2010-Audit

2010-Audit

Document Date: January 1, 2010 Document: 2010-Audit.pdf

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COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 201 0

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2010

INTRODUCTORY SECTION

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2010

TABLE OF CONTENTS

Page List of Elected and Appointed Officials… 1

FINANCIAL SECTION

Independent Auditors’ Report … . … . … . … . … . . … . … . … … . … . … . … … . … … . … … . … . … . … . … . … . … . . … . … … . … . … . … . … … . … . … . … … . 2·3

Exhibit Page Basic Financial Statements:

Government-wide Financial Statements: Statement of Net Assets … . 1 4 Statement of Activities … . 2 5

Fund Financial Statements: Balance Sheet- Governmental Funds … … 3 6 Reconciliation of the Balance Sheet of Governmental Funds to the Statement

of Net Assets … … 4 7 Statement of Revenues, Expenditures and Changes in Fund Balances-

Governmental Funds … . 5 8 Reconciliation of the Statement of Revenues, Expenditures, and Changes

in Fund Balances of Governmental Funds to the Statement of Activities … . 6 9 Statement of Net Assets - Proprietary Funds … . 7 10 Statement of Revenues, Expenses, and Changes in Fund Net Assets-

Proprietary Funds … . 8 11 Statement of Cash Flows - Proprietary Funds … … 9 12 Statement of Fiduciary Net Assets- Fiduciary Funds … … 10 13

Notes to Financial Statements … . 14·51

Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual· General Fund … 11 52 Budget and Actual- Special Revenue Fund -Industrial Development… 12 53 Budget and Actual- Special Revenue Fund- Coal Road… 13 54 Budget and Actual· Special Revenue Fund- Rental Assistance… 14 55

Schedule of OPES and Pension Funding Progress… 15 56

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FiscaL YEAR ENDED JUNE 30, 2010

TABLE OF CONTENTS INTRODUCTORY SECTION Page List of Elected and Appointed Official 1 FINANCIAL SECTION Independent Auditors’ Report … 23 Exhibit Page Basic Financial Statements: Government-wide Financial Statements Statement of Net Assets 1 4 Statement of Activities 2 5 Fund Financial Statements: Balance Sheet — Governmental Funds … 3 6 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets … 4 7 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 5 8 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 9 Statement of Net Assets ~ Proprietary Funds… 7 10 Statement of Revenues, Expenses, and Changes in Fund Net Assets -

Proprietary Funds 8 Statement of Cash Flows - Proprietary Funds. 9 12 Statement of Fiduciary Net Assets - Fiduciary Funds. 1 18

Notes to Financial Statements. 14-51 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances ~ ‘Budget and Actual - General Fund… 52 Budget and Actual - Special Revenue Fund — Industrial Development. 12 53 Budget and Actual - Special Revenue Fund ~ Coal Road 13 84 Budget and Actual - Special Revenue Fund — Rental Assistance 14 85 Schedule of OPEB and Pension Funding Progress… 15 56

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2010

TABLE OF CONTENTS (CONTINUED)

Other Supplementary Information Section:

Supplementary Financial Statements

Discretely Presented Component Unit- School Board:

Exhibit Page

Balance Sheet… 16 57 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds… 17 58 Schedule of Revenues, Expenditures, and Changes in Fund Balances-

Budget and Actual… 18 59

Schedule Page Supporting Schedules:

Schedule of Revenues- Budget and Actual - Governmental Funds … . 1 60-65 Schedule of Expenditures- Budget and Actual - Governmental Funds … … 2 66-69

Other Statistical Information:

Government-wide Information: Government-Wide Expenses by Function… 1 70 Government-Wide Revenues… 2 71

Fund Information: General Governmental Expenditures by Function… 3 72 General Governmental Revenues by Source… 4 73 Property Tax Levies and Collections… 5 74 Assessed Value of Taxable Property… 6 75 Property Tax Rates… 7 76 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded

Debt Per Capita… 8 77 Ratio of Annual Debt Service Expenditures for General Bonded Debt to

Total General Governmental Expenditures… 9 78

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FiscaL YEAR ENDED JUNE 30, 2010

‘TABLE OF CONTENTS (CONTINUED)

Other Supplementary Information Section:

Exhibit Supplementary Financial Statements Discretely Presented Component Unit - School Board: Balance Sheet 16 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds. 17 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual… 18

Schedule Supporting Schedules:

Schedule of Revenues — Budget and Actual - Governmental Funds 1 Schedule of Expenditures - Budget and Actual - Governmental Funds 2 Other Statistical Information: Table Government-wide Information: Government-Wide Expenses by Function 1 Government-Wide Revenues… 2

Fund Information: General Governmental Expenditures by Function General Governmental Revenues by Sourc Property Tax Levies and Collections Assessed Value of Taxable Property

Property Tax Rates … Ratio of Net General Bonded Debt to Assessed Value and Net Bonded

Debt Per Capita… 8 Ratio of Annual Debt Service Expenditures for General Bonded Debt to

Total General Governmental Expenditures . 9

Page

60-65 66-69

Page

70 71

72 73 74 i) 76

7 78

COMPLIANCE SECTION

Compliance:

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2010

TABLE OF CONTENTS (CONTINUED)

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards… 79-80

Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133… 81-82

Schedule of Expenditures of Federal Awards… 83-85 Schedule of Findings, Responses, and Questioned Costs… 86-88

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FiscaL YEAR ENDED JUNE 30, 2010

TABLE OF CONTENTS (CONTINUED)

COMPLIANCE SECTION Page Compliance: Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordanee with Government Auaiting Standards… 79-80 Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordanes with OMB Circular A-133. 81-82 Schedule of Expenditures of Federal Awards… 83-85 Schedule of Findings, Responses, and Questioned Costs… 86-88

INTRODUCTORY SECTION

Danny Brown, Vice Chair Bob Keene Billy Wayne Wampler

Charlie Collins, Vice Chair Fayrene Plaster Tom Griffith

Authur Lawson, Vice Chair

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Mike Puckett, Chair

COUNTY SCHOOL BOARD

Carl Jackson, Chair

SOCIAL SERVICES BOARD

Harry Ferguson, Jr., Chair

Raymond Edward Harrison, Jr., Secretary

OTHER OFFICIALS

Jon Bowerbank Earnest (Shy) Kennedy

Bob Hillman Linda Cross

Bill W. Wampler

Clerk of the Circuit Court … Ann S. McReynolds Commonwealth’s Attorney … Brian Patton Commissioner of the Revenue … Randy N. Williams Treasurer … Patrick Thompson Sheriff … Steve Dye Acting Superintendent of Schools … Mike Puckett Director of Social Services … Raymond E. Harrison, Jr. County Administrator … Jim Gillespie County Attorney … Dennis Jones

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CouNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS Mike Puckett, Chair Danny Brown, Vice Chair Jon Bowerbank Bob Keene Eamest (Shy) Kennedy Billy Wayne Wampler COUNTY SCHOOL BOARD Carl Jackson, Chair Charlie Collins, Vice Chair Bob Hillman Fayrene Plaster Linda Cross Tom Griffith SOCIAL SERVICES BOARD Harry Ferguson, Jr., Chair ‘Authur Lawson, Vice Chair Bill W. Wampler

Raymond Edward Harrison, Jr, Secretary

OTHER OFFICIALS

Clerk of the Circuit Court Commonwealth’s Attorney. Commissioner of the Revenue … Treasurer Sheriff… Acting Superintendent of Schools. Director of Social Services… County Administrator…

County Attorney…

Ann $, McReynolds seeeneee Ban Patton

Randy N. Williams. Pattick Thompson Steve Dye Mike Puckett

"Raymond E. Harrison, Jr.

…im Gillespie seneeeeDe@nnis Jones:

FINANCIAL SECTION

ROBINSON, JF ARMJER, COX ASSOCIATES CER17F!ED PUBLIC ACCOUNTANT> A PROFESSIONAL LIM/Tl:D L!ABILTTY COMPANY

Independent Auditors’ Report

TO THE HONORABLE MEMBERS OF THE BOARD OF SUPERVISORS COUNTY OF RUSSELL, VIRGINIA LEBANON, VIRGINIA

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, the major funds, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2010, which collectively comprise the County’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County of Russell, Virginia’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Russell County Public Service Authority, which represents 24.3% and 6.6% of the total net assets and program revenues, respectively, of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion on the basic financial statements insofar as they relate to the amount included for the Russell County Public Service Authority in the aggregate discretely presented component unit, are based solely on the report of the other auditors.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions.

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, , the business type activities the discretely presented component units, the major funds, and the aggregate remaining fund information of the County of Russell, Virginia as of June 30, 2010, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated January 26, 2011, on our consideration of the County of Russell, Virginia’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

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ROBINSON, FARMER, COX ASSOCIATES

(CERTIFIED PUBLIC ACCOUNTANTS ‘A PROFESSIONAL LIMITED LIABILITY COMPANY

Independent Auditors’ Report

TO THE HONORABLE MEMBERS OF THE BOARD OF SUPERVISORS COUNTY OF RUSSELL, VIRGINIA LEBANON, VIRGINIA

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, the major funds, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2010, which collectively comprise the County’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County of Russell, Virginia’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Russell County Public Service Authority, which teptesents 24.3% and 6.6% of the total net assets and program revenues, respectively, of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion on the basic financial statements insofar as they relate to the amount included for the Russell County Public Service Authority in the aggregate discretely presented component unit, are based solely ‘on the report of the other auditors.

‘We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to Obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, ‘An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions.

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, , the business- type activities the discretely presented component units, the major funds, and the aggregate remaining fund information of the County of Russell, Virginia as of June 30, 2010, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America,

In accordance with Goverment Auditing Standards, we have also issued our report dated January 26, 2011, on our consideration of the County of Russell, Virginia’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

The County has elected to omit Management’s Discussion and Analysis which is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America.

The budgetary comparison information and the schedules of OPES and pension funding progress as listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Russell, Virginia’s basic financial statements. The introductory section and the other supplementary information section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the County of Russell, Virginia. The schedule of expenditures of federal awards has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and other supplementary information section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

if~tnz., ~~ dt ~oa·~ Christiansburg, Virginia January 26, 2011

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The budgetary comparison information and the schedules of OPEB and pension funding progress as listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise ‘the County of Russell, Virginia’s basic financial statements. The introductory section and the other supplementary information section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the County of Russell, Virginia. The schedule of expenditures of federal awards has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and other supplementary information section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

Holeinoen, Seeman, py Chsocicttes- Christiansburg, Virginia January 26, 2011

Basic Financial Statements

Exhibit! County of Russell, Virginia Statement of Net Assets

June 30,2010

Com anent Units Prima~ Government Industrial Russell County Castlewood

Governmental Business·type Development Public Service Water and Sewage Activities Activities Total School Board Authoritv Authority Authority

ASSETS Cash and cash equivalents 8,145,621 49,575 $ 8,195,196 1,879,511 $ 1,119,028 $ 1,569,766 $ 134,066 Investments in custody of others 1,730,417 1,730,417 Receivables (net of allowance for uncollectibles)·

Taxes receivable 6,915,930 6,915,930 Accounts receivable 453,351 6,331 459,682 82,221 9,932 739,806 223,373 Notes receivable 4,344 4,344

Due from pnmary government 425,000 Due from component un1t 365,000 365,000 Due from other governmental umts 1,296,930 1,296,930 1,681,471 Inventories 20,473 Lease purchase receivable 578,160 Prepaid expenses 19,114 Othel assets

Bond issuance costs 34,518 Restricted assets:

Temporarity restricted: Cash and cash equivalents 2,286,757 2,286,757 426,439 117,317 Investments {in custody of others) Intergovernmental receivable

Noncurrent assets· Lease purchase receivable- net ol current portion 981,372

Capital assets (net of accumulated depreciation) Land 1,541,333 1,541,333 4,643,707 1,439,397 106,332 102,830 Bu1ldings and improvements 15,412,448 15,412,448 11,320,900 6,310,110 2,440,501 Improvements other than buildings Machinery and equipment 1,527,586 1,527,586 1,753,256 497,577 Infrastructure 12,635,185 Utility plant in service 3,647,661 3,647,661 8,653,513 Construction in prO{lress 2,445,645 2,445,645 90,571 1,176,639 571,611 Less: Accumulated Deprecia~on 2,752,659

Total assets $ 42,125,362 3,703,567 45,828,929 21,451,637 $ 12,998,172 15,331,015 9,250,213

LIABILITIES Accounts payable 1,845,561 27,050 1,872,611 618,225 $ 43,838 387,627 55,694 Accrued liabilities 980,529 129,842 8,622 Customer deposits 10,738 43,408 Accrued interest payable 323,118 1,858 324,976 126,614 23,181 9,216 Due to primary government 200,000 165,000 Due to component unit 425,000 425,000 Unearned revenue 4,313,714 4,313,714 Long-term liabiht1es:

Due within one year 2,013,436 17,867 2,031,303 2,972,910 3,870,603 233,235 Due in more than one year 20,941,961 751,554 21,693,515 1,064,578 10,781,137 3,680,992 3,928,791

Total liabilities 29,862,790 $ 798,329 30,661,"119 2,663,332 $ 14,124,499 $ 8,102,983 4,443,966

NET ASSETS Invested in capital assets, net o1 related debt 6,670,389 $ 2,878,240 $ 9,548,629 17,808,434 $ 3,889,731 $ 5,449,375 $ 4,604,201 Restricted for:

Coal Road 1,514,134 1,514,134 School Construction 909,791 909,791 Debt service and bond covenants 426,439 1,113,658 117,317

Unrestricted (dencit) Total net assets

The notes to the financial statements are an integral part of this statement.

-4-

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Functions/Programs

PRIMARY GOVERNMENT: Govemmenlal ac11V111es

Ger>eral g;JVemmenl adm1n1s1rat10fl Judrc.al adm,n1s1ra11on PUbliC safety Public works HeaHh and weilare Educat1011 Parks, recrealion, afld cultural Community development Interest on tong.1erm debt

T alai governmental actJVihes

Bus1ness·lype ae1111111es SeMce Aulhorrty

T alai pnmary govemmenl

COMPONENT UNITS: School Board lnduslrial Develq)menl Aulhonty Russell County PubliC Sef\llce Aulhorily Casllewood Water and Sewer Total compor.enl un~s

Expenses

1.828.631 s 2,219,866 4,234,145 5,549,934 6.070,09t 5.897,486

41.560.110 s 1,757.836 1,643,245 1,35t.709

46.3t2.0CKJ s

Generallllvenues General property taxes Other local taxes

Local sates arid use taxes Coal severence taxes Coal road taxes Consumers’ utility taxes Molor veh1de taxes Other local taxes

Charges for Services

727 s 6,998

85.827 195.440 28.897

10.313

717,272 s 318.t58

1.()48,857 t.017,454 3.10t,74t s

Program Ael’1!nues

Operating Grants and

Contributions

312.752 551.817

t.633.396 71.690

4,573,749

85.639 244,034

33,917,800 284,793

441,781 34.644.374 s

Unrestricted revenues I rom use of money and property Miscellaneous Paymenls from 1he Countyol Russell. Virgm.a Grants and contribulions 1101 restricled 10 spec~1c J)<ograms Gam (loss) on diSposal of cap1tal assets Transfers Total general revenues

Change in net assets Net assets· beginning. as reslated Net assets · ending

The notes to the linanc~al slatements are an inte{lral part ollh1s sta1ement

County of Russell, Virginia Statement of Activities

For the Year Ended June 30. 2010

Net (Expense) Rel’1!nue and Changes in Net Assets

capital Grants and

Contributions

1,534.705

Govcrnmcnlal Ac1ivities

Primary Government

Business-type Activilies Total

(1.515,152) s s (1,515.152) s (1,661,051) (1,661.051) (2,514.922) (2,514.922) (5,282,804) (5,282.804) (1,407,445) (1,467,445) (5.897.486) {5,897,486)

(464,783) (454.783) (1,247.173) {t,247.t73)

(728.202) (728.202) s (20.n9.018) s s {2Q,n9,018)

s (369.392) s (369,392) s (20,779.018) s (369.392) s (21.148.410) s

School Board

(6.925,038) s

Component Units

Industrial Development

Au1hority

s {1,154,885)

Russell Olunty Public Service

Authority

940,317

1,534,705 (6,925,03!Jl.L{1,t54.885l s 940,317

13,004,381

1,839,057 1,606,851 1,573,947

593.616 295,866 214,470 106,694 173,322

2,465,451

154

13.004.381

1,839,057 1,606,851 1.573.947

593,616 295.866 214,470 106,848 173,322

2.465.451

1,500 103.152 18,153 230,840 326.354

5.739,577 192.014 368,454

Exhib~ 2

castlewood Wa1er and Sewerage

Authority

107,526 107,526

3,347 222,214

9.172

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Exhibit 3 County of Russell, Virginia

Balance Sheet Governmental Funds

June 30, 2010

Industrial Coal Rental General Development Road Assistance Total

ASSETS Cash and cash equivalents $ 4,619,377 $ 586,042 $ $ $ 5,205,419 Investments in custody of others 1,730,417 1,730,417 Receivables (net of allowance for uncottectibles):

Taxes receivable 6,915,930 6,915,930 Accounts receivable 278,235 169,008 447,243 Notes receivable 4,344 4,344

Due from other funds 321,487 1,260,000 1,581,487 Due from component unit 365,000 365,000 Due from other governmental units 1,296,930 1,296,930 Restricted assets:

Temporarily restricted: Cash and cash equivalents 909,791 1,376,966 2,286,757 Total assets $ 16,441,511 $ 1,846,042 $ 1,545,974 $ $ 19,833,527

LIABILITIES AND FUND BALANCES liabilities:

Accounts payable $ 1,434,225 $ $ 28,935 $ $ 1.463,160 Due to other funds 1,578,582 2,905 1,581,487 Due to component unit 425,000 425,000 Deferred revenue 6,765,542 6,765,542

Total liabilities $ 10,203,349 $ $ 31,840 $ $ 10,235,189

Fund balances: Reserved for:

Coal Road $ $ $ 1,514,134 $ $ 1,514,134 School Construction 909,791 909,791

Unreserved: Designated, reported in: Special revenue funds 1,846,042 1,846,042 General fund 814,129 814,129

Undesignated, reported in: General fund 4,514,242 4,514,242

Total fund balances $ 6,238,162 $ 1,846,042 $ 1,514,134 $ $ 9,598,338 Total liabilities and fund balances $ 16,441,511 $ 1,846,042 $ 1,545,974 $ $ 19,833,527

The notes to the financial statements are an integral part of this statement.

-6-

County of Russell, Vigna

Exhibit 3

Balance Sheet Governmental Funds June 30,2010 Industrial Coal Roatal Seneral Development Road Total ASSETS Cash and cash equivalents 8 aeiga77 § 538,082 9.205.419 Investments in custody of others 730417 1730417 Recenvables (neta allowance fr uncoboctbls): Taxes receivable ea1s930 - 6918990 ‘Accauns receivable 278,285 - 169,008 Notes receivable 434 : : Due fom other funds sa1.te? 1,260,000 18487 Due fom component unit 386,000 - 386,000 ‘Due from other governmental unis 1.238.830 1.296.950, Rosticied essts Temporary restcied Cash and cash equivalents 909.701 - 1.376986 2.286751 Totalassets 3 Bats Tee T5A5,574 79833,527 LIABILITIES AND FUND BALANCES Abies: Accounts payable S 143205 $ 28595 1.483,160 Due fe ahr funds 1578,582 2908 11581,487 ue to component uit 425,000 - - 25,000 Deteed overue 6,765,542 . 6,765 542 Toda babies 3 10203,309 BELO 70.235, 188 Fund balances: Resened lor Coat Road 8 8 1514,134 151404 School Construction 00.701 : 09,791 Unresered Designated, reported in ‘Speci revenue funds : 1.846 042 1946.042 General fund 814,129 - 814,123 Undesignted, ported in General find 414.242 - - 451402 Total fund balances 3 6238,162_§ eo SKE 508 338 Totallaities and fund balances S__feaaistt_§ 1846007 155, 378 793833507

‘The notes tothe fnancll statements are an integral pat oft stalement

County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds

To the Statement of Net Assets June 30, 2010

Amounts reported for governmental activities in the statement of net assets are different because:

Total fund balances per Exhibit 3- Balance Sheet- Governmental Funds

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds.

Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets.

Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds.

Net assets of governmental activities

The notes to the financial statements are an integral part of this statement.

-7-

Exhibit 4

$ 9,598,338

20,927,012

2,451,828

2,563,909

(23,278,515)

$ 12,262,572

County of Russell, Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Assets June 30, 2010

Exhibit 4

‘Amounts reported for governmental activities inthe statement of net assets are diffrent because: Total fund balances per Exhibit 3 - Batance Sheet - Governmental Funds

Capital assets used in governmental actives are not financial resources and, therefore, are not reported in the funds,

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds,

Interal service funds are used by management to charge the costs of certain activities, such as insurence and telecommunication, 1 individual nds, The assets and labities of the internal service funds are included in governmental activites in the statement of net assets

Long-term ilies, including bonds payable, ae not due and payable inthe current Period and, therefor, are not reported in the funds.

Net assets of governmental activities

‘The notes tothe financial statements are an integral part of this statement

S 9,598,338

207.012

2,451,828

2,563,909

(23,278,518)

T2262 572,

Exhibit 5 County of Russell, Virginia

Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds

For the Year Ended June 30,2010

Industrial Coal Rental General DeveloQment Road Assistance Total

REVENUES General property taxes $ 12,841,457 $ $ $ $ 12,841,457 Other local taxes 4,549,880 1,573,947 6,123,807 Permits, privilege fees, and regulatory licenses 45,877 45,877 fines and forfeitures 1,049 1,049 Revenue from the use of money and property 61,156 3,397 8,228 72,779 Charges for services 281,276 281,276 Miscellaneous 62,627 62,627 Recovered costs 1,158,913 1,158,913 Intergovernmental revenues:

Commonwealth 7,457,973 37,617 7,495,590 Federal 2,442,988 2,442,988

Total revenues $ 28,903,176 $ 3,397 $ 1 ,582,173 $ 37,617 $ 30,526,363

EXPENDITURES Current:

General government administration $ 1 ,837,926 $ $ $ $ 1,837,926 Judicial administration 2,213,724 2,213,724 Public safety 4,100,378 4,100,376 Public works 3,526,556 1,984,876 5,491,432 Health and welfare 6,812,493 94,441 6,906,934 Education 4,829,713 4,829,713 Parks, recreation, and cultural 497,417 497,417 Community development 1,557,445 1,557,445 Nondepartmental 9,095 9,095

Capital projects 2,418,799 2,418,799 Debt service:

Principal retirement 1,747,568 1,747,568 Interest and other fiscal charges 757,063 757,063

Total expenditures $ 30,308,175 $ $ 1,964,876 $ 94,441 $ 32,367,492

Excess (deficiency) of revenues over (under) expenditures $ (1 ,404,999) $ 3,397 $ (382,703) $ (56,824) $ (1,841,129)

OTHER FINANCING SOURCES (USES) Transfers in $ $ $ $ 43,328 $ 43,328 Transfers out (298,054) (298,054) Issuance of general obligation bonds 1,820,000 1,620,000 Bond premium 129,582 129,582 Issuance of capital leases 306,975 306,975

Total other financing sources (uses) $ 1,758,503 $ $ $ 43,326 $ 1,801,829

Net change in fund balances $ 353,504 $ 3,397 $ (382,703) $ (13,498) $ (39,300) Fund balances- beginning 5,884,658 1,842,645 1,896,837 13,498 9,837,838 Fund balances- ending $ 8,238,162 $ 1,846,042 $ 1,514,134 $ $ 9,598,338

The notes to the financial statements are an integral part of this statement.

-8-

Tim Lovelace Oval

Tim Lovelace Highlight

Exhibit 5

‘Swtoortt Rees Eps anges inFurd Bc nen 210

Industrial Coal Rental General Develonment load “REVENUES Gonara property taxes $ ipeeias7 § 8 8 = 8 12pe1s7 ‘Other local taxes 4549.80 : 1579.87 : 6.125807 Permits, prvioge fees, and regustory loenses 45877 : : - 45877 Fes and foratures 1049 1089 Revenue ‘rom fhe use of money and property 81,188 3307 8226 : 778 CChargs for senices 28.278 : : : 201 278 Misoeleneous 62627 : : : 62607 Recovered nosis 1158913 : : 1958,813 Inlegovernmentl venues: ‘Commonwesth 7457973, : : angi 7495,500 Federal 2,012 988 : : 2.442 988 Total revenues 3 605.176 5 Ec SATE BaF 3509.58 EXPENDITURES: Cure: General govemmentadminisation $ 1897926 $ “8 $ +8 1as7 98 dial adminisvaton 2213,724 : : - 2213,724 Publ safety 4,100,376 - : 41003376 ube wos 9505588 1,984,878 : 5401 622 Health and were 9812403, oaaat 5906934 Eéucation 4,929,713, : : : 4920713 Parks recreation, and cutral 497,417 - - : 497.417 (Communi development 187.445, : : 1587.45 Nondapartmental 9,095, : : 9085 apa projects 2,418,799 : 2.418,799 Debi service: inca elrmant 1747568 . . : 1747888 Interest and other fiscal charges "757.083, : : : 75, Tots expenditures 3 ws08.175 ¥ 31a S xR RMRTESEE Excess (deficiency) of revenues over

“und oxponstres Tae acer 5 oxa709 5 cog) § (1881.20

OTHER FINANCING SOURCES (USES)

Translersin 8 8 “8 8 43526 § 43.306 Transers out (209,054) : : . (298,054) 'ssuance of general obigaton bonds 1,620,000 : 1,820,000, Bond pemiam 1293582 : : . 109.58 Issuance of cept loases 306,875 : . 908.975,

“otal ter Hnancing sources (ses) 31768503 5 sz 8 Ck TED ‘Net chenge in fund balances $ —_a55508 § 33e7 $ (582,708) § 19,498) $ (99,800) und balances «beginning 5.284 58, 242.845 +1896,897 13498, 987838 Fund balances - ending E_5258,182 5 fsbo fsa ae gS 58 598,538

‘The notes tothe Enancal statements are an integral pat ofthis statement

County of Russell, Virginia Reconciliation of Statement of Revenues,

Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities

For the Year Ended June 30,2010

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances -total governmental funds

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which the capital outlays exceeded depreciation in the current period.

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.

The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds.

Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities.

Change in net assets of governmental activities

The notes to the financial statements are an integral part of this statement.

-9-

Exhibit 6

$ (39,300)

1,273,936

162,924

(317,776)

(143,897)

(95,978)

$ 839,909

Exhibit 6 County of Russell, Virginia Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended June 30, 2010

Amounts reported for governmental actites inthe statement of aatvtes are citferent because: Net change in fund balances - total governmental funds $ (98,300)

Govemmental funds report capital outlays as expenditures. However, inthe statement of activites the cost of those assets is allocated over their estimated usetl lives and reported ‘as depreciation expense, This isthe amount by which the capital outlays exceeded ‘depreciation in the current period. 1.273.998

Revenues inthe statement of activities that do not provide current financial resources are Not reported as revenues in the funds. 162,924

‘The issuance of long-term debt (e.g. bonds, leases) provides current nancial resources to governmental funds, while the repayment ofthe principal of long-term debt consumes the current financial resources of governmental funds. Nelther transaction, however, has any etfect on net assets. Also, governmental funds report the effec of issuance costs, premiums, discounts, and simiar items when debt is first issued, whereas these amounts are deferred and amortized inthe statement of activities, This amounts the net effect of these differences in the treatment of long-term debt and related items, (317.778)

‘Some expenses reported inthe statement of activities do not require the use of curent financial eesources and, therefore are not reported as expencitures in govemmental funds. (143,897)

Internal service funds are used by management to charge the costs of certain achilles, such as insurance and telecommunications, to indvidual funds. The net revenue (expense) of certain

intemal senice funds is teported with governmental activi, (95,978) Change in net assets of governmental activites, 350,508

‘The notes tothe financial statements are an integral pat ofthis statement

Exhibit 7 County of Russell, Virginia

Statement of Net Assets Proprietary Funds

June 30, 2010 Enterprise Internal

Fund Service Service Fund

Authority Health Insurance

ASSETS Current assets:

Cash and cash equivalents $ 49,575 $ 2,940,202 Interest receivable 538 6,108 Accounts receivable, net of allowance for uncollectibles 5,793

Total current assets $ 55,906 $ 2,946,310 Noncurrent assets:

Capital assets: Utility plant in service $ 5,240,699 $ Machinery and equipment 75,470 Less accumulated depreciation (1 ,668,508) Total capital assets $ 3,647,661 $ Total noncurrent assets $ 3,647,661 $ Total assets $ 3,703,567 $ 2,946,310

LIABILITIES Current liabilities:

Accounts payable $ 27,050 $ 382,401 Accrued interest payable 1,858 Bonds payable - current portion 17,867

Total current liabilities $ 46,775 $ 382,401

Noncurrent liabilities: Bonds payable - net of current portion $ 751,554 $

Total liabilities $ 798,329 $ 382,401

NET ASSETS Invested in capital assets, net of related debt $ 2,878,240 $ Unrestricted

Total net assets

The notes to the financial statements are an integral part of this statement.

-10-

County of Russel, Vir Statement of Net Assets Proprietary Funds June 30, 2010

ASSETS Current assets: Cash and cash equivalents Interest receivable ‘Accounts receivable, net of alowanoe for uncollectbles Tota! current assets Nonourrent assets: Capital assets: Ullty plant in service Machinery and equipment Less accumulated depreciation Total capital assets Tolal noncurrent assets, Total assets

LIABILITIES Current iabiites: ‘Acoounis payable ‘Accrued interest payable Bonds payable - current portion Total curent abilties

Noncurrent lables: Bonds payable - net of current portion Total iabilties

NET ASSETS Invested in capital assets, net of related debt Unrestricted

Total net assets

‘The notes tothe financial statements are an integral part of this statement.

Enterprise Internal Fund Service Service Fund

Authority “Health Insurance

a 3 3 3,

647,661 §

49575 $ 2,940,202 538 6,108 5,798 :

55,906 $2,946,370,

240,699 $ :

75,470 : 68,508) 7,661 §

57 $2,946,370,

27,050 $ 362,401

1,858 . 17,867 : 46775 § 382401

751,854

County of Russell, Virginia Statement of Revenues, Expenses, and Changes in Fund Net Assets

Proprietary Funds For the Year Ended June 30, 2010

Enterprise Fund

Exhibit 8

Internal Service

Fund Service Authority Health Insurance

OPERATING REVENUES Charges for services:

Sewer revenues Insurance premiums

Total operating revenues

OPERATING EXPENSES Salaries and benefits Professional services Uti lites Materials and supplies Office expenses Travel expenses Insurance claims and expenses Depreciation

Total operating expenses

Change in net assets

NONOPERATING REVENUES (EXPENSES) Investment earnings Interest expense

Total nonoperating revenues (expenses) Income before contributions and transfers

Transfers in Change in net assets

Total net assets- beginning, as restated Total net assets - ending

The notes to the financial statements are an integral part of this statement.

