equal to 104.3% and 103.9% of the loaned securities value at June 30, 2001 and 2000, respectively. The loaned securities are classified as Category 1 investments (See Note C) based on the custodial arrangements for the collateral securities.
Loaned securities are included in the accompanying Statements of Plan Net Assets since the System maintains ownership. The related collateral securities are not recorded as assets on the System's Statements of Plan Net Assets, and a corresponding liability is not recorded, since the System is deemed not to have the ability to pledge or trade the collateral securities. In accordance with the criteria set forth in GASB 28, the System is deemed not to have the ability to pledge or sell collateral securities since the System's lending contracts do not address whether the lender can pledge or sell the collateral securities without a borrower default, the System has not previously demonstrated that ability, and there are no indications of the System's ability to pledge or sell the collateral securities.

E. Administrative Expenses:

Administrative expenses are reported in the financial statements; however, the actual accounting for the expenses is performed in a separate Expense Fund. Administrative expenses paid out of System earnings are as follows:

Year Ended June 30,

2001

2000

Salaries and Employee Benefits $ 7,907,879

Other Operating Expenses

4,109,537

Total Administrative Expenses 12,017,416

$ 7,122,485 3,305,448 10,427,933

Less Reimbursement by other State

Retirement Systems for services

rendered on their behalf

1,515,325

1,369,743

Net Administrative Expenses $10,502,091 $ 9,058,190

F. Due From Fulton County School H.Employees Pension Fund:
As of July 1, 1988, substantially all members of the Fulton County School Employees Pension Fund became 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 27 remaining annual installments.

Teachers Retirement System of Georgia 21

FINANCIAL SECTION

REQUIRED SUPPLEMENTARY INFORMATION
(Thousands of dollars) (See Independent Auditors' Report)
Schedule of Funding Progress

The actuarial value of assets recognized a portion of the difference between the market value of assets and the

expected actuarial value of assets, based on the assumed valuation rate of return. The amount recognized each

year is 20% of the difference between market value and expected actuarial value. The actuarial value of the

assets is limited to a range of between 80% and 120% of market value.

UAAL/

Actuarial

Unfunded

(Funding Excess)

Actuarial

Accrued

AAL

Annual

as a

Actuarial Value of Liability (AAL) (UAAL)/

Funding Covered Percentage of

Valuation Plan Assets -Entry Age (Funding Excess)

Ratio Payroll Covered Payroll

Date

(a)

(b)

(b-a)

(a/b)

(c)

[(b-a)/c]

6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00

$ 16,335,944 18,750,568 22,496,125 27,894,985 31,832,431 35,675,729

$ 19,771,740 22,163,755 24,895,047 28,798,984 32,763,470 34,876,171

$ 3,435,796 3,413,187 2,398,922 903,999 931,039 (799,558)

82.6% 84.6 90.4 96.9 97.2 102.3

$ 4,712,292 5,086,924 5,467,905 5,951,898 6,832,674 7,218,644

72.9% 67.1 43.9 15.2 13.6 (11.1)

Information prior to 1995 is not available in accordance with the parameters of GASB 25.

Schedule of Employer Contributions

The required employer contributions and percent of those contributions actually made are presented in the schedule.

State

Year Ended

Annual Required

Percentage

June 30,

Contribution

Contributed

1995 1996 1997 1998 1999 2000

$556,522 600,766 652,928 710,409 776,178 779,571

100% 100 100 100 100 100

Notes to Required Supplementary Information

The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Since the previous valuation on June 30, 1999, investment rate of return, rates of salary increases, rate of inflation and remaining amortization period have been revised to more closely reflect the actual and anticipated experience of the System. Additional information from the actuarial valuations for the most recent two year period are as follows:

Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions:
Investment Rate of Return Projected Salary Increases Inflation Rate Post-Retirement Cost of Living Adjustment

June 30, 2000 Entry Age Level Percent of Pay, open 40 Years 5-Year Smoothed Market
7.50% 3.75% to 8.00% 3.75% 3% Annually

June 30, 1999 Entry Age Level Percent of Pay, open 7 Years 5-Year Smoothed Market
7.00% 3.25% to 6.00% 3.25% 3% Annually

22 Teachers Retirement System of Georgia

FINANCIAL SECTION

ADDITIONAL INFORMATION ADMINISTRATIVE EXPENSES
(See Independent Auditors' Report)

