Comprehensive annual financial report, a component unit of the State of Georgia, fiscal year ended June 30, 2016

Teachers Retirement System of Georgia COMPREHENSIVE ANNUAL FINANCIAL REPORT
2016 Fiscal Year
ended June 30,

Teachers Retirement System of Georgia COMPREHENSIVE ANNUAL FINANCIAL REPORT
2016 Fiscal Year
ended June 30,
Prepared by the Financial Services Division of the Teachers Retirement System of Georgia
Dr. L.C. (Buster) Evans Executive Director

TABLE OF CONTENTS
Introductory Section
Certificate of Achievement........................................................................................................................... 4 Board of Trustees..........................................................................................................................................5 Letter of Transmittal ....................................................................................................................................6 Your Retirement System............................................................................................................................... 9 System Assets............................................................................................................................................10 Administrative Staff and Organization.......................................................................................................11 Summary of Plan Provisions.......................................................................................................................12
Financial Section
Independent Auditors'Report....................................................................................................................15 Management's Discussion & Analysis (Unaudited).....................................................................................17 Basic Financial Statements:
Statement of Fiduciary Net Position..............................................................................................21 Statement of Changes in Fiduciary Net Position............................................................................22 Notes to Financial Statements......................................................................................................23 Required Supplementary Information (Unaudited): Schedule of Changes in Employers'and Nonemployers'Net Pension Liability...............................37 Schedule of Employers'and Nonemployers'Net Pension Liability and Related Ratios...................37 Schedule of Employer and Nonemployer Contributions................................................................38 Schedule of Investment Returns...................................................................................................38 Schedule of the System's Proportionate Share of the Net Pension Liability to ERS........................38 Schedule of the System's Contributions to ERS..............................................................................38 Notes to Required Supplementary Information............................................................................39 Additional Information: Schedule of Administrative Expenses............................................................................................41 Schedule of Investment Expenses.................................................................................................42
Investment Section
Investment Overview.................................................................................................................................43 Rates of Return..........................................................................................................................................44 Asset Allocation.........................................................................................................................................45 Schedule of Fees and Commissions............................................................................................................45 Investment Summary................................................................................................................................45 Portfolio Detail Statistics............................................................................................................................46
2 IntroductorySection

TABLE OF CONTENTS
Actuarial Section
Actuary's Certification Letter......................................................................................................................47 Summary of Actuarial Assumptions and Methods: ....................................................................................49
Service Retirement.......................................................................................................................51 Separation Before Service Retirement..........................................................................................51 Actuarial Valuation Data: ...........................................................................................................................52 Active Members............................................................................................................................52 Retirees and Beneficiaries.............................................................................................................52 Solvency Test................................................................................................................................53 Member & Employer Contribution Rates.......................................................................................53 Schedule of Funding Progress.......................................................................................................54 Analysis of Financial Experience....................................................................................................55
Statistical Section
Statistical Section Overview.......................................................................................................................56 Financial Trends: ........................................................................................................................................56
Additions by Source......................................................................................................................56 Deductions by Type.......................................................................................................................57 Changes in Fiduciary Net Position.................................................................................................57 Operating Information:..............................................................................................................................58 Benefit Payment Statistics............................................................................................................58 Member Withdrawal Statistics .....................................................................................................59 Average Monthly Benefit Payments for New Retirees...................................................................60 Retired Members by Type of Benefit.............................................................................................61 Retirement Payments by County of Residence..............................................................................62 Principal Participating Employers.................................................................................................64 Reporting Entities.........................................................................................................................65
IntroductorySection 3

CERTIFICATE OF ACHIEVEMENT

Government Finance Officers Association

Certificate of
Achievement for Excellence
in Financial Reporting

Presented to

Teachers Retirement System

Text38:

of Georgia

For its Comprehensive Annual Financial Report
for the Fiscal Year Ended
JJuunnee 3300,, 2200153

Executive Director/CEO

4 IntroductorySection

BOARD OF TRUSTEES
as of December 1, 2016

Mr. J. Alvin Wilbanks* CHAIR
School Administrator Appointed by the Governor
Term Expires 6/30/19

Mr. Thomas W. Norwood* VICE-CHAIR
Investment Professional Elected by the Board of Trustees
Term Expires 6/30/17

Ms. Anne Cardella Classroom Teacher Appointed by the Governor Term Expires 6/30/17

Dr. Wanda G. Creel* TRS Member
Appointed by the Governor Term Expires 6/30/18

Ms. Marion R. Fedrick TRS Member
Appointed by the Board of Regents Term Expires 6/30/18

Mr. Greg S. Griffin* State Auditor Ex-Officio

Mr. Steven N. McCoy* State Treasurer Ex-Officio

Ms. Deborah K. Simonds* Retired Teacher
Elected by the Board of Trustees Term Expires 6/30/18

Dr. William G. Sloan, Jr. Member-at-Large
Appointed by the Governor Term Expires 6/30/17

Mr. Christopher M. Swanson Classroom Teacher
Appointed by the Governor Term Expires 3/31/18

* Investment Committee Member

IntroductorySection 5

LETTER OF TRANSMITTAL

Teachers Retirement System of Georgia
December 12, 2016 Board of Trustees Teachers Retirement System of Georgia Atlanta, Georgia

Dr. L.C. (Buster) Evans Executive Director

I am pleased to present the Comprehensive Annual Financial Report of the Teachers Retirement System of Georgia (the "System") for the fiscal year ended June 30, 2016. 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 OfficersAssociation 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, 2015. This was the 28th 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, and began operations in 1945. A summary of the System's provisions is provided on pages 12-14 of this report.
The System is governed by a ten-member Board of Trustees which appoints the Executive Director who is responsible for the administration and operations of the System, which serves 433,171 active and retired members, and 306 employers.

6 IntroductorySection

LETTER OF TRANSMITTAL

continued

Financial Information

The management of the System is charged with the responsibility of maintaining a sound system of internal accounting controls. The objectives of such a system are to provide management with reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations, and that they are recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. The concept of reasonable assurance recognizes the cost of a control should not exceed the benefits likely to be derived. Therefore, the objective is to provide reasonable, rather than absolute assurance, that the financial statements are free of any material misstatements. 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 beginning on page 17 of this report for an overview of the financial status of the System, including a summary of the System's Fiduciary Net Position, Changes in Fiduciary Net Position, and Asset Allocations.
INVESTMENTS -- The System has continued to invest in a mix of liquid, 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. A high quality balanced fund has proven to be a successful strategy in a variety of markets over a long period of time. For fiscal year 2016 the System's portfolio was comprised of 31.4% fixed income and 68.6% equities and experienced a 1.4% rate of return. A comparative analysis of rates of return is presented on page 44. For additional information and analysis pertaining to investment policies and strategies, asset allocations, and yield, see Management's Discussion

and Analysis beginning on page 17 and the Investment Section beginning on page 43. The System addresses the safeguarding of investments by requiring that they be held by agent custodial banks in the name of the System and that deposits are insured by the Federal Deposit Insurance Corporation.
As in previous years, maintaining quality was a primary goal and was successfully met. "Conservation of Capital" and "Conservatism" continue to be the guiding principles for 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, expressed as a percentage of annual covered payroll, that 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 System continues to remain strong as evidenced by the ratio of the actuarial value of assets to the actuarial accrued liabilities. This ratio was 79.1% for the fiscal year ended June 30, 2015. 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 Nathan Deal and the Georgia General Assembly, the System has been and will continue to be funded on an actuarially sound basis, thus providing the membership the comfort and security they expect from their retirement system.
Initiatives
At TRS, we continuously look for ways to improve our customer service and maintain a secure and stable System for our customers. Throughout the year, we solicit feedback from our members and take those suggestions and comments into consideration when

IntroductorySection 7

LETTER OF TRANSMITTAL

continued

making our processes, technology and services offered more effective and efficient.
To engage and keep our newer members informed, we individually counseled 7,429 members at the TRS office and around the State. Through our 336 outreach events, including meetings, benefit fairs, and workshops, we reached over 26,500 members and retirees in over 120 counties. We conducted 6 half-day seminars for over 600 members, with speakers from TRS, Social Security Administration, the Department of Community Health, and financial/estate planning experts. We presented 5 employer training seminars to 171 human resources personnel from 130 TRS reporting employers. We also automated the scheduling process for our event hosts, making scheduling and planning outreach events easier and more convenient for our gracious employers.
To enhance the services we provide our members, we continued the practice of automating many of our processes. We created the ability for our employers to securely upload documents to TRS via their online Employer Desktop, we enabled members with the ability to submit online requests for benefit estimates, and we provided retirees with the ability to obtain a benefit verification letter without having to verbally request one. Our goal is to continue to enhance and automate as many processes as possible to provide more expedient, accurate, convenient, and secure services.
To provide our members with more enhanced and automated business processes, our technology division was hard at work making sure our systems were secure, available, and convenient. We upgraded various systems without any interruptions in service, enhanced online security so our members can feel confident while doing business with TRS online, and blocked over 9 million hacker probes on our system. We had over 13,600 members and retirees register for a new online account, processed over 7,000 online retirement applications, and disbursed over $4.3 billion in monthly benefit payments.

Other Information
INDEPENDENT AUDIT -- The Board of Trustees 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 fiduciary net position and the related statements of changes in plan fiduciary net position 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 Nathan Deal, 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,
Dr. L.C. (Buster) Evans Executive Director

8 IntroductorySection

YOUR RETIREMENT SYSTEM

June 30,

Financial Highlights

2016

2015

Member Contributions

$ 685,626,000 $ 661,835,000

Employer and Nonemployer Contributions Interest and Dividend Income Benefits Paid to Retired Members

$ 1,580,532,000 $ 1,442,252,000 $ 4,228,819,000

$ 1,406,706,000 $ 1,450,750,000 $ 3,996,879,000

Member Withdrawals
Interest Credited to Member Contributions

$ 79,334,000 $ 80,085,000 $ 320,388,000 $ 307,113,000

% Change + 3.6 + 12.4 _ 0.6 + 5.8 _ 0.9
+ 4.3

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

218,215 7,383
117,918 $ 2,989

214,015 8,011
113,066 $ 2,946

+ 2.0 _ 7.8
+ 4.3 + 1.5

IntroductorySection 9

SYSTEM ASSETS

Total System Assets at June 30 (in thousands)

2011

2012

2013

2014

2015

2016

Equities Fixed Income Other(1)
Total System Assets

$37,567,598
14,386,920 2,196,449

$37,190,400
15,188,293 1,154,311

$41,395,706
14,882,328 2,360,040

$47,126,335
17,490,895 1,907,659

$46,422,828
18,807,238 1,620,195

$43,651,536
19,979,237 2,087,314

$54,150,967 $53,533,004 $58,638,074 $66,524,889 $66,850,261 $65,718,087

(1) Includes receivables, cash and cash equivalents, and capital assets, net.

Growth of Total System Assets (in billions)
Equities Fixed Income Other

$75

$66.5

$66.9

$65.7

$65

$58.6

$55

$54.2

$53.5

$45

$35

$25

$15 $5

2011

2012

2013

2014

2015

2016

10 IntroductorySection

ADMINISTRATIVE STAFF & ORGANIZATION

Dr. L.C. (Buster) Evans Executive Director

Stephen J. Boyers Chief Financial Officer

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

R. Cory Buice Director
Retirement Services

K. Paige Donaldson Director
Employer Services and Contact Management

Lisa M. Hajj Director
Communications

Dina N. Jones Director
Member Services

Laura L. Lanier Controller
Financial Services

J. Gregory McQueen Director
Information Technology

Tonia T. Morris Director
Human Resources

Consulting Services Actuary Cavanaugh Macdonald
Consulting, LLC
Auditor KPMG LLP

Medical Advisors Gordon J. Azar, M.D. Atlanta, Georgia William Biggers, M.D. Atlanta, Georgia Marvin Bittinger, M.D.
Gainesville, Georgia Pedro Garcia, M.D.
Atlanta, Georgia Harold Sours, M.D.
Atlanta, Georgia Joseph W. Stubbs, M.D. Albany, Georgia

Investment Advisors*
Albritton Capital Management Barrow, Hanley, Mewhinney & Strauss Baillie Gifford Overseas Limited Cooke & Bieler Fisher Investments Mondrian Investment Partners Limited Sands Capital Management
* See page 45 in the Investment Section for a summary of fees paid to Investment Advisors.

IntroductorySection 11

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 the State, and began operations in 1945. 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.

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 11 of this report.
Membership
All personnel employed in a permanent status position, and not less than one-half time, with local boards of education, charter schools, universities and colleges, technical colleges, Board of Regents, county and regional libraries, RESA's, and certain State of Georgia agencies are required to be members as a condition of employment. Exceptions to TRS membership include employees required to participate in another Georgia retirement plan or employees who may elect the Board of Regents Optional Retirement Plan in lieu of TRS membership.

