Teachers Retirement System of Georgia, comprehensive annual financial report, fiscal year ended June 30, 2008 [Dec. 15, 2008]

TEACHERS RETIREMENT SYSTEM OF GEORGIA
A COMPONENT UNIT OF THE STATE OF GEORGIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
2 0 0 8 Fiscal Year
Ended June 30,

Our mission is to provide Exceptional Service
in the administration of pension benefits and related services to
TRS members, retirees, and employers.

A Component Unit of the State of Georgia
Teachers Retirement System of Georgia Jeffrey L. Ezell Executive Director
Comprehensive Annual
Financial Report
Fiscal Year Ended June 30, 2008

Table ofContents

Teachers Retirement System of Georgia

Introductory Section

Investment Section

Certificate of Achievement

3

Board of Trustees

4

Letter of Transmittal

5

Your Retirement System

8

System Assets

9

Administrative Staff and Organization 10

Summary of Plan Provisions

11

Investment Overview

35

Time-Weighted Rates of Return

36

Asset Allocation at Fair Value

37

Schedule of Fees and Commissions

37

Investment Summary

37

Portfolio Detail Statistics

38

Financial Section

Actuarial Section

Actuary's Certification Letter

39

Independent Auditors' Report

14

Summary of Actuarial Assumptions

40

Management's Discussion & Analysis

15

and Methods

Basic Financial Statements:

Statements of Plan Net Assets

19

Actuarial Valuation Data

42

Statements of Changes in

20

Plan Net Assets

Statistical Section

Notes to Financial Statements

21

Required Supplementary Schedules:

Schedule of Funding Progress

31

Schedule of Employer Contributions 31

Statistical Section Overview

45

Financial Trends

46

Operating Information

48

Notes to Required Supplementary

32

Schedules

Additional Information:

Schedule of Administrative Expenses 33

Schedule of Investment Expenses

34

2008 Comprehensive Annual Financial Report
Certificate ofAchievement

Introductory Section

3

Board ofTrustees

Teachers Retirement System of Georgia

*Dr. Virginia J. Dixon CHAIR
Retired Teacher Elected by the Board of Trustees
Term Expires 6/30/09

*Mr. Russell W. Hinton VICE-CHAIR State Auditor Ex-Officio

Mrs. Susan T. Brantley Classroom Teacher
Appointed by the Governor Term Expires 6/30/11


*Mr. W. Daniel Ebersole Director, Office of Treasury
and Fiscal Services Ex-Officio

Dr. Lorelle C. "Buster" Evans TRS Member
Appointed by the Governor Term Expires 6/30/09


*Mr. Charles D. Moseley, Jr. Citizen of the State
Appointed by the Governor Term Expires 6/30/11

Mrs. Lisa S. Muldrew Classroom Teacher Appointed by the Governor Term Expires 3/31/09

*Mr. Thomas W. Norwood Investment Professional Elected by the Board of Trustees
Term Expires 6/30/11

* Investment Committee Member
4

Dr. Ralph E. Steuer TRS Member
Appointed by the Board of Regents Term Expires 6/30/09

*Mr. J. Alvin Wilbanks Administrator
Appointed by the Governor Term Expires 6/30/10

Introductory Section

Letter ofTransmittal
December 15, 2008 Board of Trustees Teachers Retirement System of Georgia Atlanta, Georgia

2008 Comprehensive Annual Financial Report

I am pleased to present the ComprehensiveAnnual Financial Report of the Teachers Retirement System of Georgia (the "System") for the fiscal year ended June 30, 2008. 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.
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, 2007. This was the twentieth consecutive year that the System has achieved this prestigious award.
In order to be awarded a Certificate of Achievement, 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.
History and Overview
The System was created in 1943 by an act of the Georgia General Assembly to provide retirement security to those individuals who choose to dedicate their

lives to educating the children of the State of Georgia. A summary of the System's benefits is provided on pages 11-13 of this report.
The System is the largest public retirement system in the State of Georgia and the 28th largest retirement system in the United States.
The System is administered by a ten-member Board of Trustees. The Executive Director and over 190 employees are responsible for the administration and operations of the System, which serves more than 377,000 active and retired members, and 389 employers.
Legislation
The 2008 Georgia General Assembly passed several pieces of legislation that impacted the System. Effective July 1, 2008, retirees who retired under a normal service retirement may return to work full-time as a superintendent, principal, pre-K through grade 12 classroom teacher (whose sole responsibility is academic instruction in the classroom), media specialist, counselor, or improvement specialist (allowed only with a regional educational service agency) and continue receiving full retirement benefits, provided they have been retired for a minimum of 12 months. The school system employing the retiree must pay all employee and employer contributions to the System and the retiree is not eligible to accrue any additional employment benefits or receive any further creditable service as a result of re-employment.
The "Protecting Georgia's InvestmentsAct" passed requiring the System to identify all holdings, direct or indirect, in scrutinized companies by October 1, 2008, and notify the companies of such status, encourage them to cease such activities, and divest securities from said companies. A scrutinized company is defined as one that has an investment of $20 million or more in Iran's petroleum sector. This law is automatically appealed on July 1, 2015.

Introductory Section

5

Letter of Transmittal
Legislation passed allowing a retiree, who has elected one of the survivorship options and has named his or her spouse and one or more other persons as beneficiaries, to revoke the selection of the spouse as a beneficiary upon a final judgment of complete divorce. The retiree may then either allocate the spouse's percentage to the other beneficiaries or keep their percentages the same. The retiree's benefit will be recalculated to compensate for the remaining beneficiaries. This bill only applies to final judgments received by the System on or after July 1, 2008 and no retirement benefits will be retroactively adjusted. This bill does not allow the retiree to change the plan of retirement or designate a new beneficiary.
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 ensure that through systematic reporting and internal reviews, errors or fraud would be quickly detected and corrected.
Please refer to Management's Discussion and Analysis starting on page 15 of this report for an overview of the financial status of the System including a summary of the System Net Assets, Changes in Net Assets, and Asset Allocations.
INVESTMENTS -- The System has continued to invest in a mix of 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. A high quality balanced fund has proven to be a

Teachers Retirement System of Georgia
successful strategy in a variety of markets over a long period of time.
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 System continued to use a diversified portfolio to accomplish these objectives.
FUNDING -- The System's funding policy provides for employee and employer contributions at rates that, expressed as a percentage of annual covered payroll, are sufficient to provide resources to pay benefits when due.
A useful indicator of the funded status of a retirement system is the relationship between the actuarial value of assets and the actuarial accrued liabilities. The greater the level of funding, the larger the ratio of the actuarial value of assets to the actuarial accrued liabilities.
The System continues to remain strong as evidenced by the ratio of the actuarial value of assets to the actuarial accrued liabilities. This ratio was 94.7% in the fiscal year ended June 30, 2007. 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 Governor Sonny Perdue and the General Assembly of the State of Georgia, 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.
Initiatives
In our continuous effort to make the services we provide to our members faster, friendlier, and easier, we continued to focus our efforts on providing excellent customer service throughout the System.
This year, our Call Center was recognized as the number one Call Center in the State by Governor Sonny Perdue. We proudly accepted the Call Center Excellence Award at the first annual Governor's Customer Service Awards for Excellence ceremony for its

6

Introductory Section

Letter ofTransmittal
outstanding performance in customer service. I was also honored to receive a Governor's Commendation for Customer Service for leadership, along with commendations for the Member Services Division, for its accomplishments in improving processes that allow its team members to consistently deliver a high level of customer service, and for the Customer Excellence Program's Outreach Team, for their demonstrated outstanding service to our customers.
The Customer Excellence Program (CEP) continues to make its mark throughout the State by taking our educational services on the road. Our retirement planners conducted 230 pre- and post-retirement, mid-career, and new member workshops reaching approximately 28,000 members in 51% of the counties in Georgia. In addition to the 2,181 members who visited our office to receive individual pre-retirement counseling, the CEP retirement planners counseled an additional 1,750 members. We continued to partner with the leadership and members of various educational associations throughout the State by providing educational presentations and counseling services at their annual conferences and regional meetings.
We continued to market the advantages of doing business with us online. The number of active member and retiree account registrations totaled 78,244 and 13,903 respectively. The number of beneficiary changes made online more than doubled from the previous year to 37,028, and 17,741 benefit estimates have been generated by members within five years of retirement. Giving our members the ability to conduct business online has enabled the staff to concentrate on enhancing the other services we provide, such as working diligently with all employers to ensure all monthly contributions reports are submitted in the new file format. This enhanced collection of data has eliminated all paper membership applications and automates the member enrollment process. In anticipation of the new legislation, we were able to dedicate the resources necessary to ensure the system reflected the changes brought about by the new laws.

2008 Comprehensive Annual Financial Report
Other Information
INDEPENDENTAUDIT--The Board ofTrustees requires an annual audit of the financial statements of the System by independent, certified public accountants. The accounting firm of KPMG 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.
Copies of this report can be obtained by contacting the System, or may be downloaded from the System's website.
I would like to take this opportunity to express my gratitude to Governor Sonny Perdue, 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 System. Sincerely,
Jeffrey L. Ezell Executive Director

Introductory Section

7

Teachers Retirement System of Georgia
Your
Retirement System

Financial Highlights
Member Contributions Employer Contributions Interest and Dividend Income Benefits Paid to Retired Members Member Withdrawals Interest Credited to Member Contributions
Statistical Highlights
Active Membership Members Leaving the System Retired Members Average Monthly Benefit

June 30,

2008

2007

% Change

$ 554,027,000 $ 986,759,000 $ 1,633,111,000 $ 2,756,483,000 $ 54,482,000

$ 524,940,000 $ 927,371,000 $ 1,480,105,000 $ 2,282,950,000 $ 52,875,000

+ 5.5 + 6.4 + 10.3 + 20.7 + 3.0

$ 227,201,000 $ 215,766,000

+ 5.3

225,024 8,148 78,633
$ 2,921

218,141 8,251 76,133
$ 2,499

+ 3.2 _ 1.2
+ 3.3
+ 16.9

8

Introductory Section

System
Assets

2008 Comprehensive Annual Financial Report

Total System Assets at June 30 (in thousands)

2003 2004 2005

2006

Equities Fixed Income Other(1)
Total System Assets

$20,058,758 17,961,576 1,270,063

$25,120,626 $27,121,761 16,469,405 17,075,215 1,053,021 1,160,906

$28,654,452 17,243,798 1,489,478

$39,290,397 $42,643,052 $45,357,882 $47,387,728

(1) Includes receivables, cash, short-term securities, mortgage loans, and capital assets, net.

