2013-Audit

2013-Audit

Document Date: January 1, 2013 Document: 2013-Audit.pdf

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COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2013

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2013

INTRODUCTORY SECTION

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2013

TABLE OF CONTENTS

Page List of Elected and Appointed Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FINANCIAL SECTION

Independent Auditors· Report … … … … … … 2-4 Management’s Discussion and Analysis… 5-14

Exhibit Page Basic Financial Statements:

Government-wide Financial Statements: Statement of Net Position … . 1 15 Statement of Activities … . 2 16

Fund Financial Statements: Balance Sheet - Governmental Funds … . 3 17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement

of Net Position … . 4 18 Statement of Revenues, Expenditures and Changes in Fund Balances -

Governmental Funds … . 5 19 Reconciliation of the Statement of Revenues, Expenditures, and Changes

in Fund Balances of Governmental Funds to the Statement of Activities … . 6 20 Statement of Net Position - Proprietary Funds … . 7 21 Statement of Revenues, Expenses, and Changes in Net Position -

Proprietary Funds … . 8 22 Statement of Cash Flows - Proprietary Funds … . 9 23 Statement of Fiduciary Net Position - Fiduciary Funds … . 10 24

Notes to Financial Statements … . 25-63

Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund … 11 64

Special Revenue Fund- Coal Road… 12 65 Special Revenue Fund - Workforce Investment Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 66

Schedule of Pension and OPEB Funding Progress… 14 67

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FiscaL YEAR ENDED JUNE 30, 2013

TABLE OF CONTENTS

INTRODUCTORY SECTION

Page List of Elected and Appointed Officials … 1 FINANCIAL SECTION Independent Auditors’ Report … 24 Management’s Discussion and Analysis. 54

Exhibit Page Basic Financial Statements:

Government-wide Financial Statemen

Statement of Net Position 1 15 Statement of Activities. 2 16 Fund Financial Statement: Balance Sheet - Governmental FUNS …s.c+csssesesrssstcsesstetsssisecsssvesecessseesees 30017 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position . 4 4B Statement of Revenues, Expenditures and Changes in Fund Balances -

Governmental Funds 5 19 Reconciliation of the Statement of Revenues, Expenditures, and Changes

in Fund Balances of Governmental Funds to the Statement of Activities 6 20 Statement of Net Position - Proprietary Funds… 7 2 Statement of Revenues, Expenses, and Changes in Net Position -

Proprietary Funds 8 2 Statement of Cash Flows - Proprietary Funds . 9 2B Statement of Fiduciary Net Position - Fiduciary Funds . 1024

Notes to Financial Statements. 25-63 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund . : . 64 Special Revenue Fund - Coal Road 12 65 Special Revenue Fund - Workforce Investment Board 3 66 Schedule of Pension and OPEB Funding Progress… 14 «67

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2013

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Exhibit Page

Other Supplementary Information:

Statement of Changes in Assets and Liabilities - Agency Funds . . . . . . . . . . . . . . . . . . . . . . . … . . . . . . . 15 68

Discretely Presented Component Unit- School Board: Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 69 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds… 17 70 Schedule of Revenues, Expenditures, and Changes in Fund Balances -

Budget and Actual… 18 71

Schedule Page Supporting Schedules:

Schedule of Revenues - Budget and Actual - Governmental Funds … . 1 72-77 Schedule of Expenditures- Budget and Actual - Governmental Funds … . 2 78-81

Other Statistical Information: Table Page

Government-wide Information: Government-Wide Expenses by Function … . 1 82 Government-Wide Revenues … . 2 83

Fund Information: General Governmental Expenditures by Function … . 3 84 General Governmental Revenues by Source … . 4 85 Property Tax Levies and Collections … . 5 86 Assessed Value of Taxable Property … . 6 87 Property Tax Rates … . 7 88 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded

Debt Per Capita … . 8 89 Ratio of Annual Debt Service Expenditures for General Bonded Debt to

Total General Governmental Expenditures … . 9 90

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FiscaL YEAR ENDED JUNE 30, 2013

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Exhibit Other Supplementary Information:

Statement of Changes in Assets and Liabilities - Agency Funds . 15

Discretely Presented Component Unit - School Board:

Balance Sheet … 16 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds . 7 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 3 General Governmental Revenues by Source … 4 Property Tax Levies and Collections 5 Assessed Value of Taxable Property. 6 Property Tax Rates 7 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita. 8 Ratio of Annual Debt Service Expenditures for General t to Total General Governmental Expenditures. 9

69 70 71

Page

72-77 78-81

Page

82 83

84 85 86 87 88

89 90

COMPLIANCE SECTION

Compliance:

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2013

TABLE OF CONTENTS (CONTINUED)

Independent Auditors’ 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 … .

Independent Auditors’ Report on Compliance For Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 … .

Schedule of Expenditures of Federal Awards … . Schedule of Findings and Questioned Costs … .

91-92

93-94

95-97 98-100

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FiscAL YEAR ENDED JUNE 30, 2013

TABLE OF CONTENTS (CONTINUED)

COMPLIANCE SECTION

Page Compliance: Independent Auditors’ 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 … 91-92 Independent Auditors’ Report on Compliance For Each Major Program and on Internal

Control over Comptiance in Accordance with OMB Circular A-133… 93-94 Schedule of Expenditures of Federal Awards 95-97 Schedule of Findings and Questioned Costs . 98-100

INTRODUCTORY SECTION

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Jon Bowerbank, Chairman Joseph Puckett, Vice Chairman Bob Gibson Rebecca Dye

COUNTY SCHOOL BOARD

Charlie Collins, Chairman Carl Jackson, Vice Chairman Wayne Bostic Tom Griffith

SOCIAL SERVICES BOARD

Harry Ferguson, Jr., Chairman Roger Brown, Vice Chairman Bill Hale

OTHER OFFICIALS

Larry Rasnake Earnest (Shy) Kennedy

Danny L. Brown

Bob Hillman Linda Cross

Linda Garrett

Rebecca Dye Laurel Rasnick

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 Superintendent of Schools … Dr. Brenda Hess Director of Social Services … Carol Brunty County Administrator … Rufus Hood County Attorney … Matthew Crum

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COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Jon Bowerbank, Chairman Joseph Puckett, Vice Chairman Larry Rasnake Bob Gibson Earnest (Shy) Kennedy Rebecca Dye Danny L. Brown

COUNTY SCHOOL BOARD

Charlie Collins, Chairman Carl Jackson, Vice Chairman Bob Hillman Wayne Bostic Linda Cross Tom Griffith Linda Garrett

SOCIAL SERVICES BOARD

Harry Ferguson, Jr., Chairman Roger Brown, Vice Chairman Rebecca Dye Bill Hale Laurel Rasnick OTHER OFFICIALS

Clerk of the Circuit Court. Commonwealth’s Attorney. Commissioner of the Revenue Treasure! Sheriff Superintendent of Schools. Director of Social Services. County Administrator County Attorne\

‘Ann S. McReynolds +. Brian Patton, Randy N. Williams Patrick Thompson . Steve Dye Dr. Brenda Hess .Carol Brunty … Rufus Hood Matthew Crum

FINANCIAL SECTION

ROBINSON, FARMER, COX ASSOCIA TJES ClR f If ff D Pl !BLJC ACCOl 1·'! t1N JS

INDEPENDENT AUDITORS’ REPORT

To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of County of Russell, Virginia, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Russell County Public Service Authority. Those financial statements were audited by other auditors whose report has been furnished to us and our opinion insofar as it relates to the amounts included for the Russell County Public Service Authority is 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 the 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 from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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ROBINSON, FARMER, COX ASSOCIATES

CUR TID PUBLIC ACCOUN

7s S PROFESSIONAL LIMITED LIABILITY COMPANY

INDEPENDENT AUDITORS’ REPORT

To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business- type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of County of Russell, Virginia, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the Preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Basis for Qualified Opinion

The financial statements referred to above include only the primary government of the County of Russell, Virginia and discretely presented component units-School Board, The Industrial Development Authority of Russell County, and Russell County Public Service Authority, which consists of all funds that comprise the County’s legal entity. The financial statements do not include financial data for the County’s legally separate component unit (Castlewood Water and Sewage Authority.) Accounting principles generally accepted in the United States of America require financial data for the County’s legally separate component units to be reported with the financial data of the County’s primary government. The amount by which this departure would affect the assets, liabilities, net position, revenues, and expenses of the government-wide financial statements has not been determined.

The financial statements referred to above include the fiscal year 2012 net Other Postemployment Benefits (OPEB) obligation as allocated to the County of Russell, Virginia based on an actuarial valuation prepared for use in fiscal year 2011 and 2012. The County has not received an updated actuarial valuation as required by GASB Statement No. 45. The amount by which this departure would affect the assets, liabilities, net position, revenues, and expenses of the government-wide financial statements has not been determined.

Qualified Opinion

In our opinion, except for the possible effects of the matters described in the “Basis for Qualified Opinion” paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and the discretely presented component units of County of Russell, Virginia, as of June 30, 2013, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Unmodified 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 business-type activities, each major fund, and the aggregate remaining fund information for the primary government of the County of Russell, Virginia, as of June 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As described in Note 1 to the financial statements, in 2013, the County of Russell, Virginia adopted new accounting guidance, GASB Statement Nos. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of pension and OPEB funding progress, and budgetary comparison information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

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Basis for Qualified Opinion

Qualified Opinion

Unmodified Opinions

Emphasis of Matter

‘As described in Note 1 to the financial statements, in 2013, the County of Russell, Virginia adopted new accounting guidance, GASB Statement Nos. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.

Other Matters Required Supplementary Information

We, and other auditors, have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Other Information

Our audit was conducted for the purpose of forming opm10ns on the financial statements that collectively comprise the County of Russell, Virginia’s basic financial statements. The other supplementary information, and other statistical information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by 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.

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

The other statistical information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report February 18, 2014, 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering County of Russell, Virginia’s internal control over financial reporting and compliance.

Blacksburg, Virginia February 18, 2014

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Other information

ur 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 other supplementary information, and other statistical information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by 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.

Other Reporting Required by Government Auditing Standards

Holicinoen, Shomar, yy lbsocictes

Blacksburg, Virginia February 18, 2014

Management’s Discussion and Analysis

As management of the County of Russell, Virginia, we offer readers of the County of Russell’s financial statements this narrative overview and analysis of the financial activities of the County of Russell, Virginia for the fiscal year ended June 30, 2013.

Financial Highlights

• The assets of the County of Russell, Virginia exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $15,698,677 (net position). Of this amount, $4,658,528 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors.

• The government’s total net position decreased by $572,850. This loss is spread between governmental activities ($461 ,482 loss) and business-type activity (Dante Sewer loss $111 ,368).

• As of the close of the current fiscal year, the County of Russell’s governmental funds reported combined ending fund balances of $6,025,301 a decrease of $2,152,708 in comparison with the prior year. Most of this total amount, $5,092,135 is available for spending at the government’s discretion (unassigned fund balance).

• At the end of the current fiscal year, unassigned fund balance for the general fund was $5,092,135, or 16.0% of total general fund expenditures.

• The County of Russell’s total long-term debt decreased by $2,636,566 (12.8%) during the current fiscal year. The key factors in this decrease were the principal payments on outstanding issues. There were no new long-term debt issues for the county.

Overview of the Financial Statements

This discussion and analysis are intended to serve as an introduction to the County of Russell’s basic financial statements. The County of Russell’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the County of Russell’s finances, in a manner similar to a private-sector business.

The statement (!f net position presents information on all of the County of Russell’s a) assets and deferred outflows of resources and b) liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County of Russell is improving or deteriorating.

The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless (!f the timing of the related cash .flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned, but unused vacation leave).

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Management’s Discussion and Analysis

Financial Highlights

The assets of the County of Russell, Virginia exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $15,698,677 (net position). Of this amount, $4,658,528 (unrestricted net position) may be used to meet the government’s ‘ongoing obligations to citizens and creditors
The government’s total net position decreased by $572,850. This loss is spread between governmental activities ($461,482 loss) and business-type activity (Dante Sewer loss $111,368).

© As of the close of the current fiscal year, the County of Russell’s governmental funds reported combined ending fund balances of $6,025,301 a decrease of $2,152,708 in comparison with the prior year. Most of this total amount, $5,092,136 is available for spending at the government’s discretion (unassigned fund balance).

‘* At the end of the current fiscal year, unassigned fund balance for the general fund was $5,092,135, or 16,0% of total general fund expenditures.

‘+ The County of Russell’s total long-term debt decreased by $2,636,566 (12.8%) during the current fiscal year. The key factors in this decrease were the principal payments on outstanding issues. There were no new long-term debt issues for the county.

Overview of the Financial Statements

The statement of net position presents information on all of the County of Russells a) assets and deferred outflows of resources and b) liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County of Russell is improving or deteriorating.

The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regurdless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned, but unused vacation leave).

Both of the government-wide financial statements distinguish functions of the County of Russell that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County of Russell include general government administration, judicial administration, public safety, public works, health and welfare, education (including the Russell County School Board), parks, recreation and cultural activities, community development and the Industrial Development Authority. The business-type activities of the County of Russell include the Russell County Public Service Authority and the Castlewood Water and Sewer Authority.

The government-wide financial statements include not only the County of Russell itself (known as the primary government), but also the legally separate Russell County School Board, Russell County Industrial Development Authority, Russell County Public Service Authority and the Castlewood Water and Sewer Authority for which the County of Russell is financially accountable. Financial information for these component units is reported separately from the financial information presented for the primary government itself.

The government-wide financial statements can be found on pages 15-16 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County of Russell, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County of Russell can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental.fimds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmentalfimds and governmental activities.

The County of Russell maintains three different governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, coal road fund, and workforce investment board fund, each of which are considered to be major funds.

The basic governmental fund financial statements can be found on pages 17-20 of this report.

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The government-wide financial statements include not only the County of Russell itself (known as the primary government), but also the legally separate Russell County Schoo! Board, Russell County Industrial Development Authority, Russell County Public Service Authority and the Castlewood Water and Sewer Authority for which the County of Russell is financially accountable. Financial information for these component units Is reported separately from the financial information presented for the primary government itself.

‘The government-wide financial statements can be found on pages 15-16 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County of Russell, ike other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County of Russell can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, a8 well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental finds and governmental activities.

The basic governmental fund financial statements can be found on pages 17-20 of this report,

Proprietary funds. The County of Russell maintains two different types of proprietary funds. Enterprise funds are those used to report the same functions presented as business-type activities in the government-wide financial statements. The County of Russell uses an enterprise fund to account for its water treatment system (in Dante). Internal service funds are an accounting device used to accumulate and allocate costs internally among the County of Russell’s various functions. The County of Russell uses an internal service fund to account for its health insurance. Because both of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.

The basic proprietary fund financial statements can be found on pages 21-23 of this report.

Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the County of Russell’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

The basic fiduciary funds financial statements can be found on page 24 of this report.

Notes to the .financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 25-63 of this report.

Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. The County of Russell adopts an annual appropriated budget for its general fund and special revenue funds. Budgetary comparison statements have been provided for the general fund and each of the special revenue funds to demonstrate compliance with this budget. Information concerning the County of Russell’s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on pages 64-68 of this report.

Government-wide Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the County of Russell, assets exceeded liabilities and deferred inflows of resources by $15,698,677 at the close of the most recent fiscal year.

A significant portion of the County of Russell’s net position (64.3%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The County of Russell uses these assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County of Russell’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the County of Russett’s net position (6.0%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of

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Proprietary funds. The County of Russell maintains two different types of proprietary funds, Enterprise funds are those used to report the same functions presented as business-type activities in the government-wide financial statements. The County of Russell uses an enterprise fund to account for its water treatment system (in Dante). Internal service finds are an accounting device used to accumulate and allocate costs internally among the County of Russell’s various functions. The County of Russell uses an internal service fund to account for its health insurance. Because both of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail

The basic proprietary fund financial statements can be found on pages 21-23 of this report.

County of Russell’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

The basic fiduciary funds financial statements can be found on page 24 of this report.

Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 25-63 of this report.

Other information. \n addition to the basic financial statements and accompanying notes, this, report also presents certain required supplementary information. The County of Russell adopts an annual appropriated budget for its general fund and special revenue funds. Budgetary comparison statements have been provided for the general fund and each of the special revenue funds to demonstrate compliance with this budget. Information concerning the County of Russell’s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on pages 64-68 of this report.

‘Government-wide Financial Analysis

An additional portion of the County of Russell’s net position (6.0%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of

unrestricted net position ($4,658,528) may be used to meet the government’s ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the County of Russell is able to report positive balances in all three categories of net position for the government as a whole. Within the governmental and business-type activities, positive balances are reported for each category except the unrestricted balance for the business-type activity which reported negative net position of $14,838. In the prior fiscal year the unrestricted balance for the business-type activity also reported a negative amount ($15, 118).

County of Russell’s Net Position

Governmental activities Business-type activities Total

2013 2012 2013 2012 2013 2012

Current and other assets $ 18,031,233 $ 20,699,938 $ 52,831 $ 56,744 $ 18,084,064 $ 20,756,682

Capital assets 18,518,571 20,152,631 3,254,610 3,385,627 21,773,181 23,538,258

Total assets '$ ’ 36,549,804 $ ,

40,852,569 $ ,

3,307,441 $ ’ 3,442,371 $ ’ 39,857,245 $ 44,294,940

long-term liabilities outstanding $ 17,194,489 $ 19,811,686 $ 713,586 $ 732,955 $ 17,908,075 $ 20,544,641

Other liabilities 1,662,039 2,554,530 18,094 22,287 1,680,133 2,576,817

Total liabilities $ 18,856,528 $ 22,366,216 $ 731,680 $ 755,242 $ 19,588,208 $ 23,121,458

Deferred inflows of resources $ 4,570,360 $ 4,901,955 $ $ $ 4,570,360 $ 4,901,955

Net position:

Net investment in capital assets $ 7,559,783 $ 7,183,413 $ 2,541,024 $ 2,652,672 $ 10,100,807 $ 9,836,085

Restricted 889,767 1,245,468 49,575 49,575 939,342 1,295,043

Unrestricted 4,673,366 5,155,517 (14,838) (15,118) 4,658,528 5,140,399

Total net position $ 13,122,916 $ 13,584,398 $ 2,575,761 $ 2,687,129 $ 15,698,677 $ 16,271,527

There was a decrease of $482,151 in unrestricted net position reported in connection with the County of Russell’s governmental activities. Most of the change in net position is attributable to the substantial increase in education expenditures.

Governmental activities. Governmental activities decreased the County of Russell’s net position by $461,482, which is a 3.4% change indicating the revenue was not sufficient to cover the expenditures.

A notable change in expenditures was an increase in Education cost in the amount of $2,895,431, which is offset somewhat by decreases in General Government Administration ($1 ,001 ,467) and Public Works ($1 ,469,431) costs.

-8-

unrestricted net position ($4,658,528) may be used to meet the government’s ongoing obligations to citizens and creditors.

County of Russell’s Net Position

Governmental activities Business-type activities Total 28 mB 28 mn Current and other assets $ 18031233 $§ 268938 S$ —SDABL SHTML $18 ORK $ 20756682 Capital assets WBSIgST1 20452631 3.254610 3385627 UTR 23.538, 258 Total assets "s ssigam"S apesaseo”S— 33m7an"S — ganan"S saes7a5"S 44294900 Long-term liabilities outstanding $17,194,489 $ 19,811,686 $ 713,586 $ © 732,955 $ 17,908,075 $ 20,504,641 Other lites 1662039 2.554530 18004 DIS 160018 __ 2576817 Total liabilities $18,856,528 $ 22366,216 $ 731,680 $ 755,282 $ 19588208 $ 23,121,458 Deferred inflows ofresources $4,570,360 $ 4.901955 $ _$ = $ 4570360 $ 4,901,955 ‘Net position: Netinvestmentin capitalassets $7,559783 $ 7183413 $ 2544024 § 2652672 $ 1000807 $ 9.835.085 Restricted 889767 1,205,468, 855 49575 saat 1,205,088 Unrestricted 4973366 5185517 (14838) (15,118) 4.sgsz8 5,140 399 Total net position $ 13122916 9 13,584,388 $ — 2575,761 $ 2,687,129 $§ 15,698.67 $ 16,271,527

County of Russell Changes in Net Position

Governmental activities Business-type activities Total

2013 2012 2013 2012 2013 2012

Revenues:

Program revenues:

Charges for services $ 352,519 $ 428,699 $ 46,192 $ 59,709 $ 398,711 $ 488,408

Operating grants and contributions 9,689,526 9,677,480 9,689,526 9,677,480

Capital grants and contributions 761,738 761,738

General revenues:

Property taxes 14,686,993 13,142,777 14,686,993 13,142,777

Other taxes 5,079,612 6,881,302 5,079,612 6,881,302

Grants and contributions not restricted to

specific programs 2,713,386 2,445,435 2,713,386 2,445,435

Other 106,344 215,361 106,344 215,361

Total revenues 32,628,380 33,552,792 46192 59 709 32,674,572 33,612,501

Expenses:

General government 1,265,678 2,267,145 1,265,678 2,267,145

Judicial administration 2,097,216 2,119,900 2,097,216 2,119,900

Public safety 5,894,181 5,296,188 5,894,181 5,296,188

Public works 4,591,542 6,060,973 4,591,542 6,060,973

Health and welfare 8,270,658 8,397,896 8,270,658 8,397,896

Education 7,484,972 4,589,631 7,484,972 4,589,631

Parks, recreation and cultural 529,706 539,126 529,706 539,126

Community development 2,173,719 3,493,655 2,173,719 3,493,655

Interest on long-term debt 498,401 522,300 498,401 522,300

Service Authority 441,349 410,664 441,349 410,664

Total expenses 32,806,073 33,286,814 441,349 410,664 33,247,422 33,697,478

Change in net position before transfers (177,693) 265,978 (395,157) (350,955) (572,850) (84,977)

Transfers (283,789) (238,597) 283,789 238,597

Change in net position (461,482) 27,381 (111,368) (112,358) (572,850) (84,977)

Net position· beginning 13,584,398 13,557,017 2,687,129 2,799,487 16,271,527 16,356,504

Net position· ending $ 13,122,916 $ 13,584,398 $ 2,575,761 $ 2,687,129 $ 15,698,677 $ 16,271,527

-9-

County of Russell Changes in Net Position

Governmental activities Businesstype acts Total poss par 23 pars 2013 au Revenes Program revenues: Charges for sence $ Bas9 $399 $ BLN § 59709 § «BBR TTL $688,408 Operating eens and contributions 9689526 967480 56s5518 9677480 Capital rants an contributions : T6LTB : T6738 General revenues - : Property taxes 14,686,993 B77 14,686,993 13,142,777 other tres Son9612 6 881,302 5079612 6 881,302 Grants and contribution not restricted to spec programs 2713386 2,465,435 2713386, 435 other 106384 215361 106,388 118361 Total revenues 32608380 33,582,192 46192 59709 32674572 33612501 Expenses: General goverment 1265678 2,267.48 1265678 2,261,85 Joti administration 209721 2119900 dosmz6 2.219900 Public safety 5894181 5,286,188 Sa0e 181 5,296,188 Public works 4sosn 6060973 4ss158 6060973 Heath and welfare 8270658 8397896 8270688 8,397,896 Education 1486972 4889831 7a84972 4589631 Fats, eretion and ctu 529,706 539,106 52316 539,126 Community development 2a73719 3,893,555 2189 3493685 Interest on ng term debt 488,401 522300 : 498 401 22300 Service Authority : aa1s9 1064 46149 410.68 Total expenses waa6073 3.286814 ag suoses 330702 asTATB hang net postion before transfers (u77653) 265978 395.187) (350955) 572880) (gsr?) Transfers (23789) (238597) 283,789 238597 Change in et poston (461482) m7381 (UN 368) (12358) (572,850) (e497) Net poston - begining 13584398 13557017 2687129 2.799487 16271527 16356508 Net poston - ending $_1322916 § 13884388 § —_2575,761 $ 2687109 § 15698677 $ _ 16271527

~------ - E~~~~ses and ~;~;;~e~-~-ov~r~mental ----------1

I $o,ooo,ooo Activities

$8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000

fill Expenses 11 Program Revenues

Revenues by Source - Governmental Activities

1!1 Charges for services

Iilli Operating grants and contributions

Capital grants and contributions

1!1 Property taxes

ill Other taxes

Grants and contributions not restricted to specific programs

Other

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Expenses and Program Revenues - Governmental

Activities

$9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 _ $2,000,000

neo a

B Expenses Program Revenues

Revenues by Source -

panned

Charges for services

@ Operating grants and contributions

1 Capital grants and contributions

Property taxes.

Other taxes

not restricted to specific programs

2 Other

| | | o% 25 Grants and contributions

-10-

Business-type activities. Business-type activities decreased the County of Russell’s net position by $111,368. The Dante Water Treatment System referred to as “the Service Authority,” incurred expenses of $441,349 and collected program revenue of $46,192. The Service Authority also received a General Fund subsidy of $283,789. By policy, the Dante Service Authority is not an enterprise activity and therefore is not expected to be self-supporting.

$500,000

$450,000

$400,000

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

Service Authority (Dante Water Treatment System)

Expenses Program Revenue

Revenues by Source - Business Type Activities

iEl! Charges for services

I!! Other

-11-

Service Authority (Dante Water Treatment System)

$500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000

$50,000

Expenses Program Revenue

Revenues by Source - Business Type Activities

18 Charges for services

Other

Financial Analysis of the Governmental Funds

As noted earlier, the County of Russell uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the County of Russell’s governmental fimds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the county of Russell’s financing requirements. In particular, unassigned fimd balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the County of Russell’s governmental funds reported combined ending fund balances of $6,025,301, a decrease of $2,152,708 in comparison with the prior year. The majority of this fund balance represents unassigned fund balance ($5,092, 135), which is available for spending at the government’s discretion. The remainder of fund balance is restricted or committed to indicate that it is not available for new spending because it has already been restricted or committed for the Coal Road/Revenue Sharing projects or debt service and bond covenants.

The general fund is the chief operating fund of the County of Russell. At the end of the current fiscal year, unassigned fund balance was $5,092,135. As a measure of the general fund’s liquidity, it may be useful to compare fund balance to total fund expenditures. Unassigned fund balance represents 16.0% of general fund expenditures.

The fund balance of the County of Russell’s General Fund decreased by $1,792,470 during the current fiscal year. The key factor in the increase is:

• An increase in General Fund Education expenditures in the amount of $3,559,498, which is offset by decreases in other expenditures.

The Coal Road Fund provides the 50% match required for the Virginia Department of Transportation’s (VDOT) Revenue Sharing Program. Part of the coal and gas severance taxes collected are deposited into this fund and used to fund the approved projects. Several projects are approved and were in the planning stages at July 1, 2012. Construction on these projects, along with the related expenditures, occurred during fiscal year 2013. As a result, the fund balance in the Coal Road Fund decreased by $355,701 during the fiscal year. The balance of $889,767 at the end of the year is committed for various projects.

The Workforce Investment Board Fund is a state and federal funded program. No County funds are used to support this program. The fund balance decreased by $4,537 during the year ended June 30, 2013. The entire fund balance of $43,399 is restricted for future program support.

Proprietary jimds. The County of Russell’s proprietary funds provide the same type information found in the government-wide financial statements, but in more detail.

Unrestricted net position of the Dante Service Authority at the end of the year amounted to ($14,838), and those for the Health Insurance Fund amounted to $3,081,760. The total growth or (decline) in the net position for both funds was ($111 ,368) and $677,104, respectively. Other factors concerning the finances of these two funds have been addressed in the discussion of the County of Russell’s business-type activities and proprietary funds.

-12-

Financial Analysis of the Governmental Funds

As noted earlier, the County of Russell uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the County of Russell’s governmental funds is to provide information on near-term inflows, outflows, and balances of spenduble resources. Such information is useful in assessing the county of Russell’s financing requirements. In particular, unassigned find balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the County of Russell’s governmental funds reported combined ending fund balances of $6,025,301, a decrease of $2,152,708 in comparison with the prior year. The majority of this fund balance represents unassigned fund balance (5,092,135), which is available for spending at the government’s discretion. The remainder of fund balance is restricted or committed to indicate that it is not available for new spending because it has already been restricted or committed for the Coal Road/Revenue Sharing projects or debt service and bond covenants.

The fund balance of the County of Russell’s General Fund decreased by $1,792,470 during the current fiscal year. The key factor in the increase is:

An increase in General Fund Education expenditures in the amount of $3,559,498, which is offset by decreases in other expenditures.

The Workforce Investment Board Fund is a state and federal funded program. No County funds are used to support this program. The fund balance decreased by $4,537 during the year ended June 30, 2013, The entire fund balance of $43,399 is restricted for future program support.

Proprietary funds. The County of Russell’s proprietary funds provide the same type information found in the government-wide financial statements, but in more detail.

Unrestricted net position of the Dante Service Authority at the end of the year amounted to ($14,838), and those for the Health Insurance Fund amounted fo $3,081,760. The total growth or (decline) in the net position for both funds was ($111,368) and $677,104, respectively. Other factors concerning the finances of these two funds have been addressed in the discussion of the County of Russell’s business-type activities and proprietary funds.

120

General Fund Budgetary Highlights

For many years, management in Russell County simply adjusted the final budget at June 30 to equal the actual expenditures. In fiscal year 2011, this practice was stopped. During fiscal year 2013 proper procedures were followed in which the original budget was adjusted to reflect supplemental appropriations adopted by the Board of Supervisors throughout the year or during a public hearing to formally amend the budget. This provides a properly appropriated Final Budget for CAFR presentation.

Capital Asset and Debt Administration

Capital assets

The County of Russell’s investment in capital assets for its governmental and business-type activities as of June 30, 2013, amounts to $21,773,181 (net of accumulated depreciation). This investment in capital assets includes land, buildings, a utility plant, and machinery and equipment. The total investment in the County of Russell’s capital assets for the current fiscal year decreased by 7.5% (8.1% decrease for governmental activities and 3.9% decrease for business-type activities). The decrease in investment is due to additional accumulated depreciation. Due to the continued depressed economy, the County did not expend significant funds on capital assets in fiscal year 2013.