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 State Treasurer
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-at-large
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 5 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

Eligibility
Service Retirement
Active members may retire and elect to receive monthly retirement benefits after one of the following conditions: 1) completion of 10 years of creditable service and attainment of age 60, or 2) completion of 25 years of creditable service.
Disability Retirement
Members are eligible to apply for monthly retirement benefits under the disability provision of the law if they are an active member, have at least 10 years of creditable service, and are permanently disabled.

12 IntroductorySection

SUMMARY OF PLAN PROVISIONS

continued

The Formula

Plan B - Optional Plans of Retirement

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 lesser 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. You must have at least 10 years of creditable service to qualify, however, there is no age requirement for disability 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 the retiree would have received under Plan A - Maximum Plan.

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.

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 the amount the retiree would have received under Plan A - Maximum Plan.

IntroductorySection 13

SUMMARY OF PLAN PROVISIONS

continued

Option 4
This option offers a reduced monthly lifetime benefit in exchange for the flexibility to designate a specific dollar amount or percentage of your monthly benefit to be paid to your beneficiary after your death. The beneficiary benefits you specify under this plan cannot cause your monthly benefit to be reduced below 50% of the maximum benefit available to you. If multiple beneficiaries predecease you, the dollar amounts for the percentages are not adjusted. Beneficiaries also receive a prorated share of any cost-of-living increases you received up to the date of death.
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 LumpSum 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 or 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, 6.00% of annual salary; employer contributions, 14.27% of annual salary; and investment income.

14 IntroductorySection

INDEPENDENT AUDITORS'REPORT

KPMG LLP Suite 2000, 303 Peachtree Street, NE Atlanta, GA 30308 www.kpmg.com

Report on the Financial Statements
We have audited the accompanying financial statements of the Teachers Retirement System of Georgia (the System), a component unit of the State of Georgia, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the System's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the fiduciary net position of the System as of June 30, 2016, and the changes in fiduciary net position for the year then ended in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter
As discussed in note 2 to the basic financial statements, the System adopted, in 2016, Governmental Accounting Standards Board Statement No. 72, Fair Value Measurement and Application. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
U.S. generally accepted accounting principles require that the management's discussion and analysis, schedule of changes in employers' and nonemployers' net pension liability, schedule of employers' and nonemployers' net pension liability and related ratios, schedule of employer and nonemployer contributions, schedule of investment returns, schedule of the System's proportionate share of the net pension liability to ERS, and schedule of the System's contributions to ERS on pages 1720 and 3738 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of

FinancialSection 15

INDEPENDENT AUDITORS'REPORT

continued

America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary and Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the System's basic financial statements. The schedules of administrative expenses and investment expenses, and introductory, investment, actuatial, and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements.

Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2016 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the System's internal control over financial reporting and compliance.

The schedules of administrative expenses and investment expenses are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedules of administrative expenses and investment expenses are fairly stated in all material respects in relation to the basic financial statements as a whole.

December 12, 2016

The introductory, investment, actuarial, and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide an assurance on them.

16 FinancialSection

MANAGEMENT'S DISCUSSION & ANALYSIS

(Unaudited)

This section provides a discussion and analysis of the financial performance of the Teachers Retirement System of Georgia (the System) for the year ended June 30, 2016. 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, 2016, the System's assets exceeded its liabilities by $65.6 billion (reported as net position) as compared to the net position of $66.8 billion at June 30, 2015, representing a decrease of $1.2 billion.
Contributions from members increased by $23.8 million or 3.6% from $661.8 million in 2015 to $685.6 million in 2016. Employer and nonemployer contributions increased by $173.8 million or 12.4% from $1.4 billion in 2015 to $1.6 billion in 2016. The increase in member contributions is primarily due to an increase in the number of active members and higher average payroll during the year. The increase in employer contributions is primarily due to an increase in the employer contribution rate in addition to the increase in the number of active members and higher average payrolls during the year.
Pension benefits paid to retirees and beneficiaries for the years ended June 30, 2016 and 2015 were $4.2 billion and $4.0 billion, representing an increase of 5.8%. This is due to an increase in the number of retirees and beneficiaries receiving benefit payments and postretirement benefit adjustments.
Overview of the Financial Statements
The basic financial statements include (1) the statement of fiduciary net position, (2) the statement of changes in fiduciary net position, 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 (GASB). These statements provide information about the System's overall financial status.
In addition, the System presents six required supplementary schedules which provide historical trend information about the plan. Four of these schedules are presented from the perspective of the System reporting as the plan and include (1) a schedule of changes in employers' and nonemployers' net pension liability; (2) a schedule of

employers' and nonemployers' net pension liability; (3) a schedule of employer and nonemployer contributions; and (4) a schedule of investment returns. Two schedules are presented from the perspective of the System reporting as the employer for its employees who are participants in the Employees' Retirement System of Georgia (ERS) and include (1) a schedule of the System's proportionate share of the net pension liability to ERS; and (2) a schedule of the System's contributions to ERS.
The Statement of Fiduciary Net Position
The Statement of Fiduciary Net Position presents information that includes all of the System's assets and liabilities, with the balance reported as and representing the Net Position Restricted for Pensions. The investments of the System in this statement are presented at fair value. This statement is presented on page 21.
The Statement of Changes in Fiduciary Net Position
The Statement of Changes in Fiduciary Net Position reports how the System's net position changed during the fiscal year. The additions and the deductions to net position are summarized in this statement. The additions include contributions and investment income, which includes the net increase (decrease) in the fair value of investments. The deductions include benefit payments, refunds of member contributions, and administrative expenses. This statement is presented on page 22.
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 23 of this report.
Required Supplementary Information
A brief explanation of the six required schedules found beginning on page 37 of this report follows:
Schedule of Changes in Employers' and Nonemployers' Net Pension Liability: This schedule presents historical trend information about the changes in the net pension liability and includes the beginning and ending balances of the total pension liability and the plan's fiduciary net position, the net pension liability, and the effects of certain changes on those items. This trend information will be accumulated to display a ten year presentation.
Schedule of Employers' and Nonemployers' Net Pension Liability and Related Ratios: This schedule presents historical trend information about the net pension liability and includes total pension liability, the plan's fiduciary net position, net pension liability, covered-employee payroll, and the ratios

FinancialSection 17

MANAGEMENT'S DISCUSSION & ANALYSIS

(Unaudited) continued

of fiduciary net position to total pension liability and net pension liability to covered-employee payroll. This trend information will be accumulated to display a ten year presentation.
Schedule of Employer and Nonemployer Contributions: This schedule presents historical trend information for the last ten consecutive fiscal years about the actuarially determined contributions of employers and nonemployers and the contributions made in relation to the requirement.
Schedule of Investment Returns: This schedule presents historical trend information about the annual moneyweighted rate of return on plan investments, net of plan investment expense. This trend information will be accumulated to display a ten year presentation.

Schedule of the System's Proportionate Share of the Net Pension Liability to ERS: This schedule presents historical trend information about the System's proportionate share of the net pension liability for its employees who participate in the ERS plan. This trend information will be accumulated to display a ten year presentation.
Schedule of the System's Contributions to ERS: This schedule presents historical trend information about the System's contributions for its employees who participate in the ERS plan. This trend information will be accumulated to display a ten year presentation.

Financial Analysis of the System
A summary of the System's net position at June 30, 2016 and 2015 is as follows (dollars in thousands):

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

Net Position

June 30

2016

2015

$ 2,080,140 63,630,773 7,174 65,718,087

$ 1,612,868 65,230,066 7,327 66,850,261

Deferred Outflows of Resources
Liabilities:
Net pension liability Due to brokers and
accounts payable Total Liabilities
Deferred Inflows of Resources

4,978
27,702 140,732 168,434
2,220

4,640
25,077 24,592 49,669 6,121

Amount Change

Percentage Change

$ 467,272 (1,599,293) (153) (1,132,174)
338

29.0 % (2.5) % (2.1) % (1.7) %
7.3 %

2,625
116,140 118,765
(3,901)

10.5 %
472.3 % 239.1 % (63.7) %

Net position

$ 65,552,411 $ 66,799,111 $ (1,246,700)

(1.9) %

The $1.2 billion decrease in net position from 2015 to 2016 is primarily due to net disbursements exceeding investment returns.

18 FinancialSection

MANAGEMENT'S DISCUSSION & ANALYSIS
(Unaudited) continued
Financial Analysis of the System continued
The following table presents the investment allocation at June 30, 2016 and 2015:

Asset Allocation at June 30 (in percentages):
Equities: Domestic International
Domestic Obligations: U.S. Treasuries Corporate and Other Bonds
International Obligations: Governments Corporates
Asset Allocation at June 30 (in thousands):
Equities: Domestic International
Domestic Obligations: U.S. Treasuries Corporate and Other Bonds
International Obligations: Governments Corporates

2016
52.7 % 15.9 %
15.2 % 14.5 %
0.5 % 1.2 %

2015
53.2 % 18.0 %
12.2 % 15.0 %
0.5 % 1.1 %

$ 33,530,541 $ 34,699,701

10,120,995

11,723,127

9,693,234 9,228,519

7,971,115 9,783,085

324,118 733,366
$ 63,630,773

323,472 729,566
$ 65,230,066

The total investment portfolio at June 30, 2016 decreased $1.6 billion from June 30, 2015, which is primarily due to net disbursements exceeding investment returns.
GASB Statement No. 67 requires the System to report an annual money-weighted rate of return on plan investments, net of plan investment expense. A money-weighted return is weighted by the amount of dollars in the fund at the beginning and end of the performance period. A moneyweighted return is highly influenced by the timing of cash flows into and out of the fund and is a better measure of an entity or person who controls the cash flows into or out of the

fund. The nondiscretionary cash flows for the plan, primarily contributions and benefit payments, have a considerable impact on the money-weighted returns of the portfolio. The moneyweighted rate of return for the fiscal year ended June 30, 2016 was (2.92)%, compared to (0.45)% for the fiscal year ended June 30, 2015.
The investment rate of return in fiscal year 2016 was 1.4%, with a (0.3)% return for equities and a 5.5% return for fixed income. The five-year annualized rate of return on investments at June 30, 2016 was 7.3% with an 8.8% return on equities and a 3.4% return on fixed income.

FinancialSection 19

MANAGEMENT'S DISCUSSION & ANALYSIS

(Unaudited) continued

Financial Analysis of the System continued
A summary of the changes in the System's net position for the years ended June 30, 2016 and 2015 is as follows (dollars in thousands):

Additions:
Employer Contributions Nonemployer Contributions Member Contributions Net Investment Income
Total Additions

Changes in Net Position

2016

2015

$ 1,572,624 7,908
685,626 810,574
3,076,732

$ 1,399,668 7,038
661,835 2,384,145 4,452,686

Amount Change
$ 172,956 870
23,791 (1,573,571) (1,375,954)

Percentage Change
12.4 % 12.4 % 3.6 % (66.0) % (30.9) %

Deductions:
Benefit Payments Refunds Administrative Expenses
Total Deductions

4,228,819 79,334 15,279
4,323,432

3,996,879 80,085 14,996
4,091,960

Net Increase (Decrease) in Net Position $ (1,246,700) $ 360,726

231,940 (751) 283
231,472
$ (1,607,426)

5.8 % (0.9) % 1.9 % 5.7 %
(445.6) %

Additions
The System accumulates resources needed to fund benefits through contributions and returns on invested funds. Member contributions were higher with an increase of 3.6% in 2016 compared to 2015, primarily due to an increase in membership salary coupled with an increase in the number of active members in 2016. Employer and nonemployer contributions increased 12.4% in 2016 as a result of an increase in the number of active members in 2016 and an increase in the employer contribution rate to 14.27% from 13.15% in 2015. Contribution rates are recommended by the System's actuary and approved by the System's Board of Trustees. The net investment income was lower in 2016 compared to 2015, primarily due to lower returns in equity markets.

Deductions
Deductions increased 5.7% in 2016, primarily because of the 5.8% increase in benefit payments. Regular pension benefit payments increased due to an increase in the number of retirees and beneficiaries receiving benefit payments to 117,918 in 2016 from 113,066 in 2015 and postretirement benefit increases.
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 100, Atlanta, GA 30318.

20 FinancialSection

STATEMENT OF FIDUCIARY NET POSITION
June 30, 2016 (in thousands)

Assets
Cash and Cash Equivalents

Receivables:

Interest and Dividends Due from Brokers for Securities Sold

Member and Employer Contributions

Other

Total Receivables

Investments - at fair value: Equities: Domestic International Domestic Obligations: U.S. Treasuries Corporate and Other Bonds International Obligations: Governments Corporates
Total Investments

Capital Assets, net



Total Assets

Deferred Outflows of Resources

Liabilities
Net Pension Liability Due to Brokers for Securities Purchased Accounts Payable and Other Total Liabilities
Deferred Inflows of Resources

Net Position Restricted for Pensions

See accompanying notes to financial statements.