2007
$32,928,370 17,115,170 3,249,443
$53,292,983

2008
$29,530,826 19,801,442 1,287,660
$50,619,928

Growth of Total System Assets (in billions)

Equities

Fixed Income Other

$55
$45
$39.3
$35

$42.6

$45.4

$47.4

$53.3

$50.6

$25

$15

03

04

05 06

07 08

Introductory Section

9

Teachers Retirement System of Georgia
Administrative Staff and Organization

Jeffrey L. Ezell Executive Director

Stephen J. Boyers Chief Financial Officer

Charles W. Cary, Jr. Chief Investment Officer
Investment Services

Diann F. Green Director
Retirement Services

Lisa M. Hajj Director
Communications

Dina N. Jones Director
Member Services

Laura L. Lanier Controller
Financial Services
Consulting Services
Actuary Cavanaugh Macdonald
Consulting, LLC
Auditor KPMG LLP
Medical Advisors Gordon J. Azar, M.D. Atlanta, Georgia Arthur S. Booth, Jr., M.D. Atlanta, Georgia Joseph W. Stubbs, M.D. Albany, Georgia

J. Gregory McQueen Director
Information Technology

Tonia T. Morris Director
Human Resources

Charles P. Warren Director
Employer Services and Contact Management

Investment Advisors

Albritton Capital Management Oak Associates, ltd. Sands Capital Management Montag & Caldwell NCM Capital Management
Group Fisher Investments Philadelphia International
Advisors Mesirow Financial Investment
Management

Munder Capital Management RidgeWorth Capital Management Barrow, Hanley, Mewhinney
& Strauss Cooke & Bieler Hotchkis and Wiley
Capital Management

10

Introductory Section

2008 Comprehensive Annual Financial Report
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 pay monthly benefits due to retirees accurately and in a timely manner, (2) to soundly invest retirement funds to insure adequate financing for future benefits due and for other obligations of the System, (3) to accurately account for the status and contributions of all active and inactive members, (4) to provide statewide educational and counseling services for System members, and (5) to process refunds due terminated members.
Administration
State 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 Fis-
cal Services,
Governor's appointees:
two active members of the System who are classroom 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 employee of the Board of Regents,
Trustee appointees:
one member who has retired under the System,
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 its 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, 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, technical colleges, RESA units and all colleges and universities comprising the University System of Georgia who are employed one-half time or more, except eligible faculty members 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.
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.

Introductory Section

11

Teachers Retirement System of Georgia
Summary of Plan Provisions

Disability Retirement
Members are eligible to apply for monthly retirement benefits under the disability provision of the law if they are an active member, have at least 9.5 years of creditable service, and are permanently disabled.
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 membership years of service. The resulting product is the monthly retirement benefit under the maximum plan of retirement.
Early Retirement
Any member who has not reached the age of 60 and 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 explained above. 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. There are no survivorship benefits under this plan.
Plan B - Optional Plans of Retirement
Upon retirement, a member of the System may elect one of six optional plans that provide survivorship benefits. 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.
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 surviving named beneficiary that, at the death of the retired member, the beneficiary will receive 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.
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.

12

Introductory Section

2008 Comprehensive Annual Financial Report
Summary of Plan Provisions

Option 3
This plan of retirement offers a reduced monthly benefit that 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 surviving named beneficiary that at the time of the retired member's death, the 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, 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-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 a percentage.
Partial Lump-Sum Option Plan
TRS offers a Partial Lump-Sum Option Plan (PLOP) at retirement. In exchange for a permanently reduced lifetime benefit, a member may elect to receive a lump-sum distribution in addition to a monthly retirement benefit. The age of the member and plan of retirement are used to determine the reduction in the benefit.

A member is eligible to participate in the Partial Lump-Sum Option Plan if he or she meets the following criteria. A member must:
have 30 years of creditable service or 10 years of creditable service and attain age 60 (not early retirement).
not retire with disability benefits.
At retirement, a member may elect a lump-sum distribution in an amount between 1 and 36 months of his or her normal monthly retirement benefit. This amount will be calculated under Plan A - Maximum Plan of Retirement and will be rounded up and down to be a multiple of $1,000. If a PLOP distribution is elected, the monthly benefit is actuarially reduced to reflect the value of the PLOP distribution. The combination of both the PLOP distribution and the reduced benefit are the same actuarial value as the unreduced normal benefit alone.
Financing the System
The funds to finance the System come from member contributions, 5% of annual salary; employer contributions, 9.28% of annual salary; and investment income.

Introductory Section

13

Teachers Retirement System of Georgia
IndependentAuditors' Report
KPMG LLP Suite 2000 303 Peachtree Street, NE Atlanta, GA 30308 www.kpmg.com
The Board of Trustees Teachers Retirement System of Georgia:

We have audited the accompanying statements of plan net assets of Teachers Retirement System of Georgia (the System), a component unit of the State of Georgia, as of June 30, 2008 and 2007, 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the System's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial status of the System as of June 30, 2008 and 2007, and the changes in financial status for the years then ended in conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2008 on our consideration of the System's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements

and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audits.
The management's discussion and analysis and the supplementary schedules listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management, regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules of administrative expenses and investment expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements. This additional information is the responsibility of the System's management. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. The introductory, investment, actuarial, and statistical sections have not been subjected to the auditing procedures applied by us in the audit of the basic financial statements and, accordingly, we express no opinion on them.
September 30, 2008

14

Financial Section

2008 Comprehensive Annual Financial Report
Management's Discussion and Analysis

This section provides a discussion and analysis of the financial performance of the Teachers Retirement System of Georgia (the System) for the years ended June 30, 2008 and 2007. The discussion and analysis of the System's financial performance is within the context of the accompanying financial statements and disclosures following this section.
Financial Highlights
The following highlights are discussed in more detail later in this analysis.
At June 30, 2008, the System's assets exceeded its liabilities by $50.1 billion (reported as net assets) as compared to the net assets of $53.1 billion at June 30, 2007, representing a decrease of $3.0 billion. At June 30, 2007, the System's assets exceeded its liabilities by $53.1 billion (reported as net assets) as compared to the net assets of $47.2 billion at June 30, 2006, representing an increase of $5.9 billion.
Contributions from members increased by $29.1 million or 5.5% from $524.9 million in 2007 to $554.0 million in 2008. Contributions by employers increased by $59.4 million or 6.4% from $927.4 million in 2007 to $986.8 million in 2008. Contributions from members increased by $39.2 million or 8.1% from $485.7 million in 2006 to $524.9 million in 2007. Contributions by employers increased by $71.8 million or 8.4% from $855.6 million in 2006 to $927.4 million in 2007. These increases are due to increases in membership and higher average payrolls during each of the fiscal years ended June 30, 2008 and 2007.
Pension benefits paid to retirees and beneficiaries for the years ended June 30, 2008 and 2007 were $2.8 billion and $2.3 billion, representing increases of 20.7% and 14.6%, respectively. This is due to increases in the number of retirees and beneficiaries receiving benefit payments and postretirement benefit adjustments as well as a contingent liability involving retroactive benefit payments (see note G).
Overview of the Financial Statements
The basic financial statements include (1) the statements of plan net assets, (2) the statements of changes in plan net assets, and (3) notes to the financial statements. The System also includes in this report additional information to supplement the financial statements.
The System prepares its financial statements on an accrual basis in accordance with U.S. generally accepted accounting principles promulgated by the

Governmental Accounting Standards Board. These statements provide information about the System's overall financial status.
In addition, the System presents two required supplementary schedules, which provide historical trend information about the plan's funding. The two schedules include (1) a schedule of funding progress and (2) a schedule of employer contributions.
The Statements of Plan Net Assets
The Statement of Plan Net Assets is the statement of financial position, presenting information that includes all of the System's assets and liabilities, with the balance reported as and representing the Net Assets Held in Trust for Pension Benefits. The investments of the System in this statement are presented at fair value. These statements are presented on page 19.
The Statements of Changes in Plan Net Assets
The Statement of Changes in Plan Net Assets reports how the System's net assets changed during the fiscal year. The additions and the deductions to net assets are summarized in this statement. The additions include contributions and investment income (loss), which includes the net increase (decrease) in the fair value of investments. The deductions include benefit payments, refunds of member contributions, and administrative expenses. These statements are presented on page 20.
Notes to the Financial Statements
The accompanying notes to the financial statements provide information essential to a full understanding of the System's financial statements. The notes to the financial statements begin on page 21 of this report.
Required Supplementary Schedules
A brief explanation of the two required schedules found beginning on page 31 of this report follows:
Schedule of Funding Progress This schedule includes historical trend information for the last six consecutive fiscal years about the actuarially funded status of the plan from a long-term, ongoing plan perspective, and the progress made in accumulating sufficient assets to pay benefits when due.
Schedule of Employer Contributions This schedule presents historical trend information for the last six consecutive fiscal years about the annual required contributions of employers and the contributions made by employers in relation to the requirement.

Financial Section

15

Teachers Retirement System of Georgia
Management's Discussion and Analysis
Financial Analysis of the System
A summary of the System's net assets at June 30, 2008, 2007, and 2006 is as follows:

Assets:

Net Assets (in thousands) June 30,



2008

2007

2006

2008
Amount Percentage Change Change

2007
Amount Percentage Change Change

Cash and Receivables $ 414,867 $ 612,774

Investments

50,197,679 52,669,796

Capital Assets, net

7,382

10,413

$ 570,353 $ (197,907)

46,803,873 (2,472,117)

13,502

(3,031)

(32.3)% $ 42,421

(4.7)% 5,865,923

(29.1)%

( 3,089)

7.4 % 12.5 % ( 22.9) %

Total Assets

50,619,928 53,292,983 47,387,728 (2,673,055) (5.0)% 5,905,255

12.5 %

Liabilities:

Due to Brokers and

Accounts Payable

556,328

159,882

141,381

396,446

Net Assets

$ 50,063,600 $ 53,133,101 $ 47,246,347 $ (3,069,501)

248.0 %

18,501

(5.8)% $ 5,886,754

13.1 % 12.5 %

As indicated above, the $3.1 billion decrease and $5.9 billion increase in net assets in 2008 and 2007, respectively, are principally related to the (decrease) increase in the fair value of investments. The (decrease) increase in investments is analyzed below.

The following table presents the investment allocation at June 30, 2008, 2007, and 2006:

Asset Allocation at June 30
(in percentages) Equities U.S. Treasuries U.S. Agencies Corporate and Other Bonds Short-Term
Asset Allocation at June 30
(in thousands) Equities U.S. Treasuries U.S. Agencies Corporate and Other Bonds Short-Term

2008

2007

2006

58.8 % 27.3 % 4.4 % 7.8 % 1.7 %

62.5 %

61.2 %

18.9 %

25.3 %

10.1 %

6.0 %

3.5 %

5.5 %

5.0 %

2.0 %



$ 29,530,826 13,678,959 2,211,341 3,911,142 865,411
$ 50,197,679

$ 32,928,370 9,928,110 5,317,895 1,869,165 2,626,256
$ 52,669,796

$ 28,654,452 11,851,904 2,819,958 2,571,936 905,623
$ 46,803,873



16

Financial Section

2008 Comprehensive Annual Financial Report
Management's Discussion and Analysis

Asset Allocation at June 30 continued
The total investment portfolio at June 30, 2008 decreased $2.5 billion from June 30, 2007, which is primarily due to the decrease in the fair value of investments.
The total investment portfolio at June 30, 2007 increased $5.9 billion from June 30, 2006, which is primarily due to the increase in the fair value of investments.
The investment rate of return in fiscal year 2008 was (3.4)%, with a (10.8)% return for equities and a 9.7% return for fixed income compared to the investment rate of return in fiscal year 2007 of 14.6%, with

a 20.5% return for equities and a 5.5% return for fixed income. The five-year annualized rate of return on investments at June 30, 2008 was 6.8% with a 9.2% return on equities and a 3.8% return on fixed income.
The investment rate of return in fiscal year 2007 was 14.6%, with a 20.5% return for equities and a 5.5% return for fixed income compared to an investment rate of return in fiscal year 2006 of 6.0%, with a 10.8% return for equities and a (1.4)% return for fixed income. The five-year annualized rate of return on investments at June 30, 2007 was 8.5% with an 11.2% return on equities and a 4.4% return on fixed income.