Governmental activities Business-type activities Total

2013 2012 2013 2012 2013 2012

Land $ 1,561,333 $ 1,541,333 $ $ $ 1,561,333 $ 1,541,333

Construction in Progress

Buildings 15,565,287 17,007,601 $15,565,287 $17,007,601

Utility plant 3,254,610 3,385,627 $ 3,254,610 $ 3,385,627

Machinery and equipment 1 391 951 1 603.697 :li 1,391 ,951 :li 1,603,697

Total $ 18 518 571 $20 152 631 $3 254 610 $3,385 627 $21 773 181 $23 528 2:28

Additional information on the County of Russell’s capital assets can be found in note 10 on pages 51-52 of this report.

Long-term debt.

At the end of the current fiscal year, the County of Russell’s governmental funds had total debt outstanding of $17,194,489. Of this total, $13,898,183 comprises general obligation and revenue bonds all backed by the full faith and credit of the County and $2,112,110 comprise Literary Fund Loans and Literary Anticipation Note.

-13-

General Fund Budgetary Highlights

For many years, management in Russell County simply adjusted the final budget at June 30 to equal the actual expenditures. In fiscal year 2071, this practice was stopped. During fiscal year 2013 proper procedures were followed in which the original budget was adjusted to reflect supplemental appropriations adopted by the Board of Supervisors throughout the year or during a public hearing to formally amend the budget. This provides a properly appropriated Final Budget for CAFR presentation.

Capital Asset and Debt Administration Capital assets

Governmental activities Business-type activities Total

2013 2012 2013 2012 2013 2012 Land $ 1,561,333 $ 1,541,333 § - $ - $ 1,561,333 $ 1,541,333 Construction in Progress - - - - - - Buildings 15,565,287 17,007,601 a - $15,565,287 $17,007,601 Utility plant - - 3,254,610 3,385,627 $ 3.254.610 $ 3,385,627 Machinery and equipment 4,391,951 41,603.697 = - $ 1,391,954 $ 1,603,697 Total $18,518,571 $20,152,631 $3,254,610 $3,385,627 $21,773,181 $23,528,258

Additional information on the County of Russell’s capital assets can be found in note 10 on pages 51-52 of this report

Long-term debt.

The remainder of Russell County’s debt represents lease purchase agreements, landfill post- closure liabilities, OPEB obligations and compensated absences.

Governmental Activities Business-type Activities Total 2013 2012 2013 2012 2013 2012

General obligation bonds $ 8,753,677 $9,471,649 $ $ $8,753,677 $9,471,649 Literary loans 2,095,423 2,564,585 2,095,423 2,564,585 Revenue bonds 4,877,995 5,114,923 713,586 732,955 5,591,581 5,847,878 Literary anticipation note 16,687 630,395 16,687 630,395 Deferred amounts:

Bond premium 266,511 283,315 266,511 283,315 Lease purchase agreements 341,188 617,454 341,188 617,454 closure/post-closure liability 267,913 526,868 267,913 526,868 OPEB obligations 6,609 6,609 6,609 6,609 Compensated absences 568.486 595.888 568 486 595 888

Total $:lZ :191 189 $:19 8:1:1 686 $ Z:13 586 $ Z32 955 $11 908 O:Z5 $20 544 61:1

Requests for Information

This financial report is designed to provide a general overview of the County of Russell’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Rufus W. Hood, County Administrator, County of Russell, P.O. Box 1208, 137 Highland Drive, Lebanon, VA 24266.

-14-

The remainder of Russell County’s debt represents lease purchase

closure liabilities, OPEB obligations and compensated absences.

agreements, landfill post-

Governmentel Acivites _Business-lype Activites Total

2012 2013 2012 2012 General obligation bonds S9.47te49 § $9.471,640 Literary loans 2.564.585 085,423 2.864.585 Revenue bonds 5114923 713,586 752.055 5501581 5.847878 Literary anticipation note 630,395 16987 630,395, Deferred amounts:

Bond premium 208511 289,318 266,511 283,318 Loase purchase agreoments 341188617454 3e1168 17/454 closure/post-lasure lilly 2e7e13 $26,868 persis 526,868 OPES obligations 6.609 6.609 6.808 6,608, Compensated absences 565485 __595.858 a 595,

“Total Siziaisss Geto STE EAS Zakors smseaest

Requests for Information

This financial report is designed to provide a general overview of the County of Russell’s finances for all those with an interest in the government’s finances. Questions conceming any of the information provided in this report or requests for additional financial information should be addressed to Rufus W. Hood, County Administrator, County of Russell, P.O. Box 1208, 137

Highland Drive, Lebanon, VA 24266.

Basic Financial Statements

Exhibit 1

County of Russell, Virginia

Statement of Net Position

June 30, 2013

Component Units Primary Government Industrial Russell County

Governmental Business-type Development Public Service

Activities Activities Total School Board Authority Authority

ASSETS

Cash and cash equivalents $ 5, 719,700 $ $ 5,719,700 $ 351,024 $ 853,752 $ 103,886

Receivables (net of allowance for uncollectibles):

Taxes receivable 8,396,689 8,396,689

Accounts receivable 672,033 3,256 675,289 44,540 20,339 260,332

Due from component unit 883,334 883,334

Due from other governmental units 1,572,681 1,572,681 1,508,496

Inventories 11,223

Prepaid items 385,063 25,582

Restricted assets:

Temporarily restricted:

Cash and cash equivalents 786,796 49,575 836,371 158,722

Capital assets (net of accumulated depreciation):

Land 1,561,333 1,561,333 4,643,707 2,264,397 106,332

Land improvements 331,618

Buildings and improvements 15,565,287 15,565,287 10,918,096 6,581,104 107,097

Machinery and equipment 1,391,951 1,391,951 1,460,965 358,573 2,244,427

Utility plant in service 3,254,610 3,254,610 14,744,150

Construction in progress 1,302,926 3,821,553

Less: Accumulated Depreciation (4,506,368)

Total assets $ 36,549,804 $ 3,307,441 $ 39,857,245 $ 19,311,891 $ 11,712,709 $ 17,076,936

LIABILITIES

Accounts payable $ 1,446,854 $ 16,360 $ 1,463,214 5 377,926 $ 307,908 $ 313,102

Accrued liabilities 774 774 990,356 109,968

Customer deposits 18,200

Accrued interest payable 214,411 1,734 216,145 48,935 22,055

Due to primary government 683,334 200,000

Long-term liabilities:

Due within one year 1,759,796 20,175 1,779,971 671,190 1,053,103 200,889

Due in more than one year 15,434,693 693,411 16,128,104 686,106 5,774,560 6,379,322

Total liabilities $ 18,856,528 $ 731,680 $ 19,588,208 $ 3,408,912 $ 7,384,506 $ 7,043,536

DEFERRED INFLOWS OF RESOURCES

Unavailable revenue - property taxes $ 4,570,360 $ $ 4,570,360 $ $ $

NET POSITION Net investment in capital assets $ 7,559,783 $ 2,541,024 $ 10,100,807 $ 17,022,768 $ 4,691,433 $ 9,936,980

Restricted for:

Coal Road 889,767 889,767

Debt service and bond covenants 49,575 49,575 158,722

Unrestricted (deficit) 4,673,366 (14,838) 4,658,528 (1,119,789) (363,230) (62,302)

Total net position $ 13,122,916 $ 2,575,761 $ 15,698,677 $ 15,902,979 $ 4,328,203 $ 10,033,400

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

-15-

County of Russell, Virginia ‘Statement of Net Postion

exhibit +

June 30, 2013 Component Units Primary Government Industria Russell County Governmental Businer-type Development Public Service Aetivities Activities School Board Authority Authority, assers Cash and cash equivalents 55,719,700 § S 5719700 $3502 § aSITSZ $103,806 Receivables (not of allowance fr uncllecibles)

Taxes receivable 8,396,609 2,396,689 :

Accounts receivable 67,033 3056 678,289 4450 20.9 260,382 Due from component unit 883,334 83,304 : : ‘ue from other governmental units 4,572,681 1768 1,508,496 : Inventories : creel Prepaid items 385,083, 25,582 Restricted asses:

“Temporarily restrict!

‘cash and cash equivalents 786,796 49,575 36,371 158,722 Ccaplta assets (net of accumulated depreciation:

and 1,561,333 1,561,333 4,683,707 2,264,397 106,332

Land improvements 331,618

Bullings and improvements 15,565,287 15,565,287 10,938,096 6 581,108

Machinery and equipment 1,391,951 1.391,951 1,460,965 358.573

‘att pant ia service 325610 3.254.610

Constction in progress 1,302,026

Less: Accumulated Depreciation (4,506,368)

Total assets tea SaaS we Tees TTDI 7.076.936 asiLies ‘Accounts payable S 14t6es4 $16,300 $1,463,214 § 377,926 S$ 307,508 § 313,102 Accrued liabilities 7 : 74 990,356 109,968 ‘Customer deposits : : : : 13,200 ‘Accrued interes payable aan ana 216,045 : 43,935 22,055, Due to primary government : . : 683,334 700,000 Long-term liabilities: ‘Due within ane year 1,759,796 2.78 wren ona 3,083,103 200,888 ‘Due in mare than ane year 15,436,698 3.41116, 128,104 686,106 5,774,560 637932 Total ibiities 316,856,528 $731,080 19,508,208 “S3.a08,912 8 7.284506 S 7,003,536 DEFERRED INFLOWS OF RESOURCES

‘Unavalable revenue - property taxes Ss _ 4570360 § 54570360 § s A NET Posmon Net investment n capital assets S 7,558,783 § 2,549,024 § 10,100,807 $17,022,768 5 4691.43 $ 9,936,500 Restricted fr:

Coal Road 999,767 989,767 :

Debs service and bond covenants 29.515 8.573 80,722 Uncestricted (deficit) 473,366 114838) 4,658,508 1.119.788) (363.230) (62,302)

Total net position $B,122,916 5 2375,161_3 15,698,677 “S_ 15,900,979 $4,328,203 $70,033,400

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

Functions/Programs

PRIMARY GOVERNMENT: Governmental activities:

General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Community development Interest on long-term debt

Total governmental activities

Business-type activities: Service Authority

Total primary government

COMPONENT UNITS: School Board Industrial Development Authority Russell County Public Service Authority Total component units

County of Russell, Virginia Statement of Activities

For the Year Ended June 30, 2013

Program Revenues Primary

Government

Charges for Services

Operating Grants and

Capital Grants and Governmental Business-type

Contributions Contributions

s 1,265,678 4,679 307,375 2,097,216 8,085 588,220 5,894,181 105,009 1,692,927 4,591,542 205,056 15,169 8,270,658 6,879,852 7,484,972

529,706 29,690 338,530 2,173,719

498,401 32,806,073 352,519 9,822,073

441,349 46,192 s 33,247,422 398,711 9,822,073 s

41 '136,895 647,817 32,016,007 1,098,857 17,466 1,850,003 1,133,980

44,085,755 1,781,797 s 32,033,473

General revenues: General property taxes Other local taxes:

Local sale5 and use taxes Coal road and severence taxes Consumers’ utility taxes Motor vehicle licenses Other local taxes

Unrestricted revenues from use of money and property Miscellaneous Payments from the County of Russell, Virginia

1,387,708 1,411,104 2,798,812

Grants and contributions not restricted to specific programs Gain on disposal of capital assets Transfers Total general revenues and transfers

Change in net position Net position- beginning, as restated Net position - ending

(953,624) {1 ,500,911) {4,096,245) (4,371,317)

{1,390,806) {7,484,972)

{161 ,486) {2,173,719)

14,686,993

1,689,275 2,285,086

567,707 355,686 181,858 45,865 60,479

2,580,839

{283,789) Z2,169,999

(461,482) 13,584,398 13,122,916

283,789 283,789

(111 ,368) 2,687,129 2,575,761

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

Net (Expense) Revenue and Changes in Net Position

Component

Units Industrial

Exhibit 2

Russell County Development Public Service

School Board

(8,473,071) $ 306,317

14,686,993

1,689,275 2,285,086

567,707 355,686 181,858 45,865 3,215 638,040 4,898 60,479 292,514 196,335 61,721

7,962,364 1,537,278 1,213,068 2,580,839

79,117

22,453,788 8,258,093 s 2,371,653 1,358,804 {572,850) (214,978) s 2,677,970 2,053,885

16,271,527 16,117,957 1,650,233 7,979,515 15,698,677 15,902,979 s 4,328,203 10,033,400

county of Ruel Vig Satement of Ate orth Yen Ende June 30, 2013

eh?

Funston Progam

Sovernmenta acts: {General goverment amination ‘cal amtration Prkicworts esi an welfare ark, rerention, a oda ‘cnmunty development Inert eng tr debe

uses type activities: sence sutorty Total primary government

Cconponen UNITS: Seat Bord

sti Development autocty use Canty Public Sence Authority Tot component unis

Net (expense) Revenue and

Program Revenues ‘Changes in Not Postion Primary ‘Campane Goverment Unite Operating capital Tarra Rawel Coanty Charges or Ganleand—Granteand Governmental Busnets-ype Development Publi Service fapmiss Service: Gtributions Cantrutions ——tivleg—-Actviie?—=«“Total-«=«‘Sehool Board authority” uthorty S 12678 $4679 § 307375 5S s3an0) 5 s dome sors "ae 20 song) Samat sas.co7 692.927 4.096.245) Aseise 105.056 15.68 ea7n3i7) same 6379.52 90.806) aba asasr) 518.706 26830 6786) ama ar73719) ‘oa. (98.01), THe. -§ iss S__ 9a TRS TRoLeN sais s 410 8 995,197) 5_ 095.151) Sm § warn §_9eOTS (95.157) $006 38) S mi6a9s § earsi7 § mo. § Ss warsory § s 1036857 17o6 1,307,708: 306,307 Nesnos 1.123900 2 tani0e 265001 $ Hus. 155 Syst 3 ROA Sz SEAL ea 95 cena event “Genera property taxes 5 14860985 § 5S meses 5 5 ‘Other oat or: eestor apne tes 689.075 1.689.278 osl oad and severance taxes 2.288.088 2.285.086 eosumers way ates ser207 ‘e707 Noter vail enses 355,686, 35,686 ‘ther oat axes 1a58 9858 Unreseict evens fam us of money ad prepety 5088 45.85 3218800 4398 Miscellaneous aan coarse 1968 ani Payments rem the County oF Ruse, Virgins 79a 4s AB Oe Grants and cotribtions not restrict to ec prorams 2.500 839 2.80839 Sain on eposl of cata sets r07 Tenses 2e3.709) 283,709 Total general revenues and rasfers 51999 2 a7 5 TSS eR SS change met coon SSL § (LSB) S GIZASOY S (214978) §—2ATTITO 8 2.053.885 Net poston -baginig, 2 restated sass 2657.9 7s ToT sea.a9s 7.9718 Net besten ening Sia na.916 F255. 761§ 15.08.4775 15,502.99 SA ze IS 0.003.400

‘The acomesing notes othe financial ttemens are an interal soo ne statement

Exhibit 3

County of Russell, Virginia

Balance Sheet

Governmental Funds

June 30, 2013

Coal Workforce

General Road Investment Board Total

ASSETS

Cash and cash equivalents s 2,405,137 s s 120,642 s 2,525,779

Receivables (net of allowance for uncollectibles):

Taxes receivable 8,396,689 8,396,689

Accounts receivable 258,314 71,507 329,821

Due from other funds 46,115 65,105 111,220

Due from component unit 883,334 883,334

Due from other governmental units 1,246,030 326,651 1,572,681

Restricted assets:

Temporarily restricted:

Cash and cash equivalents 786,796 786,796

Total assets s 13,235,619 923,408 447,293 s 14,606,320

LIABILITIES

Accounts payable s 666,166 s 33,641 s 292,674 s 992,481

Accrued liabilities 774 774

Due to other funds 111,220 111,220

Total liabilities 666,940 s 33,641 s 403,894 s 1,104,475

DEFERRED INFLOWS OF RESOURCES

Unavailable revenue - property taxes 7,476,544 s s s 7,476,544

FUND BALANCES

Restricted:

Coal Road s s 889,767 s 889,767

Committed:

Special revenue funds 43,399 43,399

Unassigned: 5,092,135 5,092,135

Total fund balances s 5,092,135 889,767 s 43,399 s 6,025,301

Total liabilities, deferred inflows of resources, and fund balances s 13,235,619 923,408 s 447,293 s 14,606,320

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

-17-

County of Russoll, Virginia Balance Sheet Governmental Funds june 30, 2013

exhibit 3

ASSETS Cash and eash equivalents Receivables (net of allowance for collectibles} Taxes receivable Accounts receivable ‘ue fram other funds ue from component unit ue from other governmental units Restricted assets: Temporarily restricted! Cash an cash equivalents Total assets

asiumies ‘Accounts payeble Accrued tables Bue to other funds Total abilities

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes

FUND BALANCES. Restricted Coal Road Committed Special revenue funds Unassigned: Total fund balances

coat Woekforce Road lavestment Board Total

$ 2405,037 § s 120602 § 2,805,779

8,396,669 8,396,669

258,314 7,507 329,821

26,115, 65,105 1.220

285,334 83,334

1,246,030 326.651 1,572,681

788,796 785,796

FRE _ 973.c08 BS S605, 370

S e516 § — T6e1 S 2674 $992,481

74 77%

111,220 111,220,

3 w9% 5 __Saoa_S 403.0945 1.104.475

Ss 7765M_§ A S_7476,504

s +S 88,067 § Ss a89,767

: a8 339

5,092,135, : 5,092,135

3 5,002.135 5 __ 669,767 5 BI_S_ 6.025.301

§ I$ 14,606,320

Total iabilities, deferred lions of resources, and fund balances $13,735,619 5 923,408

‘The eccomparying notes tothe financial statements are an integral part ofthis statement,

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

To the Statement of Net Position

June 30, 2013

Amounts reported for governmental activities in the statement of net position 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.

Land

Buildings and improvements

Machinery and equipment

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 position.

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

Bonds, literary loans, and note

Capital lease

Unamortized premium

Accrued interest payable

Landfill accrued closure and postclosure liability

Net OPEB obligation

Compensated absences

Net position of governmental activities

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

-18-

1,561,333

15,565,287

1,391,951

(15,743,782)

(341, 188)

(266,511 1 (214,411)

(267,913)

(6,609)

(568,486)

Exhibit 4

$ 6,025,301

18,518,571

2,906,184

3,081 '760

(17,408,900)

$ 13,122,916

Exhibit 4 County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Not Position June 30, 2013

Amounts reported for governmental activities in the statement of net position are different because: Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds 5 6,025,301

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

Land 1,561,333, Busldings and improvements 15,565,287 Machinery and equipment 1,391,951 18,518,571

Other long-term assets are not avallable to pay for current-periad expenditures and, therefore, are deferred in the funds, 2,906,184

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 position. 3,081,760

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

Bonds, literary loans, and note (15,743,782)

Capital lease (341,188)

Unamortized premium (266,511)

Accrued interest payable (214,41)

Landfill accrued closure and postelosure liability (267,913)

Net OPEB obligation (6,609),

Compensated absences (568,486) (17,408,900) Net position of governmental activities EEE

‘The accompanying nates to the financial statements are an integral part ofthis statement.

Exhibit 5

County of Russell, Virginia

Statement of Revenues, Expenditures, and Changes in Fund Balances

Governmental Funds

For the Year Ended June 30, 2013

Coat Workforce

General Road Investment Board Total

REVENUES

General property taxes s 14,696,587 s s s 14,696,587

Other local taxes 3,937,219 1 '142,393 5,079,612

Permits, privilege fees, and regulatory licenses 34,152 34,152

Fines and forfeitures 14,955 14,955

Revenue from the use of money and property 31,431 5,232 36,663

Charges for services 303,412 303,412

Miscellaneous 60,479 60,479

Recovered costs 1,009,359 1,009,359

Intergovernmental revenues:

Commonwealth 7, 734,506 2,550 7,737,056

Federal 2,458,978 2,206,878 4,665,856

Total revenues s 30,281,078 s 1 '147,625 $ 2,209,428 s 33,638,131

EXPENDITURES

Current:

General government administration s 1,797,929 s s s 1,797,929

Judicial administration 2,096,382 2,096,382

Public safety 5,742,101 5,742,101

Public works 3,241,005 1,503,326 4,744,331

Health and welfare 6,120,771 2,213,965 8,334,736

Education 6,390,469 6,390,469

Parks, recreation, and cultural 488,706 488,706

Community development 2,283,910 2,283,910

Nondepartmental 423,737 423,737

Capital projects 334,929 334,929

Debt service:

Principal retirement 2,314,036 2,314,036

Interest and other fiscal charges 555,784 555,784

Total expenditures s 31,789,759 s 1,503,326 s 2,213,965 s 35,507,050

Excess (deficiency) of revenues over

(under) expenditures s (1 ,508,681) $ (355,701) s (4,537) s (1,868,919)

OTHER FINANCING SOURCES (USES)

Transfers out s (283,789) s s s (283,789)

Net change in fund balances s (1 '792,470) s (355, 701) s (4,537) s (2,152,708)

Fund balances- beginning 6,884,605 1,245,468 47,936 8,178,009

Fund balances- ending s 5,092,135 s 889,767 s 43,399 s 6,025,301

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

-19-

Exhibit 5 County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2013

Coat Workforce General Road Investment Board Total REVENUES General property taxes, 5 14,696,587 $ :$ + $14,696,587 Other local taxes 3,937,219 1,142,393 5,079,612 Permits, privilege fees, and regulatory licenses 34,152, - : 34,152 Fines and forfeitures 14,955, : 14,955 Revenue from the use of money and property 31,431 9,232 : 36,663, Charges for services 303,412 : 303,412 ‘Miscellaneous 60,479 : 60,479 Recovered costs 1,009,359 : = 1,009,359 ntergovernmentat revenues: Commonwealth 7,734,506 : 2,550 7,737,056 Federal 2,458,978 : 2,206,878 4,665,856 Total revenues 3 30,281,078 $1,147,625 §) 2,209,428 $33,638,131 EXPENDITURES Current’ General government administration $1,797,929 $ “8 = $1,797,929 Jusicial administration 2,096,382 : = 2,096,382 Public safety 5,742,101 : - 5,742,101 Public works 3,241,005 1,503,326 = 4,744,331 Health and welfare 6,120,771 - 2,213,965 8,334,736 Education 6,390,469 6,390,469 Parks, recreation, and cultural 488,706 : 488,706 Community development 2,283,910 : 2,283,910 Nondepartmental 423,737 - : 423,737 Capital projects 334,929 : : 334,929 Debt service: : Principal retirement 2,314,086 : + 2,314,036 Interest and other fiscal charges 995,784 : : 585,784 Total expenditures 331,789,759 $1,503,326 §) 2,213,965 8 35,507,050 Excess (deficiency) of revenues over (under) expenditures (1,508,681) $__ (355,701) $. (4,537) $ (1,868,919) OTHER FINANCING SOURCES (USES) Transfers out S$ (283,789) $ 3 = S_ (283,789) Net change in fund balances S (1,792,470) $ (355,701) $ (4,537) $ (2,152,708) Fund balances - beginning 6,884,605 1,245,468 41,936 8,178,009 Fund batances - ending $5,092,135 S$ 889,767_$ 43,399_§ 6,025,301

‘The accompanying notes to the financial statements are an integral part of this 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, 2013

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 depreciation exceeded capital outlays in the current period.

Capital outlay Reversion of assets back to the School Board (net) Depreciation expense

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 obligations (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term obligations consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when obligations 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 obligations and related items.

Principal Payments: Bonds, literary loans, and notes Landfill accrued closure and postclosure liability Capital lease

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.

(Increase) decrease in compensated absences (Increase) decrease in accrued interest payable Amortization of bond premiums

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 position of governmental activities

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

-20-

378,940 (876,894)

Exhibit 6

$ (2,152,708)

(1 '1 36, 106) (1 ,634,060)

2,037,770 258,955 276,266

27,402 40,579 16,804

(9,594)

2,572,991

84,785

677,104

$ (461,482)

County of Russel, 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, 2013

Exhibit 6

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 s allocated over their estimated useful les and reported as depreciation expense. This is the {amount by which depreciation exceeded capital outlays in the current period.

Capital outlay Reversion of assets back to the School Board (net) Depreciation expense

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

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

Principal Payments Bonds, literary loans, and notes Landfill accrued closure and postelosure Wability Capital lease

‘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,

(increase) decrease in compensated absences

(tnerease) decrease in accrued Interest payable Amortization of bond premiums

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 intemal service funds is reported with governmental activities,

Change in net position of governmental activities,

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

§ (2,152,708)

378,940 (676,894)

11.136,106) (1,634,060)

9,094)

2,037,770 258,955,

276266 2,572,991

27,0 40,579 16,00 84,785,

677,104

3 aia

Exhibit 7 County of Russell, Virginia

Statement of Net Position Proprietary Funds

June 30, 2013 Enterprise Internal

Fund Service Fund

Dante Self Fund Health Insurance

ASSETS

Current assets: Cash and cash equivalents s s 3,193,921

Interest receivable 58 1,504 Accounts receivable, net of allowance for uncollectibles 3,198 340,708

Total current assets s 3,256 $ 3,536,133

Noncurrent assets:

Restricted assets: Cash and cash equivalents (in custody of others) $ 49,575 $

Capital assets: Utility plant in service $ 5,240,699 $ Less accumulated depreciation (1 '986,089) Total capital assets $ 3,254,610 $ Total noncurrent assets $ 3,304,185 $ Total assets $ 3,307,441 $ 3,536,133

LIABILITIES Current liabilities:

Accounts payable $ 16,360 $ 454,373

Accrued interest payable 1 '734 Revenue bonds - current portion 20,175

Total current liabilities $ 38,269 $ 454,373

Noncurrent liabilities: Revenue bonds - net of current portion $ 693,411 $

Total liabilities $ 731,680 $ 454,373

NET POSITION Net investment in capital assets $ 2,541,024 $ Restricted for debt service and bond covenants 49,575

Unrestricted (14,838) 3,081,760

Total net position $ 2,575,761 $ 3,081,760

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

-21-

County of Russell, Virginia ‘Statement of Net Position

Proprietary Funds dune 30, 2013

Exhibit 7

ASSETS, Current assets: Cash and cash equivalents Interest receivable Accounts receivable, net of allowance for uncollectibles Total current assets

Noncurrent assets: Restricted assets: Cash and cash equivalents (in custody of others) Capital assets: Utility plant in service Less accumulated depreciation Total capital assets Total noncurrent assets Total assets

LIABILITIES Current liabilities: Accounts payable Accrued interest payable Revenue bonds - current portion Total current liabilities

Noncurrent liabilities: Revenue bonds - net of current portion Total tiabilities

NET POSITION Net investment in capital assets Restricted for debt service and bond covenants Unrestricted

Total net position

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

Enterprise Fund Dante Fund

58 3,198 3,256

49,575

5,240,699 (1,986,089)

3,254,610 304,185 3,307,441

16,360

1,734 20,175 38,269

693,411 734,680

2,541,024 49,575 (14,838)

7,575,761

Internal

Service Fund

‘Self

Health Insurance

3,193,921 1,504 340,708 3,536,133,

3,536,133,

454,373

3,081,760 3,081,760

Exhibit 8

County of Russell, Virginia

Statement of Revenues, Expenses, and Changes in Net Position

Proprietary Funds

For the Year Ended June 30, 2013

Enterprise Internal

Fund Service Fund

Dante Self

Fund Health Insurance

OPERATING REVENUES

Charges for services:

Sewer revenues s 46,192 s Insurance premiums 5,494,453

Total operating revenues s 46,192 s 5,494,453

OPERATING EXPENSES

Salaries and benefits s 157,187 s Professional services 8,389

Utilities 1,045

Materials and supplies 39,456

Office expenses 62,531

Repairs and maintenance 9,689

Insurance claims and expenses 4,826,551

Depreciation 131,017

Total operating expenses s 409,314 s 4,826,551

Operating income (loss) s (363,122) s 667,902

NONOPERATING REVENUES (EXPENSES)

Investment income s s 9,202

Interest expense (32,035)

Total nonoperating revenues (expenses) s (32,035) s 9,202

Income before transfers s (395, 157) s 677,104

Transfers in s 283,789 s Change in net position s (111 ,368) s 677,104

Total net position - beginning 2,687,129 2,404,656

Total net position - ending s 2,575,761 s 3,081,760

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

-22-

Exhibit 8 County of Russell, Virginia Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2013

Enterprise internal Fund Service Fund Dante Self Fund Health Insurance OPERATING REVENUES Charges for services: Sewer revenues s 46,192 § : Insurance premiums 5,494,453 Total operating revenues $ 46,192 $ 5,494,453 OPERATING EXPENSES Salaries and benefits $ 197,187 $ : Professional services 8,389 utilities 1,045 ‘Materials and supplies 39,456 : Office expenses 62,531 : Repairs and maintenance 9,689 : Insurance claims and expenses : 4,826,551 Depreciation 131,017 : Total operating expenses 409,314_§ 826,551 Operating income (loss) (363,122) $ 667,902 NONOPERATING REVENUES (EXPENSES) Investment income $ -$ 9,202 Interest expense (32,035) - Total nonoperating revenues (expenses) 3 (62,035) $ 9,202 Income before transfers $ 895,157) $ 67,104 Transfers in s 283,789_$ - Change in net position 3 (117,368) § 677,104 Total net position - beginning 2,687,129 2,404,656 Total net position - ending $ 2,575,761 _$ 3,081,760,

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

22-

County of Russell, Virginia Statement of Cash Flows

Proprietary Funds

For the Year Ended June 30, 2013

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 by (used for) 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 by (used for) capital and related

financing activities

CASH FLOWS FROM INVESTING ACTIVITIES

Interest income

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 by (used for) operating activities:

Operating income (loss)

Adjustments to reconcile operating income (loss) to net cash

provided by (used for) operating activities:

Depreciation

(Increase) decrease in accounts receivable

Increase (decrease) in accounts payable

Total adjustments

Net cash provided by (used for) operating activities

$ $

Enterprise Fund Dante Fund

49,408

(125,260)

(157, 187)

(233,039)

283,789

(19,369)

(32,078)

(51,447)

(658)

50,233

49,575

Exhibit 9

Internal Service Fund

Self Health Insurance

$ 5,153,745

(4,938,609)

$ 215,136

$ 10,206

$ 225,342

2,968,579

$ 3,193,921

(363, 122) $ 667,902

131,017

3,216

(4, 150)

130,083

(233,039)

$ $

(340,708)

(112,058)

(452, 766)

215,136

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

-23-

Exhibit 9 County of Russell, Virginia, Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2013

Enterprise Internal Fund Service Fund Dani Fund Health insurance CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users 5 49,408 § : Receipts for Insurance premiums : 5,193,745, Payments to suppliers (125,260) . Payments to employees (157,187) - Payments for premiums (4,938,609) Net cash provided by (used for) operating activities 3 (233,088) $ 215,136 ‘CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds s 283,789_$ ‘CASH FLOWS FROM CAPITAL AND RELATED FINANCING. ACTIVITIES. Principal payments on bonds $ (19,369) 5 - Interest payments 32,078) Net cash provided by (used for) capitat anc related financing activities 8 (s1.4ey) S : CASH FLOWS FROM INVESTING ACTIVITIES Interest income 38 10,206 Net increase (decrease) in cash and cash equivalents 8 (658) 5 225,342 Cash and cash equivalents - beginning 50,233 2,968,579 Cash and cash equivalents » ending 29,575 $3,193,921 Reconciliation of operating income (loss) to net cash provided by (used for) operating activt Operating income (loss) (263,122) $ 67,902 Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activites: Depreciation s 131,017 § {Increase) decrease in accounts receivable 3,216 (40,708) Increase (decrease) in accounts payable (4,150) (112,058) Total adjustments 3 730,083 5 (452,766) Net cash provided by (used for) operating activities $ 233,039) $ 215,136

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

-23-

ASSETS

Cash and cash equivalents

Total assets

LIABILITIES

County of Russell, Virginia

Statement of Fiduciary Net Position

Fiduciary Fund

June 30, 2013

Amounts held for Social Services clients

Amounts held for VASAP

Total liabilities

s s

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

-24-

Exhibit 10

Agency

Funds

50,670 50,670

60,387

(9,717)

50,670

Exhibit 10 County of Russell, Virginia

Statement of Fiduciary Net Position Fiduciary Fund June 30, 2013

Agency Funds

ASSETS.