$ 1,611,503
181,651 108,698 176,641
1,647 468,637
33,530,541 10,120,995
9,693,234 9,228,519
324,118 733,366 63,630,773
7,174 65,718,087
4,978
27,702 133,725
7,007 168,434
2,220
$ 65,552,411

FinancialSection 21

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
For the Year Ended June 30, 2016 (in thousands)

Additions:
Contributions: Employer Nonemployer Member
Investment Income: Net Decrease in Fair Value of Investments Interest, Dividends, and Other
Total Investment Income
Less Investment Expense
Net Investment Income
Total Additions
Deductions:
Benefit Payments Refunds of Member Contributions Administrative Expenses, net
Total Deductions
Net Decrease in Net Position
Net Position Restricted for Pensions:
Beginning of Year End of Year
See accompanying notes to financial statements.

$ 1,572,624 7,908
685,626
(593,395) 1,442,252
848,857 38,283 810,574 3,076,732
4,228,819 79,334 15,279
4,323,432 (1,246,700)
66,799,111 $ 65,552,411

22 FinancialSection

NOTES TO FINANCIAL STATEMENTS

June 30, 2016

1. Plan Description
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 administers a cost-sharing, multiple-employer defined benefit pension plan as defined in Governmental Accounting Standards Board (GASB) Statement No. 67, Financial Reporting for Pension Plans. A Board of Trustees comprised of two appointees by the Board, two ex-officio state employees, five appointees by the Governor, and one appointee of the Board of Regents is ultimately responsible for the administration of the System.
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. There were 306 employers and 1 nonemployer contributing entity participating in the plan at June 30, 2016.
As of June 30, 2016, participation in the System is as follows:

Inactive members and beneficiaries currently receiving benefits
Inactive members not yet receiving benefits, vested
Inactive members, nonvested Active plan members
Total

117,918
11,251 85,787 218,215 433,171

Retirement Benefits
The System provides service retirement, disability retirement, and survivor's benefits. Title 47 of the Official Code of Georgia Annotated (O.C.G.A.) 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.
The normal retirement (pension) benefit paid to a member is 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, may 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, employer, and nonemployer contributing entity (Nonemployer) contributions. The contribution rates are adopted and amended by the Board of Trustees. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employers by the State of Georgia.
Contributions, as a percentage of covered payroll, required for fiscal year 2016 were based on the June 30, 2013 actuarial valuation as follows:

Member

Employer: Normal Unfunded accrued liability



Total

6.00 %
6.38 % 7.89 % 14.27 %

FinancialSection 23

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued

1. Plan Description continued
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 position restricted for pensions.
2. 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, nonemployers, and the members are recognized when due, based on statutory requirements. Retirement and refund payments are recognized as deductions when due and payable.
Reporting Entity
The System is a component unit of the State of Georgia, however, it is accountable for its own fiscal matters and presentation of its separate financial statements. The System has considered potential component units under GASB Statements No. 61, The Financial Reporting Entity's Omnibus An Amendment of GASB Statements No. 14 and No. 34, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, and determined there were no component units of the System.
Cash and Cash Equivalents
Cash and cash equivalents, reported at cost, include cash in banks and cash on deposit with the investment custodian earning a credit to offset fees.
Investments
Investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price. There are no investments in, loans to, or leases with parties related to the System.
The System utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, foreign currency, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.

The System's policy in regard to the allocation of invested assets is established on a cost basis in compliance with Georgia Statute. Plan assets are managed on a total return basis with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension plan. The following was the System's adopted asset allocation policy as of June 30, 2016:

Asset Class

Target Allocation

Fixed income Equities Cash and cash equivalents
Total

25% - 45% 55% - 75%
--
100%

Approximately 15.2% of the investments held for pension benefits are invested in debt securities of the U.S. government. The System has no investments in any one organization, other than those issued by the U.S. government, that represent 5% or more of the System's net position restricted for pensions.
For the fiscal year ended June 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was (2.92)%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.
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, net. 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 statement of changes in fiduciary net position in the period of disposal.
System Employee Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the ERS plan and additions to/deductions from the ERS fiduciary

24 FinancialSection

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued

2. Summary of Significant Accounting Policies and Plan Asset Matters continued
net position have been determined on the same basis as they are reported by ERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of fiduciary net position and changes therein. Actual results could differ from those estimates.
New Accounting Pronouncements
During fiscal year 2016, the System adopted the provisions of GASB Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements and requires disclosures to be made about fair value measurements, the level of fair value hierarchy, and valuation techniques. See note 3 for disclosures related to GASB Statement No. 72.
During fiscal year 2016, the System adopted the provisions of GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are Not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The objective of this Statement is to improve the usefulness of information about pensions included in external financial reports for making decisions and assessing accountability. The implementation of GASB Statement No. 73 did not impact the amounts recorded in the financial statements. However, this Statement did provide additional clarification on the reporting requirements of the System's required supplementary information.
During fiscal year 2016, the System adopted the provisions of GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments which supersedes GASB Statement 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify the hierarchy of GAAP used to prepare financial statements for the purpose of improving the usefulness and comparability of those statements among governments. The implementation of GASB Statement No. 76 did not impact the amounts recorded or disclosures in the financial statements.

During fiscal year 2016, the System adopted the provisions of GASB Statement No. 79, Certain External Investment Pools and Pool Participants. The objective of this Statement is to establish criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial statement reporting. There are no applicable reporting requirements for the System related to the adoption of this Statement.
3. Investment Program
The System maintains sufficient cash to meet its immediate liquidity needs. Cash not immediately needed is invested as directed by the Board of Trustees. All investments are held by agent custodial banks in the name of the System. State statutes and the System's investment policy authorize the System to invest in a variety of short-term and long-term securities as follows:
Cash and Cash Equivalents
The carrying amount of the System's deposits totaled $1,611,502,713 at June 30, 2016, with actual bank balances of $1,618,130,658. The System's cash balances are fully insured through the Federal Deposit Insurance Corporation, an independent agency of the U.S. government.
Short-term securities authorized but not currently used are:
Repurchase and reverse repurchase agreements, whereby the System and a broker exchange cash for direct obligations of the U.S. government or obligations unconditionally guaranteed by agencies of the U.S. government or U.S. corporations. The System or broker promises to repay the cash received plus interest at a specific date in the future in exchange for the same securities.
U.S. Treasury obligations.
Commercial paper, with a maturity of 180 days or less. Commercial paper is an unsecured promissory note issued primarily by corporations for a specific amount and maturing on a specific day. The System considers for investment only commercial paper of the highest quality, rated P-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.

FinancialSection 25

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued

3. Investment Program continued

Investments in commercial paper or master notes are limited to no more than $500 million in any one name.
Investments
Fixed income investments, managed by the Division of Investment Services (the Division), are authorized in the following instruments:
U.S. and foreign government obligations. At June 30, 2016, the System held U.S. Treasury bonds of $9,693,234,530 and international government bonds of $324,117,580.
U.S. and foreign corporate obligations. At June 30, 2016, the System held U.S. corporate bonds of $9,228,519,170 and international corporate bonds of $733,365,800.
Obligations unconditionally guaranteed by agencies of the U.S. government. At June 30, 2016, the System did not hold agency bonds.
Private placements are authorized under the same general restrictions applicable to corporate bonds. At June 30, 2016, the System did not hold private placements.
Mortgage investments are authorized to the extent that they are secured by first mortgages on improved real property located in the State of Georgia.
Equity securities are also authorized (in statutes) for investment as a complement to the System's fixed income portfolio and as a long-term inflation hedge. By statute, no more than 75% of the total invested assets on a historical cost basis may be placed in equities. Equity holdings in any one corporation may not exceed 5% of the outstanding equity of the issuing corporation. The equity portfolio is managed by the Division in conjunction with independent 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. Equity investments are authorized in the following instruments:

International equities, including American Depository Receipts (ADR), are not considered by the O.C.G.A. to be domiciled in the United States. At June 30, 2016, the System held ADRs of $7,690,333,820 and international equities of $2,430,661,504.
Fair Value Measurements: The System categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the inputs used in valuation and gives the highest priority to unadjusted quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the hierarchy is based on whether the significant inputs into the valuations are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest level, Level 1, is given to unadjusted quoted prices in active markets and the lowest level, Level 3, to unobservable inputs.
Level 1 Valuations based on unadjusted quoted prices for identical instruments in active markets that the System has the ability to access.
Level 2 Valuations based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable.
Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
In instances where inputs used to measure fair value fall into different levels in the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The System's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each investment. The table on page 27 shows the fair value leveling of the System's investments.

Domestic equities are those securities considered by the O.C.G.A. to be domiciled in the United States. At June 30, 2016, the System held domestic equities of $33,530,540,904.

26 FinancialSection

3. Investment Program continued

NOTES TO FINANCIAL STATEMENTS
June 30, 2016, continued

Investments Measured at Fair Value as of June 30, 2016

Fair value measures using

Quoted prices in active markets for identical assets

Significant other

Significant

observable inputs unobservable inputs

Investment by fair value level

Level 1

Level 2

Level 3

Equities: Domestic International

$ 33,530,207,866 10,050,913,291

-- 70,082,033

333,038 --

Obligations:

Domestic:

U.S. Treasuries

9,693,234,530

--

--

Corporate Bonds

-- 9,228,519,170

--

International: Governments Corporate Bonds

--

324,117,580

--

--

733,365,800

--

Total Investments by fair value level $ 53,274,355,687 10,356,084,583

333,038

Total
33,530,540,904 10,120,995,324
9,693,234,530 9,228,519,170
324,117,580 733,365,800
63,630,773,308

Equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Equity securities classified in Level 2 are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the common ordinary share. Equity securities classified in Level 3 are valued using third party valuations not currently observable in the market.
Debt securities classified in Level 1 are valued using prices quoted in active markets. Debt securities classified in Level 2 are valued using either a bid evaluation or a matrix pricing technique. Bid evaluations may include market quotations, yields, maturities, call features and ratings. Matrix pricing is used to value securities based on the securities relationship to benchmark quoted prices. These securities have nonproprietary information that was readily available to market participants, from multiple independent sources, which are known to be actively involved in the market.

Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the 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. If a bond is subsequently downgraded to a rating below "A", it is placed on a watch list. The System holds one bond which was downgraded to a rating below "A". Obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government are not considered to have credit risk and do not require disclosure of credit quality. The quality ratings of investments in fixed income securities as described by Standard & Poor's and by Moody's Investor Services, which are nationally recognized statistical rating organizations, at June 30, 2016, are shown in the chart on page 28.

FinancialSection 27

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued

3. Investment Program continued

Quality Ratings of Fixed Income Investments Held at June 30, 2016

Investment type

Standard and Poor's/ Moody's quality rating

June 30, 2016 fair value

Domestic Obligations: U.S. Treasuries

$ 9,693,234,530

Corporates

AAA/Aaa AA/Aaa AA/Aa
A/Aa AA/A A/A BBB/Baa

747,119,570 824,087,920 1,073,113,560 346,252,770 2,024,487,440 3,889,941,110 323,516,800

Total Corporates

9,228,519,170

International Obligations: Governments Corporates
Total Fixed Income Investments

A/Aa
AA/Aa A/Aa

324,117,580 322,392,760 410,973,040
$ 19,979,237,080

Concentration of Credit Risk: Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government's investment in a single issue. At June 30, 2016, the System did not have debt or equity investments in any one organization, other than those issued or guaranteed by the U.S. government or its agencies, which represented greater than 5% of plan net position.
Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. While the System has no formal interest rate risk policy, active management of the bond portfolio incorporates interest rate risk to generate improved returns. This risk is

managed within the portfolio using the effective duration method. This method is widely used in the management of fixed income portfolios and quantifies to a much greater degree the sensitivity to interest rate changes when analyzing a bond portfolio with call options, prepayment provisions, and any other cash flows. Effective duration makes assumptions regarding the most likely timing and amounts of variable cash flows and is best utilized to gauge the effect of a change in interest rates on the fair value of a portfolio. It is believed that the reporting of effective duration found in the table below quantifies to the fullest extent possible the interest rate risk of the System's fixed income assets.