A summary of changes in the System's net assets for the years ended June 30, 2008, 2007, and 2006 is as follows:

Changes in Net Assets

2008

2007

( in th ousands) A mount Perc entage Amount Percentage

2008

2007

2006

Change Change Change Change

A dditions:

Member Contributions $ 554,027 $ 524,940 $ 485,721 $ 29,087

5.5 % $ 39,219

8.1 %

Employer Contributions 986,759

927,371

855,626

59,388

6.4 %

71,745

8.4 %



Net Investment Income

(Loss)

(1,775,578)

6,792,341

2,691,062 (8,567,919) (126.1)% 4,101,279 152.4 %

Total Additions (234, 792) 8,244,652 4,032,409 (8 ,479,444) (102.8)% 4,212,2 43 104 .5 %

Deductions:

Benefit Payments

2,756,483

2,282,950

1,991,431

473,533

20.7 % 291,519 14.6 %

Refunds

54,482

52,875

53,138

1,607

3.0 %

(263) (0.5) %

Administrative Expenses

23,744

22,073

20,173

1,671

7.6 %

1,900

9.4 %

Total Deductions

2,834,709

2,357,898

2,064,742

476,811

20.2 % 293,156 14.2 %

Net Increase (Decrease) in Plan Net Assets $ (3,069,501) $ 5,886,754

$ 1,967 ,667 $(8,9 56,255) (152.1) % $ 3,919,087

199.2 %

Financial Section

17

Teachers Retirement System of Georgia
Management'sDiscussion and Analysis

Additions
The System accumulates resources needed to fund benefits through contributions and returns on invested funds. Member contributions increased 5.5% and 8.1% in 2008 and 2007, respectively, primarily because of increased membership and a higher average payroll in both years. Employer contributions likewise increased 6.4% and 8.4% in 2008 and 2007, respectively, also as a result of increased membership and a higher average payroll. The employer contribution rate remained constant at 9.28% in 2008 and 2007. The employer contribution rate was recommended by the actuary and approved by the System's Board of Trustees. The net investment loss is a result of declining equities markets during fiscal year 2008.
Deductions
Deductions increased 20.2% in 2008 and 14.2% in 2007, primarily because of the 20.7% and 14.6% increase in benefit payments resulting from an increase in the number of retirees and beneficiaries receiving benefit payments to 78,633 in 2008 from 76,133 in 2007 and 70,239 in 2006 and postretirement benefit increases in both years, as well as a contingent liability involving retroactive benefit payments.

Funding Status
The schedule of funding progress and schedule of employer contributions provide information regarding how the plan is performing and funded from an actuarial perspective. The information is based upon actuarial valuations conducted by certified actuaries. The funding ratio, which is presented on the schedule of funding progress, indicates the ratio between the actuarial value of assets and the actuarial accrued liabilities. The higher this ratio, the better funded the System is from an actuarial perspective.
The June 30, 2007 actuarial valuation, which is the latest valuation available, indicates that the actuarial value of assets was $52.1 billion and that the actuarial accrued liability was $55.0 billion. This results in a funding ratio of 94.7%. The June 30, 2006 actuarial valuation indicates that the actuarial value of assets was $49.3 billion and that the actuarial accrued liability was $51.1 billion. This results in a funding ratio of 96.5%.
Management believes the System continues to be in a solid financial position, as evidenced by the funding ratio.
Requests for Information
This financial report is designed to provide a general overview of the System's finances for all those with interest in the System's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Teachers Retirement System of Georgia,
Two Northside 75, Suite 200, Atlanta, GA 30318.

18

Financial Section

2008 Comprehensive Annual Financial Report
Statements of Plan Net Assets June 30, 2008 and 2007 (in thousands)

Assets
Cash

2008
$ 3,038

Receivables:

Interest and Dividends

Due from Brokers for Securities Sold

Member and Employer Contributions

Due from Fulton County School Employees Pension Fund

Other



Total Receivables

222,537 63,179 125,104
1,009 411,829

Investments - at fair value:
Short-Term U.S. Treasuries U.S. Agencies Corporate and Other Bonds Common Stocks

865,411 13,678,959
2,211,341 3,911,142 29,530,826



Total Investments

50,197,679

Capital Assets, net

7,382



Total Assets

Liabilities
Due to Brokers for Securities Purchased Accounts Payable and Other

50,619,928
171,178 385,150



Total Liabilities

Net Assets Held in Trust for Pension Benefits

(A Schedule of Funding Progress is presented on page 31.) See accompanying notes to financial statements.

556,328 $ 50,063,600

2007
$ 8,596
253,020 199,616 113,527 38,015
604,178
2,626,256 9,928,110 5,317,895 1,869,165 32,928,370 52,669,796
10,413
53,292,983
52,613 107,269 159,882
$ 53,133,101

Financial Section

19

Teachers Retirement System of Georgia
Statements ofChanges in Plan Net Assets Years ended June 30, 2008 and 2007 (in thousands)

Net Assets Held in Trust for Pension Benefits - Beginning of year
Additions:

2008
$ 53,133,101

Contributions: Employer Member

986,759 554,027

Investment Income (Loss): Net (Decrease) Increase in Fair Value of Investments Interest, Dividends, and Other

(3,358,095) 1,633,111



Total

(1,724,984)

Less Investment Expense

50,594




Net Investment Income (Loss) Total Additions

Deductions:

Benefit Payments Refunds of Member Contributions
Administrative Expenses, net



Total Deductions

(1,775,578) (234,792)
2,756,483 54,482 23,744
2,834,709



Net (Decrease) Increase

Net Assets Held in Trust for Pension Benefits - End of year

( 3,069,501) $ 50,063,600

See accompanying notes to financial statements.

2007
$ 47,246,347
927,371 524,940
5,361,759 1,480,105 6,841,864
49,523 6,792,341 8,244,652
2,282,950 52,875 22,073
2,357,898 5,886,754
$ 53,133,101

20

Financial Section

2008 Comprehensive Annual Financial Report
Notes to Financial Statements June 30, 2008 and 2007

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 (GASB) Statement No. 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 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 exofficio 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 Statement No. 14. The concept underlying the definition of the reporting entity is that elected officials are accountable. The decision to include a potential component unit in the reporting entity is also made by applying specific criteria as outlined in GASB Statement No. 39, including consideration of the nature and significance of the relationship of potential component units. 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, 2008, participation in the System is as follows:

Retirees and beneficiaries currently receiving benefits
Terminated employees entitled to benefits but not yet receiving
benefits

78,633 73,687

Active plan members

225,024



Total

Employers

377,344 389

As of June 30, 2007, participation in the System was as follows:

Retirees and beneficiaries currently receiving benefits
Terminated employees entitled to benefits but not yet receiving
benefits

76,133 69,317

Active plan members

218,141



Total

Employers

363,591 385

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 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.

Financial Section

21

Teachers Retirement System of Georgia
Notes to Financial Statements June 30, 2008 and 2007

A. Plan Description continued
Retirement Benefits
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth 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 Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Options 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 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 ten 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 ten 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 2008 were based on the June 30, 2005 actuarial valuation as follows:

Member:

Employer: Normal Unfunded accrued liability



Total

5.00 %
8.17 % 1.11 % 9.28 %

Contributions required for fiscal year 2007 were based on the June 30, 2004 actuarial valuation as follows:

Member:

Employer: Normal Unfunded accrued liability



Total

5.00 %
9.85 % (0.57) % 9.28 %

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 may be refunded with interest. Member contributions with accumulated interest are reported as net assets held in trust for pension benefits.
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, 2008 and 2007, there were 25 and 23 members, respectively, eligible to participate in this portion of the System. Employer contributions of $332,000 and $276,000 and retirement payments of $334,000 and $280,000 under the SRBP are included in the statement of changes in plan net assets for the years ended June 30, 2008 and 2007, respectively.

22

Financial Section

2008 Comprehensive Annual Financial Report
Notes to Financial Statements June 30, 2008 and 2007

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 additions when due, pursuant to formal commitments, as well as statutory or contractual requirements. Retirement and refund payments are recognized as deductions when due and payable.
During fiscal year 2008, the System adopted the provisions of GASB Statement No. 50, Pension Disclosures. The objective of this Statement is to amend note disclosure and required supplementary information (RSI) standards of Statement No. 25 and Statement No. 27 to conform with applicable changes adopted in Statement No. 43 and Statement No. 45 for other post employment benefits.
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 or its agencies, 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.
The System utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
Capital Assets
Capital assets are stated at cost less accumulated depreciation. Capital assets costing $5,000 or more are capitalized. Depreciation on capital assets is computed using the straight-line method over estimated useful lives of three to forty years. Depreciation expense is included in administrative expenses.

Maintenance and repairs are charged to administrative expenses when incurred. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the statements of changes in plan net assets in the period of disposal.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of plan net assets and changes therein. Actual results could differ from those estimates.
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 the Board of Trustees. All investments are held by agent custodial banks in the name of the System.
Cash
Cash balances are fully insured through the Federal Deposit Insurance Corporation, an agency of the U.S. Government. Fiduciary accounts, such as those of the System, are granted $100,000 of insurance coverage per participant in the System. Temporary cash on hand not committed for a specific purpose is invested overnight.
Investments
State statutes authorize the System to invest in a variety of short-term and long-term securities as follows:
a) Short-Term
Short-term investments are authorized in the following instruments:
Repurchase and reverse repurchase agreements, whereby the System and a broker exchange cash for direct obligations of the U.S. Government or obligations unconditionally guaranteed by agencies of the U.S. Government or U.S. corporations. The System or broker promises to repay the cash received plus interest at a specific date in the future in exchange for the same securities. The System

Financial Section

23

Teachers Retirement System of Georgia
Notes to Financial Statements June 30, 2008 and 2007

C. Investment Program continued
held repurchase agreements of $865,411,000 and $2,626,256,000 at June 30, 2008 and 2007, 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 considers for investment only commercial paper of the highest quality, rated P-1 and/or A-1 by national credit rating agencies.
Master notes, an overnight security administered by a custodian bank, and an obligation of a corporation whose commercial paper is rated P-1 and/or A-1 by national credit rating agencies.
Investments in commercial paper or master notes are limited to no more than $100 million in any one name.
b) Long-Term
Fixed income investments are authorized in the following instruments:
U.S. and foreign government obligations with terms up to 30 years. The System held U.S. Treasuries of $13,678,958,750 and $9,928,109,780 at June 30, 2008 and 2007, respectively.
Obligations unconditionally guaranteed by agencies of the U.S. Government with terms up to 30 years. The System held agency bonds of $2,211,341,328 and $5,317,895,120 at June 30, 2008 and 2007, respectively.
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. The System held corporate bonds of $3,911,141,820 and $1,869,164,970 at June 30, 2008 and 2007, 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 fixedincome portfolio and as a long-term inflation hedge. By statute, no more than 60% of the total invested assets on a historical cost basis may be placed in equities and no more than 5% in any one corporation. Equity holdings in any one corporation may not exceed 5% of the outstanding equity of the issuing corporation. The equity portfolio is managed by the Division of Investment Services (the "Division") in conjunction with independent advisors. Buy/sell decisions are based on securities meeting rating criteria established by the Board of Trustees; in-house research considering such matters as yield, growth, and sales statistics; and analysis of independent market research. Equity trades are approved and executed by the Division's staff. Common stocks eligible for investment are approved by the Investment Committee of the Board of Trustees before being placed on an approved list.
Credit Risk: Credit risk is the risk that an issuer or other counter party to an investment will not fulfill its obligations to the Teachers Retirement System. State law limits investments to investment grade securities.
It is the System's investment policy to require that the bond portfolio be of high quality and chosen with respect to maturity ranges, coupon levels, refunding characteristics, and marketability. The System's policy is to require that new purchases of bonds be restricted to high grade bonds rated no lower than "A" by any nationally recognized statistical rating organization. The System's investment in U.S. Agencies as of June 30, 2008 was 11.2% of total fixedincome securities and was rated AAA by Standard & Poor's and Aaa by Moody's Investors Service. The System's investment in corporate bonds as of June 30, 2008 was 19.8% of total fixed-income securities, which consisted of 13.6% rated AAA/Aaa and 6.2% rated AA/Aa.