Cash and cash equivatents $ 50,670 Total assets $ 50,670

LIABILITIES

Amounts held for Social Services clients $ 60,387

‘Amounts held for VASAP. (3,717) Total liabitities $ 50,670

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

COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE fiNANCIAL STATEMENTS

JUNE 30, 2013

Note 1-Summary of Significant Accounting Policies:

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

A. Financial 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 Industrial Development Authority of Russell County, Virginia (IDA) encourages and provides financing for industrial development in Russell County. The financial statements of the IDA 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 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 can be obtained in writing at 7341 Swords Creek Road, Swords Creek, VA 24649.

The Castlewood Water and Sewage Authority of Russell County 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 Authority can be obtained in writing at P.O. Box 655, Castlewood, VA 24224, but they were not available as of the report date.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS. JUNE 30, 2013

Note 1-Summary of Significant Accounting Policies:

A. Financial Reporting Entity

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 ina 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

A. Financial 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 $2,157,445 to the Regional Jail and $154,433 to the Community Services Board. The County does not have any ongoing financial responsibility for these Organizations.

B. Government-wide and Fund Financial Statements

Government-wide financial statements- The reporting model includes financial statements prepared using full accrual accounting for all of the government’s activities. This approach includes not just current assets and liabilities but also capital assets and long-term liabilities (such as buildings and general obligation debt).

The government-wide financial statements (i.e., the statement of net position 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.

Statement of Net Position -The government-wide Statement of Net Position is designed to display the financial position of the primary government (government and business-type activities) and its component units. Governments report all capital assets, including infrastructure, in the government wide statement of net position and report depreciation expense - the cost of “using up” capital assets - in the statement of activities. The net position of a government will be broken down into three categories: 1) net investment in capital assets; 2) restricted; and 3) unrestricted.

Statement of Activities - The government-wide Statement of Activities reports expenses and revenues in a format that focuses on the cost of each of the government’s functions. The expense of individual functions is compared to the revenues generated directly by the function (for instance, through user charges or intergovernmental grants).

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

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

A. Financial Reporting Entity (continued)

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 §2,157,445 to the Regional Jail and $154,433 to the Community Services Board. The County does not have any ongoing financial responsibility for these Organizations.

B. Government-wide and Fund Financial Statements

Government-wide financial statements - The reporting model includes financial statements prepared using full accrual accounting for all of the government’s activities. This approach includes not just current assets and liabilities but also capital assets and long-term liabilities (such as buildings and general obligation debt).

Statement of Net Position - The government-wide Statement of Net Position is designed to display the financial position of the primary government (government and business-type activities) and its component units. Governments report all capital assets, including infrastructure, in the government- wide statement of net position and report depreciation expense - the cost of “using up” capital assets - in the statement of activities. The net position of a government will be broken down into three categories: 1) net investment in capital assets; 2) restricted; and 3) unrestricted.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

B. Government·wide and Fund Financial Statements (continued)

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.

The government·wide Statement of Activities reflects both the gross and net cost per functional category (public safety, public works, health and welfare, etc.) which are otherwise being supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.) The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants, and contributions. The program revenues must be directly associated with the function (public safety, public works, health and welfare, etc.) or a business·type activity.

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 unavailable 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

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

B. Government-wide and Fund Financial Statements (continued)

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

The government-wide Statement of Activities reflects both the gross and net cost per functional category (public safety, public works, health and welfare, etc.) which are otherwise being supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.) The Statement of Activities reduces gross expenses (including depreciation) by retated program revenues, operating and capital grants, and contributions. The program revenues must be directly associated with the function (public safety, public works, health and welfare, etc.) or a business-type activity.

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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

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

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 and reports 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 Coal Road and Workforce Investment Board Funds serve as the County’s major Special Revenue Funds. The Coal Road Fund accounts for and reports 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 Workforce Investment Board Fund accounts for and reports financial resources to be used for workforce development benefiting the County.

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 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 (Trust and Agency 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 Fund and VA5AP Fund. The Special Welfare Fund includes activity of the Title XX and the 551 Fund, which have all been merged for financial reporting purposes.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

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 governmental funds:

The General Fund is the government’s primary operating fund. It accounts for and reports 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, €-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 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 fund.

Additionally, the government reports the following fund types:

Fiduciary funds (Trust and Agency 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 Fund and VASAP Fund. The Special Welfare Fund includes activity of the Title XX and the SS! Fund, which have all been merged for financial reporting purposes.

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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

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

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 nan-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 health insurance. Operating expenses for Internal Service Funds include the cost of services and administrative expenses. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance:

Cash and Cash Equivalents

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.

Deposits with banks are covered by the Federal Deposit Insurance Corporation (FDIC) and Collateralized in accordance with the Virginia Security for Public Deposits Act (the “Act”).

Investments for the government, as well as for its component units, are reported at fair value. The State Treasurer’s Local Government Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.

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 nonspendable fund balance in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

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

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

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 health insurance. Operating expenses for Internal Service Funds include the cost of services and administrative expenses. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

D. Assets, deferred outflows/ inflows of resources, liabilities, and net position/fund balance:

Cash and Cash Equivalents

Deposits with banks are covered by the Federal Deposit Insurance Corporation (FDIC) and Collateralized in accordance with the Virginia Security for Public Deposits Act (the “Act”).

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.”

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

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’h and December 5’h. Personal property taxes are due and collectible on December 5’h. 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 $886,473 at June 30, 2013 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.

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 the asset’s life are not capitalized.

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

Property, plant, equipment, and infrastructure 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

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Years 40

20·40

4·30

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

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

Capital Assets

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

Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, equipment, and infrastructure 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 0 Building improvements 40 Structures, lines, and accessories 20-40 Machinery and equipment 4:30

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

Prepaid Items

Certain payments to vendors represent costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The County does not have any deferred outflows of resources as of June 30, 2013.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The County has one type of item that qualifies for reporting in this category. Under a modified accrual basis of accounting, unavailable revenue representing property taxes receivable is reported in the governmental funds balance sheet. This amount is comprised of uncollected property taxes due prior to June 30, 2nd half installments levied during the fiscal year but due after June 30th, and amounts prepaid on the 2nd half installments and is deferred and recognized as an inflow of resources in the period that the amount becomes available. Under the accrual basis, 2nd half installments levied during the fiscal year but due after June 30th and amounts prepaid on the 2nd half installments are reported as deferred inflows of resources.

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, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

Prepaid Items

Deferred Outflows/Inflows of Resources

Compensated Absences

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

Long-term Obligations

ln the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, 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.

ln the fund financial statements, governmental fund types recognize bond premiums and discounts, 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.

Fund Equity

The County reports fund balance in accordance with GASB Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

• Nonspendable fund balance - amounts that are not in spendable form (such as inventory and prepaid expenditures) or are required to be maintained intact (corpus of a permanent fund);

• Restricted fund balance - amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation;

• Committed fund balance - amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint;

• Assigned fund balance - amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority;

• Unassigned fund balance- amounts that are available for any purpose; positive amounts are only reported in the general fund.

The Board of Supervisors is the highest level of decision-making authority and the formal action that is required to establish, modify or rescind a fund balance commitment is a resolution approved by the Board of Supervisors. The resolution must either be approved or rescinded as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

Long-term Obligations

in the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, 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.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, 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.

Fund Equity

= Nonspendable fund balance - amounts that are not in spendable form (such as inventory and prepaid expenditures) or are required to be maintained intact (corpus of a permanent fund);

= Restricted fund balance - amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation;

= — Committed fund balance - amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint;

= Assigned fund balance - amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority;

= Unassigned fund balance - amounts that are available for any purpose; positive amounts are only reported in the general fund.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

Fund Equity (continued)

The Board of Supervisors has authorized the County Administrator as the official authorized to assign fund balance to a specific purpose as approved by the fund balance policy.

The County of Russell will maintain an unassigned fund balance in the general fund equal to 16% of the expenditures/operating revenues (two months). The County considers a balance of less than 10% to be a cause for concern, barring unusual of deliberate circumstances.

The County considers restricted fund balance to be spent when an expenditure is incurred for purposes for which restricted and unassigned, assigned, or committed fund balances are available, unless prohibited by legal documents or contracts. When an expenditure is incurred for purposes for which committed, assigned or unassigned amounts are available, the County considers committed fund balance to be spent first, then assigned fund balance, and lastly unassigned fund balance.

Net Position

Net position is the difference between a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources. Net investment in capital assets represents capital assets, less accumulated depreciation, less any outstanding debt related to the acquisition, construction or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are also included in this component of net position.

Net Position Flow Assumption

Sometimes the County will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted- net position and unrestricted- net position in the government wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the County’s policy to consider restricted - net position to have been depleted before unrestricted - net position is applied.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

Fund Equity (continued)

The Board of Supervisors has authorized the County Administrator as the official authorized to assign fund balance to a specific purpose as approved by the fund balance policy.

‘The County considers restricted fund balance to be spent when an expenditure is incurred for purposes for which restricted and unassigned, assigned, or committed fund balances are available, unless prohibited by legal documents or contracts. When an expenditure is incurred for purposes for which committed, assigned or unassigned amounts are available, the County considers committed fund balance to be spent first, then assigned fund balance, and lastly unassigned fund balance.

Net Position

Net position is the difference between a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources. Net investment in capital assets represents capital assets, less accumulated depreciation, tess any outstanding debt related to the acquisition, construction or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are also included in this component of net position.

Net Position Flow Assumption

Sometimes the County will fund outlays for a particular purpose from both restricted (e.¢., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted - net position in the government wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the County’s policy to consider restricted - net position to have been depleted before unrestricted - net position is applied.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, Statement No. 63 of the Governmental Accounting Standards Board:

The County implemented the financial reporting provisions of the above Statement for the fiscal year ended June 30, 2013. This Statement provides guidance for reporting deferred inflows and deferred outflows of resources. The requirements of this Statement will improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effects on an entity’s net position. With the implementation of this Statement, certain terminology has changed and financial statement descriptions have changed from “net assets” to “net position.” The net equity reported in the financial statements was not changed as a result of implementing this Statement and no restatement of prior balances is required.

Items Previously Reported as Assets and Liabilities, Statement No. 65 of the Governmental Accounting Standards Board:

The County implemented the financial reporting provisions of the above Statement for the fiscal year ended June 30, 2013. This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The net equity reported in the financial statements was not changed as a result of implementing this Statement and no restatement of prior balances is required.

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-34-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

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

D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (continued)

14,

Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, Statement No, 63 of the Governmental Accounting Standards Board:

Items Previously Reported as Assets and Liabilities, Statement No. 65 of the Governmental Accounting Standards Board:

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-34-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 2-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 the Industrial Development Authority Fund and 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 commit that portion of the applicable appropriations, is not part of the County’s accounting system.

B. Excess of expenditures over appropriations

The County had numerous departments and funds that had excess expenditures over appropriations in the current year.

C. Deficit fund equity

At June 30, 2013, there were no funds which had deficit fund equity.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 2-Stewardship, Compliance, and Accountability:

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 the Industrial Development Authority Fund and 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.

Alt 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 commit that portion of the applicable appropriations, is not part of the County’s accounting system.

Excess of expenditures over appropriations

The County had numerous departments and funds that had excess expenditures over appropriations in the current year.

Deficit fund equity

At June 30, 2013, there were no funds which had deficit fund equity.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 3-Deposits and Investments:

Deposits: Deposits with banks are covered by the Federal Deposit Insurance Corporations (FDIC) and collateralized in accordance with the Virginia Security for Public Deposits Act (the “Act”) Section 2.2· 4400 et. seq. of the Code of Virginia. Under the Act, banks and savings institutions holding public deposits in excess of the amount insured by the FDIC must pledge collateral to the Commonwealth of Virginia Treasury Board. Financial Institutions may choose between two collateralization methodologies and depending upon that choice, will pledge collateral that ranges in the amounts from 50% to 130% of excess deposits. Accordingly, all deposits are considered fully collateralized.

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). At June 30, 2013, the County had no investments.

Note 4-Due from Other Governmental Units:

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

Commonwealth of Virginia:

Local sales tax

State sales tax

Non-categorical aid

Categorical aid-shared expenses

Categorical aid-Virginia Public Assistance funds

Categorical aid-other

Categorical aid-Comprehensive Services Act funds

Federal Government:

Categorical aid-Virginia Public Assistance funds

Categorical aid-Workforce Investment funds

School federal programs

Categorical aid-other

Total Amount Due from Other Governmental Units

-36-

Primary

Government

296,591

320,630

180,243

137,747

42,341

114,332

146,827

326,651

319

1,572,681 s

Component Unit

School Board

674,359

834,137

1,508,496

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 3-Deposits and Investments:

Deposits: Deposits with banks are covered by the Federal Deposit Insurance Corporations (FDIC) and collateralized in accordance with the Virginia Security for Public Deposits Act (the “Act”) Section 2.2 4400 et. seq. of the Code of Virginia. Under the Act, banks and savings institutions holding public deposits in excess of the amount insured by the FDIC must pledge collateral to the Commonwealth of Virginia Treasury Board. Financial institutions may choose between two collateralization methodologies and depending upon that choice, will pledge collateral that ranges in the amounts from 50% to 130% of excess deposits. Accordingly, all deposits are considered fully collateralized.

Note 4-Due from Other Governmental Units:

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

Primary Component Unit Government School Board Commonweaith of Virginia:

Local sales tax 296,591 : State sales tax - 674,359 Non-categorical aid 320,630 - Categorical aid-shared expenses 180,243 : Categorical aid-Virginia Public Assistance funds 137,747 - Categorical aid-other 42,341 - Categorical aid-Comprehensive Services Act funds 114,332

Federal Government:

Categorical aid-Virginia Public Assistance funds 146,827 - Categorical aid-Workforce Investment funds 326,651 - School federal programs - 834,137 Categorical aid-other 7,319

Total Amount Due from Other Governmental Units $1,572,681 $ 1,508,496

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 5-lnterfund/Component-Unit Obligations:

Fund

Primary Government:

Due to Primary Due from Primar)

Government/

Component Unit

Government/

Component Unit

General Fund $==== s ===88=3~,3=34=

Component Unit:

School Board

IDA

Total

683,334 s 200,000

883,334 $===88=3~,3=34=

lnterfund transfers and remaining balances for the year ended June 30, 2013, consisted of the following:

Fund

Primary Government:

General Fund

Dante Fund

Total

Primary Government:

General Fund

Coal Road Fund

Workforce Investment Board Fund

Total

Transfers In

s 283,789

Due From

s 46,115

65,105

s 111,220

Transfers Out

s 283,789

Due To

111,220

s 111,220

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.

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-37-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Government/

Fund Component Unit

Due from Primary Government/ Component Unit

Primary Government:

General Fund 5 Component Unit: School Board $ 683,334 IDA 200,000 Total $ 883,334

Interfund transfers and remaining balances for the year ended June 30,

Fund Transfers In

2013, consisted of the following:

Transfers Out,

Primary Government:

General Fund $ Dante Fund 283,789 Total 283,789 Primary Government: Due From General Fund $46,115 Coal Road Fund 65,105 Workforce Investment Board Fund : Total $111,220

$ 283,789 283,789 Due To

3 7 111,220

$111,220

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 un

restricted revenues collected in

the General Fund to finance various programs accounted for in other funds in accordance with budgeting

authorization.

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-3T-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 6-Long-Term Obligations:

Primary Government - Governmental Activity Indebtedness

The following is a summary of long-term obligation transactions of the County for the year ended June 30, 2013:

Balance Increases/ Decreases/ Balance

July 1, 2012 Issuances Retirements June 30, 2013

General obligation bonds s 9,471,649 s s (717,972) s 8, 753,677

Literary loans 2,564,585 (469,162) 2,095,423

Revenue bonds 5,114,923 (236, 928) 4,877,995

Literary anticipation note 630,395 (613,708) 16,687

Deferred Amounts:

Bond premiums 283,315 (16,804) 266,511

Capital lease 617,454 (276,266) 341 '188 Landfill closure/

postclosure liability 526,868 (258, 955) 267,913

Net OPEB obligation 6,609 6,609

Compensated absences 595,888 454,472 (481 ,874) 568,486

Total s 19,811,686 s 454,472 s (3,071 ,669) s 17,194,489

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

Year Ending General Obligation Bonds Literary Loans Revenue Bonds

June 30, Principal Interest Principal Interest Principal Interest

2014 s 611,026 s 403,830 s 282,792 s 38,872 s 237,459 s 2015 627,696 372,805 375,977 41,092 237,459

2016 644,976 340,870 375,977 32,130 237,459

2017 647,901 308,788 375,977 23,167 237,459

2018 670,770 277,286 282,792 14,205 237,459

2019-2023 3,284,952 856,665 401 '908 13,642 1 '187,295

2024-2028 1,706,356 366,998 1 '135,623 2029-2033 560,000 50,388 1 ,017, 958

2034-2038 349,824

Totals s 8,753,677 s 2,977,630 s 2,095,423 s 163,108 s 4,877, 995 s

-38-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2013

Note 6-Long-Term Obligations:

Primary Government - Governmental Activity indebtedness

The following is a summary of long-term obligation transactions of the County for the year ended June

30, 2013:

General obligation bonds

Literary loans Revenue bonds

Literary anticipation note Deferred Amounts: Bond premiums.

Capital leas

Landfill closure/ postclosure liability

Net OPEB obligation

Compensated absences

Total

Balance Increases’ _Decreases/ Balance July 1, 2012 _Issuances__Retirements__June 30, 2013 S$ 9,471,649 $ 7 § (717,972) $8,753,677 2,564,585 : (469,162) 2,095,423 5,114,923 - (236,928) 4,877,995 630,395, - (613,708) 16,687 283,315 : (16,804) 266,511 617,454 (276,266) 341,188 526,868 (258,955) 267,943

6,609 : : 6,609 595,888 454,472 (481,874) 568,486 $19,811,686 $454,472 $__ (3,071,669) $__ 17,194,489

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

Year Ending

General Obligation Bonds

Literary Loans

Revenue Bonds

June 30, Principal Interest Principal _Interest _ Principal___Interest 2014 § ~~ 611,026 $ 403,830 $ 282,792 $ 38,872 $237,459 $ 2015 627,696 372,805 375,977 41,092 237,459 2016 644,976 340,870 375,977 32,130 237,459 2017 647,901 308,788 375,977 23,167 237,459 2018 670,770 277,286 282,792 14,205 237,459

2019-2023 «3,284,952 856,665, 401,908 13,642 1,187,295

2024-2028 ‘1,706,356 366,998 - - 1,135,623

2029-2033 560,000 50,388 1,017,958

2034-2038 - : 349,824 Totals $ 8,753,677 $ 2,977,630 $ 2,095,423 $ 163,108 $__ 4,877,995 $

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 6-Long-Term Obligations: (continued)

Primary Government- Governmental Activity Indebtedness (continued)

Details of long-term indebtedness:

Final Amount of Balance Amount

Interest Date Maturity Installment Original Governmental Due Within

Rates Issued Date Amounts Issue Activities One Year

General Obligation Bonds:

General obligation bond 5.10%-6.10% 1995 2016 $15,000 a+ s 325,000 s 45,000 s 15,000

General obligation bond 5.10%-6.10% 1997 2016 $5,000 a+ 140,000 25,000 5,000

General obligation bond 4.10%-5.23% 1999 2019 $25,000 a+ 510,000 175,000 25,000

General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210 839,548 94,999

General obligation bond 2.35%-5.10% 2002 2023 $213,799-272,702 a+ 4,382,954 2,419,261 213,799

General obligation bond 4.60%-5.10% 2006 2027 $147,228·197,458 a+ 3,205,190 2,394,868 147,228

General obligation bond 4.60%-5.10% 2009 2030 $55,000-110,000 a+ 1,485,000 1,340,000 55,000

General obligation bond 3.05%-5.05% 2010 2031 $55,000-120,000 a+ 1,620,000 1,515,000 55,000

Total General Obligation Bonds s 8,753,677 s 611,026

Revenue Bonds:

Revenue bond 0.00% 11/28/2001 2033 $15,595 sa 935,690 592,604 31,190

Revenue bond 0.00% 11/28/2001 2033 $27,973 sa 1,678,400 1,080,612 55,946

Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 206,686 17,224

Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 534,538 27,412

Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 417,404 18,551

Revenue bond 0.00% 10/14/2005 2036 $1,524sa 91,439 70,103 3,048

Revenue bond 0.00% 10/14/2005 2037 $31,779 sa 1, 906,717 1,493,595 63,557

Revenue bond 0.00% 4/2812006 2037 $6,925 sa 415,513 325,484 13,851

Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 156,969 6,680

Total Revenue Bonds s 4,877,995 s 237,459

Plus:

Unamortized Premium s 266,511 s 16,804

Total General Obligation and Revenue Bonds s 13,898,183 s 865,289

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-39-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2013

Note 6-Long-Term Obligations: (continued)

Primary Government - Governmental Activity Indebtedness (continued)

Details of long-term indebtednes:

General Obligation Bonds: Generat obligation bond General obligation bond General obligation bond General obligation bond General obligation bond General obligation bond General obligation bond General obligation bond

‘Total General Obligation Bonds

Revenue Bonds: Revenue bond Revenue bond Revenue bond Revenue bond Revenue bond Revenue bond Revenue bond Revenve bond Revenue bond

Total Revenue Bonds

Plus Unamortized Premium

Interest Rates

5.108-6.108, 5.1086, 10% A185. 23% 4,.985-5.10% 2.3585. 10% AOS 10% 4.6085. 105 3.058-5.05%

0.00%, 0.00%, 0.00%, 0.00%, 0.00% 0.00% 0.00% 0.00% 0.00%

Total Generat Obligation and Revenue Bonds

Date Issued

1995 1997 1999 2000 2002 2006 2009 2010

11/28/2001 11/28/2004 11/28/2008 siya 3710/2005 10/14/2005 1071472005 477812006 3/30/2007

Final Maturity Date

2016 2016 2009 2021 2023 2007 2030 2031

2033 2033 2028 2033 2036 2036 2037 2037 2037

lnstaliment ‘Amounts

$15,000 as $5,000 a+ 525,000 a $94,999-115,952 av 5213,799-272,702 a+ $147,228-197, 458 a+ $55,000-110,000 a+ $55,000-120,000 a+

515,595 sa $27,973 sa $8,612 5a $13,707 sa $9,276 sa $1,524 sa $3,779 sa $6,925 se $3,340 sa

Amaunt of Original

325,000 149,000 510,000

1,802,210

4,382,954

3,208,190

4,485,000

1,620,000

935,690 1,678,400 346,477 822,366 996,538 91,439 1,906,717 45,513 197,179

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-39-

Balance “Amnount Governmental Due Within Activities One Year 3 43,000 $15,000 2,000 5,000 175,000 25,000 839,548 94,999 2,419,261 213,799 2,394,868 147,228 1,340,000 35,000 1,515,000 5,000 $8,753,677 $611,026 592,604 31,190 1,080,612 55,946 206,686 17,04 534,538 27,412 417,404 18,551 70,103 3,048, 1,493,595 63,557 305,484 13.851 156,969 6,680 $4,877,995 § 237,459 $266,511 $16,804 $13,898,183 $865,289

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 6-Long-Term Obligations: (continued)

Primary Government- Governmental Activity Indebtedness (continued)

Details of long-term indebtedness: (continued)

Final Amount of Balance Amount

Interest Date Maturity Installment Original Governmental Due Within

Rates Issued Date Amounts Issue Activities One Year

Literary loans:

Literary loan 3.00% 7/15/1986 2017 $30,222 a+ s 960,000 s 90,666 s Literary loan 3.00% 7/15/1986 2017 $62,693 a+ 2,000,000 188,889

Literary loan 3.00% 2/1/1988 2018 $18,522 a+ 530,999 92,610 18,522

Literary loan 3.00% 2/1/1988 2018 $12,581 a+ 358,151 62,905 12,581

Literary loan 3.00% 2/1/1988 2018 $3,005 a+ 84,805 15,025 3,005

Literary loan 3.00% 2/1/1988 2018 $9,995 a+ 281,079 49,975 9,995

Literary loan 3.00% 2/1/1988 2018 $6,989 a+ 196,873 34,945 6,989

Literary loan 2.00% 1/112000 2020 $57,757 a+ 1,155,140 404,299 57,757

Literary loan 2.00% 3/15/1999 2019 $55,700 a+ 1,114,086 334,286 55,700

Literary loan 2.00% 3/15/1999 2019 $8,200 a+ 161,449 46,649 8,200

Literary loan 2.00% 6/15/1999 2019 $21,134a+ 422,680 126,804 21 '134 Literary loan 2.00% 6/15/1999 2019 $44,020 a+ 880,411 264,131 44,020

Literary loan 2.00% 11/15/2000 2021 $24,689 a+ 493,789 197,521 24,689

Literary loan 3.00% 12/15/2000 2021 $7,700 a+ 154,118 61,718 7,700

Literary loan 2.00% 7/1/2003 2023 $12,500 a+ 250,000 125,000 12,500

Total Literary Loans s 2,095,423 s 282,792

Literary Anticipation Note 4.10% 9/412008 9/4/2013 s 992,638 s 16,687 s 16,687

Other Obligations:

Capital Lease (Note 7) s 341,188 s 168,663

Landfill Closure and Postclosure Liability 267,913

Net OPEB Obligation 6,609

Compensated Absences 568,486 426,365

Total Other Obligations s 1,184,196 s 595,028

Total Long-term Obligations s 17,194,489 s 1,759,796

(a+)· annual principal installments shown; does not include semi-annual interest installments

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 6-Long-Term Obligations: (continued)

Primary Government - Governmental Activity Indebtedness (continued)

Details of long-term indebtedness: (continued)

Final Amount of Balance: ‘Amount Interest Date Maturity Installment Original Governmental__Due Within Rates Issued Date Amounts Issue Activities One Year

Literary loans Literary loan 3.00% 7/15/1986 2017 «$30,222 a $ 960,000 $ 90,666 § : Literary loan 3.00% 7/15/1986 2017-—«$62,693 a+ 2,000,000 188,889 : Literary loan 3.00% 2/1/1988 2018-«$18,522a+ 530,999 92,610 18,522 Literary loan 3.00% 2/1/1988 2018 «$12,581.ar 358,151 62,905, 12,581 Literary toan 3.00% 2/1/1988 2018——$3,005 as 84,805, 15,025 3,005 Literary loan 3.008 2/1/1988 2018 $9,995 a+ 281,079 9,975 9,995 Literary toan 3.00% 2/1/1988 2018——$6,989 a+ 196,873 34,945, 6,989 Literary toan 2.00% 1/1/2000 2020 $57,757 a+ 1,155,140 404,299 51,757 Literary loan 2.00% 3/15/1999 2019 $55,700a+ 1,114,086, 334,286 35,700 Literary toan 2.00% 3/15/1999 2019——$8,200 a 161,449 46,649, 8,200 Literary toan 2.00% 6/15/1999 2019 S2T134ax 422,680 126,804 21,134 Literary toan 2.00% 6/15/1999 2019 $44,020. a+ 880,411 264,134 44,020 Literary loan 2.00% 11/15/2000 2021 $24,689 a» 493,789 197,524 24,689 Literary loan 3.008 12/15/2000 2021 $7,700 a+ 154,118 61,718 7,700 Literary loan 200% 7/1/2003 2023 $12,500a+ 250,000 125,000 500 Total Literary Loans S$ 2,095,423 § _ 282,792 Literary Anticipation Note 4.10% 9/4/2008 9/4/2013, S 992,638 $ 16,687 $ 16,687 Other Obligations:

Capital Lease (Note 7) 5 341,188 $168,663

Landfill Closure and Postelosure Liability 267,913

Net OPEB Obligation 6,609 :

Compensated Absences 368,486 426,365

Total Other Obligations

1,184,196 $595,028,

Total Long-term Obligations $17,194,489 $1,759,796

(a+) - annual principal installments shown; does not include semi-annual interest installments

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 6-Long-Term Obligations: (continued)

Primary Government - Business-type Activity Indebtedness:

The following is a summary of long-term obligation transactions of the Enterprise Fund for the year ended June 30, 2013:

July 1, 2012 Issuances Retirements June 30, 2013

Revenue bonds s 732,955 s - s (19,369) s 713,586 ------'—

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

Year Ending Revenue Bonds

June 30, Principal Interest

2014 s 20,175 s 31,272

2015 21 ,015 30,432

2016 21,894 29,553

2017 22,814 28,633

2018 23,776 27,671

2019-2023 126,492 122,306

2024-2028 157,168 90,691

2029-2033 196,743 51,117

2034-2036 123,509 7,723

Totals s 713,586 s 419,398

Details of long-term indebtedness:

Final Amount of Balance Amount Interest Date Maturity Original Governmental Due Within Rates Issued Date Issue Activities One Year

Revenue Bonds:

Revenue bond 0.00% 3/24/1999 2019 s 37,500 s 10,313 s 1,875 Revenue bond 4.50% 4/10/1996 2036 900,000 703,273 18,300

Total Revenue Bonds s 713,586 s 20,175

-41-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 6-Long-Term Obligations: (continued)

Primary Government - Business-type Activity Indebtedness:

The following is a summary of long-term obligation transactions of the Enterprise Fund for the year ended June 30, 2013:

July 1, 2012 _Issuances__Retirements _June 30, 2013

Revenue bonds $ 732,955_$ 28 (19,369) $ 713,586

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

Year Ending Revenue Bonds

June 30, Principal Interest 2014 S$ 20,175 $ 31,272 2015 21,015 30,432 2016 21,894 29,553 2017 22,814 28,633 2018 23,776 27,671

2019-2023 126,492 122,306

2024-2028 157,168 90,691

2029-2033 196,743 51,117

2034-2036 123,509 7,723 Totals $713,586 $ 419,398

Details of long-term indebtedness:

Final Amount of Balance Amount Interest. Date Maturity Original Governmental Due Within Rates Issued Date Issue Activities One Year Revenue Bonds: Revenue bond 0.00% 3/24/1999 2019 $37,500 § = 10,313 $1,875 Revenue bond 4.50% 4/10/1996 2036 900,000 703,273, 18,300 Total Revenue Bonds 713,586 $ 20,175

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 6-Long-Term Obligations: (continued)

Component Unit - School Board Indebtedness

The following is a summary of long-term obligation transactions of the discretely presented component unit for the year ended June 30, 2013:

Balance

July 1, 2012, Balance

As restated Increases Decreases June 30, 2013

Net OPEB obligation s 44,828 s 885,708 s (503,000) s 427,536 Early retirement incentive 546,791 (368,111) 178,680 Compensated absences 740,978 565,835 (555,733) 751,080

Total s 1,332,597 s 1,451,543 s (1 ,426,844) s 1,357,296

Details of long-term indebtedness:

Amount Total Due Within

Amount One Year Other Obligations:

Early retirement incentive s 178,680 s 107,880 Net OPEB Obligation 427,536

Compensated Absences 751,080 563,310

Total Other Obligations s 1,357,296 s 671 '190

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-42-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 6-Long-Term Obligations: (continued)

Component Unit - School Board Indebtedness

The following is a summary of long-term obligation transactions of the discretely presented component unit for the year ended June 30, 2013:

Balance July 1, 2012, Balance As restated Increases Decreases June 30, 2013, Net OPEB obligation $ 44,828 $ 885,708 $ (503,000) $ 427,536 Early retirement incentive 546,791 : (368,111) 178,680 Compensated absences 740,978 565,835 (555,733) 751,080 Total $__ 1,332,597 $1,451,543 $_ (1,426,844) $1,357,296 Details of long-term indebtedness: Amount: Total Due Within Amount: One Year Other Obligations: Early retirement incentive $ 178,680 $ 107,880 Net OPEB Obligation 427,536 - Compensated Absences 751,080 563,310 Total Other Obligations $1,357,296 $671,190

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO fiNANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 7 -Capital Lease:

Primary Government The County has entered into a lease agreement to finance the acquisition of school buses for the School Board. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of minimum lease payments at the date of inception.