Effective Duration of Fixed Income Assets by Security Type

Effective

Fair Value

Percentage of all fixed

duration

Fixed income security type

June 30, 2016

income assets

(years)

Domestic Obligations:

U.S. Treasuries

$ 9,693,234,530

48.5 %

6.1

Corporates

9,228,519,170

46.2 %

3.5

International Obligations:



Governments

324,117,580

1.6 %

1.3

Corporates

733,365,800

3.7 %

1.5

Total

$ 19,979,237,080

100.0 %

4.6

28 FinancialSection

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued

3. Investment Program continued
Foreign Currency Risk: Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The System's currency risk exposures, or exchange rate risks, primarily reside within the System's international equity investment holdings. The System's asset allocation and investment policies allow for active and passive investments in international securities. The System's Board-adopted foreign exchange risk management policy is to minimize risk and protect the investments from negative impact by hedging foreign currency exposures with

foreign exchange instruments when market conditions and circumstances are deemed appropriate. Foreign exchange instruments are used to protect the value of noncash investments from currency movements, through the use of foreign exchange instruments. The System's foreign exchange risk management policy does not quantify limitations on foreign currency-denominated investments. As of June 30, 2016, the System's exposure to foreign currency risk in U.S. Dollars is highlighted in the following table:

International Investment Securities at Fair Value as of June 30, 2016

Currency Australian Dollar Brazilian Real British Pound Canadian Dollar Czech Krone Danish Krone Euro Hong Kong Dollar Indonesian Rupiah Japanese Yen Malaysian Ringgit Mexican Peso New Taiwan Dollar Philippine Peso Polish Zloty Singapore Dollar South African Rand South Korean Won Swedish Krona Swiss Franc
Thailand Baht

Equities $ 121,650,100
67,565,634 274,708,195
26,370,562 1,870,189 43,639,880
297,222,810 159,852,207
24,468,392 455,472,087
40,860,654 39,273,757 154,189,050 23,614,146 10,523,085 62,662,897 127,972,965 238,620,540 126,123,104 63,921,706
70,079,544

Fixed Income $--
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
--

Total $ 121,650,100
67,565,634 274,708,195
26,370,562 1,870,189 43,639,880
297,222,810 159,852,207
24,468,392 455,472,087
40,860,654 39,273,757 154,189,050 23,614,146 10,523,085 62,662,897 127,972,965 238,620,540 126,123,104 63,921,706
70,079,544

Total Holdings subject

to foreign currency risk 2,430,661,504

--

2,430,661,504

Investment securities payable in U.S. dollars

7,690,333,820

1,057,483,380

8,747,817,200

Total international investments - at fair value

$ 10,120,995,324

$ 1,057,483,380

$ 11,178,478,704

FinancialSection 29

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued

4. Securities 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, corporate bonds, and equities. The collateral value must be equal to at least 102% to 109% of the loaned securities' value, depending on the type of collateral security.
Securities loaned totaled $14,136,669,213 at June 30, 2016. The collateral value was equal to 105.5% of the loaned securities' value at June 30, 2016. The System's lending collateral was held in the System's name by the tri-party custodian.

Loaned securities are included in the accompanying statement of fiduciary net position since the System maintains ownership. The related collateral securities are not recorded as assets on the System's statement of fiduciary net position, and a corresponding liability is not recorded, since the System is deemed not to have the ability to pledge or trade the collateral securities. In accordance with the criteria set forth in GASB Statement No. 28, Accounting and Financial Reporting for Securities Lending Transactions, 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.

30 FinancialSection

NOTES TO FINANCIAL STATEMENTS
June 30, 2016, continued
5. 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, 2015

Additions

Disposals June 30, 2016

$ 4,320,718 2,800,000 530,131 2,514,821 14,979,713 25,145,383

$ 21,069 --
19,192 247,350
--
287,611

$-- --
(145,907) (265,525)
__
(411,432)

$ 4,341,787 2,800,000 403,416 2,496,646 14,979,713 25,021,562

(770,000) (433,536) (1,634,875) (14,979,713) (17,818,124)
$ 7,327,259

(70,000) (22,315) (338,544)
-- (430,859)

-- 145,907 255,710
-- 401,617

$ (143,248) $ (9,815)

(840,000) (309,944) (1,717,709) (14,979,713) (17,847,366)
$ 7,174,196

During fiscal year 2016, 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.

6. Net Pension Liability of Employers and Nonemployers
The components of the net pension liability of the participating employers and nonemployers at June 30, 2016 were as follows (dollars in thousands):

Total pension liability Plan fiduciary net position
Employers' and nonemployers' net pension liability
Plan fiduciary net position as a percentage of the total pension liability

$ 86,183,526 65,552,411
$ 20,631,115
76.06%

FinancialSection 31

NOTES TO FINANCIAL STATEMENTS
June 30, 2016, continued
6. Net Pension Liability of Employers and Nonemployers continued Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2015, using
the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary Increases
Investment Rate of Return

2.75% 3.25 - 9.00%, including inflation 7.50%, net of pension plan investment expense,
including inflation

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table for future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:



Asset Class

Target Allocation

Fixed income Domestic large cap equities Domestic mid cap equities Domestic small cap equities International developed market equities International emerging market equities

30.00 % 39.80 % 3.70 % 1.50 % 19.40 % 5.60 %

Total

100.00 %

*Net of inflation

Long-Term expected real rate of return*
(0.50) % 9.00 % 12.00 % 13.50 % 8.00 % 12.00 %

32 FinancialSection

NOTES TO FINANCIAL STATEMENTS
June 30, 2016, continued
6. Net Pension Liability of Employers and Nonemployers continued Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows
used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate: The following presents the net pension liability of the employers and nonemployers, calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands):

Employers' and nonemployers' net pension liability

1% Decrease (6.50%)
$ 32,112,585

Current discount rate
(7.50%)
$ 20,631,115

1% Increase (8.50%)
$ 11,178,017

Actuarial valuation date: The total pension liability is based upon the June 30, 2015 actuarial valuation. An expected total pension liability is determined as of June 30, 2016 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year.

FinancialSection 33

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued

7. System Employees' Retirement Benefits

The System's employees are members of the ERS plan. The notes to the financial statements that follow and required supplementary information on page 38 are presented from the perspective of the System as an employer.

payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

General Information about the Employees' Retirement System of Georgia
Plan description: ERS is a cost-sharing multipleemployer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.html.
Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the Old Plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are New Plan members subject to modified plan provisions. Effective January 1, 2009, new State employees and rehired State employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
Under the Old Plan, the New Plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is

Contributions: Member contributions under the Old Plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the Old Plan, the State pays member contributions in excess of 1.25% of annual compensation. Under the Old Plan, these State contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the New Plan and GSEPS are 1.25% of annual compensation. The System's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2016 was 24.72% of annual covered payroll for Old and New Plan members and 21.69% for GSEPS members. The System's contributions to ERS for funding purposes totaled $4.1 million for the year ended June 30, 2016. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2016, the System reported a liability for its proportionate share of the net pension liability for the ERS plan. The net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The System's proportion of the net pension liability was based on contributions to ERS during the fiscal year ended June 30, 2015. At June 30 2015, the System's proportion was 0.683763%, which is based on contributions, and an increase of 0.015143% from its proportion measured as of June 30, 2014.

34 FinancialSection

NOTES TO FINANCIAL STATEMENTS

June 30, 2016, continued
7. System Employees' Retirement Benefits continued
For the year ended June 30, 2016, the System recognized pension expense of $2.5 million. At June 30, 2016, the System reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actual experience

Net difference between projected and actual

earnings on pension plan investments

Changes in proportion and differences between the System's

contributions and proportionate share of contributions

System's contributions subsequent to the measurement date



Total

Deferred outflows

of resources

$





876,395 4,101,877 $ 4,978,272

Deferred inflows of resources
$ 221,334
1,998,742
$ 2,220,076

System contributions subsequent to the measurement date of $4.1 million are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:
2017 2018 2019 2020

$ (303,365) (823,352) (890,882) 673,918

Actuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014 using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary Increases Investment Rate of Return

3.00% 5.45 - 9.25%, including inflation 7.50%, net of pension plan investment expense,
including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement.
The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

FinancialSection 35

NOTES TO FINANCIAL STATEMENTS
June 30, 2016, continued
7. System Employees' Retirement Benefits continued
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:



Asset Class

Target Allocation

Long-Term expected real rate of return*

Fixed income Domestic large cap equities Domestic mid cap equities Domestic small cap equities International developed market equities International emerging market equities

30.00 % 39.70 % 3.70 % 1.60 % 18.90 % 6.10 %

3.00 % 6.50 % 10.00 % 13.00 % 6.50 % 11.00 %

Total

100.00 %

*Rates shown are net of the 3.00% assumed rate of inflation

Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the ERS fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the System's proportionate share of the net pension liability to changes in the discount rate: The following presents the System's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the System's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

System's proportionate share of the net pension liability

1% Decrease (6.50%)
$ 39,268,523

Current discount rate
(7.50%)
$ 27,701,961

1% Increase (8.50%)
$ 17,841,018

Pension plan fiduciary net position: Detailed information about the ERS plan's fiduciary net position is available in the separately issued ERS financial report which is publically available at www.ers.ga.gov/formspubs/formspubs.html.

36 FinancialSection

REQUIRED SUPPLEMENTARY INFORMATION

For the Year Ended June 30 (Unaudited)

Schedule of Changes in Employers' and Nonemployers' Net Pension Liability (dollars in thousands)

Total pension liability: Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of member contributions
Net change in total pension liability
Total pension liability - beginning Total pension liability - ending (a)

2016
$ 1,435,810 5,990,178 -- 380,526 662,047 (4,228,819) (79,334)
4,160,408
82,023,118 86,183,526

Plan fiduciary net position:

Contributions - employer

Contributions - nonemployer

Contributions - member

Net investment income

Benefit payments

Refunds of member contributions

Administrative expense

Other1



Net Change in Plan Fiduciary Net Position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

1,572,624 7,908
685,626 810,574 (4,228,819) (79,334) (15,279)
-- (1,246,700) 66,799,111
65,552,411

Net pension liability - ending (a) - (b)

$ 20,631,115

2015
$ 1,386,498 5,779,597 -- (165,785) -- (3,996,879) (80,085)
2,923,346
79,099,772 82,023,118
1,399,668 7,038
661,835 2,384,145 (3,996,879)
(80,085) (14,996) (27,706) 333,020 66,466,091
66,799,111
$ 15,224,007

2014
$ 1,374,556 5,557,046 -- -- -- (3,764,452) (87,095)
3,080,055
76,019,717 79,099,772
1,264,546 6,417
640,120 9,826,743 (3,764,452)
(87,095) (15,025)
-- 7,871,254 58,594,837
66,466,091
12,633,681

1The System is a participating employer in the Employees' Retirement System of Georgia. Pursuant to the requirements of GASB Statement No. 68, the fiscal year 2015 beginning Fiduciary Net Position was restated by $27,705,937 for reporting purposes to reflect the impact of recording the initial Deferred Outflows of Resources and the Net Pension Liability. For actuarial purposes, this adjustment is being recognized in fiscal year 2015 and beginning Fiduciary Net Position was not restated.
Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
Schedule of Employers' and Nonemployers' Net Pension Liability and Related Ratios (dollars in thousands)

Total pension liability Plan fiduciary net position
Employers' and nonemployers' net pension liability
Plan fiduciary net position as a percentage of the total pension liability
Covered-employee payroll Employers' and nonemployers' net pension liability as a
percentage of covered-employee payroll

2016
$ 86,183,526 65,552,411
$ 20,631,115
76.06% $ 11,075,907
186.27%

2015
$ 82,023,118 66,799,111
$ 15,224,007
81.44% $ 10,697,384
142.32%

2014
$ 79,099,772 66,466,091 12,633,681
84.03% 10,349,862
122.07%

Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary information and accompanying independent auditors' report.

FinancialSection 37

REQUIRED SUPPLEMENTARY INFORMATION

For the Year Ended June 30 (Unaudited), continued

Schedule of Employer and Nonemployer Contributions (dollars in thousands)

2016

Actuarially determined employer and

nonemployer contribution

$ 1,580,532

Contributions in relation to actuarially

determined contribution

$ 1,580,532

Contribution deficiency (excess) $

--

2015
1,406,706
1,406,706 --

2014
1,270,963
1,270,963 --

2013
1,180,469
1,180,469 --

2012
1,082,224
1,082,224 --

2011
1,089,912
1,089,912 --

2010
1,057,416
1,057,416 --

2009
1,026,287
1,026,287 --

2008
986,759
986,759 --

2007
927,371
927,371 --

Covered-employee payroll

$ 11,075,907 10,697,384 10,349,862 10,345,916 10,527,471 10,602,257 10,856,427 11,059,127 10,633,179 10,036,483

Contributions as a percentage of

covered-employee payroll 14.27% 13.15% 12.28% 11.41% 10.28% 10.28%

9.74%

9.28%

9.28%

9.24%

Schedule of Investment Returns
Annual money-weighted rate of return, net of investment expense

2016
(2.92)%

2015 2014
(0.45)% 12.17%

Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

Schedule of the System's Proportionate Share of the Net Pension Liability to ERS (dollars in thousands)

System's proportion of the net pension liability System's proportionate share of the net pension liability System's covered-employee payroll System's proportionate share of the net pension liability as a
percentage of its covered-employee payroll ERS fiduciary net position as a percentage of the total pension liability

2016 0.683763 %
$ 27,702 16,291
170.04 % 76.20 %

Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

2015 0.668620 %
$ 25,077 17,622
142.31 % 77.99 %

Schedule of the System's Contributions to ERS (dollars in thousands)

Contractually required contribution Contributions in relation to the contractually required contribution
Contribution deficiency (excess) System's covered-employee payroll Contributions as a percentage of covered-employee payroll

2016
$ 4,102 4,102
$-- $ 16,880
24.30 %

Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

2015
$ 3,433 3,433
$-- $ 18,145
18.92 %

See accompanying notes to required supplementary information and accompanying independent auditors' report.