-11-

$ $

65,160 $ 5,171,358

101,350 $ 67,392 19,556 10,154 70,209

154 5,301,251

131,491 400,306 $ 5,301,251

(335,146) $ (129,893)

154 $ 33,915 (34,246) (34,092) $ 33,915

(369,238) $ (95,978)

254,728 $ (114,510) $ (95,978)

3,019,748 $ 2,659,887 2,905,238 $ 2,563,909

County of Russell, Virginia

Exhibit 8

Statement of Revenues, Expenses, and Changes in Fund Net Assets

Proprietary Funds For the Year Ended June 30, 2010

‘OPERATING REVENUES Charges for services: Sewer revenues Insurance premiums Total operating revenues

OPERATING EXPENSES Salaries and benefits Professional services Utites Materials and supplies, Office expenses ‘Travel expenses Insurance claims and expenses: Depreciation

Total operating expanses

Change in net assets

NONOPERATING REVENUES (EXPENSES)

Investment eamings Interest expanse

Tota nonoperating revenues (expenses) Income before contributions and transfers

Transfers in Change in net assets

Total net assets - beginning, as restated

Total net assets - ending

The notes tothe financial statements are an integral part of this statement.

ete

Enterprise Tntemal Fund Servic Service Fund Authority “Healthrinsurance

$ 65,160 $ -

: 5.171 358 $ 65,160 $ 5,171,358 8 101,350 $ : 67,392 : 19,556 : 10,184 : 70,208 : 154 : : 5,301,251 131,491

301,251

400,306§

$ (335,146) $ (129,893)

$ 154 § 33,915

(34,246) . $ (94,092) § ERG $ (369.238) $ (95,978) $ 254,728 § : 3 (14,510) § (65.578) § 3.019,748 § 2,850,887 S___ 2,905,288 § 563,909

County of Russell, Virginia Statement of Cash Flows

Proprietary Funds For the Year Ended June 30,2010

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users Receipts for insurance premiums Payments to suppliers Payments to employees Payments for premiums

Net cash provided (used) by operating activities

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds Interest payments

Net cash provided (used) by capital and related financing activities

CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends received

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents - beginning Cash and cash equivalents - ending

Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash

provided (used) by operating activities: Depreciation expense (Increase) decrease in accounts receivable Increase (decrease) in accounts payable Total adjustments

Net cash provided (used) by operating activities

The notes to the financial statements are an integral part of this statement

-12-

$ $

Enterprise Fund

Exhibit 9

Internal Service Fund Service

Authority Health Insurance

64,878 $

(166,809) (101,350)

(203,281) $

254,728 $

(17,165) $ (34,282)

(51 ,447) $

49,575 $ 49,575 $

(335, 146) $

131,491 $ (282) 656

131,865 $ (203,281) $

5,171,358

(5,316,589) (145,231)

40,417

(104,814)

3,045,016 2,940,202

(129,893)

(15,338) (15,338)

(145,231)

Exhibit 9 County of Russell, Virginia

Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2010 Enterprise internal Fund Service Service Fund

Authority “Health Insurance CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers and users $ 64878 § : Receipts for insurance premiums - 5,171,358 Paymenis to suppliers (186,809) - Payments to employees (101,350) - Payments for premiums - (6,316,580)

Net cash provided (used) by operating activities 3 oa2e ¢ 146,231)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers trom other funds $___254728 $ -

‘CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds S (17,185) : Interest payments (34,282)

Net cash provided (used) by capital and related financing aciitles $51,447) $ :

‘CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends received $ -$ 40.817

Net inorease (decrease) in cash and cash equivalents $ “8 (104,814)

Cash and cash equivalents - beginning $ 49575 $ _3,045016

Cash and cash equivalents - ending 349575 $§ 2,940,202

Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $___ (635,146) $ 129,099 AAgjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation expense $ 131,491 $ : (Increase) decrease in accounts receivable (282) : Increase (decrease) in accounts payable 656 (15,338) Total adjustments S___ 131,865 $ (15,336) ‘Net cash provided (used) by operating activities S$ (203,281) § (146,231)

The notes to the financial statements are an integral part of this statement.

ASSETS Cash and cash equivalents

Total assets

LIABILITIES Amounts held for Social Services clients

Total liabilities

County of Russell, Virginia Statement of Fiduciary Net Assets

Fiduciary Fund June 30, 2010

The notes to the financial statements are an integral part of this statement.

-13-

$ $

Exhibit 10

Agency Funds

54,533 54,533

County of Russell, Vieginia Statement of Fiduciary Net Assets Fiduciary Fund June 30, 2010

Exhibit 10

ASSETS Cash and cash equivalents Total assels

LIABILITIES Amounts held for Social Services clients Total liabilities

The notes to the financial statements are an integral part of this statement.

‘Agency Funds

54,533

54,533 54,533

COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS JUNE 30,2010

Note 1-Summary of Significant Accounting Policies:

The financial statements of the County conform to generally accepted accounting principles (GAAP) applicable to government units promulgated by the Governmental Accounting Standards Board (GASB). The following is a summary of the more significant policies:

A. Reporting Entity

The County of Russell, Virginia is a municipal corporation governed by an elected six-member Board of Supervisors. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for description) to emphasize that it is legally separate from the government.

Blended component units - None

Discretely Presented Component Units - The component unit columns in the financial statements include the financial data of the County’s discretely presented component units. They are reported in a separate column to emphasize that they are legally separate from the County.

The Russell County School Board operates the elementary and secondary public schools in the County. School Board members are popularly elected. The School Board is fiscally dependent upon the County because the County approves all debt issuances of the School Board and provides significant funding to operate the public schools since the School Board does not have separate taxing powers. The School Board is presented as a governmental fund type. The School Board does not issue separate financial statements.

The Russell County Industrial Development Authority (IDA) encourages and provides financing for industrial development in Russell County. The financial statements of the IDA should have been included because the County appoints the governing body and has made moral obligation resolutions to finance deficits of any kind or nature that may occur each year subject to annual appropriation. Complete financial statements of the IDA can be obtained in writing at 137 Highland Drive, Lebanon, VA 24266.

The Castlewood Water and Sewage Authority of Russell County provide water and sewer service to residents of Russell County. The Authority is fiscally dependent on the County because the County appoints the governing body and has financing guarantees involving the Authority. Complete financial statements of the Authority can be obtained in writing at P.O. Box 655, Castlewood, VA 24224.

The Russell County Public Service Authority (PSA) provides water and sewer service to residents of Russell County. The Authority is fiscally dependent on the County because the County appoints the governing body and has financing guarantees involving the Authority. Complete financial statements of the PSA were not available at the report date.

-14-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS, JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies:

A. Reporting Entity

The County of Russell, Virginia is @ municipal corporation governed by an elected sixmember Board of Supervisors. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations. Each discretely presented component unitis reported in a separate column in the government-wide financial statements (see note below for description) to emphasize that itis legally separate from the government.

Blended component units - None

Diseretely Presented Component Units - The component unit columns in the financial statements include the financial data of the County’s discretely presented component units, They are reported in a separate column to emphasize that they are legally separate from the County.

The Castlewood Water and Sewage Authority of Russell County provide water and sewer service to residents of Russell County. The Authority is fiscally dependent on the County because the County appoints the governing body and has financing guarantees involving the Authority, Complete financial statements of the Authority can be obtained in writing at P.O, Box 655, Castlewood, VA 24224

Ade

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

A. Reporting Entity (continued)

Related Organizations -The County’s officials are also responsible for appointing the members of the boards of other organizations, but the county’s accountability for these organizations does not extend beyond making the appointment.

Jointly Governed Organizations- The County, in conjunction with other local jurisdictions, participates in supporting the Southwest Virginia Regional Jail and the Cumberland Mountain Community Services Board. The governing bodies of these organizations are appointed by the respective governing bodies of the participating jurisdictions. During the year, the County contributed $1,127,786 to the Regional Jail and $58,912 to the Community Services Board. The County does not have any ongoing financial responsibility for these Organizations.

B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds, if any, are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

-15-

COUNTY OF RUSSELL, VIRGINIA

NoTES T0 FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

Reporting Entity (continued)

Related Organizations - The County’s officials are also responsible for appointing the members of the boards of other organizations, but the county’s accountability for these organizations does not extend beyond making the appointment.

Jointly Governed Organizations - The County, in conjunction with other local jurisdictions, participates in supporting the Southwest Virginia Regional Jail and the Cumberland Mountain Community Services Board. The governing bodies of these organizations are appointed by the respective governing bodies of the participating jurisdictions. During the year, the County contributed $1,127,786 to the Regional Jail and $58,912 to the Community Services Board. The County does not have any ongoing financial responsibilty for these Organizations.

Government-wide and Fund Financial Statements

The government-wide financial statements (ie., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely o a significant extent on fees and charges for support, Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially aocountable.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are cleariy identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2} grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements, Major individual governmental funds and major individual enterprise funds, if any, are reported as separate columns in the fund financial statements.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when eamed and expenses are recorded when a liabilty is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30,2010

Note 1-Summary of Significant Accounting Policies: (continued)

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation: (continued)

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Accordingly, real and personal property taxes are recorded as revenues and receivables when billed, net of allowances for un collectible amounts. Property taxes not collected within 60 days after year-end are reflected as deferred revenues.

Sales and utility taxes, which are collected by the state or utilities and subsequently remitted to the County, are recognized as revenues and receivables upon collection by the state or utility, which is generally in the month preceding receipt by the County.

Licenses, permits, fines and rents are recorded as revenues when received. Intergovernmental revenues, consisting primarily of federal, state and other grants for the purpose of funding specific expenditures, are recognized when earned or at the time of the specific expenditure. Revenues from general-purpose grants are recognized in the period to which the grant applies. All other revenue items are considered to be measurable and available only when the government receives cash.

The government reports the following major governmental funds:

The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in other funds. The General Fund includes the activities of the Social Services, E-911, Dog Tag, Damage Stamp, Revenue Anticipation Note, Law Library, and Knox Creek Funds . The aforementioned Funds have been merged with the General Fund for financial reporting purposes.

The Industrial Development, Coal Road and Rental Assistance Funds serve as the County’s major Special Revenue Funds. The Industrial Development Fund accounts for financial resources to be used for industrial and community development benefiting the County. The Industrial Development Fund includes activities aimed at attracting and retaining industrial prospects in Russell County. The Coal Road Fund accounts for financial resources to be used for improvements to roads used in conjunction with coal mining and other expenses allowable by the Code of Virginia, (1950), as amended. The Rental Assistance Fund accounts for the financial resources used to assist low income families with rental expenses.

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COUNTY OF RUSSELL, VIRGINIA

Notes TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30,2010

Note 1-Summary of Significant Accounting Policies: (continued)

Cc.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation: (continued)

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting, Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days ofthe end of the current fiscal period. Expenditures generally are recorded when aliabilty is incurred, as under accrual accounting, However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceplible to accrual and so have been recognized as revenues of the current fiscal period, Accordingly, reat and personal property taxes are recorded as revenues and receivables when billed, net of allowances for un- collectible amounts, Property taxes not collected within 60 days after year-end are reflected as deferred revenues.

Sales and utility taxes, which are collected by the state of utilities and subsequently remitted to the County, are recognized as revenues and receivables upon collection by the state or utility, which is generally in the month preceding receipt by the County.

Licenses, permits, fines and renis are recorded as revenues when received. Intergovemmental revenues, consisting primarily of federal, state and other grants for the purpose of funding specific expenditures, are recognized when eamed or at the time of the specific expenditure. Revenues from general-purpose grants are recognized in the period to which the grant applies. All other revenue items are considered to be measurable and available only when the government receives cash.

The government reports the following major governmental funds:

The General Fundis the government’s primary operating fund. It zecounts forall nancial resources of the general government, except those required to be accounted for in other funds. The General Fund includes the activities of the Social Services, E-911, Dog Tag, Damage Stamp, Revenue Anticipation Note, Law Library, and Knox Creek Funds . The aforementioned Funds have been merged with the General Fund for financial reporting purposes.

The Industrial Development, Coal Road and Rental Assistance Funds serve as the County’s major Special Revenue Funds. The Industrial Development Fund accounts for financial resources to be used for industrial and community development benefiting the County. The Industrial Development Fund includes activities aimed at attracting and retaining industrial prospects in Russell County. The Coal Road Fund accounts for financial resources to be used for improvements to roads used in conjunction with coal mining and other expenses allowable by the Code of Virginia, (1950), as amended, The Rental Assistance Fund accounts for the financial resources used to assist low income families with rental expenses.

-16-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation: (continued)

The government reports the following major proprietary funds:

The County operates a water treatment system. The activities of the system are accounted for in the Dante System fund.

Additionally, the government reports the following fund types:

Internal Service Funds account for the financing of goods and services provided to other departments or agencies of the government, or to other governments, on a cost reimbursement basis. The Internal Service Funds consist of the Self Health Insurance Funds.

Fiduciary funds account for assets held by the government in a trustee capacity or as agent or custodian for individuals, private organizations, other governmental units, or other funds. Agency funds include the Special Welfare Account Fund. The Special Welfare Account Fund includes activity of the Title XX and the SSI Fund, which have all been merged for financial reporting purposes.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are other charges between the government’s functions. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary Funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the County’s Internal Service Funds are charges to departments for sales and health insurance. Operating expenses for Internal Service Funds include the cost of sales and services, administrative expense, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, and then unrestricted resources as they are needed.

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COUNTY OF RUSSELL, VIRGINIA

NoTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

CC. Measurement Focus, Basis of Accounting, and Financial Statement Presentation: (continued) The government reports the following major proprietary funds:

The County operates a water treatment system, The activities of the system are accounted for in the Dante System fund

Additionally, the government reports the following fund types:

Intemal Service Funds account for the financing of goods and services provided to other departments or agencies ofthe government, orto other governments, on a cost reimbursement basis. The intemal Service Funds consist of the Self Health Insurance Funds

Fiduciary funds account for assets held by the government in a trustee capacity or as agent or custodian for individuals, private organizations, other governmental units, or other funds. Agency funds include the Special Welfare Account Fund. The Special Welfare Account Fund includes activity ofthe Tite XX and the SSI Fund, Which have all been merged for financial reporting purposes.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not confit with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance.

As a general rule, the effect of interfund activity has been eliminated from the govemment-wide financial statements, Exceptions to this general rule are other charges between the government’s functions. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concemed.

Proprietary Funds distinguish operating revenues and expenses from non-operating tems. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the County’s Internal Service Funds are charges to departments for sales and health insurance. Operating expenses for Internal Service Funds include the cost of sales and services, administrative expense, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses

‘When both restricted and unrestricted resources are available for use, itis the government’s policy to use restricted resources first, and then unrestricted resources as they are needed.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

D. Assets, Liabilities, and Net Assets or Equity

Deposits and Investments

The government’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

Receivables and Payables

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

Property Taxes

Property is assessed at its value on January 1. Property taxes attach as an enforceable lien on property as of January 1. Real estate taxes are payable in installments on June 5th and December 5th. Personal property taxes are due and collectible on December 5th The County bills and collects its own property taxes.

Allowance for Uncollectible Accounts

The County calculates its allowance for uncollectible accounts using historical collection data and, in certain cases, specific account analysis. The allowance amounted to approximately $984,939 at June 30, 2010 and is comprised solely of property taxes.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

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COUNTY OF RUSSELL, VIRGINIA

NoTEs T0 FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

D. Assets, Liabilities, and Net Assets or Equity

Deposits and Investments

Receivables and Payables

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either ‘due torfrom other funds’ (i, the current portion of interfund loans) or “advances tolirom other funds’ (.e., the non-current portion of interfund loans). All other outstanding balances between funds ate reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and businessype activities are reported in the government-wide financial statements as "internal balances.”

Property Taxes

Property is assessed at its value on January 1. Property taxes attach as an enforceable lien on property as of January 1. Real estate taxes are payable in installments on June 5% and December 5". Personal property taxes are due and collectible on December 5. The County bills and collects its own property taxes. Allowance for Uncollectible Accounts

Use of Estimates

‘The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

D. Assets, Liabilities, and Net Assets or Equity (continued)

Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental column in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed.

Property, plant, and equipment of the primary government, as well as the Component Unit- School Board, are depreciated using the straight line method over the following estimated useful lives:

Assets Buildings Building improvements Structures, lines, and accessories Machinery and equipment

Compensated Absences

Years 40 40

20-40 4-30

Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. In accordance with the provisions of Governmental Accounting Standards No. 16, Accounting for Compensated Absences, no liability is recorded for non-vesting accumulating rights to receive sick pay benefits. The County accrues salary-related payments associated with the payment of compensated absences. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements.

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COUNTY OF RUSSELL, VIRGINIA

NoTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

D. Assets, Liabilities, and Net Assets or Equity (continued) 6. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar ites), are reported in the applicable governmental colurnn in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical costif purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assels lives are not capitalized.

Mejor outlays for capital assets and improvements are capitalized as projects are constructed.

Property, plant, and equipment of the primary government, as well as the Component Unit - School Board, are depreciated using the straight line method over the following estimated useful lives:

Assets Years Buildings 40 Building improvements 40 Structures, lines, and accessories 20-40 Machinery and equipment 420

Compensated Absences

\Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it, In accordance with the provisions of Governmental Accounting Standards No, 16, Accounting for Compensated Absences, no liability is recorded for non-vesting accumulating rights to receive sick pay benefits. The County accrues salary-related payments associated with the payment of compensated absences. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements,

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS {CONTINUED) JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

D. Assets, Liabilities, and Net Assets or Equity (continued)

B. Long-term Obligations

In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net ofthe applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debtissuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Fund Equity

In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

NetAssets

Net assets are the difference between assets and liabilities. Net assets invested in capital assets represent capital assets, less accumulated depreciation less any outstanding debt related to the acquisition, construction or improvement of those assets.

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-20-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ‘JUNE 30, 2010

Note 1-Summary of Significant Accounting Policies: (continued)

D. Assets, Liabilities, and Net Assets or Equity (continued)

Long-term Obligations

In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-lype actviies, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance cosls, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period, The face amount of debt issued is reported as other financing sources, Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debl proceeds received, are reported as debt service expenditures.

Fund Equity

Net Assets

Net assets are the difference between assets and labiliies. Net assets invested in capital assets represent

capital assets, less accumulated depreciation less any outstanding debt related to the acquisition, construction oF improvement of those assets.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS {CONTINUED) JUNE 30, 201 0

Note 2-Reconciliation of Government-Wide and Fund Financial Statements:

A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net assets.

The governmental fund balance sheet includes a reconciliation between fund balance-total governmental funds and net assets-governmental activities as reported in the government-wide statements of net assets. One element of that reconciliation explains that long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. The details of these $(23,278,515) and $(1 ,064,578) differences for the primary government and discretely presented component unit-School Board, respectively, are as follows:

Primary School

Government Board

Bonds and literary loans payable $ (20,162,294) $ Lease purchase agreements (701 ,31 0)

Unamortized premium (316,923)

Accrued interest payable {323, 118)

Landfill accrued closure and postclosure monitoring costs (1 ,264,062)

Net OPEB Obligation (4,949) (34,000)

Compensated absences (505,859) (1 ,030,578)

Net adjustment to reduce fund balance-total governmental funds to arrive at net assets-governmental activities $ (23,278,515) $ (1 ,064,578)

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COUNTY OF RUSSELL, VIRGINIA

NoTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 2-Reconciliation of Government-Wide and Fund Financial Statements:

A. Explanation of certain differences between the governmental fund balance sheet and the govemment-wide

statement of net assets.

The governmental fund balance sheet includes a reconciliation between fund balance-total governmental funds and net assets-governmental activities as reported in the government-wide statements of net assets. One element of that reconciliation explains that long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. The details of these $(23,278,515) and $(1,064,578) differences for the primary government and discretely presented component unit-School Board, respectively, are

Primary Government

as follows: Bonds and literary loans payable $ (20,162,294) Lease purchase agreements (701,310) Unamortzed premium (316,923) Accrued interest payable (323,118) Landi accrued closure and postelosure monitoring costs (1,264,062)

Net OPEB Obligation

Compensated absences (505,859)

[Net adjustment to reduce fund balance-total governmental funds

to arrive at net assets-governmental activities $__ (23,278,515)

School Board $ : (34,000) (1,030,578) $ (1,064,578)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 2·Reconciliation of Government-Wide and Fund Financial Statements: (continued)

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities

The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances-total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, “Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of these $1,273,936 and $(17,183) for the primary government and discretely presented component unit-School Board, respectively, are as follows:

Capital outlays School debt financed assets (net) Capital asset deletions (net) Depreciation expense

Net adjustment to increase (decrease) net changes in fund balances - total governmental funds to arrive at changes in

Primary Government

2,592,345

(72,762)

(11 ,659)

(1 ,233,988)

Component Unit

School Board

$ 475.740

72,762

(565,685)

net assets of governmental activities $ 1 ,273’ 936 $ __ ,_( 17-‘-, 1-’-83:…!..)

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-22-

‘COUNTY OF RUSSELL, VIRGINIA

Notes To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 2-Reconciliation of Government-Wide and Fund Financial Statements: (continued)

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and

changes in fund balances and the government-wide statement of activities

The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances-total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, “Governmental funds report capital outlays as expenditures. However, inthe statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of these $1,273,936 and $(17, 183) for the primary government and discretely presented

component unit-School Board, respectively, are as follows

‘Component Unit Primary School Government Board Capital outlays S 2592,945 § 475,740 School debt financed assets (net) (72,762) 72,762 Capital asset deletions (net) (11,659) - Depreciation expense (1,233,988) (565,685) ‘Net adjustment to increase (decrease) net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 3 1,273936 $ (17,183)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 201 0

Note 2-Reconciliation of Government-Wide and Fund Financial Statements: (continued)

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities (continued)

Another element of that reconciliation states “the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.” The details of this $(317,776) difference in the primary government are as follows:

Debt Issued or Incurred: Issuance of general obligation bonds, literary loans, and notes Lease purchase agreement Accrued landfill closure/postclosure

Principal Payments: Bonds, literary loans, and notes Lease purchase agreements

Net adjustment to increase (decrease) net changes in fund balances

total governmental funds to arrive at changes in net assets of

Primary Government

(1,749,582)

(306,975)

(8,787)

1,385,262

362,306

governmental activities $ (317,776) =~~.,;,

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-23-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 2-Reconciliation of Government-Wide and Fund Financial Statements: (continued)

8, Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities (continued)

Another element of that reconciliation states "the issuance of long-term debt e.9., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debtis first issued, whereas these amounts are deferred and amortized in the statement of activities.” The detals of this $(317,776) difference in the primary government are as follows:

Primary Government Debt Issued or Incurred: Issuance of general obligation bonds, literary loans, and notes $$ -—( 1,749,582) Lease purchase agreement (306,975) Accrued landiill closurelpostelosure (8,787) Principal Payments: Bonds, literary loans, and notes 1,385,262 Lease purchase agreements 362,306 Net adjustment to increase (decrease) net changes in fund balances = total govemmental funds to arrive at changes in net assets of governmental activities $_@t7,76)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 0

Note 2-Reconciliation of Government-Wide and Fund Financial Statements: (continued)

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities (continued)

Another element of that reconciliation states, “Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this $(143,897) and $(140,649) difference for the primary government and discretely presented component unit-School Board, respectively, are as follows:

(Increase) decrease in compensated absences (Increase) decrease in accrued interest (Increase) decrease in net OPEB obligation

Net adjustment to increase (decrease) net changes in fund balances-total governmental funds to arrive

at changes in net assets of governmental activities $

Primary Government

(172,754) $ 28,861

(4)

Component Unit School Board

(140,621)

(28)

(143,897) $ __ .:.(1_40.:._,6_49…:…)

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-24-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 2-Reconciliation of Government-Wide and Fund Financial Statements: (continued)

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities (continued)

Another element ofthat reconciliation states, "Some expenses reported in the statement of activities do not require the use of current financial resourcas and therefore are not reported as expenditures in governmental funds.” The details of this $(143,897) and $(140,649) difference for the primary government and discretely presented component unit-School Board, respectively, are as follows:

Primary Government

(Increase) decrease in compensated absences $ (172,754) $ (Increase) decrease in accrued interest 28,861 (increase) decrease in net OPEB obligation (4) Net adjustment to increase (decrease) net changes

in fund balances-total governmental funds to arrive

at changes in net assets of govemmental activities ¢ (143,897) §

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‘Component Unit

School Board

(140,621)

(28)

(140,649)

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 0

Note 3-Stewardship, Compliance, and Accountability:

A. Budgetary Information

The following procedures are used by the County in establishing the budgetary data reflected in the financial statements:

Prior to March 30, the County Administrator submits to the Board of Supervisors a proposed operating and capital budget for the fiscal year commencing the following July 1. The operating and capital budget includes proposed expenditures and the means of financing them. All Funds of the County have legally adopted budgets with the exception of Agency Funds.
Public hearings are conducted to obtain citizen comments.
Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution.
The Appropriations Resolution places legal restrictions on expenditures at the function level. Only the Board of Supervisors can revise the appropriation for each department or category. The County Administrator is authorized to transfer budgeted amounts within general government departments; however, the School Board is authorized to transfer budgeted amounts within the school system’s categories.
Formal budgetary integration is employed as a management control device during the year for the General Fund, and the Special Revenue Funds (except the School Fund). The School Fund is integrated only at the level of legal adoption.
All budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).
Appropriations lapse on June 30, for all County units.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriations, is not part of the County’s accounting system.

B. Excess of expenditures over appropriations

The Social Services, Damage Stamp, Dante and Law Library Funds had excess expenditures over appropriations in the current year.

C. Deficit fund equity

At June 30, 2010, there were no funds which had deficit fund equity.

-25-

‘COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 3-Stewardship, Compliance, and Accountability:

‘A. Budgetary Information

The following procedures are used by the County in establishing the budgetary data reflected in the financial statements:

Prior to March 30, the County Administrator submits to the Board of Supervisors a proposed operating and capital budget for the fiscal year commencing the following July 1. The operating and capital budget includes proposed expenditures and the means of financing them. All Funds of the County have legally adopted budgets with the exception of Agency Funds,

Public hearings are conducted to obtain citizen comments.

Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution,

The Appropriations Resolution places legal restrictions on expenditures at the function level. Only the Board of Supervisors can revise the appropriation for each department or category. The County Administrator is authorized to transfer budgeted amounts within general government departments; however, the School Board is authorized to transfer budgeted amounts within the school system’s categories.

Formal budgetary integration is employed as a management control device during the year for the General Fund, and the Special Revenue Funds (except the School Fund). The School Fund is integrated only at the evel of legal adoption.

‘All budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP), Appropriations lapse on June 30, for all County units.

Encumbrance accounting, under which purchase orders, contracts, and other commitments for the

expenditure of monies are recorded in order to reserve that portion of the applicable appropriations, is not part of the County’s accounting system.

B. Excess of expenditures over appropriations

The Social Services, Damage Stamp, Dante and Law Library Funds had excess expenditures over appropriations in the current year.

C._ Deficit fund equity

At June 30, 2010, there were no funds which had deficit fund equity.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 4-Deposits and Investments:

Deposits: All cash of the County is maintained in accounts collateralized in accordance with the Virginia Security for Public Deposits Act, Section 2.2-4400 et. seq. of the Code of Virginia or covered by federal depository insurance.

Investments: Statutes authorize local governments and other public bodies to invest in obligations of the United States or agencies thereof, obligations of the Commonwealth of Virginia or political subdivisions thereof, obligations of the International Bank for Reconstruction and Development (World Bank), the Asian Development Bank, the African Development Bank, “prime quality” commercial paper and certain corporate notes, banker’s acceptances, repurchase agreements, and the State Treasurer’s Local Government Investment Pool (LGIP).

Custodial Credit Risk

Custodial credit risk is the risk that, in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County’s investments at June 30, 2010 were held in the County’s name by the County’s custodial bank. The State Non-Arbitrage (SNAP) Pools are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form.

Credit Risk of Debt Securities

The County’s rated debt investments as of June 30, 2010 were rated by Standard and Poor’s and/or an equivalent national rating organization and the ratings are presented below using the Standard and Poor’s rating scale.

County’s Rated Debt Investments’ Values

Rated Debt Investments

SNAP

Concentration of Credit Risk

Fair Quality Ratings AAAm

$ 1,730,417

At June 30, 2010, the County did not have any investments meeting the GASB 40 definition requiring concentration of credit risk disclosures that exceeded 5% of total investments.

The State Non-Arbitrage Pool (SNAP) is an open-end management investment company registered with the Securities and Exchange Commission (SEC).

Interest Rate Risk

There are no interest rate risk disclosures required for the year ended June 30, 2010.

-26-

‘COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 4-Deposits and Investments:

Deposits: All cash of the County is maintained in accounts collateralized in accordance with the Virginia Security for Public

Deposits Act, Section 2.2-4400 ef, seq, of the Code of Virginia or covered by federal depository insurance.

investments: Statutes authorize local governments and other public bodies to invest in obligations of the United States or agencies thereof, obligations of the Commonwealth of Virginia or politcal subdivisions thereof, obligations of the International Bank for Reconstruction and Development (World Bank), the Asian Development Bank, the AVtican Development Bank, “prime quality’ commercial paper and certain corporate notes, banker’s acceptances, repurchase agreements, and the State Treasurer’s Local Government investment Pool (LGIP).

Custodial Credit Risk

Custodial credit risk is the risk that, in the event ofthe failure of the counterparty, the County will not be able to recover the value of is investments or collateral securities that are in the possession of an outside party. The County’ investments at June 30, 2010 were held in the County’s name by the County’s custodial bank, The State Non-Arbitrage (SNAP) Pools are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form.

Credit Risk of Debt Securities

County’s Rated Debt Investments’ Values

Rated Debt Investments Fair Quality Ratings AAAm SNAP $ 1,730,417 Concentration of Credit Risk

At June 30, 2010, the County did not have any investments meeting the GASB 40 definition requiring concentration of credit risk disclosures that exceeded 5% of total investments,

The State Non-Arbitrage Poot (SNAP) is an open-end management investment company registered with the Securities and Exchange Commission (SEC)

Interest Rate Risk

There are no interest rate risk disclosures required for the year ended June 30, 2010.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 5-Due from Other Governmental Units:

The following amounts represent receivables from other governments at year-end:

Workforce Investment Board:

Workforce Investment funds

Commonwealth of Virginia:

Local sales tax

State sales tax

Non-categorical aid

Categorical aid-shared expenses

Categorical aid-Virginia Public Assistance funds

Categorical aid-Comprehensive Services Act funds

Federal Government:

Categorical aid-Virginia Public Assistance funds

Categorical aid-other

Total Amount Due from Other Governmental Units

Note 6-lnterfund/Comgonent-Unit Obligations:

Fund

Primary Government:

General Fund

Component Unit:

IDA

Castlewood Water and

Sewage Authority

Total

-27-

Primary Component Unit

Government School Board

$ 38,728 $

336,150

536,656

163,278

189,687

177,844

211,359

130,037

49,847 1,144,815

$ 1,296,930 $ 1,681,471

Due to Primary

Government/

Component Unit

Due from Primary

Government/

Component Unit

425,000 $ 365,000

200,000 $ 425,000

165,000

365,000 $ 425,000 ==~=

COUNTY OF RUSSELL, VIRGINIA.

NoTEes To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 5-Due from Other Governmental Units:

The following amounts represent receivables from other governments at year-end:

Primary Component Unit Government School Board Workforce Investment Board: Workforce Investment funds $ 38,728 $ : Commonwealth of Virginia: Local sales tax 336,150 : State sales tax - 536,656 Non-categorial aid 163,278 : Categorical id-shared expenses 489,687 Categorical aid-Virginia Public Assistance funds 177,844 - Categorical eid-Comprehensive Services Act funds 211,359 - Federal Governme Categorical aid-Virginia Public Assistance funds 130,037 - Categorical aid-other 49,847 1,144,815 Total Amount Due from Other Governmental Units $__ 1,296,930 $ 1,681,471 Note 6-Interfund/Component-Unit Obligation: Dueto Primary Due from Primary Government! Government’ Fund Component Unit_ _ Component Unit Primary Government: General Fund $ 425,000. $ 365,000 Component Unit: IDA $ 200,000 $ 425,000 Castlewood Water and Sewage Authority 465,000 Total $ 365,000. $ 425,000

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30,2010

Note 6-lnterfund/Component-Unit Obligations: (continued)

lnterfund transfers and remaining balances for the year ended June 30, 2010, consisted of the following:

Fund

Primary Government: General Fund Dante Fund Rental Assistance Fund Total

Transfers In

$ 254,728

43,326 $ 298,054

Transfers Out

$ 298,054

Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgeting authorization.

Note 7-Lonq-Term Debt:

Primary Government· Governmental Activity Indebtedness

Annual requirements to amortize long-term debt and related interest are as follows:

Year Ending General Obligation Bonds Literary Loans Revenue Bonds June 30, Principal Interest Principal Interest Principal Interest

2011 $ 645,069 $ 512,393 $ 426,281 $ 80,807 $ 201,688 $ 2012 738,745 475,010 426,278 70,259 201,688

2013 717,972 439,060 375,977 59,711 201,688

2014 606,026 406,231 375,977 50,671 201,688

2015 627,696 375,145 375,977 41,632 201,688

2016-2020 3,329,673 1 ,399,194 1,366,638 82,539 1,008,442

2021-2025 2,605,335 654,843 70,016 2,229 1,008,442

2026-2030 1,404,948 201,074 1,008,442

2031-2035 230,000 5,463 684,101

2036-2037 129,181

Totals $ 10,905,464 $ 4,468,413 $ 3,417,144 $ 387,848 $ 4,847,048 $

-28-

COUNTY OF RUSSELL, VIRGINIA

NoTes To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 6-Interfund/Component-Unit Obligations: (continued)

Interfund transfers and remaining balances for the year ended June 30, 2010, consisted of the following:

Fund Transfers In Transfers Out

Primary Government: General Fund $ - $298,054 Dante Fund 254,728 : Rental Assistance Fund 43,326 -

Total

Note 7-Long-Term Debt:

Primary Government - Governmental Activity Indebtedness

Annual requirements to amortize long-term debt and related interest are as follows:

Year Ending General Obligation Bonds Literary Loans Revenue Bonds

dune 30, Principal Interest Principal Interest Principal Interest

2011 $ 645,069 $ 512,393 $ 426,281 $ 80,807 $ 201,688 §

2012 738,745 475,010 426,278 70,259 201,688 2013 717,972 439,060 375,977 89,711 201,688 2014 606,026 406,231 375,977 50,671 201,688 2015 627,696 375,145 375,977 44,632 201,688 2016-2020 3,829,673 1,999,194 1,966,638 82,539 1,008,442 2021-2025 2,605,335 654,843 70,016 2,209 1,008,442 2026-2030 1,404,948 201,074 - - 1,008,442 2031-2035 230,000 5,463 - 7 684,101 2036-2037 : : : 129,181

Totals — $_ 10,905,464 $ 4,468,413 $3,417,144 $ 387,848 $4,847,048 §

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30,2010

Note 7-Long-Term Debt: (continued)

Primary Government - Governmental Activity Indebtedness (continued)

The following is a summary of long-term debt transactions of the County for the year ended June 30, 2010:

Balance Balance

July 1, 2009 Issuances Retirements June 30, 2010

General obligation bonds $ 9,942,289 $ 1,620,000 $ (656,825) $ 10,905,464

Literary loans 3,943,893 (526,749) 3,417,144

Revenue bonds 5,048,736 (201 ,688) 4,847,048

Literary anticipation note 992,638 992,638

Deferred Amounts:

Bond premiums 197,666 129,582 (1 0,325) 316,923

Lease purchase agreements 756,641 306,975 (362,306) 701,310

Landfill closure/

postclosure liability 1 ,255,275 8,787 1,264,062

OPEB obligation 4,945 4 4,949

Compensated absences 333,105 422,583 (249,829) 505,859

Total $ 22,475,188 $ 2,487,931 $ (2,007,722) $ 22,955,397

The remainder of this page left blank intentionally.