The capital assets acquired through capital leases are as follows:

Machinery &

Equipment

Machinery and equipment s 565,114

Less: Accumulated depreciation (70,638)

Net capital asset s 494,476

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2013, were as follows:

Year Ending Capital

June 30, Leases

2014 s 176,476

2015 176,476

Subtotal s 352,952

Less, amount

representing interest (11,764)

Present Value of

Lease Agreement s 341,188

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-43-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 7-Capital Lease:

Primary Government

The County has entered into a lease agreement to finance the acquisition of school buses for the School Board. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of minimum lease payments at the date of inception.

‘The capital assets acquired through capital leases are as follows:

Machinery & Equipment Machinery and equipment $565,114 Less: Accumulated depreciation (70,638) Net capital asset $494,476

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2013, were as follows:

Year Ending Capital June 30, Leases 2014 $176,476 2015 176,476 Subtotal $ 352,952 Less, amount representing interest (14,764)

Present Value of Lease Agreement $

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO fiNANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan:

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 (professional) employees of public school divisions and employees of participating employers are automatically covered by VRS upon employment. Benefits vest after five years of service credit. Members earn one month of service credit for each month they are employed and their employer is paying into the VRS. Members are eligible to purchase prior public service, active duty military service, certain periods of leave, and previously refunded VRS service as service credit in their plan.

VRS administers two defined benefit plans for local government employees- Plan 1 and Plan 2: • Members hired before July 1, 2010 and who were vested as of January 1, 2013

are covered under Plan 1. Non-hazardous duty members are eligible for an unreduced retirement benefit beginning at age 65 with at least five years of service credit or age 50 with at least 30 years of service credit. They may retire with a reduced benefit early at age 55 with at least five years of service credit or age 50 with at least 10 years of service credit.

• Members hired or rehired on or after July 1, 2010 and Plan 1 members who were not vested on January 1, 2013 are covered under Plan 2. Non-hazardous duty members are eligible for an unreduced benefit beginning at their normal Social Security retirement age with at least five years of service credit or when the sum of their age and service equals 90. They may retire with a reduced benefit as early as age 60 with at least five years of service credit.

• Eligible hazardous duty members in Plan 1 and Plan 2 are eligible for an unreduced benefit beginning at age 60 with at least 5 years of service credit or age 50 with at least 25 years of service credit. These members include sheriffs, deputy sheriffs and hazardous duty employees of political subdivisions that have elected to provide enhanced coverage for hazardous duty service. They may retire with a reduced benefit as early as age 50 with at least five years of service credit. All other provisions of the member’s plan apply.

The VRS Basic Benefit is a lifetime monthly benefit based on a retirement multiplier as a percentage of the member’s average final compensation multiplied by the member’s total service credit. Under Plan 1, average final compensation is the average of the member’s 36 consecutive months of highest compensation. Under Plan 2, average final compensation is the average of the member’s 60 consecutive months of highest compensation. The retirement multiplier for non hazardous duty members is 1. 70%. The retirement multiplier for sheriffs and regional jail superintendents is 1.85%. The retirement multiplier for eligible political subdivision hazardous duty employees other than sheriffs and jail superintendents is 1. 70% or 1.85% as elected by the employer. The multiplier for Plan 2 members was reduced to 1.65% effective January 1, 2013 unless they are hazardous duty employees and their employer has elected the enhanced retirement multiplier. At retirement, members can elect the Basic Benefit, the Survivor Option, a Partial Lump-Sum Option Payment (PLOP) or the Advance Pension Option. A retirement reduction factor is applied to the Basic Benefit amount for members electing the Survivor Option, PLOP or Advance Pension Option or those retiring with a reduced benefit.

-44-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan:

Plan Description

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

VRS administers two defined benefit plans for local government employees - Plan 1 and Plan 2:

‘* Members hired before July 1, 2010 and who were vested as of January 1, 2013 are covered under Plan 1. Non-hazardous duty members are eligible for an unreduced retirement benefit beginning at age 65 with at least five years of service credit or age 50 with at least 30 years of service credit. They may retire with a reduced benefit early at age 55 with at least five years of service credit or age 50 with at least 10 years of service credit.

‘* Members hired or rehired on or after July 1, 2010 and Plan 1 members who were not vested on January 1, 2013 are covered under Plan 2. Non-hazardous duty members are eligible for an unreduced benefit beginning at their normal Social Security retirement age with at least five years of service credit or when the sum of their age and service equals 90, They may retire with a reduced benefit as early as age 60 with at least five years of service credit.

© Eligible hazardous duty members in Plan 1 and Plan 2 are eligible for an unreduced benefit beginning at age 60 with at least 5 years of service credit or age 50 with at least 25 years of service credit. These members include sheriffs, deputy sheriffs and hazardous duty employees of political subdivisions that have elected to provide enhanced coverage for hazardous duty service. They may retire with a reduced benefit as early as age 50 with at least five years of service credit. All other provisions of the member’s plan apply.

The VRS Basic Benefit is a lifetime monthly benefit based on a retirement multiplier as a percentage of the member’s average final compensation multiplied by the member’s total service credit. Under Plan 1, average final compensation is the average of the member’s 36 consecutive months of highest compensation, Under Plan 2, average final compensation is the average of the member’s 60 consecutive months of highest compensation. The retirement multiplier for non- hazardous duty members is 1.70%. The retirement multiplier for sheriffs and regional jail superintendents is 1.85%. The retirement multiplier for eligible political subdivision hazardous duty employees other than sheriffs and jail superintendents is 1.70% or 1.85% as elected by the employer. The multiplier for Plan 2 members was reduced to 1.65% effective January 1, 2013 unless they are hazardous duty employees and their employer has elected the enhanced retirement multiplier. At retirement, members can elect the Basic Benefit, the Survivor Option, a Partial Lump-Sum Option Payment (PLOP) or the Advance Pension Option. A retirement reduction factor is applied to the Basic Benefit amount for members electing the Survivor Option, PLOP or Advance Pension Option or those retiring with a reduced benefit.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (continued)

A. Plan Description (continued)

Retirees are eligible for an annual cost-of-living adjustment (COLA) effective July 1 of the second calendar year of retirement. Under Plan 1, the COLA cannot exceed 5.00%; under Plan 2, the COLA cannot exceed 6.00%. During years of no inflation or deflation, the COLA is 0.00%. 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 report that includes financial statements and required supplementary information for VRS. A copy of the most recent report may be obtained from the VRS website at http: I I www. vareti re. orgl Pdf I Publ icationsl 2012 -annual-report. pdf or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

B. Funding Policy

Primary Government: Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their compensation toward their retirement. All or part of the 5.00% member contribution may be assumed by the employer. Beginning July 1, 2012 new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. 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 2013 was 14.36% 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 compensation toward their retirement. All or part of the 5.00% member contribution may be assumed by the employer. Beginning July 1, 2012 new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. 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 2013 was 16.24% of annual covered payroll.

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-45-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (continued)

Plan Description (continued)

Retirees are eligible for an annual cost-of-living adjustment (COLA) effective July 1 of the second calendar year of retirement. Under Plan 1, the COLA cannot exceed 5.00%; under Plan 2, the COLA cannot exceed 6.00%. During years of no inflation or deflation, the COLA is 0.00%. 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 report that includes financial statements and required supplementary information for VRS. A copy of the most recent report may be obtained from the VRS website at http://www. varetire.org/Pdf/Publications/2012-annual-report.pdf or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Funding Policy

Primary Government:

Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their compensation toward their retirement. All or part of the 5.00% member contribution may be assumed by the employer. Beginning July 1, 2012 new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. 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 2013 was 14.36% 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 compensation toward their retirement. All or part of the 5.00% member contribution may be assumed by the employer. Beginning July 1, 2012 new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. 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 2013 was 16.24% of annual covered payroll.

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-A5-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (continued)

C. Annual Pension Cost

For fiscal year 2013, the County and School Board annual pension costs of $800,479 and $434,345 were equal to the required and actual contributions for the County and the School Board Non Professionals, respectively.

Three-Year Trend Information

Primary Government:

County

Discretely Presented-Component Unit:

School Board Non-Professional

1 Employer portion only

Primary Government:

Fiscal

Year

Ending

6/30/2011

6/30/2012

6/30/2013

6/3012011

6/30/2012

6/30/2013

Annual

Pension

Cost (APC) 1

$ 579,314

576,628

800,479

$ 384,524

386,243

434,345

Percentage

of APC

Contributed

100.00%

Net

Pension

Obligation

The FY 2013 required contribution was determined as part of the June 30, 2011 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2011 included (a) an investment rate of return (net of administrative expenses) of 7.00%, (b) projected salary increases ranging from 3. 75% to 5.60% for general government employees, 3. 75% to 6.20% per year for teachers, 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 for Plan 1 employees and 2.25% for Plan 2 employees. 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 payrolls on an open basis. The remaining amortization period at June 30, 2011 for the Unfunded Actuarial Liability (UAAL) was 30 years.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (continued)

Annual Pension Cost

Three-Year Trend Information

Fiscal Annual Percentage Net Year Pension of APC Pension Ending Cost (APC)* Contributed Obligation Primary Government: County 6/30/2011 $ 579,314 100.00% $ 6/30/2012 576,628 100.00% 6/30/2013 800,479 100.00% Discretely Presented-Component Unit: School Board Non-Professional 6/30/2011 $384,524 100.00% $ : 6/30/2012 386,243 10.00% - 6/30/2013 434,345 100.0% -

‘Employer portion only

Primary Government: The FY 2013 required contribution was determined as part of the June 30, 2011 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2011 included (a) an investment rate of return (net of administrative expenses) of 7.00%, (b) projected salary increases ranging from 3.75% to 5.60% for general government employees, 3.75% to 6.20% per year for teachers, 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 for Plan 1 employees and 2.25% for Plan 2 employees. 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 payrolls on an open basis. The remaining amortization period at June 30, 2011 for the Unfunded Actuarial Liability (UAAL) was 30 years.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (continued)

C. Annual Pension Cost (continued)

Discretely Presented-Component Unit School Board - Non-Professional: The FY 2013 required contribution was determined as part of the June 30, 2011 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2011 included (a) an investment rate of return (net of administrative expenses) of 7.00%, (b) projected salary increases ranging from 3.75% to 5.60% for general government employees, 3. 75% to 6. 20% per year for teachers, 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 for Plan 1 employees and 2.25% for Plan 2 employees. Both the investment rate of return and the projected salary increases include an inflation component of 2.50%. The actuarial value of the School Board’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 School Board’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payrolls on an open basis. The remaining amortization period at June 30, 2011 for the Unfunded Actuarial Liability (UAAL) was 30 years.

D. Funded Status and Funding Progress

Primary Government: As of June 30, 2012, the most recent actuarial valuation date, the plan was 70.15% funded. The actuarial accrued liability for benefits was $28,359,443, and the actuarial value of assets was $19,894,452, resulting in an unfunded actuarial accrued liability (UAAL) of $8,464,991. The covered payroll (annual payroll of active employees covered by the plan) was $5,481,683, and ratio of the UAAL to the covered payroll was 154.42%.

Discretely Presented Component Unit- School Board (Non-Professional Employees): As of June 30, 2012, the most recent actuarial valuation date, the plan was 61.14% funded. The actuarial accrued liability for benefits was $16,469,710, and the actuarial value of assets was $10,068,998, resulting in an unfunded actuarial accrued liability (UAAL) of $6,400,712. The covered payroll (annual payroll of active employees covered by the plan) was $2,689,457, and ratio of the UAAL to the covered payroll was 237.99%.

The schedule of funding progress, presented as Required Supplementary Information (RSI) 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.

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-47-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (continued)

Annual Pension Cost (continued)

Discretely Presented-Component Unit School Board - Non-Professional:

The FY 2013 required contribution was determined as part of the June 30, 2011 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2011 included (a) an investment rate of return (net of administrative expenses) of 7.00%, (b) projected salary increases ranging from 3.75% to 5.60% for general government employees, 3.75% to 6.20% per year for teachers, 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 for Plan 1 employees and 2.25% for Plan 2 employees. Both the investment rate of return and the projected salary increases include an inflation component of 2.50%. The actuarial value of the School Board’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 School Board’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payrolls on an open basis. The remaining amortization period at June 30, 2011 for the Unfunded Actuarial Liability (UAAL) was 30 years.

Funded Status and Funding Progress

Primary Government: As of June 30, 2012, the most recent actuarial valuation date, the plan was 70.15% funded. The actuarial accrued liability for benefits was $28,359,443, and the actuarial value of assets was $19,894,452, resulting in an unfunded actuarial accrued liability (UAL) of $8,464,991. The covered payroll (annual payroll of active employees covered by the plan) was $5,481,683, and ratio of the UAL to the covered payroll was 154.42%.

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

As of June 30, 2012, the most recent actuarial valuation date, the plan was 61.14% funded, The actuarial accrued liability for benefits was $16,469,710, and the actuarial value of assets was $10,068,998, resulting in an unfunded actuarial accrued liability (UAL) of $6,400,712. The covered payroll (annual payroll of active employees covered by the plan) was $2,689,457, and ratio of the UAL to the covered payroll was 237.99%.

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AT-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (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 report that includes financial statements and required supplementary information for VRS. A copy of the most recent report may be obtained from the VRS website at http:/ /www.varetire.org/Pdf /Publications/2012-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 compensation toward their retirement. All or part of the 5.00% member contribution may be assumed by the employer. Beginning July 1, 2012 new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. 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 $2,037,610, $1,164,108, and $700,575 for the fiscal years ended 2013, 2012, and 2011, respectively. Employer contributions represented 11.66%, 6.33%, and 3. 93% of covered payroll for the fiscal years ended 2013, 2012, and 2011, respectively.

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-48-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 8-Employee Retirement System and Defined Benefit Pension Plan: (continued)

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 report that includes financial statements and required supplementary information for VRS. A copy of the most recent report may be obtained from the VRS website at http://www.varetire.org/Pdf /Publications/2012-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 compensation toward their retirement. Alor part of the 5.00% member contribution may be assumed by the employer. Beginning July 1, 2012 new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. 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 $2,037,610, $1,164, 108, and $700,575 for the fiscal years ended 2013, 2012, and 2011, respectively. Employer contributions represented 11.66%, 6.33%, and 3.93% of covered payroll for the fiscal years ended 2013, 2012, and 2011, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 9-Capital Assets:

Capital asset activity for the year ended June 30, 2013 was as follows:

Primary Government:

Beginning Balance Increases

Governmental Activities: Capital assets, not being depreciated:

Land s 1,541,333 s 20,000 s

Capital assets, being depreciated: Buildings and improvements s 28,465,973 s s Machinery and equipment 3,780,691 358,940

Total capital assets being depreciated s 32,246,664 s 358,940 s

Accumulated depreciation: Buildings and improvements s (11 ,402,017) s (683,170) s Machinery and equipment (2,233,349) (452, 936)

Total accumulated depreciation s (13,635,366) s (1,136,106) s

Total capital assets being depreciated, net s 18,611,298 s (777, 166) s

Governmental activities capital assets, net s 20,152,631 s (757, 166) s

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-49-

Ending Decreases Balance

s 1,561,333

(1,812,215) s 26,653,758 (374,364) 3,765,267

(2, 186,579) s 30,419,025

996,716 s (11 ,088,471)

312,969 (2,373,316)

1,309,685 s (13,461 ,787)

(876,894) s 16,957,238

(876,894) s 18,518,571

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2013

Note 9-Capital Assets:

Capital asset activity for the year ended June 30, 2013 was as follows:

Primary Government:

Governmental Activities: Capital assets, not being depreciated: Land

Capital assets, being depreciated: Buildings and improvements Machinery and equipment

Total capital assets being depreciated

Accumulated depreciation: Buildings and improvements Machinery and equipment

Total accumulated depreciation

Total capital assets being depreciated, net

Governmental activities capital assets, net

Beginning Ending Balance Increases Decreases Balance 1,541,333 $ 20,000 $ + $___ 1,561,333 28,465,973 § $ (1,812,215) $26,653,758 3,780,691 358,940 (374,364) 3,765,267 32,246,664 $ 358,940 $_ (2,186,579) $30,419,025 (11,402,017) $ (683,170) $996,716 § (11,088,471) (2,233,349) (452,936) 312,969 (2,373,316) (13,635,366) $__ (1,136,106) $_ 1,309,685 $__ (13,461,787) 18,611,298 $ (777,166) $__ (876,894) $16,957,238 20,152,631 $_ (757,166) $(876,894) $ 18,518,571

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO fiNANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 9-Capital Assets: (continued)

Primary Government: (continued)

Business-Type Activities

Capital assets, being depreciated:

Beginning Balance Increases Decreases

Ending

Balance

Utility plant $ 5,240,699 s _____ - s ____ -_ s 5,240,699

Accumulated depreciation: Utility plant $ (1 ,855,072) $ (131,017) s ____ s (1,986,089)

Total capital assets being depreciated, net $ 3,385,627 $ (131,017) s _____ s 3,254,610

Business-Type activities capital assets, net $ 3,385,627 $ (131,017) s ____ s 3,254,610

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

Community development

Total depreciation expense-governmental activities

Business-Type activities:

Sewer Authority

s 15,600

754

213,546

49,978

24,866

785,326

38,222

7,814

s 1,136,106

s ==13=1 ;.,'0=17=

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-50-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 9-Capital Assets: (continued)

Primary Government: (continued)

Business-Type Activities Capital assets, being depreciated: Utility plant $

‘Accumulated depreciation: Utility plant $

Total capital assets being depreciated, net §

Business-Type activities capital assets, net $

Beginning Ending Balance Increases Decreases Balance 5,240,699 $ $ = $_ 5,240,699 (1,855,072) $(131,017) $ = $_(1,986,089) 3,385,627 § (131,017) $ = $ 3,254,610 3,385,627_ $ (131,017) $ = $_ 3,254,610

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

Governmental activities:

General government administration $ 15,600 Judicial administration 754 Public safety 213,546 Public works 49,978 Health and welfare 24,866 Education 785,326 Parks, recreation, and cultural 38,222 Community development 7,814 Total depreciation expense-governmental activities $_1,136,106 Business-Type activities: Sewer Authority $__131,017

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 9-Capital Assets: (continued)

Capital asset activity for the School Board for the year ended June 30, 2013 was as follows:

Discretely Presented Component Unit - School Board:

Capital assets, not being depreciated:

Beginning Balance Increases Decreases

Ending Balance

Land s 4,643,707 s ---- s ___ _ s ___ 4.:…,6_4–'3’c…7_07_

Capital assets, being depreciated: Buildings and improvements Machinery and equipment

Total capital assets being depreciated

Accumulated depreciation: Buildings and improvements Machinery and equipment

Total accumulated depreciation

Total capital assets being depreciated, net

Governmental activities capital assets, net

Note 1 0-Risk Management:

20,471,789 s 1,812,215 s 6,248,380 327,091

26,720,169 s 2,139,306 s

(9,797,780) s (1 ,568, 128) s (4,585,495) (529,011)

(14,383,275) s (2,097, 139) s

12,336,894 s 42,167 s

16,980,601 s 42,167 s

s 22,284,004

(203,000) 6,372,471

(203,000) s _ ____::c28::…:'.:…:65:…:c6.:…,4.:…:75=-

s (11 ,365, 908)

203,000 (4,911,506)

203,000 s (16,277,414)

s 12,379,061

s 17,022,768

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, 2013

Note 9-Capital Assets: (continued) Capital asset activity for the School Board for the year ended June 30, 2013 was as follows:

Discretely Presented Component Unit - School Board:

Beginning Ending Balance Increases Decreases Balance

Capital assets, not being depreciated:

Land S____ 4,643,707. $ 3 = S$ 4,643,707 Capital assets, being depreciated:

Buildings and improvements S$ 20,471,789 $1,812,215 $ + $22,284,004

Machinery and equipment 6,248,380 327,091 (203,000) 6,372,471 Total capital assets being depreciated S___ 26,720,169 $2,139,306 $” (203,000) $28,656,475 Accumulated depreciation:

Buildings and improvements S$ (9,797,780) $ (1,568,128) $ = $ (11,365,908)

‘Machinery and equipment (4,585,495) (529,011) 203,000 (4,911,506) Total accumulated depreciation $__ (14,383,275) $_ (2,097,139) $ 203,000 $(16,277,414) Total capital assets being depreciated, net $—12,336,894 $42,167 § = $12,379,064 Governmental activities capital assets, net $—*16,980,601 $42,167 $ = $_ 17,022,768

Note 10-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 - 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, 2013

Note 11-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, if any, would be immaterial.

Note 12-Surety Bonds:

Fidelity & Deposit Company of Maryland· Surety: Ann McReynolds, 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 Gilbert · Clerk of the School Board All school employees: blanket bond

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

Note 13-Landfill Closure and Postclosure Care Cost:

1,010,000

400,000

3,000

30,000

50,000

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. $267,913 is the total estimated closure and postclosure care liability at June 30, 2013. 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 2013. 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.

The County demonstrated financial assurance requirements for closure, post-closure care, and corrective action costs through the submission of a Local Government Financial Test to the Virginia Department of Environmental Quality in accordance with Section 9VA C20·70 of the Virginia Administrative Code.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 11-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, if any, would be immaterial.

Note 12-Surety Bond:

Fidelity & Deposit Company of Maryland-Surety:

‘Ann McReynolds, 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 Gilbert - Clerk of the School Board $10,000 All school employees: blanket bond 10,000

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

Note 13-Landfill Closure and Postclosure Care Cost:

‘The County demonstrated financial assurance requirements for closure, post-closure care, and corrective action costs through the submission of a Local Government Financial Test to the Virginia Department of Environmentat Quality in accordance with Section 9VA C20-70 of the Virginia Administrative Code.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 14-Unavailable Revenue:

Governmental funds report unavailable 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 unavailable revenue reported in the governmental funds were as follows:

Delinquent property taxes receivable Prepaid taxes Total unavailable revenue for governmental funds

Note 15-Self Health Insurance:

Gov’t-wide Statements Governmental Activities

7,337,069 65,753

7,402,822

Balance Sheet Governmental Funds

4,504,607 65,753

4,570,360

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 2013, a total of $4,826,551 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, 2013, 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 $454,373 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 2013 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

2012-13 s 566,431 s 4,714,493 s (4,826, 551) s 454,373

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 14-Unavai

ble Revenue:

Govt Statements Balance Sheet Governmental Activities __ Governmental Funds Delinquent property taxes receivable $ 7,337,069 $ 4,504,607 Prepaid taxes 65,753 65,753 Total unavailable revenue for governmental funds $ 7,402,822 $ 4,570,360

Note 15-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 costs of the program. During the fiscal year 2013, a total of $4,826,551 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, 2013, 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 $454,373 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 2013 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

2012-13 $ 566,431 $ 4,714,493 S$ (4,826,551) $ 454,373

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 16-0ther Postemployment Benefits-Health Insurance:

A. Plan Description

The County of Russell and Russell County’s Component Unit- School Board administer 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 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, 100 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 s 8,600 s 8,600

COBRA Retiree Family

Under 65 s 5,880 s 13,842

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 16-Other Postemployment Benefits-Health Insurance:

A. Plan Description

The County of Russell and Russell County’s Component Unit - School Board administer 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 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, 100 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 S$ 8,600 $ 8,600 COBRA Retiree Family Under 65 $5,880 $13,842

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 16-0ther Postemployment 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 fiscal year 2012, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation during fiscal year 2012. The OPEB plan has not been updated for the current year.

Annual required contribution $ 42,919

Interest on net OPEB obligation 361 Adjustment to annual required contribution (526)

Annual OPEB cost (expense) 42,754 Contributions made (43,298)

Increase (decrease) in net OPEB obligation (544)

Net OPEB obligation · beginning of year 7,153

Net OPEB obligation · end of year $ 6,609

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2012 and the two preceding years were as follows:

Percentage of

Fiscal Annual Annual OPEB Cost Net OPEB

Year Ended OPEB Cost Contributed Obligation

6/30/2010 $ 42,981 99.99% $ 4,949

6/30/2011 42,373 94.80% 7,153

6/30/2012 42,754 101.27% 6,609

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 16-Other Postemployment 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 fiscal year 2012, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation during fiscal year 2012. The OPEB plan has not been updated for the current year.

Annual required contribution $42,919 Interest on net OPEB obligation 361 Adjustment to annual required contribution (526) Annual OPEB cost (expense) 42,754 Contributions made (43,298) Increase (decrease) in net OPEB obligation (544) Net OPEB obligation - beginning of year 7,153 Net OPEB obligation - end of year $6,609

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2012 and the two preceding years were as follows:

Percentage of

Fiscal Annual Annual OPEB Cost Net OPEB Year Ended _ OPEB Cost Contributed Obligation 6/30/2010 $ 42,981 99.99% $ 4,949 6/30/2011 42,373 94.80% 7,153 6/30/2012 42,754 101.27% 6,609

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COUNTY OF RUSSEll, VIRGINIA

NOTES TO FINANCIAl STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 16-0ther Postemployment 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 liabilities (or funding excess) over a period not to 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 $ 886,300 Interest on net OPEB obligation 1,793 Adjustment to annual required contribution (2,385)

Annual OPEB cost (expense) 885,708 Contributions made (503,000)

Increase (decrease) in net OPEB obligation 382,708

Net OPEB obligation · beginning of year 44,828 Net OPEB obligation - end of year $ 427,536

The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 and the two preceding years were as follows:

Percentage of

Fiscal Annual Annual OPEB Cost Net OPEB Year Ended OPEB Cost Contributed Obligation

6/30/2011 $ 276,346 94.80% $ 48,377 6/30/2012 278,829 101.27% 44,828

6/30/2013 885,708 56.79% 427,536

D. Funded Status and Funding Progress

The funded status of the Plan for the County as of July 1, 2010, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL) $ 464,748

Actuarial value of plan assets $ Unfunded actuarial accrued liability (UAAL) $ 464,748

Funded ratio (actuarial value of plan assets I AAL) 0.00%

Covered payroll (active plan members) $ 5,581,443

UAAL as a percentage of covered payroll 8.33%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 16-Other Postemployment Benefits-Health Insurance: (continued)

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

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 (decrease) in net OPEB obligation

Net OPEB obligation - beginning of year

Net OPEB obligation - end of year

886,300 1,793 (2,385)

885,708 (603,000) 382,;

The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 and the two preceding years were as follows:

Percentage of

Fiscal Annual Annual OPEB Cost. Net OPEB YearEnded _ OPEB Cost Contributed Obligation 6/30/2011 $ 276,346 94.80% $ 48,377 6/30/2012 278,829 101.27% 44,828 6/30/2013 885,708 56.79% 427,536

D. Funded Status and Funding Progress

‘The funded status of the Plan for the County as of July 1, 2010, the most recent actuarial valuation date,

is as follows:

Actuarial accrued liability (AAL)

Actuarial value of plan assets

Unfunded actuarial accrued liability (UAL) Funded ratio (actuarial vatue of plan assets / AAL) Covered payrolt (active plan members)

UAAL as a percentage of covered payroll

464,748

464,748 0.00%

5,581,443 8.33%

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 16-0ther Postemployment 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, 2012, the most recent actuarial valuation date, 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

s s s

8, 991,400

8,991,400

0.00%

21,181,100

42.45%

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.