Year Ended June 30,

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

2001
$5,839,577 1,202,332 765,338 55,648 44,984 7,907,879

2000
$5,238,572 1,099,820 686,606 59,821 37,666 7,122,485

Communications: Postage Publications and printing Telecommunications Travel
Total communications

195,028 111,291 321,146 23,646
651,111

181,413 127,839 341,538 12,891
663,681

Professional Services: Computer services Contracts Actuarial services Audit fees Legal services Medical services 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

1,698,562 233,986 87,194 47,392 36,000 97,255
2,200,389
622,335 1,814
624,149
366,539 26,186 49,905 71,515 22,081 7,456 90,206 633,888 12,017,416

1,307,806
79,109 46,866 36,149 85,989 1,555,919
611,330 1,242
612,572
226,188 19,521 55,036 60,087 15,565 6,210 90,669 473,276 10,427,933

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

1,515,325 $10,502,091

1,369,743 $9,058,190

Teachers Retirement System of Georgia 23

INVESTMENT SECTION
INVESTMENT OVERVIEW

T he Teachers Retirement System (the System) experienced a decline in assets in the fiscal period ended June 30, 2001 for the first time in seven years. During the year the total investments of the System decreased from $41.3 billion to $39.2 billion. Income for the period was over $1.3 billion.
As in previous years, maintaining quality was a primary goal and was successfully met. "Conservation of Capital" and "Conservatism" continue to be the principal guides in investment decisions. The Board of Trustees continued to use a diversified portfolio to accomplish these objectives.
Returns for rolling three and five year periods are presented in this section. These longer time periods, in our opinion, allow for more valid evaluation of returns, both in absolute terms and relative to an asset class index, by reducing emphasis on the short-term volatility of markets. Rates of return are calculated by using a modified "Dietz time-weighted method" which is in accordance with the Association for Investment Management and Research (AIMR) objectives.
Studies undertaken to evaluate the investment returns of pension funds over very long time horizons indicate that the asset allocation decision has the most impact on the fund's returns. Although the returns for the various asset categories vary from year to year, over the long term equities have outperformed fixed income and cash by a very wide margin. For that reason, the System has maintained a maximum equity exposure with the remainder of the fund in fixed income securities designed to generate income and preserve capital.
Both U.S. and worldwide economic growth rates slowed during the year but remained positive. U.S. unemployment rates rose but are still at historically low levels. Inflation increased somewhat but seems to have peaked in the first quarter of 2001. The dichotomy of strong consumer spending and weak capital or business spending, particularly on technology, continued throughout the year in the U.S.

The equity market broke its lengthy string of positive returns with most indexes in negative territory for the year ended June 30, 2001. Among individual companies, returns varied a great deal depending upon the company's size, industry and exposure to global markets. Index returns at the extremes varied from -45% for the NASDAQ Composite, which is heavily weighted in technology stocks to +9% for the Standard & Poor's Mid Cap 400. The S&P 500 returned -15% while the Dow Jones Industrials gained 2% and the foreign companies in the MSCI EAFE suffered losses of 24%.
Returns for the fixed income markets were above average this year as yields on long term Treasury bonds dropped from 6.1% in June 2000 to 5.8% at the end of June 2001. The 10-year U.S. Treasury Note returned 8% and the 30-year U.S. Treasury Bond returned 6%. Our primary benchmark, the Lehman Government/Corporate Index, returned 11%. It is a shorter maturity index containing higher yielding corporate bonds as well as Treasuries.
The financial markets continued to be volatile, as has been the case over the last eight years. The System has continued to invest in high quality bonds and stocks as it historically has done. These types of investments have allowed the System to participate in rising markets, while moderating the risks on the downside. New funds continue to be invested in high quality securities.
In summary, the investment status of the System is excellent. The high quality of the System's investments is in keeping with the continued policy of "Conservatism" and "Conservation of Capital."
Prepared by Investment Services Division

24 Teachers Retirement System of Georgia

INVESTMENT SECTION
TIME WEIGHTED RATES OF RETURN

Equities Fixed Income

3-Year: Equities S&P 500
5-Year: Equities S&P 500

1999 2000 2001
27.0% 17.8% 3.2% 29.1% 19.9% 3.9%
26.7% 22.7% 13.6% 27.9% 23.9% 14.5%