24

Financial Section

2008 Comprehensive Annual Financial Report
Notes to Financial Statements June 30, 2008 and 2007

The investment policy requires that repurchase agreements be limited to the purchase of U.S. Treasury or Agency obligations or corporate bonds rated no lower than "A" by any nationally recognized statistical rating organization, with a market value in excess of funds advanced. The System held repurchase agreements of $865,411,000 as of June 30, 2008 and $2,626,256,000 as of June 30, 2007.
Concentration of Credit Risk: Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government's investment in a single issue. State statutes and the System's investment policy limit investments to no more than 5% of total System net assets in any one corporation. On

June 30, 2008, the System did not have debt or equity investments in any one organization, other than those issued by the U. S. Government or its agencies, which represented greater than 5% of plan net assets.
Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. This risk is managed within the portfolio using the effective duration method. This method is widely used in the management of fixed income portfolios and quantifies to a much greater degree the sensitivity to interest rate changes when analyzing a bond portfolio with call options, prepayment provisions, and any other cash flows. Effective duration makes assumptions regarding the

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





Fixed income and repurchase

Market value,

agreements security type

June 30, 2008

U.S. Treasuries U.S. Agencies Corporate Bonds Repurchase Agreements

$ 13,678,958,750 2,211,341,328 3,911,141,820 865,411,000

Total

$ 20,666,852,898

Percent of all fixed income assets
and repurchase agreements
66.2 % 10.7 % 18.9 % 4.2 %
100.0 %

*Total effective duration (years) does not include repurchase agreements.

Effective duration (years)
5.2 3.6 5.1
5.0*





Fixed income and repurchase

Market value,

agreements security type

June 30, 2007

U.S. Treasuries U.S. Agencies Corporate Bonds Repurchase Agreements

$ 9,928,109,780 5,317,895,120 1,869,164,970 2,626,256,000

Total

$ 19,741,425,870

Percent of all fixed income assets
and repurchase agreements
50.3 % 26.9 % 9.5 % 13.3 %
100.0 %

*Total effective duration (years) does not include repurchase agreements.

Effective duration (years)
6.3 4.2 6.2
4.9*

Financial Section

25

Teachers Retirement System of Georgia
Notes toFinancial Statements June 30, 2008 and 2007

C. Investment Program continued
most likely timing and amounts of variable cash flows and is best utilized to gauge the effect of a change in interest rates on the fair value of a portfolio. It is believed that the reporting of effective duration found in the table on page 25 quantifies to the fullest extent possible the interest rate risk of the System's fixed income assets.
D. Investments Lending Program
State statutes and Board of Trustees' policies permit the System to lend its securities to broker/dealers with a simultaneous agreement to return the collateral for the same securities in the future. The System is presently involved in a securities lending program with major brokerage firms. The System lends equity and fixed-income securities for varying terms and receives a fee based on the loaned securities' value. During a loan, the System continues to receive dividends and interest as the owner of the loaned securities. The brokerage firms pledge collateral securities consisting of U.S. Government and agency securities, mortgage-backed securities issued by a U.S. Government agency, and corporate bonds. The collateral value must be equal to at least 102% to 110% of the loaned securities' value, depending on the type of collateral security.

Securities loaned totaled $17,316,635,279 and $17,067,376,984 at market value at June 30, 2008 and 2007, respectively. The collateral value was equal to 104.9% and 105.1% of the loaned securities' value at June 30, 2008 and 2007, respectively. The System's lending collateral was held in the System's name by the tri-party custodian.
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 Statement No. 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.

26

Financial Section

2008 Comprehensive Annual Financial Report
Notes to Financial Statements June 30, 2008 and 2007
E. Capital Assets
The following is a summary of capital assets and depreciation information as of June 30 and for the years then ended:

Capital Assets:
Land Building Furniture and Fixtures Computer Equipment Computer Software
Accumulated Depreciation For:
Building Furniture and Fixtures Computer Equipment Computer Software
Capital Assets, Net

Balance at

Balance at

June 30, 2007

Additions Disposals June 30, 2008

$ 944,225 2,800,000 413,647 1,128,381 14,979,713 20,265,966

$

--

--

29,875

290,748 --

320,623

$

--

--

(6,000)

(47,170) --

(53,170)

$ 944,225 2,800,000 437,522 1,371,959 14,979,713 20,533,419

(210,000) (260,069) (394,745) (8,987,829) (9,852,643)
$ 10,413,323

(70,000) (35,483) (249,071) (2,995,943) (3,350,497)
$ (3,029,874)

-- 5,572 46,207
-- 51,779
$ (1,391)

(280,000) (289,980) (597,609) (11,983,772) (13,151,361)
$ 7,382,058

Financial Section

27

Teachers Retirement System of Georgia
Notes toFinancial Statements
June 30, 2008 and 2007
E. Capital Assets continued
The following is a summary of capital assets and depreciation information as of June 30 and for the years then ended:

Capital Assets:
Land Building Furniture and Fixtures Computer Equipment Computer Software
Accumulated Depreciation For:
Building Furniture and Fixtures Computer Equipment Computer Software
Capital Assets, Net

Balance at

June 30, 2006

Additions

$ 944,225 2,800,000 347,958 1,151,269 14,979,713 20,223,165

$

--

--

65,689

181,576 --

247,265

Balance at Disposals June 30, 2007

$

--

-- __

(204,464) --
(204,464)

$ 944,225 2,800,000 413,647 1,128,381 14,979,713 20,265,966

(140,000) (227,326) (362,304) (5,991,886) (6,721,516)
$ 13,501,649

(70,000) (32,743) (212,638) (2,995,943) (3,311,324)
$ (3,064,059)

-- __ 180,197 -- 180,197
$ (24,267)

(210,000) (260,069) (394,745) (8,987,829) (9,852,643)
$ 10,413,323

During fiscal years 2008 and 2007, the System did not experience any capital asset impairment loss with respect to the provisions of GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries.

28

Financial Section

2008 Comprehensive Annual Financial Report
Notes to Financial Statements June 30, 2008 and 2007

F. 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:

2008

2007

Salaries and Employee Benefits $ 20,958,016 $ 18,152,511 Other Operating Expenses 7,449,6 64 7,991,279

Total Administrative Expenses 28,407,680

26,143,790

Less Reimbursement by Other State Retirement Systems for Services Rendered on Their Behalf 4,663,8 03 4,070,462

Net Administrative Expenses $ 23,743,877 $ 22,073,328

G. Commitments and Contingencies
In April, 2004, two retirees filed a civil action in Fulton County Superior Court (the Court) seeking additional benefits retroactive to the time of their retirement dates for a class of those retirees who elected survivorship options and who retired during the preceding 20-year period. Plaintiffs alleged that the System did not use updated mortality tables in the calculation of their benefits. The Superior Court granted summary judgment for the System; however, the judgment was reversed on appeal by the Georgia Supreme Court in October, 2006. The case was remanded back to the trial court to determine liability to plaintiffs and whether any of their claims are barred by applicable statute of limitations. The Court ruled on February 29, 2008 for the plaintiffs using a 20-year statute of limitations. This judgment is being appealed by both the System and plaintiffs. The System is appealing the 20-year statute of limitations and the attorney fees. The plaintiffs are appealing the interest rate granted. On February 29, 2008, the Court also issued an uncontested claims order using a sixyear statute of limitations.

The ultimate liability to the System is impacted by certain variables that are uncertain until the final decision by the Court, most notably the applicable statute of limitations and any applicable interest rates on such liability. The System anticipates a decision from the Court within the year.
At June 30, 2007, management recorded an estimate of the potential liability of $100 million using a six-year statute of limitation ruling and the interest rates used during that time period. During fiscal year 2008, the System paid approximately $93 million in retroactive benefits and attorney fees on the uncontested claims order using a six-year statute of limitation. At June 30, 2008, management estimates an additional potential liability of approximately $377.3 million using a 20-year statute of limitation ruling and the interest rates used during that time period. This amount is recorded in accounts payable and other liabilities in the accompanying statement of plan net assets as of June 30, 2008. Although the ultimate liability may vary from the amount recorded, management believes that it will not have a material impact on the financial statements of the System.
H. Subsequent Event
On September 7, 2008, the Federal Housing Finance Agency (FHFA) placed Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) into conservatorship with FHFA as the conservator. The conservatorship is a statutory process designed to stabilize a troubled institution with the objective of returning the entities to normal business operations. As a result there will be a financing and investing relationship with the United States Government via the FHFA. Changes in fair values of the Plan's investments in FNMA and FHLMC subsequent to June 30, 2008 have not had a material impact on the fair value of Plan assets.

Financial Section

29

Teachers Retirement System of Georgia
Notes toFinancial Statements June 30, 2008 and 2007
I. Funded Status and Funding Progress
The funded status of the plan as of June 30, 2007, the most recent actuarial valuation date, is as follows (dollars in thousands):

Actuarial Value of Plan
Assets (a)
$ 52,099,171

Actuarial Accrued

Liability

Unfunded

(AAL)

AAL (UAAL)

Entry Age (Funding Excess)

(b)

(b-a)

$ 54,996,570

$ 2,897,399

Funding Ratio (a/b)
94.7%

Annual Covered Payroll
(c)

UAAL (Funding Excess) as
a Percentage of Covered Payroll
[(b-a)/c]

$ 9,482,003

30.5%

The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, present multi-year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the ALL for benefits.

Additional information as of the latest actuarial valuation follows:

Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumption:
Investment Rate of Return Projected Salary Increases Inflation Rate Postretirement Cost-of-Living Adjustments

June 30, 2007 Entry Age Level Percent of Pay, Open 30 Years Seven-Year Smoothed Market
7.50% 3.20 to 8.60% 3.75% 3% annually

30

Financial Section

2008 Comprehensive Annual Financial Report
Required Supplementary Schedules
See Independent Auditors' Report
Schedule of Funding Progress (Dollars in thousands)





Actuarial

Actuarial

Value of

Valuation

Plan Assets

Date

(a)

6/30/02 6/30/03 6/30/04 6/30/05 6/30/06 6/30/07

$40,502,333 42,372,661 44,617,956 46,836,895 49,263,027 52,099,171

Actuarial Accrued Liability (AAL) -Entry Age
(b)
$39,706,523 41,905,676 44,230,031
47,811,214 51,059,681
54,996,570

Unfunded

AAL

Annual

(UAAL)

Funding

Covered

(Funding Excess)

Ratio

Payroll

(b-a)

(a/b)

(c)

$ (795,810) (466,985) (387,925) 974,319 1,796,654 2,897,399

102.0 % 101.1 100.9 98.0 96.5 94.7

$7,617,869 8,261,961 8,083,118 8,252,598 8,785,985 9,482,003

UAAL (Funding Excess)
as a Percentage of Covered Payroll
[(b-a)/c]
(10.4) %
(5.7) (4.8)
11.8
20.4
30.5

This data, except for annual covered payroll, was provided by the System's actuary.

Schedule of Employer Contributions (Dollars in thousands)

Years Ended June 30,
2002 2003 2004 2005 2006 2007

State Annual Required
Contribution
$ 716,917 768,673 782,301 815,693 855,626 927,371

Percentage Contributed
100 % 100 100 100 100 100

See accompanying notes to required supplementary schedules.