As of July 1, 2012, the most recent actuarial valuation date, 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: inflation at 2.50 percent, plus productivity component of 1.25 percent, investment rate of return at 4.00 percent, and a health care trend rate of 7.50 percent graded to 4.80 percent over 72 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2012 was 20 years.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 16-Other Postemployment 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, 2012, the most recent actuarial valuation date, is as follows:

‘Actuarial accrued liability (AAL) $ 8,991,400 Actuarial value of pian assets $ -

Unfunded actuarial accrued liability (UAL) $ 8,991,400 Funded ratio (actuarial value of plan assets / AL) 0.00% Covered payroll (active plan members) $ 21,181,100 UAAL as a percentage of covered payroll ALASK

E. Actuarial Methods and Assumptions

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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 17-0ther Postemployment Benefits-VRS Health Insurance Credit:

A. Plan Description

The County and School Board participate 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 or School Board, 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

Primary Government: 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 2013 was 0.23% of annual covered payroll.

Discretely Presented Component Unit - School Board (Non-Professional Employees): As a participating local political subdivision, the Covington School Board 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 School Board’s contribution rate for the fiscal year ended 2013 was 0.59% of annual covered payroll.

C. Annual OPEB Cost and Net OPEB Obligation

Primary Government: 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 17-Other Postemployment Benefits-VRS Health Insurance Credit:

A, Plan Description

The County and School Board participate 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, muttiple-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.

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

Primary Government:

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 2013 was 0.23% of annual covered payroll.

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

As a participating local political subdivision, the Covington School Board 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 School Board’s contribution rate for the fiscal year ended 2013 was 0.59% of annual covered payroll.

C. Annual OPEB Cost and Net OPEB Obligation

Primary Government:

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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 17-0ther Postemployment Benefits-VRS Health Insurance Credit: (continued)

C. OPEB Cost and Net OPEB Obligation (continued)

Primary Government: (continued) For 2013, the County’s contribution of $1,764 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 2013 and the two preceding years are shown below:

Fiscal Annual Percentage Net Year OPEB of ARC OPEB

Ending Cost (ARC) Contributed Obligation Primary Government:

County 6/3012011 s 3,304 100.00% s 6/30/2012 3,289 100.00% 6/3012013 1,764 100.00%

Discretely Presented Component Unit - School Board (Non-Professional Employees): 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 School Board 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 2013, the School Board’s contribution of S 15,780 was equal to the ARC and OPEB cost. The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 is as follows:

Discretely Presented Component Unit

School Board

Year

Ending

6/30/2013 s

OPEB

Cost (ARC)

15,780

of ARC

Contributed

100.00%

OPEB

Obligation

Note: 2013 is the first year of the VRS health insurance credit program for non-professional school board employees.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (continued)

C. OPEB Cost and Net OPEB Obligation (continued)

Primary Government: (continued) For 2013, the County’s contribution of $1,764 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 2013 and the two preceding years are shown below:

Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending Cost (ARC) Contributed _ Obligation Primary Government: County 6/30/2011 $ 3,304 100.00% $ - 6/30/2012 3,289 10.00% 6/30/2013 1,764 100.00%

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

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 School Board 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 2013, the School Board’s contribution of $15,780 was equal to the ARC and OPEB cost. The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 is as follows:

Year OPEB of ARC OPEB Ending Cost (ARC) Contributed _ Obligation Discretely Presented Component Unit School Board 6/30/2013 § 15,780 100.00% $

Note: 2013 is the first year of the VRS health insurance credit program for non-professional school board employees.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 17-0ther Postemployment Benefits-VRS Health Insurance Credit: (continued)

D. Funded Status and Funding Progress

Primary Government: The funded status of the plan as of June 30, 2012, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL)

Actuarial value of plan assets

Unfunded actuarial accrued liability (UAAL)

Funded ratio (actuarial value of plan assets/ AAL)

Covered payroll (active plan members)

UAAL as a percentage of covered payroll

s s s

101,849

78,231

23,618

76.81%

1,769,420

1.33%

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.

Discretely Presented Component Unit · School Board (Non·Professional Employees): The funded status of the plan as of June 30, 2012, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL)

Actuarial value of plan assets

Unfunded actuarial accrued liability (UAAL)

Funded ratio (actuarial value of plan assets/ AAL)

Covered payroll (active plan members)

UAAL as a percentage of covered payroll

s s s

161,463

0.00%

2,689,457

6.00%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (continued)

D. Funded Status and Funding Progress

Primary Government: The funded status of the plan as of June 30, 2012, the most recent actuarial valuation date, is as fotlows:

Actuarial accrued liability (AAL) $ 101,849 Actuarial value of plan assets $ 78,231 Unfunded actuarial accrued liability (UAAL) $ 23,618 Funded ratio (actuarial value of plan assets/AAL) 76.81% Covered payroll (active plan members) $1,769,420 UAAL as a percentage of covered payroll 1.33%

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.

Discretely Presented Component Unit - School Board (Non-Professional Employees): The funded status of the plan as of June 30, 2012, the most recent actuarial valuation date, is as follows:

‘Actuarial accrued liability (AL) $ 161,463 Actuarial value of plan assets s - Unfunded actuarial accrued liability (UAAL) 5 161,463 Funded ratio (actuarial value of plan assets/AAL) 0.00% Covered payroll (active plan members) $2,689,457 UAAL as a percentage of covered payroll 6.00%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

Note 17-0ther Postemployment Benefits-VRS Health Insurance Credit: (continued)

D. Funded Status and Funding Progress (continued)

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

Primary Government: 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 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAAL is being amortized as a level percentage of payrolls on an open basis. The remaining open amortization period at June 30, 2012 was 29 years.

Discretely Presented Component Unit- School Board (Non-Professional Employees): 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 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2012 was 29 years.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (continued)

D. Funded Status and Funding Progress (continued)

E. Actuarial Methods and Assumptions

Primary Government

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.

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

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 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2012 was 29 years.

F. Professional Employees - Discretely Presented Component Unit School Board

61-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 17-0ther Postemployment Benefits-VRS Health Insurance Credit: (continued)

F. Professional Employees - Discretely Presented Component Unit School Board (continued)

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 School Board’s contribution to VRS was $193,975, $110,342 and $165,875 for the fiscal years ended 2013, 2012, and 2011, respectively. The School Board’s contributions represented 1.11%, 0.60% and 1.08% of covered payroll for the fiscal years ended 2013, 2012, and 2011, respectively.

Note 18-Moral Obligation:

The County has signed support agreements that back certain debt obligations of The Industrial Development Authority of Russell County (a component unit of the County). In these agreements, the Board of Supervisors has a non-binding (moral obligation) to fund the Russell County Industrial Development Authority in amounts sufficient to cover debt service on referenced obligations. To date, the County of Russell, Virginia has provided funds sufficient to cover such debt service. As of June 30, 2013, the outstanding balance such loans was $600,000. During fiscal year 2013, the County paid $944,503 in debt service for The Industrial Development Authority of Russell County. The Industrial Development Authority of Russell County expects the County to pay the remaining $600,000 during fiscal year 2014.

The County has signed a support agreement that backs certain debt obligations of the Russell County Public Service Authority (a component unit of the County). In the agreement, the Board of Supervisors has a moral obligation to fund the Russell County Public Service Authority in amounts sufficient to cover debt service issued during fiscal year 2013 in the amount of $700,843. To date, the County of Russell, Virginia has provided funds sufficient to cover such debt service. During fiscal year 2013, the County paid $132,046 in debt service for the Russell County Public Service Authority.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2013

Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (continued)

F, Professional Employees - Discretely Presented Component Unit School Board (continued)

Ateacher, 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.

Note 18-Moral Obligation:

The County has signed support agreements that back certain debt obligations of The Industrial Development Authority of Russell County (a component unit of the County). In these agreements, the Board of Supervisors has a non-binding (moral obligation) to fund the Russell County Industrial Development Authority in amounts sufficient to cover debt service on referenced obligations. To date, the County of Russell, Virginia has provided funds sufficient to cover such debt service. As of June 30, 2013, the outstanding balance such loans was $600,000. During fiscal year 2013, the County paid $944,503 in debt service for The Industrial Development Authority of Russell County. The Industrial Devetopment Authority of Russell County expects the County to pay the remaining $600,000 during fiscal year 2014.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 19-0perating Lease:

The County has signed a lease agreement with The Industrial Development Authority of Russell County to pay rent equivalent to the required debt service as it relates to the Russell County Government Center. To date, the County of Russell, Virginia has provided funds sufficient to cover such debt service. As of June 30, 2013, the outstanding balance of the loan was $5,086,100. Future required rent payments are as follows:

Year Ending Operating Lease June 30, Principal Interest

2014 s 223,300 s 116,497 2015 355,100 109,767 2016 363,300 101,621 2017 372,100 92,744 2018 381,000 83,925

2019·2023 2,044,500 280,035 2024·2028 1,346,800 47,997

Totals s 5,086,100 s 832,586

Note 20-Upcoming Pronouncements:

The GASB has issued Statement No. 68, ""Accounting and Financial Reporting for Pensions; an amendment of GASB Statement No. 27 :· This Statement replaces the requirements of Statements No. 27 and No. 50 related to pension plans that are administered through trusts or equivalent arrangements. The requirements of Statements No. 27 and No. 50 remain applicable for pensions that are not administered as trusts or equivalent arrangements. The requirements of this Statement are effective for financial statements for fiscal years beginning after June 15, 2014. The County has not determined the impact of this pronouncement on its financial statements.

Note 21-Litigation:

As of June 30, 2013, there were no matters of litigation involving the County which would materially affect the County’s financial position should an court decisions on pending matters not be favorable.

Note 22 -Restatement:

Beginning net position of the School Board has been restated due to the discovery of an early retirement incentive program and an additional adjustment for unrecorded depreciation expense in the prior year. The restatement is demonstrated below:

Net Position as Previously Reported 6/30/12

Early Retirement Incentive Program

Depreciation Expense

Net Position as Restated 6/30/12

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Component Unit ·

School Board

16,988,114

(451, 958)

(418, 199)

16,117,957

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2013

Note 19-Operating Leas:

Year Ending Operating Lease

June 30, Principal Interest 2014 $ 223,300 $ 116,497 2015 355,100 109,767, 2016 363,300 101,621 2017 372,100 92,744 2018 381,000 83,925

2019-2023 2,044,500 280,035

2024-2028 1,346,800 47,997

Totals

086,700 S$ 832,586

Note 20-Upcoming Pronouncements:

The GASB has issued Statement No. 68, “Accounting and Financial Reporting for Pensions; an amendment of GASB Statement No. 27.” This Statement replaces the requirements of Statements No. 27 and No. 50 related to pension plans that are administered through trusts or equivalent arrangements. The requirements of Statements No. 27 and No. 50 remain applicable for pensions that are not administered as trusts or equivalent arrangements. The requirements of this Statement are effective for financial statements for fiscal years beginning after June 15, 2014. The County has not determined the impact of this pronouncement on its financial statements.

Note 22-Restatement:

Component Unit -

Schoot Board Net Position as Previously Reported 6/30/12 $ 16,988,114 Early Retirement Incentive Program (451,958) Depreciation Expense (418,199)

Net Position as Restated 6/30/12 16,117,957

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, 2013

Variance with

Budgeted Amounts Final Budget -

Actual Positive

Original Final Amounts (Negative)

REVENUES

General property taxes $ 13,985,801 $ 13,985,801 $ 14,696,587 $ 710,786

Other local taxes 5,062, 996 5,042, 996 3,937,219 (1,105,777)

Permits, privilege fees, and regulatory licenses 19,800 19,800 34,152 14,352 Fines and forfeitures 73,806 73,806 14,955 (58,851)

Revenue from the use of money and property 50,000 50,000 31,431 (18,569)

Charges for services 270,900 474,108 303,412 (170,696)

Miscellaneous 44,000 44,000 60,479 16,479

Recovered costs 383,000 383,000 1,009,359 626,359

Intergovernmental revenues:

Commonwealth 7,956,339 7,956,339 7,734,506 (221 ,833)

Federal 2,355,448 2,355,448 2,458, 978 103,530

Total revenues $ 30,202,090 $ 30,385,298 $ 30,281,078 $ (104,220)

EXPENDITURES

Current:

General government administration $ 1,571,513 $ 1,726,663 $ 1 '797, 929 $ (71,266)

Judicial administration 2,150,066 2,154,866 2,096,382 58,484

Public safety 5,197,517 5,419,427 5,742,101 (322,674)

Public works 3,638,060 3,514,305 3,241,005 273,300

Health and welfare 6,770,802 6, 708,456 6,120,771 587,685

Education 7,258,593 7,258,593 6,390,469 868,124

Parks, recreation, and cultural 469,655 469,655 488,706 (19,051)

Community development 1,532,898 1,530,569 2,283,910 (753,341)

Nondepartmental 806,600 408,328 423,737 (15,409)

Capital projects 100,000 280,008 334,929 (54,921)

Debt service:

Principal retirement 1 ,424, 901 1 ,424, 901 2,314,036 (889,135)

Interest and other fiscal charges 352,481 352,481 555,784 (203,303)

Total expenditures $ 31,273,086 $ 31,248,252 $ 31,789,759 $ (541 ,507)

Excess (deficiency) of revenues over (under)

expenditures $ (1 ,070,996) $ (862,954) $ (1 ,508,681) $ (645, 727)

OTHER FINANCING SOURCES (USES)

Transfers out $ (100,000) $ (183,042) $ (283,789) $ (100,747)

Net change in fund balances $ (1,170,996) $ (1,045,996) $ (1 ,792,470) $ (746,474)

Fund balances - beginning 1 '170, 996 1 ,045, 996 6,884,605 5,838,609

Fund balances -ending $ $ $ 5,092,135 $ 5,092,135

-64-

County of Russell, Virginia General Fund

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

For the Year Ended June 30, 2013,

Exhibit 14

REVENUES

General property taxes Other local taxes

Permits, privilege fees, and regulatory licenses

Fines and forfeitures

Revenue from the use of money and property

Charges for services Miscellaneous Recovered costs Intergovernmental revenues: Commonwealth Federal Total revenues

EXPENDITURES. Current: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural ‘Community development Nondepartmental Capital projects Debt service: Principal retirement, Interest and other fiscal charges Total expenditures,

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers out

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

Variance with

Budgeted Amounts Final Budget -

Actual Positive

Original Final ‘Amounts (Negative! $13,985,801 $13,985,801 § 14,696,587 $ 710,786 5,062,996 5,042,996 3,937,219 (1,105,777) 19,800 19,800 34,152 14,352 73,806 73,806 14,955 (68,851) 50,000 50,000 31,431 (18,569) 270,900 474,108 303,412 (170,696) 44,000 44,000 60,479 16,479 383,000 383,000 1,009,359 626,359 7,996,339 7,956,339 ‘7,734,506, (221,833) 2,395,448 2,355,448 2,458,978 103,530 3 30,202,090_$ 30,385,298 § 30,261,078 § (104,220) $1,571,513 $4,726,663 $1,797,929 § (71,266) 2,150,066 2,154,866 2,096,382 38,484 5,197,517 5,419,427 5,742,101 (622,674) 3,638,060 «3,514,305. «3,241,005 273,300 6,770,802 6,708,456 6,120,771 587,685 7,258,593 7,258,593 6,390,469 868,124 469,655, 469,655 488,706 (19,051) 1,532,898 1,530,569 2,283,910 (753,341) 806,600 408,328 423,737 (15,409) 100,000 280,008 334,929 (54,921) 4,424,901 1,424,901 2,314,036 (889,135) 352,481 352,481 955,784 (203,303) $34,773,086 $34,248,252 $31,789,759 $ (541,507) $(1,070,996) $ (862,954) $ (1,508,681) $ (645,727) $ (100,000) $_ (183,042) $__ (283,789) $ (100,747) $ (1,170,996) $ (1,045,996) $ (1,792,470) § (746,474) 4,170,996 1,045,996 6,884,605 __—5,838,609

s —s $5,072, 135_§ 5,092,135

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County of Russell, Virginia

Special Revenue Fund -Coal Road Fund

Exhibit 12

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

For the Year Ended June 30, 2013

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

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

Budgeted Amounts

Original Final

s 1,320,000 s 1,320,000 s

s s s

-65-

Variance with Final Budget -

Actual

Amounts

1 '142,393 s 5,232

1,147,625 s

1,503,326 s

(355,701) s

(355,701) s 1,245,468

889,767 s

Positive (Negative)

(177,607)

5,232

(172,375)

(183,326)

(355, 701)

(355,701)

1,245,468

889,767

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, 2013

Exhibit 12

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 Net change in fund balances

Fund balances - beginning Fund balances - ending,

Variance with

Budgeted Amounts Final Budget - Actuat Positive Original Final Amounts (Negative) $1,320,000 $ 1,320,000 $1,142,393 $ (177,607)

: 5,232 5,232 $_ £320,000 § 1,320,000 $4,147,625 (172,375) $1,320,000 $ _ 1,320,000_$ 1,503,326 $ (183,326) $ s $55,701) $__ (355,701) 8 5 $355,701) $ (355,701) : 1,245,468 1,245,468 3 =~ $ = $889,767 _§ 889,767

65-

County of Russell, Virginia Special Revenue Fund -Workforce Investment Board Fund

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

For the Year Ended June 30, 2013

Exhibit 13

Variance with

REVENUES

Intergovernmental revenues: Commonwealth Federal

Total revenues

EXPENDITURES

Current:

Health and welfare

Excess (deficiency) of revenues over (under) expenditures

Net change in fund balances

Fund balances - beginning Fund balances- ending

Budgeted Amounts Final Budget -

Actual Positive

Original Final Amounts (Negative)

$ $ $ 2,550 $ 2,550

3,198,324 3,198,324 2,206,878 (991 ,446)

$ 3,198,324 $ 3,198,324 $ 2,209,428 $ (988,896)

$ 3,198,324 $ 3,198,324 $ 2,213,965 $ 984,359

$ $ $

-66-

(4,537) $

(4,537) $ 47,936

43,399 $

(4,537)

47,936

43,399

County of Russell, Virginia Special Revenue Fund - Workforce Investment Board Fund ‘Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual

For the Year Ended June 30, 2013

Exhibit 13

REVENUES Intergovernmental revenues: Commonwealth Federal Total revenues

EXPENDITURES. Current: Health and welfare

Excess (deficiency) of revenues over (under) expenditures Net change in fund balances

Fund balances - beginning Fund balances - ending

Variance with Budgeted Amounts Final Budget - Actual Positive Original Amounts (Negative) 5 : : 2,550 $ 2,550 3,198,324 3,198,324 2,206,878 (991,446) 53,198,324 3,198, 324 2,209,428 (988,896) $3,198,324 3,198,324 2,213,965 $984,359 s (4,537) §___(4,537) $ (4,537) § (4,537) : : 47,936 41,936 3 43,399 $43,309

Exhibit 14

County of Russell, Virginia

Schedule of Pension and OPEB Funding Progress

For the Year Ended June 30, 2013

Primary Government

County Retirement Plan:

Actuarial Actuarial Actuarial Unfunded UAAL as a

Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered %of Covered

as of Assets Liability (AAL) (3( ~ (Z) (Z)/(3) Payroll Payroll (4)/(6)

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

June 30, 2012 19,894,452 28,359,443 8,464,991 70.15% 5,481,683 154.42%

June 30, 2011 20,084,643 27,499,897 7,415,254 73.04% 5,413,452 136.98%

June 30, 2010 19,759,376 26,221,057 6,461,681 75.36% 5,581,443 115.77%

County Other Postemployment Benefits-Health Insurance:

Actuarial Actuarial Actuarial Unfunded UAAL as a

Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered %of Covered

as of(") Assets Liability (AAL) (3) ~ (Z) (2)/(3) Payroll Payroll (4)/(6)

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

July1,2010 464,748 464,748 0.00% 5,581,443 8.33%

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

County Other Postemployment Benefits-VRS Health Insurance Credit:

Actuarial Actuarial Actuarial Unfunded UAAL as a

Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered %of Covered

as of Assets Liability (AAL) (3) ~ (Z) (2)/(3) Payroll Payroll (4)/(6)

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

June 30, 2012 78,231 101,849 23,618 76.81% 1,769,420 1.33%

June 30, 2011 82,852 100,667 17,815 82.30% 1,523,173 1.17%

June 30, 2010 71,521 76,866 5,345 93.05% 5,581,443 0.10%

Discretely Presented Component Unit:

School Board Non-Professional Retirement Plan:

Actuarial Actuarial Actuarial Unfunded UAAL as a

Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered %of Covered

as of Assets Liability (AAL) (3) ~ (1) (2)/(3) Payroll Payroll (4)/(6)

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

June 30, 2012 10,068,998 s 16,469,710 6,400,712 61.14% 2,689,457 237.99%

June 30, 2011 10,328,276 16,067,146 5,738,870 64.28% 2,693,695 213.05%

June 30, 2010 10,392,200 15,863,210 5,471,010 65.51% 2,838,654 192.73%

School Board Other Postemployment Benefits-Health Insurance:

Actuarial Actuarial Actuarial Unfunded UAAL as a

Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered %of Covered

as of Assets Liability (AAL) (3) ~ (1) (2)/(3) Payroll Payroll (4)/(6)

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

July 1, 2012 8,991,400 8,991,400 0.00% 21 '181 '100 42.45%

July 1, 2010 3,030,967 3,030,967 0.00% 20,559,274 14.74%

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

School Board Other Postemployment Benefits-VRS Health Insurance Credit:

Actuarial Actuarial Actuarial Unfunded UAAL as a

Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered %of Covered

as of{“”) Assets Liability (AAL) (3). (2) (2)/(3) Payroll Payroll {4)/(6)

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

June 30, 2012 161,463 161,463 0.00% 2,689,457 6.00%

I" I ·An actuarial valuation was not performed in the last two fiscal years for the County.

t••) -This was the initial valuatioin as the School Board recently joined this plan.

-67-

County of Ruse, Virgina

Schadule of Ponsion and OPEB Fund

ogress

For the Yoar Ended Juno 30,2013

exh 4

Primary Government

County Retirement Plan

Actual petunia Aetwaral ——_Unfonded estas Vateation Value of Aecrued «AL (UANL)-— Funded Ratio Covered Covres iol sss _Liaity aL) -@) evo) Payroll Payroll 4/18) i @ 8 @ co 6 7 pe 30,2012 § 19,894,452 § 78,358,401 § 8,484,001 yoIse —$ 54biéen “hune 30,2011” 20’0s4eas aon ao7TaIS BAT. Sans. 136.088 “ine 30,2010 19’780,376 26.221,057 as, 681 v5.68 Soe 577% county other Pstemployment Senefls Healt Insurance: actuarial Actuarat Actuarial Unfunded ast as Valuation Value of ‘Accrued «RAL (UAAL—— “Funded Ratio Covered == Covered Bolt) Bssets___abiity (Au) _@)-@) aio) Payee __—_ayeol 16) a a oO @ 6 o O July 1,200 § Sans $64 768 0% S330 Bae Sty 9, 2008 546,570 546,570 o.00% Anger 13.00% County Other Postemployment Benefits RS Health Insurance Creat: setuarat Actuarial petuarlal = Unfndes xara Valuation Value of ‘Accrued AML (UAAL)-—“FandedRatia.—=—<Covered«=‘ol Covered asof doses _Lisblity aL} O)- 20) Payroll —Payol 6) oF @ @ @ © 6 a une30,202 § Tea «$ ONES tT Teae 1am Sune 30,2011 2288 10,67 Weis 0230 vam Sune 30,2010 mst 76,866 SMS 98.05% oe Discretty Presented Componont Unit ‘School ard Non Prefesional Retirement Plan tua Ausra Aetwariat Unfunded ueaLasa Valuation Vatueot pecrued MAL (UAAL)— “Furled Rat Covered «=o Covered ast assets Liaity (@AL) =) ave) Payrll—_Payrol 4/16) a a oO @ cy @ a June 20,2012 $10,068,998 -§ 16.68,710 $00.72 oS aan 8T.9mH ‘hie 20,2011 10,928.27 16,067.14 5,738,870 as 260305 T3058 one 20,2010 10,392,200 15.960200 «© SaTio a Six pees RTE School ear Other Postemployment Benes Heleh Insurance etuarta ctrl petvarial ——_Ufundes Uebase austin Value of nected HAL (URAL) “Funded Ratio Covered «Nf Covered aeot asses _Liailty WALI _G)- (2, ave) Payee ayo 6) 7 a oy @ @ @ a duty 202 § 5 8991400 § 8,901,400 oon Satara 258 “uly 1.2010, 300967 3,080,967 00% wosss774 ae daly 1, 2008 Sy7ssas 3,758,080 0.00% 26186,461 15 53% Schoo Bors Other Postemloyment Benes VRE Health insurance Credit Actua ctuarat Aewaral Unfunded Uettasa valuation Vatue ot Deenied ——«AAL(UAAL)— Funded Ratio. «Covered Covered asof assets _Liablity Gal) _G@)- au) Payroll Payroll 4/46) 1 a a @ 6) ‘6 a June 30,208 Ss venass § tena89 00% $s 208857 6 cae

(0) An eto valetion was nt performed inthe as two sal years fer tre County

(1 This was te nil valuation a5 te Sencol Board recent jones this plan

67-

Other Supplementary Information

Assets Current Assets

Cash and cash equivalents Special Welfare Fund

VASAP Fund Total Assets

Liabilities

County of Russell, Virginia Statement of Changes in Assets and Liabilities

Agency Funds

For the Year Ended June 30, 2013

Balance Beginning

of Year Additions

s 68,973 s 127,869

260,316

s 68,973 s 388,185

Amounts held for social services clients s 68,973 s 127,869

Amounts held for VASAP 260,316 Total Liabilities s 68,973 s 388,185

-68-

Exhibit 15

Balance

End Deletions of Year

s (136,455) s 60,387

(270,033) (9,717)

s (406,488) s 50,670

s (136,455) s 60,387 (270,033) (9,717)

s (406,488) s 50,670

Exhibit 15 County of Russell, Virginia ‘Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2013

Balance Balance Beginning End ofYear Additions Deletions ~—of Year.

Assets

Current Assets

Cash and cash equivalents Special Welfare Fund $ 68,973 $ 127,869 $ (136,455) $60,387 VASAP Fund : 260,316 (270,033) (9,717) Total Assets 568,973 $388,185 “$ (406,488) $50,670 Liabilities Amounts held for social services clients § 68,973 $ 127,869 $ (136,455) $60,387 Amounts held for VASAP : 260,316 (270,033) (9,717) Total Liabilities S 68,973 _$ 388,185 _$ (406,488) § 50,670

-68-

ASSETS

Cash and cash equivalents

County of Russell, Virginia Balance Sheet

Discretely Presented Component Unit - School Board June 30, 2013

Receivables (net of allowance for uncollectibles): Accounts receivable

Due from other governmental units

Prepaid items Total assets

LIABILITIES AND FUND BALANCES

Liabilities:

Accounts payable Salaries payable

Due to primary government Total liabilities

Fund balances:

Nonspendable: Prepaid items

Committed:

Textbook purchases Regional Adult Education

Unassigned: Total fund balances Total liabilities and fund balances

Amounts reported for governmental activities in the statement of net position (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.

Land

Buildings and improvements Machinery and equipment

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

Compensated absences

Early retirement incentive

Net OPEB obligation

Net position of governmental activities

-69-

4,643, 707

10,918,096

1,460,965

(751 ,080)

(178,680)

(427,536)

$ s

Exhibit 16

School Operating

Fund

351,024

44,540

1,508,496

385,063

2,289,123

377,926

990,356

683,334

2,051,616

385,063

12,924

224,583

(385,063)

237,507

2,289,123

237,507

17,022,768

(1 ,357,296)

$ 15,902,979

Discretely Presented Component Unit - School Board

County of Russell, Virginia Balance Sheet

June 30, 2013

Exhibit 16

ASSETS. Cash and cash equivalents Receivables (net of allowance for uncoltectibles): Accounts receivable Due from other governmental units Prepaid items Total assets

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Salaries payable Due to primary government Total liabilities

Fund balances:

Nonspendable:

Prepaid items Committed:

‘Textbook purchases

Regional Adult Education Unassigned:

Total fund balances

Total liabilities and fund balances

Amounts reported for governmental activities in the statement of net position (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.

Land Buildings and improvements Machinery and equipment

Long-term liabilities, including early retirement incentives, are not due and payable in the current

period and, therefore, are not reported in the funds.

Compensated absences Early retirement incentive Net OPEB obligation

Net position of governmental activities

-69-

School Operating Eund

5 351,024

44,540 1,508,496 385,063,

377,926 990,356 683,334

7,051,616

5 385,063

12,924 224,583

(385,063)

$237,507

17,022,768

(1,357,296)

3 15,902,979

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, 2013

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

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 capital outlays exceeded depreciation in the current period.

Capital outlays

Reversion of assets back to the School Board (net)

Depreciation expense

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.