3-Year: Equities S&P 500
5-Year: Equities S&P 500

1997 1998
29.1% 29.3% 28.8% 30.3%
19.3% 22.7% 19.7% 23.1%

Total Portfolio

1999 2000 2001

3-Year:

Fixed Income

9.2% 8.6% 5.7%

Lehman Govt/Corp 7.2% 6.0% 6.0%

5-Year:

Fixed Income

9.8% 7.5% 8.8%

Lehman Govt/Corp 7.8% 6.1% 7.4%

1997 1998

3-Year:

Fixed Income

9.9% 10.2%

Lehman Govt/Corp 8.3% 7.9%

5-Year:

Fixed Income

8.2% 8.8%

Lehman Govt/Corp 7.2% 6.9%

1999

3-Year:

Total Portfolio 19.2%

CPI

2.0%

5-Year:

Total Portfolio 19.0%

CPI

2.3%

2000 2001
13.8% 4.3% 2.4% 3.0%
15.9% 11.5% 2.5% 2.6%

1997

3-Year:

Total Portfolio 20.1%

CPI

2.7%

5-Year:

Total Portfolio 14.2%

CPI

2.7%

1998
20.6% 2.0%
16.2% 2.5%

Note
Rates of return are calculated by using a modified "Dietz time-weighted method" which is in accordance with AIMR objectives.
Teachers Retirement System of Georgia 25

INVESTMENT SECTION
ASSET ALLOCATION
Asset Allocation at Fair Value

Asset AAllllooccaattiioonnaattJuJunnee303,0,
Equities Fixed Income Short-Term Securities (1)

1996 1997 1998 1999

2000 2001

57.5% 41.5% 1.0%

60.8% 37.9% 1.3%

60.1% 38.5% 1.4%

59.9% 38.4%
1.7%

61.2% 37.8%
1.0%

56.9% 41.7%
1.4%

Asset AAllllooccaattiioonnaattJuJunnee303,0(,In(Imnimlliiollniso)ns)

Equities

$12,831

Fixed Income

9,244

Short-Term Securities (1)

223

Total Investments

$22,298

$16,851 10,504 366
$27,721

$20,686 13,269
490
$34,445

$23,094 14,807
640
$38,541

$25,288 15,643
412
$41,343

$22,310 16,380 541
$39,231

(1) Short-term securities includes mortgages and real estate.

26 Teachers Retirement System of Georgia

INVESTMENT SECTION
PORTFOLIO DETAIL STATISTICS

Twenty Largest Equity Holdings*

Shares

Company

16,597,800 10,591,968 7,260,400 12,638,900 9,035,504 5,069,012 4,195,460 7,834,000 11,882,200 5,213,100 5,915,340 2,728,000 5,811,000 6,513,500 5,230,800 5,332,000 4,221,758 5,101,700 2,568,700 3,398,288

General Electric Co. Citigroup Inc. Microsoft Corp. Pfizer, Inc. Johnson & Johnson American International Group, Inc. Exxon Mobil Home Depot Intel Corp. Electronic Data Systems Bristol-Myers Squibb Intl Bus. Machines AOL Time Warner Coca Cola Co. Wal-Mart Stores Medtronic, Inc. Tyco International Pepsico Inc. Fannie Mae Proctor & Gamble

Total of 20 Largest Equity Holdings

Total Equity Holdings

Fair Value
$ 809,142,750 559,679,589 530,009,200 506,187,945 451,775,200 430,916,710 366,473,431 364,672,700 347,554,350 325,818,750 309,372,282 308,264,000 307,983,000 293,107,500 255,263,040 245,325,320 230,128,029 225,495,140 218,416,561 216,810,774
$ 7,302,396,271
$ 22,309,783,475

Ten Largest Fixed Income Holdings*

Description

Maturity Date

U.S. Treasury Note U.S. Treasury Note U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Bond U.S. Treasury Note

2/15/11 5/15/06 8/15/19 11/15/27 5/15/16 8/15/22 8/15/23 8/15/17 5/15/17 11/15/04

Total of 10 Largest Fixed Income Holdings

Total Fixed Income Holdings

Interest Rate (%)
5.000 4.625 8.125 6.125 7.250 7.250 6.250 8.875 8.750 5.875

Par Value
$ 3,010,000,000 2,395,000,000 1,169,000,000 1,250,000,000 1,026,000,000 935,000,000 858,000,000 594,000,000 520,000,000 627,000,000

Fair Value
$ 2,920,633,100 2,362,068,750 1,455,405,000 1,287,887,500 1,167,393,060 1,084,020,300 893,126,520 779,066,640 674,211,200 648,556,260
$ 13,272,368,330
$ 16,379,674,201

* A complete listing is available upon request.