38 FinancialSection

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2016 (Unaudited)
Required Supplementary Information for the System as the Plan
Schedule of Changes in the Employers' and Nonemployers' Net Pension Liability
The total pension liability contained in this schedule was provided by the System's actuary, Cavanaugh Macdonald Consulting, LLC. The net pension liability is measured as the total pension liability less the amount of the fiduciary net position of the System.
Schedule of Employer and Nonemployer Contributions
The required employer and nonemployer contributions and percentage of those contributions actually made are presented in the schedule.
Actuarial Methods and Assumptions Changes of assumptions: On November 18, 2015, the
Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases.
Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of employer and nonemployer contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported (June 30, 2016 employer contributions are based on June 30, 2013 valuation). The following actuarial methods and assumptions were used to determine the most recent contribution rate reported in that schedule:

Valuation date

June 30, 2013

Actuarial cost method

Entry age

Amortization method

Level percent of payroll, closed

Remaining amortization period 30 Years

Asset valuation method

Five-year smoothed market

Inflation rate

3.00%

Salary increases

3.75 to 7.00%, including inflation

Investment rate of return

7.50%, net of pension plan investment

expense, including inflation

FinancialSection 39

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2016 (Unaudited)
Required Supplementary Information for the System as a Participating Employer in ERS
Schedule of the System's Proportionate Share of the Net Pension Liability to ERS
This schedule presents historical trend information about the System's proportionate share of the net pension liability for its employees who participate in the ERS plan. GASB Statement No. 68 was implemented in 2015. Information related to previous years is not available, therefore, trend information will be accumulated going forward to display a ten year presentation. Schedule of the System's Contributions to ERS
This schedule presents historical trend information about the System's contributions for its employees who participate in the ERS plan. GASB Statement No. 68 was implemented in 2015. Information related to previous years is not available, therefore, trend information will be accumulated going forward to display a ten year presentation. Changes in Benefit Terms and Assumptions
Changes of benefit terms: There were no changes in benefit terms that affect the measurement of the total pension liability since the prior measurement date.
Changes of assumption: There were no changes in assumptions that affect the measurement of the total pension liability since the prior measurement date.
40 FinancialSection

Schedule of Administrative Expenses

ADDITIONAL INFORMATION
For the Year Ended June 30, 2016

Personal Services:
Salaries and Fringes 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 Expenses:
Building Maintenance Total Management Expenses
Other Services and Charges:
Repairs and Maintenance Supplies and Materials Depreciation Expense 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
See accompanying independent auditors' report.

$ 8,006,658 1,227,683 2,437,301 571,795 89,578
12,333,015
275,544 207,529 116,922 113,308 713,303
970,854 5,455
188,910 195,540 41,318 62,775 1,464,852
578,950 578,950
6,593 260,959 430,859 166,347 864,758 15,954,878
675,960 $ 15,278,918

FinancialSection 41

ADDITIONAL INFORMATION
For the Year Ended June 30, 2016
Schedule of Investment Expenses
Investment Advisory and Custodial Fees Miscellaneous Total Investment Expenses
See accompanying independent auditors' report.

$ 24,854,868 13,428,673
$ 38,283,542

42 FinancialSection

INVESTMENT OVERVIEW

While worldwide economic concerns remain in the forefront of investors' minds, it is politics that seems to have moved to the forefront of market worries. The concerns are too numerous to name, but the biggest problems currently seem to be Brexit and the U.S. election. The economy continued its slow growth with Real GDP increasing 1.3% year over year. Generally, global growth remains concentrated in Asia and Emerging markets. Despite relatively slow growth, low inflation and political uncertainty, the U.S. economy is performing better than most developed economies. The U.S. stock market had a subpar return of 3.6% for the fiscal year.
It is important to remember the pension plan has a long-term investment horizon and that short-term concerns should not drive the investment decisions. The System continues to invest in a mix of liquid, high quality bonds and stocks. These types of investments allow the System to participate in rising markets while moderating the risks on the downside. A high quality balanced fund has proven to be a successful strategy in a variety of markets over long periods of time.
As in previous years, the bias to quality was a primary goal and was successfully met. "Conservation of Capital" and "Conservatism" remain the guiding principles for investment decisions. The Board of Trustees continues to use a diversified portfolio to accomplish these objectives.
The domestic economy continued to grow for the fiscal year although there was not broad based strength. Industrial production has been erratic and decreased slightly on a year over year basis. Employment and consumer demand remained relatively strong. Likewise, foreign economies presented a mixed bag of strength and weakness. For the most part central banks remained accommodative, though the Federal Reserve Bank did raise short term rates by 0.25% in December of 2015.
Studies undertaken to evaluate the investment returns of pension funds over very long time horizons indicate that the asset allocation decision has the largest impact on the fund's returns. Although the returns for the various asset categories vary from year to year, over the long term equities usually outperform fixed income and cash by a very wide margin. For that reason, the System has generally maintained a significant equity exposure with the remainder of the fund invested in fixed income securities designed to generate income and preserve capital.

Returns for one-, three-, five-, ten- and twentyyear periods are presented in this section. Longer time periods, such as the twenty-year period, allow for more valid evaluation of returns, both in absolute terms and relative to an asset class index, by reducing emphasis on the short-term volatility of markets. The Daily Valuation Method was used to calculate rates of return in a manner consistent with the CFA Institute's objectives as stated in its publication "Global Investment Performance Standards Handbook," third edition.
The return for the S&P 500 was 4.0%. U.S. large cap stocks outperformed small cap and mid cap stocks last year. The S&P MidCap 400 and the S&P SmallCap 600 indexes had returns of 1.3% and 0.0%, respectively. The search for yield led to outsized returns for the Utilities and Telecom sectors while Financials and Energy had negative returns.
International markets on the other hand had negative returns. The MSCI EAFE Index had a (10.2)% return and the MSCI Emerging Market Index had a return of (12.1)%. In a reversal from the prior year, the dollar was down about 1% against foreign currencies.
Interest rates declined again so the longer the maturity of the bond the better the performance. The total return on the 10 year Treasury Note was 9.5% and the 30 year Treasury Bond had a 20.6% return. The return on shortterm Treasury bills was 0.1%.
We look at two fixed income indexes to measure the bond market's performance. The Barclays Government/ Credit Index had a return of 6.7%. It is a broad index containing corporate and government sponsored bonds as well as Treasuries. The Citigroup Treasury/ Sponsored / AAA/AA had a return of 6.1% and is a broad index containing higher rated corporate bonds as well as Treasuries and Government securities. In another change from the prior year, higher quality bonds underperformed lower quality bonds as evidenced by a 1.5% outperformance of BBB rated bonds versus AA rated 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

InvestmentSection 43

RATES OF RETURN

15 10 5 0 (5) (10)
1 Year
7 6 5 4 3 2 1
1 Year

Equities (%)
Equities S&P 1500 MSCI ACWI ex US

3 Year

5 Year

10 Year

Equities 1 Year (0.3)% 3 Year 8.7 5 Year 8.8 10 Year 6.0 20 Year 7.3

S&P 1500 3.6% 11.5 11.9 7.5 8.2

MSCI ACWI ex US (10.2)% 1.2 0.1 1.9 --

20 Year

Fixed Income (%)
Fixed Income Barclays Govt/Credit 1 Month T Bills

3 Year

5 Year

10 Year

20 Year

Fixed Income 1 Year 5.5% 3 Year 3.5 5 Year 3.4 10 Year 5.1 20 Year 6.1

Barclays Govt/ Credit 6.7% 4.2 4.1 5.2 5.7

1 Month T Bills 0.1% 0.1
-- 0.9 2.2

8 6 4 2
1 Year

Total Portfolio (%)
Total Portfolio CPI

3 Year

5 Year

10 Year

20 Year

Note: Time-weighted rates of return are calculated using the Daily Valuation Method based on market rates of return.

44 InvestmentSection

1 Year 3 Year 5 Year 10 Year 20 Year

Total Portfolio
1.4% 7.2 7.3 6.3 7.2

CPI 1.1% 1.1 1.3 1.7 2.2

INVESTMENTS

Asset Allocation

Equities

Fixed Income

80%

70%

60%

50%

40%

30%

20%

10%

0%

2011

2012

2013

2014

2015

2016

Schedule of Fees and Commissions
For the Year Ended June 30, 2016

Investment Advisors' Fees*: U.S. Equity International Equity
Investment Commissions: U.S. Equity International Equity
SEC & Foreign Transaction Fees:
Miscellaneous*:
Total Fees and Commissions

$ 13,999,074 9,167,917
6,042,522 13,010,731 1,899,909 15,116,551 $ 59,236,704

*Amount included in total investment expenses shown on page 42.

Investment Summary

Asset Allocation at June 30 Equities
Fixed Income

2011
72.3% 27.7%

Asset Allocation at June 30 (in millions)

Equities

$37,568

Fixed Income

14,387

Short-Term Securities

--

Total Investments

$51,955

2012
71.0% 29.0%
$37,191 15,188
-- $52,379

2013
73.5% 26.5%
$41,396 14,882
-- $56,278

2014
72.9% 27.1%
$47,126 17,491
-- $64,617

2015
71.2% 28.8%

2016
68.6% 31.4%

$46,423 18,807
100 $65,230

$43,652 19,979
-- $63,631

InvestmentSection 45

PORTFOLIO DETAIL STATISTICS

Twenty Largest Equity Holdings*

Shares
6,998,308 906,472
12,195,242 6,515,077 4,709,330 4,036,200
598,284 7,411,309 11,424,406 3,733,777 4,487,180 11,880,862 2,488,500 8,012,917 5,538,509 7,131,428 4,187,600 6,788,300 8,968,374 2,649,565

Company
Apple Inc. Alphabet Inc. Microsoft Corp. Exxon Mobil Corp. Johnson & Johnson Facebook Inc. Amazon.Com Inc. Verizon Communications Inc. Pfizer Inc. Chevron Corp. Procter & Gamble Co. General Electric Co. Berkshire Hathaway Inc. AT&T Inc. JPMorgan Chase & Co. Wells Fargo & Co. Visa Inc. Coca Cola Co. Intel Corp. PepsiCo Inc.