(Increase) decrease in compensated absences

(Increase) decrease in early retirement incentive

(Increase) decrease in net OPEB obligation

Change in net position of governmental activities

-70-

20,116

876,894 (854,843)

(10, 102)

368,111

(382,708)

Exhibit 17

School Operating

Fund

$ 3,215

647,817

292,514 578,948

6,300,144 26,537,482

5,478,525

$ 39,838,645

$ 40,071,091

(232,446)

469,953

237,507

(232,446)

42,167

(24,699)

(214,978)

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, 2013

School Operating Fund

REVENUES Revenue from the use of money and property $3,218 Charges for services 647,817 Miscellaneous 292,514 Recovered costs 578,948 {otergovernmental revenues:

Locat government 6,300,144

Commonwealth 26,537,482

Federal 5,478,525

Total revenues 339,838,645

EXPENDITURES Current:

Education 40,071,091 Excess (deficiency) of revenues over (under)

‘expenditures (232,446) Net change in fund balances 5 32,446) Fund balances - beginning 469,953,

Fund balances - ending

‘Amounts reported for governmental activities in the statement of acti

ies (Exhibit 2) are different because:

Net change in fund balances - total governmental funds - per above S$ (232,446)

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 epreciation expense. This is the amount by which capital outlays exceeded depreciation in the ‘current period,

Capital outlays 20,116 Reversion of assets back to the School Board (net) 876,894 Depreciation expense (854,843) 42,167

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

\Uncrease) decrease in compensated absences (10,102)

(Increase) decrease in early retirement incentive 368,111

(increase) decrease in net OPEB obligation (382,708) (24,699) ‘Change in net position of governmental activities 4,978)

-10-

Exhibit 18 County of Russell, Virginia

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

Discretely Presented Component Unit - School Board For the Year Ended June 30, 2013

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

School Operating Fund Variance with Final Budget

Budgeted Amounts Positive

Original Final Actual (Negative)

s 1,500 s 1,500 s 3,215 s 1 '715 792,114 792,114 647,817 (144,297)

184,999 184,999 292,514 107,515 545,735 545,735 578,948 33’ 213

7,168,268 7,168,268 6,300,144 (868, 124) 26,697,463 26,697,463 26,537,482 (159,981)

5,905,574 5,905,574 5,478,525 (427,049)

s 41,295,653 s 41,295,653 s 39,838,645 s (1,457,008)

s 41,295,653 s 41,295,653 s 40,071,091 s 1,224,562

s s s

-71-

(232,446) s

(232,446) s 469,953 237,507 s

(232,446)

(232,446) 469,953 237,507

Exhibit 18 County of Russell, Virginia Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Discretely Presented Component Unit - School Board For the Year Ended June 30, 2013

School Operating Fund

Variance with Final Budget

Budgeted Amounts Positive Final Actual Negative)

REVENUES Revenue from the use of money and property s 1,500 $ 1,500 $ 3215 § 1,715 Charges for services 792,114 792,114 647,817 (144,297) Niscellaneous 184,999 134,999 292,514 107,515 Recovered costs 545,735, 545,735 578,948 33,213 Intergovernmental revenues:

Local government 7,168,268 7,168,268 6,300,144 (868,124)

Commonwealth 26,697,463 26,697,463 26,537,482 (159,981)

Federal 5,905,574 5,905,574 ___5,478,525 (427,049)

Total revenues 541,295,653 $41,295,053 $39,836,645 _$ (1,457,008)

EXPENDITURES Current:

Education $41,295,053 _$ 41,295,653 _$ 40,071,091 $ 1,224,562 Excess (deficiency) of revenues over (under)

expenditures $ $ <8 (232,446) § (232,446) Net change in fund balances $ “3s - S$ (232,446) § (232,446) Fund balances - beginning : : 469,953 469,953, Fund balances - ending 3 _ 3s 3 27,507§ 237,507

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, 2013

Variance with

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 s 8,628,051 s 8,628,051 s 6,953,198 s (1 ,674,853)

Real and Personal PSC Tax 1,006,250 1,006,250 1,878,891 872,641 Personal Property Tax 2,200,000 2,200,000 3,102,651 902,651

Mobile Home Tax 126,500 126,500 126,660 160 Machinery and Tools Tax 800,000 800,000 1,272,447 472,447 Merchants Capital 25,000 25,000 31,021 6,021 Mineral Tax 900,000 900,000 964,538 64,538 Penalties 100,000 100,000 122,649 22,649 Interest 200,000 200,000 244,532 44,532

Total general property taxes s 13,985,801 s 13,985,801 s 14,696,587 s 710,786

Other local taxes:

Local Sales and Use Tax s 1,924,996 s 1,904,996 s 1,689,275 s (215,721) Consumers’ Utility Tax 600,000 600,000 567,707 (32,293) Consumption Taxes 95,000 95,000 84,573 (10,427)

Franchise License Tax 18,000 18,000 (18,000)

Coal Severance Tax 2,000,000 2,000,000 1,142,693 (857,307)

Bank Stock Tax 10,652 10,652

Grantee tax 100,000 100,000 73,154 (26,846) Motor Vehicle Licenses 300,000 300,000 355,686 55,686 Taxes on Recordation and Wills 25,000 25,000 13,479 (11 ,521)

Total other local taxes s 5,062,996 s 5,042,996 s 3,937,219 s (1,105,777)

Permits, privilege fees, and regulatory licenses:

Animal licenses s 1,500 s 1,500 s 2,720 s 1,220 Building permits 15,000 15,000 27,967 12,967 Other permits and other licenses 3,300 3,300 3,465 165

Total permits, privilege fees, and regulatory licenses s 19,800 s 19,800 s 34,152 s 14,352

Fines and forfeitures:

Court fines and forfeitures s 73,806 s 73,806 s 14,955 s (58,851)

Revenue from use of money and property:

Revenue from use of money s 50,000 s 50,000 s 25,040 s (24,960)

Revenue from use of property 6,391 6,391 Total revenue from use of money and property s 50,000 s 50,000 s 31,431 s (18,569)

Charges for services:

Charges for sanitation and waste removal s 200,000 s 403,208 s 200,586 s (202,622)

Charges for courthouse security 37,000 37,000 51,603 14,603 Charges for cannery operations 27,766 27,766 Charges for commonwealth attorney 2,000 2,000 5,352 3,352 Charges for courthouse maintenance 7,000 7,000 4,470 (2,530) Charges for jail and inmate fees 6,500 6,500 4,299 (2,201)

Charges for district court 2,733 2,733 Charges for library 14,500 14,500 1,924 (12,576) Other charges for services 3,900 3,900 4,679 779

Total charges for services s 270,900 s 474,108 s 303,412 s (170,696)

-72-

County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 1 of 6 Governmental Funds For the Year Ended June 30, 2013

Variance with

Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget ‘Actual (Negative) General Fund: Revenve from lacal sources General property taxes: Real Property Tax $8,628,051 $628,051 $6,953,198 $ (1,674,853) Real and Personal PSC Tax. 4,006,250 1,006,250 1,878,891 872,641 Personal Property Tax 2,200,000 2,200,000 3,102,685 902,651 Mobile Home Tax 126,500 126,500 126,660 160 ‘Machinery and Tools Tax 800,000 800,000 1,272,447, a72,Aa7 ‘Merchants Capital 25,000 25,000 31,021 6,021 Mineral Tax 900,000 900,000 964,538 64,538 Penalties 100,000 100,000 122,649 22,688 Interest 200,000 200,000 244,532 44,532 Total general property taxes 315,985,801 $13,985,801 5 14,696,587 5 710,786 ther toca taxes: Local Sales and Use Tax 5 1,924,996 $1,904,996 $ 1,689,275 $ (215,721) Consumers’ Utility Tax 600,000 600,000 567,707 62,293) Consumption Taxes 95,000 95,000 84,573 (10,427) Franchise License Tax 18,000 18,000 : (18,000) Coal Severance Tax 2,000,000 2,000,000 4,147,693 (857,307) ‘Bank Stock Tax - - 10,652 10,652 Grantee tax 100,000 100,000 73,154 (26,846) Motor Vehicle Licenses 300,000 300,000 355,686 35,686 Taxes on Recordation and Wills 25,000 25,000 13,479 1,521) Total other local taxes 35,062,996 55 042,996_5 3,037,219 $ (1,105,777) Permits, privilege fees, and regulatory licenses: animal ticenses S 4500 $ 1,500 $2,720 $1,200 Building permits 45,000 45,000 27,987 12,987 Other permits and other licenses 3,300, 3,300 3,465, 165, Total permits, privilege fees, and regulatory licenses 519,800" 519,005 34.ts2_S tas Fines and forfeitures: Court fines and forfeitures $73,806 $73,806 $14,955 9 (58,851) Revenue from use of money and property: Revenue from use of money $90,000 $ 50,000 $25,040 $ (24,960) Revenue from use of praperty : 6.391 6,391 Total revenue from use of money and property 350,000 $50,005 a3 118,569) ‘Charges for services Charges for sanitation and waste removal $200,000 $ 403,208 § 200,586 § 202,622) Charges for courthouse security 37,000 37,000 51,603 14,603, Charges for cannery operations : : 27,786 27,766 Charges for commonweaith attorney 2,000 2,000 5,352 3,352 Charges for courthouse maintenance 7,000 7,000 4,470 2,530) Charges for jail and inmate fees 6,500 6,500 4299 2,201) Charges for district court : : 2,733 2,783 Charges for library 14,500 14,500 1,924 (12,576) Other charges for services 3,900, 3,900 4479 79 Total charges for services $270,500 $474,108 $303,412 § (170,696)

County of Russell, Virginia Schedule 1

Schedule of Revenues · Budget and Actual Page 2 of 6

Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget

Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative)

General Fund: (Continued)

Revenue from local sources: (Continued)

Miscellaneous revenue: Other misceltaneous revenue $ 44,000 $ 44,000 $ 60,479 $ 16,479

Recovered costs:

Social services $ $ $ 227,313 $ 227,313 Health department 82,467 82,467 School resource officer 63,000 63,000 89,540 26,540 Insurance recoveries 12,621 12,621 Regional jail 6,586 6,586 Industrial development 70,000 70,000 118,005 48,005 Other Recovered Costs 250,000 250,000 472,827 222,827

Total recovered costs $ 383,000 $ 383,000 $ 1,009,359 $ 626,359

Total revenue from local sources s 19,890,303 $ 20,073,511 s 20,087,594 $ 14,083

Intergovernmental Revenues:

Revenue from the Commonwealth: Noncategorical aid:

Motor vehicles carriers’ tax s 125,000 $ 125,000 s 300,420 $ 175,420 Mobile home titling tax 135,000 135,000 75,522 (59,478) Motor vehicle rental tax 2,500 2,500 3,785 1,285 State budget reduction (252,756) (252,756) (139,859) 112,897 Communications tax 900,000 900,000 881,071 (18,929) State recordation tax 34,965 34,965 22,897 (12,068) Personal property tax relief act funds 1,437,003 1,437,003 1,437,003

Total noncategorical aid s 2,381,712 s 2,381,712 $ 2,580,839 $ 199,127

Categorical aid:

Shared expenses: Commonwealth’s attorney $ 314,501 $ 314,501 $ 314,522 $ 21 Sheriff 1,338,443 1,338,443 1,339,982 1,539 Commissioner of revenue 111,761 111 '761 162,991 51,230 Treasurer 103,089 103,089 103,401 312 Medical examiner 400 400 (400) Registrar/electoral board 65,000 65,000 39,833 (25, 167) Clerk of the Circuit Court 249,524 249,524 273,698 24,174 Total Shared Expenses s 2,182,718 $ 2,182,718 s 2,234,427 51,709

Other categorical aid: Victim witness grant s 24,000 $ 24,000 $ 72,948 s 48,948 GIS 1,150 1,150 JAG grants 1,597 1,597 (1,597) E911 state funds 85,000 85,000 41,033 (43,967) Law enforcement grants 1,437 1,437 Asset forfeiture funds 8,534 8,534

-73-

County of Russell, Virginia Schedule 1 ‘Schedule of Revenues - Budget and Actus Page 20f 6 Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative) General Fund: (Continued) Revenue from local sources: (Continued) ‘Miscellaneous revenue: ‘Other miscellaneous revenue 8 S 44,000 $ 60.479 5S 16,479 Recovered costs: Soctal services s $ + 8 BH3 S$ 27,13 Health department : : 82,467 82,467 School resource officer 63,000 63,000 89,540 26,540 Insurance recoveries : 12,621 12,621 Regional jail - 6,586 6,586 Industeal development 70,000 70,000 148,005 48,005 Other Recovered Costs 250,000 250,000 4307 222,87 Total recovered costs $383,000 $383,000 51,009,359 5 626,359 Total revenue from local sources $19,890,303 $20,073,511 _$ 20,087,594 $ 14,083 Intergovernmental Revenues: Revenue from the Commonwealth: Noncategorical ai ‘Motor vehicles carriers’ tax $ 125,000 $ 125,000 § 300,420 $175,420 mobile home titling tax 135,000 135,000 75,522 (653,478) ‘Motor vehicle rental tax 2,500 2,500 3,785 1,285, State budget reduction (252,756) (252,756) (139,859) 112,897 Communications tax 900,000 0,000 851,071 (18,929) State recordation tax 34,965 34,965 22,897 (12,068) Personal property tax relief act funds 4,437,003 1,437,003 __1,437,003, Total nancategorical aid S_2361,712 $2,381,712 § 2,500,839 8 197 Categorical aid Shared expenses Commonwealths attorney $ 314,501 § 314501 $314,522 § 2 Sherttt 1,338,443 1,338,443 1,339,982 1,539 Commissioner of revenue 111,761 111,76 162,991 51,230 Treasurer 103,089 103,089 103,401 312 ‘edical examiner 400 400 : (409) Registrar/electoral board 65,000 65,000 39,833 (25,167) Clerk ofthe Circuit Court 249,504 209,504 273,698 24,174 Total Shared Expenses 32162718 $0 182,718 $2,034,427 51,709 Other categorical aid ‘Victim witness grant 5 24,000 § 24,000 § © 72,948 $48,948, cis : 11150 1,150 JAG grants 4,597 1/597 : 1597) EST state funds 85,000 85,000 41,033 (43,967) Law enforcement grants 1,87 187 Asset forfeltue funds : 8,534 3.534

T3-

County of Russell, Virginia Schedule 1

Schedule of Revenues - Budget and Actual Page 3 of 6

Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget

Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative)

General Fund: (Continued) Intergovernmental Revenues: (continued)

Revenue from the Commonwealth: (Continued) Categorical aid: {Continued)

Other categorical aid: {Continued) EMS grants $ $ $ 29,599 $ 29,599 Fire Program Funds 67,942 67,942 Library grants 78,186 78,186 78,186 Litter control grants 15,169 15,169 Public assistance 1,886,675 1,886,675 1,792,969 (93,706) Comprehensive services act 1,316,451 1,316,451 764,843 (551 ,608) School resource officer grants 45,430 45,430 Total other categorical aid $ 3,391,909 $ 3,391,909 $ 2,919,240 $ (472,669)

Total categorical aid $ 5,574,627 $ 5,574,627 $ 5,153,667 $ (420,960)

Total revenue from the Commonwealth $ 7,956,339 $ 7,956,339 $ 7,734,506 (221 ,833)

Revenue from the federal government:

Categorical aid: CDBG grants $ $ $ 260,344 $ 260,344 Emergency management grants 16,750 16,750 Law enforcement grants 25,875 25,875 Violence against women 36,597 36,597 DMV ground transportation safety grant 6,800 6,800 Comprehensive services act 251,164 251,164 112,842 (138,322) Public assistance 2,104,284 2,104,284 1,999,770 (104,514)

Total categorical aid $ 2,355,448 $ 2,355,448 $ 2,458,978 $ 103,530

Total revenue from the federal government $ 2,355,448 $ 2,355,448 $ 2,458,978 $ 103,530

Total General Fund $ 30,202,090 $ 30,385,298 $ 30,281,078 $ (104,220)

Coal Road Fund:

Revenue from local sources:

Other local taxes:

Coal road taxes $ 1,320,000 $ 1,320,000 $ 1 '142,393 $ (177,607)

Revenue from use of money and property: Revenue from the use of money $ $ $ 5,232 $ 5,232

Total revenue from local sources $ 1,320,000 $ 1,320,000 $ 1 '147,625 $ (172,375)

Total Coal Road Fund $ 1,320,000 $ 1,320,000 $ 1,147,625 (172,375)

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County of Russell, Virginia

Schedule of Revenues - Budget and Actual Governmental Funds

For the Year Ended June 30, 2013,

Schedule + Page 3 of 6

Fund, Major and Minor Revenue Source

General Fund: (Continued) Incergovernmental Revenues: (continued) Revenue from the Commonwealth: (Continued) Categorical aid: (Contiaued) Other categorical aid: (Continued) ENS grants Fire Program Funds Library grants Litter control grants Public assistance Comprehensive services act School resource officer grants Total other categorical aid

Totat categorical aid Total revenue from the Commonwealth

Revenve from the federal government Categorical zi CDBG grants Emergency management grants Law enforcement grants Violence against women DIV ground transportation safety grant Comprehensive services act Public assistance Total categorical aid

Total revenue from the federal government ‘Total General Fund Coat Road Fund: Revenve from local sources Other locat taxes:

Coal road taxes

Revenue from use of money and property: Revenue from the use of money

Total revenue from local sources

Total Coal Road Fund

Variance with

Final Budget Original Finat Positive Budget Budget Actual Wegative)

5 5 5 19,59 § 29,599

: : 7,982 67,942 78,186 78,186 78,186

15,169 15,169

1,886,675 1,886,675 1,792,969 (93,706)

46451 1,316,451 764,843 (651,608)

: 45,430 45,430

53397909 $530,909 5 2919.24 5 (472,665)

S$ 5,574,627 § 5,574,627 $5,153,667 _§ (420,960)

$7,956,339 _$ 7,956,339 $7,734,506 _$§ (221,833),

s s S 260,344 $260,344

16,750 16,750

: 25,875 25,875

: : 26,597 36,597

6,800 6,800

251,164 251,364 112,842 138,322) 2,104,284 2,104,284 __1,999,70(104,514)

32,355,448 $2,355,448 § 2,458,978 $103,530

$2,385,448 $2,395,408 5 2,458,978 $103,530

$30,202,090 _$ 30,385,298 $30,281,078 _§ (104,220)

$1,320,000 _$ 1,320,000 $ 1,142,393 $ (177,607)

8 8 S52 $5232

$1,320,000 _$ 1,320,000 $1,147,625 $ (172,375)

$1,320,000 _§ 1,320,000$ 1,147,625 § (172,375)

County of Russell, Virginia Schedule 1

Schedule of Revenues - Budget and Actual Page 4 of 6

Governmental Funds

For the Year Ended June 30, 2013

Variance with

Final Budget

Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative)

Special Revenue Funds: (Continued)

Workforce Investment Board Fund:

Intergovernmental Revenues:

Revenue from the Commonwealth:

Categorical aid:

Workforce Investment $ $ $ 2,550 $ 2,550

Total revenue from the Commonwealth $ $ $ 2,550 $ 2,550

Revenue from the federal government:

Categorical aid:

Workforce Investment $ 3,198,324 $ 3,198,324 $ 2,206,878 $ (991,446)

Total revenue from the federal government $ 3,198,324 $ 3,198,324 $ 2,206,878 $ (991,446)

Total Workforce Investment Board Fund $ 3,198,324 $ 3,198,324 $ 2,209,428 $ (988,896)

Total Primary Government $ 34,720,414 $ 34,903,622 $ 33,638,131 $ (1 ,265,491 I

Discretely Presented Component Unit - School Board:

School Operating Fund:

Revenue from local sources:

Revenue from use of money and property:

Revenue from the use of property $ 1,500 $ 1,500 $ 3,215 $ 1,715

Charges for services:

Cafeteria sales $ 682,214 $ 682,214 $ 487,645 $ (194,569) Tuition payments 5,130 5,130 Drivers Ed fees 14,000 14,000 12,420 (1,580) Other charges for services 11,000 11,000 637 (10,363) Regional Adult Education 74,900 74,900 139,108 64,208 GED Testing fees 10,000 10,000 2,877 (7,123)

Total charges for services $ 792,114 $ 792,114 $ 647,817 $ (144,297)

Miscellaneous revenue:

Other miscellaneous $ 184,999 $ 184,999 $ 292,514 $ 107,515

Recovered costs:

Insurance recoveries $ $ $ 11,251 $ 11 ,251 Extra duties revenue 23,000 23,000 23,970 970 Dual Enrollment 350,000 350,000 331,555 (18,445) Sale of Equipment and Supplies 20,000 20,000 12,460 (7,540) Reimburse Health Services 45,000 45,000 101,211 56,211 Other recovered costs 107,735 107,735 98,501 (9,234)

Total recovered costs $ 545,735 $ 545,735 $ 578,948 33,213

Total revenue from local sources $ 1,524,348 $ 1,524,348 $ 1,522,494 (1,854)

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County of Russell, Virginia

Schedule 1

Schedule of Revenues - Budget and Actual Page 4 of 6 Governmental Funds For the Year Ended June 30, 2013 Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (egative) Special Revenue Funds: (Continued) Workforce Investment Board Fund: Intergovernmental Revenues Revenue from the Commonwealth Categorical ai: Workforce Investment s aay $2850 5 2,550 Total revenue from the Commonwealth $ - $8 S259 $2,550 Revenue from the federal government Categorical ai: WorkForce investment $3,198,324 $3,198,324 $2,206,878 _$ (991,446) Total revenue from the federal government $3,198,324 $3,198,324 $ 2,206,678 _§ (991,446) Total Workforce Investment Board Fund $319,324 $ 3,198,324 $2,209,428 § (988,896) Total Primary Government $34,720,614 $34,903,622 $33,638,13§ (1,265,491) Discretely Presented Component Unit - School Board: School Operating Fund: Revenve from local sources Revenue from use of money and property: Revenue from the use of property $4500 § 1,500 § 3.215 $5 Charges for services Cafeteria sales S 682,214 $682,214 5 487,645 $ (194,569) “Tuition payments : 5130 5,130 Drivers Ed foes 14,000 14,000 12,420 (9,580) ther charges for services 11,000 1,000 67 10,363) Regional Adult Education 74,900 74,900 139,108 64,208 GED Testing fees 10,000 10,000 2,877 7,123) Total charges for services 3 Won,it4 $792,114 § 647.817 (104,297) ‘iscellancous revenue: Other miscellaneous S__184,999 $184,999 § 292,514 § 107,515 Recovered costs Insurance recoveries 5 5 5 $1251 $125 Extra duties revenue 23,000 23,000 23,970 970 ual Enrollment 350,000 350,000 331,555 (18,445) Sale of Equipment and Supplies 20,000 20,000 12,460 7,540) Roimburse Health Services 45,000 8,000 101,211 56,291 (Other recovered costs 107.735 107,735 98,501 (9.24) Total recovered costs 356.735 $565,735 $5789 SBI Total revenue from local sources $1,524,248 $1,524,348 $1,522,494 $ (1,854)

T5-

County of Russell, Virginia Schedule 1

Schedule of Revenues · Budget and Actual Page 5 of 6

Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget

Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative)

Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Intergovernmental revenues:

Revenues from local governments: Contribution from County of Russell, Virginia $ 7,168,268 $ 7,168,268 $ 6,300,144 $ (868, 124)

Total revenues from local governments $ 7,168,268 s 7,168,268 s 6,300,144 s (868,124)

Revenue from the Commonwealth: Categorical aid:

Share of state sates tax s 3,926,711 s 3,926,711 s 3,930,493 $ 3,782 Basic Aid 13,551,280 13,551,280 13,319,918 (231 ,362) Remedial summer education 175,450 175,450 179,031 3,581 Regular foster care 12,579 12,579 1,733 (10,846) Gifted and talented 144,367 144,367 142,561 (1,806) Remedial education 502,148 502,148 495,863 (6,285) Special education 1,710,441 1,710,441 1,689,033 (21 ,408) Textbook payment 281,611 281,611 278,086 (3,525) Career and Technical Education 71,479 71,479 37,062 (34,417) Alternative education 814,785 814,785 814,904 119 Elementary Alternative Education 2,500 2,500 Algebra readiness 77,316 77,316 72,814 (4,502) Mentor teacher program 8,080 8,080 2,943 (5, 137) Social security fringe benefits 866,205 866,205 855,363 (10,842)

Group life 53,353 53,353 52,685 (668) Retirement fringe benefits 1,446,813 1,446,813 1,428,705 (18, 108) Early reading intervention 94,537 94,537 85,083 (9,454)

Adult Education 6,338 6,338 31,563 25,225 Homebound education 26,942 26,942 15,337 (11 ,605) Vocation education 404,857 404,857 445,179 40,322 At risk payments 547,826 547,826 540,952 (6,874) Primary class size 688,085 688,085 662,121 (25,964) Technology 414,000 414,000 496,216 82,216 Jobs for Virginia Graduates 22,500 22,500 21,000 (1,500) Industry Certification Costs 4,117 4,117 At risk four·year olds 467,826 467,826 467,826 School Food 37,221 37,221 38,874 1,653 English as a second language 12,187 12,187 6,928 (5,259) Project graduation 5,784 5,784 GED prep programs 15,717 15,717 85,375 69,658 Lottery payments 215,638 215,638 (215,638)

Tobacco Commission 6,094 6,094 Adult literacy 99,595 99,595 99,595 Other state funds 1,576 1,576 221,744 220,168

Total categorical aid s 26,697,463 $ 26,697,463 s 26,537,482 s (159,981)

Total revenue from the Commonwealth s 26,697,463 s 26,697,463 s 26,537,482 s (159,981)

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County of Russel, Virginia

Schedule 1

Schedule of Revenues - Budget and Actual Page 5 of 6 Governmental Funds For the Vear Ended June 30, 2013 Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative) Discretely Presented Component Unit - Schoo! Board: (Continued) School Operating Fund: (Continued) Intergovernmontal revenues: Revenues from local governments: Contribution from County of Russell, Virginia $7,168,268 $7,168,268 $6,300,144 § (868,124) Total revenues from local governments $7,168,268 $7,168,268 § 6,300,144 § (868,124) Revenue from the Commonwealth Categorict aid Share of state sales tax S$ 3,926,711 $3,926,715 $3,930,498 § 3,782 Basic id 13,551,280 13,551,280 13,319,918 (231,362) Remedial summer education 175,450 175,450 179,031 3,581 Regular foster care 12579 12.579 4.7383 (10,846) Gifted and talented 144,367 144,367 142,561 4.806) Remedial education 502,148 502,148 495,863 (6,285) Special education 170441 1,710,481 1,689,033, (21,408) Textbook payment 281,611 281,611 278,086 0.525) Career and Technical Eeveation 7479 nan 37,062 (4,417) Alternative education 814,785 814,785 814,904 10 Elementary Alternative Education 2,500 2,500 Algebra readiness 77316 77,316 nai 4,502) mentor teacher program 8,080 8,080 2,943 6437) Social securty fringe benefits 866,205 866,205 255,363 (10,842) Group tive 53,353 53,353 52,685 (668) Retirement fringe benefits 4,446,513 1,446,813 1,428,705 (18,108) Early reading intervention 94,597 94537 85,083, (0,454) Adult Education 6,338 6,338 31,863 B25 Homebound education 26,982 26,942 15,337 (11,605) Yocation eciscation 404,857 404,857 445,179 40,322 ‘A isk payments 547,826 547,826 540,982 (6.874) Primary class ste 688,085 688,085 662,121 (25,964) Technology 414,000 414,000 496,218 82,216 4obs for Virginia Graduates 22,500 22,500 21,000 1,500) Industry Certification Costs - : 47 4a? At risk four-year olds 467,826 467,826 467,826 : Schoat Food 37221 sz 38.874 1,653 English asa second language 12,187 12,187 6,928 (6.259) Project graduation : 5,784 5.784 {GED prep programs 15,717 15,717 85,375 69,658 Lottery payments 215,638 215,638 = 15,638) ‘Tobacco Commission - - 6,094 6,094 Adut ieraey 99,595 99,595, 99,595, Other state funds 1576 1,576 221,744 220,168 Totat categorical aid $26,687 463 $26,697,463 $26,537 482§ (159,561) ‘otat revenve from the Commonwealth $26,697,463 $26,697,463 $26,537,482 _§ (159,987)

County of Russell, Virginia Schedule 1

Schedule of Revenues · Budget and Actual Page 6 of 6

Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget

Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative)

Discretely Presented Component Unit · School Board: (Continued) School Operating Fund: (Continued) Intergovernmental revenues: (Continued)

Revenue from the federal government: Categorical aid:

Basic Adult Education s 320,856 s 320,856 s 294,285 s (26,571) Title I 1,430,324 1,430,324 1,634,498 204,174 Special Education 885,248 885,248 948,471 63,223 Title VI-B, preschool 35,770 35,770 35,752 (18) Vocational education 92,718 92,718 88,956 (3,762) School Food Program 1,295,000 1,295,000 1,317,776 22,776 Improving teacher quality 267,991 267,991 285,064 17,073 Even start 30,000 30,000 42,529 12,529 21st century grant 1,221,704 1,221,704 755,496 (466,208) Learn and serve America 25,000 25,000 7,176 (17,824) Rural and low income schools 86,414 86,414 68,522 (17,892) Other federal funds 214,549 214,549 (214,549)

Total categorical aid s 5,905,574 s 5,905,574 s 5,478,525 s (427,049)

Total revenue from the federal government s 5,905,574 s 5,905,574 s 5,478,525 s (427,049)

Total Discretely Presented Component Unit · School Board s 41,295,653 s 41,295,653 s 39,838,645 s (1 ,457,008)

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County of Russel, Virginia Schedule of Revenues - Budget and Actual Governmental Funds For the Year Ended June 30, 2013

Schedule t Page 6 of 6

Fund, Major and Minor Revenue Source

Discretely Presented Component Unit - School Board: (Continued) ‘School Operating Fund: (Continued) Intergovernmental revenues: (Continved) Revenue from the federat government Categorical aid Basic Adult Education Title! Special Education Title VFB, preschool Vocational education School Food Program Improving teacher quality Even start 21st century grant Lear and serve America Rural and low income schools Other federal funds Total categorical aid

Total revenue from the federal government

Total Discretoly Presented Component Unit - School Board

TT-

Variance with

Final Budget Original Final Positive Budget Budget Actual (Negative)

$320,856 $ 320,856 § 294,285 § (26,571) 1,430,324 1,430,324 1,634,498 204,174

885,248 885,248, 948,471 63,203 35,770 35,770 35,752 (8) 92,718 92,718 88,956 0,762) 4,295,000 1,295,000 1,317,776 22,716 267,991 267,991 285,064 17.073 30,000 30,000 42,529 12,529 1,221,704 1,221,704 755,496 (466,208) 25,000 725,000 7176 (17,824) 86,414 86,414 68,522 (17,892) 214,549 214,549 (214,548)