-29-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 7-Long-Term Debt: (continued)

Primary Government - Governmental Activity Indebtedness (continued)

The following is a summary of long-term debt transactions of the County for the year ended June 30, 2010:

Balance Balance July 1,2009__Issuances__Retitements__ June 30, 2010 General obligation bonds $ 9,942,289 § 1,620,000 $ (656,825) $ 10,905,464 Literary loans 3,949,893 - (626,749) 3,417,144 Revenue bonds 5,048,736 : (201,688) 4,847,088 Literary anticipation note 902,638 : : 992,638 Deferred Amounts:

Bond premiums 197,666 129,582 (10,325) 316,028, Lease purchase agreements 756,641 306,975 (362,306) 701,310 Landfill closure!

postclosure liability 4,255,275 8,787 : 4,264,062 OPEB obligation 4945 4 : 4,949 Compensated absences 398,105 422,583 (249,828) 505,859

Total $22,475,188 § 2,487,931 $_ (2,007,722) $22,955,397

The remainder ofthis page left blank intentionally.

-29-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30,2010

Note 7-Long-Term Debt: (continued)

Primary Government- Governmental Activity Indebtedness (continued)

Details of long-term indebtedness:

General Obligation and Revenue Bonds: Final

Interest Date Maturity Rates Issued Date

General obligation bond 4.85%-6.60% 1991 2012 General obligation bond 4.90%-6.35% 1992 2013 General obligation bond 6.4%-7.167% 1994 2012 General obligation bond 5.1%-6.1% 1995 2016 General obligation bond 5.1%-6.1% 1997 2016 General obligation bond 4.10%-5.225% 1999 2019 General obligation bond 4.975%-5.1% 2000 2021 General obligation bond 2.35%-5.1% 2002 2023 General obligation bond 4.6%-5.1% 2006 2027 General obligation bond 4.6%-5.1% 2009 2030 General obligation bond 3.05%-5.05% 2010 2031 General obligation/Revenue bond 0.00% 11/28/2001 2033 General obligation/Revenue bond 0.00% 11/28/2001 2033 General obligation/Revenue bond 0.00% 11/1/2002 2033 General obligation/Revenue bond 0.00% 10/14/2005 2036 General obligation/Revenue bond 0.00% 10/14/2005 2037 General obligation/Revenue bond 0.00% 4/28/2006 2037 General obligation/Revenue bond 0.00% 3/30/2007 2037

Subtotal General Obligation and Revenue Bonds Plus: Unamortized Premium

Total General Obligation and Revenue Bonds

Amount of Original Issue

$ 133,833 1,812,215 3,620,000

325,000 140,000 510,000

1,802,210 4,382,954 3,205,190 1,485,000 1,620,000

935,690 1,678,400

822,366 91,439

1,906,717 415,513 197,179

The remainder of this page left blank intentionally.

-30-

Balance Amount Governmental Due Within

Activities One Year

$ 18,937 $ 9,256 351,812 112,378 85,000 50,000 90,000 15,000 40,000 5,000

250,000 25,000 1,110,132 87,750 3,037,887 203,219 2,816,696 137,466 1,485,000 1,620,000

686,173 31,190 1,236,425 55,947

616,774 27,412 79,247 3,048

1,684,267 63,557 367,035 13,851 177,127 6,683

$ 15,752,512 $ 846,757

$ 316,923 $ 16,754

$ 16,069,435 $ 863,511

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 7-Long-Term Debt: {conti

inued)

Primary Government - Governmental Activity Indebtedness (continued)

Details of long-term indebtedness:

General Obligation and Revenue Bonds

General obligation bond General obligation bond General obligation bond General obligation bond General obligation bond General obligation bond General obligation bond General obligation bond Genera obligation bond General obligation bond General obligation bond General obligalion/Revenue bond General obligation/Revenue bond General obligation/Revenue bond General obligation/Revenue bond General obigation/Revenue bond General obigation/Revenue bond General obigation/Revenue bond

Interest Rates

4,85%-6.60% 4.90%-6.35% 6.4%-7.167% 516.1% BA%-6.1% 4.10% 5.225% 4975%5.1% 2.35%-5.1% 46%-5.1% 4.6%-5.1% 3,08%-5.05% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

‘Subtotal General Obligation and Revenue Bonds

Plus: Unamortized Premium

Total General Obligation and Revenue

Bonds

The remainder ofthis page lett blank intentionally

Date Issued

1991 1982 4984 1985 1987 1989 2000 2002 2008 2009 2010

1112812001

11912812001

+1/4/2002

10/14/2005

40/14/2005

472812008

373012007

Final

Maturity

Date

2012 2013, 2012 2016 2016 2019 2021 2023, 2027 2030 2031 2033, 2033, 2033, 2036 2037 2037 2037

Amount of Original

issue

133,833 $ 4,812,215 3,620,000 325,000 140,000 510,000 41,802,210 4,382,954 3,208,190 4,485,000 41,620,000 935,690 4,878,400 822,366 91,499 1,906,717 415,513, 197,179

Balance

Governmental

Activities

18,937 $ 351,812 85,000 90,000 40,000 250,000 4,110,132 3,087,887 2,816,696 4,485,000 4,620,000 686,173 1,288,425 616,774 79,247 1,684,267 367,036 Ara

752512 § 316.923 §

16,069,435

‘Amount

Due Within

One Year

9,256 112,378 50,000 16,000 5,000 25,000 87,750 203,219 137,466

31,190 55,947 AZ

3,088 63,557 19,881

6,683

B46 757 16,754

263,517

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30,2010

Note 7-Long-Term Debt: (continued)

Primary Government - Governmental Activity Indebtedness (continued)

Details of long-term indebtedness: (continued)

Final Interest Date Maturity Rates Issued Date

Literary loans: Literary loan 3% 12115/1981 2012 Literary loan 3% 12/15/1981 2012 Literary loan 3% 12115/1981 2012 Literary loan 3% 12115/1981 2012 Literary loan 3% 7/15/1986 2017 Literary loan 3% 7/15/1986 2017 Literary loan 3% 211/1988 2018 Literary loan 3% 211/1988 2018 Literary loan 3% 211/1988 2018 Literary loan 3% 211/1988 2018 Literary loan 3% 211/1988 2018 Literary loan 2% 1/1/2000 2020 Literary loan 2% 3/15/1999 2019 Literary loan 2% 3/15/1999 2019 Literary loan 2% 6/15/1999 2019 Literary loan 2% 6/15/1999 2019 Literary loan 2% 11/15/2000 2021 Literary loan 3% 12/15/2000 2021 Literary loan 2% 7/1/2003 2023 Total Literary loans

Literary anticipation note 4% 9/4/2008 9/4/2013

Other Obligations: Capital Leases (Note 8) Landfill Closure and Postclosure Monitoring Liability OPEB Obligation Compensated Absences

Total Other Obligations

Total Long-Term Obligations

-31-

Amountol Balance Amount Original Governmental Due Within Issue Activities One Year

176,504 $ 10,557 $ 5,280 293,797 17,528 8,764 194,990 11,656 5,828

1,019,500 60,864 30,432 960,000 211,554 30,222

2,000,000 440,741 62,963 530,999 148,176 18,522 358,151 100,648 12,581 84,805 24,040 3,005

281,079 79,960 9,995 196,873 55,912 6,989

1,155,140 577,570 57,757 1,114,086 501,386 55,700

161,449 71,249 8,200 422,680 190,206 21,134 880,411 396,191 44,020 493,789 271,588 24,689 154,118 84,818 7,700 250,000 162,500 12,500

$ 3,417,144 $ 426,281

992,638 $ 992,638 $

$ 701,310 $ 344,250 1,264,062

4,949 505,859 379,394

$ 2,476,180 $ 723,644

$ 22,955,397 $ 2,013,436

‘COUNTY OF RUSSELL, VIRGINIA

NoTes To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 7-Long-Term Debt: (continued)

Primary Government - Governmental Activity Indebtedness (continued)

Delails of long-term indebtedness: (continued)

Final Amount of Balance Amount Interest Date Maturity —Original_»=—Governmental_ Due Within Rates Issued Date Issue Activities One Year Literary bans. Literary loan 3% —1NSH9B1—«2012_«$~—«178.504 10587 $ 5,280 Literary oan 3% 12N5N9B1 2012 293,797 17,528 8764 Literary loan 3% © 12NB/N9Bi 2012 194,990 11,656 5,828 Literary loen 3% 12/5/91 2012 4,019,500 60,864 30,432 Literary oan 3% 78/1966 2017 ‘960,000 211,854 30,222 Literary loan 3% 751986 2017 2,000,000 aao,rat 62,983 Literary loan 2h1888 2018, 590,909 148,178 18,522 Literary oan aig 2018 358,161 100,648 12,581 Literary oan aig 2018 84,805 24,040 $8,005 Literary loan 2nrg3 2018, 281,079 79,960 9,995 Literary oan anri988 2018, 196,873 95,912 6,989, Literary loan smieo00 (2020 4,185,140 877570 BUTST Literary loan ansiiggs 2019 1,114,088 501,386 55,700 Literary foan gisiigas 2019 161,449 71269 8,200 Literary loan aisiig99 2019 422,680 190,206 23,134 Literary loan en5ii939 2019 890,411 396,191 44,020 Literary loan 11/15/2000 2021 493,789 271,588 24,689 Literary loan aris/e000 2021 184,118 84,818 7,700 Literary loan 7iie003 (2028 250,000 162,500 12,500 Total Literary bans Bair, 144_§ 426,281 Literary anticipation note 4% giale008 9142013 § © 992,638 $992,698 _§ : Other Obligation Capital Leases (Note 8) $ 701310 § 344,260 Landill Closure and Postelosure Monitoring Liabilty 4,264,062 - OPEB Obiigation 4,949 : Compensated Absences 505,850 379,304 Tolal Other Obligations $ 2476180 § 723,644 Total Long-Term Obligations $22,955,397 § 2,019,496

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 0

Note 7-Long-Term Debt: (continued)

Primary Government- Enterprise Activity Indebtedness:

Annual requirements to amortize long-term debt and related interest are as follows:

Year Ending Revenue Bonds

June 30, Principal Interest

2011 $ 17,867 $ 33,580

2012 18,602 32,845

2013 19,371 32,076

2014 20,174 31,273

2015 21,015 30,432

2016-2020 116,288 138,134

2021-2025 137,354 110,507

2026-2030 171,940 75,921

2031-2035 215,233 32,627

2036 31,577 511

Totals $ 769,421 $ 517,906

The following is a summary of long-term debt transactions of the Enterprise Fund for the year ended June 30, 2010.

Revenue bonds $

Total $

Balance

July 1, 2009 Issuances

786,586 $ ____ $

786,584 $==== $

-32-

Retirements

Balance

June 30, 2010

(17,165) $ __ 7_69…:…,4_21_

(17,165) $==7=69=,4=21=

COUNTY OF RUSSELL, VIRGINIA

NoTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 7-Long-Term Debt: (continued)

Primary Government — Enterprise Activity Indebtedness:

Annual requirements to amortize long-term debt and related interest are as follows:

Year Ending Revenue Bonds

June 30, Principal Interest 2ot1 $ 17867 $)~=—(93,580 2012 18,602 32,845 2013 19371 32,076 2014 20,174 31,273 2018 21,018 30,492

2016-2020 116,288 138,134

2021-2025 187,354 440,507

2026-2080 171,940 75924

2031-2035 215,233 32,627 2038 7 St

Totals $ § 517,906

The following is a summary of long-term debt transactions of the Enterprise Fund for the year ended June 30, 2010,

Balance Balance July 1, 2009 _Issuances Retirements _June 30, 2010 Revenue bonds $ 786,586 $ -$ (17,165) $ 769,421 Total $786,584 $ _§ (17,165) $ 769,421

-32-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 7-Long-Term Debt: (continued)

Primary Government- Enterprise Fund Indebtedness (continued)

Details of long-term indebtedness:

Revenue Bonds:

Interest Date Rates Issued

Revenue bond 0% 3/24/1999 Revenue bond 4.50% 4/10/1996

Total Revenue Bonds

Component Unit- School Board Indebtedness

Final Maturity

Date

20t9 2036

Amount of Balance Amount Original Governmental Due Within Issue Activities One Year

$ 37,500 $ 15,938 $ 1,875 900,000 753,483 15,992

$ 769,421 $ 17,867

The following is a summary of long-term debt transactions of the discretely presented component unit for the year ended June 30, 2010:

Balance Balance

July 1, 2009 Issuances Retirements June 30, 2010

OPEB obligation $ 33,972 $ 28 $ $ 34,000

Compensated absences 889,957 808,089 (667,468) 1,030,578

Total $ 923,929 $ 808,117 $ (667,468) $ 1,064,578

The remainder of this page left blank intentionally.

-33-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 7-Long-Term Debt: (continued)

Primary Government ~ Enterprise Fund Indebtedness (continued)

Details of long-term indebtedness:

Total Revenue Bonds

Component Unit - School Board Indebtedness

The following is a summary of long-term debt transactions of the discretely presented component unt for the year ended

June 30, 2010:

Balance Balance July 1, 2009 issuances Retirements dune 30, 2010 OPEB obligation $ 33,972 $ 2 $ 78 Compensated absences 889,957 808,089 (667,468) Total $ 923,929 $ 808,117 $ (667,468) $

The remainder ofthis page left blank intentionally.

-33-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 0

Note 8-Capital Leases:

Primary Government The County has entered into lease agreements to finance the acquisition of school buses, vehicles, trailers, tractors, and an excavator for the County and the School Board. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their minimum lease payments at the date of inception.

The assets acquired through capital leases are as follows:

Machinery and equipment Less: Accumulated depreciation

Net Asset

Machinery & Equipment

1,182,093 (199,368)

$ _ __::9:::82:!.:., 7.:::25:…

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2010, were as follows:

Year Ending June 30,

2011 2012 2013

Subtotal Less, amount

representing interest

Present Value of Lease Agreement

-34-

Capital Leases

366,529 264,010 108,527

739,066

(37,756)

$ =.,;7,;;,0 1;,:,;, 3;,;;1 0;,

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 8-Capital Leases:

Primary Government The County has entered into lease agreements to finance the acquisition of school buses, vehicles, trailers, tractors, and

‘an excavator for the County and the School Board. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their minimum lease payments at the date of inception.

The assets acquired through capital leases are as follows:

Machinery & Equipment Machinery and equipment $ 1,182,093 Less: Accumulated depreciation (199,368) Net Asset $ 982,725

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2010, were as follows:

Year Ending Capital June 30, Leases 2011 $ 366,529 2012 264,010 2013 108,527 Subtotal $ 739,066 Less, amount representing interest (37,756)

Present Value of Lease Agreement $__ 701,310

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans:

A. Plan Description

Name of Plan: Identification of Plan: Administering Entity:

Virginia Retirement System (VRS) Agent and Cost-Sharing Multiple-Employer Defined Benefit Pension Plan Virginia Retirement System (System)

All full-time, salaried permanent employees of participating employers must participate in the VRS. Benefits vest after five years of service. Employees are eligible for an unreduced retirement benefit at age 65 with 5 years of service (age 60 for participating local law enforcement officers, firefighters, and sheriffs) or at age 50 with at least 30 years of service if elected by the employer (age 50 with at least 25 years of service for participating local law enforcement officers, firefighters, and sheriffs) payable monthly for life in an amount equal to 1. 70% of their average final compensation (AFC) for each year of credited service (1.85% for sheriffs and if the employer elects, for other employees in hazardous duty positions receiving enhanced benefits). Benefits are actuarially reduced for retirees who retire prior to becoming eligible for full retirement benefits. In addition, retirees qualify for annual cost-of-living adjustment (COLA) beginning in their second year of retirement. The COLA is limited to 5.00% per year. AFC is defined as the highest consecutive 36 months of reported compensation. Participating local law enforcement officers, firefighters, and sheriffs may receive a monthly benefit supplement if they retire prior to age 65. The VRS also provides death and disability benefits. Title 51.1 of the Code of Virginia (1950), as amended, assigns the authority to establish and amend benefit provisions to the General Assembly of Virginia.

The system issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. A copy of that report may be downloaded from their website at http://www.varetire.org/Pdf/Publications/2009-Annuai-Report.pdf or obtained by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

B. Funding Policy

Primarv Government: Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their annual salary to the VRS. This 5.00% member contribution may be assumed by the employer. In addition, the County of Russell, Virginia is required to contribute the remaining amounts necessary to fund its participation in the VRS using the actuarial basis specified by the Code of Virginia and approved by the VRS Board of Trustees. The County of Russell, Virginia’s contribution rate for the fiscal year ended 2010 was 8.00% of annual covered payroll.

Discretely Presented Component Unit- School Board (Non-Professional Employees): Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their annual salary to the VRS. This 5.00% member contribution may be assumed by the employer. In addition, the School Board is required to contribute the remaining amounts necessary to fund its participation in the VRS using the actuarial basis specified by the Code of Virginia and approved by the VRS Board of Trustees. The School Board’s contribution rate for the fiscal year ended 2010 was 14.60% of annual covered payroll.

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COUNTY OF RUSSELL, VIRGINA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans:

Plan Description

Name of Plant Virginia Retirement System (VRS) Identification of Pian: Agent and Cost-Sharing Multiple-Employer Defined Benefit Pension Pian Administering Entity: Virginia Retirement System (System)

All fulltime, salaried permanent employees of participating employers must participate in the VRS. Benefits vest after five years of service. Employees are eligible for an unreduced retirement benefit at age 65 with 5 years of service (age 60 for participating local law enforcement officers, firefighters, and sheriffs) or at age 50 with at least 30 years of service if elected by the employer (age 50 with at least 25 years of service for participating local law enforcement officers, firefighters, and sheriffs) payable monthly for ife in an amount equal to 1.70 % of their average final compensation (AFC) for each year of credited service (1.85% for sherifis and if the employer elects, for other employees in hazardous duly positions receiving enhanced benefits). Benefits are actuarially reduced for retirees who retire prior to becoming eligible for full retirement benefits. In addition, retirees qualify for annual cost-of-living adjustment (COLA) beginning in their second year of retirement. The COLA is limited to 5,00% per year. AFC is defined as the highest consecutive 36 months of reported compensation. Participating local law enforcement officers, firefighters, and sheriffs may receive a monthly benefit supplement i they retire prior to age 65. The VRS also provides death and disabilly benefits. Title 51.1 of the Code of Virainia (1950), as amended, assigns the authority to establish and amend benefit provisions to the General Assembly of Virginia.

The system issues a publicly available comprehensive annual financial report that includes financial statements: and required supplementary information for VRS. A copy ofthat report may be downloaded from their website athitp: www, varetire org/PaffPublications!2009-Annual-Repor.paf or obtained by writing tothe System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Funding Policy

Primary Government:

Discretely Presented Component Unit - School Board (Non-Professional Employees}

Plan members are required by Tile 51.1 of the Code of Virainia (1950), as amended, to contribute 5.00% of their annual salary to the VRS. This 5.00% member contribution may be assumed by the employer. In addition, the School Board is required to contribute the remaining amounts necessary to fund its participation in the VRS using the actuarial basis specified by the Code of Virainia and approved by the VRS Board of Trustees. The School Board’s contribution rate forthe fiscal year ended 2010 was 14.60% of annual covered payroll

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans: (continued)

C. Annual Pension Cost

For fiscal year 2010, the County of Russell, Virginia’s annual pension cost of $437,791 and $412,281 was equal to the County of Russell, Virginia’s required and actual contributions for the County and the School Board Non Professionals, respectively.

Three-Year Trend Information

Fiscal Annual Percentage Net Year Pension of APC Pension

Ending Cost (APC) 1 Contributed Obligation

Primary Government: County 6/30/2008 $ 289,428 100.00% $

6/30/2009 432,914 100.00%

6/30/2010 437,791 100.00%

Discretely Presented-Component Unit: School Board Non-Professional 6/30/2008 $ 416,704 100.00% $

6/30/2009 422,641 100.00%

6/30/2010 412,281 100.00%

1 Employer portion only

Primarv Government: The required contribution was determined as part of the June 30, 2007 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2007 included (a) an investment rate of return (net of administrative expenses) of 7.50%, (b) projected salary increases ranging from 3.75% to 5.60% per year for general government employees and 3.50% to 4.75% for employees eligible for enhanced benefits available to law enforcement officers, firefighters, and sheriffs, and © a cost-of-living adjustment of 2.50% per year. Both the investment rate of return and the projected salary increases include an inflation component of 2.50%. The actuarial value of the County’s assets is equal to the modified market value of assets. This method uses techniques that smooth the effects of short-term volatility in the market value of assets over a five-year period. The County’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2007 was within a period of 20 years.

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COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans: (continued)

Annual Pension Cost

Professionals, respectively

Three-Year Trend Information

Fiscal Annual Percentage Net Year Pension of APC Pension Ending Cost (APC)’ Contributed Obligation Primary Government County 6/30/2008 «= $289,428 ~=——100.00% - 6/30/2008 492,914 100.00% 6/30/2010 437,791 100.00% Diseretely Presented-Component Unit: ‘School Board Non-Professional 6/30/2008 $ 416,704 100.00% - 6730/2009 422,641 100.00% 6/30/2010 412,281 100.00%

‘Employer portion only

Primary Government:

The required contribution was determined as part of the June 30, 2007 actuarial valuation using the entry age actuarial cost method, The actuarial assumptions at June 30, 2007 included (2) an investment rate of return (net of administrative expenses) of 7.50%, (b) projected salary increases ranging from 3.75% to 5.60% per year for general government employees and 3.50% to 4.75% for employees eligible for enfianced benefits avaliable to law enforcement oficers, firefighters, and sheriffs, and © a cost-of-living adjustment of 2.50% per year. Both the investment rate of return and the projected salary increases include an inflation component of 2.50%. The actuarial value of the County’s assets is equal to the modified market value of assets. This method uses, techniques that smooth the effects of short-term volaity in the market value of assets over a five-year period. The County’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2007 was within a period of 20 years.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS {CONTINUED) JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans: (continued)

C. Annual Pension Cost (continued)

Discretely Presented-Component Unit School Board- Non-Professional: The required contribution was determined as part of the June 30, 2007 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2007 included (a) an investment rate of return (net of administrative expenses) of 7.50%, (b) projected salary increases ranging from 3.75% to 5.60% per year for general government employees and 3.50% to 4.75% for employees eligible for enhanced benefits available to law enforcement officers, firefighters, and sheriffs, and © a cost-of-living adjustment of 2.50% per year. Both the investment rate of return and the projected salary increases include an inflation component of 2.50%. The actuarial value of the County’s assets is equal to the modified market value of assets. This method uses techniques that smooth the effects of short-term volatility in the market value of assets over a five-year period. The County’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2007 was within a period of 20 years.

D. Funded Status and Funding Progress

Primary Government: As of June 30, 2009, the most recent actuarial valuation date, the plan was 83.74% funded. The actuarial accrued liability for benefits was $22,803,518, and the actuarial value of assets was $19,933,712, resulting in an unfunded actuarial accrued liability (UAAL) of $3,869,806. The covered payroll (annual payroll of active employees covered by the plan) was $5,559,094, and ratio of the UAAL to the covered payroll was 69.61%.

Discretely Presented Component Unit- School Board (Non-Professional Employees): As of June 30, 2009, the most recent actuarial valuation date, the plan was 71.78% funded. The actuarial accrued liability for benefits was $14,751,035, and the actuarial value of assets was $10,588,117, resulting in an unfunded actuarial accrued liability (UAAL) of $4,162,918. The covered payroll (annual payroll of active employees covered by the plan) was $2,878,696, and ratio of the UAAL to the covered payroll was 144.61%.

The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability (AAL) for benefits.

The remainder of this page left blank intentionally.

-37-

COUNTY oF RUSSELL, VIRGINIA.

NoTes To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans: (continued)

‘Annual Pension Cost (continued)

Discretely Presented-Component Unit School Board - Non-Professional

The required contribution was determined as part of the June 30, 2007 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2007 included (a) an investment rate of return (net of administrative expenses) of 7.50%, (b) projected salary increases ranging from 3.75% to 5.60% per year for general government employees and 3.50% to 4.75% for employees eligible for enhanced benefits available {o law enforcement officers, firefighters, and sheriffs, and © a cost-of-living adjustment of 2.50% per year,

Both the investment rate of return and the projected salary increases include an inflation component of 2.50%.

The actuarial value of the County’s assets is equal to the modified market value of assets. This method uses techniques that smooth the effects of short-term volaility in the market value of assets over a five-year period. ‘The County’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2007 was within a period of 20 years.

Funded Status and Funding Progress

Primary Governme!

As of June 30, 2009, the most recent actuarial valuation date, the plan was 83.74% funded. The actuarial accrued liability for benefits was $22,803,518, and the actuarial value of assets was $19,933,712, resulting in an unfunded actuarial accrued liability (UAAL) of $3,869,806. The covered payroll (annual payroll of active employees covered by the plan) was $5,559,094, and ratio of the UAAL to the covered payroll was 69.61%.

Discretely Presented Component Unit - School Board (Non-Professional Employees):

As of June 30, 2009, the most recent actuarial valuation date, the plan was 71.78% funded, The actuarial accrued liability for benefits was $14,751,035, and the actuarial value of assets was $10,588,117, resulting in an unfunded actuarial accrued liability (UAAL) of $4,162,918. The covered payroll (annual payroll of active employees covered by the plan) was $2,878,696, and ratio of the UAAL to the covered payroll was 14.61%.

The schedule of funding progress, presented as Required Supplementary Information folowing the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability (AL) for benefits

The remainder of this page left blank intentionally.

-37-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans: (continued)

E. Discretely Presented Component Unit School Board

Professional Employees:

Plan Description The Russell County School Board contributes to the Virginia Retirement System (VRS), a cost-sharing multiple employer defined benefit pension plan administered by the Virginia Retirement System. VRS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Title 51.1 of the Code of Virginia (1950), as amended, assigns the authority to establish and amend benefit provisions to the General Assembly of Virginia. The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. That report may be downloaded from the System’s web site at http://www.varetire.org/Pdf/Publications/2009-Annuai-Report.pdf or obtained by writing to the System’s Chief Financial Officer at P. 0. Box 2500, Richmond, Virginia 23218-2500.

Funding Policy Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their annual salary to the VRS. This 5.00% member contribution may be assumed by the employer. In addition, the School Board is required to contribute the remaining amounts necessary to fund its participation in the VRS using the actuarial basis specified by the statute and approved by the VRS Board of Trustees. The School Board’s contribution to the statewide cost sharing pool for professional employees was $1,202,914, 1 ,766,705, and 1,853,860 for the fiscal years ended 2010, 2009, and 2008, respectively. Employer contributions represented 8.81% for July 2009 through March 2010 and zero (0.00%) for April through June 2010,8.81%, and 10.30% of covered payroll for the fiscal years ended 2010, 2009, and 2008, respectively.

The remainder of this page left blank intentionally.

-38-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 9-Employee Retirement System and Pension Plans: (continued)

Discretely Presented Component Unit School Board

Professional Employees

Plan Descripi

The Russell County School Board contributes to the Virginia Retirement System (VRS), a cost-sharing multiple- employer defined benefit pension plan administered by the Virginia Retirement System, VRS provides retirement and disability benefits, annual cost-of-living adjustment, and death benefits to plan members and beneficiaries. Title 51.1 of the Code of Virginia (1950), as amended, assigns the authority to establish and amend benefit provisions to the General Assembly of Virginia. The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. That report may be downloaded from the System’s web site at http://www. varetire.org/PdflPublications/2009-Annual-Report pdf or obtained by writing to the System’s Chief Financial Officer at P. 0. Box 2500, Richmond, Virginia 23218-2500.

Funding Policy

Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their annual salary to the VRS. This 5.00% member contribution may be assumed by the employer. In addition, the School Board is required to contribute the remaining amounts necessary to fund its participation in the VRS using the actuarial basis specified by the statute and approved by the VRS Board of Trustees. The School Board’s contribution to the statewide cost sharing pool for professional employees was $1,202,914, 1,766,705, and 1,853,860 for the fiscal years ended 2010, 2009, and 2008, respectively. Employer contributions represented 8.81% for July 2009 through March 2010 and zero (0,00%) for April through June 2010, 8.81%, and 10.30% of covered payroll for the fiscal years ended 2010, 2009, and 2008, respectively.

The remainder of this page left blank intentionally,

-38-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 10-Capital Assets:

Capital asset activity for the year ended June 30, 2010 was as follows:

Primary Government: Beginning

Balance

(as restated)

Governmental Activities:

Capital assets, not being depreciated:

Land $ 1,430,638 $ Construction in progress 428,749

Total capital assets not being depreciated $ 1,859,387 $

Capital assets, being depreciated:

Buildings $ 26,761,071 $ Machinery and equipment 3,798,539

Total capital assets being depreciated $ 30,559,610 $

Less: accumulated depreciation for:

Buildings $ (1 0,697,955) $ Machinery and equipment (2,067,966)

Total accumulated depreciation $ (12,765,921) $

Total capital assets being depreciated, net $ 17,793,689 $

Governmental activities capital assets, net $ 19,653,076 $

Increases

110,695 $ 2,016,896

2,127,591 $

14,595 $ 450,159

464,754 $

(665,263) $ (568,725)

(1 ,233,988) $

(769,234) $

1,358,357 $

The remainder of this page left blank intentionally.