Financial Section

31

Teachers Retirement System of Georgia
RequiredSupplementary Schedules
See Independent Auditors' Report
Notes to Required Supplementary Schedules
Schedule of Funding Progress The actuarial value of assets recognizes 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 one-seventh of the difference between market value and expected actuarial value. The actuarial value of assets is limited to a range between 80% and 120% of market value.
Schedule of Employer Contributions The required employer contributions and percentage of those contributions actually made are presented in the
schedule.
Actuarial Assumptions The information presented in the required supplementary schedules was determined as part of the actuarial
valuations at the dates indicated. Additional information from the actuarial valuations for the most recent two-year period is as follows:

Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumption:
Investment Rate of Return Projected Salary Increases Inflation Rate Postretirement Cost-of-Living Adjustments

June 30, 2007 Entry Age Level Percent of Pay, Open 30 Years Seven-Year Smoothed Market

June 30, 2006 Entry Age Level Percent of Pay, Open 30 Years Seven-Year Smoothed Market

7.50% 3.20 to 8.60% 3.75% 3% annually

7.50% 3.20 to 8.60% 3.75% 3% annually

32

Financial Section

2008 Comprehensive Annual Financial Report
Schedule ofAdministrative Expenses
For the Years ended June 30, 2008 and 2007

Personal Services:
Salaries and Wages Retirement Contributions Health Insurance FICA Miscellaneous
Total Personal Services
Communications:
Postage Publications and Printing Telecommunications Travel
Total Communications
Professional Services:
Computer Services Contracts Actuarial Services Audit Fees Legal Services Medical Services
Total Professional Services
Management Fees:
Building Maintenance Total Management Fees
Other Services and Charges:
Temporary Services Repairs and Maintenance Supplies and Materials Courier Services Depreciation Expense Loss on Disposal of Equipment Miscellaneous
Total Other Services and Charges
Total Administrative Expenses
Less Reimbursement by Other State Retirement Systems for Services Rendered on Their Behalf
Net Administrative Expenses

2008
$ 15,109,722 1,488,850 3,343,884 927,557 88,003
20,958,016

2007
$ 13,596,829 1,408,353 2,256,863 844,744 45,722 18,152,511

197,938 339,723 189,132 120,963
847,756

189,497 327,250 216,065 121,721
854,533

1,757,589 1,275
122,084 107,770 59,341 140,900
2,188,959
724,875 724,875

2,312,528 2,520
106,156 73,800 46,021 144,416 2,685,441
724,875 724,875

29,257 10,511 207,578 12,153 3,350,497 1,391
76,687
3,688,074
28,407,680

45,619 27,834 211,077 11,636 3,311,324 24,267 94,673
3,726,430
26,143,790

4,663,803 $ 23,743,877

4,070,462 $ 22,073,328

See accompanying independent auditors' report.

Financial Section

33

Teachers Retirement System of Georgia
Schedule of Investment Expenses
For the Years ended June 30, 2008 and 2007

2008

Investment Advisory and Custodial Fees Commissions and Fees Miscellaneous
Total Investment Expenses

$ 26,988,684 21,054,773 2,550,048
$ 50,593,505

See accompanying independent auditors' report.

2007
$ 26,996,821 19,209,149 3,317,091
$ 49,523,061

34

Financial Section

Investment Overview

2008 Comprehensive Annual Financial Report

The market turbulence over the past year is troubling, but we have endured similar periods in the past. It is important to recognize and remember that the time horizon of the fund's investment portfolio is measured in decades, not days, weeks, or months. Much attention is paid to what is happening at the current time, but the goal is to use periods of market fear and exuberance to the fund's long-term advantage. The System has continued to invest in a mix of high quality bonds and stocks as it has historically 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. A high quality balanced fund has proven to be a successful strategy in a variety of markets over a long period of time.
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.
U.S. economic growth slowed during the second and third quarters of the fiscal year, but ended the last quarter up at an annualized rate of 1.8%. Consumer and business spending remained steady throughout the period, but new housing starts and home sales fell dramatically. Housing starts and new home sales fell by 27% and 33% respectively. Employment levels also showed weakness. Oil prices were very volatile, beginning the year at $75 a barrel, rising to $91 in January, and then climbing to an average high of $124 at the end of the year. Despite these issues, corporate profits were solid, but began to decelerate to singledigit growth.
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.
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 shortterm volatility of markets. The original "Dietz" timeweighted method was used to calculate rates of return which is in accordance with the CFA Institute's objectives as stated in its publication "Global Investment Performance Standards Handbook," second edition.
Equity markets declined significantly during this period. The return for the S&P 500 Index was negative 13%. The Dow Jones Industrial Average Index also declined 13%. Among individual companies, returns varied depending upon the company's size, industry, and exposure to global markets. Foreign stocks started the year outpacing the rest of the markets, but began a decline by year end. The MSCI EAFE Index returned negative 11% and MSCI Emerging Market Index returned 4.63%.
In a change from last year, large and small capitalization domestic stocks underperformed. The S&P 400 Mid Capitalization Index outperformed both S&P 500 and S&P 600 with a return of negative 7%. The S&P 600 Small Capitalization Index declined 15%, well below its ten-year average return of 8%, and below the S&P 500's negative 13% return.
These overall returns can be explained by relatively low interest rates, credit volatility and availability, contracting corporate cash flows, and a reduction in the level of merger and acquisition activity. The decline in foreign returns can be attributed to higher inflation, volatile oil prices, and higher financing costs.
Returns for the fixed-income markets were above average this year. Yields on long-term Treasury bonds began the period at 5.1% and ended the year at 4.5%, but they spent most of the time well below 5%, falling to a low of 4.3% in December. Overall the ten-year U.S. Treasury Bond returned 12.6% and the thirtyyear U.S. Treasury Bond returned 14.6%. Short-term treasury bills only returned 3.0%.
Our primary benchmark, the Lehman Government / Credit Index rose 7.2%. It is a shorter maturity index containing higher yielding corporate bonds as well as Treasuries. Higher quality bonds outperformed lower quality bonds as evidenced by the 9.3% return for AAA & AA versus 3.3% for BBB bonds.
In summary, the investment status of the System is excellent. The high quality of the System's investments is in keeping with the continued policy of "Conservatism" and "Conservation of Capital."
Prepared by the Division of Investment Services

Investment Section

35

Teachers Retirement System of Georgia
Time-Weighted Rates of Return

2004 20 15 10 5 0 -5 -10 -15
5yr 3yr

2005

Equities S&P 500

2006

2007

5yr 3yr

5yr 3yr

5yr 3yr

Equities (%)

2008

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

5yr 3yr

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

2006
13.0% 11.2%

2007
13.1% 11.7%

2008
6.0% 4.4%

3.8% 2.5%
2004
.1% -.6%

11.2% 10.7%
2005
8.4% 8.3%

9.2% 7.6%

-1.6% -2.1%

-1.4% -2.4%

2004 12 10 8 6 4 2 0
5yr 3yr

Fixed Income Lehman Govt/Credit

2005

2006

2007

2008

5yr 3yr

5yr 3yr

5yr 3yr

5yr 3yr

Fixed Income (%)

3-Year:
Fixed Income Lehman Govt/Credit
5-Year:
Fixed Income Lehman Govt/Credit
3-Year:
Fixed Income Lehman Govt/Credit
5-Year:
Fixed Income Lehman Govt/Credit

2006 2007 2008
1.4% 3.7% 4.5% 1.6% 3.8% 3.8%
5.4% 4.4% 3.8% 5.1% 4.7% 3.6%
2004 2005
7.2% 6.0% 6.7% 6.4%
7.7% 7.8% 7.1% 7.7%

2004 20
15
10
5
0
-5 5yr 3yr

Total Portfolio

2005

2006

CPI
2007

2008

5yr 3yr

5yr 3yr

5yr 3yr

5yr 3yr

Total Portfolio (%)

3-Year:
Total Portfolio CPI
5-Year:
Total Portfolio CPI
3-Year:
Total Portfolio CPI
5-Year:
Total Portfolio CPI

2006 2007 2008
7.9% 9.5% 5.5% 3.4% 3.2% 4.0%
4.8% 8.5% 6.8% 2.7% 3.0% 3.6%
2004 2005
3.3% 7.4% 2.1% 2.7%
2.4% 2.5% 2.7% 2.2%

36

Investment Section

2008 Comprehensive Annual Financial Report
AssetAllocation at Fair Value
Equities Fixed Income Short-term Securities
60%

50%

40%

30%

20%

10%

0%

03

04

05

06

07

08

Schedule ofFees and Commissions

For the Year ended June 30, 2008

2008

Investment Advisors' Fees:

U.S. Equity International Equity Fixed Income

$ 20,406,027
5,271,545 0

Investment Commissions:

U.S. Equity International Equity

15,478,212 5,454,936

SEC Fees: Miscellaneous:

121,625 3,861,160

Total Fees and Commissions $ 50,593,505

Investment Summary

Asset Allocation at June 30

2003

Equities

51.5%

Fixed Income

46.2%

Short-Term Securities 2.3%

Asset Allocation

at June 30 (in millions)

Equities

$20,059

Fixed Income

17,961

Short-Term Securities 899

Total Investments

$38,919

2004
59.4% 39.0% 1.6%
$25,121 16,469
677 $42,267

2005
60.4% 38.0% 1.6%
$27,122 17,075
739 $44,936

2006
61.2% 36.8% 2.0%

2007
62.5% 32.5% 5.0%

2008
58.8% 39.5% 1.7%

$28,654 17,244
906 $46,804

$32,929 17,115 2,626
$52,670

$29,531 19,802
865 $50,198

Investment Section

37

Teachers Retirement System of Georgia
PortfolioDetail Statistics

Twenty Largest Equity Holdings*

Shares Company

6,999,878 12,142,000
580,220 2,767,900 1,720,000 2,765,098 4,630,300 2,182,500 2,608,258 9,676,900 4,245,722 3,881,280 2,529,128 9,764,600 6,430,710 3,385,720 10,784,142 8,711,100 4,006,100 3,062,600

Exxon Mobil Corp.

$

Microsoft Corp.

Google Inc.

Schlumberger Ltd.

Apple Inc.

ConocoPhillips

Wal-Mart Stores Inc.

International Business Machines Corp.

Chevron Corp.

General Electric Co.

Proctor & Gamble Co.

Johnson & Johnson

Occidental Petroleum Corp.

Cisco Systems Inc.

AT&T Inc.

Pepisco Inc.

Pfizer Inc.

Intel Corp.

QUALCOMM Inc.

McDonald's Corp.