Teachers Retirement System of Georgia 27

ACTUARIAL SECTION
ACTUARY'S CERTIFICATION LETTER

200 Galleria Parkway, N.W., Suite 1900 Atlanta, Georgia 30339-5945
October 9, 2001
Board of Trustees Teachers Retirement System of Georgia Suite 400, Two Northside 75 Atlanta, Georgia 30318
Attention: Mr. Jeffrey L. Ezell, Executive Director
Ladies and Gentlemen:
S ection 47-3-23 of the law governing the operation 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 actuarial valuation of the System prepared as of June 30, 2000. The report indicates that employer contributions at the rate of 9.24% of compensation are sufficient to support the benefits of the System. In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the report and the supporting schedules in the actuarial section.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. Since the previous valuation, rates of separation from active service and rates of salary increase have been revised to more closely reflect the actual and anticipated experience of the System. In addition, the interest rate assumption has been changed from 7.0% to 7.5%. The assumptions and methods used for funding purposes meet the parameters set for the disclosures presented in the financial section by Government Accounting Standards Board (GASB) Statement Nos. 25 and 27. The funding objective of the plan is that contribution rates over time will remain level as a percent of payroll. The valuation method used is the entry age normal cost method. The normal contribution
28 Teachers Retirement System of Georgia

rate to cover current cost has been determined as a level percent of payroll. Gains and losses are reflected in the unfunded accrued liability which is negative and being amortized as a level percent of payroll within a 40-year period as a credit against the normal contribution rate.
The System is being funded in conformity with the minimum funding standard set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. In our opinion the System is operating on an actuarially sound basis. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience is performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
Sincerely yours,
Edward A. Macdonald Principal and Consulting Actuary

ACTUARIAL SECTION
SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS

T he laws governing the Teachers Retirement System of Georgia (the "System") provide that an actuary perform an annual valuation of the contingent assets and liabilities of the System and perform at least once every five years an actuarial investigation of the mortality, service, and compensation experience of the members and beneficiaries of the System. The latest actuarial valuation of the System prepared as of June 30, 2000 was made on the basis of disability retirement mortality tables approved by the Board of Trustees on June 20, 1962, interest rate approved by the Board on May 17, 2000, and active service tables and service retirement mortality tables approved by the Board on May 22, 1996.
The more pertinent facts and significant assumptions underlying the computations included in the June 30, 2000 report are as follows:
a) Actuarial Method UsedThe actuarial cost method used to determine funding is the entry age actuarial cost method. Gains and losses are reflected in the unfunded accrued liability. Adopted December 30, 1976.
b) Investment Return71/2% per annum, compounded annually. Adopted May 17, 2000.
c) Earnings ProgressionSalaries are expected to increase 33/4% to 8% annually depending upon the employee's age. Includes inflation at 33/4%. Adopted May 17, 2000.
d) Death, Disability and Withdrawal RatesDeath, disability and withdrawal rates for active employees and service retirement tables are based upon the System's historical experience. The death-after-retirement rates are based on the 1983 Group Annuity Mortality Table (set back one year for males). Adopted May 22, 1996.

e) Asset Valuation Method5-year smoothed market actuarial value. The actuarial value of assets recognizes a portion of the 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 actuarial expected value. The actuarial value of assets is limited to a range between 80% and 120% of market value. Adopted May 26, 1996.

f) Service Retirement BenefitThe 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 creditable service up to 40 years. It is also assumed that certain cost-ofliving adjustments will be made in future years.

g) Actuarially Determined Unfunded Accrued Liability (Funding Excess)The present value of the funding excess, based on unaudited data provided the actuary by the System, was approximately $800 million at June 30, 2000.
h) Required Contributions (% of compensation) Adopted May 23, 2001. Contributions required by the annual actuarial valuation as of June 30, 2000, to be made for the year ended June 30, 2002:

(1) Member (2) Employer:

5.00%

Normal Unfunded accrued liability Expenses

9.62% (0.53)
.15%
9.24%

Teachers Retirement System of Georgia 29

ACTUARIAL SECTION
SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS

Service Retirement:

Adopted May 17, 2000

Annual Rate*

Annual Rate*

Age

Men

Women

Age

Men

Women

50

23%

22%

65

40%

40%

55

21

22

66

30

30

60

20

20

67

30

30

61

20

20

68

30

30

62

30

30

69

30

30

63

20

25

70

100

100

64

24

25

*It is also assumed that 5% of eligible active members will retire each year with a reduced early retirement benefit and

that an additional 15% of active members will retire in their first year of eligibility for unreduced retirement.

Separation Before Service Retirement:

Adopted May 17, 2000

Annual Rate of

Age

Death

Disability

0-4

MEN

20

0.04%

0.09%

39.42%

25

0.04

0.09

17.62

30

0.06

0.14

14.13

35

0.08

0.14

13.54

40

0.11

0.18

12.61

45

0.19

0.23

10.70

50

0.35

0.50

9.00

55

0.57

1.05

10.28

60

0.84

--

--

64

1.24

--

--

WOMEN

20

0.02%

0.05%

27.32%

25

0.03

0.06

14.97

30

0.03

0.07

14.29

35

0.05

0.09

11.84

40

0.07

0.13

10.00

45

0.10

0.22

8.61

50

0.17

0.39

8.49

55

0.25

0.63

10.32

60

0.42

--

--

64

0.64

--

--

Withdrawal Years of Service
5-9
-- 16.52% 7.07 6.35 5.12 4.63
3.89 4.50
-- --
-- 11.22% 7.79 6.62 4.94
4.00 3.47 3.50
-- --

10+
-- -- 4.71% 2.96 1.84 1.44 1.21 1.80 -- --
-- -- 4.55% 3.09 2.31 1.56 1.35 1.57 -- --

30 Teachers Retirement System of Georgia

ACTUARIAL SECTION
ACTUARIAL VALUATION DATA

Active Members

Fiscal Year* 1995 1996 1997 1998 1999 2000 %

Members 163,890 168,961 173,599 180,417 186,822 190,911

Annual Payroll (000's)

Active Members
Average Pay

$ 4,712,292

$ 28,753

5,086,924

30,107

5,467,905

31,497

5,951,898

32,990

6,832,674***

36,573

7,218,644

37,812

Retiree and Beneficiary Data**

% Increase
4.3% 4.7 4.6 4.7% 10.9 3.4%

Fiscal Year* 1995 1996 1997 1998 1999 2000

Number on Roll 35,714 37,326 39,278 41,420 43,732 47,105

Additions 2,632 2,805 3,152 3,388 3,614 4,814

Deletions 1,126 1,193 1,200 1,246 1,302 1,444

Annual Allowances
(000's) $ 585,639
642,781 710,667 785,705 871,129 1,033,324

% Increase In Annual Allowances
13.1% 9.8 10.6 10.6 10.9% 18.6

Average Annual Allowance $ 16,398
17,221 18,093 18,969 19,920 21,937

*
* 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, 2001 is currently in process and was not available for this analysis.
** Valuation data presented exclusive of local system retirees. *** Includes pay raises averaging 6% granted to teachers July 1, 1999.
Teachers Retirement System of Georgia 31

ACTUARIAL SECTION
ACTUARIAL VALUATION DATA

Solvency Test (Thousands of dollars)

Fiscal Year* 1995 1996 1997 1998 1999 2000

Aggregate Actuarial Accrued Liabilities For

(1) Active Member Contributions

(2) Retirees
and Beneficiaries

(3)

Active Members Actuarial

(Employer Financed Value of

Portion)

Assets

$ 2,959,297

$ 6,739,239

$10,073,204 $16,335,944

3,183,299

7,410,171

11,570,285 18,750,568

3,409,260

8,400,514

13,085,273 22,496,125

3,647,880

9,943,066

15,208,038 27,894,985

3,897,847

11,124,459

17,741,164 31,832,431

4,092,231

12,657,649

18,126,291 35,675,729

Portion of Accrued

Liabilities Covered by Assets

(1)

(2)

(3)

100.0% 100.0%%65.9%%

100.0 100.0 70.5

100.0 100.0 81.7

100.0 100.0 94.1

100.0 100.0 94.8

100.0 100.0% 100.0%

* 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, 2001 is currently in process and was not available for this analysis.