3 5905,574 $6,905,574 5 5,478,505 8 (427,065)

$5,905,574 § 5,905,574 $5,478,525 § (427,089)

$41,295,653 $41,295,653 $39,838,645 _§ (1,457,008)

County of Russell, Virginia Schedule 2

Schedule of Expenditures - Budget and Actual Page 1 of 4

Governmental Funds For the Year Ended June 30, 2013

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 s 148,644 s 168,644 s 166,923 s 1,721

General and financial administration: County administrator s 285,961 s 313,511 s 328,400 s (14,8891

Independent auditor 74,700 63,100 57,700 5,400

Commissioner of the revenue 291,470 291,470 306,441 (14,971 1

Real estate assessor 110,611 215,611 264,650 (49,0391

Treasurer 377,567 386,067 396,064 (9,9971

Data processing 94,188 109,888 105,875 4,013

Total general and financial administration s 1,234,497 s 1,379,647 s 1 ,459,130 s (79,4831

Board of elections: Electoral Board s 65,164 s 65,164 s 66,679 s (1 ,5151

General Registrar 123,208 113,208 105,197 8,011

Total board of elections s 188,372 s 178,372 s 171,876 s 6,496

Total general government administration s 1,571,513 s 1,726,663 s 1,797,929 s (71 ,2661

Judicial administration: Courts:

Circuit Court s 115,640 s 120,440 s 140,266 s (19,8261

General District Court 10,340 10,340 10,344 (41 Special Magistrates 8,836 8,836 8,143 693 Clerk’s Office 368,039 368,039 387,938 (19,8991

Sheriff Courts 1,100,956 1,100,956 1,008,906 92,050

Victim and Witness Assistance 27,809 27,809 33,740 (5,931 I Law Library 672 (6721

Total courts s 1,631,620 s 1,636,420 s 1,590,009 s 46,411

Commonwealth’s attorney: Commonwealth’s Attorney s 518,446 s 518,446 s 506,373 s 12,073

Total judicial administration s 2,150,066 s 2,154,866 s 2,096,382 s 58,484

Public safety: Law enforcement and traffic control:

Sheriff s 1,605,766 s 1,783,224 s 1,887,829 s (104,6051

Dare program 3,000 3,000 3,222 (2221

Total law enforcement and traffic control s 1,608,766 s 1,786,224 s 1,891,051 s (104,8271

Fire and rescue services: Volunteer Fire Departments s 242,391 s 242,391 s 277,103 s (34,7121

Ambulance Rescue Squad 170,575 170,575 228,915 (58,3401

Total fire and rescue services s 412,966 s 412,966 s 506,018 s (93,0521

Correction and detention: Operation of Jail s 2,013,904 s 2,013,904 s 2,157,445 s (143,5411

Probation Office 201,710 201,710 204,309 (2,5991

Total correction and detention s 2,215,614 s 2,215,614 s 2,361,754 s (146,1401

-78-

County of Russel, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 1 of 4 Governmental Funds For the Year Ended June 30, 2013

Varience with Final Budget Original Final Positive Fund, Function, Activity and Element Budget Budest Actual (Negative) General Fund: ‘General government administration: Leghslatve: Board of supervisors S$ 148,044 § 168,044 $ 166,923 § 1,721 General and financial administration: County administrator S 285,961 $3,511 $328,400 § (14,88) Independent auctor 74,700 63,100 57,700 5,400 Commissioner ofthe revenue 291,470 306,461 (aor) Real estate assessor not 25,611 284,650 149,039) Treasurer 377,567 386,067 396,064 0.997) Data processing 94,188, 109,888 105,875 4,013 Total general and financial administration 3 1234,097_§ 1,379,647 § 1,459,130 § 09.483) Board of elections: Electoral Board S 65,164 § 65464 $66,679 S$ ,515) General Registrar 123,208 113,208 105,197 sort Total board of elections S157 17837 $1787 S66 “Total general goverment administration $4571.53 $ 1,726,663$ 1,797,929 $ (71.266) Judicial administration: Cours Circuit Court S 115,640 $120,440 $ 140,266 $19,826) General District Court 10,340 10,340 10,344 « Special Magistrates 8,836 8,836 8183 63 Clerks Office 368,039 268,039 387,938 (19,895) Sherif Courts 1,100,956 1,100,956 1,008,906 92,050 Vietim and Witness Assistance 27,809 77,809 33,740 69311 aw Library : - on (672) Total courts 3 1Gi20§ 1,536,420$ 1 590,009_§ want Commonweath’ attorney: Commonwealth’s Attorney $518,446 § 518,446 § 506,373 § 12,073, “otal judicial administration $250,056 § 254,866 $2,096,382 $ 58.ata Public safety: Law enforcement and traffic contol Sheriff § 1,605,766 § 1,783,224 § 1,887,829 § (104,608) Dare program 3,000 3,000 a2 (222) Total law enforcement and tatfic contro $1,608,766 $1,786,724 § 1,891,051§ 104,827) Fire and rescue services: Volunteer Fire Departments $2239 § 142,391 § 277,103 $84,712) Ambulance Rescue Squad 170,575 170,575 228,915 (58,340) otal fie and rescue services, T__ 412,966 $412,966 § 506,018 § (93,052) Correction and detention: Operation of Jat 5 2,013,904 $ 2,013,904 $2,157,445 $ (143,541) Probation Office 201,710 201,710 204,208 2.599) “otal correction and detention T_a2i5,6i4 52715614 97,361,794 8 (46,140)

-78-

County of Russell, Virginia Schedule 2

Schedule of Expenditures· Budget and Actual Page 2 of 4

Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget

Original Final Positive Fund. Function. Activity and Element Budget Budget Actual (Negative)

General Fund: (Continued) Public safety: (Continued)

Inspections: Building inspector $ 117,784 $ 117,784 $ 122,955 $ (5,171)

Other protection: Forestry Service $ 11,616 $ 11,616 $ 12,098 $ (482) Enhanced 911 549,066 583,366 583,067 299 Medical Examiner 960 960 500 460 Emergency Services 105,184 105,184 73,353 31,831 Animal Control 175,561 185,713 191,305 (5,592)

Total other protection $ 842,387 $ 886,839 $ 860,323 $ 26,516

Total public safety $ 5,197,517 $ 5,419,427 $ 5,742,101 $ (322,674)

Public works:

Sanitation and waste removal: Landfill $ 2,565,768 $ 2,565,768 $ 2,417,009 $ 148,759

Refuse collection 371,320 51,320 51,320 Total sanitation and waste removal $ 2,937,088 $ 2,617,088 $ 2,417,009 $ 200,079

Maintenance of general buildings and grounds:

General properties $ 700,972 $ 897,217 $ 823,996 $ 73,221

Total public works $ 3,638,060 $ 3,514,305 $ 3,241,005 273,300

Health and welfare: Health:

Health Department $ 353,211 s 353,211 $ 459,412 $ (106,201)

Mental health and mental retardation: Cumberland Mountain Community Services Board s 154,433 s 154,433 s 154,433

Welfare/Social Services:

Social services s 4,515,180 $ 4,515,180 $ 4,244,566 $ 270,614

Comprehensive Services Act 1,650,793 1,588,447 1,162,425 426,022

Appalachian Agency for Senior Citizens 87,315 87,315 83,665 3,650 Lebanon Speech and Hearing 9,870 9,870 9,870

Other health and welfare 6,400 (6,400)

Total welfare $ 6,263,158 $ 6,200,812 s 5,506,926 $ 693,886

Total health and welfare $ 6,770,802 $ 6,708,456 $ 6,120,771 $ 587,685

Education: Contributions to County School Board $ 7,168,268 $ 7,168,268 s 6,300,144 $ 868,124

SVCC Contribution 90,325 90,325 90,325

Total education $ 7,258,593 $ 7,258,593 s 6,390,469 $ 868,124

Parks, recreation, and cultural: Parks and recreation:

Recreation Park $ 104,829 $ 104,829 s 122,552 $ (17,723)

-79-

County of Russel, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 2 of 4 Governmental Funds For the Year Ended June 30, 2013,

Variance with Final Budget Original Final Positive Fund, Function, Activity and Element Budset Budget Actual (Negative) Public safety: (Continued) Inspections: Butlding inspector S$ 7yea_s__u77ee $122,955 $6,171) Other protection: Forestry Service S16 § 11616 $12,098 5 482) Enhanced 911 549,066 583,366 583,067 29 Medical Examiner 960 360 500 460 Emergency Services 105,184 105,184 73,353 31,831 ‘Animal Controt 175,561, 185,73, 191,305 (6,592) Total other protection 5 a0387 5 886,09 F860 SF 26,516 Totat public safety $5197 517 $5,419,427 § 5,742,101 § (322.674) Public works Sanitation and waste removal anal 5 3 2,565,768 $2,417,009 5 148,759 Refuse collection 51,320 51,320 ‘Total sanitation and waste removal $2,937,088 $ 7,617,088_5_2417,009§ 700,079 Maintenance of general buildings and grounds: General properties S097. $897,217 § 3.9% § 73,24 Total public works $3,638,060 $ 3,514,305 § 3,241,005§ 773,300 Health and welfare: Healt: Health Department S 353,211 $353,211 $459,412, § (106,201) ‘Mental health and mental retardation: ‘Cumbertang Mountain Community Services Board S__14,433_$ 154,833 $154,433 $ Wettare/Social Services Social services 5S 4,515,180 $ 4,515,180 § 4,244,566 § 270,614 Comprehensive Services Act 1,690,793 1,588,447 1,162,425 426,022 ‘Appalachian Agency for Senior Citizens 87,315 87,315 83,665 3,650 Lebanon Speech and Hearing. 9,870 9,870 9,870 Other health and welfare - 6,400 (6,400) Total welfare 36,263,158 $6,200,812 $5,506,926 $693,886 Total health and welfare $6,770,802 $6,708,456 § 6,120,771 $587,685 Education: Contributions to County School Board S$ 7,168,268 $7,168,268 5 6,300,144 $868,124 SVC Contribution 90,325 90,325 90,325 : Totat education 37,058,593 § 7,758,535 6,390,467 5 668,124 Parks, recreation, and cultural: Parks and recreation: Recreation Park $104,829 § 104,829 $122,952 § (17,723)

County of Russell, Virginia Schedule 2

Schedule of Expenditures- Budget and Actual Page 3 of 4

Governmental Funds

For the Year Ended June 30, 2013

Variance with Final Budget

Original Final Positive

Fund. Function. Activity and Element Budget Budget Actual (Negative)

General Fund: (Continued)

Parks, recreation, and cultural: (Continued) Library:

Public Library s 364,826 s 364,826 s 366,154 s {1 ,3281

Total parks, recreation, and cultural s 469,655 s 469,655 s 488,706 s {19,0511

Community development:

Planning and community development:

Planning Commission s 25,100 s 25,100 s 30,650 s {5,5501 Community Development 59,458 64,458 262,091 {197,6331

Industrial Development 1,031,617 918,617 1,537,278 {618,661 I

PSA Contributions 281,011 371,011 237,794 133,217

Cumberland Plateau 35,000 35,000 35,000 Highway Safety Commission 1,920 1,920 1,545 375

Canneries 71,516 {71,5161

Tourism 15,671 15,915 {2441

Total planning and community development s 1 ,434,106 s 1,431,777 s 2,191,789 s {760,0121

Environmental management:

Soil and Water Conservation s 34,236 s 34,236 s 34,653 s {4171

Cooperative extension program:

VPI Extension s 64,556 s 64,556 s 57,468 s 7,088

Total community development s 1,532,898 s 1,530,569 s 2,283,910 s {753,341 1

Nondepartmental:

Nondepartmental s 806,600 s 408,328 s 423,737 s {15,4091

Capital projects:

Other capital projects s 100,000 s 280,008 s 334,929 s {54,9211

Debt service:

Principal payments s 1,424,901 s 1,424,901 s 2,314,036 s {889, 1351

Interest Expense 352,481 352,481 555,784 {203,3031

Total debt service s 1,777,382 s 1,777,382 s 2,869,820 s {1 ,092,4381

Total General Fund s 31,273,086 s 31,248,252 s 31,789,759 s {541 ,5071

Special Revenue Funds:

Coal Road Fund:

Public Works: Maintenance of highways, streets, bridges and sidewalks:

Maintenance of highways, streets, bridges and sidewalks s 1,100,000 s 1 '100,000 s 1,100,000 s Virginia coalfield 220,000 220,000 403,326 {183,3261

Total Public Works s 1,320,000 s 1,320,000 s 1,503,326 s {183,3261

Total Coal Road Fund s 1,320,000 s 1,320,000 s 1,503,326 s {183,3261

-80-

County of Russel, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 3 of 4 Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget Original Final Positive Fund, Function, Activity and Element Budget Budget ‘Actual (Negative) ‘General Fund: (Continued) Parks, recreation, and cultural: (Continued) Libeary: Public Library S 364,826 § 364,826 $366,154 $1,328) Total parks, recreation, and cultural 5 169,655 $149,655 $488,706 $119,051) ‘Community development flanaing and community development: Planning Commission S 25100 § 25,100 $30,480 $5,550) Community Development 59,458 64,458 262,081 (197,833), Industrial Development 1,031,617 918,617 1,537,278 (618,661) 5A Contributions 281,011 srant 237,794 433,217 ‘Cumberland Plateau 35,000, 35,000, 35,000 Highway Safety Commission 1,920 1,920 1545 75 Canneries 71,516 71,516) Tourism 15,671 15,915 244)

Total planning and community development S144 106 5 G75 291.7695 70.012)

Eaviconmental management: Soll and Water Conservation S 34236 5 42% 534,653 § fc)

Cooperative extension program

PI Extension $64,556 $64,556 § 57.468 $7,088 Total community development $1,537,898 $1,530,569 $2,283,910 § (753,341) Nondepartmenta Nondepartmental $206,600 $408,328 5 473,737_5 (15,409) Capital projects: Other capital projects $100,000 $ 260,008 5 334,929 § (54,921) Debt service: Principal payments S 1,424,901 $ 1,424,901 $2,314,036 § (889,135) Interest Expense 352,481 352,481 385,784 (203,303) Total dent service $4,777,382 _§ 1,777,382 2,869,620 § (1,092,438) Total General Fund $31,273,086 $31,248,252 §31,789,759§ (541,507)

‘Special Revenue Funds:

Coal Road Fund: Public Works: Maintenance of highways, streets, bridges and sidewalks: Maintenance of highways, streets, bridges and sidewalks 5 1,100,000 § 1,100,000 $ 1,100,000 $ : Virginia coalfield 720,000, 220,000 403,326 (183,326) Total Public Works $1,320,005 1,320,005 1,503,326 (183,326) Total Coal Road Fund $1,320,000$ 1,320,000$ 1,503,326 $ (183,326)

County of Russell, Virginia Schedule 2

Schedule of Expenditures - Budget and Actual Page 4 of 4

Governmental Funds For the Year Ended June 30, 2013

Variance with Final Budget

Original Final Positive Fund. Function. Activity and Element Budget Budget Actual I Negative)

Special Revenue Funds: (Continued) Workforce Investment Board Fund: Health and Welfare

Welfare Workforce Investment s 3,198,324 s 3,198,324 s 2,213,965 s 984,359

Total Primary Government s 35,791,410 s 35,766,576 s 35,507,050 s 259,526

Discretely Presented Component Unit - School Board: School Operating Fund: Education:

Administration of schools: Administration and health services s 1,501,083 s 1,501,083 s 1,502,698 s (1 ,615)

Instruction costs: Instructional costs s 29,577,733 s 29,577,733 s 29,064,390 s 513,343 Technology 514,444 514,444 532,807 (18,363)

Total instruction costs s 30,092,177 s 30,092,177 s 29,597,197 s 494,980

Operating costs: Pupil transportation s 3,099,656 s 3,099,656 s 2,611,543 s 488,113 Operation and maintenance of school plant 4,586,802 4,586,802 4,415,994 170,808 Food service and non-instructional 2,015, 935 2,015, 935 1,943,659 72,276

Total operating costs s 9,702,393 s 9,702,393 s 8,971,196 s 731,197

Total education s 41,295,653 s 41,295,653 s 40,071,091 s 1,224,562

Total School Operating Fund s 41,295,653 s 41,295,653 s 40,071,091 s 1,224,562

Total Discretely Presented Component Unit - School Board s 41,295,653 s 41,295,653 s 40,071,091 s 1,224,562

-81-

County of Russell, Virginta

Schedule 2

Schedule of Expenditures - Budget and Actuat Page 4 of 4 Governmental Funds For the Year Ended June 30, 2013 Variance with Final Budget Original Finat Positive Fund, Function, Activity and Element Budaet Budget Actual (Negative) Special Revenue Funds: (Continued) ‘Workforce Investment Board Fund: Health and Welfare Welfare Workforce investment 3,198,524 § 3,198,324 § 2,213,965 $984,359 Total Primary Government 35,791,410 $ 35,766,575 $35,507,050$ 259,526 Discretely Presented Component Unit - Schoo! Board! School Operating Fund: Eucation: ‘Administration of schools: ‘Administration and health services 1,501,083 $1,501,083 $1,502,698 $§ (1,615) Instruction costs: Instructional costs 29,577,733 § 29,577,733 § 29,064,390 § 513,343 Techaology 514,444 514,444 532,807 (18,363) Total instruction costs 30,052,177 530,092,177 $29,597,197 $494,980 ‘Operating costs: Pupil transportation 3,099,655 $3,099,656 $2,611,549 $488,113 Operation and maintenance of schoo! plant 4,586,802 4,586,802 4,415,994 170,808 Food service and non-instructional 2,015,935 2,015,935 1,943,659 72,276 Total operating costs 9,702,393 8 9,702,393 3 8,971,196 3 734,197 Total education 41,295,653_5_41,299,653_$ 40,071,001 $1,224,962 Total Schaol Operating Fund 41,295,658 $4,295,653$ 40,071,091 $1,224,562 Total Discretely Presented Component Unit» School Board 41,295,653 § 41,295,653 _$ 40,071,091 $ 1,224,562

Other Statistical Section

c’:o N ’

General

Fiscal Government Judicial Public

Year Administration Administration Safety

2012·13 s 1,265,678 s 2,097,216 s 5,894,181 2011·12 2,267,145 2,119,900 5,296,188

2010·11 1,691,031 2,112,758 5,091,612 2009·10 1,828,631 2,219,866 4,234,145

2008·09 1,706,342 2,243,005 4,013,947 2007·08 1,411,595 2,070,008 4,025,383 2006·07 1,465,480 1,710,751 3,667,580

11 I Information has only been available for 7 years.

County of Russell, Virginia

Government-Wide Expenses by Function

Last Ten Fiscal Years (1)

Parks,

Public Health and Recreation,

Works Welfare (2) Education and Cultural

4,591,542 s 8,270,658 s 7,484,972 s 529,706 6,060,973 8,397,896 4,589,631 539,126 4,003,987 8,592,042 5,681,243 563,123

5,549,934 6,070,091 5,897,486 560,735 6,055,397 5,982,456 5,471 '573 541,087

5,386,506 5,395,294 4,508,131 433,946 2,867,007 4,880,408 3,884,301 477,515

(2) 2010-2011 is the first year the Workforce Investment Board is included.

(3) In 2010-2011 the County paid $1,508,677 towards the IDA debt.

Table 1

Interest

Community on Long- Service

Development (3) Term Debt Authority Total

s 2,173,719 s 498,401 s 441,349 s 33,247,422 3,493,655 522,300 410,664 33,697,478

3,191,256 756,064 423,945 32,107,061 1,491,257 728,202 434,552 29,014,899 4,826,721 758,753 407,145 32,006,426 5,549,375 827,965 388,949 29,997,152

3,246,100 852,493 422,425 23,474,060

Tablet County of Russell, Virginia Government-Wide Expenses by Function Last Ten Fiscal Years (1)

General Parks, Interest Fiscal Government Judicial. Public Public Health and Recreation, Community on tong Service Year Administration Administration Safety Works __Welfare (2) Education _and Cultural_Development (3) Term Debt_Authority __ Total

2012-13 $ 1,265,678 $ 2,097,216 § 5,894,181 $ 4,591,542 § 8,270,658 $ 7,484,972 $ $29,706 $ 273,719 $ 498,401 $ 444,349 $33,247,422

201112 2,267,145 «2,119,900 5,296,188 6,060,973 8,397,896 4,589,631 539,126 3,493,695, 522,300 410,664 33,697,478 2010-11 1,691,031 «2,112,758 5,091,612 4,003,987 8,597,042 5,681,243 563,123 3,191,256 756,064 423,945 32,107,061 2009-10 «1,828,631 2,219,866 4,234,145 5,549,934 6,070,091 5,897,486 560,735 4,491,257 728,202 434,552 29,014,899 2008-09 1,706,342 «2,243,005 4,013,947 6,085,307 5,982,456 5,471,573. 541,087 4,826,721 758,753 407,145 32,006,426 2007-08 1,411,595 2,070,008 4,025,383 $386,506 5,395,294 4,508,131 433,946 5,549,375 877,965 388,949 29,997,152 2006-07 1,465,480 1,710,751 3,667,580 2,867,007 4,880,408 3,884,301 477,515 3,246,100 852,493 422,425 23,474,060

(1) Information has only been available for 7 years. (2) 2010-2011 is the first year the Workforce Investment Board is included. (3) In 2010-2011 the County paid $1,508,677 towards the IDA debt.

Table 2 County of Russell, Virginia

Government-Wide Revenues

Last Ten Fiscal Years (1)

PROGRAM REVENUES GENERAL REVENUES

Grants and

Operating Capital Contributions

Charges Grants Grants General Other Unrestricted Not Restricted

Fiscal for and and Property Local Investment to Specific

Year Services Contributions Contributions Taxes Taxes (2) Earnings Miscellaneous Programs (2) Total

2012-13 s 398,711 s 9,822,073 s s 14,686,993 s 5,079,612 s 45,865 s 60,479 s 2,580,839 s 32,674,572 2011-12 488,408 9,677,480 761,738 13,142,777 6,881,302 77,226 138,135 2,445,435 33,612,501 2010-11 337,064 10,635,876 13,683,476 6,340,919 89,819 177,669 2,638,202 33,903,025 2009-10 393,362 7,473,127 13,004,381 6,123,807 106,848 173,322 2,465,451 29,740,298 2008-09 481,092 7,376,521 12,889,357 7,779,265 153,807 346,880 1,771,674 30,798,596

’ 2007-08 505,428 7,780,609 12,279,583 7,976,046 529,827 55,649 1,711,485 30,838,627 co ‘f’

2006-07 527,092 8,235,960 802,191 13,239,976 5,467,574 808,979 252,756 1,881,802 31,216,330

(1) Information has only been available for 7 years.

(2) 2009-10 is the first year State Communications tax is classified as grants and contributions not restricted to specific programs.

County of Russell, Virginia

Government-Wide Revenues Last Ten Fiscal Years (1)

Table 2

PROGRAM REVENUES GENERAL REVENUES,

Grants and

Operating Capital Contributions

Charges Grants Grants General Other Unrestricted Not Restricted

Fiscal for and and Property Local Investment to Specific

Year Services Contributions Contributions Taxes Taxes (2) Earnings Miscellaneous _ Programs (2) Total

2012-13 $ 398,711 $ 9,822,073 $ = $ 14,686,993 $ 5,079,612 $ 45,865 $ 60,479 $ 2,580,839 $ 32,674,572 2011-12 488,408 9,677,480 761,738 13,142,777 6,881,302 77,226 138,135, 2,445,435 33,612,501 2010-11 337,064 10,635,876 = 13,683,476 6,340,919 89,819 177,669 2,638,202 33,903,025 2009-10 393,362 7,473,127 13,004,381 6,123,807 106,848 173,322 2,465,451 29,740,298 2008-09 481,092 7,376,521 12,889,357 7,779,265 153,807 346,880 1,771,674 30,798,596 2007-08 505,428 7,780,609 - 12,279,583 7,976,046 529,827 55,649 4,711,485 30,838,627 2006-07 527,092 «8,235,960 802,191 13,239,976 5,467,574 808,979 252,756 1,881,802 31,216,330

(1) Information has only been available for 7 years. (2) 2009-10 is the first year State Communications tax is classified as grants and contributions not restricted to specific programs.

General Fiscal Government Judicial Public Year Administration Administration Safety

2012-13 s 1,797,929 s 2,096,382 s 5,742,101 s 2011-12 2,060,380 2,114,097 5,509,998 2010-11 1,712,850 2,106,641 5,226,797 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

County of Russell, Virginia General Governmental Expenditures by Function (1)

Last Ten Fiscal Years

Parks, Public Health and Recreation, Works Welfare (3) Education (2) and Cultural

4,744,331 s 8,334,736 s 40,161,416 s 488,706 6,515,152 8,518,725 40,540,127 484,891 4,102,279 8,662,052 40,273,694 556,723 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

Community Non- Debt Development ( 4) departmental Service

s 2,283,910 s 423,737 s 2,869,820 2,442,356 305,904 2,526,021 2,311,048 103,820 2,537,376 1,557,445 9,095 2,504,631 3,925,736 56,093 2,547,424 5,549,375 45,503 2,669,081 5,699,361 2,429,487 7,653,814 2,546,073 5,186,187 2, 704,665 2,843,672 2,497,309

Co (1) Includes General and Special Revenue funds of the Primary Government and the operating fund of its Discretely Presented Component Unit- School Board. Excludes Capital Projects. f"" (2) Excludes contribution from Primary Government to Discretely Presented Component Unit- School Board.

(3) 2010-2011 is the first year the Workforce Investment Board is included. (4) In 2010-2011 the County paid $1,508,677 towards the IDA debt.

Table 3

Total

s 68,943,068 71,017,651 67,593,280 66,185,342 70,616,832 66,777,351 65,517,828 66,468,920 56,151,677 52,479,334

county of Russell, Virginia General Governmental Expenditures by Function (1) ‘Last Ten Fiscal Years

Table 3

Generat Parks,

Fiscal Government. dda Public Public Health and Recreation, Community Non: Debt

Year __Administration Administration _ Safety Works __ Welfare (3)__Education @) _and Cultural_Development (4) departmental ___ Service Totat 202413 $4,797,929 § 2,096,382 $5,742,101 $ 4744931 § 8394796 S$ 40,461,416 S 488,706 S 2,783,910 S 22,797 $7,869,820 $68,948,068 wri 2,060,380 «2,114,097 «5,509,998 ,515,152 8,818,725 40,540,127 484891 2,402,356 305,904 7,526,001 71,017,651 2010-11 1,712,850 7,106,641 5,226,797 4,102,279 8,667,052 40,273,694 556,723 2,311,088 103,820 2,537,376 67,593,280 2008-10 1,897,926 2,213,724 4,100,376 5,491,432 6,906,984 41,066,362 47.417 1,587,485 9,098 2,804,631 66,185,242 7008-09 41,702,193 2,236,691 4,383,789 6,093,252 6,672,387 42,452,183 547,104 3,925,736 56,093 2,547,424 70,616,832 2007-08, 11745,817 2,070,455 4,057,495 5,080,514 5,398,035 39,724,130 433,946 5,549,375 45503 2,669,081 66,777,351 2006-07, 1)547,966 1,805,418 «3,863,960 3,205,718 5,125,034 4,346,518 493,366 5,699,361, 219,467 65,517,828 2005-06 1,810,230 1,814,649 4,022,185 3,605,915 5,002,591 39,574,345 438,198 (7,653,814 21546072 66,468,900 2004.05, 1,471,083 7,058,566 «3,977,841 3,434,569 4,948,270 33,030,282 339,245,186 187 2,704,565 56,151,677 2003-04 1,216,960 957,520 3,585,934 3,100,508 4,893,329 33,016,616 367,688 2,843,672 2,497,309 52,479,334

(1) Includes General and Spacial Revenue funds of the Primary Government and the operating fund of its Disretely Presented Component Unit - School Board.

(2) Excludes contribution from Primary Government to Disretely Presented Companent Unit - School Board (3) 2010-2081 is the frst year the Workforce Investment Boar is included.

(4) In 2010-2011 the County pad $1,508,677 towards the (DA debt.

Excludes Capital Projects,

Co (J1

’

County of Russell, Virginia General Governmental Revenues by Source (1)

Last Ten Fiscal Years

Revenue Permits, from the

General Other Privilege Fees, Fines Use of Charges

Fiscal Property Local Regulatory and Money and for Recovered Inter-

Year Taxes Taxes (3) Licenses Forfeitures Property Services Miscellaneous Costs governmental (2), (3)

2012-13 $ 14,696,587 $ 5,079,612 $ 34,152 $ 14,955 $ 39,878 $ 951,229 $ 352,993 $ 1,588,307 $ 2011-12 12,813,407 6,881,302 28,272 24,567 65,238 1 '162,800 394,657 1,139,070 2010-11 13,548,896 6,340,919 22,834 1,206 73,514 1,101,993 416,883 898,399 2009-10 12,841,457 6,123,807 45,877 1,049 74,279 998,548 293,467 1,732,861 2008-09 12,540,392 7,779,265 39,662 1,168 117,983 1,148,414 643,861 1 ,884,165 2007-08 11,826,325 7,976,046 44,933 321 501,144 1,023,848 510,972 796,913 2006-07 11,566,874 6,869,060 144,452 7,547 794,365 1,122,223 289,980 276,806 2005-06 12,337,123 6,713,063 52,707 8,181 660,142 878,017 310,534 187,855 2004-05 12,204,466 5,981,937 35,700 9,430 231,701 755,446 192,958 266,232 2003-04 10,148,719 4,820,255 38,906 9,938 74,324 892,392 209,598 283,077

(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 aid.