Fair Value
616,899,248 334,026,420 305,439,412 297,355,497 287,996,800 260,997,600 260,222,860 258,691,725 258,556,616 258,276,461 258,182,355 249,721,555 227,267,442 227,124,596 216,650,620 215,297,935 188,398,961 187,114,428 177,750,657 172,179,372

Total of 20 Largest Equity Holdings

$ 5,258,150,560

Total Equity Holdings

$29,530,826,444

Ten Largest Fixed-Income Holdings*

Description
U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note FHLMC-Callable U.S. Treasury Bond

Maturity Date
05/15/17 03/31/13 02/15/15 02/15/18 08/31/12 11/30/08 05/15/18 11/30/12 05/05/11 11/15/28

Interest Rate %
4.500 $ 2.500 4.000 3.500 4.125 4.625 3.875 3.375 3.500 5.250

Par Value
1,210,000,000 1,306,000,000 1,198,000,000
925,000,000 781,000,000 796,000,000 799,000,000 781,000,000 768,000,000 683,000,000

Fair Value
$ 1,260,287,600 1,259,989,620 1,231,412,220 890,386,500 808,397,480 804,708,240 792,320,360 784,420,780 760,525,056 740,358,340

Total of 10 Largest Fixed-Income Holdings

$ 9,332,806,196

Total Fixed-Income Holdings

$ 19,801,441,898

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

38

Investment Section

Actuarial Section

2008 Comprehensive Annual Financial Report
Actuary'sCertification Letter

July 23, 2008
Board of Trustees, Teachers Retirement System of Georgia Suite 100, Two Northside 75 Atlanta, GA 30318
Members of the Board:
Section 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, 2007. The report indicates that annual employer contributions at the rate of 9.74% of compensation for the fiscal year ending June 30, 2010 are sufficient to support the benefits of the System. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2007 session of the General Assembly. The valuation reflects the member contribution rate increase from 5.00% to 5.25% effective July 1, 2009. 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.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for funding purposes meet the parameters set for the disclosures presented in the financial section by Governmental Accounting Standards Board (GASB) State-
ment 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 contribu-

tion 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 amortized as a level percent of payroll within a 30-year period.
The System is being funded in conformity with the minimum funding standard set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. In our opinion the System is operating on an actuarially sound basis. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
The valuation reflects the impact of the Plymel lawsuit based on a six-year statute of limitations. The 20-year statute of limitations is being appealed so, therefore, the potential impact has not been reflected in the valuation.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President

Cathy Turcot Managing Director

Actuarial Section

39

Teachers Retirement System of Georgia
Summary ofActuarialAssumptions & Methods

The 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, 2007, was made on the basis of the interest rate assumption approved by the Board on November 19, 2003, and the mortality, rates of separation and salary increase tables approved by the Board on March 22, 2006.
The more pertinent facts and significant assumptions underlying the computations included in the June 30, 2007, 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 Return7.50% per annum, compounded annually. Adopted November 19, 2003.
c) Earnings ProgressionSalaries are expected to increase 3.20% to 8.60% annually depending upon the employee's age. Includes inflation at 3.75%. Adopted March 22, 2006.
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-afterretirement rates are based on the 1994 GroupAnnuity Mortality Table (set forward one year for males). Adopted March 22, 2006.
e) Asset Valuation Method7-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 oneseventh 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 March 22, 2006.

f) Service Retirement BenefitThe service benefit (pension) paid to members is an annuity that is owed to them at retirement that 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-of-living adjustments will be made in future years.
g) Actuarially Determined Unfunded Accrued Liability The present value of the unfunded accrued liability, based on unaudited data provided the actuary by the System, was approximately $2.9 billion at June 30, 2007.
h) Required Contributions (% of compensation) Adopted July 23, 2008. Contributions required by the annual actuarial valuation as of June 30, 2007, to be made for the year ended June 30, 2010:

(1) Member
(2) Employer: Normal Unfunded Accrued Liability Total

5.25%
7.96% 1.78% 9.74%

40

Actuarial Section

2008 Comprehensive Annual Financial Report
Summary ofActuarialAssumptions & Methods

Service Retirement
Adopted March 22, 2006

Annual Rate*

Age

Men

50

28%

55

29

60

23

61

23

62

29

63

23

64

25

Women 23% 28 30 25 31 27 26

Annual Rate*

Age

Men

Women

65

32%

30%

66

25

30

67

30

26

68

28

26

69

28

26

70

100

100

*It is also assumed that 10% of eligible active members will retire each year with a reduced early retirement benefit and that an additional 5% of active members will retire in their first year of eligibility for unreduced retirement with 30 years of service.

Separation Before Service Retirement
Adopted March 22, 2006



Age

Death

20

0.05%

25

0.06

30

0.08

35

0.09

40

0.10

45

0.15

50

0.23

55

0.40

60

0.71

64

1.15

Annual ARnatneuoafl Rate of Withdrawal

Disability

0-4 Yrs

5-9 Yrs

10+ Yrs

MEN

0.05% 0.05 0.07 0.07 0.09 0.11 0.25 0.53 -- --

39.00% 18.00 16.00 15.00 15.00 13.00 11.00 12.00
-- --

-- %-- %

11.00--

6.00

7.00

6.00

3.00

6.00

2.00

6.00

2.00

4.50

2.00

4.50

2.00

--

--

--

--

20

0.03%

25

0.03

30

0.03

35

0.05

40

0.07

45

0.09

50

0.13

55

0.21

60

0.39

64

0.67

0.03% 0.03 0.04 0.05 0.07 0.11 0.20 0.63 -- --

WOMEN
30.00% 15.00 16.00 15.00 12.00 11.00 11.00 12.00
-- --

--% 13.00 8.00 8.00 6.00 5.00 4.50 4.50
-- --

--% -- 5.00 4.00 3.00 2.00 2.00 3.00 -- --

Actuarial Section

41

Teachers Retirement System of Georgia
Actuarial Valuation Data

Active Members





Fiscal

Year(1)

Members

2002 2003 2004 2005 2006 2007

199,029 205,453 198,572 199,088 206,592 215,566

Active Members

Annual

Payroll

Average

(000's)

Pay

$ 7,617,869 8,261,961 8,083,118 8,252,598 8,785,985 9,492,003

$ 38,275 40,213 40,706 41,452 42,528 44,033

% Increase
0.9% 5.1 1.2 1.8 2.6 3.5

Retirees and Beneficiaries

Added to Roll

Removed from Roll



Roll- End of Year



Annual

Annual

Annual

Fiscal Allowances

Allowances Allowances

Year(1) Number (000's) Number

(000's)

Number (000's)

2002

4,858 $ 169,833

1,403

$ 26,286

54,222 $ 1,321,842

2003

5,097

188,458

1,627

30,581

57,692 1,479,719

2004

5,381

206,251

1,483

29,525

61,590 1,656,445

2005

6,176

230,973

1,594

33,139

66,172 1,854,279

2006

5,691

223,279

1,644

37,087

70,219 2,040,471

2007

5,858

230,924

1,656

39,293

74,421 2,232,102

% Increase in Annual Allowances
12.2 % 11.9
11.9
11.9
10.0
9.4

Average Annual Allowances $ 24,378 25,649 26,895 28,022 29,059
29,993

(1) Fiscal year refers to the actuarial valuation performed as of June 30 of that year and determines the funding necessary for the fiscal year beginning two years after the valuation date. (Prior to fiscal year 2003 the actuarial valuation performed as of June 30 of that year determined the funding necessary for the subsequent fiscal year.) An actuarial valuation for the fiscal year ended June 30, 2008 is currently in process and was not available for this analysis.

42

Actuarial Section

2008 Comprehensive Annual Financial Report
Actuarial Valuation Data

Solvency Test (in thousands)


Fiscal
Year*

Aggregate Actuarial Accrued Liabilities For

(1) Active Member

(2) Retirees
and

(3) Active Members Actuarial (Employer-Financed Value of

Contributions Beneficiaries

Portion)

Assets

Portion of Accrued Liabilities Covered by Assets
(1) (2) (3)

2002 2003 2004 2005 2006

$ 4,487,248 4,739,109 4,923,415 5,171,813 5,417,408

$ 15,915,320 17,581,264 19,870,020 23,229,592 25,653,251

$ 19,303,955 19,585,303 19,436,596 19,409,809 19,989,022

$ 40,502,333 42,372,661 44,617,956 46,836,895 49,263,027

100.0 % 100.0 % 100.0% 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 95.0 100.0 100.0 91.0

2007

5,703,184

28,212,100

21,081,286

52,099,171 100.0 100.0 86.3

* Fiscal year refers to the actuarial valuation performed as of June 30 of that year and determines the funding necessary for the fiscal year beginning two years after the valuation date. (Prior to fiscal year 2003 the actuarial valuation performed as of June 30 of that year determined the funding necessary for the subsequent fiscal year.) An actuarial valuation for the fiscal year ended June 30, 2008 is currently in process and was not available for this analysis.

Member and Employer Contribution Rates

Fiscal Year
2004 2005 2006 2007 2008 2009

Member
5.00% 5.00 5.00 5.00 5.00 5.00

Employer
9.24% 9.24 9.24 9.28 9.28 9.28

Actuarial Section

43

Teachers Retirement System of Georgia
Actuarial Valuation Data
Analysis of Financial Experience (in millions)

Item

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

2007

2006

2005

2004

2003

2002

Interest Added to Previous Unfunded Accrued Liability
Accrued Liability Contribution Experience:

$ 134.7 57.2

Valuation Asset Growth

( 132.3)

Pensioners' Mortality Turnover and Retirements (1)

25.6 213.3

New Entrants

212.6

Salary Increases Method Changes Amendments (2)

294.5 --
252.3

Change in Member Contribution Rate (4) (8.4)

Assumption Changes (3)

--

Miscellaneous

51.2

Total Increase (Decrease)

$ 1,100.7

$ 73.1 $ (29.1)

51.9

49.4

675.3 ( 40.7) 65.8
143.5 144.1 (339.2) 48.5
-- -- --
$ 822.3

516.4 ( 14.0) 59.9
104.0 ( 227.5)
313.7 -- --
589.4 --
$ 1,362.2

$ (35.0) 79.6
507.5 48.8 26.8 118.5 ( 667.1)
-- -- -- -- --
$ 79.1

$ (57.7) $ (103.8)

77.4

41.1

788.5 ( 30.0) 277.0 149.1 372.4
-- 78.7
-- ( 1,326.6)
--
$ 328.8

667.7 ( 35.1) ( 236.5)
99.9 202.3
-- -- -- -- --
$ 635.6

(1) Turnover and Retirements 2004 - Reflects impact of change in reported data due to a change in computer system. Previous years' data reported active members as any participant who contributed during the fiscal year. The 2004 data reported active members as only those who were contributing any of the last three months of the fiscal year.
(2) Amendments 2003 - Reflects an ad hoc cost-of-living adjustment of 0.5% to all retirees as of July 1, 2002. 2006 - Reflects the impact of House Bill 400 which increased allowances effective July 1, 2006 to retirees and beneficiaries retired before July 1, 1987. 2007- Reflects the impact of the Plymel lawsuit based on a six-year statue of limitations.
(3) Assumption Changes 2003 - Reflects an increase in interest rate assumption from 7.25% to 7.50% and an increase in the salary increase assumption by 0.25% at each age.
2005 - The assumed rates of withdrawal, disability, retirement, and mortality and the assumed rates of salary increase have been revised to more closely reflect the actual and anticipated experience of the System. In addition, the administration expense load was increased to 0.25% from 0.15% of active payroll.
(4) Member Contribution Rate 2007 - Reflects an increase in the member contribution rate from 5.00% to 5.25% effective July 1, 2009.

44

Actuarial Section

2008 Comprehensive Annual Financial Report
StatisticalSection Overview

The statistical section presents additional information to provide financial statement users with added historical perspective, context, and detail to assist in using the information in the financial statements, notes to financial statements, and required supplementary information to understand and assess the
System's financial condition.

Operating Information
The schedules presented on pages 48 through 60 contain benefits, service and employer data to help the reader understand how the System's financial report relates to the services of the System and the activities it performs.

Financial Trends
The schedules presented on page 46 and page 47 contain trend information to help the reader understand how the System's financial position has changed over time.

Statistical Section

45

Financial Trends
Additions by Source (in thousands)

Teachers Retirement System of Georgia





Net

Fiscal

Member

Employer

Investment

Year

Contributions

Contributions Income (Loss)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$ 330,517 355,948 369,006 403,952 438,998 448,929 464,931 485,721 524,940 554,027

$ 776,178 779,571 808,480 716,917 768,673 782,301 815,693 855,626 927,371 986,759

$ 3,889,927 2,788,202 (2,099,972) (1,610,477) 1,669,768 3,794,733 3,279,505 2,691,062 6,792,341 (1,775,578)

Total Additions to (Deductions from) Plan Net Assets
$ 4,996,622 3,923,721 (922,486) (489,608) 2,877,439 5,025,963 4,560,129 4,032,409 8,244,652 (234,792)

Contributions were made in accordance with actuarially determined contribution requirements.