Fair Value
$ 669,038,245 632,875,879 624,030,533 610,723,318 571,241,729 461,256,936 428,143,996 413,847,495 402,253,335 391,411,843 379,929,531 374,009,536 360,309,915 346,238,144 344,162,949 337,530,487 310,594,292 307,713,639 294,162,667 280,694,916

Total of 20 Largest Equity Holdings

$ 8,540,169,385

Total Equity Holdings

$ 43,651,536,228

Ten Largest Fixed-Income Holdings*

Description

Maturity Date

Interest Rate %

U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note U.S. Treasury Note General Electric Company U.S. Treasury Note U.S. Treasury Bond U.S. Treasury Bond General Electric Capital Corporation

11/15/24 9/30/17 3/31/23 4/30/19 8/15/21 10/9/22 8/15/24 2/15/39 11/15/28 1/5/26

2.2500 1.8750 1.5000 1.6250 2.1250 2.7000 2.3750 3.5000 5.2500 5.5500

Total of 10 Largest Fixed-Income Holdings

Par Value
$ 1,291,000,000 1,065,000,000 800,000,000 768,000,000 645,000,000 605,000,000 564,000,000 480,000,000 428,000,000 388,000,000

Fair Value
$ 1,377,135,520 1,082,434,050 811,528,000 787,622,400 679,720,350 634,947,500 607,095,240 605,774,400 602,444,240 483,673,040
$ 7,672,374,740

Total Fixed-Income Holdings

$ 19,979,237,080

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

46 InvestmentSection

ACTUARY'S CERTIFICATION LETTER
May 1, 2016
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, 2015. The report indicates that annual employer contributions at the rate of 16.81% of compensation for the fiscal year ending June 30, 2018 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.
Since the previous valuation, various assumptions and methods have been revised to reflect the results of the experience investigation for the five-year period ending June 30, 2014.
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 2015 Session of the General Assembly. 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 both individually and in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPS). The funding objective of the plan is that contribution rates over time will remain level as a percent of payroll. The valuation method used is the entry age normal cost method. The normal contribution rate to cover current cost has been determined as a level percent of payroll. Gains and losses are reflected in the unfunded accrued liability, which is amortized as a level percent of payroll in accordance with the funding policy adopted by the Board.
The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports.
We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report:
Summary of Actuarial Assumptions and Methods Schedule of Active Members Schedule of Retirees and Beneficiaries Added to and Removed from Rolls Schedule of Funding Progress Analysis of Financial Experience
ActuarialSection 47

ACTUARY'S CERTIFICATION LETTER
continued
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.
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 Principal and Managing Director

John J. Garrett, ASA, FCA, MAAA Principal and Consulting Actuary

48 ActuarialSection

SUMMARY OF ACTUARIAL ASSUMPTIONS & 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, 2015, was made on the basis of the funding policy adopted by the Board on November 20, 2013 and the 5-year experience study adopted by the Board on November 18, 2015. The Board is responsible for maintaining this funding policy.A summary of plan provisions can be found in the Introductory Section beginning on page 12, and a plan description can be found in the Financial Section beginning on page 15.
The more pertinent facts and significant assumptions underlying the computations included in the June 30, 2015 valuation are as follows:
a) Actuarial Method Used. The actuarial cost method used for funding purposes is the Entry Age Normal method, which is the same cost method used for financial reporting purposes. The Entry Age Normal method is the most commonly used funding method among public retirement plans. This cost method allocates the cost of benefits over each member's expected career as a level percentage of their expected salary and demonstrates the highest degree of stability in the calculation of a plan's normal cost over time. Gains and losses are reflected in the unfunded accrued liability. Adopted November 20, 2013.
b) Ultimate Investment Return. 7.50% compounded annually, which consists of a 4.75% assumed real rate of return and a 2.75% assumed annual rate of inflation. This long-term expected rate of return is used to determine the total pension liability for financial reporting purposes. Adopted November 18, 2015.
c) Salary Increases. Salaries are expected to increase 3.25% to 9.00% annually depending upon the members' years of creditable service. The salary increase includes a 0.50% assumed real rate of wage inflation and a 2.75% assumed annual rate of inflation. Adopted November 18, 2015.

d) Death, Disability and Withdrawal Rates. Death, disability and withdrawal rates for active employees and service retirement tables are based upon the System's historical experience. The death-after-retirement rates are based on the RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward one year for males). The death-after-disability retirement rates are based on the RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females). Adopted November 18, 2015.
e) AssetValuation Method. Inaccordancewiththefunding policy, the actuarial value of the assets was set equal to the market value of assets on June 30, 2013. Five-year smoothing of investment gains and losses commenced in the subsequent year. 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 is one-fifth of the difference between market value and actuarial expected value. Adopted November 20, 2013. The actuarial value of assets is limited to a range between 75% and 125% of market value. Adopted July 27, 2011.
f) Service Retirement Benefit. The 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 member's average compensation over the two consecutive years of membership service producing the highest such average, 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 $17.3 billion at June 30, 2015.

ActuarialSection 49

SUMMARY OF ACTUARIAL ASSUMPTIONS & METHODS

continued

h) Valuation Interest Rate Smoothing. The valuation liabilities are calculated using a smoothed interest rate method. The interest rate assumed during the look-forward period (currently 23 years from the valuation date) is the investment rate of return expected to be earned during the look-forward period based on the actual rate of return earned during the look-back period (currently 7 years) such that the average assumed rate of return over the combined 30-year period is equivalent to the assumed ultimate investment rate of return (currently 7.50%). The interest rate after the 23-year look-forward period is the ultimate investment rate of return of 7.50%. Adopted November 20, 2013. The smoothed interest rate used during the 23-year look-forward period is subject to a corridor around the annual expected rate of return to limit the extent that the calculated smoothed rate can vary from the long-term investment rate of return. Adopted November 20, 2013.

i) Required Contributions (% of compensation). Contributions required by the annual actuarial valuation as of June 30, 2015, to be made for the year ended June 30, 2018.

(1) Member

6.00%

(2) Employer: Normal Unfunded Accrued Liability Total

6.84% 9.97% 16.81%

50 ActuarialSection

SUMMARY OF ACTUARIAL ASSUMPTIONS & METHODS

Service Retirement
Adopted November 18, 2015

< 30 years

Age

of service

50

3.50%

55

5.00

60

20.00

61

18.00

62

26.00

63

22.00

64

22.00

65

30.00

66

32.00

67

30.00

68

30.00

69

28.00

70

30.00

Male

> 30 years of service
60.00% 40.00 36.00 32.00 36.00 33.00 32.00 30.00 32.00 30.00 30.00 28.00 30.00

< 30 years of service
3.00% 5.50 25.00 25.00 25.00 25.00 25.00 31.00 33.00 30.00 30.00 30.00 30.00

Female

> 30 years of service
55.00% 37.00 43.00 43.00 43.00 43.00 43.00 31.00 33.00 30.00 30.00 30.00 30.00

continued

Separation Before Service Retirement
Adopted November 18, 2015

Age

Death

Disability



20

0.0320%

0.0135%

25

0.0349

0.0135

30

0.0412

0.0210

35

0.0717

0.0330

40

0.1001

0.0550

45

0.1399

0.0900

50

0.1983

0.1700

55

0.2810

0.3000

60

0.4092

--

64

0.5330

--

Annual Rate of

Male

0-4 Yrs
25.00% 17.00 13.50 13.50 13.00 12.00 11.00 11.00 12.00 13.00

Withdrawal Years of Service
5-9 Yrs

10+ Yrs

-- %-- %

12.00--

7.00

8.00

6.00

3.00

6.00

2.50

6.00

2.30

5.50

2.50

5.50

3.00

5.50

--

6.50

--

Female

20

0.0177%

0.0100%

25

0.0192

0.0130

30

0.0245

0.0140

35

0.0441

0.0190

40

0.0655

0.0390

45

0.1043

0.0650

50

0.1555

0.1400

55

0.2228

0.3400

60

0.3058

--

64

0.4015

--

28.00% 13.50 13.50 13.00 11.00 10.50 10.00 10.00 10.50 13.00

--% 16.00 8.00 7.00 6.50 6.00 5.00 5.00
5.50 6.50

--% -- 6.00 3.50 3.00 2.30 2.40 2.75 -- --

ActuarialSection 51

ACTUARIAL VALUATION DATA

Active Members

Fiscal Year(1)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Number of Participating Employers Members

377

206,592

385

215,566

389

224,993

392

226,537

386

222,020

399

216,137

404

213,648

401

209,854

405

209,828

414

213,990

Active Members

Annual Payroll(2) (000's)

Average Pay

$ 8,785,985

$ 42,528

9,492,003

44,033

10,197,584

45,324

10,641,543

46,975

10,437,703

47,012

10,099,278

46,726

10,036,023

46,975

9,924,682

47,293

9,993,686

47,628

10,347,332

48,354

% Increase
2.6 % 3.5 2.9 3.6 0.1 (0.6) 0.5 0.7 0.7 1.5

Retirees and Beneficiaries

Added to Roll

Removed from Roll

Roll-End of Year

Annual

Annual

Annual

Fiscal Allowances AllowancesAllowances

Year(1) Number

(000's) Number (000's) Number (000's)

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

2008 5,817

238,137

1,655

39,808

78,583 2,430,431

2009 5,543

245,006

1,768

45,116

82,358 2,630,321

2010 6,383

279,009

1,763

46,853

86,978 2,862,477

2011 7,136

295,192

1,937

55,062

92,177 3,102,607

2012 7,055

298,471

1,915

55,565

97,317 3,345,513

2013 7,937

322,853

1,983

59,453

103,271 3,608,913

2014 7,078

291,066

2,195

68,324

108,154 3,831,655

2015 7,207

306,751

2,237

72,818

113,124 4,065,588

% Increase in Annual Allowances
10.0 % 9.4 8.9 8.2 8.8 8.4 7.8 7.9 6.2 6.1

Average Annual Allowances
$ 29,059 29,993 30,928 31,938 32,910 33,659 34,377 34,946 35,428 35,939

(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. An actuarial valuation for the fiscal year ended June 30, 2016 is currently in process and was not available for this analysis.
(2) The annual payroll shown in the schedule of active member valuation data is the annual compensation of the active members at the date of the valuation. The covered payroll reported in the financial section represents the payroll during the fiscal year upon which employer contributions were made.

52 ActuarialSection

Solvency Test (in thousands)

ACTUARIAL VALUATION DATA
continued

Aggregate Actuarial Accrued Liabilities For



(1)



Active

Fiscal

Member

Year* Contributions

(2) Retirees
and Beneficiaries

(3)

Active Members Actuarial

(Employer-Financed Value of

Portion)

Assets

2006 $ 5,417,408

$ 25,653,251

$ 19,989,022

$ 49,263,027

2007

5,703,184

28,212,100

21,081,286

52,099,171

2008

6,009,710

30,915,200

22,208,867

54,354,284

2009**

6,382,932

29,725,063

23,342,121

53,438,604

2010

6,705,274

34,264,548

22,622,215

54,529,416

2011

6,973,343

37,271,020

21,734,277

55,427,716

2012

7,242,569

39,759,145

21,346,964

56,262,332

2013

7,480,767

43,152,402

21,587,696

58,594,837

2014

7,815,630

45,841,742

22,114,745

62,061,722

2015

8,153,958

50,251,964

24,385,088

65,514,119

Portion of

Accrued Liabilities

Covered by Assets

(1)

(2)

(3)

100.0 % 100.0 % 91.0 %

100.0

100.0

86.3

100.0

100.0

78.5

100.0

100.0

74.2

100.0

100.0

59.9

100.0

100.0

51.5

100.0

100.0

43.4

100.0

100.0

36.9

100.0

100.0

38.0

100.0

100.0

29.1

* 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. An actuarial valuation for the fiscal year ended June 30, 2016 is currently in process and was not available for this analysis.

** Revised since the previous valuation to reflect the refinement of the smoothed valuation interest rate methodology used in the 2010 valuation, which includes corridors around the long-term investment rate of return.

Member and Employer Contribution Rates

Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Member 5.00 % 5.00 5.25 5.53 5.53 6.00 6.00 6.00 6.00 6.00

Employer 9.28 % 9.28 9.74 10.28 10.28 11.41 12.28 13.15 14.27 14.27

ActuarialSection 53

ACTUARIAL VALUATION DATA

continued

Schedule of Funding Progress (in thousands)





Actuarial

Unfunded



Actuarial

Accrued

AAL

Annual

Actuarial

Value of

Liability (AAL)

(UAAL)

Funded

Covered

Valuation

Plan Assets

-Entry Age

(Funding Excess)

Ratio

Payroll

Date

(a)

(b)

(b-a)

(a/b)

(c)

6/30/06

$ 49,263,027 $ 51,059,681

$ 1,796,654

96.5 % $ 8,785,985

6/30/07

52,099,171

54,996,570

2,897,399

94.7

9,482,003

6/30/08

54,354,284

59,133,777

4,779,493

91.9

10,197,584

6/30/09*

53,438,604

59,450,116

6,011,512

89.9

10,641,543

6/30/10

54,529,416

63,592,037

9,062,621

85.7

10,437,703

6/30/11

55,427,716

65,978,640

10,550,924

84.0

10,099,278

6/30/12

56,262,332

68,348,678

12,086,346

82.3

10,036,023

6/30/13

58,594,837

72,220,865

13,626,028

81.1

9,924,682

6/30/14

62,061,722

75,772,117

13,710,395

81.9

9,993,686

6/30/15

65,514,119

82,791,010

17,276,891

79.1

10,347,332

UAAL (Funding Excess)
as a Percentage of Covered Payroll
[(b-a)/c] 20.4 %
30.5
46.9
56.5
86.8
104.5
120.4
137.3
137.2
167.0

*Revised since the previous valuation to reflect the refinement of the "smoothed valuation interest rate" methodology used in the 2010 valuation, which includes corridors around the long-term investment rates of return.