-39-

Ending

Decreases Balance

$ 1,541,333

2,445,645

$ 3,986,978

$ 26,775,666

(465,634) 3,783,064

(465,634) $ 30,558,730

$ (11 ,363,218)

381,213 (2,255,478)

381,213 $ (13,618,696)

(84,421) $ 16,940,034

(84,421) $ 20,927,012

COUNTY OF RUSSELL, VIRGINIA

NoTes To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 10-Capital Assets: Capital asset actviy for the year ended June 30, 2010 was as follows:

Primary Government:

Beginning Balance Ending (as restated) Increases Decreases Balance Governmental Activities: Capital assets, nat being depreciated: Land $1,430,638 $ 110,695. $ - $1,841,333 Construction in progress 428,749 2,016,896 = 245,648 Total capital assets not being depreciated «$§—=—1,859,387 $2,127,591 $ = $3,986,978 Capital assets, being depreciated: Buildings $ 26761071 $ 14,595 $ - $26,775,866 Machinery and equipment 3,798,539 450,159 (465,634) 3,783,064 Total capital assets being depreciated $30,550,610 § GATE $ (465,634) $30,558,730 Less: accumulated depreciation for Buildings $ (10,697,955) $ (665,263) $ ~ $ (11,363,218) Machinery and equipment (2,087,966) (668,725) 381,213 __ (2,255,478) Total accumulated depreciation $ (12,765,921) $ (7,233,988) $ 381,213 $ (13,618,696)

Total capital assets being depreciated, net —«$§—17,793,689 $ ——(769,284) $__—(84,421) $ 16,940,034

‘Governmental activities capital assets, net $ 19,653,076 $ 1,358,357 $ (84,421) $ 20,927,012

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 10-Capital Assets: (continued)

Primary Government: (continued)

Business-Type Activities

Capital assets, being depreciated:

Utility plant

Machinery and equipment

Total capital assets being depreciated

Less: accumulated depreciation for:

Utility plant

Machinery and equipment

Total accumulated depreciation

Total capital assets being depreciated, net

Business-Type activities capital assets, net

Beginning

Balance

(as restated) Increases Decreases

5,240,699 $ $ 75,470

5,316,169 $ $

(1 ,462,020) $ (131,018) $ (74,997) (473)

(1 ,537,017) $ (131 ,491) $

3,779,152 $ (131,491) $

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities:

General government administration

Judicial administration

Public safety

Public works

Health and welfare

Education

Parks, recreation, and cultural

Total depreciation expense-governmental activities

Business-Type activities:

Sewer Authority

-40-

$ 3,477

6,142

185,873

51,495

39,081

884,602

63,318

$ ==1~,2=33~,9=88=

$ ==1~31~,4~91=

Ending

Balance

$ 5,240,699

75,470

$ 5,316,169

$ (1 ,593,038)

(75,470)

$ (1 ,668,508)

$ 3,647,661

COUNTY OF RUSSELL, VIRGINIA

NoTes TO FINANCIAL STATEMENTS (CONTINUED) JuNE 30, 2010

Note 10-Capital Assets: (continued)

Primaty Government: (continued)

Beginning Balance Ending (as restated) Increases Decreases Balance Business- Type Activities Capital assets, being depreciated: Utity plant $5,240,699 § -$8 5,240,899 Machinery and equipment 75,470 - 75,470 Total capital assets being depreciated $ 5,316,169 $ -$ 5,316,169 Less: accumulated depreciation for: Utity plant $ (1,462,020) $ (131,018) $ (1,593,038) Machinery and equipment (74,997) (473) (75,470) Total accumulated depreciation $(1597,017) $ (137,497) $ (7,668,508) Total capital assets being depreciated, net $ 3,779,152 $ (131,491) $ 3,647,661 Business-Type activities capital assets, net «$3,779,152. $——(131,491) $ 3,647,661

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural

Total depreciation expense-governmental activities

Business-Type activities: Sewer Authority

-40-

3477 6,142 185,873 51,495 39,081 884,602 63,318

1,233,988

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 10-Capital Assets: (continued)

Capital asset activity for the School Board for the year ended June 30, 2010 was as follows:

Discretely Presented Component Unit- School Board:

Capital assets, not being depreciated:

Land

Construction in progress

Total capital assets not being depreciated

Capital assets, being depreciated:

Buildings

Machinery and equipment

Total capital assets being depreciated

Less: accumulated depreciation for:

Buildings

Machinery and equipment

Total accumulaled depreciation

Total capital assets being depreciated, net

Governmental activities capital assets, net

Note 11-Risk Management:

Beginning

Balance

(as restated)

4,643,707 $

18,640,322 $ 4,693,637

23,333,959 $

(6,950,552) $ (3,201,497)

(10, 152,049) $

13,181,910 $

17,825,617 $

Increases

$ 90,571

90,571 $

73,600 $

675,383

748,983 $

(442,470) $ (414,267)

(856,737) $

(107,754) $

(17, 183) $

Decreases

Ending

Balance

4,643,707

90,571

----- $ __ 4_;,7_34;_,2_7_8

$ (162, 196)

(162, 196) $

$ 162,196

162,196 $

18,713,922

5,206,824

23,920,746

(7,393,022)

(3,453,568)

(10,846,590)

13,074,156

17,808,434

The County and its Component Unit - School Board are exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The County and the related Component Unit- School Board participate with other localities in a public entity risk pool for their coverage of general liability, property, crime and auto insurance with the Virginia Association of Counties Risk Pool. Each member of this risk pool jointly and severally agrees to assume, pay and discharge any liability. The County and the School Board pay the Risk Pool contributions and assessments based upon classification and rates into a designated cash reserve fund out of which expenses of the pool, claims and awards are to be paid. In the event of a loss, deficit, or depletion of all available excess insurance, the pool may assess all members in the proportion to which the premium of each bears to the total premiums of all members in the year in which such deficit occurs. The County and its Component Unit School Board continue to carry commercial insurance for all other risks of loss. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years.

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COUNTY OF RUSSELL, VIRGINIA.

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JuNe 30, 2010

Note 10-Capital Assets: (continued) Capital asset activity for the School Board for the year ended June 30, 2010 was as follows:

Discretely Presented Component Unit ~ School Board

Beginning Balance Ending (as restated) Increases Decreases Belance

Capital assets, not being depreciated:

Land $ 4,643,707 § - - $ 4,643,707

Construction in progress : 90,571 : 90,571 Total capital assets notbeing depreciated —«§_—=—«4,643,707 90571 $ = $$ 4734,278 Capital assets, being depreciated:

Buildings $ 18,640,322 § 73,600 $ - $ 18,713,922

Machinery and equipment 4,893,637 675,383 (162,196) 5,208,824 Total capital assets being depreciated $ 23,533.069 $ 748983 $ (162,198) $23,920,746 Less: accumulated depreciation for

Buildings $ 6,950,552} $ (442,470) $ - $ — (7,393,022)

Machinery and equipment (3,201,497) (414,267) 162,196 (3,453,568) Total accumulated depreciation $ (10,152,049) $_ (856,737) $ 162,196 $ (10,846,590) Total capital assets being depreciated, net «$13,181,910 $ (107,754) $ - $13,074,156 Governmental activites capital assets, net «$17,825,617 $_—(17,183)-$ = $ 17,808,434

Note 11-Risk Management:

The County and its Component Unit - School Board are exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The County and the related Component Unit - Schoo! Board participate with other localities in a public entity risk poo! for their coverage of general liability, property, crime and auto insurance with the Virginia Association of Counties Risk Pool. Each member of this risk pool jointly and severally agrees to assume, pay and discharge any liability. The County and the School Board pay the Risk Pool contibutions and assessments based upon classification and rates into a designated cash reserve fund ut of which expenses of the pool, claims and awards are to be paid. In the event of a loss, deficit, or depletion of al available excess insurance, the pool may assess all members in the proportion to which the premium of each bears to the total premiums of all members in the year in which such deficit occurs. The County and its Component Unit — ‘School Board continue to carry commercial insurance for all other risks of loss. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years.

Ate

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30,2010

Note 12-Contingent Liabilities:

Federal programs in which the County and its component units participate were audited in accordance with the provisions of U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non Profit Organizations. Pursuant to the provisions of this circular all major programs and certain other programs were tested for compliance with applicable grant requirements. While matters of noncompliance were disclosed by the audit, the Federal Government rnay subject grant programs to additional compliance tests, which may result in disallowed expenditures. In the opinion of management, any future disallowances of current grant program expenditures, if any, would be immaterial.

Note 13-Surety Bonds:

Fidelity & Deposit Company of Maryland-Surety: Dollie Compton, Clerk of the Circuit Court Patrick Thompson, Treasurer Randy N. Williams, Commissioner of the Revenue Steve Dye, Sheriff All constitutional officers’ employees: blanket bond

Hartford Company- Surety: Tammy Caldwell - Clerk of the School Board All school employees: blanket bond

USF&G Insurance Co. - Surety: All Social Services employees-blanket bond

Note 14-Landfill Closure and Postclosure Care Cost:

$ 1,010,000 400,000

3,000 30,000 50,000

$ 10,000 10,000

$ 100,000

State and federal laws and regulations require the County to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site after closure. $1 ,264,062 is the total estimated closure and postclosure care liability at June 30, 2010. This represents the cumulative amount based on the use of 100% of the estimated capacity of the landfill and is based on what it would cost to perform all remaining closure and postclosure in 2010. Actual costs for closure and postclosure monitoring may change due to inflation, deflation, changes in technology or changes in regulations. The County uses the Commonwealth of Virginia’s financial assurance mechanism to meet the Department of Environmental Quality’s assurance requirements for landfill closure and postclosure costs.

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COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) ‘JUNE 30, 2010

Note 12-Contingent Liabilities:

Federal programs in which the County and its component units participate were audited in accordance with the provisions of U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations. Pursuant to the provisions of this circular all major programs and certain other programs were tested for compliance with applicable grant requirements. While matters of noncompliance were disclosed by the audit, the Federal Government may subject grant programs to additional compliance tests, which may result in disallowed expenditures. In the opinion of management, any future disallowances of current grant program expenditures, it any, would be immaterial.

Note 13-Surety Bonds:

Fidelity & Deposit Company of Maryland-Surety:

Dollie Compton, Clerk of the Circuit Court $ 1,010,000 Patrick Thompson, Treasurer 400,000 Randy N. Williams, Commissioner of the Revenue 3,000 Steve Dye, Sheriff 30,000 All constitutional officers’ employees: blanket bond 50,000 Hartford Company - Surety

Tammy Caldwell - Clerk of the School Board $ 10,000 All school employees: blanket bond 10,000

USF&G Insurance Co. - Surety: ‘All Social Services employees-blanket bond $ 100,000

Note 14-Landfill Closure and Postclosure Care Cost:

State and federal laws and regulations require the County to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site after closure. $1,264,062 is the total estimated closure and postclosure care liability at June 0, 2010. This represents the cumulative amount based on the use of 100% of the estimated capacity of the landfill and is based on what it would cost to perform ail remaining closure and postclosure in 2010. Actual cosis for closure and postclosure monitoring may change due to inflation, deflation, changes in technology or changes in regulations. The County uses the Commonwealth of Virginia’s financial assurance mechanism to meet the Department of Environmental Quality’s assurance requirements for landfill closure and postclosure costs.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 0

Note 15-Deferred (Unearned) Revenue:

Governmental funds report deferred revenue in connection with receivables for revenues not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows:

Delinquent property taxes receivable Prepaid taxes Total deferred/unearned revenue for governmental funds

Note 16-Self Health Insurance:

Unavailable $ 6,728,379 $

37,163 $ 6,765,542 $

Unearned 4,276,551

37,163 4,313,714

The County of Russell, Virginia established a limited risk management program for health insurance. Premiums are paid into the health plan fund from the County and School Board and are available to pay claims, and administrative costs of the program. During the fiscal year 2010, a total of $5,301,251 was paid in benefits and administrative costs. The risk assumed by the County and School Board is based on the number of participants in the program. The risk varies by the number of participants and their specific plan type. As of June 30, 2010, the County and School Board were exposed to risk which represents the difference between the claims to date and the ceiling liability as calculated based on enrollment levels and health plan coverage. Additional costs in excess of the ceiling liability are covered as part of the contract with the County. Incurred but not reported claims of $382,401 have been accrued as a liability based primarily on actual cost incurred prior to June 30 but paid after year-end. lnterfund premiums are based primarily upon the insured funds’ claims experience and are reported as quasi-external interfund transactions. Changes in the claims liability during fiscal year 2010 were as follows:

Current Year Balance at Claims and Balance at

Beginning of Changes in Claim End of Fiscal Year Fiscal Year Estimates Payments Fiscal Year

2009-10 $ 397,739 $ 5,285,913 $ (5,301 ,251) $ 382,401

Note 17-Commitments and Contingencies:

The School Board has obligated funds for the projects described below as of June 30, 2010:

Honaker High Renovation

Original Contract

$ 1,241,500

Amount Paid Remaining As of 6/30/2010 Contract Amount $ 77,371 $ 1,164,129 $

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Accounts Payable

734,701

Retainage Payable

$ 42,598

COUNTY OF RUSSELL, VIRGINIA

NoTEs To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 15-Deferred (Unearned) Revenue:

‘Governmental funds report deferred revenue in connection with receivables for revenues not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows:

Unavailable Uneamed Delinquent property taxes receivable $ 6,728,379 $ 4,276,551 Prepaid taxes 37,163 37,163

Total deferred/uneared revenue for governmental funds $6,765,542 $ 4,313,714

Note 16-Self Health Insurance:

The County of Russell, Virginia established a limited risk management program for health insurance. Premiums are paid into the health plan fund from the County and School Board and are available to pay claims, and administrative cosis of the program. During the fiscal year 2010, a total of $5,301,251 was paid in benefits and administrative costs. The risk assumed by the County and School Board is based on the number of participants in the program. The risk varies by the number of participants and their specific plan type. As of June 30, 2010, the County and School Board were exposed to risk which represents the difference between the claims to date and the ceiling liability as calculated based on enrollment levels and health plan coverage. Additional costs in excess of the ceiling liability are covered as part of the contract with the County. Incurred but not reported claims of $382,401 have been accrued as a liability based primarily on actual cost incurred prior to June 30 but paid after year-end. Interfund premiums are based primarily upon the insured funds’ claims experience and are reported as quasi-external interfund transactions. Changes in the claims liability during fiscal year 2010 were as follows:

Current Year Balance at Claims and Balance at Beginning ot /—Changes in Claim End of Fiscal Year _ Fiscal Year _Estimates Payments _ Fiscal Year

2009-10 $ 397,739 $ __ 5,285,913 $ _ (6,301,251) $ 382,401

Note 17-Commitments and Contingencies: The School Board has obligated funds for the projects described below as of June 30, 2010:

Original © Amount Paid Remaining Accounts —_—Retainage Contract __As of 6/30/2010 Contract Amount __ Payable Payable Honaker High Renovation $ 124,500 § 77371 $ 1,164,129 § 734,701 $ 42,598

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 1 B-Other Post-Employment Benefits-Health Insurance

From an accrual accounting perspective, the cost of post-employment health care benefits (OPEB), like the cost of pension benefits, generally should be associated with the periods in which the cost occurs, rather than in future years when it will be paid. In adopting the requirements of GASB Statement No. 45 during the year ended June 30, 2009, the County recognizes the cost of post-employment health care in the year when the employee services are rendered, reports the accumulating liability, and provides information useful in assessing potential demands on the County’s future cash flows. Recognition of the liability accumulated from prior years will be phased in over 30 years, commencing with the 2009 liability.

A. Plan Description

The County of Russell and Russell County’s Component Unit- School Board administers a single-employer healthcare plan (“the Plan”). The Plan provides for participation by eligible retirees and their dependents in the health insurance programs available to County and School Board employees. The Plan will provide retiring employees the option to continue health insurance offered by the County and School Board. Any County or School Board employee eligible retiree may receive this benefit until he/she has reached sixty five years of age.

To be eligible for this benefit a retiree must meet the following criteria: attained age 50 and 15 years of service and not eligible for Medicare and the last 10 years must be with the County or School Board prior to retirement. The benefits, employee contributions and the employer contributions are governed by the Board of Supervisors and the School Board and can be amended through the Board of Supervisors and the School Board action respectively. The Plan does not issue a publicly available financial report.

B. Funding Policy

The County and School Board currently pay for the post-retirement health care benefits on a pay-as-you-go basis. The County and School Board currently have 496 employees that are eligible, respectively, for the program. In addition, 1 DO percent of premiums are the responsibility of the retiree.

Health benefits include Medical, Dental, and Vision coverage for retirees and eligible spouses/dependents. Retirees are eligible to choose one of the following medical options through the County and School Board. The rates are as follows:

Medical & Rx

Retiree Spouse

Under 65 $ 8,600 $ 8,600

COBRA

Retiree Family

Under 65 $ 490 $ 1,123

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COUNTY OF RUSSELL, VIRGINIA

NoTES 70 FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2040

Note 18-Other Post-Employment Benefits-Health Insurance

From an accrual accounting perspective, the cost of post-employment health care benefits (OPEB), lke the cost of pension benefits, generally should be associated with the periods in which the cost occurs, rather than in future years when itwill be paid. In adopting the requirements of GASB Statement No. 45 during the year ended June 30, 2009, the County recognizes the cost of post-employment health care in the year when the employee services are rendered, reports the accumulating liability, and provides information usefulin assessing potential demands on the County’s future cash flows. Recognition of the liability accumulated from prior years will be phased in over 30 years, commencing with the 2009 labilty

A. Plan Description

The County of Russell and Russell County’s Component Unit- School Board administers a single-employer healthcare plan (‘the Plan’). The Plan provides for participation by eligible retirees and their dependents in the health insurance programs available to County and School Board employees. The Plan will provide retiring employees the option to continue health insurance offered by the County and School Board. Any County or School Board employee eligible retiree may receive this benefit until he/she has reached sixty five years of age.

Tobe eligible for this benefit a retiree must meet the following criteria: attained age 50 and 15 years of service and not eligible for Medicare and the last 10 years must be with the County or School Board prior to retirement. The benefits, ‘employee contributions and the employer contributions are governed by the Board of Supervisors and the School Board and can be amended through the Board of Supervisors and the School Board action respectively. The Plan does not issue a publicly available financial report

B. Funding Policy

The County and School Board currently pay for the post-retirement health care benefits on a pay-as-you-go basis. The County and Schoo! Board currently have 496 employees that are eligible, respectively, for the program. In addition, 100 percent of premiums are the responsibility of the retiree.

Medical & Rx Retiree Spouse Under 65 $ 8,600 $ 8,600

Under 65

490 $ 4,123

4d.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 18-0ther Post-Employment Benefits-Health Insurance (continued)

C. Annual OPEB Cost and Net OPEB Obligation:

The County’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the County’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation:

Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution

Annual OPEB cost (expense) Contributions made

Increase in net OPEB obligation Net OPEB obligation· beginning of year Net OPEB obligation - end of year

$ 42,985

198 (202)

42,981 42,977

4,945 4,949

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2010 were as follows:

Percentage of Fiscal Annual Annual OPEB Cost Net OPEB Year Ended’ OPEB Cost Contributed Obligation

6/30/2009 $ 42,981 88% $ 4,949

'only available for one year

The remainder of this page left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NoTES TO FINANCIAL STATEMENTS (CONTINUED) ‘JUNE 30, 2010

Note 18-Other Post-Employment Benefits-Health Insurance (continued)

C. Annual OPEB Cost and Net OPEB Obligation:

The County’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding thet, ifpaid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial abilties (or funding excess) over a period not to exceed thirty years. The following table shows the components of the County’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation

Annual required contribution

Interest on net OPEB obligation ‘Adjustment to annual required contribution ‘Annual OPEB cost (expense)

Contributions made

Increase in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB

obligation for 2010 were as follows:

42,985 198

(202)

42,981

42,977

4 4,945,

4,949

Percentage of

Fiscal Annual Annual OPEB Cost. Net OPEB

Year Ended* OPEB Cost. Contributed Obligation 6/30/2009 $ 42,981 88% $ 4,949

“only available for one year

The remainder of this page left biank intentionally

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30,2010

Note 18-0ther Post-Employment Benefits-Health Insurance (continued)

C. Annual OPES Cost and Net OPES Obligation: (continued)

The School Board’s annual other postemployment benefit (OPES) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the School Board’s annual OPES cost for the year, the amount actually contributed to the plan, and changes in the School Board’s net OPES obligation:

Annual required contribution $ 295,315

Interest on net OPEB obligation 1,359

Adjustment to annual required contribution (1 ,387)

Annual OPEB cost (expense) 295,287

Contributions made 295,259

Increase in net OPEB obligation 28

Net OPEB obligation - beginning of year 33,972 Net OPEB obligation - end of year $ 34,000

The School Board’s annual OPES cost, the percentage of annual OPES cost contributed to the plan, and the net OPES obligation for 2010 were as follows:

Percentage of Fiscal Annual Annual OPEB Cost Net OPEB Year Ended’ OPEB Cost Contributed Obligation

6/30/2009 $ 295,287 88% $ 34,000

'only available for one year

D. Funded Status and Funding Progress

The funded status of the Plan for the County as of July 1, 2008, is as follows:

Actuarial accrued liability (AAL) $ 546,570

Actuarial value of plan assets $ Unfunded actuarial accrued liability (UAAL) $ 546,570 Funded ratio (actuarial value of plan assets I AAL) 0.00% Covered payroll (active plan members) $ 4,198,697

UAAL as a percentage of covered payroll 13.02%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 18-Other Post-Employment Benefits-Health Insurance (continued)

C. Annual OPEB Cost and Net OPEB Obligation: (continued)

The School Board’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial lablties (or funding excess) over a period not o exceed thirty years, The following table shows the components of the School Board’s annual OPEB cost for the year, the

amount actually contributed to the plan, and changes in the School Board’s net OPEB obligation:

‘Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution ‘Annual OPEB cost (expense) Contributions made. Increase in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year

The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed fo the plan, and the net OPEB.

obligation for 2010 were as follows:

295,315 1,359 (1,387)

295,287 295,259

2B 33,972

34,000

Percentage of Fiscal Annual Annual OPEB Cost Net OPES YearEnded* _ OPEBCost_ Contributed Obligation 6130/2009 § 295,287 88% $ 34,000 “only available for one year D. Funded Status and Funding Progress ‘The funded status of the Plan for the County as of July 1, 2008, is as follows: Actuatial accrued liabilty (AL) $ 546,570 Actuarial value of plan assets $ : Unfunded actuarial acerued liability (UAL) $ 548,570 Funded ratio (actuarial value of plan assets / AL) 0.00% Covered payroll (active pian members) $ 4,198,697 UAAL as a percentage of covered payroll 13.02%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 0

Note 18-0ther Post-Employment Benefits-Health Insurance (continued)

D. Funded Status and Funding Progress (continued)

The funded status of the Plan for the School Board as of July 1, 2008, is as follows:

Actuarial accrued liability (AAL) $ Actuarial value of plan assets $ Unfunded actuarial accrued liability (UAAL) $

Funded ratio (actuarial value of plan assets I AAL) Covered payroll (active plan members) $

UAAL as a percentage of covered payroll

3,755,059

0.00%

24,186,441

15.53%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far in the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multiyear trend information, as it becomes available, about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

E. Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point.

The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2008, actuarial valuation, the projected unit of credit actuarial cost method was used. Under this method, future benefits are projected and the present value of such benefits is allocated from date of hire to date of eligibility the actuarial assumptions included: inflations at 2.50 percent, plus productivity component of 1.25 percent, and investments rate of return at 4.00 percent, and a health care trend rate of 10.00 percent graded to 5.00 percent over 8 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at June 30, 2009 was 29 years.

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COUNTY OF RUSSELL, VIRGINIA

NoTEs To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 18-Other Post-Employment Benefits-Health Insurance (continued)

D. Funded Status and Funding Progress (continued)

The funded status of the Plan for the School Board as of July 1, 2008, is as follows:

Actuarial accrued liability (AL) $ 3,755,059 Actuarial value of plan assets $ : Unfunded actuarial accrued liability (UAL) $ 3,755,059 Funded ratio (actuarial value of plan assets / AL) 0.00% Covered payroll (active plan members) $ 24,186,441 UAAL as a percentage of covered payroll 15.59%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probabilly of occurrence of events farin the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

The schedule of funding progress, presented as required supplementary information following the notes to the financial ‘statements, will present multiyear trend information, as it becomes available, about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

E. Actuarial Methods and Assumptions:

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the ‘employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattem of sharing of benefit costs between the employer and plan members to that point.

In the July 1, 2008, actuarial valuation, the projected unit of credit actuarial cost method was used. Under this method, future benefits are projected and the present value of such benefits is allocated from date of hire to date of eligibility the actuarial assumptions included: inflations at 2.50 percent, plus productivity component of 1.25 percent, and investments rate of return at 4.00 percent, and a health care trend rate of 10,00 percent graded to 5.00 percent over 8 years. The UAALs being amortized as a level percentage over the remaining amortization period, which at June 30, 2009 was 29 years.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2010

Note 19-0ther Post-Employment Benefits-VRS Health Insurance Credit

A. Plan Description

The County participates in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is an agent and cost sharing, multiple-employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dollar amount of the health insurance credit for each year of creditable service. The credit amount and eligibility differs for state, school division, political subdivision, local officer, local social services department and general registrar retirees.

An employee of the County, who retires under VRS with at least 15 years of total creditable service under the System and is enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $1 .50 per year of creditable service up to a maximum monthly credit of $45. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automatically receive the maximum monthly health insurance credit of $45.

Benefit provisions and eligibility requirements are established by Title 51.1, Chapter 14 of the Code of Virginia. The VRS actuarially determines the amount necessary to fund all credits provided, reflects the cost of such credits in the applicable employer contribution rate pursuant to §51. 1-145, and prescribes such terms and conditions as are necessary to carry out the provisions of the health insurance credit program. VRS issues separate financial statements as previously discussed in Note 9.

B. Funding Policy

As a participating local political subdivision, the County is required to contribute the entire amount necessary to fund participation in the program using the actuarial basis specified by the Code of Virginia and the VRS Board of Trustees. The County’s contribution rate for the fiscal year ended 2010 was 0.14% of annual covered payroll.

C. OPEB Cost and Net OPEB Obligation:

The annual cost of OPEB under Governmental Accounting Standards Board (GASB) 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, is based on the annual required contribution (ARC). The County is required to contribute the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

For 2010, the County’s contribution of $996 was equal to the ARC and OPEB cost. The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2010:

Fiscal Annual Percentage Net Year OPEB of ARC OPEB

Ending Cost (ARC) Contributed Obligation Primary Government:

County 6/30/2010 $ 996 100.00% $

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COUNTY OF RUSSELL, VIRGINIA

Notes To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 19-Other Post-Employment Benefits-VRS Health Insurance Credit

A. Plan Description

The County participates in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is an agent and cost sharing, multiple-employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dollar amount of the health insurance credit for each year of creditable service. The credit amount and eligibility differs for stale, school division, political subdivision, local officer, local social services department and general registrar retirees.

‘An employee of the County, who retires under VRS with at least 15 years of total creditable service under the System and is enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $1.50 per year of creditable service up to a maximum monthly credit of $45. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automatically receive the maximum monihly health insurance credit of $45.

Benefit provisions and eligibility requirements are established by Title 51.1, Chapter 14 of the Code of Virginia. The VRS actuarially determines the amount necessary to fund all credits provided, reflects the cost of such credits in the applicable employer contribution rate pursuant to §51.1-145, and prescribes such terms and conditions as are necessary to cary out the provisions of the health insurance credit program, VR& issues separate financial statements as previously discussed in Note 9.

B. Funding Policy

As a participating local political subdivision, the County is required to contribute the entire amount necessary to fund participation in the program using the actuarial basis specified by the Code of Virginia and the VRS Board of Trustees. The County’s contribution rate forthe fiscal year ended 2010 was 0.14% of annual covered payral

C. OPEB Cost and Net OPEB Obligation:

The annual cost of OPEB under Governmental Accounting Standards Board (GASB) 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, is based on the annual required contribution (ARC). The County is required to contribute the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45, The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years,

Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending Cost (ARC) Contributed Obligation Primary Government: County 6/30/2010 $ 996 100.0% $

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS {CONTINUED) JUNE 30, 201 0

Note 19-0ther Post-Employment Benefits-VRS Health Insurance Credit (continued)

D. Funded Status and Funding Progress

The funded status of the plan as of June 30, 2009, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability {AAL) $ 72,718

Actuarial value of plan assets $ 60,586

Unfunded actuarial accrued liability {UAAL) $ 12,132

Funded ratio {actuarial value of plan assets/AAL) 83.32%

Covered payroll (active plan members) $ 5,559,094

UAAL as a percentage of covered payroll 0.22%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future and reflect a long-term perspective. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

The schedule of funding progress, presented as required supplementary information following the notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations.

E. Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used included techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

The entry age normal cost method was used to determine the plan’s funding liabilities and costs. The actuarial assumptions included a 7.5% investment rate of return, compounded annually, including an inflation component of 2.5%, and a payroll growth rate of 3%. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2009 was 27 years.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 19-Other Post-Employment Benefits-VRS Health Insurance Credit (continued)

D. Funded Status and Funding Progress

The funded status of the plan as of June 30, 2009, the most recent actuarial valuation date, is as follows:

Actuarial acerued liability (AL) $ 72,718 Actuarial value of plan assets $ 60,586 Unfunded actuarial accrued liability (UAL) $ 12,132 Funded rato (actuarial value of plan assets/AAL) 83.32% Covered payroll (active plan members) $ 5,559,094 UAAL as a percentage of covered payroll 0.22%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future and reflect a long-term perspective, Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

The schedule of funding progress, presented as required supplementary information following the notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing overtime relative to the actuarial accrued liability for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations.

E. Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used included techniques thal are designed to reduce short-lerm volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the caleulations.

2.5%, and a payroll growth rate of 3%. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2009 was 27 years.

The remainder of this page is left blank intentionally.

-49-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 19-0ther Post-Employment Benefits-VAS Health Insurance Credit (continued)

F. Professional Employees- Discretely Presented Component Unit School Board

The School Board participates in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is a cost sharing, multiple-employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dollar amount of the health insurance credit for each year of creditable service.

A teacher, who retires under VRS with at least 15 years of total creditable service under the System and is enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $4 per year of creditable service. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automatically receive a monthly health insurance credit of $4 multiplied by the smaller of (i) twice the amount of their creditable service or (ii) the amount of creditable service they would have completed at age 60 if they had remained in service to that age.

The School Board is required to contribute, at an actuarially determined rate, the entire amount necessary to fund participation in the program. The current rate is 1.04% of annual covered payroll. The School Board’s contributions to VRS for the year ended June 30, 2010 was $22,459 and equaled the required contributions.

Note 20-Reserved/Designated Fund Balance and Restricted Net Assets:

Primary Government: Reserved for:

Coal Road Fund

Designated, Reported in: General Fund for: Honaker Library DARE Funds Sheriff Funds Sheriff Forfeited Assets Commonwealth Altorney’s Forteiled Assets Library Dona lions Danle CDBG Damage Slamp Knox Coal Insurance Law Library Housing

Tolal General Fund Designations

Industrial Development Fund for: Industrial development

Total Primary Government Designations

-50-

$ __ .:,:1 ,5;,;,1 ;;.c4,:.;:13:.:,_4

$ 76,716 83,242 41,341 34,034 49,049 90,511

165,676 8,786

234,538 22,875

7,361

$ ___ 8"-'1-“4,;,:12”-9

$ __ _c1 •c::84:.;:6~,04::.::2c…

$ —“‘2’”-66:…:.0’-', 17;;1

COUNTY OF RUSSELL, VIRGINIA

NoTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010

Note 19-Other Post-Employment Benefits-VRS Health Insurance Credit (continued)

F. Professional Employees ~ Discretely Presented Component Unit School Board

The Schoo! Board participates in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is a cost sharing, multiole-employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dolar amount of the health insurance credit for each year of creditable service.

Ateacher, who retires under VRS with atleast 15 years of total creditable service under the System ands enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $4 per year of creditable service. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automaticaly receive a monthly health insurance credit of $4 multiplied by the smaller of (i) twice the amount oftheir creditable serviee or (i) the amount of creditable service they would have completed at age 60 if they had remained in service to that age.

The School Board is required to contribute, at an actuarially determined rate, the entire amount necessary to fund parlicipation in the program, The current rate Is 1.04% of annual covered payroll. The School Board!s contributions to VRS for the year ended June 30, 2010 was $22,459 and equaled the required contributions.

Note 20-Reserved/Designated Fund Balance and Restricted Net Assets:

Primary Government: Reserved for: Coal Road Fund $ 1,514,134

Designated, Reported in: General Fund for

Honaker Library $ 78718 DARE Funds 83,242 Sherif Funds 44,341 Sherif Forfeited Assets 34,034 Commonwealth Attomey’s Forfeited Assets 49,049 Library Donations 90,511 Dante CDBG 165,678 Damage Stamp 8,786 Knox Coal Insurance 234,538 Law Library 22,875 Housing 7,361 Total General Fund Designations $ 814,129 Industrial Development Fund for: Industrial development $ 1,946,042 Total Primary Government Designations 8 2,660,171

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30,2010

Note 21-Restatement of Beginning Fund Balance/Net Assets:

Primary Government Governmental Business-type

Activities Activities Net Assets, as previously reported $ 19,432,909 $ 3,024,137

Adjustments: Capital assets (8,01 0,246) (4,389)

Accumulated depreciation Net Assets, as restated $ 11,422,663 $ 3,019,748

The remainder of this page is left blank intentionally.

-51-

Component Unit

School Board

$ 19,607,338

149,465

(15,377)

$ 19,741,426

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2010

Note 21-Restatement of Beginning Fund Balance/Net Assets:

Primary Government Component Unit Governmental Business-type Activities Activities ‘School Board

Net Assets, as previously reported = $ 49,432,909 _$ 3,024,137 $ 19,607,338 Adjustments:

Capital assets (8,010,246) (4,389) 149,465,

Accumulated depreciation - - (15,377) Net Assets, as restated $ 11,422,663 $ 3,019,748 $ 19,741,426

The remainder ofthis page is lett blank intentionally

5h.