Member and Employer Contribution Rates

Fiscal Year
1996 1997 1998 1999 2000 2001

Member
5.00% 5.00 5.00 5.00 5.00 5.00

Employer
11.81% 11.81 11.81 11.95 11.29 11.29

32 Teachers Retirement System of Georgia

ACTUARIAL SECTION
ACTUARIAL VALUATION DATA

Analysis of Financial Experience (Millions of dollars)

Item
Interest added to previous unfunded accrued liability
Accrued liability contribution

Analysis of the Change in Unfunded Accrued Liability Increase (Decrease) During the Years Ended June 30,

2000

1999

1998

1997

1996 1995

$ 65.2 (164.5)

$ 63.3 $ 173.9 $ 256.0 $ 257.7 $ 236.8 (224.3) (235.2) (234.4) (218.0) (233.0)

Experience: Valuation Asset Growth Pensioners' Mortality Turnover and Retirements New Entrants Salary Increases Method Changes (1) Amendments (2) Assumption Changes (3)
Total Increase (Decrease)

(1,533.0) 3.4
643.8 106.4 106.7
-- -- (958.6)
$(1,730.6)

(1,779.3) 9.0
639.9 111.1 1207.3
-- -- --
$27.0

(3,567.4) 6.1
494.5 102.3 277.7
-- 550.4 702.8
$(1,494.9)

(2,140.1) 0.8
345.7 80.9 180.0 -- -- 496.8

(987.6) (3.5)
266.8 69.4 166.3 426.3 -- --

$(1,014.3) $ (22.6)

(335.3) 17.0 298.8 75.4 24.7
(478.9) --
673.5
$ 279.0

(1) Method changes 1996 - Reflects taking into account a one-time 3% benefit increase at retirement. 1995 - Reflects asset valuation method change from book value to market related actuarial value.
(2) Amendments 1998 - Reflects an Ad Hoc cost of living adjustment of 3% to 10% depending upon date of retirement and to provide credit for unused sick leave.
(3) Assumption Changes 2000 -Rates of separation from active service and rates of salary increase have been revised to more closely reflect the actual and anticipated experience of the System. In addition, the interest rate assumption has been changed from 7% to 71/2%. 1998 - Reflects a reduction in interest rate assumption from 7-1/4% to 7% and a decrease in the salary increase assumption by 1/4% at each age. 1997 - Reflects a reduction in interest rate assumption from 7-1/2% to 7-1/4% and a decrease in the salary increase assumption by 1/4% at each age. 1995 - Rates of separation from active service, rates of salary increase and rates of post-retirement mortality revised to more closely reflect the actual and anticipated experience.

Teachers Retirement System of Georgia 33

STATISTICAL SECTION
PARTICIPATING EMPLOYERS

Universities and Colleges
Abraham Baldwin Agricultural College
Albany State University Armstrong Atlantic State
University Atlanta Metropolitan College Augusta State University Bainbridge College Clayton College and
State University Coastal Georgia Community
College Columbus State University Dalton State College Darton College East Georgia College Floyd College Fort Valley State University Gainesville College Georgia College and
State University Georgia Institute of Technology Georgia Perimeter College Georgia Southern University Georgia Southwestern
State University Georgia State University Gordon College Kennesaw State University Macon State College Medical College of Georgia Middle Georgia College North Georgia College and
State University Savannah State University University System of
Skidaway Institute South Georgia College Southern Polytechnic State
University University of Georgia Valdosta State University Waycross College State University of
West Georgia
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

34 Teachers Retirement System of Georgia

STATISTICAL SECTION
PARTICIPATING EMPLOYERS

Union County Schools Valdosta City Schools Vidalia City Schools Walker County Schools 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 Barnesville-Lamar County
Library Bartow County Library Bartram Trail Regional Library Brooks County Library Brunswick Regional Library Camden County 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 Public Library Conyers-Rockdale Library Dalton Regional Library DeKalb County Public Library Desoto Trail Regional Library Dougherty County Public
Library East Central Georgia Regional
Library Elbert County Public Library Fitzgerald-Ben Hill County
Library Flint River Regional Library Forsyth County Public Library