Deductions by Type (in thousands)

Fiscal Year

Service

Benefit Payments

Partial Lump-Sum Option (1)

Lump-Sum

Survivor Supplemental Death

Disability Benefits

(2)
Payments Settlement

Total Benefit Payments

Net Administrative
Expenses

Refunds

Total Deductions From Plan Net Assets



1999 $ 786,963 $ -- $ 30,302 $ 41,852 $ 4,628 $ 1,446 $ 865,191 $ 7,810 $ 42,911 $ 915,912

2000 923,049

--

34,160 48,063 4,334 1,962 1,011,568 9,058 44,718 1,065,344

2001 1,058,683

--

37,118 52,528 3,881 1,166 1,153,376 10,502 58,831 1,222,709

2002 1,181,838

--

40,418 57,178 3,582 1,355 1,284,371 15,966 41,250 1,341,587

2003 1,323,871

--

43,545 62,223 3,120 1,881 1,434,640 14,804 40,883 1,490,327

2004 1,481,710

--

47,002 65,821 2,757 1,177 1,598,467 15,378 42,580 1,656,425

2005 1,656,652 15,653 50,959 72,025 2,398 1,791 1,799,478 19,558 50,491 1,869,527

2006 1,863,194 26,601 62,773 35,394 2,093 1,376 1,991,431 20,173 53,138 2,064,742

2007 2,128,927 33,378 70,431 46,670 1,842 1,702 2,282,950 22,073 52,875 2,357,898

2008 2,527,156 40,820 89,348 95,452 1,648 2,059 2,756,483 23,744 54,482 2,834,709 (1) Partial Lump-Sum Option Plan became effective July 1, 2004. (2) Supplemental payments to retirees who belong to a local retirement system.


46

Statistical Section

Financial Trends

Changes in Net Assets (in thousands)





Total



Additions

FFiissccaall YYeeaarr

to Plan Net Assets

1999

$ 4,996,622

2000

3,923,721

2001

( 922,486 )

2002

( 489,608 )

2003

2,877,439

2004

5,025,963

2005

4,560,129

2006

4,032,409

2007

8,244,652

2008

( 234,792 )

2008 Comprehensive Annual Financial Report

Total Deductions from Plan Net Assets $ 915,912
1,065,344
1,222,709 1,341,587 1,490,327 1,656,425
1,869,527 2,064,742 2,357,898 2,834,709

Changes in Plan Net Assets $ 4,080,710 2,858,377 (2,145,195) (1,831,195) 1,387,112 3,369,538 2,690,602 1,967,667 5,886,754 ( 3,069,501)

Statistical Section

47

Operating Information

Teachers Retirement System of Georgia

Benefit Payment Statistics

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

10

20

Number of Retirees

78,633

76,133

70,239 66,282

61,590

57,692

54,222

50,767

47,105

43,732

30

40

50

60

70

80

$25

$2,756.5

$2,283.0

$1,991.4 $2,283.0

$20

$1,799.5

$1,598.5

$15

$1,434.6

$10 $865.2 $1,011.6 $1,153.4 $1,284.4

$5

$0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Annual Benefit (in millions)

$2,900

Average Monthly Benefit (1)

$2,921

2,600 $2,300

$2,262

$2,363

$2,499

$2,000 $1,700

$1,790

$1,893

$1,974

$1,649

$1,400 1999

2000

2001

2002

$2,072 $2,163
2003 2004

2005

2006

2007

2008

(1) Retirees who belonged to a local retirement system and who receive supplemental payments are not included.

48

Statistical Section

2008 Comprehensive Annual Financial Report
Operating Information

Member Withdrawal Statistics

Number of Members

2008 2007 2006 2005
2004 2003 2002 2001 2000 1999
$25 6

8,148 8,251 8,649 8,518
7,805 7,714
9,120

9,923

9,828

7

8

9

10

11

12,563

12

13

$60

$58.8

$55

$53.1 $52.3

$54.5

$50.5 $50

$45 $42.9
$40

$44.7

$41.3 $40.9 $42.6

$35 1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Annual Withdrawal (in millions)

$7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000

$4,507 $4,366

Average Withdrawal

$5,458 $5,302

$6,139 $5,929

$6,689 $6,338

$4,523 $4,683

$3,500 1999

2000

2001 2002

2003

2004

2005

2006

2007

2008

Statistical Section

49

Operating Information

Teachers Retirement System of Georgia

Average Monthly Benefit Payments for New Retirees

Effective Retirement Dates
for Fiscal Years Ended June 30, 10 - 15

Years Credited Service

16 - 20 21 - 25

26 - 30 Over 30

1999

Average monthly benefit

$ 633.00 $ 995.24 $1,417.05

$2,265.15 $2,901.89

Average final average salary

$2,261.00 $2,854.55 $3,177.89

$3,675.51 $4,564.05

Number of retirees

591

426

522

1,147

928



2000

Average monthly benefit

$ 631.36 $1,074.51 $1,432.55

$2,373.56 $3,121.26

Average final average salary

$2,253.00 $3,096.25 $3,178.02

$3,947.94 $4,786.21

Number of retirees

687

414

657

1,819

1,237



2001

Average monthly benefit

$ 639.66 $1,184.73 $1,549.76

$2,474.70 $3,198.55

Average final average salary

$2,295.08 $3,103.29 $3,403.14

$4,251.56 $5,069.71

Number of retirees

751

447

633

2,017

1,398



2002

Average monthly benefit

$ 669.01 $1,129.23 $1,646.88

$2,624.62 $3,322.04

Average final average salary

$2,499.32 $3,627.31 $3,545.14

$4,433.46 $5,070.61

Number of retirees

721

445

614

1,795

1,283



2003

Average monthly benefit

$ 783.71 $1,526.45 $1,859.12

$2,604.05 $3,462.68

Average final average salary

$2,673.99 $3,339.27 $3,745.58

$4,401.55 $5,216.65

Number of retirees

807

483

545

1,714

1,661



2004

Average monthly benefit

$1,405.03 $1,351.04 $1,895.12

$2,763.31 $3,557.04

Average final average salary

$5,017.00 $3,283.34 $3,823.40

$4,471.74 $5,389.07

Number of retirees

906

579

630

1,864

1,611



2005

Average monthly benefit

$ 729.34 $1,216.78 $1,751.04

$2,575.64 $3,474.65

Average final average salary

$2,960.22 $3,315.00 $4,014.56

$4,511.41 $5,345.03

Number of retirees

907

689

693

1,379

2,545



2006

Average monthly benefit

$ 759.49 $1,236.93 $1,874.90

$2,356.35 $3,361.85

Average final average salary

$3,002.19 $3,273.99 $4,036.61

$4,571.12 $5,338.88

Number of retirees

815

651

653

718

2,780



2007

Average monthly benefit

$ 757.50 $1,246.18 $1,782.60

$2,350.01 $3,330.98

Average final average salary

$3,193.24 $3,580.49 $4,061.53

$4,669.55 $5,406.13

Number of retirees

975

704

758

729

2,725

2008

Average monthly benefit

$ 809.08 $1,324.02 $1,866.99

$2,466.86 $3,488.62

Average final average salary

$3,404.28 $3,734. 90 $4,28 3.55 $ 4,797.61 $5,676.32

Number of retirees 1,010

726

777

686

2,665

Total
$1,889.58 $3,763.86
3,614
$2,076.92 $4,017.50
4,814
$2,183.38 $4,183.26
5,246
$2,258.01 $4,298.67
4,858
$2,418.00 $4,405.15
5,210
$2,527.79 $4,628.32
5,590
$2,431.70 $4,455.10
6,213
$2,436.59 $4,495.40
5,617
$2,335.28 $4,182.19
5,891
$2,424.71 $4,755.66
5,864

50

Statistical Section

2008 Comprehensive Annual Financial Report
Operating Information
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

$

1 - 250 892 435 79 167

251-500 4,137 3,268 481 377

501-750 5,009 4,091 522 374

751-1000 4,917 4,012 511 343

1001-1250 4,186 3,480 408 267

1,251 - 1,500 3,759 3,137 391 222

1,501 - 1,750 3,657 3,145 330 174

1,751 - 2,000 3,663 3,234 298 130

2,001 - 2,250 3,797 3,382 305 110

2,251 - 2,500 4,500 4,164 241 95

2,501 - 2,750 5,130 4,825 218 87

2,751 - 3,000 5,531 5,349 135 47

3,001 - 3,250 5,725 5,617 73 35

3,251 - 3,500 4,846 4,762 39 45

3,501 - 3,750 3,876 3,826 27 23

3,751 - 4,000 3,105 3,069 16 20

4,001 - 4,250 2,311 2,290 12

9

4,251 - 4,500 1,764 1,741 13 10

4,501 - 4,750 1,432 1,417

3 12

4,751 - 5,000 1,194 1,179

3 12

Over 5,000 5,202 5,147 12 43

TOTALS 78,633 71,570 4,117 2,602

211 275

14

260

11 2,819

80

743

22 3,492 142 813

51 3,332 145 764

31 2,773 126 654

9 2,410 123 637

8 2,419 118 528

1 2,427 130

498

0 2,523 140 479

0 3,085 154 506

0 3,542 200 566

0 3,880 265 441

0 4,193 261 413

0 3,489 259 362

0 2,823 202 283

0 2,282 145 219

0 1,656 105 179

0 1,224 107 153

0 949

85

135

0 775

65

115

0 3,109 290 618

344 53,477 3,156 9,366

46

44

27

166

86 161

212

48 187

259

34 207

239

36 198

223

40 194

251

40 175

235

45 197

251

51 216

266

75 255

248

72 306

275 103 336

263

91 288

235

83 225

195

52 180

165

68 110

152

53

90

109

37

75

105

36

55

110

35

49

557 215 178

4,562 1,344 3,709

13 71 93 125 129 123 118 130 137 159 196 231 216 193 141 116 76 59 67 45 233 2,671

(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.

Statistical Section

51

Operating Information
Retirement Payments By County Residence

County

Number of FY08 Total Retirees Gross Pay

Appling Atkinson Bacon Baker Baldwin Banks Barrow Bartow Ben Hill Berrien Bibb Bleckley Brantley Brooks Bryan Bulloch Burke Butts Calhoun Camden Candler Carroll Catoosa Charlton Chatham Chattahoochee Chattooga Cherokee Clarke Clay Clayton Clinch Cobb

204 67 100 14 508 135 373 586 191 192 1,636 207 100 137 165 991 174 164 31 199 113 1,173 294 60 2,106 21 212 971 2,499 15 742 70 3,428

$ 6,078,761.41 1,751,259.74 2,736,494.87 308,804.64 14,428,842.26 3,477,933.55 9,923,202.34 16,825,958.90 5,386,182.52 4,782,846.05 47,984,749.09 5,066,091.58 2,604,396.88 3,848,066.11 4,164,224.31 29,705,279.63 4,632,642.09 4,709,961.82 812,222.59 5,828,889.51 2,878,852.99 34,327,592.29 8,338,463.34 1,576,796.89 64,251,270.79 544,144.00 5,542,651.94 28,921,320.19 91,895,684.77 399,029.16 23,015,592.43 1,946,493.34
107,734,520.15

County

Number of FY08 Total Retirees Gross Pay

Coffee Colquitt Columbia Cook Coweta Crawford Crisp Dade Dawson Decatur DeKalb Dodge Dooly Dougherty Douglas Early Echols Effingham Elbert Emanuel Evans Fannin Fayette Floyd Forsyth Franklin Fulton Gilmer Glascock Glynn Gordon Grady Greene

379 349 1,364 175 796 44 245 98 159 106 4,091 214 95 1,041 562 38
4 247 193 291 104 256 948 990 464 268 5,131 198 27 846 372 83 212