Required Supplementary Information

Exhibit 11 County of Russell, Virginia

General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances· Budget and Actual

For the Year Ended June 30, 2010

Variance with Bud~eted Amounts Final Budget·

Actual Positive Original Final Amounts (Negative}

REVENUES General property laxes $ 11,856,409 $ 11,856,409 $ 12,841,457 $ 985,048 Other local taxes 4,771,986 4,771,986 4,549,860 (222,126) Permits, privilege lees, and regulatory licenses 34,313 34,313 45,877 11,564 Fines and forfeitures 1,000 1,000 1,049 49 Revenue I rom the use ol money and property 100,000 100,000 61 '156 (38,844) Charges for services 260,317 260,317 281,276 20,959 Miscellaneous 150,200 150,200 62,627 (87,573) Recovered costs 6,490,349 6,490,349 1,158,913 (5,331 ,436) Intergovernmental revenues:

Commonwealth 6,009,970 5,888,672 7,457,973 1,569,301 Federal 2,442,988 2,442,988

Total revenues $ 29,674,544 $ 29,553,246 $ 28,903,176 $ (650,070)

EXPENDITURES Current:

General government administration $ 1,924,151 $ 2,023,957 $ 1,837,926 $ 186,031 Judicial administration 2,236,896 2,293,301 2,213,724 79,577 Public safety 4,600,754 4,717,644 4,100,376 617,268 Public works 4,314,653 4,370,151 3,526,556 843,595 Health and welfare 2,733,725 2,733,725 6,812,493 (4,078,768) Education 5,030,296 5,030,296 4,829,713 200,583 Parks, recreation, and cultural 476,420 499,412 497,417 1,995 Community development 4,101,443 3,289,240 1,557,445 1,731,795 Nondepartmental 289,857 9,095 280,762

Capital projects 3,794,205 3,794,205 2,418,799 1,375,406 Debt service:

Principal retirement 1,375,388 1,375,388 1,747,568 (372,180) Interest and olher fiscal charges 577,230 577,230 757,063 (179,833)

Total expenditures $ 31,165,161 $ 30,994,406 $ 30,308,175 $ 686,231

Excess (deficiency) of revenues over (under) expenditures $ (1 ,490,617) $ (1,441,160) $ (1 ,404,999) $ 36,161

OTHER FINANCING SOURCES (USES) Transfers out $ (112,600) $ (162,057) $ (298,054) $ (135,997) Issuance of general obligation bonds 1,603,217 1,603,217 1,620,000 16,783 Bond premium 129,582 129,582 Issuance of capital leases 306,975 306,975

Total other financing sources and uses $ 1,490,617 $ 1,441,160 $ 1,758,503 $ 317,343

Net change in lund balances $ $ $ 353,504 $ 353,504 Fund balances ·beginning 5,884,658 5,884,658 Fund balances· ending $ $ $ 6,238,162 $ 6,238,162

-52-

County of Russel, Virginia General Fund ‘Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actuat

For the Year Ended June 90, 2010

Exhibit 11

REVENUES ‘General property taxes Other local taxes Permits, privilege fees, and regulatory licenses Fines and friitures Revenue from the use of money and property Charges lor services iscalzneous Recovered costs Infergovernmental revenues:

‘Commonwealth

Federal

Tolal revenues

EXPENDITURES. Cutten: ‘General government administration Jocicial administration Public safoty Public works Health and welfare Education Pat, recreation, and cultural Community development Nondeparimental Capital projects Debt service: Principal retirement Interest and other fiscal charges Total expenditures

Exc9ss (deficiency) ol revenues over (under) expendiiures

OTHER FINANCING SOURCES (USES) Transfers out Issuance of general obigation bonds ‘Bond premium Issuance of capital leases Tolal other financing sources and uses

‘Net change In fund balances Fund balances - beginning Fund balances - ending

Budgeted Amounts

Actual Original inal Amounts

$ 11,886,408 $§ 11,858.408 $§ 12.841457 § 985,048

4719864771986 4,549,860 (222,128)

34313 34,318 4587 11566

4,000 4,000 4.049 49

100,000 100,000 61.156 (98.48)

2605317 280,317 281.276 20,959

150,200 150,200 62827 (67.573)

649049 6,480,948 1,158,913 (6,831,438)

6009970 5.888672 7,487,978. 4,569,301

2.442.988 2.442.988

3 Baris S wa SERRIE FS PH.903.176 $ (650.070)

$ 1.904151 $ 2023957 $ 1.997.926 $ 186,031

2238808 = 2,290,501 2.219,724 787

4600754 = 4.717844 = 4,100,576, 617,268

4314853 4,870,151 3,526,556 843,595

2793725 «2.733725 «6,812,498, (4.078.768)

91090,296 5080.28 4829719 200,583

476,420 499,412 497.417 1.995

4101443 9.289.240, 1.957.445 4,781,795

: 289,857 9.095 200,762

3.794205 3.794205 2,418,799 1.375.408

1,375,388 4,975,988 1,747,588 (372,180)

577,230 877.230 757.083 (179.839)

S_3i,165,161_§ 90,994,408 5 90,908,175 § 686.231

S__ (1.490617) S$ (1.441.160) $ (1,404,900) § 35,161

$ (112,600) $ (182057) $ (298.054) § (195,997)

1603.217 4608,217 4,620,000 16,783

: : 1293582 129,582

- 308,975 308,975

5am SaaS 1 758.509 F 738,

8 “8 + $ 353.506 $ 959,504

: = 584,658 5,884,658

a = = 36,258,162 §__ 6,238,162

County of Russell, Virginia Special Revenue Fund • Industrial Development Fund

Schedule of Revenues, Expenditures, and Changes in Fund Balances • Budget and Actual For the Year Ended June 30, 2010

Bud~eted Amounts Actual

Original Final Amounts REVENUES Revenue from the use of money and property $ $ $ 3,397

Excess (deficiency) of revenues over (under) expenditures $ $ $ 3,397

Net change in fund balances $ $ $ 3,397 Fund balances- beginning 1,842,645 Fund balances- ending $ $ $ 1,846,042

-53·

Exhibit 12

Variance with Final Budget·

Positive (Negative}

$ 3,397

$ 3,397 1,842,645

$ 1,846,042

Exhibit 12 County of Russell, Virginia Spocial Revenue Fund - Industrial Development Fund, Schedule of Revenues, Expenditures, and Changes in Fund Balances « Budget and Actual For the Year Ended June 30, 2010

Variance with Budgeted Amounts Actual Positive Original Final Amounts Negative)

REVENUES

Revenue from the use of money and property $ 3 -$ 3307_$ 3397 Excess (deficiency) of revenues over (under) expenditures. $ -$ $ 3397$ 3,397. Net change in fund balances $ -§ -$ 3397 $ 3,307 Fund balances - beginning ~ = 1,842,645 1,842,645,

Fund balances - ending ii =s 3186.04 $1845.08

County of Russell, Virginia Special Revenue Fund· Coal Road Fund

Schedule of Revenues, Expenditures, and Changes in Fund Balances· Budget and Actual For the Year Ended June 30, 2010

REVENUES Other local taxes Revenue from the use of money and property

Total revenues

EXPENDITURES Current:

Public works

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers in

Net change in fund balances Fund balances- beginning Fund balances- ending

-54-

Bud~eted Amounts Actual

Original Final Amounts

3,075,000 $ 3,075,000 $ 1,573,947 $ 8,226

3,075,000 $ 3,075,000 $ 1 ,582,173 $

3,075,600 $ 3,075,600 $ 1,964,876 $

(600) $ (600) $ (382,703) $

600 $ 600 $ $

$ $ (382,703) $ 1,896,837

$ $ 1,514,134 $

Exhibit 13

Variance with Final Budget·

Positive (Negative)

(1 ,501 ,053) 8,226

(1 ,492,827)

1,110,724

(382,103)

(600)

(382,703) 1,896,837 1,514,134

Exhibit 13 County of Russel, Virginia Special Revenue Fund - Coal Road Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2010

Variance with Budgeted Amounts Final Budget - Actual Positive Original al Amounts (Negative REVENUES Other local taxes $ 3075000 $ 3.075.000 $ 1,573,947 $ (1,501,053) Revenue from the use of money and property - - 8,226, 8,226 Total revenues 53075 000_S__ 3.075 000_F 1582173 F (1,492,827) EXPENDITURES Current:

Public works $3075.00 _$ 3,075.60 $1,964876 $1,110,724 Excess (deficiency) of revenues over (under) expencitures $ (600) $ (600) $ (982,703) $ (382,103) OTHER FINANCING SOURCES (USES)

Transfersin $ 600_§ 600_$ $8 (600) Net change in fund balances $ “8 = $ (382,703) $ (982,703) Fund balances - beginning : : 4,896,837 11896,897

Fund balances - ending 5 _s — 31514394 1514, 134

County of Russell, Virginia Special Revenue Fund -Rental Assistance Fund

Schedule of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual For the Year Ended June 30, 2010

REVENUES Intergovernmental revenues:

Commonwealth

EXPENDITURES Current:

Health and welfare

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers in

Net change in lund balances Fund balances- beginning Fund balances- ending

Budgeted Amounts

$ 86,397 $

$ $

-55-

86,397 $

94,391 $

(7,994) $

7,994 $

Actual Amounts

37,617 $

94,441 $

(56,824) $

43,326 $

(13,498) $ 13,498

Exhibit 14

Variance with Final Budget

Positive (Negative)

(48,780)

(50)

(48,830)

35,332

(13,498) 13,498

‘Schedule of Revenues, Expe

County of Russell, Virginia Special Revenue Fund - Rental Assistance Fund

res, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2010

Exhibit 14

REVENUES Intergoveromental revenues: Commonweath

EXPENDITURES. Current Health and welare

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Translrs in

Not change in fund balances Fund balances - begining Fund balances - ending

Variance with Budgeted Amounts Final Budget - Actual Positive

rina Final ‘Amounts (Negative 3 86397 es § o7si7 8 (48,780) S$ 86597 e4got $ o4aet_§ (50) 8 : (7.994) $_ (66,824) $ (48,890) $ : 79% $4392 § 95,932 $ . = $ (13,498) $ (19,499),

: 13.498 13498

z = =s 5 o

Exhibit 15 County of Russell, Virginia

Required Supplementary Information

Schedules of OPEB and Pension Funding Progress For the Year Ended June 30, 2010

Priimary Government

County Retirement Plan:

Actuarial Actuarial Unfunded Funded Ratio Annual UAAL as a Valuation Value of Accrued AAL (UAAL) Assets as% Covered %of Covered

as of Assets Liability (AAL) 131·121 of AAL (21/131 Payroll Pa1roll (4)/(6) (1) (2) (3) (4) (5) (6) (7)

June 30, 2009 $ 19,933,712 $ 23,803,518 $ 3,869,806 83,74% $ 5,559,094 69.61% June 30, 2008 19,979,433 22,063,871 2,084,438 90,55% 5,013,469 41.58% June 30, 2007 18,329,611 18,933,887 604,276 96.81% 5,121,001 11.80%

County Other Postemployment Benefits-Health Insurance:

Actuarial Actuarial Unfunded Funded Ratio Annual UAAL as a Valuation Value of Accrued AAL (UAAL) Assets as% Covered %of Covered as of(') Assets Liability (AAL) (3). (2) of AAL (211131 Payroll Pa1roll(41/(6)

(1) (2) (3) (4) (5) (6) (7)

July 1, 2008 $ $ 546,570 $ 546,570 0.00% $ 4,198,697 13.02%

County Other Postemployment Benefits-VAS Health Insurance Credit:

Actuarial Actuarial Unfunded Funded Ratio Annual UAAL as a Valuation Value of Accrued AAL (UAAL) Assets as% Covered %of Covered

as of Assets Liability (AAL) (3)· (2) of AAL 121/131 Pa~roll Pa1roll (4)/(6) (1) (2) (3) (4) (5) (6) (7)

June 30, 2009 $ 60,586 $ 72,718 $ 12,132 83.32% $ 5,559,094 0.22% June 30, 2008 75,699 132,923 57,224 56.95% 5,013,469 1.14% June 30, 2007 52,044 136,250 84,206 38.20% 5,121,001 1.64%

Discretely Presented Component Unit:

School Board Non-Professional Retirement Plan:

Actuarial Actuarial Unfunded Funded Ratio Annual UAAL as a Valuation Value of Accrued AAL (UAAL) Assets as% Covered %of Covered

as of Assets Liability (AAL) (3)· (2) of AAL (211131 Payroll Payroll (4)/(6) (1) (2) (3) (4) (5) (6) (7)

June 30, 2009 $ 10,588,117 $ 14,751,035 $ 4,162,918 71.78% $ 2,878,696 144.61% June 30, 2008 10,678,577 13,994,136 3,315,559 76.31% 2,603,882 127.33% June 30, 2007 9,884,747 13,292,383 3,407,636 74.36% 2,477,872 137.52%

School Board Other Postemployment Benefits-Health Insurance:

Actuarial Actuarial Unfunded Funded Ratio Annual UAALas a Valuation Value of Accrued AAL (UAAL) Assets as% Covered %of Covered as of(') Assets Liability (AAL) 131· (2) of AAL (21/131 Payroll Payroll (4)/161

(1) (2) (3) (4) (5) (6) (7)

July 1, 2008 $ $ 3,755,059 $ 3,755,059 0.00% $ 24,186,441 15.53%

·only one year available

-56-

County of Russet, Viginia Required Supplementary Information

‘Schedules of OPEB and Pension Funding Progress For the Year Ended June 30,2010

Exhibit 1s

Primary Goveroment County Retirement Plan: Actuarial ‘Actual Uniinded Funded Rio Annual UMLasa Veluaton Value of ‘Acctwod ——AAL(UAAL)-—Asse’s 5% —Covarad— of Covered ascot Assois__Uablly MAL) _@)+@)___ofAAL VQ) Payrol—_Payrot ay). 0) @ @) 4 ® @ o june 30,2009 $ 19999,712 § 29009518 $ 3850806 BATE ©—«§ <SESBOD BETTE sine 90,2002 19978438 «2089T! 208440890 55%, 5013489 «4158% sjme0,2007 tggaget1 —1899,887 604778 988% BAZLO01 11.80% (County Other Posterploymant Beefs Health Insurance Actuarial Actual —-—«Unlunded-=—=— ‘Funded Ratio. Annual UaALasa Vaan Value of Accrued AL (UAAL)-—Aselsas% Covered «=o Covered asolf) Assets ___Liaity (MAL) (@)-@)—_oL AL (2/9) Payrol—_Payrot 6) @ @ @ @ cy @ tt) yt, 2008 S$ 545570 $ 54857 00H $4 1986071002% ‘County Cer Postenployment Benefis-VRS Heath nscance red ‘Actual Auaral Uniunded — Fundad Ratio Annual UaALasa Vahiation Valve of Accuad AL (UAAL)-—Asselsas% © Covered-—«Ss of Covered ascot Assets _Liaily (AL) _(S)-@) of AAL(2V(9),Payeol—_Pyrol 6) o a i) @ @ ® a June 90,2008 $ © «8088 «§ «TTB «$1252 BMH «$5889 05 ORTH June 90,2008 75,690, 192928 S728 56.5% 5013489148 June 80, 2007 52.046 196280 84205 8.20% 5.121001 168% Diseretely Presented Component Uni: ‘Schoo! Board Non Polesionl Retirement Pan Aaluail ‘cual Unfunded “Funded Ratio’ Annual AKL Valuation Value of ‘Accrued —«AAL(UAAL)-—ASselv 3% Covered. of Covered asf Assels __ably (RAL) (@)-2)—_of AL (2619), Payrol—_Payrl (26) a @ @ a @ @ a une 90,2009 $ 10588,117 § 14751095 $.4,t62918 —TH.7B «$2,878,606 ada vlne 80,2008 «10878577 «18,904,198 «3.815559 6.81 2803882 127.9%, slune 30,2007 gee4ra7 19,200,989 307695 TA. 2ATTBI.—18782% ‘Schoo! Board Over PostemploymentBenelis Health insurance elu ‘Actual Uniunded Funded Ratio Annual UMALas2 Valuation Value of ‘Acctued ——AAL(UAAL)-—Assais2s% Covered Sof Covered asoiC) Assels__Uabéty (MAL) @)-@) of AAL (243). Paysoll—_Payrl a6) @) @ a) @ @ } a shy 3.20088 $ 9785059 $.3755059 00K $24,641 «185

“Only one yer avaible

56-

Other Supplementary Information

DISCRETELY PRESENTED COMPONENT UNIT- SCHOOL BOARD

MAJOR GOVERNMENTAL FUNDS

School Operating Fund- The School Operating Fund is a special revenue fund that accounts for the operations of the County’s school system. Financing is provided by the State and Federal governments as well as contributions from the General Fund.

DISCRETELY PRESENTED COMPONENT UNIT - SCHOOL BOARD.

MAJOR GOVERNMENTAL FUNDS

‘Schoo! Operating Fund - The School Operating Fund is a special revenue fund that accounts for the operations of the County’s school system. Financing is provided by the State and Federal governments as well as contributions from the General Fund.

ASSETS Cash and cash equivalents Receivables (net of allowance

Accounts receivable Due from other governmental units

Total assets

LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable Salaries payable

Total liabilities

Fund balances: Unreserved:

Designated balances Total fund balances

County of Russell, Virginia Balance Sheet

Discretely Presented Component Unit- School Board June 30, 2010

Total liabilities and fund balances

Amounts reported for governmental activities in the statement of net assets (Exhibit 1) are different because:

Total fund balances per above

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Long-term liabilities, including early retirement incentives, are not due and payable in the current period and, therefore, are not reported in the funds.

Net assets of governmental activities

-57-

$ $ $

Exhibit 16

School Operating

Fund

1,879,511

82,221 1 ,681 ,471 3,643,203

618,225 980,529

1,598,754

2,044,449 2,044,449 3,643,203

2,044,449

17,808,434

(1 ,064,578)

18,788,305

Exhibit 16

County of Russel, Virginia Balance Sheet Discretely Presented Component Unit - School Board June 30, 2010 School Operating Fund ASSETS Cash and cash equivalents $ 4,879,511 Receivables (net of allowance ‘Accounts receivable Due from other governmental units Total assets 3 LIABILITIES AND FUND BALANCES ‘Liabilities: ‘Accounts payable $ 618,225 Salaries payable 960,529 Total liabilities: $ 4,598,754 Fund balances: Unteserved: Designated balances: $ 2,044,449 Total fund balances $ 2,044,449 Total iabilies and fund balances 5 3613,203

Amounts reported for governmental activites in the stalement of net assets (Exhibit 1) are different because:

‘Total fund balances per above $2,048,449 Capital assets used in governmental activities are no financial resources and, therefore,

are not reported inthe funds, 17,808,434 Long-term labile, including earty retirement incentives, are not due and payable in the current

period and, therefore, are not reported inthe funds. (1,064,578) Net assets of governmental activities, 76,788,505

5T-

County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balances

Governmental Funds . Discretely Presented Component Unit. School Board For the Year Ended June 30,2010

REVENUES Revenue from the use of money and property Charges for services Miscellaneous Recovered costs Intergovernmental revenues:

Local government Commonwealth Federal

Total revenues

EXPENDITURES Current:

Education

Excess (deficiency) of revenues over (under) expenditures

Net change in fund balances Fund balances· beginning Fund balances· ending

Amounts reported for governmental activities in the statement of activities (Exhibit 2) are different because:

Net change in fund balances· total governmental funds· per above

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds.

Change in net assets of governmental activities

-58-

Exhibit 17

School Operating

Fund

$ 1,500 717,272 230,840 573,948

4,782,213 26,283,660 7,634,140

$ 40,223,573

$ 41,018,862

$ (795,289)

$ (795,289) 2,839,738

$ 2,044,449

$ (795,289)

(17,183)

(140,649)

$ (953, 121)

Exhibit 17 County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds - Discretely Presented Component Unit- School Board For the Year Ended June 30, 2010

School Operating Fund

REVENUES: Revenue from the use of money and property $ +1500 Charges for services 7272 Miscellaneous: 230,840 Recovered costs 573,948 Intergovernmental revenues:

Loca government 4782213,

Commonwealth 26,283,660

Federal 7,834,140

Total revenues 40,223,573

EXPENDITURES Curent

Education $ 41,018,862 Excess (deficiency) of revenues over (under)

expenditures (795,269) Net change in fund balances $ (796,289) Fund balances - beginning 2,839,738,

Fund balances - ending

Amounts repotted for governmental actives in the statement of acts (Exhibit 2) are diferent because: ‘Net change in fund balances - total governmental funds - per above $ (795,289) Governmental funds report capital outlays as expenditures. However, in the statement of

~2ctvtes the cost of those assets is allocated over thelr estimated useful ives and reported

‘as depreciation expense. This is the amount by which the capital outlays exceeded depreciation in

the current peso. (17,183)

Some expenses reported in the statement of activites do not require the use of current financial resources and, therefore are not reported as expenditure in governmental funds. (140,649)

Change in net assets of governmental activities

~58-

County of Russell, Virginia Schedule of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual

Discretely Presented Component Unit- School Board

REVENUES Revenue from the use of money and property Charges for services Miscellaneous Recovered costs Intergovernmental revenues:

Local government Commonwealth Federal

Total revenues

EXPENDITURES Current:

Education

Excess (deficiency) of revenues over (under) expenditures

Net change in fund balances Fund balances- beginning Fund balances- ending

For the Year Ended June 30, 2010

School Operating Fund

Budgeted Amounts Original Final Actual

$ 50,318 $ 50,318 $ 1,500 $ 791,844 791,844 717,272 152,046 152,046 230,840 414,642 414,642 573,948

4,982,796 4,982,796 4,782,213 28,227,545 28,250,045 26,283,660 8,565,005 9,477,329 7,634,140

$ 43,184,196 $ 44,119,020 $ 40,223,573 $

$ 43,184,196 $ 44,119,020 $ 41,018,862 $

$ $ $ (795,289) $

$ $ $ (795,289) $ 2,839,738

$ $ $ 2,044,449 $

-59-

Exhibit 18

Variance with Final Budget

Positive (Negative)

(48,818) (74,572) 78,794

159,306

(200,583) (1 ,966,385) (1 ,843, 189) (3,895,447)

3,100,158

(795,289)

(795,289) 2,839,738 2,044,449

Exhibit 18 County of Russell, Virginia Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Discretely Presented Component Unit - Schoo! Board For the Year Ended June 30, 2010

School Operating Fund Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Revenue from the use of money and property 8 50318 § 50,318 § 1,500 $ (48,818) Charges for services 791,844 791,844 717,272 (74572) Miscellaneous 152.046 152,046 230,840 73,798 Recovered costs 414642 414,642 573,948 159,306 Intergovernmental revenues: Local government 4,982,796 4,982,798 4.782.213 (200,583) ‘Commonwealth 28,227,585 28,250,045 26,283,660 (1,986,385) Federal 8,565,005 9,477,328 7,634,140 (1,843,189) Tolal revenues 5 4104.16 F44,119020 F 40,223.573 F (3.805.447) EXPENDITURES Curent Education $43,184,198 $ _44,119.020 $ 41,018,862 § 3,100,158

Excess (deficiency of revenues over (under)

expenditures $ $ -$ (795,289) $__ (795,268) Net change in fund balances: § +8 “$8 (795,289) $ (795,289) Fund balances - beginning : - 2,839,738. 2,839,738 Fund balances - ending g _$ = S204 SF 2,084,449

Supporting Schedules

County of Russell, Virginia Schedule 1 Schedule of Revenues· Budget and Actual Page 1 of 6

Governmental Funds For the Year Ended June 30,2010

Variance wi!h Final Budget·

Original Final Positive Fund. Major and Minor Revenue Source Budget Budget Actual (Negative)

General Fund: Revenue from local sources:

General property taxes: Real Property Tax $ 5,317,663 $ 5,317,663 $ 6,229,645 $ 911,982 Real and Personal PSC Tax 1,410,000 1,410,000 1,583,060 173,060 Personal Property Tax 2,468,279 2,468,279 2,056,106 {412,173) Mobile Home Tax 109,737 109,737 105,965 {3,772) Machinery and Tools Tax 1,535,941 1,535,941 1,556,747 20,806 Merchants Capital 34,789 34,789 26,942 {7,847) Mineral Tax 830,000 830,000 929,918 99,918 Penalties 50,000 50,000 135,593 85,593 Interest 100,000 100,000 217,481 117,481

Total general property taxes $ 11,856,409 $ 11,856,409 $ 12,841,457 $ 985,048

Other local taxes: Local Sales and Use Tax $ 1,831,492 $ 1,831,492 s 1,839,057 $ 7,565 Consumers’ Utility Tax 594,960 594,960 593,616 (1,344) Consumption Taxes 85,333 85,333 95,363 10,030 Franchise License Tax 18,443 18,443 Coal Severance Tax 1 ,820,021 1,820,021 1,606,851 {213,170) Grantee tax 115,180 115,180 85,307 {29,873) Motor Vehicle Licenses 325,000 325,000 295,866 {29,134) Taxes on Recordation and Wills 15,357 15,357

Total other local taxes s 4,771,986 $ 4,771,986 $ 4,549,860 $ (222,126)

Permits, privilege fees, and regulatory licenses: Animal licenses $ 1,000 $ 1,000 s 1,515 $ 515 Transfer fees 750 750 793 43 Building permits 32,000 32,000 37,358 5,358 Other permits and other licenses 563 563 6,211 5,648

Total permits, privilege fees, and regulatory licenses $ 34,313 $ 34,313 $ 45,877 $ 11,564

Fines and forteitures: Court fines and forteitures $ 1,000 $ 1,000 $ 1,049 $ 49

Revenue from use of money and property: Revenue from use of money $ 100,000 $ 100,000 $ 61,156 $ 138,844)

Charges for services: Charges for law enforcement and traffic control $ 25,000 $ 25,000 $ $ {25,000) Charges for Commonwealth’s Attorney 1,500 1,500 2,052 552 Miscellaneous jail and inmate fees 3,156 3,156 District court fees 3,045 3,045 Clerk’s collections 852 852 Charges for sanitation and waste removal 164,155 164,155 188,585 24,430 Charges for library 33,617 33,617 10,313 {23,304) Courthouse maintenance fees 6,045 6,045 6,855 810 Courthouse security fees 36,794 36,794 Cannery charges 30,000 30,000 28,897 {1,103) Other charges for services 727 727

Total charges for services $ 260,317 $ 260,317 s 281,276 $ 20,959

-60-

County of Russell, Virginia Schedule 1

‘Schedule of Revenues - Budget and Actuat Page 1 of6 Governmental Funds For the Voor Ended June 30,2010 Variance with Final Budget - Originat Fal Positive Fund, ior and Ninor Revenue Source Budget Budget Atul ‘edative) General Fund: Fevenue fem cal souces: ‘General propary taxes: Fea Properly Tax S 5317883 § 517883 § G2R8I5 § — sT1982 Real and Personal PSC Tax 1,410,900 19001 809}080 173080 Personal Property Tax 2asegTs 2488279 2,058,108. ast) Mobile Home Tax 109,797 105,985 g7n} Machinery and Tools Tax 153511556747 20.806 Merchares Capital 24,709, 25342 aa) Mawal Tax 20,000 ag.aie 99818 Perales 0,000 195593 85590 Intros 100,00, 217A 117888 ola gener! property exes F1as509§__11555.409 6 Tesi as _§ 585046 ther orl teres Local Seles and Use Tax S$ 1B1es2 § 1891892 8 1eaK087 8 7585 (Consumer Uy Tax 594.960, 384860 593516 (34a) Consumption Taxes 85,388 85,059 95,968, 10090 Franchise Lense Tex - - 19483 (Coal Severance Tax genet 120021108851 (213,170) Geant ax 118,160 115,180 85,07 (29870) Molo Vehicle Licenses 825,000 25,000 235,066, (29,138) exes on Recoraton and Wits - - 18357 1537 Total cites cal taxes SSS ara SAGO See es) Permits, pvage fees, and regulatory lenses: ‘nial lconses s 1000 $ 1900 § 1515 8 515 Transer fees 750 750 793 3 Bulking permits 32000 32000 a7ss6 5958 (Other perms and othe oensos 358 583 batt 508 Total perms, privilege fees, and regulatory lenses Saas Sass Sa Fes and foratues Court nes and foroturos 3 4,000 $ 1000 $ 1988 8, mn ‘Revenue rem use of manoy and popery: avenue kom use of money S$ 1oo.000 § 00009 $6158 $___isag4e) Charges or sarvies: ‘Chargas fo iaw onforemant and vate cont S 25000 § 25.000 $ $ CChargas for Coronas Attorney 1500 1500 2062 isceleneous jal and inmate fees : : 5358 Dist court eas : - 3.045, ters colectons : 152 Charges or saraaton and waste removal 164,355, 168,155 188 95 ‘Charges oc ibrary 23617 39817 19313 (es.a0e) Courtouse maintenance foes 604s 5015 8.855, B10 Gouthouse sunt ees : - 35,708 95794 ‘Camary charges 30,000, 30000, 2eeo7 (1109) Other charges tor sonices - - 727 27 Talal charges for senices FS

-60-

County of Russell, Virginia Schedule 1 Schedule of Revenues- Budget and Actual Page 2 of 6

Governmental Funds For the Year Ended June 30, 2010

Variance with Final Budget·

Original Final Positive Fund, Major and Minor Revenue Source Budge! Budget Actual (Negative)

General Fund: (Continued) Revenue from local sources: (Continued)

Miscellaneous revenue: Sale of maps, ordinances $ $ $ 202 $ 202 Donations 14,814 14,814 Miscellaneous other 150,200 150,200 8,911 (141,289) Sale of property/surplus 38,700 38,700

Total miscellaneous revenue $ 150,200 $ 150,200 $ 62,627 $ (87,573)

Recovered costs: Housing Fund s s $ 2,043 $ 2,043 Telephone 4,223 4,223 Extradition expense 1,875 1,875 Recovered Cost - Social Services 20,000 20,000 430,353 410,353 Recovered Cost - Health Department 42,407 42,407 137,231 94,824 Recovered Cost- Tax Collections 121,295 121,295 8,700 (112,595) Recovered Cost- Sheriff 4,500 4,500 92,959 88,459 Insurance recoveries 41,376 41,376 Restitution 4,161 4,161 Recovered Cost • Alcohol Safety 323,366 323,366 4,880 (318,486) Recovered Cost • Regional Jail 70,737 70,737 Recovered Cost • Workforce Investment 3,017,264 3,017,264 265,050 (2,752,214) Recovered Cost· Swords Creek 261,517 261,517 (261,517) Recovered Cost - Industrial 2,700,000 2,700,000 94,951 (2,605,049) Other Recovered Costs 374 374

Total recovered costs $ 6,490,349 $ 6,490,349 $ 1,158,913 $ (5,331 ,436)

Total revenue from local sources $ 23,664,574 $ 23,664,574 $ 19,002,215 $ (4,662,359)

Revenue from the Commonwealth: Noncategorical aid:

ABC profits $ 29,000 $ 29,000 $ $ (29,000) Wine taxes 30,000 30,000 (30,000) Motor vehicles carriers’ tax 115,862 111,734 (4,097) (115,831) Mobile home titling tax 122,000 122,000 100,228 (21,772) Motor vehicle rental lax 2,445 2,445 Communications tax 966,384 966,384 901,430 (64,954) State recordation tax 18,914 17,828 28,442 10,614 Personal property tax relief act funds 1,299,170 1,299,170 1,437,003 137,833

Total noncategorical aid $ 2,581 ,330 $ 2,576,116 $ 2,465,451 $ (110,665)

Categorical aid: Shared expenses:

Commonwealth’s attorney 231,426 $ 223,172 $ 303,360 $ 80,188 Sheriff 1,185,044 1,130,793 1,199,750 68,957 Commissioner of revenue 133,741 131,302 147,635 16,333 Treasurer 138,408 135,788 118,496 (17,292) Medical examiner 400 400 (400) Registrar/electoral board 67,670 65,340 46,621 (18,719) Clerk of the Circuit Court 279,961 274,392 243,565 (30,827) Total Shared Expenses $ 2,036,650 $ 1,961,187 $ 2,059,427 $ 98,240

Other categorical aid: Victim witness grant $ 22,222 $ 22,222 $ $ (22,222) E911 Grant 94,170 94,170 73,832 (20,338) School resource officer 29,586 29,586 GIS 27 27 Law enforcement grants 1,300 1,300 Asset forfeiture funds 70,620 70,620

-61-

County of Russel, Virginia Schedule 4

Schedule of Revenues - Budget and Actual Page 20f6 Governmental Funds For the Year Endod June 30,2010 Variance with Final Budget - Original Final Positive f and Minor Hever Budget Budaet Actual (Mesativel ‘General Fund: (Continued) verve tamloca sources: (Continued) Mscaaneous venue: ‘Sale ol maps, ordinances 8 8 5 202 § Donations : : tape ‘Misealaneous eter 180200 150200 89it Sale of propertyisuphs - : 33.700, Toil miscslaneous reverue 5S 0 ‘Recovered costs: Housing Fund 8 “8 “8 20s 2088 “Teaphone : : 4203, 4223 Esration expense - 1.875 1875 Facavered Cost - Socil Servioes 20.000 20000 490.58, 410353, Recavered Cost Hells Deparment 22407 42407 137231 94,824 Fecavered Coat Tax Coletions 121298 121295 700 (112586) Recovered Cost Seti 4500, 4500 92.958 an. Insurance recoveries : : 41376 Restiuton : 4161 438 Recovered Cost Alc! Salty 823.966 23.358 4500 (916,486) Recovered Cost Rion ei : 20,737 Tore Recovered Cost - Workiorce Investment spi72es 3.017264 265.000 (BT82.214) Recovered Cost- Swords Crk 281517 261817 : (81517) Recovered Cost: Indust 2qooe 2,700,000, 4961 (2,605,049) Other Recovered Costs : - 3m Ba Toll covered costs ES EY A RSTICES Total venue fom cal sources S$ rosssrs § 23604574 $ 190.215 § (4,652.50) everue ram tha Coneoniveath Noncstegorcal at ABC profs $ 29000 8 28000 § 8 3000) Wine tres 30,000, 30,000, : (0.000 Motor vehicles cari tex 115.862 111794 (soe) (115,834), abil oie lng tax 122,000 122,000 100,228 (e177) tor vericerrtal ax : 25 ‘Communications tex 965,284 986,904 901,490, (e4a5e) Slate recordation ax 19914 17828 28.842 10814 Personal popary iat ot act ands 1208170 1.280,170 4,447 008, 197833 Tota nancategre! ed T2s81880 F576 116 5 Fito 865) Categorical i ‘Sharad expenses: ‘Commonseaits atomoy paige § 223,172 § © 08980 $B Sheri 1188.044 1.190798 1,198,750 8957 ‘Commissioner a revenue 195,741 131/308 147835 19809 Treasurer 136,408 135,788 118496 728) Nodal examiner ‘400 00 : (400) Fegisharfletoral boa erg70 65,340 48621 (719) Clk ofthe Cet Cout 279.961 274360 243.565, (07) Toll Sates Expenses T2065 ST eei.ta7_ 8205047 “F 96200 Other categorical it Vier winess grant Sue § apes = $ — @azza) Ett Grant 9470, 94170 73982 (20.208) ‘Schoo resoues oer : 23.506 29588 os : 2 7 Law enforcement rants : 1300 1.300 Asset foreture funds : 70820 70820