Gwinnett County Public Library Hall County Library Hart County Library Hawkes Library Henry County Library Houston County Public Library Jefferson County Library Kinchafoonee Regional Library Lake Blackshear Regional
Library Lee County Public 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 Peach Public 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 Three Rivers Regional 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 College Altamaha Technical College Athens Technical College Atlanta Technical College Augusta Technical College Central GA Technical College Chattahoochee Technical
College Columbus Technical College Coosa Valley Technical College DeKalb Technical College East Central Technical College Flint River Technical College Griffin Technical College Heart of Georgia Technical
College Lanier Technical College Middle Georgia Technical
College Moultrie Area Technical
College North Georgia Technical
College North Metro Technical College Northwestern Technical College Ogeechee Technical College Okefenokee Technical College Pickens Technical College Sandersville Technical College Savannah Technical College South Georgia Technical
College Southeastern Technical
College Southwest GA Technical
College Swainsboro Technical College Thomas Technical College Valdosta Technical College West Central Technical College West Georgia Technical College
Regional Educational Service Agencies
Central Savannah River Area RESA
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
Baconton Community Charter School
Board of Regents Charles Drew Charter School Cooperative Extension Service Department of Community Health Department of Corrections Department of Industry, Trade
and Tourism Department of Juvenile Justice Department of Natural Resources Department of Public Safety Georgia Association of Educators Georgia Department of
Administrative Services Georgia Department of
Education Georgia Department of Human
Resources Georgia Department of
Technical and Adult Education Georgia High School Association Georgia Public Telecommunications Georgia Regional Transportation Authority Georgia Student Finance Commission Office of Planning and Budget Office of School Readiness Professional Standards Commission Secretary of State South East Health Unit

Teachers Retirement System of Georgia 35

STATISTICAL SECTION
MEMBER DATA
Retirement Payment Statistics
36 Teachers Retirement System of Georgia

STATISTICAL SECTION
MEMBER DATA
Member Withdrawal Statistics
Teachers Retirement System of Georgia 37

STATISTICAL SECTION
BENEFIT DATA

Benefit Expense by Type (Thousands of dollars)

Fiscal Year 1996 1997 1998 1999 2000 2001

Service $580,404
639,404 707,595 786,963 923,049 1,058,683

Type of Retirement

Disability $22,187 24,861 27,700 30,302 34,160 37,118

Survivor Benefit $31,663
35,160 38,760 41,852 48,063 52,528

Supplemental Payments (1)
$5,458 5,199 4,949 4,628 4,334 3,881

Lump Sum Death
Settlement

Total

$ 903 $640,615

1,408

706,032

1,578

780,582

1,446

865,191

1,962 1,011,568

1,166 1,153,376

(1) Supplemental payments to retirees who belong to a local retirement system.

Average Monthly Benefit Payments

Effective Retirement Dates For Fiscal Years Ended June 30,
1996 Average monthly benefit Number of active retirees
1997 Average monthly benefit Number of active retirees
1998 Average monthly benefit Number of active retirees
1999 Average monthly benefit Number of active retirees
2000 Average monthly benefit Number of active retirees
2001 Average monthly benefit Number of new retirants

10-15 16-20

Years Credited Service

21-25

26-30 Over 30

Total

$519.25 $883.14 $1,209.02 $2,017.10 $2,530.72 $1,666.52

425

376

396

830

778

2,805

$571.07 $923.75 $1,346.02 $2,075.97 $2,730.33 $1,765.78

487

390

480

947

848

3,152

$565.70 $943.93 $1,370.06 $2,197.00 $2,718.23 $1,784.64

575

419

485

1,013

896

3,388

$633.16 $995.24 $1,417.05 $2,265.15 $2,901.89 $1,889.58

591

426

522

1,147

928

3,614

$631.36 $1,074.51 $1,432.55 $2,373.56 $3,121.26 $2,076.92

687

414

657

1,819

1,237

4,814

$639.66 $1,184.73 $1,549.76 $2,474.70 $3,198.55 $2,183.38

751

447

633

2,017

1,398

5,246

38 Teachers Retirement System of Georgia

STATISTICAL SECTION
REVENUES AND EXPENSES DATA
(Thousands of dollars)
Revenues by Source