$ 10,370,647.17 9,449,108.75 38,777,667.27 4,563,296.11 23,933,870.52 1,272,551.08 6,263,294.23 2,406,182.58 5,585,902.22 2,902,713.27
148,411,359.11 5,614,677.08 2,650,111.81 30,758,983.76 17,049,067.47 1,125,973.58 110,520.90 5,881,686.14 4,787,378.86 7,784,638.41 2,881,144.96 7,119,005.93 28,975,108.61 28,249,940.06 14,230,749.23 7,520,990.97
192,068,695.76 6,109,246.99 648,692.74 25,565,967.57 10,386,389.99 2,089,247.06 6,788,113.24

52

Statistical Section

Operating Information
Retirement Payments By County Residence continued

County

Number of FY08 Total Retirees Gross Pay

Gwinnett Habersham Hall Hancock Haralson Harris Hart Heard Henry Houston Irwin Jackson Jasper Jeff Davis Jefferson Jenkins Johnson Jones Lamar Lanier Laurens Lee Liberty Lincoln Long Lowndes Lumpkin Macon Madison Marion McDuffie McIntosh Meriwether

2,494 433
1,234 105 205 242 220 59
1,006 819 83 540 151 102 159 86 84 159 193 55 530 173 179 107 43
1,173 319 116 513 64 223 129 186

$ 79,125,319.09 12,171,895.87 37,005,945.41 2,591,254.04 5,776,147.37 7,000,704.66 6,701,661.73 1,450,281.90 30,510,691.88 24,810,941.88 2,192,929.47 14,850,906.18 3,946,087.50 2,756,861.02 3,912,777.25 2,309,045.09 2,140,921.63 4,838,394.45 5,341,291.14 1,535,363.86 14,954,313.10 5,042,510.06 4,999,516.93 2,938,744.53 1,048,598.58 31,059,698.57 9,432,786.89 3,409,284.97 11,490,450.61 1,455,217.56 6,365,346.38 3,718,408.58 5,441,965.67

County

Number of FY08 Total Retirees Gross Pay

Miller Mitchell Monroe Montgomery Morgan Murray Muscogee Newton Oconee Oglethorpe Paulding Peach Pickens Pierce Pike Polk Pulaski Putnam Quitman Rabun Randolph Richmond Rockdale Schley Screven Seminole Spalding Stephens Stewart Sumter Talbot Taliaferro Tattnall

27 202 185 96 228 229 1,886 426 752 202 318 482 438 176 160 360 88 257
7 200 34 2,318 515 34 162 33 602 308 62 379 60 17 144

$ 814,627.20 5,312,451.78 5,076,449.42 2,724,726.28 6,978,355.53 6,937,131.15 57,117,364.66 12,486,477.91 25,024,374.42 4,942,115.76 8,539,325.08 14,444,950.72 14,278,408.34 4,645,943.55 4,147,550.89 10,377,682.48 2,561,938.28 8,125,842.38 171,535.38 6,385,876.71 783,994.05 63,790,015.62 15,402,663.67 754,411.06 3,888,522.62 908,119.20 16,725,252.26 8,349,111.56 1,825,964.00 11,063,568.45 1,481,642.17 355,699.16 4,015,397.21

Statistical Section

53

Operating Information
Retirement Payments By County Residence continued

County

Number of FY08 Total Retirees Gross Pay

Taylor Telfair Terrell Thomas Tift Toombs Towns Treutlen Troup Turner Twiggs Union Upson Walker Walton Ware Warren Washington Wayne Webster Wheeler White Whitfield Wilcox Wilkes Wilkinson Worth Outside GA

91 157 50 505 675 259 168 79 553 121 51 225 291 441 664 440 52 220 285 21 71 308 680 103 122 109 161 9,892

$ 2,489,979.20 4,654,468.38 1,544,643.39 13,551,260.11 18,721,964.80 6,844,945.16 4,934,093.90 2,165,888.82 16,065,785.59 3,138,941.63 1,429,857.24 6,510,362.33 8,320,397.80 11,688,230.72 19,357,530.55 12,289,316.83 1,472,351.91 6,201,948.01 7,106,505.02 455,963.94 1,902,372.11 9,052,728.67 20,591,329.48 2,831,677.17 3,373,034.36 2,841,867.16 4,279,409.42
300,266,276.41

TOTALS

78,633 *$2,385,609,028.51

* This number does not include the effect of the Plymel lawsuit as described on page 29.

54

Statistical Section

Operating Information

Teachers Retirement System of Georgia

Principal Participating Employers







2008

2000 (1)





Percentage

Percentage



Covered

of Total

Covered

of Total

Emp loyer s

Employees Rank System

Employees Rank System

Gwinnett County Schools Cobb County Schools Dekalb County Schools Fulton County Schools University of Georgia Clayton County Schools Atlanta City Schools Chatham County Schools Muscogee County School District Henry County Schools Medical College of Georgia

16,448 12,314 11,774 9,912 8,130 5,804 5,563 4,272 3,974 3,915
__

All Others

142,918

Total

225,024

1 7.31%

2 5.47

3 5.23

4 4.40

5 3.61

6 2.58

7 2.47

8 1.90

9 1.77

10 1.74

__

__

63.52

100.00%

10,438 9,766 10,349 7,354 8,575 5,075 6,131 4,070 4,025
__ 6,338
119,787
191,908

1 5.44%

3 5.09

2 5.39

5 3.83

4 4.47

8 2.64

7 3.19

9 2.12

10 2.10

__

__

6 3.30

62.43

100.00%

(1) Data by employer is unavailable prior to fiscal year 2000.



Statistical Section

55

Operating Information

Teachers Retirement System of Georgia

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 Fort Valley State University Gainesville College Georgia College and State
University Georgia Gwinnett College Georgia Highlands College Georgia Institute of Technology Georgia Perimeter College Georgia Southern University Georgia Southwestern College 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 Skidaway Institute of
Oceanography South Georgia College Southern Polytechnic State University University of Georgia Valdosta State University Waycross College State University of West Georgia

Boards of Education
Appling County Atkinson County Atlanta City Bacon County Baker County Baldwin County Banks County Barrow County Bartow County Ben Hill County Berrien County Bibb County Bleckley County Brantley County Bremen City Brooks County Bryan County Buford City Bulloch County Burke County Butts County Calhoun City Calhoun County Camden County Candler County Carroll County Carrollton City Cartersville City Catoosa County Charlton County Chatham County Chattahoochee County Chattooga County Cherokee County Chickamauga City Clarke County Clay County Clayton County Clinch County Cobb County Coffee County Colquitt County Columbia County Commerce City Cook County

56

Statistical Section

2008 Comprehensive Annual Financial Report
Operating Information

Participating Employers
Boards of Education continued
Coweta County Crawford County Crisp County Dade County Dalton City Dawson County Decatur City Decatur County DeKalb County Dodge County Dooly County Dougherty County Douglas County Dublin City Early County Echols County Effingham County Elbert County Emanuel County Evans County Fannin County Fayette County Floyd County Forsyth County Franklin County Fulton County Gainesville City Georgia Military College Gilmer County Glascock County Glynn County Gordon County Grady County Greene County Griffin-Spalding County Gwinnett County Habersham County Hall County Hancock County Haralson County Harris County Hart County Heard County Henry County Houston County

Irwin County Jackson County Jasper County Jeff Davis County Jefferson City Jefferson County Jenkins County Johnson County Jones County Lamar County Lanier County Laurens County Lee County Liberty County Lincoln County Long County Lowndes County Lumpkin County Macon County Madison County Marietta City Marion County McDuffie County McIntosh County Meriwether County Miller County Mitchell County Monroe County Montgomery County Morgan County Murray County Muscogee County Newton County Oconee County Oglethorpe County Paulding County Peach County Pelham City Pickens County Pierce County Pike County Polk School District Pulaski County Putnam County Quitman County Rabun County

Statistical Section

57

Operating Information

Teachers Retirement System of Georgia

Participating Employers
Boards of Education continued
Randolph County Richmond County Rockdale County Rome City Schley County Screven County Seminole County Social Circle City Stephens County Stewart County Sumter County Talbot County Taliaferro County Tattnall County Taylor County Telfair County Terrell County Thomas County Thomasville City Thomaston-Upson County Tift County Toombs County Towns County Treutlen County Trion City Troup County Turner County Twiggs County Union County Valdosta City Vidalia City Walker County Walton County Ware County Warren County Washington County Wayne County Webster County Wheeler County White County Whitfield County Wilcox County Wilkes County Wilkinson County Worth County

Public Libraries
A Mitchell Powell Jr. Public Library Athens Regional Library Barnesville-Lamar County Bartow County Library Bartram Trail Regional Library Brooks County Library Camden County 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 DeKalb County Public Library Desota 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 Live Oak Public Library M.E. Roden Memorial Library Mary Vinson Memorial Library Middle Georgia Regional Library Moultrie-Colquitt County Library Mountain Regional Library Newton County Library Northeast Georgia Regional
Library

58

Statistical Section

Operating Information

Participating Employers Public Libraries continued

Technical Colleges continued

Northwest 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 Troup-Harris-Coweta
Regional Library Uncle Remus Regional Library Warren County Public Library West Georgia Regional Library
Technical Colleges
Albany Technical College Altamaha Technical College Applachian Technical College Athens Technical College Atlanta Technical College Augusta Technical College Central Georgia 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 Gwinnett Technical College Heart of Georgia Technical College

Lanier Technical College Middle Georgia Technical College Moultrie Technical College North Georgia Technical College North Metro Technical College Northwestern Technical College Ogeechee Technical College Okefenokee Technical College Sandersville Technical College Savannah Technical College South Georgia Technical College Southeastern Technical College Southwest GA Technical College Swainsboro 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

Statistical Section

59

Operating Information
Participating Employers Other
Academy of Lithonia Charter Amana Academy Baconton Community Charter
School Baldwin County Board of Health Board of Regents Brighten Academy Chancellor Beacon Academy Charles Drew Charter School Charter Conservatory for Liberal
Arts and Technology, Inc. Cooperative Extension Service DeKalb Academy of Technology DeKalb Path Academy Destiny Academy of Excellence Fulton County DFACS Fulton Science Academy Charter School Georgia Association of Educators Georgia Department of Administrative Services Georgia Department of Agriculture Georgia Department of Audits Georgia Department of Community Health Georgia Department of Corrections Georgia Department of Driver Services Georgia Department of Early Care and Learning Georgia Department of Economic
Development Georgia Department of Education Georgia Department of Human
Resources Georgia Department of Juvenile Justice Georgia Department of Labor Georgia Department of Natural Resources Georgia Department of Public Safety Georgia Department of Technical
and Adult Education

Georgia Student Finance Commission
Georgia High School Association Georgia Magnet Charter School Georgia Public Defender Council Georgia Public
Telecommunications Imagine International Academy of
Mableton Imagine International Academy of Smyrna Imagine Wesley International
Academy International Community
Charter School Kidspeace Charter School Kipp South Fulton Academy Kipp Ways Academy Lewis Academy of Excellence Lake Oconee Academy Marietta Charter School Mountain Education Center Neighborhood Charter School New Life Academy of Excellence Odyssey Charter School Office of Planning and Budget Secretary of State
Southeast Atlanta Charter Schools State Accounting Office T.E.A.C.H. Charter School
Teachers Retirement System of Georgia
Tech High School University Community Academy Ware County Health Department

60

Statistical Section

Two Northside 75 Atlanta, GA 30318 (800) 352-0650 or (404) 352-6500
www.trsga.com
TEACHERS RETIREMENT SYSTEM OF GEORGIA