County of Russell, Virginia Schedule 1 Schedule of Revenues· Budget and Actual Page 3 of6

Governmental Funds For the Year Ended June 30, 2010

Variance with Final Budget-

Original Final Positive Fund. Major and Minor Revenue Source Budget Budget Actual fNegatfvel

General Fund: (Continued) Revenue from the Commonwealth: (Continued)

Categorical aid: (Continued) Other categorical aid: (Continued)

EMS grants $ 12,000 $ 12,000 $ 28,646 $ 16,646 Fire Program Funds 35,000 35,000 68,078 33,078 library grants 77,691 74,213 81,639 7,426 Litter control grants 13,500 13,500 11,017 (2,483) Clerk of the circuit court grants 109,500 109,500 4,892 (104,608) Public assistance 440,383 438,766 1,444,378 1,005,612 Comprehensive services act 583,524 547,998 1,058,407 510,409 Other categorical aid 4,000 4,000 60,673 56,673 Total other categorical aid $ 1,391,990 $ 1,351 ,369 $ 2,933,095 $ 1,581,726

Total categorical aid $ 3,428,640 $ 3,312,556 $ 4,992,522 $ 1,679,966

T o\al revenue from the Commonwealth $ 6,009,970 $ 5,888,672 $ 7,457,973 $ 1,569,301

Revenue from the federal government: Calegorical aid:

CDBG grants $ $ $ 244,084 $ 244,084 ARRA • Violence against women 27,093 27,093 Violence againsl women 19,530 19,530 ARRA • Justice assistance grant 72,946 72,946 Library grant to states 4,000 4,000 Emergency management grants 65,361 65,361 DMV ground transportation safety grant 3,720 3,720 Public assistance 1,954,041 1,954,041 ARRA ·Public assislance 52,213 52,213

Total categorical aid $ $ $ 2,442,988 $ 2,442,988

Total revenue from the federal government $ $ $ 2,442,988 $ 2,442,988

Total General Fund $ 29,674,544 $ 29,553,246 $ 28,903,176 $ 1650,0701

Special Revenue Funds: Industrial Development Fund: Revenue from local sources:

Revenue from use of money and property: Revenue from the use of money $ $ $ 3,397 $ 3,397

Total Industrial Development Fund $ $ $ 3,397 $ 3,397

Coal Road Fund: Revenue from local sources:

Other local taxes: Coal road taxes $ 3,075,000 $ 3,075,000 $ 1,573,947 $ 11,501,0531

Revenue from use of money and property: Revenue from the use of money $ $ $ 8,226 $ 8,226

Total revenue from local sources $ 3,075,000 $ 3,075,000 $ 1,582,173 $ 11,492,8271

Total Coal Road Fund $ 3,075,000 $ 3,075,000 $ 1 ,582,173 $ 11,492,8271

-62-

County of Russel Virginia

Schedule 1

Schedule of Revenues - Budget and Actual Page 3of6 ‘Governmental Funds. For the Year Ended June 30,2010 Variance with Final Budget - Original Final Positive Fund. sor and liner Revenue Sour Budgst user Actual (iegativ) General Fund: (Continued) Feverue om he Conrrorwet: (Coninued) ‘Celogocal ald (Continua) ‘her celgorical ait (Continued) ENS grants $ 12000 1200 $ BMS S$ TOR Fe Program Funds 35,000, $5,000, ea078 33078 brary rants T7691 4213 81839 7428 ter conto grants 19500 13500 n017 (2.489) Clerk ofthe cout court ants 109.500 109500, (104608) Public assistance 40.368 498,768 4,006,612 CComprenensivesevies act 589.524 S478 9,066,407 510.409 thar categorical ad 00, 4000 60678 5873 Toll other categorical aid S__Awei.9e0 STG, 968_S 2005 Sra Toll catogorcal id S_saenoun § 3.912885 $ __agensee § 1.670085 Tota revenue rom the Commonwaath S__so0ag70 § _sgensre $ 7457973 $ 1569301 avenue fom the federal government Categorical ait (0086 grants 8 - 3 magose $ — 2a488 -ARRA-Vllence agains! women : 27098, 27.088 Vilance agains! women : 193590 19380 ARRA…usice assistance grant : 7298 7288 Una gantio states : 400 4000 Emergency management grants : 65,361 65.61 ‘ON ground tranporation salty gran : 3720 3720 Pobic assistance sigstas; 9581 ABR - Pub assistance 52219 52.218 Total celepoial aid = 3 2i.se8 = 2.908 Totlsevenue frm he federal government $ 2 $ gavage § _ 24v2.9H8 Total General Fund S$ wonsis § _295ss246 § 26008,178 $650,070) Special Revenue Funds: Industrial Development Fund: venue fom local sources: Revenue kom use ol maney and pope Revenue fromthe use of monay 8 : 8 3397 §__g9o7 otal instal Daelopment Fund $ 8 37 § 9987 (Coat Red Fund: ‘Revenue fom local sources: ‘ther ocala: (Coal road axes S$ 3075.000 $ 3.075.000 $ 1573947 §(1.501,059) venue fr use of maney and property: Fevenue fom the use of money 8 13 ame $ 8276 Total venue cm local sources S$ ___3075,000 $ _3076.000 $1502173 § (1490827) ola Goal Red Fund $075,000 § 3ovs0n0$_1552173 $ (1490827)

62-

County of Russell, Virginia Schedule 1 Schedule of Revenues· Budget and Actual Page 4 of 6

Governmental Funds For the Year Ended June 30, 2010

Variance with Final Budget·

Original Final Positive Fund. Major and Minor Revenue Source Budget Budget Actual {Negative)

Special Revenue Funds: (Continued) Rental Assistance Fund: Revenue from the Commonwealth:

Categorical aid: Rental Assistance Grants $ 86,397 $ 86,397 $ 37,617 $ 148,7801

Total Rental Assistance Fund $ 86,397 $ 86,397 $ 37,617 $ 148,7801

Total Primary Government $ 32,835,941 $ 32,714,643 $ 30,526,363 $ 12,188,2801

Discretely Presented Component Unit· School Board: Special Revenue Funds: School Operating Fund: Revenue from local sources:

Revenue from use of money and property: Revenue from the use of money $ 48,278 $ 48,278 $ $ (48,278) Revenue from the use of property 2,040 2,040 1,500 15401

Total revenue from use of money and property $ 50,318 $ 50,318 $ 1,500 $ 148,8181

Charges for seNices: Cafeteria sales $ 682,214 $ 682,214 $ 572,373 $ (109,841) Tuition payments 6,213 6,213 Drivers Ed fees 14,000 14,000 10,860 (3,140) Other charges for seNices 10,000 10,000 (10,000) Regional Adult Education 75,630 75,630 124,070 48,440 GED Testing fees 10,000 10,000 3,756 16,2441

Total charges for seNices $ 791,844 $ 791 ,844 $ 717,272 $ 174,5721

Miscellaneous revenue: Other miscellaneous $ 152,Q46 $ 152,046 $ 230,840 $ 78,794

Recovered costs: Insurance recoveries $ $ $ 65,173 $ 65,173 Extra duties revenue 23,000 23,000 40,299 17,299 FAPT reimbursememts 30,240 30,240 8,400 (21,840) Dual Enrollment 200,000 200,000 268,242 68,242 Consortium Clerical Sale of Vocational House 22,000 22,000 32,000 10,000 Sale of Equipment and Supplies 20,000 20,000 8,308 (11,692) Reimburse Health SeNices 45,000 45,000 55,300 10,300 Other recovered costs 74,402 74,402 96,226 21,824

Total recovered costs $ 414,642 $ 414,642 $ 573,948 $ 159,306

Total revenue from local sources $ 1,408,850 $ 1,408,850 $ 1,523,560 $ 114,710

Intergovernmental revenues: Revenues from local governments:

Contribution from County of Russell, Virginia $ 4,982,796 $ 4,982,796 $ 4,782,213 $ 1200,5831 Total revenues from local governments $ 4,982,796 $ 4,982,796 $ 4,782,213 $ 1200,5831

Revenue from the Commonwealth: Categorical aid:

Share of state sales tax $ 3,206,345 $ 3,206,345 $ 3,063,177 $ (143,168) Basic Aid 15,607,438 15,607,438 13,996,053 (1,611 ,385) Remedial summer education 224,793 224,793 195,264 (29,529) Regular foster care 14,809 14,809 11,287 (3,522) Gifted and talented 145,833 145,833 144,234 (1,599) Remedial education 486,111 486,111 480,780 (5,331) Enrollment loss 118,373 118,373

-63-

‘County of Russel, Virgina Schedule of Revenues - Budget and Actual Governmental Funds For the Vear Ended June 9, 2010,

Variance with Final Budget - Original Final Positive Fund Maior and Minor Revenve Source Bucget Budget ‘Actual (Negative ‘Special Revenue Funds: (Continued) Rental Assistance Fund: Fevenue fom the Conerenwlt Calagorical ai Renta sistance Grants S__me997 § maga7 set §48,700) etl Rental Assistance Fund S$ 86307 §m97 ss aners 40.700) ola Prinery Government S_soaassu1§ 2714643 § 90596953. § (2.188.200) Diseretely Presented Component Unit- School Board: Special Revenue Funds: School Operating Fund: Revenue fom acl sources: Revenue ton use of maney and propery ‘Revenue tom tha use of money S827 $ aaeTa § -$ 49278) Revenue orn uso of property 2.040 2040 4,500 (640) Talal revue rom use of ney and propery yo hoses sass 7.5003 (asia) Charges for senives: Calor sales S esazre § © eozia $ © -sIzaT9-§—((10aAN) Tuiton payments . : 6213 5213 Drivers Ea fans 1400 10360 (14g) Other charges lor servis 10900 10,000) Regional Aduk Education 75620 124070 48.440 GED Testng fees 3756 (6244) “otal charges for services 5 LEE

Miscellaneous revenue

‘Other miscellaneous $1529 § 152046 § zmpauo § 7a7a Recovored costs: Insurance reooveres $ 8 <8 65173 $65,173 Extra dts revenue 25000 23,000 40288 17298 APT reimbursements 80240 20200 8400 21,880) ual Enralimant 200,000 200,000 a0 242 e322 CConseium Clerical : : : : Sala of Vocational House 22000 22.000 2000 10900 Sale of Equipment end Supplies 20,000 79,000 8.08 (5,632) eenburse Health Senicas 45,000 45,000 55.300 10300 Other recovered costs 74402 7402 965.206 2108 “ota raovered costs Sse gage T Sra S 188 06 “otal revenue ram cal sources S$ 1aoegso § _ 14ogaso $ 1529560 § 114710

lnleqgovernecial revenues: Fevenues rom al governments

‘Contibuen rom County of Fuss, Vigra S__don.705 § 4.900796 § 4780213 $ (gone) Total cevonves fom ical govermanis §hgse.705$49ea 798 $_AyeazIC $ (00583)

Revenue fro bv Cormmonneat:

Categorical ak

‘Share of slate sales tax S 9208885 $ 306385 § —306m,177 $40,168) Basic Aid 15607498 15607498 13,898,059 —_1,811.225) Remedial summer edvaton 724,708 224,788 195,254 (29528) Regular foster care +4300 14309 11287 (522) (Ged and talented 145899, 145,898 a2 (1598), ‘emodal educafon 486,111 485111 -o,7e0 1) Envoleent oes 118378 118373

63-

County of Russell, Virginia Schedule 1 Schedule of Revenues • Budget and Actual Page 5 of 6

Governmental Funds For the Year Ended June 30, 2010

Variance with Final Budget •

Original Final Positive Fund. Major and Minor Revenue Source Budget Budget Actual !Negative)

Discretely Presented Component Unit· School Board: (Continued) Special Revenue Funds: (Continued) School Operating Fund: (Continued) Intergovernmental revenues: (Continued) Revenue from the Commonwealth: (Continued)

Categorical aid: (Continued) Special education s 1,963,890 $ 1 ,963,890 $ 1,942,352 $ (21,538) Textbook payment 384,094 384,094 174,118 (209,976) Career and Technical Education 61,788 61,788 31,127 (30,661) Alternative education 771,602 771 ,602 800,809 29,207 Elementary Alternative Education 2,500 2,500 Algebra readiness 72,038 72,038 64,643 (7,395) Mentor teacher program 4,898 4,898 4,449 (449) Social security fringe benefits 894,445 894,445 884,636 (9,809) Group life 32,407 32,407 22,436 (9,971) Retirement fringe benefits 1,153,704 1,153,704 855,789 (297,915) Early reading inleNention 60,756 60,756 60,756 Adult Education 6,338 6,338 36,160 29,822 Homebound education 81,332 81,332 92,478 11,146 Vocation education 525,000 525,000 604,098 79,098 Advanced placement incentive 78 78 At risk payments 587,708 587,708 570,190 (17,518) Primary class size 675,277 675,277 658,098 (17,179) Technology 400,000 400,000 340,067 (59,933) Jobs for Virginia Graduates 22,500 43,498 20,998 Indus!!)’ Certification Costs 8,739 8,739 At risk four·year olds 427,734 427,734 465,755 38,021 School Food 24,002 24,002 32,138 8,136 School construction 294,486 294,486 (294,486) GED prep programs 15,717 15,717 96,193 80,476 Lotte!)’ payments 370,041 370,041 Tobacco Commission 20,000 20,000 5,309 (14,691) Adult literacy 85,000 85,000 102,000 17,000 Special education· foster care 6,035 6,035

Total categorical aid $ 28,227,545 $ 28,250,045 $ 26,283,660 $ 11 ,966,385)

Total revenue from the Commonwealth $ 28,227,545 $ 28,250,045 $ 26,283,660 $ 11 ,966,385)

Revenue from the federal government: Categorical aid:

Basic Adult Education $ 453,160 $ 453,160 $ 250,726 $ (202,434) Title I 1,568,477 1,568,477 1 ,336,604 (231 ,873) ARRA· Title I 448,400 448,400 295,710 (152,690) Special Education 1,048,208 1,048,208 913,016 (135,192) ARRA • Special Education 446,297 446,297 390,652 (55,645) Title VI·B, preschool 36,198 36,198 (36,198) ARRA ·Title VI·B, preschool 15,029 15,029 35,825 20,796 Vocational education 101,391 101,391 101,391 Drug free schools 23,834 23,834 5,005 (18,829) School Food Program 1,031,129 1,031,129 1,229,829 198,700 ARRA. School Food Program Equipment 30,300 30,318 18 Fresh fruit and vegetable program 7,704 6,674 (1,030) WIA youth activities 11,197 11,197 WIA adult activities 57,000 57,000 Title II 327,208 327,208 334,477 7,269 Even start 357,733 357,733 233,098 (124,635)

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County of Russel Virginia Schedule 1 ‘Schedule of Rvenues - Budget and Actus] Page 5 0f6 Goveramental Funds For the Voor Endod June 30,2010

Variance with Final Budget -

Original Fiat Positive

Fund Hajar and tinge source Busoet Budgot Setual {Negative

Diseretely Presented Component Unit - School Board: (Continued) Special Rovenue Funds: (Continued) School Operating Fund: (Continued) Intergovernmental revenues: (Continosd) Feverue rom the Comnonveat: (Cortinued) Categorical ait: (Continued)

‘Spectl education S 19899800 § tags § (21838) Textoook payment 384,094 174,18 (202.76) Career and Tocizal Eduction 81,788 3107 (90.551) ‘erat education Tiga 00,808 29207 Elementary Ateroalve Educallon : 2500, 2500 ‘Ageba readiness 72038 e848 (7998) Menlo teacher program 4998 4469 (949) ‘Sovilsecuy fing benefits andes 84,696 (9.209) ‘Goop lite 2407 407 22638 (e971) Fesrementrnge benefits 4153708 1,383,704 955,788, 237815) Eatly acing iterention 60758 80.786, 0,758 : Adult Education 6398 6936 35,160, 2g Homnebound edeaton 81.02 81,382 e278 11148 Vocation edueaton 25,000 26,000 e098 088 Advanced placement incentive : % 8 Attic payments 587,708 87,708 570,390 (7518) Primary class size ersar 675,277 650,008 (779) Technology 400,000 400,000 (69383) obs for Vigiis Graduates : 22.500, 20.998 Industry Cedieaton Costs : : 3730 ‘Asik foueyear ods e778 27796 aaoat Schoo! Food 24002 24.002 8,186 School contruction 2306 254.486 (236 488) {GED prop programs 187 1817 5 90476 Lotery payments . 70.41 S701 “Tobacco Commission 20,000 20,000 5308 114831) Aauititeacy 5,000 85,000 102,00 17900 ‘Special education foster owe : - 6.035, 8.035,

otal categorical ld SCTE AEBSO NE 8 PRR GHD_S 11965.565)

Teal evenue om the Conenenwlth 820227845 § 2m250,045 § 26280600 § (1.966.805)

Revenue tom he federal goverment Categorical i

Basic Aduit Education S 459160 § 453,160 $5075 § Tale 1siear7 4865477 106,804 (231,873) ARRA-Tilo| "48,400 “49,400 295,710 (152660) ‘Special Education 1.048208 1,048,208 sr9.018 135,192) APRA - Spoil Education 488.297 48,287 an0.2 (65,8585) Tie WB, preschoo! 8198 36,188 : (65.198) ARR. Tile VB, preschoo! 15023 15/009 25,805 20796, \Voratonal education 101391 101,991 101391 - Drug te schoo 2354 25,884 5,005, (18.08) Scio! Food Program 031,129 101,128 ,209820 198,700 ARRA.- School Foed Program Equipment - 30,300 90.18 8 Fresh ul and vegetable progtam 7704 8574 (1,00) ‘WMA youth actives - : 11,97 tis7 Wt adult aves - : 37,000, 57.000 Tee # 27208 37208 sudan? 7258 Even stat 357738, 957758, 256.008 128835)

64-

County of Russell, Virginia Schedule 1 Schedule of Revenues- Budget and Actual Page 6 of 6

Governmental Funds For the Year Ended June 30,2010

Variance with Final Budget -

Original Final Positive Fund. Major and Minor Revenue Source Budget Budget Actual INegativel

Discretely Presented Component Unit- School Board: (Continued) Special Revenue Funds: (Continued) School Operating Fund: (Continued) Intergovernmental revenues: (Continued) Revenue from the federal government: {Continued)

Categorical aid: (Continued) 21st century grant $ 952,181 $ 1,826,501 $ 985,091 $ (841,410) ARRA ·State fiscal stabilization funds 1,695,268 1,695,268 1,203,591 (491 ,677) Learn and serve america 22,709 22,709 24,150 1,441 Rural and low income schools 22,355 22,355 Reading first grant 57,056 57,056 REMS 64,067 64,067 ARRA . Educational technology 19,750 19,750 Educational technology 37,783 37,783 26,558 (11,2251

Total categorical aid $ 8,565,005 $ 9,477,329 $ 7,634,140 $ 11,843,189)

Total revenue from the federal government $ 8,565,005 $ 9,477,329 $ 7,634,140 $ 11,843,189)

Total Discretely Presented Component Unit- School Board $ 43,184,196 $ 44,119,020 $ 40,223,573 $ p,895,4471

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‘County of Russel, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 6 of6 ‘Governmental Funds For the Veer Ended June 30,2010

Variance with Original Final Fund, alo Budget Budaet Actual Diseretely Presented Component Unit School Board: (Continued) Special Revenue Funds: (Continued) ‘School Operating Fund: (Continued) Infegovernmental revenues: (Continued) Fevenve fom te federal govement (Conte) Categorical al: (Continued) 2s century grant S 962181 § 1826501 $ BBO § © feATAIO [ARR Slate tcl sabiization funds 1995,268 4,209,581 (991.877) eam and serve america 22708 24,150 test Fura and low nce schools : 22.55 2285 eading tt grant : 57058, 57.058, Rens - : 64.067 e067 [ARR Educational technology 19780 19,750 Evcatona technology 3778, 37,788 26556 1225) Total celegorical aid EBs 005 §__Gari.ges §_7esa tao Ses, f09) Total venue rom h federal goverment $9586.00 § 9477929 $ 7604140 $ (1.848,169) ola Discretly resanied Component Uni: School Board 845,184,105 $44,119,000 § 4020573 $(3805,447)

County of Russell, Virginia Schedule 2 Schedule of Expenditures· Budget and Actual Page 1 of4

Governmental Funds For the Year Ended June 30, 2010

Variance with Final Budget-

Original Final Positive Fund. Function. Activity and Element Budget Budget Actual (Negative)

General Fund: General government administration:

Legislative: Board of supervisors $ 214,297 $ 276,045 $ 270,259 $ 5,786

General and financial administration: County administrator $ 392,579 $ 393,357 $ 520,604 $ (127,247) Independent auditor 66,395 100,334 63,834 36,500 Commissioner of the revenue 298,423 298,423 300,417 (1,994) Real estate assessor 153,115 153,115 60,033 93,082 Real estate assessment 50,000 50,000 50,000 Treasurer 387,977 387,977 366,556 21,421 Auto decals 37,350 37,350 24,209 13,141 Data processing 115,338 115,338 73,789 41,549

Total general and financial administration $ 1,501,177 $ I ,535,894 $ I ,409,442 $ 126,452

Board of elections< Electoral Board $ 89,407 $ 92,748 $ 59,388 $ 33,360 General Registrar 119,270 119,270 98,837 20,433

Total board of elections $ 208,677 $ 212,018 $ 158,225 s 53,793

Total general government administration $ I ,924,151 $ 2,023,957 $ I ,837,926 $ 186,031

Judicial administration: Courts:

Circuit Court s 114,147 $ 114,147 $ 104,157 $ 9,990 General District Court 16,200 16,200 10,938 5,262 Special Magistrates 15,400 15,400 8,881 6,519 Probation Office 131,800 137,907 136,711 1,196 Clerk’s Office 385,589 385,589 354,632 30,957 Sheriff Civil and Court 1,084,304 I ,115,428 1,127,786 (12,358) Law Library 5,299 5,299

Total courts $ I ,747,440 $ I ,784,671 $ I ,748,404 $ 36,267

Commonweallh’s attorney: Commonweallh’s Attorney $ 467,234 $ 477,284 $ 433,630 $ 43,654 Victim Witness Grant 22,222 31,346 31,690 (344)

Total commonwealth’s attorney s 489,456 $ 508,630 $ 465,320 $ 43,310

Total judicial administration $ 2,236,896 $ 2,293,301 $ 2,213,724 $ 79,577

Public safety: Law enforcement and traffic control:

Sheriff $ I ,653,393 $ I ,656,452 $ I ,427,985 $ 228,467 Dare program 4,275 5,244 2,250 2,994

Total law enforcement and traffic control $ I ,657,668 $ I ,661,696 $ I ,430,235 s 231,461

Fire and rescue services: Volunteer Fire Departments $ 242,391 $ 242,391 $ 329,612 $ (87,221) Ambulance Rescue Squad 170,575 218,424 218,423 1

Total fire and rescue services s 412,966 $ 460,815 $ 548,035 $ (87,220)

Correction and detention: Operation of Jail $ 1,249,255 $ 1,312,218 $ 1,248,253 $ 63,965

Inspections: Building inspector $ 147,274 $ 147,274 $ 106,385 $ 40,889

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County of Russel Vigna Schedule 2 ‘Schedule of Expenditures - Budget and Actual Pago 1 of 4 Governmental Funds For the Vear Ended June 30,2010 Variance with Final Budget - Origins! Final Positive Fund, Function, Astivty ang Element Budget Budget Actual (iegatve) General Fund: General ovement adninisaton Legiatve Board of supanisors S$ 214207 § __27ou § amas § 588 General and thanciat acninistation: County acinistrlor S$ — gaas7e § sagas § senso § (127247) Independant auctor 06,295, 100.394 e304 35500 Commissioner ofthe revenue 298.428, 298,428 moan (1334) Fel esol assessor 186,15 153,15 60,088, 53.082 eal ese assessment 50,000, 50,000, : 50,000, Treasurer asrar 987977 558 21a to cacais 37.350 37.360, 24.208 ‘gai Data processing 115338 115.538 73.709 41549 otal generl and fiscal adinisaton Tigo? Ss oaeS__taoee Si a82 Board ol eecons Electoral Board $s saaar § sora $ — s9g00 $83,360 ‘General Register 119270 119270 96697 20.408 Toll bord of alecions FS ‘Totl general goverment eeinistaion S$ 1924151 § 2003957 § 137928 $ 166031 udisil driniston outs: Creuit Court S47 8 tte § 10487 § 9990 Gonoral Distt Court 18200 16200 19993 5262 Special Maicteles 15400 18400 88st bod Probation Oice 1313800, 137807 186,711 1198 lets Otoe 35,509 365,589 20387 ‘Sharif Chal and Court 1,088:304 1115428 (12,358) Lavubrey, - : (5299) Total courts eS __ eT S Ga CCommonweatisatomey: ‘Commonweal’ Alomey S 48724 Ss aTTZEA § «aa 8 ABBE Vieim Winess Grant 22202 31348 31,690 (94a) Toll commonweathsatorney S565 50,690 Fes 220-10 Total ji administraton S 2296565 § 2200901 § azi37a¢ § _TaSTT Pub stety: Law enforcement and ec onto Shetit $ 1853903 $ 1656852 § 1427995 § © ROEAET Dare progr 4275, 5286 2250, 2934 Talla forcement and tac contol FSSA ITE Fe andrascue sences: Voluntoe: Fre Dopartnonts $ — 2azgor § —ategar $= meaI2 $67 Z2N) Ambulance Rescue Squad 570875 2igaze 718,23, i Toa fro androscue senices FS 7A EZ ‘Conteton an detention: Operatcn oft S$ 1249255 § _1gizgie § 1249259 § _saoes Inspections: Bulg inpactor S$ vurgma go aig7 $10.85 § 40889

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County of Russell, Virginia Schedule 2 Schedule of Expenditures- Budget and Actual Page 2 of4

Governmental Funds For the Year Ended June 30, 2010

Variance with Final Budget -

Original Final Positive Fund, Function. Activity and Element Budget Budget Actual lNeqativel

General Fund: (Continued) Public safety: (Continued)

Other protection: Forestry Service $ 10,048 $ 12,098 $ 12,098 $ Enhanced 911 535,539 535,539 541,569 {6,030) Medical Examiner 1,750 1,750 580 1,170 Emergency Services 112,363 112,363 73,202 39,161 Animal Control 150,525 150,525 121,589 28,936 Animal Shelter 18,430 {18,430) Alcohol Safety Action Program 323,366 323,366 323,366

Total other protection $ 1,133,591 $ 1,135,641 $ 767,468 $ 368,173

Total public safety $ 4,600,754 $ 4,717,644 $ 4,100,376 $ 617,268

Public works: Sanitation and waste removal:

Landfill $ 1,825,782 $ 1,825,782 $ 1,716,105 $ 109,677 Refuse collection 1,345,000 1,345,000 968,272 376,728 Litter Coordinator 73,301 73,301 66,379 6,922

Total sanitation and waste removal $ 3,244,083 $ 3,244,083 $ 2,750,756 $ 493,327

Maintenance of general buildings and grounds: General properties $ 1,070,570 $ 1,126,068 $ 775,800 $ 350,268

Total public works $ 4,314,653 $ 4,370,151 $ 3,526,556 $ 843,595

Health and welfare: Health:

Health Department $ 399,994 $ 399,994 $ 352,407 $ 47,587

Mental health and mental retardation: Cumberland Mountain Community $ 47,500 $ 47,500 $ 58,912 $ j11,412)

Welfare: Health and welfare $ 167,941 $ 167,941 $ 68,135 $ 99,806 Social services 406,506 406,506 4,510,312 {4,103,806) Comprehensive Services Act 783,188 783,188 1,372,707 {589,519) Appalachian Agency for Senior Citizens 90,920 90,920 88,624 2,296 Lebanon Speech and Hearing 11,400 11,400 11,400 Workforce Investment Act 826,276 826,276 349,996 476,280

Total welfare $ 2,286,231 $ 2,286,231 $ 6,401,174 $ j4,114,943)

Total health and welfare $ 2,733,725 $ 2,733,725 $ 6,812,493 $ j4,078,768)

Education: Other instructional costs:

Contributions to County School Board $ 4,982,796 $ 4,982,796 $ 4,782,213 $ 200,583 SVCC Contribution 47,500 47,500 47,500

Total education $ 5,030,296 $ 5,030,296 $ 4,829,713 $ 200,583

Parks, recreation, and cultural: Parks and recreation:

Recreation Park $ 101,748 $ 110,650 $ 105,511 $ 5,139

Library: Public Library $ 374,672 $ 388,762 $ 391,906 $ j3,144)

Total parks, recreation, and cultural $ 476,420 $ 499,412 $ 497,417 $ 1,995

-67-

County of Russel, Viginia.