Fiscal Year
1996 1997 1998 1999 2000 2001

Member Contributions
$259,683 281,472 305,752 330,517 355,948 369,006

Employer Contributions

Dollar Amount

Percentage Of Annual
Covered Payroll

$607,275 652,928 710,409 776,178 779,571 808,480

11.81% 11.81 11.81 11.95 11.29 11.29

Net Investment Income (loss)*
$2,919,349
5,233,522 6,561,731 3,889,927 2,788,202
(2,099,972)

Total
$3,786,307 6,167,922 7,577,892 4,996,622 3,923,721 (922,486)

Expenses by Type

Fiscal Year
1996 1997 1998 1999 2000 2001

Retirement Payments
$ 640,615 706,032 780,582 865,191
1,011,568 1,153,376

Net Administrative
Expenses
$5,578 6,157 6,637 7,810 9,058
10,502

Refund Payments
$31,778 36,415 42,098 42,911 44,718 58,831

Total $677,971
748,604 829,317 915,912 1,065,344 1,222,709

Contributions were made in accordance with actuarially determined contribution requirements.
*Effective 1996, in accordance with parameters of GASB 25, Net Investment Income includes net appreciation (depreciation) in fair value of investments.

Teachers Retirement System of Georgia 39

STATISTICAL SECTION
RETIRED MEMBERS BY TYPE OF BENEFIT

Amount of Number of Type of Retirement (1)

Monthly Benefit Retirees A

B

C

D Maximum Opt-1

Option Selected (2) Opt-2 Opt-3 Opt-4

Opt-2 Pop-Up

Opt-3 Pop-Up

$0,001 - 1,250 1,216 331 51 287 547 858

13

248

41

41

13

2

251 - 1,500 4,171 3,070 349 668

84 3,142

52

665

185

49

50

28

501 - 1,750 4,287 3,069 380 648 190 3,098 107

703

238

44

57

40

751 - 1,000 3,695 2,707 378 516

94 2,645 100

572

238

35

54

51

1,001 - 1,250 3,339 2,583 309 420

27 2,323 122

528

229

42

43

52

1,251 - 1,500 3,711 3,083 311 309

8 2,732 149

452

238

40

55

45

1,501 - 1,750 3,869 3,349 268 252

2,813 171

454

258

56

47

70

1,751 - 2,000 4,124 3,713 221 190

3,107 136

404

262

68

66

81

2,001 - 2,250 4,080 3,791 136 153

3,101 165

353

241

70

58

92

2,251 - 2,500 4,074 3,912 80 82

3,178 212

253

233

84

48

66

2,501 - 2,750 3,295 3,181 35 79

2,567 156

246

172

72

31

51

2,751 - 3,000 2,497 2,410 26 61

1,877 133

197

192

47

14

37

3,001 - 3,250 1,945 1,898

9 38

1,435 107

128

151

64

21

39

3,251 - 3,500 1,410 1,366 13 31

1,030

70

120

123

32

14

21

3,501 - 3,750 1,053 1,028

3 22

728

56

101

107

31

10

20

3,751 - 4,000

914 886

3 25

594

56

91

107

40

8

18

4,001 - 4,250

666 655

1 10

423

55

62

74

25

9

18

4,251 - 4,500

565 553

2 10

363

30

57

79

23

5

8

4,501 - 4,750

425 418

1

6

270

18

46

52

24

5

10

4,751 - 5,000

325 320

2

3

204

23

35

38

15

3

7

Over 5,000 1,106 1,074

2 30

631

58

135

161

74

17

30

Totals

50,767 43,397 2,580 3,840 950 37,119 1,989 5,850

3,419

976

628

786

(1) Type of Retirement A - Service B - Disability C - Survivor benefit D - Supplemental payments to retirees who belonged to a local retirement system.
(2) Refer to INTRODUCTORY SECTION, pages 12 and 13 for descriptions of Options.

40 Teachers Retirement System of Georgia

TEACHERS
RETIREMENT
SYSTEM OF GEORGIA
Suite 400 Two Northside 75 Atlanta, Georgia 30318 (404) 352-6500 (800) 352-0650 (Within Georgia)
www.trsga.com
Teachers Retirement System of Georgia 41