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

54 ActuarialSection

Analysis of Financial Experience (in millions)

ACTUARIAL VALUATION DATA
continued

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

Item

2015 2014 2013 2012 2011 2010 2009 2008 2007

Interest Added to Previous

Unfunded Accrued Liability $ 1,077.6 $ 1,084.6

Accrued Liability Contribution (796.1) (662.0)

Experience:

Valuation Asset Growth

(677.3) ( 836.1)

Pensioners' Mortality

37.7 35.3

Turnover and Retirements

335.9 119.6

New Entrants

138.9 115.3

Salary Increases

(227.6) (624.9)

Method Changes (4)

--

--

Interest Smoothing

2,861.2 739.8

Amendments (1)

--

--

Change in Member

Contribution Rate (3)

--

--

Assumption Changes (2)

688.3

--

Miscellaneous

127.9 112.8

$ 977.8 (604.7)
1,241.1 52.7 378.2 96.2
(715.2) (926.7) 915.9
--
-- -- 124.4

$ 846.2 $ 733.2 $ 486.3 $ 358.5 $ 217.3 (443.5) (396.3) (312.0) (125.0) (118.5)

1,855.1 51.6 319.1 101.2
(709.9) --
(627.0 ) --

2,018.7 24.2 195.3 89.6
(1,132.2 ) --
412.8 (685.5 )

1,674.9 89.8 269.5 123.7
(1,040.5 ) -- -- --

2,433.5 50.1 307.1 185.1 14.1
(2,062.3) -- --

548.9 58.4 291.4 258.8 162.8
-- -- 386.3

-- -- 142.6

-- -- 228.5

12.8 1,472.4
274.2

-- (15.7)

--

--

70.9 92.4

$ 134.7 57.2
(132.3 ) 25.6 213.3 212.6 294.5 -- -- 252.3
(8.4 ) -- 51.2

Total Increase

$ 3,566.5 $ 84.4 $ 1,539.7 $ 1,535.4 $ 1,488.3 $ 3,051.1 $ 1,232.0 $ 1,882.1 $ 1,100.7

2006
$ 73.1 51.9
675.3 (40.7) 65.8 143.5 144.1 (339.2)
-- 48.5
-- -- -- $ 822.3

(1) Amendments 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 first phase of the Plymel lawsuit. 2008 - Reflects the impact of the final Plymel lawsuit. 2011 - Reflects the impact of discontinuing the one-time 3% increase on the first $37,500 of members' allowances for all members who retire on or after January 1, 2013.
(2) Assumption Changes 2010 - 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.
2015 - 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, assumptions related to percent married, unused sick leave, and termination benefits were also revised.
(3) Member Contribution Rate 2007 - Reflects an increase in the member contribution rate from 5.00% to 5.25% effective July 1, 2009. 2008 - Reflects an increase in the member contribution rate from 5.25% to 5.53% effective July 1, 2010. 2010 - Reflects an increase in the member contribution rate from 5.53% to 6.00% effective July 1, 2012.
(4) Method Changes 2006 - Reflects change from 5-year to 7-year market value smoothing (method for determining the actuarial value of assets). 2009 - Reflects change to a valuation interest rate smoothing methodology and a change to include a corridor around the long-term investment rate of return. 2013 - Reflects change to asset smoothing methodology where the final actuarial value of assets used for the current valuation was set to the market value of assets as of June 30, 2013. Five-year smoothing of investment gains and losses will commence in subsequent years.

ActuarialSection 55

STATISTICAL SECTION OVERVIEW & FINANCIAL TRENDS

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 58 through 68 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 56 and page 57 contain trend information to help the reader understand how the System's financial position has changed over time.

Additions by Source (in thousands)





Employer and

Net

Fiscal

Member

Nonemployer

Investment

Year

Contributions

Contributions

Income (Loss)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$ 524,940 554,027 567,635 592,264 604,126 601,512 640,745 640,120 661,835 685,626

$ 927,371 986,759
1,026,287 1,057,416 1,089,912 1,082,224 1,180,469 1,270,963 1,406,706 1,580,532

$ 6,792,341 (1,775,578) (6,572,435) 4,671,571 9,594,994 1,090,900 6,938,349 9,826,743 2,384,145 810,574

Total Additions to (Deductions from) Fiduciary Net Position
$ 8,244,652 (234,792)
(4,978,513) 6,321,251 11,289,032 2,774,636 8,759,563 11,737,826 4,452,686 3,076,732

Contributions were made in accordance with actuarially determined contribution requirements.

56 StatisticalSection

FINANCIAL TRENDS

Deductions by Type (in thousands)

Benefit Payments

Partial

Lump-Sum

Total

Net

Fiscal

Lump-Sum

Survivor Supplemental Death

Benefit Administrative

Year

Service

Option Disability Benefits Payments(1) Settlement Payments

Expenses



2007 $ 2,128,927 $ 33,378 $ 70,431 $ 46,670 $ 1,842 $ 1,702 $ 2,282,950 $ 22,073

2008 2,527,156 40,820 89,348 95,452 1,648 2,059 2,756,483 23,744

2009 2,385,561 37,191 72,028 36,922 1,414 1,371 2,534,487 22,603

2010 2,639,144 34,530 74,998 49,290 1,122 1,340 2,800,424 20,223

2011 2,868,815 37,652 80,393 52,122

922 1,599 3,041,503 20,986

2012 3,091,370 42,441 85,830 55,328

754 1,829 3,277,552 21,954

2013 3,353,295 42,259 91,727 58,234

633 2,001 3,548,149

2014 3,569,374 33,148 98,145 61,203 508 2,074 3,764,452

2015 3,791,526 34,494 103,483 64,911 379 2,086 3,996,879

2016 4,015,786 33,929 109,669 67,013 312 2,110 4,228,819

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

22,584 15,025 14,996 15,279

Refunds
$ 52,875 54,482 49,414 53,638 67,916 72,157 81,142 87,095 80,085 79,334

Total Deductions From Fiduciary Net Position
$ 2,357,898 2,834,709 2,606,504 2,874,285 3,130,405 3,371,663 3,651,875 3,866,572 4,091,960 4,323,432

Changes in Fiduciary Net Position (in thousands)

Fiscal
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Additions to (Deductions from) Fiduciary Net Position $ 8,244,652 (234,792) (4,978,513) 6,321,251 11,289,032 2,774,636 8,759,563 11,737,826 4,452,686 3,076,732

Total Deductions from Fiduciary Net Position $ 2,357,898 2,834,709 2,606,504 2,874,285 3,130,405 3,371,663 3,651,875 3,866,572 4,091,960 4,323,432

Changes in Fiduciary Net Position $ 5,886,754 (3,069,501) (7,585,017)
3,446,966 8,158,627 (597,027) 5,107,688 7,871,254
360,726 (1,246,700)

StatisticalSection 57

OPERATING INFORMATION

Benefit Payment Statistics

76,133

78,633

82,382

87,017

92,180

97,323

101,139

108,100

113,066

117,918

NUMBER OF RETIREES

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$2,283

$2,757

$2,535

$3,042 $2,800

$3,278

$3,548

$3,764

$3,997

$4,229

ANNUAL BENEFIT
(in Millions)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$2,389

$2,528

$2,620

$2,682

$2,750

$2,807

$2,923

$2,902

$2,946

$2,989

AVERAGE MONTHLY BENEFIT

2007 2008 2009 2010 2011 2012 2013 2014 Retirees who belonged to a local retirement system and who received supplemental payments are not included.

2015

2016

58 StatisticalSection

Member Withdrawal Statistics

OPERATING INFORMATION
continued

8,251 8,148

8,687

8,423

8,394

8,106

8,011

7,383

6,939

6,944

NUMBER OF MEMBERS

ANNUAL WITHDRAWAL
(in Millions)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$87

$81

$80

$79

$72 $68

$55 $52

$54

$49

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$9,650

$10,015

$9,986

$10,700

$6,338

$6,689

$7,119

$7,719

$8,389

$8,548

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

AVERAGE WITHDRAWAL

StatisticalSection 59

OPERATING INFORMATION
continued
Average Monthly Benefit Payments for New Retirees



Years Credited Service

Effective Retirement Dates

for Fiscal Years Ended June 30,

10 - 15

16 - 20

21 - 25

26 - 30

Over 30

Total



2007

Average monthly benefit

$ 757.50 $1,246.18 $1,782.60 $2,350.01 $3,330.98

$2,335.28

Average final average salary

$3,193.24 $3,580.49 $4,061.53 $4,669.55 $5,406.13

$4,182.19

Number of retirees

975

704

758

729

2,725

5,891



2008

Average monthly benefit

$ 809.08 $1,324.02 $1,866.99 $2,466.86 $3,488.62

$2,424.71

Average final average salary

$3,404.28 $3,734.90 $4,283.55 $4,797.61 $5,676.32

$4,755.66

Number of retirees

1,010

726

777

686

2,665

5,864

2009 Average monthly benefit Average final average salary Number of retirees
2010 Average monthly benefit Average final average salary Number of retirees

$ 812.18 $3,430.35
1,008

$1,293.52 $3,676.14
701

$1,892.41 $4,302.88
774

$2,564.06 $4,938.17
601

$3,603.15 $5,785.56
2,480

$ 859.93 $3,651.87
1,195

$1,433.00 $4,095.26
786

$1,931.22 $4,366.28
1,018

$2,624.98 $5,142.35
690

$3,655.74 $5,820.83
2,736

$2,456.32 $4,794.47
5,564
$2,479.89 $4,902.99
6,425

2011 Average monthly benefit Average final average salary Number of retirees

$ 879.11 $3,753.60
1,455

$1,483.30 $4,216.80
954

$1,963.77 $4,461.70
1,150

$2,719.55 $5,175.76
812

$3,735.70 $5,940.78
2,797

$2,456.69 $4,943.41
7,168

2012 Average monthly benefit Average final average salary Number of retirees

$ 900.60 $3,813.60
1,532

$1,417.23 $4,070.28
920

$2,008.09 $4,564.72
1,125

$2,723.70 $5,250.18
885

$3,764.35 $5,995.69
2,589

$2,425.05 $4,948.47
7,051

2013 Average monthly benefit Average final average salary Number of retirees

$ 881.25 $3,720.18
1,721

$1,465.23 $4,200.63
1,107

$1,979.00 $4,506.44
1,279

$2,626.66 $5,060.19
1,060

$3,642.94 $5,811.25
2,762

$2,335.21 $4,821.63
7,929

2014 Average monthly benefit Average final average salary Number of retirees

$ 877.35 $3,801.40
1,744

$1,410.94 $4,136.09
1,066

$1,902.93 $4,454.29
1,169

$2,515.64 $4,962.86
994

$3,556.03 $5,868.78
2,099

$2,152.62 $4,736.63
7,072

2015 Average monthly benefit Average final average salary Number of retirees

$ 897.66 $3,818.45
1,659

$1,416.36 $4,161.17
1,119

$2,008.34 $4,635.36
1,164

$2,566.87 $5,007.10
1,035

$3,573.41 $5,900.24
2,190

$2,217.71 $4,812.42
7,167

2016

Average monthly benefit

$ 883.07 $1,447.47 $1,979.68 $2,582.75 $3,496.30

$2,207.94

Average final average salary

$3,786.36 $4,215.09 $4,558.19 $5,046.61 $5,796.47

$4,786.10

Number of retirees

1,695

1,094

1,130

1,001

2,297

7,217

60 StatisticalSection

Retired Members by Type of Benefit

OPERATING INFORMATION
continued

Amount of Monthly Number of Benefit Retirees

$ 1250

530

Type of Retirement (1)

A

B CD

316 52 109 53

250500 4,670 3,870 403 395 2

Max
201 2,891

Opt-1
8

Option Selected (2)

Opt-2 Opt-3 Opt-4

171

64 47

Opt-2 Opt-3 Pop-Up Pop-Up

29

10

161 877 195 113 319 114

500750 6,420 5,413 611 392 4 4,093 233 1,077 253 68 512 183

7501000 6,938 6,023 537 375 3 4,303 264 1,149 274 58 660 230

10001250 7,065 6,159 521 380 5 4,321 263 1,176 318 40 666 281

1,2501,500 6,039 5,315 455 267 2 3,650 214 965 266 52 622 270

1,5001,750 5,207 4,583 375 246 3 3,000 209 823 307 43 549 276

1,7502,000 4,797 4,260 328 209 - 2,729 201 751 274 42 503 297

2,0002,250 4,680 4,184 320 174 2 2,658 192 704 272 49 483 322

2,2502,500 4,573 4,155 302 116 - 2,595 191 634 292 53 525 282

2,5002,750 4,651 4,281 270 100 - 2,646 210 619 270 41 560 305

2,7503,000 4,982 4,596 293 93 - 2,909 218 641 263 55 602 294

3,0003,250 5,555 5,251 217 87 - 3,311 258 639 285 80 613 368

3,2503,500 5,918 5,676 160 82 - 3,611 251 668 275 77 678 358

3,5003,750 6,101 5,928 128 45 - 3,835 312 572 267 97 622 396

3,7504,000 6,464 6,345 83 36 - 4,248 350 531 279 85 606 365

4,0004,250 5,576 5,499 46 31 - 3,643 300 447 263 83 486 354

4,2504,500 5,003 4,948 27 28 - 3,333 303 403 220 79 391 274

4,5004,750 3,982 3,919 28 35 - 2,665 224 343 197 44 301 208

4,7505,000 3,254 3,221 15 18 - 2,227 164 260 155 63 215 170

Over 5,000 15,513 15,366 40 107 - 9,362 881 1,874 1,140 429 993 837

TOTALS 117,918 109,308 5,211 3,325 74 72,231 5,407 15,324 6,129 1,698 10,935 6,194

(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, beginning on page 12 for descriptions of Options.