‘Schedule 2

‘Schedule of Expencitures - Budget and Actual Page 2 of 4 ‘Governmental Funds For the Year Ended June 30,2010 Vviance wth Final Budget original Final Positive Fund, Function, Aetity and El Budt Budget rl Negative ube efety: (Continued) (ier preiecion Forestry Senice 8 100K § 12008 $ 12088 § Enhanced 911 535,509 535,508 541.568 oaieal Examiner 1750 1750 560 Energency Senices 112353, 112369, 73.202 rina Conte 150525, 160525 121588 ‘nival Seller : - 18490 ‘lohalSaaty Acton Progam 323.366 09,988 : Total othe peotoxson Ease, SLs SES ola pui safety $_4sua7sa §__a7i7gad § ato0g7e § 617268 Pubic wort: Serilation ad waste mova Landi S 1925780 § 1805782 § 1,716,108 $ TORT? Reuse ooledtion 4,848,000 11345}000, ‘972 376,728 Utler Coordinator 73.201 73201 66,579 8922 Total sanalon and waste removal 3 Sps0e5 SSpuaoasy §__a7e0.756 SUNT Neietenance of general bulings ane ground: ‘General properies $_soros7o s 1126088 $ 775900 $§ __s60288 ota pi works $_43i4653 § _ag7oJst $ _9526555 § 843595 Health and wellare Heath: Health Departnent $g0a904 $ so.904 §asato7 sar sa? ‘Mental heath and mental retardation: ‘Cumbariand Mountain Corerunity S 47500 § argo $ saga $—tttata) Wille: Healt and wore S te7gH Stare § 68,98 $ © Sg808 Social sevens 405,506, 406508 4st0.s12 (108806) Compretensive Senices Act 733,188, 799.168 1,972,107 (689519) Appalacian Agency fox Senior Citzans 0920 80.900 99.626 2298 Lebanon Speech and Heating 11400 11,400 11400 - Weortorce vestment Al 626.076 826.276, 149.98 476.200, ola wolare EBzee aS apeb aS Hao Seta ‘Teel heath and wore S__2703725 § 2750725 § 6812409 $ (4,078,768) Edveaon ‘ther nsrstnal cost: Contains to County Soe! Board S 4982798 § 4980798 $ © a7BaeIs $ 200889 VCC Contouten 47.500, 47500, 47500 - Toll education 5 smeo.ze6_S——Soa0 296 Fame 719 Fa Parks eceaton, and ctr Parks and ocean: Feceaton Park $ 101748 § tosses sesh $8198 Lay Public bray $s74g7e § 88.762 § 1g SB. Total parks, reseaton and cultural $476.00 § waar sears? 8 1.885

67-

County of Russell, Virginia Schedule 2 Schedule of Expenditures· Budget and Actual Page3of4

Governmental Funds For the Year Ended June 30,2010

Variance with Final Budget·

Original Final Positive Fund. Function. Activity and Element Budget Budget Actual !Negative)

General Fund: (Continued) Community development:

Planning and community development: Planning Commission $ 40,700 $ 56,699 $ 53,046 $ 3,653 Community Development 486,840 726,211 170,372 555,839 Industrial Development Authority 3,239,250 2,156,980 433,615 1,723,365 PSA Contributions 360,000 {360,000) Cumberland Plateau 35,000 35,000 35,000 Regional Housing 15,000 15,000 183,820 {168,820) Highway Safety Commission 2,500 2,500 1,935 565 Canneries 98,404 113,101 165,217 {52,116) Tourism 79,282 79,282 54,211 25,071

Total planning and community development $ 3,996,976 $ 3,184,773 $ 1,457,216 $ 1,727,557

Environmental management: Soil and Water Conservation $ 31,215 $ 31,215 $ 30,715 $ 500

Cooperative extension program: VPI Extension $ 73,252 $ 73,252 $ 69,514 $ 3.738

Total community development $ 4,101,443 $ 3,289,240 $ 1,557,445 $ 1.731,795

Nondepartmental: Nondepartmental $ $ 289,857 $ 9,095 $ 280,762

Capital projects: Water projects $ $ $ 44,016 $ (44,016) Other capital projects 2,190,988 2,190,988 50,911 2,140,077 School projects 1,603,217 1,603,217 2,323,872 (720,655)

Total capital projects $ 3,794,205 $ 3,794,205 $ 2,418,799 $ 1,375,406

Debt service: Principal payments $ 1,375,388 $ 1,375,388 $ 1,747,568 $ {372,180) Interest Expense 577,230 577,230 757,063 (179,833)

Total debt service $ 1,952,618 $ 1,952,618 $ 2,504,631 $ (552,013)

Total General Fund $ 31,165,161 $ 30,994,406 $ 30,308,175 $ 686,231

Special Revenue Funds: Coal Road Fund: Public Works:

Maintenance of highways, streets, bridges and sidewalks: Maintenance of highways, streets, bridges and sidewalks $ 2,500,600 $ 2,500,600 $ 1,398,241 $ 1,102,359 Virginia coalfield 575,000 575,000 566,635 8,365

Total Public Works $ 3,075,600 $ 3,075,600 $ 1,964,876 $ 1,110,724

Total Coal Road Fund $ 3,075,600 $ 3,075,600 $ 1,964,876 $ 1,110,724

Rental Assistance Fund: Health and Welfare

Welfare Rental Assistance $ 86,397 $ 94,391 $ 94,441 $ (50)

Total Rental Assistance Fund $ 86,397 $ 94,391 $ 94,441 $ (50)

Total Primary Government $ 34,327,158 $ 34,164,397 $ 32,367,492 $ 1,796,905

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County of Russel, Virginia Schedule 2

Schedule of Expenditures - Budget and Actual Page 3 of ‘Governmental Funds For the Year Endod June 30,2010 Variance with Final Budget - Original Final Positive Fund, Function, Activity and Element Budget Burlaet ‘Actual (ogatve) General Fund: (Continued) Community development: Planaing and comunity dveloprent Planing Comission s 40700 spe $580 $9,650 Comma Develoenent 486,000 reat s70372 555,558, Indstl Development Authosty 9259,250 2,156,980 495615 1723.88, PSR Contiutons . : 80,000, (50,000) CCunberané Plateau 25,000, 35,000 Regional Housing 15,000 183820 (168,820) Fightay Safety Commission 2500 1905 65 Carneros v13.to1 185217 (62,116) Tourism 73282 sa2it 25.074 Toil planning and community development Sseeears SSeS Saw Sz SST Envormantl management ‘Soil and Water Conservation $___sizis $ g12i5 $ aot 8 00 (Cooperative extension program: VPI Extension $1525 § 73282 $ easid § 9798 Tota community d2elopment $4101.03 § gzmo240 § 16744 $1,731,795 Nondeparmentl Nendepartntl 8 _ 8 29657 § goss $2076 Cail projets: Witer projects 8 “8 same § ‘Other capa pojacts 2,190 988 2,190,088 Sogn Schoo! projets 1,903.217 ieog217 2823.72 (720,686) “ota capil projets F 3 794206 S704, 205 8 2418,799 1.975405 Debt sence nepal payments S 1975988 § 1975288 § © 4747.568 $ (672,180) Interest Expanse 577.220, 577290 "757,063. (79839) Total det sone 3 iesasie S 19261 Fass S201 Toll Ganeral Fund $.31165,161 $ 90904406 $ 90908175 $ __885251 Special Revenve Funds (Coal Road Fund: ube Wor Vaintenance of highways, sets, bridges and stews Naintenance of highways, sees, bidges and sdewalis $ 2500600 § 2500600 $ sagem § —1,100;859 Vegi coatild 575,000, 575,000, 508,595, 8.965 Total Pub Works $__Bors.500~§ "Gore, a00§ Toe gre ST .res Total Coal Road Fund $075,800 $ go7s.go0 $984.76 § 1,110,724 Rental Assistance Fun Heath and Wolre Wetere ental Acsistanca Seeger season § sates (50) Toll Penll Assistance Fund S___sss7 $___osgot§__gatt (50) Total Peary Government S_s4927.158 § _94,164597 $_s2ge74ve$ 1.796905

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County of Russell, Virginia Schedule of Expenditures- Budget and Actual

Governmental Funds For the Year Ended June 30, 2010

Fund. Function. Activity and Element Original Budget

Discretely Presented Component Unit- School Board: Special revenue funds: School Operating Fund: Education:

Administration of schools: Administration and health seNices

Instruction costs: Instructional costs Technology

Total instruction costs

Operating costs: Pupil transportation Operation and maintenance of school plant Food seNice and non-instructional Facilities

Total operating costs

Total Discretely Presented Component Unit- School Board

$ 1,436,872 $

$ 30,624,098 $ 553,690

$ 31,177,788 $

$ 2,938,074 $ 5,704,064 1,917,398

10,000 $ 10,569,536 $

$ 43,184,196 $

-69-

Final Budget

1,436,872 s

31,520,918 $ 553,690

32,074,608 $

2,938,074 $ 5,704,064 1,955,402

10,000 10,607,540 $

44,119,020 $

Schedule 2 Page 4 of4

Variance with Final Budget

Positive (Negative)

1,342,400 $

29,594,301 $ 546,654

30,140,955 $

2,477,431 $ 4,989,085 1,956,085

112,906 9,535,507 $

41,018,862 $

94,472

1,926,617 7,036

1 ,933,653

460,643 714,979

(683) (102,906)

1,072,033

3,100,158

69-

County of Russel, Vigna Schedule 2 Schedule of Expenditures - Budget and Actual Page dof Governmental Funds For the Year Ended June 0, 2010 Voriance with Fisal Budget Original Fal Positive Fund, Function, Activity and Element Budget Busaet Actual Negative Discretely Presented Component Unit - School Boar ‘Special revenue funds: School Operating Fune: Education: ‘Aislin of schools Adniisvalin and hea senices 696 872 1assgre $ _1g4e.c00 $94.72 Instruction ents Insrvetona costs sng2dons $ s1s20918 $ 2950401 $ 1926817 Tecnology $59,600, 553,600 546,554 7958 Talal insrution cosis Bi,i77 788 8 “wera g0e FH. osss STR. Operating costs ug ransporation 2aceore 2oseore § 2a7Tasl $ 480813. (Operation and erintenance of schoo plant 5704066 57rodoca——4.89,005, n4g7a Food sence and nom nstuctonal 11917,398 1985.40 ‘1,858,095 (683) Facies 10.00, 10.000, 114,608 02,908) Tolal operating costs THses,595 S —TOso7 sao S$ SH5 507 § 072 000, “TotelOiscretly Presented Component Unt - School Board 49184196 _§ _44.119000 §419rgss2 $9,100,158

Other Statistical Section

.:_, '?

General Fiscal Government Judicial Year Administration Administration

2009-10 $ 1,828,631 $ 2,219,866 $ 2008-09 1,706,342 2,243,005 2007-08 1,411,595 2,070,008 2006-07 1,465,480 1,710,751

(1) Information has only been available for 4 years .

County of Russell, Virginia Government-Wide Expenses by Function

Last Ten Fiscal Years (1)

Parks, Interest Public Public Health and Recreation, Community on long· Service

Table 1

Safety Works Welfare Education and Cultural Development Term Debt Authority Total

4,234,145 $ 4,013,947 4,025,383 3,667,580

5,549,934 $ 6,055,397 5,386,506 2,867,007

6,070,091 $ 5,982,456 5,395,294 4,880,408

5,897,486 $ 5,471,573 4,508,131 3,884,301

560,735 $ 541,087 433,946 477,515

1,491,257 $ 4,826,721 5,549,375 3,246,100

728,202 $ 758,753 827,965 852,493

434,552 $ 407,145 388,949 422,425

29,014,899 32,006,426 29,997,152 23,474,060

“0

County of Russel

eine

Goverriant Wide Expenses by Function Last Ten Fiscal Years (1)

Table

Genera Pat letrest, Focal Government studi Poblc ube Heath and eceeation, Community on Long Seniee Yost Amnon __ Admission __ Salty orks Wetiare Edveaion __ardGultwal___Developmert__TormDaot___Autosty Teal 2009-10 ieeessr $ 2zigee0 $ 599894 § — GOTOOR SS 887.KE5 § — SHOTS $1025 § Ta ROD § —aa4sse 29014899 2008-08 170812 248,005, 6055387 5.90488 5471873, 541067 4006,721 7se753aOT148 2006 428 2007.08 1411595 2orooos == 4na5.363 5.556508 5.395.206 4508,131 455908 55103375 ears 8,848 29,997,152 2006.07 1485 480 1710751 3687580 2887,007 g00,400 3,884,201 47sis——8246,100 a52493 22,005 23,474,060

(1) Infomation has ony boon avalble for yeas

.!_, ~

’

Fiscal Year

2009-10 $ 2008-09 2007-08 2006-07

PROGRAM REVENUES

Charges for

Services

393,362 $ 481,092 505,428 527,092

Operating Grants

and Contributions

7,473,127 $ 7,376,521 7,780,609 8,235,960

(1) Information has only been available for 4 years.

Capital Grants

and Contributions

County of Russell, Virginia Government-Wide Revenues

Last Ten Fiscal Years (1)

GENERAL REVENUES

Other Unrestricted

Grants and Contributions Not Restricted General

Property Taxes

Local Investment to Specific

$ 13,004,381 $ 12,889,357 12,279,583

Taxes (2) Earnings Miscellaneous Programs (2)

2,465,451 $ 1,771,674

802,191 13,239,976

6,123,807 $ 7,779,265 7,976,046 5,467,574

106,848 $ 153,807 529,827 808,979

173,322 $ 346,880 55,649

252,756 1 ,711 ,485 1,881 ,802

(2) 2009-10 is the first year State Communications tax is classified as grants and contributions not restricted to specific programs .

Table 2

Total

29,740,298 30,798,596 30,838,627 31,216,330

County of Russell, Virgt

Government-Wide Revenues Last Ten Fiscal Years (1)

Table2

PROGRAM REVENUES GENERAL REVENUES Grants and Operating Capital Contibutions Charges Grants Grants General Other Unrestricted Not Restricted

Fiscal for and and Property Local Investment to Specific.

Year Senices Contibutions Contributions Taxes Taxes (2) Eamings _Misceaneous Programs (2) Total 2009-10 999,62 § 7,473,127 § : 43,004381 $ 6123807 § 108848 § © 173,822 § 2,486,481 29,740,208 2008-09 481,092 7,376 521 12,889,357 7.779265 153,807 346,860 171,674 30,798,596 2007-08 505,428 7,780,609 : 12,270,588 7,976,085 529.827 55,649 1,711,485 30,898,627 2006-07 527,092 8,235,980 802,191 13,239,976 5,467,574 808,979 252,756 1,881,802 31,216,330

(1) Information has only been avaiable for 4 years. (2) 2009-10 the frst year Stale Communications taxis classified as grants and contributions not resticted to specific programs.

-!, ‘>’

General Fiscal Government Judicial Public Year Administration Administration Safe!~

2009-10 $ 1,837,926 $ 2,213,724 $ 4,100,376 $ 2008-09 1,702,193 2,236,691 4,383,789 2007-08 1,745,817 2,070,455 4,057,495 2006-07 1,547,966 1,805,418 3,863,960 2005-06 1,810,230 1,814,649 4,022,185 2004-05 1,471,043 1,059,566 3,977,841 2003-04 1,216,960 957,320 3,585,934 2002-03 1,267,146 977,540 3,651,469 2001-02 1,365,932 1,017,492 3,635,861 2000-01 1,450,187 1,031,613 3,664,306

County of Russell, Virginia General Governmental Expenditures by Function (1)

Last Ten Fiscal Years

Parks, Public Health and Recreation, Works Welfare Education (2) and Cultural

5,491,432 $ 6,906,934 $ 41 ,066,362 $ 497,417 $ 6,093,232 6,672,387 42,452,183 547,104 5,083,514 5,398,035 39,724,130 433,946 3,205,718 5,126,034 41,346,518 493,366 3,605,915 5,003,511 39,574,345 438,198 3,434,569 4,948,270 33,030,292 339,244 3,100,508 4,893,329 33,016,616 367,686 3,067,788 4,910,495 27,683,380 378,365 2,699,858 4,968,406 27,361,431 479,313 2,555,345 4,680,775 27,897,353 419,894

Community Develo~ment

1,557,445 $ 3,925,736 5,549,375 5,699,361 7,653,814 5,186,187 2,843,672 4,133,801 3,648,003 3,435,485

(1) Includes General and Special Revenue funds of \he Primary Government and its Discretely Presented Component Unit· School Board. Excludes Capita! Projects. (2) Excludes contribution from Primary Government to Discretely Presented Component Unit · School Board.

Table3

Non· Debt de~artmental Service Total

9,095 $ 2,504,631 $ 66,185,342 56,093 2,547,424 70,616,832 45,503 2,669,081 66,777,351

2,429,487 65,517,828 2,546,073 66,468,920 2,704,665 56,151,677 2,497,309 52,479,334 2,111,104 48,181,088 3,353,899 48,530,195 3,007,990 48,142,948

Teble3 County of Russel, Virginia GGenerat Governmental Expenditures by Function (1) Last Ten Fiscal Years

General Pets, Fiscal Goverment cial Poblic Public Heath and Receeation, _Commrunty Nene eb ‘Year __Adrinisation Administration ___—Slty Worts ‘Wottre Education (2) and Cutural_Oavelopment_apanmantal__Servina Total 2006-10 S$ 1897928 § © —-BIATA § —4,00STS $ SANTA § GUSH § doa. § 4BTAIT S LSBTAKS $ 9095 -§ —BOKAN § —Bs.5 342 2008.08 1702198 2226891 4983789 Goua2%—6672.387 501837104 3.805795 sous ser roses? 200708 174587 40s7405 e554 5.398095 93704100 ARH BAG 75 45503 2,688,08t 6777381 200807 11547 96 3psas0 3.205718 5.126038 41gi6518 493.905.699.981, : 65517 28 2005.08 110.200 1814649 400218 305915 o0R BT 29574345 AURIS - 468,220, 200805 1713 11959368 sa77Bit 3434509 3gqs0222 «© seBzae 5,185,187 : 56,151877 2o0s04 1216.60 967,320 asesse¢ 3.400500 Beoige1s © 87H Te : 82479534 2002083 1207.46 977540 3651469 3,057,788 2rgeg390 © regs 1a 80 : 48,181,088 2oo%ae 13851922 1.017.492 3606,851 2.699868 2rasias 479219 3848.08 48,520,195 2000-91 #460.187 41031,613, 3564205 2555;948 re 45,142,948

(1) ncludes General and Special Revenue funds of he Primary Goversmen! ands Disrley Presented Component Unt - School Board, Excludes Capita Projects, (2) Excludes cotibuton tom Primary Governenent to Dscrciely Presented Component Unt Scheel Boar

’ ___, y:>

Permits, General Other Privilege Fees,

Fiscal Property Local Regulatory Year Taxes Taxes 13) Licenses

2009-10 $ 12,841,457 $ 6,123,807 $ 45,877 $ 2008-09 12,540,392 7,779,265 39,662 2007-08 11,826,325 7,976,046 44,933 2006-07 11,566,874 6,869,060 144,452 2005-06 12,337,123 6,713,063 52,707 2004-05 12,204,466 5,981,937 35,700 2003-04 10,148,719 4,820,255 38,906 2002-03 10,025,380 4,785,938 45,294 2001-02 10,375,632 3,909,367 64,261 2000-01 9,124,022 3,260,808 45,707

County of Russell, Virginia General Governmental Revenues by Source (1)

Last Ten Fiscal Years

Revenue from the

Fines Useol Charges and Money and lor

Forfeitures Proeerty Services

1,049 $ 74,279 $ 998,548 $ 1,168 117,983 1,148,414

321 501,144 1,023,848 7,547 794,365 1,122,223 8,181 660,142 878,017 9,430 231,701 755,446 9,938 74,324 892,392

19,552 89,715 764,203 11,766 228,739 791,877 17,217 445,809 750,746

Recovered Miscellaneous Costs

293,467 $ 1,732,861 643,861 1,884,165 510,972 796,913 289,980 276,806 310,534 187,855 192,958 266,232 209,598 283,077 209,160 145,776 164,096 476,465 383,544 291,711

(1) Includes General and Special Revenue funds of the Primary Government and its Discretely Presented Component Unit- School Board. Excludes Capital Projects. (2) Excludes contribution from Primary Government to Discretely Presented Component Unit- School Board. (3) 2009-10 is the first year State Communications tax is classified as noncategorical state aide.

Table 4

Inter- governmentall2), !3) Total

$ 43,856,378 $ 65,967,723 45,438,632 69,593,542 43,519,497 66,199,999 48,149,588 69,220,895 42,906,554 64,054,176 38,060,020 57,737,890 35,517,991 51,995,200 36,381,448 52,466,466 30,997,358 47,019,561 30,439,563 44,759,127

Table County of Russell, Virginia General Governmontal Revenues by Source (1) Last Ten Fiscal Years

Pevenue Permits, from the General Other Prvlege Fees, Fines Use of Charges

Fiscal Property Local Regulatory and Money snd for Recovered tetor

Year Tangs Taxes (3) Lisensos Forletures Property Services Miscellaneous ___Costs_governmantal 2), (3). Total 200810 § © 1aBH1457 § 6,123,807 § 45erT $1088 $7427 -§ —SaBsA S$ —DEHGT § I TERAEL § —«aBASESTE $5967, 729, 2008-08 10,392 7,779,265 39,662 1168 417,983, asia eagae1 1,884,165 45,499,622 69,590,542 2007-08 11226225, 7,978,086 44923, cal son tae 1023 246 s10972 798.18 43519,497 66,199,999 2008-07 11,566,874 6,969,060 44452 78a7 794,365, 1122208 269,980, 278,06 45,149,588 69,220,895 2008-08 123397,128, 6,713,063 2707 a18t 60,142 878017 310594 167,885 42,906,554 64,054,176 2004-05 127204465, 5,981,997 35,700 9490 231,701 755,448 192.958 266,232 38,080,020 57737890 2008-04 10,148,719 4.920.285 36,906, 9.938 74,324 992,392 209,598, 2077 35517.991 51,995,200 2002-03 10,025,380 4,785,898 45,284 19.552 saris 764,208, 209,160, 145,778 26,381,448 52,405,488 2003-02 10,575,632 3.909.367 eazet 11,768 28,758 1877 164.096 476,485, 30,997,858 47,019,581 2000-01, 9,124,002 3,260,008 70 weir 445,609 750,748 aaa 544 port 30,499,569 4789,127

(1) Includes General and Special Revenue funds ofthe Primary Government and its Discoely Presontad Component Unit - School Board, Exckies Capit! Projects {2) Excludes convbution kom Primary Government to Discretely Presented Component Unt» School Board, (3) 2009-10 the fist year Stele Communications axis casiled as noncategeical sale ede,

Total Current Fiscal Tax Tax Year Levy(1) Collections (1)

2009-10 $ 14,169,807 $ 13,038,906 2008-09 14,091,178 13,212,582 2007-08 13,784,900 12,618,969 2006-07 12,104,262 8,435,607 2005-06 11,360,623 11,118,399 2004-05 10,576,870 9,740,619 2003-04 9,070,812 8,274,805 2002-03 8,989,461 8,106,975

.!.., 2001-02 9,760,635 8,957,849

_,. 2000-01 9,105,631 8,381,781 ’

(1) Exclusive of penalties and interest.

County of Russell, Virginia Property Tax Levies and Collections

Last Ten Fiscal Years

Percent Delinquent Total of Levy Tax Tax

Collected Collections (1) Collections

92.02% $ 886,480 $ 13,925,386 93.76% 496,787 13,709,369 91.54% 411,887 13,030,856 69.69% 863,735 9,299,342 97.87% 797,364 11,915,763 92.09% 537,362 10,277,981 91.22% 324,217 8,599,022 90.18% 361,604 8,468,579 91.78% 407,972 9,365,821 9205% 439,386 8,821,167

Table 5

Percent of Percent of Total Tax Outstanding Delinquent

Collections Delinquent Taxes Ia to Tax Levy Taxes (1) Tax Levy

98.28% $ 3,624,318 25.58% 97.29% 3,506,132 24.88% 94.53% 3,234,367 23.46% 76.83% 1,628,182 13.45%

104.89% 1,854,243 16.32% 97.17% 1 ,849,194 17.48% 94.80% 1,772,141 19.54% 94.21% 1,853,569 20.62% 95.96% 1,481,506 15.18% 96.88% 1,290,811 14.18%

County of Russell, Virginia Property Tax Levies and Collections: Last Ten Fiscal Years

Table 5

Percent of Percent of

Total Current Percent Delinquent Total Total Tax Outstanding Detinguent

Fiscal Tax Tax of Lew Tax Tax Collections Delinquent Taxes 10

Year Lewy (1) Collections (1) Callested Collections (1) Collections toTaxLey Taxes (1) Taxlevy 200010 $ © — 14,169,807 $ 13,038,906 92.02% $ 886,480 $13,025,386 98.28% $ 3,624,318 25.58% 2008-09 14,091,178 13,212,582 93.76% 496,787 13,709,369 97.29% — 3,506,132 24.88% 2007-08 13,784,900 12,618,969 91.54% 411,887 13,080,856 94.53% 3,234,367 23.46% 2006-07 12,104,262 8,435,607 69.69% 863,735 9,299,342 76.83% 1,628,182 13.45% 2006-06 11,360,623 11,118,399 97.87% 797,364 11,915,763 106.89% 1,854,243 16.32% 2004-05 10,576,870 9,740,819 92.09% 537,362 10,277,981 97.17% 1,849,194 17.48% 2003-04 9.070.812 8,274,805 91.22% 324,217 8,599,022 94.80% 1,772,141 19.54% 2002-03 8,989,461 8,108,975 90.18% 361,604 8,468,579 94.21% 1,853,569 20.62% 2001-02 9,760,635 8,957,849 91.78% 407,972 9,365,821 95.96% 1,481,506 15.18% 2000-01 9,105,631 8,381,781 92.05% 439,386 8,821,167 96.88% 1,290,814 14.18%

(1) Exclusive of penalties and interest

…!.., 01 ’

Fiscal Real Personal Year Estate (1) Property

2009-10 $ 1,181,352,276 $ 224,871,200 $ 2008-09 1,153,488,246 239,254,757 2007-08 1,130,643,127 243,837,948 2006-07 931,095,586 152,418,7 44 2005-06 927,558,386 241 ,849,424 2004-05 905,496,7 46 220,786,936 2003-04 885,323,887 205,377,101 2002-03 842,179,548 114,427,984 2001-02 810,877,087 199,122,212 2000-01 693,154,045 174,082,673 1999-00 682,080,389 205,617,833

(1) Real estate is assessed at 1 00% of fair market value.

County of Russell, Virginia Assessed Value of Taxable Property

Last Ten Fiscal Years

Machinery and Merchant’s

Tools Capital

96,552,183 $ 5,402,115 $ 93,960,621 5,501,882

107,205,468 5,742,600 99,124,678 4,954,226 92,859,770 5,113,134

102,287,891 4,160,621 77,287,167 3,438,802 78,930,645 3,051,245 67,692,057 2,978,115 68,630,472 2,788,937 77,018,308 3,405,765

(2) Assessed values are established by the State Corporation Commission-includes all property types.

Table 6

Mobile Public Homes Service (2) Total

22,864,821 $ 253,750,196 $ 1,784,792,791 23,139,220 234,196,018 1,749,540,744 23,608,064 231,981,492 1,743,018,699 23,802,666 199,922,460 1,411,318,360 26,020,997 206,306,945 1,499,708,656 24,774,536 222,627,640 1 ,480,134,370 23,763,122 226,411’ 983 1,421,602,062 24,231,179 226,477,438 1,289,298,039 22,720,856 227,820,417 1,331,210,744 18,014,620 195,932,118 1 '152,602,865 17,458,675 206,155,148 1,191,736,118

“or

County of Russell, Virginia Assessed Value of Taxable Property Last Ten Fiscal Years

Table 6

Machinery

Fiscal Real Personal and Merchant’s, Mobiie Public

Year Estate (1) Property Tools Capital Homes Service (2) Total 2008-10 § — 1,181,352,276 $ 224,871,200 $ 96,552,183 $ 5402.18 22,864,821 $ 263,750,196 § — 1,784,792,791 2008-09 4,153,488,246 239,254,757 93,960,621 5,501,882 23,139,220 234,196,018 4,749,540,744 2007-08 1,130,643,127 243,837,948 107,205,468 5,742,600 23,608,064 231,981,492 1,743,018,699 2006-07 931,095,586 152,418,744 99,124,678 4,954,226 23,802,666 199,922,460 1,411,318,360 2005-06 927,558,386 241,849,424 92,859,770 5,113,134 26,020,997 206,306,945 1,499,708,656, 2004-05, 905,496,746 220,786,936 102,287,891 4,160,621 24,774,536 222,627,840 1,480,134,370 2003-04 885,323,887 205,377,101 77,287,167 3,438,802 23,763,122 226,411,983, 1,421,602,062 2002-03 842,179,548 114,427,984 78,930,645 3,081,245 24,231,179 228,877,438 1,289,298,039 2001-02 810,877,087 199,122,212 67,692,057 2,978,115 22,120,856 21,820,417 41,331,210,744 2000-01, 693,154,045 174,082,673 68,690,472 2,788,937 18,014,620 195,932,118 1,182,602,865, 1999-00 682,080,389 205,617,833 77,018,308 3,405,765 17,458,675 206,155,148 1,194,736,118

(1) Realestate is assessed at 100% of far market value (2) Assessed values ate established by the State Corporation Commission-incudes all property types.

Fiscal Real Year Estate

2009-10 $ 0.61 $ 2008-09 0.61

2007-08(3) 0.56/0.61 2006-07(2) 0.65/0.56

2005-06 0.65 2004-05 0.60 2003-04 0.60 2002-03 0.55 2001-02 0.55 2000-01 0.64

(1) Per $100 of assessed value. (2) 2nd half 2006/1 st half 2007 (3) 2nd half 2007/1 st half 2008

County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Personal Machinery Property & Tools

1.65 $ 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.45 2.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45

-76-

Table 7

Merchant’s Mobile Capital Homes

0.65 $ 0.61 0.65 0.61 0.65 0.56

NA 0.64 NA 0.64 NA NA NA NA NA NA NA NA NA NA

County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Table 7

Fiscal Real Personal Machinery Merchants Mobile Year Estate Propet & Tools Capital Homes 2009-10 061 $ 165 $ 1.65 § 0.65 $ 0.61 2008-09 0.61 1.65 1.65 0.65 0.61 2007-083) 0.56/0.61 185 1.85 0.85 058 2008-072) 0.65/0.56 1.65 1.85 NA 064 2005-06 085 1.65 1.65 NA 064 2004.05 0.60 4.45 245 NA NA 2003-04 0.60 1.45 445 NA NA 2002-03 0.55 145 1.45 NA NA 2001-02 0.55 1.45 1.45 NA NA 2000-01 0.64 1.45 1.45 NA NA

(1) Per $100 of assessed value. (2) 2nd half 2006/1st half 2007 (3) 2nd half 2007/'st half 2008

T6-

Table 8 County of Russell, Virginia

Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita

Last Ten Fiscal Years

Ratio of Net Bonded Net

Assessed Gross Net Debt to Bonded Fiscal Value (in Bonded Bonded Assessed Debt per Year Population (1) thousands) (2) Debt (3) Debt Value Capita

2009-10 28,790 $ 1,784,793 $ 20,863,604 $ 20,863,604 1.17% $ 725 2008-09 28,790 1,749,541 20,684,197 20,684,197 1.18% 718 2007-08 28,790 1,743,019 19,834,689 19,834,689 1.14% 689 2006-07 28,790 1,411,318 14,836,861 14,836,861 1.05% 515 2005-06 28,790 1,499,709 12,594,094 12,594,094 0.84% 437 2004-05 28,830 1 ,480,134 13,633,304 13,633,304 0.92% 473 2003-04 28,795 1,421,602 14,670,561 14,670,561 1.03% 509 2002-03 28,940 1,289,298 15,770,006 15,770,006 1.22% 545 2001-02 28,944 1,331,211 12,408,937 12,408,937 0.93% 429 2000-01 29,071 1 '152,603 13,293,135 13,293,135 1.15% 457

(1) Bureau of the Census (2) Real property assessed at 100% of the fair market value. (3) Includes all long-term general obligation bonded debt, bonded anticipation notes, and literary fund loans.

Excludes revenue bonds, landfill closure/post-closure care liability, capital leases, and compensated absences.

-77-

Tables County of Russell, Virginia Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years

Ratio of Net Bonded Net

Assessed Gross Net Debt to Bonded

Fiscal Value (in Bonded Bonded Assessed Debt per

Year Population (1) thousands) (2) Debt (3) Debt Value Capita 2009-10 28,790 $ 1,784,793 § 20,863,604 $ 20,863,604 117% § 725 2008-08 28,790 1,749,541 20,684,197 20,684,197 1.18% 718 2007-08 28,790 1,743,019 19,834,689 19,834,689 1.14% 689 2006-07 28,790 1,441,318 14,836,864 14,836,864 1.05% 515 2006-06, 28,790 1,499,708 12,594,094 12,594,094 0.84% 437 2004-05, 28,830 41,480,434 13,633,304 13,633,304 0.92% 473 2008-04 28,795 4,421,602 14,870,564 14,670,561 1.03% 509 2002-03, 28,940 1,289,298, 18,770,008 18,770,006 1.20% 545, 2001-02 28,944 1,831,211 12,408,937 12,408,937 0.93% 429 2000-01 29074 4,182,603, 13,203,135 13,203,135, 1.15% 457

(1) Bureau of the Census

(2) Real property assessed at 100% ofthe fair market value

(3) Ince alliong-term general obigation bonded debt, bonded antcipation notes, and iterary fund loans. Excludes revenue bonds, lanl cosure/post-closure care liailty, capital leases, and compensated absences.

T7-

Table 9 County of Russell, Virginia

Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures (1)

Last Ten Fiscal Years

Ratio of Total Debt Service

Total General to General Fiscal Debt Governmental Governmental Year Service Expenditures Expenditures

2009-10 $ 2,504,631 $ 66,185,342 3.78% 2008-09 2,547,424 70,616,832 3.61% 2007-08 2,669,081 66,777,351 4.00% 2006-07 2,429,487 65,517,828 3.71% 2005-06 2,546,073 66,468,920 3.83% 2004-05 1,775,036 56,151,677 3.16% 2003-04 1,742,481 52,479,334 3.32% 2002-03 1,658,923 48,181,088 3.44% 2001-02 1,939,714 48,530,195 4.00% 2000-01 1,790,670 48,142,948 3.72%

(1) Includes all governmental funds of the Primary Government and Special Revenue funds of the Discretely Presented Component Unit-School Board.

-78-

Table 9 County of Russell, Virginia tio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures (1) Last Ten Fiscal Years

Ratio of

Total Debi Service

Total General to General

Fisoal Debt Governmental Governmental

Year Servioe Expenditures Expenditures 2008-10 $ 2804631 § 65,185,942 3.78% 2008-09 2,547,424 70,616.832 3.61% 2007-08 2,069,081 66,777,351 4.00% 2006-07 2,429,487 65517.828 3.71% 2005-06 2,548,073 66,468,920 3.83% 2004-05 4,775,036 56,151,677 3.18% 2008-04 4,742,484 52,479,334 3.82% 2002-08 4,658,923, 48,181,088 3.44% 2001-02 1,999,714 48,530,195 4.00% 2000-01 1,790,670 48,142,948 3.72%

{1) Includes all governmental funds of the Primary Government and Special Revenue funds of the Discretely Presented Component Unit-School Board.