StatisticalSection 61

OPERATING INFORMATION
continued
Retirement Payments By County of Residence

County

Number of FY16 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 Coffee Colquitt Columbia Cook Coweta Crawford Crisp

282 94 141 32 740 199 624 938 271 249 1,858 279 136 183 315 1,322 268 267 120 362 154 1,738 457 87 2,809 30 304 2,007 3,162 58 1,196 96 5,531 504 565 2,214 211 1,298 199 328

$ 10,403,523 3,231,082 4,937,728 1,039,727 26,300,300 6,689,425 20,621,485 32,335,410 9,129,817 8,204,198 66,015,943 9,107,101 4,568,862 6,377,048 10,326,304 47,456,956 8,732,672 9,577,475 3,725,689 12,974,347 4,872,492 62,609,482 15,530,646 3,246,253 99,909,220 1,079,378 10,117,841 72,974,570
136,150,327 2,012,281 43,904,834 3,633,565
205,217,805 17,799,275 20,221,109 79,319,379 7,361,481 47,468,450 6,925,323 11,516,472

County
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 Gwinnett Habersham Hall Hancock Haralson Harris Hart Heard Henry
Houston Irwin Jackson Jasper Jeff Davis

Number of Retirees
118 293 346 5,839 262 124 1,628 936 191
8 405 297 368 140 347 1,697 1,347 978 350 7,016 379 37 1,253 530 284 287 4,385 616 1,852 141 328 388 290 93 1,783 1,333 107 970 188 150

FY16 Total Gross Pay
$ 3,700,306 11,946,438 13,266,177
247,402,657 8,923,239 4,641,783 61,242,790 33,450,177 6,675,630 267,806 12,092,998 9,485,267 13,422,696 4,656,803 12,603,771 67,783,015 50,980,996 34,968,141 12,760,340
306,692,407 13,928,462 1,128,067 46,762,453 18,302,576 10,273,457 12,158,660 165,463,540 21,068,967 72,254,734 4,336,192 10,689,731 14,143,826 11,365,940 2,780,580 65,355,976 49,470,891 3,759,987 34,415,777 6,539,713 5,727,716

62 StatisticalSection

OPERATING INFORMATION
continued
Retirement Payments By County of Residence continued

County

Number of Retirees

Jefferson Jenkins Johnson Jones Lamar Lanier Laurens Lee Liberty Lincoln Long Lowndes Lumpkin Macon Madison Marion McDuffie McIntosh Meriwether Miller Mitchell Monroe Montgomery Morgan Murray Muscogee Newton Oconee Oglethorpe Paulding Peach Pickens Pierce Pike Polk
Pulaski Putnam Quitman Rabun Randolph

208 123 122 222 234 70 695 294 298 152 56 1,625 451 154 764 83 306 173 240 81 270 285 138 360 319 2,494 786 1,199 281 618 582 612 256 243 456 145 357 36 266 91

FY16 Total Gross Pay
$ 7,266,640 4,132,842 4,181,231 8,309,500 8,265,610 2,245,076 25,095,654 10,288,187 9,967,269 5,671,710 1,718,850 56,297,055 16,614,067 5,065,689 22,210,524 2,500,312 10,922,870 5,973,271 8,548,529 2,781,273 8,739,663 10,367,499 4,846,269 13,640,388 12,255,528 90,927,127 28,356,019 50,165,790 8,950,302 20,054,185 22,421,722 24,370,856 8,289,838 8,446,971 17,218,554 5,096,126 13,643,160 1,207,860 11,049,261 3,444,413

County

Number of Retirees

FY16 Total Gross Pay

Richmond Rockdale Schley Screven Seminole Spalding Stephens Stewart Sumter Talbot Taliaferro Tattnall 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

2,815 820 57 220 133 856 410 76 522 84 21 198 115 189 124 731 827 365 240 104 773 181 77 372 363 573
1,088 549 57 266 381 26 94
446
910 148 170 129
221
16,330

$ 92,989,541 30,551,049 1,762,216 7,439,449 4,554,712 29,600,565 14,689,204 2,559,812 19,681,139 2,361,972 624,451 6,836,110 4,192,884 6,726,583 4,313,956 25,328,961 30,039,893 13,323,353 9,017,503 3,434,314 28,784,180 5,945,953 2,658,630 14,244,836 12,651,666 19,136,113 38,726,509 19,800,546 1,989,468 9,493,039 12,789,574 842,176 3,522,558
16,352,737 34,155,180 5,523,274
5,798,007 4,086,825
7,447,016
452,779,399

TOTALS

117,918 $ 4,228,819,000

StatisticalSection 63

OPERATING INFORMATION
continued

Principal Participating Employers

Employers

Covered Employees

2016
Rank

State of Georgia

37,036

1

Gwinnett County Schools

16,701

2

Cobb County Schools

11,410

3

DeKalb County Schools

10,618

4

Fulton County Schools

9,804

5

Atlanta Public Schools

5,177

6

Clayton County Schools

4,983

7

Chatham County Schools

4,458

8

Henry County Schools

4,053

9

Cherokee County Schools

3,782

10

Muscogee County School District --

--

Richmond County Schools

--

--

University of Georgia

*

--

Top 10

108,022

Total

218,215

Percentage of Total System
15.26 % 7.65 % 5.23 % 4.87 % 4.49 % 2.37 % 2.28 % 2.04 % 1.86 % 1.73 %
-- -- *
47.78 %
100.0 %

Covered Employees

2007
Rank

--

--

15,626

1

11,996

3

11,726

2

9,407

4

5,487

7

5,560

6

4,058

8

--

--

--

--

3,894

9

3,828

10

8,059

5

79,641

218,141

Percentage of Total System
-- 7.16 % 5.50 % 5.38 % 4.31 % 2.52 % 2.55 % 1.86 %
-- -- 1.79 % 1.75 % 3.69 %
36.51 %
100.00 %

* Amount is included in State of Georgia totals
Note: GASB Statement No. 67 was implemented during the fiscal year ended June 30, 2014 and required legally separate employers within the same financial reporting entity to be treated as a single employer for reporting purposes. Therefore, information presented for fiscal years prior to implementation is not comparable with information presented for fiscal years after implementation.

64 StatisticalSection

Reporting Entities
Universities and Colleges
Abraham Baldwin Agricultural College
Albany State University Armstrong Atlantic State
University Atlanta Metropolitan
State College Augusta University Bainbridge College Clayton College & State
University College of Coastal Georgia Columbus State University Cooperative Extension Service Dalton State College Darton College East Georgia State College Fort Valley State University Georgia College & State
University Georgia Gwinnett College Georgia Highlands College Georgia Institute of Technology Georgia Perimeter College Georgia Southern University Georgia Southwestern State
University Georgia State University Gordon College Kennesaw State University Middle Georgia State College Savannah State University South Georgia State College The University of Georgia University of North Georgia University of West Georgia Valdosta State University

OPERATING INFORMATION
continued

Boards of Education
Appling County Atkinson County Atlanta Public 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 Schools 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 Coweta County Crawford County

Boards of Education, cont.
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 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

StatisticalSection 65

OPERATING INFORMATION
continued

Reporting Entities, cont.
Boards of Education, cont.
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 Randolph County Richmond County Rockdale County Rome City Schley County Screven County

Boards of Education, cont.
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 Thomaston-Upson County Thomasville City 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

66 StatisticalSection

Public Libraries
Athens Regional Library Barnesville-Lamar
County Library Bartow County Library Bartram Trail Regional Library Brooks County Library Camden County Library Catoosa County Library Chattooga County Library System Cherokee Regional Library Chestatee Regional Library Clayton County Regional Library Coastal Plains Regional Library Cobb County Public Library Conyers-Rockdale
Library System Coweta Public Library DeKalb County Public Library DeSoto Trail Regional Library Dougherty County Public Library East Central Georgia
Regional Library Elbert County Library Fitzgerald-Ben Hill
County Library Flint River Regional Library Forsyth County Public Library Gwinnett County Public Library Hall County Library Hart County Library Henry County Library Houston County Public Library Jackson Butts County Library Jefferson County Library System Kinchafoonee Regional Library Lake Blackshear
Regional Library Lee County Library Lincoln County Library Live Oak Public Libraries Mary Vinson Memorial Library Middle Georgia Regional Library Moultrie-Colquitt County Library Mountain Regional Library

Reporting Entities, cont.
Public Libraries, cont.
Northeast Georgia Regional Library
Newton County Library 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 Roddenbery 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 Worth County Library System
Technical Colleges
Albany Technical Institute Athens Technical College Atlanta Technical College Augusta Technical Institute Central Georgia Technical
College Chattahoochee Technical College Coastal Pines Technical College Columbus Technical Institute Georgia Northwestern
Technical College Georgia Piedmont
Technical College Gwinnett Technical College Lanier Technical College

OPERATING INFORMATION
continued

Technical Colleges, cont.
North Georgia Technical Institute Oconee Fall Line Technical
College Ogeechee Technical College Savannah Technical College South Georgia Technical College Southeastern Technical College Southern Crescent
Technical College Southern Regional Technical
College West Georgia Technical College Wiregrass 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

Charter Schools
Academy for Classical Education, Inc.
Amana Academy Atlanta Classical Academy Atlanta Heights Charter School Atlanta Neighborhood
Charter School, Inc. Baconton Community
Charter School Brighten Academy Centennial Academy Charles Drew Charter School Charter Conservatory for
Liberal Arts and Technology Chattahoochee Hills
Charter School, Inc. Cherokee Charter Academy Coweta Charter Academy DeKalb Academy of
Technology and Environment DeKalb Path Academy DeKalb Preparatory Academy Destiny Achievers Academy
of Excellence Dubois Integrity Academy Foothills Education Charter
High School Fulton Leadership Academy Furlow Charter School Georgia Connections Academy Georgia Cyber Academy Georgia Magnet Charter School Georgia Online Academy, Inc. Georgia School for Innovation
and the Classics International Academy of Smyrna
Charter School International Charter School of
Atlanta International Community School Ivy Preparatory Academy
for Girls Ivy Preparatory Young
Men's Academy Ivy Preparatory Academy Kennesaw Charter Science
and Math Academy

StatisticalSection 67

OPERATING INFORMATION
continued

Reporting Entities, cont.
Charter Schools, cont.
Kipp Metro Atlanta Collaborative Latin Academy Charter School Latin College Prep Latin Grammar School Leadership Preparatory Academy
Charter School Macon Charter Mountain Education Center Inc. New Life Academy of
Excellence Inc. North Metro Academy of
Performing Arts Odyssey Charter School Pataula Charter Academy Scintilla Charter Academy Tapestry Public Charter School The Globe Academy The Kindezi School The Main Street Academy The Museum School of
Avondale Estates Utopian Academy for the Arts Wesley International Academy Westside Atlanta Charter School
State Agencies
Department of Administrative Service
Department of Agriculture Department of Community Health Department of Corrections Department of Human Services Department of Natural Resource Department of Public Health Department of Public Safety Department of Behavioral Health
and Development Disability Georgia Building Authority Georgia Bureau of Investigation Georgia Department of Audits Georgia Department of
Community Affairs Georgia Department of Driver
Services Georgia Department of Early
Care and Learning Georgia Department of Education

State Agencies, cont.
Georgia Department of Economic Development
Georgia Department of Juvenile Justice
Georgia Department of Labor Georgia Department of Law Georgia Department of Revenue Georgia General Assembly Georgia Public Defender
Standard Council Georgia Public
Telecommunications Commission Georgia Soil and Water Conservation Commission Georgia Student Finance Commission Georgia World Congress Center Authority Governors Office of Planning and Budget Georgia Technology Authority Prosecuting Attorneys' Council of Georgia Secretary of State State Accounting Office State Board of Pardons and Paroles State Road Toll and Authority Technical College System of Georgia University System of Georgia

Other
Baldwin County Board of Health Clarke County Health Department Clayton Center Community
Service Board DeKalb County DFACS Effingham County Tax
Commissioner Office Floyd County DFACS Georgia Military College Glynn County Health Dept
Coastal Health District Habersham County Board
of Commissioners Ware County Health Department Whitfield County Board of Health

68 StatisticalSection

A COMPONENT UNIT OF THE STATE OF GEORGIA
Two Northside 75, Suite 100 Atlanta, GA 30318
(404) 352-6500 or (800) 352-0650 www.TRSGA.com