COMPLIANCE SECTION

ROJB][NSON, F ARMJER, Cox Assoc][ATJES CERTIFiED PUBliC ACCOUNTANTS A PROFESSIONAL LIMITED IJABllJTY COMPANY

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2010, which collectively comprise the County of Russell, Virginia’s basic financial statements and have issued our report thereon dated January 26, 2011, which was qualified due to scope limitations. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the County of Russell, Virginia’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County of Russell, Virginia’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia’s internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs to be material weakness 2010-1.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the County of Russell, Virginia’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests

-79-

ROBINSON, FARMER, COX ASSOCIATES

(CERTIFUED PUBLIC ACCOUNTANTS "A PROFESSIONAL LIMITED LIABILITY COMPANY

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2010, which collectively comprise the County of Russell, Virginia’s basic financial statemients and have issued our report thereon dated January 26, 2011, which was qualified due to scope limitations. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

Our consideration of intemal controt over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in intemal control over financial reporting that we consider to be material weaknesses,

Compliance and Other Matters

AAs part of obtaining reasonable assurance about whether the County of Russell, Virginia’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts, However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests

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disclosed an instance of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings, responses, and questioned costs as item 2010-2.

We noted certain matters that we reported to management of the County of Russell, Virginia, in a separate letter dated January 26, 2011.

The County of Russell, Virginia’s responses to the findings identified in our audit are described in the accompanying schedule of findings, responses, and questioned costs. We did not audit the County of Russell, Virginia’s responses and, accordingly, we express no opinion on them.

This report is intended solely for the information and use of management, the Board of Supervisors, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

if?, /,c~oa·~ Christiansburg, Virginia January 26, 2011

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disclosed an instance of noncompliance or other matters that are required to be reported under Goverment Auditing Standards and which are described in the accompanying schedule of findings, responses, and questioned costs as item 2010-2.

‘We noted certain matters that we reported to management of the County of Russell, Virginia, in a separate letter daied January 26, 2011,

‘The County of Russell, Virginia’s responses to the findings identified in our audit are described in the accompanying schedule of findings, responses, and questioned costs. We did not audit the County of Russell, Virginia’s responses and, accordingly, we express no opinion on them.

Hateimoen, Saomar, py Chsocittes-

Christiansburg, Virginia January 26, 2011

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ROBINSON, FARMER, COX ASSOCIATES CI:Rllf1ED PUBLTC ACCOUNTANTS A PROFESSIONAL LIMITED LTABTLTTY COMPANY

Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMS Circular A-133

Independent Auditors’ Report

To the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

Compliance

We have audited the County of Russell, Virginia’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County of Russell, Virginia’s major federal programs for the year ended June 30, 2010. The County of Russell, Virginia’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings, responses, and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the County of Russell, Virginia’s management. Our responsibility is to express an opinion on the County of Russell, Virginia’s compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County of Russell, Virginia’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the County of Russell, Virginia’s compliance with those requirements.

As described in item 2010-3 in the accompanying schedule of findings, responses, and questioned costs, we were unable to obtain audited financial statements of the local Workforce Investment Board that administers the Workforce Investment Act Cluster (CFDA 17.258, 17.259, 17.260) on behalf of the County. The County serves as the grant recipient, however all funds are remitted directly to the Workforce Investment Board from the Commonwealth of Virginia. Aside from requiring an annual audit of the Workforce Investment Board, the County does not have a process in place to monitor the Board’s performance in relation to this grant. The Workforce Investment Board has not completed audits for the fiscal years ending June 30, 2007, June 30, 2008, June 30, 2009 or June 30, 2010. As such, we were unable to obtain sufficient documentation supporting the compliance of the County of Russell, Virginia (via the Workforce Investment Board) regarding all applicable compliance requirements, nor were we able to satisfy ourselves as to the County of Russell, Virginia’s compliance with those requirements by other auditing procedures.

As described in item 2010-4 in the accompanying schedule of findings, responses and questioned costs, the County of Russell, Virginia did not comply with requirements regarding Davis Bacon Act that are applicable to its ARRA - State Fiscal Stabilization Funds. Compliance with such requirements is necessary, in our opinion, for the

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ROBINSON, FARMER, COX ASSOCIATES

‘CERTIFIED PUBLIC ACCOUNTANTS “A PROFESSIONAL LIMITED LIABILITY COMPANY

Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 Independent Auditors’ Report

To the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

Compliance

We have audited the County of Russell, Virginia’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County of Russell, Virginia’s major federal programs for the year ended June 30, 2010. The County of Russell, Virginia’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings, responses, and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibilty of the County of Russell, Virginia’s management. Our responsibility is to express an opinion on the County of Russell, Virginia’s compliance based on our audit.

‘As described in item 2010-3 in the accompanying schedule of findings, responses, and questioned costs, we were unable to obtain audited financial statements of the local Workforce Investment Board that administers the Workforce Investment Act Cluster (CFDA 17.258, 17.259, 17.260) on behalf of the County. The County serves as the grant recipient, however all funds are remitted directly to the Workforce Investment Board from the Commonwealth of Virginia. Aside from requiring an annual audit of the Workforce Investment Board, the County does not have a process in place to monitor the Board’s performance in relation to this grant. The Workforce Investment Board has not completed audits for the fiscal years ending June 30, 2007, June 30, 2008, June 30, 2009 or June 30, 2010. As such, we were unable to obtain sufficient documentation supporting the compliance of the County of Russell, Virginia (via the Workforce Investment Board) regarding all applicable compliance requirements, nor were we able to satisfy ourselves as to the County of Russell, Virginia’s compliance with those requirements by other auditing procedures.

As described in item 2010-4 in the accompanying schedule of findings, responses and questioned costs, the

County of Russell, Virginia did not comply with requirements regarding Davis Bacon Act that are applicable to its ARRA - State Fiscal Stabilization Funds. Compliance with such requirements is necessary, in our opinion, for the

County of Russell, Virginia to comply with the requirements applicable to that program.

In our opinion, except for the noncompliance described in the preceding paragraphs, the County of Russell, Virginia complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30,2010.

Internal Control Over Compliance

Management of the County of Russell, Virginia is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the County of Russell, Virginia’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia’s internal control over compliance.

Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2010-3 and 2010-4 to be material weaknesses.

This report is intended solely for the information and use of management, Board of Supervisors, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

i’f~mt, ~~ '~tJa~ Christiansburg, Virginia January 26, 2011

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County of Russell, Virginia to comply with the requirements applicable to that program.

In our opinion, except for the noncompliance described in the preceding paragraphs, the County of Russell, Virginia complied, in all material respects, with the compliance requirements referted to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010.

Internal Control Over Compliance

Management of the County of Russell, Virginia is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the County of Russell, Virginia’s internal control ‘over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report ‘on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virgiia’s internal control over compliance.

Our consideration of intemal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identity all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses.

‘A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in intemal control over compliance is a deficiency, or combination of deficiencies, in intemal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis, We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2010-3 and 2010-4 to be material weaknesses.

Hsteinson, Gaoman, lay Cssocictes-

Christiansburg, Virginia January 26, 2011

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County ol Russell, Virginia Page 1 of3 Schedule of Expenditures of Federal Awards

For the Year Ended June 30,2010

Pass-through Federal Entity

Federal Grantor/State Pass • Through Grantor/ CFOA Identifying Federal Program Cluster or Title Number Number Expenditures

Departmer~t or Health and Humar1 Services: Pass Through Payments:

Departmer1l of Social Services: Promoting Safe and Stable Families 93.556 90249, 90359, 90360, 90361 s 26,279 Temporary Assistance for Needy Families (T ANF) 93.558 90109, 90110, 90111’ 90112 647,095

90127, 90229, 90230, 90231 90232, 90247, 90365, 90366 90367, 90377, 90603, 90621

Refugee and Entrant Assistance· Slate Administered Programs 93.566 90113,90233 796 Low-Income Home Energy Assistance 93.568 90114,90115,90234,90235 20,887 Child Care and Development Fund Cluster:

Child Care and Development Block Grant 93.575 90545 16,092 ARRA • Child Care and Development Block Grant 93.713 90529, 90540, 90541’ 90545 7,798 Child Care Mandatory and Matching Funds of the 93.596 90116,90117,90118,90119 69,047

Child Care and Development Fund 90236, 90237, 90238, 90239 90529, 90540, 90541

Child Welfare Services · Slate Grants 93.645 90251 1,352 Foster Care· Title IV-E 93.658 90105,90106,90107,90209 391,992

90225, 90226, 90227, 90253 90258, 90636, 90637, 90639

90657, 90658 ARRA- Foster Care- Title IV-E 93.658 90636, 90637, 90639, 90657 35,388

90658 Adoption Assistance 93.659 90108, 90214, 90228, 90606 54,327

90627 ARRA- Adoption Assistance 93.659 90606 5,277 Soc1al Services Block Grant 93.667 90120,90122,90123,90124 174,104

90125, 90126, 90240, 90242 90243, 90244, 90245, 90246 90262,90312,90313,90332 90338, 90340, 90358, 90379

Chafee Foster Care Independence Program 96.674 90254, 90356 8,029 Children’s Health Insurance Program 93.767 90102, 90222 15,269 Medical Assistance Program 93.778 90101,90146,90213,90221 194,995

90266

Total Department of Health and Human Services $ 1,668,727

Department of Agriculture: Pass Through Payments: Department of Agriculture: Child Nutrition Cluster:

Food Distribution-Schools (Note 3) 10.555 Not applicable s 106,824

Department of Education: Child Nutrition Cluster:

National School Breakfast Program 10.553 40591 272,420 National School Lunch Program 10.555 40623 850,585

ARRA- National School Lunch Program Equipment 10.579 40592 30,318 Fresh Fruit and Vegetable Program 10.582 40599 6,674

Department of Social Services: SNAP Cluster:

State Administrative Matching Grants for the Supplemental 10.561 90103,90104,90212,90223 333,777 Nutrition Assistance Program 90224

ARRA- State Administrative Matching Grants for the Supplemental 10.561 90103,90104,90212,90223 3,750 Nutrition Assistance Program 90224

Total Department of Agriculture 1,604,348

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ounty of uss, Virginia Pago ot Schedule of Expenatures of Feral Awards Forth Year Ended Jura 30,2010,

Pasesnrough Fectral Entity Federal Geantorsata Pass-Through Grate! orDA entiying erat Prop Gtr Tie umber Numer Exgonctres Depsient ot Heath an Human Sarces: Pass Thugh Payers Depatnani ol Sol Sees: ‘Prong Sie are Sable Faris ee ‘Tenparary Aosinos or Nos Farben TANF) 98556 08, coro, spt, nie 687085 soir, size, 922080284, Boe, 0247, 90985 308 5057, 9087, 6a, 8082, ‘auge ent EntantAsilence Slt Adninisled Prorans ans sot, 90238 Lonsteome Hemet nagy Asstance 58556 9014 S015, 91254, 0285, (tid Catered Devaoorent Fund Duster (Ch Cae sn Deepen ick rat 3575 God RRA. Ci Cand Developmen Bock Grant 758604 S060, B54, 0585, (ht Cate Many ae ching Fars ote 95586 16 c0r7, 90018 ene (hie Care a6 Deepen Fins 5126, 257, 9228, 8028 50525, 0, 9584 ‘hi eta Senses Ste Gras sais ast tae sls Caro TeV 58856 905 gots, sbi, szn8 swig sz, uz, 90227, 90253 80258, os, 90887, 90699 0657, 0658 -ARRA. Foster Cre The N-E 856 5005, S067, 9068, 0887 88 esd Acopn Assistance 3058 S108 904, ote, 0808 sar 0ea7 ARPA. Acopln Asisneo suas eos san Steal Serves Beek Grant, ‘8867 rz ootz, 90128 012s 7404 eas, 01, cen, se ez, ope, 25,90 5026, 9082, 90518 90382 508, to, 90988, 80078 ‘ale Fotr Care nopensonce Program soon a, 586 008 ‘Chicas Hath lswarce Progam 38767 one, 0222 13209 ail Aesance Progr, 55776 oro}, ses 92,0221 194985 ‘es Tl Dopartnat ot Hea Hun Senices 1988727 Departmen of Apel: ass Trough Payrens: Donate of Agree Chianaion cha Fao isn Shoo (Nae) 10585 tape Soa Depart of actor: Chis Muse Cer Naioa ence Bestest Progen 10553 eg 272420 Natal etc! Le Pega 10585 23 50585 RRA. Nara Schaal Lune Program Egret 10579 se mai6 Fresh Fa nd Voge Progam see 9 can Depart of Soil Sees SP Cus Sie AtminsabeMalsing rans ore Superenat 051 onto, ia, sate 80203 ss” ‘nen Asiteoe Progam ca8 ABBA Sl Aiiave Maching Gas ote Supplements soset soto oro, sera soa 370 ‘aon Asis Prepam cat

‘To Deprertt Agee Siem

County of Russell, Virginia Page 2 of 3 Schedule of Expenditures of Federal Awards

For the Year Ended June 30,2010

Pass-through Federal Entity

Federal Grantor/State Pass· Through Grantor/ CFDA Identifying Federal Program Cluster or Title Number Number Expenditures

(Continued) Department of Justice:

Pass Through Payments· Department of Criminal Justice Services: Violence Against Women Formula Grants 16.588 08WFAX0050 $ 19,530

09WFAX0037 ARRA- Stop Violence Againsl Women Formula Grants 16.588 09EFS60025 27,093

Total Department of Criminal Justice Services-pass through 46,623

Compensation Board: ARRA- Edward Byme Memorial Justice Assistance Grant Program 16.803 09SUB9033 $ 72.946

Total Department of Justice s 119,569

Department ofT ransportation: Pass Through Payments: Department of Motor Vehicles·

State and Community Highway Safety (402 Funds) 20600 AL-2010 50321 3941 $ 3,720 SC-2009 59295 3598

Department of Emergency Management: Interagency Hazardous Materials Public Sector Training and Planning Grants 20.703 52609 3,842

Total Department of Transportation $ 7,562

Department of Education: Pass Through Payments: Department of Education: Adult Education - Basic Grants to States 84.002 42801,61111 250,726 Title I Cluster:

Title 1: Grants to Local Educational Agencies 84.010 42901’ 42999 1,336,504 ARRA- Tille 1· Grants to Local Educational Agencies 84.389 42913 295,710

Special Education Cluster: Special Education - Grants to Stales 84.027 43071 913,016 ARRA- Special Education -Grants to States 84.391 61245 390,652 Special Education - Preschool Grants 84.173 62521 35,825

Career and Technical Education: Basic Grants to States 84.048 61095 101,391 Safe and Drug Free Schools and Communities- State Grants 84.186 60511 5,005 Even Start- State Educational Agencies 84.213 42950, 86603 233,098 Twenty-First Century Community Learning Centers 84.287 60565 985,091 Readinesss and Emergency Management for Schools Program 84.184E 64,067 Education Technology Stale Grants 84.318 61600 26,558 ARRA- Education Technology State Grants 84.386 60897 19,750 Reading First State Grants 84.357 60655 57,056 Rural Education 84.358 43481 22,355 ARRA- State Fiscal Stabilization Funds - Educational Stale Grants 84.394 62532 1,203,591 Improving Teacher Quality State Grants 84.367 61480 334,477

Total Department of Education $ 6,274,972

Deparbnent of Housing and Urban Development: Pass Through Payments: Deparbnent of Housing and Community Development:

Community Development Block Grant 14.228 50797, 50799 $ 244,084

National Endowment for the Arts· Pass Through Payments: Virginia Commission for the Arts: Promotion of the Arts Partnership Agreements 45.025 99910 4,000

Corporation for National Community Service: Pass Through Payments: Department of Education:

Learn and Serve America- School and Community Based Programs 94.004 60185 $ 24,150

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County of Russ, Vega

‘Schodul of Expestre of Feral Avards

Forth Year Ended June 30,2010,

Page2ot3

Pasettrough Feterat Entity Federal Grantostat Pass-Through Grote ‘FDA loettyng Fete! Program Custer oT umber Number Expentures (Conieves Deparment of size: ass Trough Payents: para Cerin usceSences

‘ier Aga! Worn Forma Gaal 15588 wr ax0s0 S980

ewes

ARRA. Sp Vidor Agia Women Formule als 13538 wEFSeoNes 210083

Tol Dope Cin! use Senice pas trowgh 583 ‘onpesaon Boar

"AREA. Edvard Bye Marat uses Assan Gran Paya ae ess s_ma16 Tale patra of toe 19880 Depart of renee:

Pass Tron Payers: Depron of tr Visas: ‘So an Communty Highway Slay (02 Funds) 20600 L200 ssz1 sot 37m ‘5070 Sea 88 Degatent of Emagen Managenant:

Ineragoney Harari Male Puc Sco Taig an Plain Gras 20708 508 soe “Te Dearne Tenspatiton 1582 Depatnent of Eaton:

as To.gh Payers Deparment of Eceton Au Eucla Gan Stes x00 ace, 6115 sma Ti Out Tie CranisoLoa cesta gens axot0 1,290 ‘guge04 AREA. Tile Gas o LoralEevetona Agence 4s aS ‘as Spi Eastin Cua Speci Euan - Gras Stas ex0ar sant 13016 -ARRA. Speed Eoveton- Cease Sias ease eis 0352 Spe Even - Prec Grane au173 2821 52

ar Tete Etec: Bae Cran Silos 84048 085 101381

Salen Ou Fre cons and Communion - Sta Gels 84105 eoeit 5005

Even Sa Sao Edvatal Agee 24213 650, 5803 230%

ToatyFit Contry ConmuniyLeanirg Caries 34267 0885 85081,

eesinets and Enageny Meagan a eno Progr Ae 4057

Etucaton Teco Sia Gris 318 seen 2588

RRA. Eden Tesolagy Sta Grats 35 ‘0887 19780

eat Fst Site Gants 357 ss 51088

irl eaten 8 ‘ve 2388

AREA Sil Feral Statileon Funds - Elona Sale Grn ey 582 ‘208881

roeg Tear Oly Sine rans 387 cra Sear? “oa Dapartnortt Edn apie ‘eparrent of Hung ant idan Doveapent

Pas Though Payers epatnerof Husg and Community Doeopant

Conny Deveopmert Bec Grek 14228 ser. 0729 $s neous

ton Endooret re At: Pass Tru Panes ‘Vegi Gans rho et ‘Proraton ale As Parveen Aearant 25005 se sso Copan atl Commanty Serie: Pass Tough Payents ‘sparta of Eeson: Lean and Seve Aner Scheel and Corman Based Pron ot es sms0

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2010

Federal Grantor/State Pass ·Through Grantor/ Program Cluster or Title

Federal CFOA

Number

(Continued) Oepartmenl of labor: Pass Through Payments: Oepartmenl of Education: Workforce Investment Act Cluster:

WIA Youth Activities WIA Adult Program

Total Department of labor

U.S. Department of Homeland Security: Pass Through Payments: Department of Emergency Management:

State Homeland Security Program (SHSP) Emergency Management Performance Grant

Total U.S. Department of Homeland Security

Total Federal Expenditures of Federal Awards

Note 1 – Basis of Presentation

17 259 17.258

97.073 97.042

Pass-through Entity

Identifying Number

86713 86712

52708 52749

Federal Expenditures

11,197 57,000

68,197

54,750 6,769

$ 61,519

$ 10,077,128

The accompanying schedule of expenditures of federal awards {the Schedule) includes the federal grant activity of Russell County, Virginia under programs of the federal government for the year ended June 30, 2010. The information in this Schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portion of the operations of Russell County, Virginia, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Russell County, Virginia.

Note 2 ·- Summary of Significant Accounting Policies (1) Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMS Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. (2) Pass-through entity identifying numbers are presented where available.

Note 3 – Food Distribution Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and disbursed. At June 30, 2010 Russell County, Virginia had food commodities totaling $0 in inventory

Note 4 ·· Subrecipients Of the federal expenditures presented in the Schedule, Russell County, Virginia provided federal awards to subrecipients as follows: CFDA Number Prooram Name Amount

14.228 Community Development Block Grant $ 168,820 The County of Russell serves as the grant recipient for the Workforce Investment Act Cluster (WIA) CFDA numbers 17.258, 17.259, and 17.260. Funds are delivered direcUy to the subrecipient (local Workforce Investment Board) through the Virginia Employment Commission. The Workforce Investment Board did not produce an audit for the fiscal year ending June 30, 2010 and therefore no amounts are available for presentation herein related to the program See schedule of findings, responses and questioned costs for additional information.

Note 5 – Relationship to the Financial Statements Federal expenditures, revenues and capital contributions are reported in the County’s basic financial statements as follows:

Intergovernmental federal revenues per the basic financial statements: Primary government: General Fund $ 2,442,988

Component Unit Schools: School Operating Fund 7,634,140

Total federal expenditures per the Schedule of Expenditures of Federal Awards $ 10,077,128

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Page 3 of3

‘County of Russe, Vigna Schedule of Expenstres of Federal Awards Forth YearEnded June 32000,

Pasetrough Federal ty Federal Granortete Pats - Trough Grant rOA, eenting Fetes! Progam Guster or Tile urbe Number Expenditures {Contnuet) Depotnan tbe: Pass Tough Payments: Depart Eda: ‘Wolke nesta at sie ‘WIA Yeu ties 17289 3 some {Maa Progam 17238 2 Tole Department Labor sar US, Depron Homans Secu Pass Though Paynes ‘partment Erergency Manage ‘Se Homan Seu Pega (SHSP) sro7s 57708 5 tt EmsgenyHanepement Pestmenc Gran 02 508 53 Total US, Deparment of Homer Secnty sas “Told Fees penis Feral Ais $997.18

Nott Bas of revertation

The sesarpsnyig shel of expense firs awards ho Schein he ore rant acto Fuss Cun, Vii under rogram fo feral oven fr yo endo Je 0, ZO. The nate ns Schetue pesos in zcrcsne wih fe regan of OME Grol 13,

‘Aus of Stes, Loc! Coveramens, a Non Po Orgarzaone. cau to Sehedde pect cly called grin of he coatalre ol assel Co, ‘Vapi, is tne oa oes ot presen tern positon cheges nl asst, or cash ows Rusa Cau, Vig

‘Noe 2–Surmay of Sica ossuning Plies (*) pecs repre ne Seneca epson Be ca base anxunng, Such expenses a eons owing Be cos picfles cama OMG Cle A122, Cas Pras foc Non-Pro Crgatizsos, wer carn yes expen aol lowe cris 2 ‘eenboeeran

(2) Pass streagh ry tethjing manasa rosea are abi

te Foot Dison Nonna eaitence aorta hace ae alt are vl fhe canes reed and dsb, Aue 0, 2010 seal County, Vigil aed corse srg Si inven.

No Subeiiants ‘ft deal anges peor ine Schad, Russel Cony, Vega poi ode swans lo ube 8 ons (CeDANenber Pronanane Anau

14238 ena Daveopent ek Crt se80

The Counly of Rusa eeves athe int eet the Woes Isnt Act Cie (HU) CFDA meters 1.258, 17.259, an 17.280. Furs ee «elves eet loth versie Lea Wares nese oad ivcgh te Vigna Eoymar Corson. The Wore resent Boa ot rede ana ote fa yar ntng June 20,200 anette no amounts all presen herein ata of progam. Se sche of Teg, sponses td quosionod ests orale inoralon.

Note ~Rolaonstip ote Frac Stores Fedo expres, oveuts ae copa cota eer ine Couns bas acl tates slows

Intrgoveraril oferclevnon othe basic fara sae:

Pinay goverment Gone fund 296 ‘omg Uni Shek: ‘Sted Operating Fund sano Tot ote expends pre Shetlands ct Fea ards 5 morn

Pagoda

County of Russell, Virginia

Schedule of Findings, Responses and Questioned Costs Year Ended June 30, 2010

Section I- Summary of Auditor’s Results

Financial Statements

Type of auditor’s report issued:

Internal control over financial reporting: Material weakness(es) identified?

Significant deficiency(ies) identified?

Noncompliance material to financial statements noted?

Federal Awards

Internal control over financial reporting: Material weakness(es) identified?

Significant deficiency(ies) identified?

Type of auditor’s report issued on compliance for major programs:

Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510 (a)?

Identification of major programs:

CFDA#

84.173/84.027/84.391

Name of Federal Program or Cluster

Special Education Cluster Title 1: Part A Cluster

Unqualified

Yes

Qualified

Yes

84.010/84.389 10.561 93.558 93.658 84.394

State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Cluster Temporary Assistance for Needy Families (TANF) Foster Care- Title IV-E Cluster

10.553/10.555 17.258/17.259/17.260

ARRA- State Fiscal Stabilization Funds - Educational State Grants Child Nutrition Cluster Workforce Investment Act Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

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$302,314

County of Russell, Virginia

‘Schedule of Findings, Responses and Questioned Costs ‘Year Ended June 30, 2010

Section |- Summary of Auditor’s Results

Financial Statements

Type of auditor’s report issued: Unqualified Internal control over financia! reporting: Material weakness(es) identified? Yes Significant deficiency(jes) identified? No Noncompliance material to financial statements noted? Yes Federal Awards Internal control over financial reporting: Material weakness(es) identified? Yes Significant deficiency(jes) identiled? No Type of auditors report issued on compliance for major programs: Qualified

Any audit findings disclosed that are required to be

reported in accordance with Circular A-133,

Section .510 (a)? Yes Identtcation of major programs:

CFDA # Name of Federal Program or Cluster

84.173/84,027/84.391 Special Education Cluster 84.010/84.389 Title 1: Part A Cluster

10.561 State Administrative Matching Grants for he Supplemental Nutrition Assistance Program Cluster 93.558 Temporary Assistance for Needy Families (TANF)

93.658 Foster Care - Tile IV-E Cluster

84,304 ARRA - State Fiscal Stabilization Funds - Educational State Grants

10.559/10.555 Child Nutrition Cluster 17.258/17.259/17.260 Workforce Investment Act Cluster

Dolar threshold used fo distinguish between Type A and Type 8 programs: $302,314

Auditee qualified as low-risk ausitee? No

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County of Russell, Virginia

Schedule of Findings, Responses and Questioned Costs Year Ended June 30,2010

Section II· Financial Statement Findings

2010-1

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

2010-2

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

Per Statement on Auditing Standards 115 (SAS 115), identification of a material adjustment to the financial statements that was not detected by the entity’s internal controls indicates that a material weakness exist.

The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP). As such, the auditor proposed adjustments that were material to the financial statements.

The County does not have proper controls in place to notice and correct errors in closing their year end financial statements.

There is more than a remote likelihood that a misstatement of the County’s financial statements that is more than inconsequential will not be prevented or detected by the County’s internal controls over financial reporting.

The County should review the auditors’ proposed audit adjustments for 2010 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

The County will review the auditors’ proposed audit adjustments for 2010 and will develop a plan of action to ensure that all adjusting entries are made prior to final audit fieldwork next year.

The Code of Virginia, (1950), as amended requires that an appropriation exist prior to the expenditure of funds.

The budgeting process for the County did not include the Department of Social Services. As such, anticipated expenditures were not included in the County’s advertisement process and no appropriation of funds was given.

The County had never budgeted to include the Department of Social Services in the past.

The County has not met the requirements of the Code of Virginia, (1950), as amended.

The County should budget to include appropriations for all necessary expenditures.

Management will begin to include the Department of Social Services expenditures in all aspects of the budgeting process. In addition, management will post all appropriations in the County’s accounting system and monitor expenditures against same.

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County of Russell, Virginia

Schedule of Findings, Respor Year Ended June 30, 2010

nses and Questioned Costs,

Section II - Financial Statement Findings

2010-4 Criteria Per Statement on Auditing Standards 116 (SAS 115), identtication of a material adjustment to the financial statements that was not detected by the entity’s intemal controls indicates that a material weakness exist.

Condition The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP). As such, the auditor proposed adjustments that were material tothe financial statements

Cause of Condition: The County does not have proper controls in place to notice and correct errors in closing their year end financial statements.

Effect of Condition: There is more than a remote likelihood that a misstatement of the County’ financial statements that is more than inconsequential will not be prevented or detected by the County’s internal controls over financial reporting

Recommendation: The County should review the aucitors’ proposed audit adjustments for 2010 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

Managements The County will review the auditors’ proposed aucit adjustments for 2010 and will develop a plan of

Response: action to ensure that all adjusting entries are made prior to final auit fieldwork next year

2010-2 Criteria: ‘The Code of Virginia, (1950), as amended requires that an appropriation exist prior to the expenditure of funds.

Condition: The budgeting process for the County did not include the Department of Social Services. As such, anticipated expenditures were not included in the County’s advertisement process and no ‘appropriation of funds was given.

Cause of Condition: The County hed never budgeted to include the Department of Social Services in the past.

Effect of Condition: The County has not met the requirements of the Code of Virainia, (1950), as amended.

Recommendation: The County should budget to include appropriations forall necessary expenditures

Managements Management will begin to include the Department of Social Services expenditures in all aspects of

Response the budgeting process. In addition, management wil post all appropriations in the County’s

~2ccounting system and monitor expenditures against same,

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County of Russell, Virginia

Schedule of Findings, Responses and Questioned Costs Year Ended June 30, 2010

Section Ill· Federal Award Findings and Questioned Costs

Statement of Condition:

Criteria:

Effect:

Recommendation:

Statement of Condition:

Criteria:

Effect:

Recommendation:

Workforce Investment Act Cluster (WIA) · CFDA 17.258, 17.259, 17.260

Reporting: The County of Russell serves as the grant recipient for the WIA grant, however funds are remitted directly to the local Workforce Investment Board from the Commonwealth of Virginia. The County does not receive or disburse federal funds, however pursuant to their agreement with the State certain oversight functions are required of the County. Specifically, the County is required to monitor their subrecipient. To date, the County has relied on the Workforce Investment Board’s annual audit, performed in accordance with OMB Circular A-133 to serve as documentation that the Workforce Investment Board has complied with requirements of the grant. The Workforce Investment Board has not completed an audit for the fiscal years ending June 30, 2007, June 30, 2008, June 30, 2009 or June 30, 2010. In addition, the County has not implemented other programs to monitor the Board’s compliance with requirements of the Grant.

The County, as the grant recipient, has the responsibility of monitoring their subrecipient’s compliance with grant requirements.

The subrecipient may not be in compliance with all grant requirements.

The County should require that the subrecipient have the program audited annually and require that the annual audit be completed and finalized within 90 days of year end.

ARRA ·State Fiscal Stabilization Funds· Educational State Grants· CFDA 84.394

Davis Bacon Act: The School Board did not receive weekly certified payrolls in conjunction with construction related to the schools.

The Davis Bacon Act requires that all contractors and subcontractors performing on federal contracts in excess of $2,000 pay their laborers and mechanics not less than the prevailing wage rates and fringe benefits.

Although the School Board received signed notifications from contractors agreeing to follow the Davis Bacon Act, without reviewing the certified payrolls as required, there is a likelihood the School Board is not in compliance with the Davis Bacon Act.

The School Board should require the contractors and subcontractors to submit weekly certified payrolls and review to ensure they meet the required prevailing wage rate clauses in the agreements.

Section IV· Status of Prior Audit Findings and Questioned Costs

Financial Statement Findings 2009-1 and 2009-3 recurred during fiscal year 2010. Federal Award Findings and Questioned Costs 2009-5 recurred during fiscal year 2010.

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County of Russell, Virginia

‘Schedule of Findings, Responses and Questioned Costs

Year Ended June 30, 2010

Section Ill - Federal Award Findings and Questioned Costs

2010:3

Statement of Condition:

Criteria

Effect

Recommendation:

2010-4

Statement of Condition:

Criteria

Effect:

Recommendation:

Section 1V - Status of Prior

Workforce Investment Act Cluster (WIA) - CFDA 17.258, 17.259, 17.260

Reporting: The County of Russell serves as the grant recipient for the WIA grant, however funds are remitted directly o the local Workforce Investment Board from the Commonwealth of Virginia, The County does not receive or disburse federal funds, however pursuant to their agreement with the Slate certain oversight functions are required of the County. Specifically, the County is required to monitor their subrecipient. To date, the County has relied on the Workforce Investment Board’s annual audit, performed in acoordance with OMB Circular A-133 to serve as documentation that the Workforce investment Board has complied with requirements ofthe grant. The Workforce Investment Board has not completed an audit for the fiscal years ending June 30, 2007, June 30, 2008, June 30, 2009 or June 30, 2010. in addition, the County has not implemented other programs to monitor the Board’s compliance with requirements ofthe Grant.

The County, as the grant recipient, has the responsibilty of monitoring their subrecipient’s compliance with grant requirements.

The subrecipient may not be in compliance with all grant requirements,

The County should require that the subrecipient have the program audited annually and require that the annual audit be completed and finalized within 90 days of year end,

ARRA - State Fiscal Stabilization Funds - Educational State Grants - CFDA 84.304

Davis Bacon Act: The School Board did not receive weekly certified payrolls in conjunction with construction related to the schools.

Although the Schoo! Board received signed notifications from contractors agreeing to follow the Davis Bacon Act, without reviewing the certified payrolls as required, there isa likelihood the ‘Schoo! Board is not in compliance with the Davis Bacon Act.

‘The School Board should require the contractors and subcontractors to submit weekly certied payrolls and review to ensure they meet the required prevaling wage rate clauses in the agreements.

‘Audit Findings and Questioned Costs

Financial Statement Findings 2009-1 and 2009-3 recurred during fiscal year 2010. Federal Award Findings and Questioned Costs 2008-5 recurred during fiscal year 2010.

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