44,418,919 46,119,628 47,717,709

43,856,378 45,438,632 43,519,497 48,149,588 42,906,554 38,060,020 35,517,991

Table 4

Total

$ 67,176,632 68,628,941 70,122,353

65,967,723 69,593,542 66,199,999 69,220,895 64,054,176 57,737,890 51,995,200

County of Russell, Virginia General Governmental Revenues by Source (1) Last Ten Fiscal Years

Table 4

Revenue Permits, from the General otter Privilege Fees, Fines Use of Charges

Fiscat Property Local Regulatory and Money and for Recovered inter

Year Taxes Taxes (3) Licenses Forfeitures—Propeny Services Miscellaneous __Costs governmental (2),(3)_Total 2012-13 14,696,587 § 5,079,612 $ 34,152 $14,955 §—«39,87B 5 951,209 $352,993 $1,588,307 § 44,418,919 567,176,632 2011-12 12,813,407 6,881,302 28,272 24,567 65,238 1,162,800 394,657 1,139,070 46,119,628 68,628,941 2010611 13,548,896 6,340,919, 22,834 41,208 73514 1,101,993 416,883 998,399 41,717,709 70,122,353 2008-10 12,841,457 6,123,807 48,87 1,049 74,279 998,548 293,467 1,732,861 43,856,378 65,967,723 7008-09 12,540,392 7,779,265, 39,662 1,168 197,983 1,148,414 643,861 1,884,165 45,438,632 69,593,542 2007-08 11,826,325 7,976,046, 44,933 32 sorta 1,023,848, 510,972 796,913 8,519,497 66,199,999 2006-07 11,366,874 6,868,060, 144,452 7547 794,365 1,122,223, 289,980 276,808 48,149,588 69,220,895 2005-06 12,337,123, 6,713,063, 52,707 8,181 660,142 878,017 310,534 187,855 42,906,554 64,054,176 2004-05, 12,204,468 5,981,937 35,700 9,430 231,701 738,446 192,958 266,232 38,080,020 57,737,890 2003-04 10,148,719 4,820,255, 38,906 9,938, 74,324 992,392 209,598 283,077 35,517,991 51,996,200

(1) Includes Generat and Speciat 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.

(@) 2009-10 isthe first year State Communications tax is classified as noncategorical state ai.

Total Current

Fiscal Tax Tax

Year Levy (1) Collections (1)

2012-13 s 16,328,495 s 14,812,738

2011-12 14,681,089 13,185,991 2010-11 14,682,949 13,329,182 2009-10 14,169,807 13,038,906 2008-09 14,091,178 13,212,582 2007-08 13,784,900 12,618,969

c’o 2006-07 12,104,262 8,435,607 CJ)

’ 2005-06 11,360,623 11,118,399 2004-05 10,576,870 9,740,619 2003-04 9,070,812 8,274,805

(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

90.72% s 953,671 s 15,766,409

89.82% 723,190 13,909,181 90.78% 1,330,697 14,659,879

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

Table 5

Percent of Percent of

Total Tax Outstanding Delinquent Collections Delinquent Taxes to to Tax Levy Taxes (1) Tax Levy

96.56% s 4,786,523 29.31%

94.74% 4,693,121 31.97%

99.84% 3,847,456 26.20% 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%

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 Delinquent Fiscal Tax Tax of Levy Tax Tax Collections Delinquent Taxes to Year Lev (1) Collections (1) Collected Collections (1) _Collections__toTaxLevy Taxes (1) Tax Lew 2012-13 $ 16,328,495 § 14,812,738 90.72% $ 953,671 $15,766,409 96.56% $ 4,786,523 29.31% 2011-12 14,681,089 13,185,991 89.82% 723,190 13,909,181 94.74% 4,693,121 31.97% 2010-11 14,682,949 13,329,182 90.78% 1,330,697 14,659,879 99.84% 3,847,456 26.20% 2009-10 14,169,807 13,038,906 92.02% 886,480 13,925,386 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 13,030,856 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% 2005-06 11,360,623 11,118,399 97.87% 797,364 11,915,763 104.89% 1,854,243, 16.32% 2004-05 10,576,870 9,740,619 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%

(1) Exclusive of penalties and interest.

’ 00 “”;"

Fiscal Real Personal

Year Estate ( 1) Property

2012-13 $ 1 ,323,141,655 $ 292,809,049 2011-12 1,214,673,535 251,383,699 2010-11 1,197,720,260 235,114,151 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 2006-07 931,095,586 152,418,744 2005-06 927,558,386 241,849,424 2004-05 905,496,746 220,786,936 2003-04 885,323,887 205,377,101

County of Russell, Virginia Assessed Value of Taxable Property

Last Ten Fiscal Years

Machinery

and Merchant’s Mobile Tools Capital Homes

$ 86,317,454 $ 5,631,601 $ 23,486,868

60,747,073 5,340,902 23,401,571 82,948,411 5,136,529 23,320,148

96,552,183 5,402,115 22,864,821

93,960,621 5,501,882 23,139,220 107,205,468 5,742,600 23,608,064

99,124,678 4,954,226 23,802,666 92,859,770 5,113,134 26,020,997

102,287,891 4,160,621 24,774,536 77,287,167 3,438,802 23,763,122

(1) Real estate is assessed at 100% of fair market value.

Public Service (2)

$ 230,027,520

269’ 503 '982 326,871,285

253,750,196

234,196,018 231,981,492

199,922,460

206,306,945 222,627,640 226,411,983

(2) Assessed values are established by the State Corporation Commission-includes all property types.

Table 6

Total

$ 1,961,414,147

1,825,050,762

1,871 '110,784 1,784,792,791

1,749,540,744 1,743,018,699

1,411,318,360

1,499,708,656 1 ,480,134,370 1,421,602,062

“lg:

County of Russell, Virginia

Assessed Value of Taxable Property Last Ten Fiscal Years

Table 6

Machinery

Fiscal Real Personal and Merchant’s Mobile Public

Year Estate (1) Property Tools Capitat Homes Service (2) Total 2012-13 $ 1,323,141,655 § 292,809,049 $ 86,317,454 $ 5,631,601 $ 23,486,868 $ 230,027,520 $ 1,961,414,147 2011-12 1,214,673,535 251,383,699 60,747,073 5,340,902 23,401,571 269,503,982 —1,825,050,762 2010-11 1,197,720,260 235,114,151 82,948,411 5,136,529 23,320,148 326,871,285 1,871, 110,784 2009-10 1,181,352,276 224,871,200 96,552,183 5,402,115 22,864,821 253,750,196 —+1,784,792,791 2008-09 1,153,488,246 239,254,757 93,960,621 5,501,882 23,139,220 234,196,018 1, 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 24,774,536 222,627,640 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

(1) Real estate is assessed at 100% of fair market value. (2) Assessed values are established by the State Corporation Commission includes all property types.

Fiscal Real Year Estate

2012-13(5) $ 0.70/0.56 $ 2011-12(4) 0.61/0.70

2010-11 0.61 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

( 1) Per $100 of assessed value. (2) 2nd half 2006/1st half 2007

(3) 2nd half 2007/1st half 2008

(4) 2nd half 2011/1st half 2012 (5) 2nd half 2012/1st half 2013

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

1.65 1.65 1.45 2.45

1.45 1.45

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Table 7

Merchant’s Mobile Capital Homes

0.65 $ 0.70

0.65 0.61

0.65 0.61 0.65 0.61 0.65 0.61 0.65 0.56

NA 0.64 NA 0.64 NA NA NA NA

County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Table 7

Fiscal Real Personal Machinery Merchant’s Mobile

Year Estate Property & Tools Capital Homes 2012-13 (5) $ 0.70/0.56 $ 1.65 $ 1.65 0.65 § 0.70 2011-42 (4) —(0.61/0.70 1.65 1.65 0.65 0.64 2010-11 0.61 1.65 1.65 0.65 0.61 2009-10 0.61 1.65 1.65 0.65 0.61 2008-08 0.61 1.65 1.65 0.65 0.64 2007-08(3) —(0.56/0.61 1.65 1.65 0.65 0.56 2006-07(2) 0.65/0.56 1.65 1.65 NA 0.64 2005-06 0.65 1.65 1.65 NA 0.64 2004-05 0.60 1.45 2.45 NA NA 2003-04 0.60 1.45 1.45 NA Na

(1) Per $100 of assessed value. (2) 2nd hatf 2006/1st half 2007 (3) 2nd half 2007/ st half 2008 (4) 2nd half 2011 /1st half 2012 (5) 2nd half 2012/1st half 2013

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

2012-13 28,897 s 1,961,414 s 10,865,788 s 10,865,788 0.55% s 376

2011-12 28,897 1,825,051 12,666,629 12,666,629 0.69% 438 2010-11 28,897 1,871,111 14,066,729 14,066,729 0.75% 487 2009-10 28,790 1,784,793 15,315,245 15,315,245 0.86% 532 2008-09 28,790 1,749,541 14,878,819 14,878,819 0.85% 517 2007-08 28,790 1,743,019 14,584,265 14,584,265 0.84% 507 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

(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.

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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 2012-13 28,897 § 1,961,414 $10,865,788 $ 10,865,788 0.55% § 378 2011-12 28,897 1,825,051 12,666,629 12,666,629 0.69% 438 2010-11 28,897 A871,111 14,066,729 14,086,729 0.75% 487 2009-10 28,790 4,784,793 15,315,245 15,315,245 0.86% 532 2008-09 28,790 1,749,541 14,878,819 14,878,819, 0.85% 317 2007-08 28,790 1,743,019 14,584,265 14,584,265 0.84% 07 2006-07 28,790 4,411,318 14,836,861 14,836,861 1.05% 315 7005-06 28,790 1,499,709 12,594,004 12,594,094 0.84% “7 7004-05 28,830 1,480,134 13,633,304 13,633,304 0.92% 4B 2003-04 28,795 1,421,602 14,670,561 14,670,561 1.038 509

(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 titerary fund loans. Excludes revenue bonds, landfill closure/post-closure care liability, capital leases, and compensated absences.

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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

2012-13 s 2,869,820 s 68,943,068 4.16% 2011-12 2,526,021 71,017,651 3.56% 2010-11 2,537,376 67,593,280 3.75% 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%

(1) Includes all governmental funds of the Primary Government

and funds of the Discretely Presented Component Unit-School Board.

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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 Generat

Fiscal Debt Governmental Governmental

Year Service Expenditures Expenditures 2012-13 § 2,869,820 § 68,943,068 4.16% 2014-12 2,526,021 71,017,651 3.56% 2010-11 2,537,376 67,593,280 3.75% 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%

(1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board.

COMPLIANCE SECTION

ROBINSON, fARMER, COX ASSOCIATES U R! !! If D /‘( tBLJC 11CCOf !1\·’ !11 /‘I/ f.<… A J’ROJ-LSS/0'/~L LH!/ I lD IL1BJLJ J }’ COi\11’:1 '}

INDEPENDENT AUDITORS’ 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, in accordance with the auditing standards generally accepted in the United States of America; the 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, the financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of County of Russell, Virginia, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise County of Russell, Virginia’s basic financial statements and have issued our report thereon dated February 18, 2014. Our report includes a reference to other auditors who audited the financial statements of Russell County Public Service Authority, as described in our report on County of Russell, Virginia’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. The report opinion on the financial statements was modified because of the omission of the discretely presented component unit (Castlewood Water and Sewage Authority) and lack of an updated actuarial valuation of the County’s Other Postemployment Benefits (OPEB) plan and related net OPEB obligation in accordance with GASB Statement No. 45.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered County of Russell, Virginia’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of County of Russell, Virginia’s internal control. Accordingly, we do not express an opinion on the effectiveness of County of Russell, Virginia’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

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 deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses [2013-1, 2013-2].

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ROBINSON, FARMER, COX ASSOCIATES

CIR THIED PUBLIC ACCOUN

NOS UPRONLSSIONAL LINHTED LIABILII ¥ COMPANY

INDEPENDENT AUDITORS’ 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, in accordance with the auditing standards generally accepted in the United States of America; the 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, the financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of County of Russell, Virginia, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise County of Russell, Virginia’s basic financial statements and have issued our report thereon dated February 18, 2014, Our report includes a reference to other auditors who audited the financial statements of Russell County Public Service Authority, as described in our report on County of Russell, Virginia’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors, The report opinion on the financial statements was modified because of the omission of the discretely presented component unit (Castlewood Water and Sewage Authority) and lack of an updated actuarial valuation of the County’s Other Postemployment Benefits (OPEB) plan and related net OPEB obligation in accordance with GASB Statement No. 45.

Internal Control Over Financial Reporting

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies May exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

A deficiency in internat 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 deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses [2013-1, 2013-2].

Compliance and Other Matters

As part of obtaining reasonable assurance about whether County of Russell, Virginia’s financial statements are free from 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 disclosed an instance of noncompliance or other matters that are required to be reported under Government Auditing Standards and which is described in the accompanying schedule of findings and questioned costs as item 2013·3.

County of Russell, Virginia’s Response to Findings

County of Russell, Virginia’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. County of Russell, Virginia’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Blacksburg, Virginia February 18, 2014

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Compliance and Other Matters

County of Russell, Virgi

jas Response to Findings

Purpose of this Report

Hoetinson, Suman, (yy Chsociattes

Blacksburg, Virginia February 18, 2014

92-

ROBINSON, FARMJER, Cox ASSOCIATES Cl:RTIFllD PUBLIC ACCOUf{TANTS A PROFES:iJONAL LIMITJ:D LIABJLrTY COMPANY

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

Report on Compliance for Each Major Federal Program

We have audited 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 County of Russell, Virginia’s major federal programs for the year ended June 30, 2013. County of Russell, Virginia’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of County of Russell, Virginia’s major federal programs based on our audit of the types of compliance requirements referred to above. 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 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 on compliance for each major federal program. However, our audit does not provide a legal determination of County of Russell, Virginia’s compliance.

Opinion on Each Major Federal Program

In our opinion, County of Russell, Virginia, complied, in all material respects, with the types of 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, 2013.

Report on Internal Control Over Compliance

Management of County of Russell, Virginia, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered County of Russell, Virginia’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the

-93-

ROBINSON, FARMER, COX ASSOCIATES

CERTIFIED PUBLIC ACCOUNTANTS. ‘A PROFESSIONAL LDAITED LIABILITY COMPANY

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia

Report on Compliance for Each Major Federal Program

Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of County of Russell, Virginia’s major federal programs based on our audit of the types of compliance requirements referred to above. 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 County of Russell, Virginia’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances,

Opinion on Each Major Federal Program

Report on Internal Control Over Compliance

‘Management of County of Russell, Virginia, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered County of Russell, Virginia’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the

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circumstances for the purpose of expressing an opmmn on compliance for each major federal program 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 County of Russell, Virginia’s internal control over compliance.

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. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Blacksburg, Virginia February 18, 2014

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circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular 4-133, 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 County of Russell, Virginia’s internat control over compliance.

Holuinoin, Shuman, ly, laacciates

Blacksburg, Virginia February 18, 2014

County of Russell, Virginia Page 1 of 3

Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2013

Pass-through

Federal Entity

Federal Grantor/State Pass -Through Grantor/ CFDA Identifying Federal

Program Cluster or Title Number Number Expenditures

Department of Health and Human Services:

Pass Through Payments:

Department of Social Services:

Promoting Safe and Stable Families 93.556 0950112, 0950113 $ 17,793

Temporary Assistance for Needy Families 93.558 0400112, 0400113 379,106

Refugee and Entrant Assistance - State Administered Programs 93.566 0500112, 0500113 1,767

low-Income Home Energy Assistance 93.568 0600412, 0600413 36,070 Child Care Mandatory and Matching Funds of the 93.596 0760112, 0760113 54,884

Child Care and Development Fund

Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900112, 0900113 2,185

Foster Care -Title IV-E 93.658 1100112, 1100113 291,578

Adoption Assistance 93.659 1120112, 1120113 379,595 Social Services Block Grant 93.667 1000112, 1000113 397,191

Chafee Foster Care Independence Program 93.674 9150111’ 9150112 9,561

Children·s Health Insurance Program 93.767 0540112, 0540113 8,167

Medical Assistance Program 93.778 1200112, 1200113 201,148

Total Department of Health and Human Services $ 1,779,045

Department of Agriculture:

Pass Through Payments:

Child Nutrition Cluster:

Department of Agriculture:

Food Distribution-Schools (Note 3) 10.555 Not applicable $ 110,659

Department of Education:

National School Lunch Program 10.555 40623 900,139

Department of Education:

School Breakfast Program 10.553 40591 306,978

Total Child Nutrition Cluster 1,317,776

Department of Social Services:

State Administrative Matching Grants for the Supplemental 10.561 0010112,0010113 333,567

Nutrition Assistance Program 0040112,0040113

Total Department of Agriculture $ 1,651,343

Department of Justice:

Direct Payments:

ARRA- Edward Byrne Memorial Justice Assistance Grant Program/Grants 16.804 Not applicable $ 25,875

To Units of local Government

Pass Through Payments:

Department of Criminal Justice Services:

Violence Against Women Formula Grants 16.588 11WFAX0028 36,597

Total Department of Justice $ 62,472

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County of Russell, Virginia Page 1 of 3 Schedule of Expenditures of Federal Awards For the Vear Ended June 30, 2013, Pass-through Federal Entity Federal Grantoc/State Pass Through Grantor! cA Ientitying Federal Program Cluster or Title Number Number Expenditures Department of Health and Humen Services Pass Through Payments: Department of Sctal Services: Promoting Safe and Stable Families 93.556 0980112, 0950113 17,793, Temporary Assistance for Needy Families 93.558 0400112, 0900113 379,106 Refugee and Entrant Assistance - State Administered Programs 93.566 (9500112, 0500113 1767 Low-lncome Home Energy Assistance 98.568 9600812, 0600413 36,070 Child Care Mandatory and Matching Funds ofthe 93.596 (760112, 0760113 54,884 Child Care and Development Fund Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900112, 0900113 2,985 Foster Care Title WE 93.658 svoott2, 1400113 31,578 Adoption Assistance 93.659 120112, 1120113 379,595 Sociat Services Block Grant 93.667 090112, 1000113 397,001 CChatee Foster Care Independence Program 93.674 asott, 9150112 9,961 Childrens Heath insurance Program 93.767 0840112, 0540113 8,367 Medical Assistance Program 93.778 szoott2, 1200113 201,148, Total Department of Health and Human Services $1,779,085 Department of Agriculture: ess Through Payments: Child Nutrition Cluster: Department of Agriculture: Food Distribution-Schools (Note 3) 10.555 Notapplicable $110,659 Department of Education: [Nationa School Lunch Program 10.555 40823, 900,139 Department of Education: ‘School Breakfast Program 10,553 40591 306,978 ‘otal Child Nutrition Custer 4,317,776 Department of Socal Services: State Administrative Matching Grants forthe Supplemental 10.561 0010112, 0030113 333,567 Nutrition Assistance Program (9040112, 0040113 ‘Totat Department of Agriculture 51651348 Department of Justice: Direct Payments: ‘ARRA- Edward Byrne Memorial Justice Assistance Grant Program /Grants 16.804 Notapplicable «$5,875, To Units of Local Government Pass Throweh Payments: Department of Criminal Justice Services: Violence Against Women Formula Grants 16.588 ivr axon28 36,597 Total Department of Justice Sane

County of Russell, Virginia

Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2013

Federal Grantor/State Pass -Through Grantor/

Program Cluster or Title

Department of Transportation:

Pass Through Payments:

Department of Motor Vehicles:

State and Community Highway Safety (402 Funds)

Alcohol Open Container Requirements

Total Department of Transportation

Department of Education:

Pass Through Payments:

Department of Education:

Adult Education - Basic Grants to States

Title 1: Grants to Local Educational Agencies

Special Education Cluster:

Special Education - Grants to States

Special Education - Preschool Grants

Career and Technical Education: Basic Grants to States

Even Start - State Educational Agencies

Twenty-First Century Community Learning Centers

Rural Education

Improving Teacher Quality State Grants

Total Department of Education

Department of Housing and Urban Development:

Pass Through Payments:

Department of Housing and Community Development:

Community Development Block Grant/State’s Program and Non-entitlement

Grants in Hawaii

Corporation on National and Community Service:

Pass Through Payments:

Department of Education:

Learn and Serve America - School and Community Based Programs

Department of Labor:

Pass Through Payments:

Virginia Community College System:

Workforce Investment Act Cluster:

WlA Adult Program

WIA Youth Activities

WlA Dislocated Workers

Workforce Investment Act Cluster Total

Community Based Job Training Grants

Virginia Department for Aging and Rehabilitative Services:

Employment Service/Wagner-Peyser Funded Activities

Total Department of Labor

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Federal

CFDA

Number

20.600

20.607

84.002

84.010

84.027

84.173

84.048

84.213

84.287

84.358

84.367

14.228

94.004

17.258

17.259

17.260

17.269

17.207

Pass-through

Entity

Identifying

Number

SC-201 2-52260-4638

154AL-2013-53020-4736

42801

42901

43071

62521

61095

42950

60565

43481

61480

50790

60185

53427

Not applicable

Page 2 of 3

Federal

Expenditures

2,500

4,300

6,800

294,285

1 ,634,498

948,471

35,752

88,956

42,529

755,496

68,522

285,064

4,153,573

260,344

7,176

1,013,106

896,084

216,302

2,125,492

68,260

13,126

2,206,878

County of Russell, Virginia Page 2 of 3 ‘Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2013,

Pass-through Federal Entity Federal Grantor/State Pass - Through Genter! FOR, Identifying Feceral Program Cluster or Title Number Number Expencitures Department of Trenspartation: Pass Through Payments Department of Motor Vehicles: State and Community Highway Safety (402 Funds) 20.600 scrorsrzso-4s3a § 2,500 ‘Alcohol Open Container Requirements 20.07 1548L-2013-53020-4736 4,200 Total Department of Transportation 6,800 Department of Education: ass Theough Payments: Department of Education: ‘Adult Education - Basle Gants to States 24.002 42801 $794,785 Title: Grants to Local Educational Agencies 84.010 42501 1,634,498 Special Education Cluster: Special Education - Grants to States a4.007 48071 48,471 Special Education - Preschool Grants 4.173 2511 35,752 Career and Technical Edueation: Basie Grants to States 84.048 61095, 88,956 Even Start - State Educational Agencies e213 42950 2529 “Twenty-First Century Community Learning Centers 84.287 60865 755,498 Rural Education 84.358, 43481 66,522 Improving Teacher Quality State Grants 84367 61480 285,064 “Total Department of Education $4,153,573 Department of Housing and Urban Development: Pass Through Payments: Department of Housing ané Community Development: Community Development Block Grant/State’s Program and Non-entitlement sama 50790 260,344 Grants in Hawai Corporation on National and Community Service: ass Through Payments: Department of Education Lear and Serve Ameria »Schoot and Community Based Programs 94.004 60185, s 7.176 Department af Labor: Pass Through Payments Viegnia Community College System: Workforce Investment Act Cluster: ‘Wah Adult Program 17.258 n07 Ss 1,013,106 ‘Wih Youth Activities 17.259 5307 896,084 WIA Dislocated Workers 17.260 5307 216,302 Workforce Investment Act Cluster Totat 3 2135,492 Community Based Job Training Grants 17.269 Not applicable 68,260 Virginia Department for Aging and Rehabilitative Services: Employment Service/Wasner-Peyser Funded Activities v.07 Not applicable ‘Total Department of Labor 5

County of Russell, Virginia

Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2013

Federal Grantor/State Pass -Through Grantor/

Program Cluster or Title

Federal

CFDA

Number

Department of Homeland Security:

Pass Through Payments:

Department of Emergency Management:

Emergency Management Performance Grants 97.042

Total Expenditures of Federal Awards

Note 1 – Basis of Presentation

Pass-through

Entity

Identifying

Number

52741

Page 3 of 3

Federal

Expenditures

16,750

10,144,381

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, 2013. 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 Orsanizations. 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 position, 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 recogmzed following the cost

principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, 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, 2013 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 Program Name Amount

14.228 Community Development Block Grant 260,344

17.258, 17.259, 17.260 Workforce Investment Act Cluster 2,125,492

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

Workforce Investment Board Fund

Total primary government:

Component Unit School Board:

School Operating Fund

Total federal expenditures per the Schedule of Expenditures of Federal Awards

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2,458, 978

2,206,878

4,665,856

5,478,525

10,144,381

‘County of Russell, iginia Page 3 of 3 Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2013

Pass-through Federal Entity Federal Grantor/State Pass - Through Grantor? cra Identifying Federal Program Cluster or Title Number Number Expencitures Department of Homeland Security: ess Through Payments: Department of Emergency Management: Emergency Management Performance Grants 7.08 surat Ss __16,750 Total Expenditures of Federal Awards 5

Note 1 ~ Basis of Presentation

The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of Russell County, Veginia under programs of the federal government for the year ended lune 30, 2013, The information in this Schedule is presented in accordance with the requirements of ONG Circular A-133, Audits of States, Local Governments, and Non-Profit Orsanizations. Because the Schedule presents only a selected portion of the operations of Russell County, Virginia, i is not intended to and does not present the financial position, changes in net position, ar cash flows of Russlt County, Virgina

Note 2 Summary of Significant Accounting Policies

(1) Expenditures reported on the Schedule are renerted on the accrual basis of accounting. Such expenditures are recognized following the cost Principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, whereln certain types of expenditures are not allowable or are limited as to reimbursement,

(2) Pass-through entity identifying numbers are presented where avaiable.

Note 3 - Feod Distribution "Nonmonetary assistance is reported in the schedule atthe fair market value of the commodities received and disbursed. At June 30, 2013 Russell County, Virginia had food cammocities totaling $0 in inventory.

Note 4 Subrecipients ‘Of the federal expenditures presented inthe Schedule, Russell County, Virginia provided federal awards to subrecipients s follows

‘CFDA Number Program Name ‘amount 14.208 Community Development Block Grant Ss 260,344 17.258, 17.259, 17.260 Workforce Investment Act Cluster 2,125,492

Note 5 ~ Relationship to the Financial Statements Federal expenditures, revenues and capital contributions are reported inthe County’s base financial statements as follows:

“ntergovernmental federal revenves per the basi financial statements:

Primary government General Fund $2,488,078 Workforce Investment Board Fund 2,206,878 Total primary government 5S 4,865,856

Component Unit Shoot Board: School Operating Fund

‘Total federal expenditures per the Schedule of Expenditures of Federal Awards

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County of Russell, Virginia

Schedule of Findings and Questioned Costs Year Ended June 30, 2013

Section I - Summary of Auditors’ Results

Financial Statements

Type of auditors’ 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 auditors’ 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# Name of Federal Program or Cluster

84.173/84.027 84.010

10.553/10.555 93.558 93.659 93.667

Special Education Cluster Title 1: Grants to Local Educational Agencies Child Nutrition Cluster Temporary Assistance for Needy Families Adoption Assistance Social Services Block Grant

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

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Qualified

Yes

None reported

Yes

None reported

Unmodified

$304,331

County of Russell, Virginia

Schedule of Findings and Questioned Costs Year Ended June 30, 2013

Section | - Summary of Auditors’ Results

incial Statements Type of auditors’ report issued:

Internat 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 auditors’ 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# Name of Federal Program or Cluster 84.173/84.027 Special Education Cluster

84.010 Title |: Grants to Local Educational Agencies 10.553/10.555 Child Nutrition Cluster

93.558 Temporary Assistance for Needy Families

93.659 Adoption Assistance:

93.667 Social Services Block Grant

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

Qualified

Yes

None reported

Yes

None reported

Unmodified

$304,331

County of Russell, Virginia

Schedule of Findings and Questioned Costs Year Ended June 30, 2013

Section II - Financial Statement Findings

2013-1

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

2013-2

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 exists.

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 detect 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 2013 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 2013 and will develop a plan of action to ensure that all adjusting entries are made prior to final audit fieldwork next year.

A key concept of internal controls is the segregation of duties. No one employee should have access to both accounting records and related assets.

The School Board and County lack proper segregation of duties over payroll.

The School Board and County lack the funding to fully support a completely segregated finance department.

Management should further try to segregate duties amongst current staff to help alleviate risk created by improper segregation of duties.

Management acknowledges that internal controls over School Board and County payroll lacks proper segregation of duties and is implementing processes to alleviate

the situation.

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County of Russell, Virginia

Schedule of Findings and Questioned Costs

Year Ended June 30, 2013

Section Il - Financial Statement Findings

2013-4

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

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 financiat statements.

The County does not have proper controls in place to detect and correct errors in closing their year end financial statements.

There {s 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 2013 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

Management’s The County will review the auditors’ proposed audit adjustments for 2013 and will Response: develop a plan of action to ensure that all adjusting entries are made prior to final audit fieldwork next year. 2013-2

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

‘A key concept of internal controls is the segregation of duties. No one employee should have access to both accounting records and related assets.

The School Board and County lack proper segregation of duties over payroll.

The School Board and County lack the funding to fully support a completely segregated finance department.

Management should further try to segregate duties amongst current staff to help alleviate risk created by improper segregation of duties.

Management acknowledges that internal controls over School Board and County

payroll lacks proper segregation of duties and is implementing processes to alleviate the situation.

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County of Russell, Virginia

Schedule of Findings and Questioned Costs Year Ended June 30, 2013

Section II - Financial Statement Findings (continued)

2013-3

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s

Response:

The Code of Virginia, (1950), as amended requires that an appropriation exists prior to the expenditure of funds.

The VPA Expenditures Fund, Cannery Fund, and Coal Road Fund overspent the budget. Numerous departments within the General fund also overspent their budget.

The County does not consistently monitor appropriations. The County Administrator or each department head should be in charge of monitoring spending versus appropriations.

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 post additional appropriations to the accounting system and pay closer attention to budgeted and actual expenditures.

Section Ill -Federal Award Findings and Questioned Costs

None

Section IV- Status of Prior Audit Findings and Questioned Costs

Financial Statement Findings 2012-1, 2012-2, and 2012-3 recurred during fiscal year 2013. Financial Statement Finding 2012-4 was corrected during fiscal year 2013. Federal Award Findings and Questioned Costs 2012-5 was corrected during fiscal year 2012.

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County of Russell, Virginia

Schedule of Findings and Questioned Casts

Year Ended June 30, 2013

Section Il - Financial Statement Findings (continued)

2013-3

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

The Code of Virginia, (1950), as amended requires that an appropriation exists prior to the expenditure of funds.

The VPA Expenditures Fund, Cannery Fund, and Coal Road Fund overspent the budget. Numerous departments within the General fund also overspent their budget.

The County does not consistently monitor appropriations. The County Administrator or each department head should be in charge of monitoring spending versus appropriations.

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 post additional appropriations to the accounting system and pay closer attention to budgeted and actual expenditures.

Section Ill - Federal Award Findings and Questioned Costs

None

Section IV - Status of Prior Audit Findings and Questioned Costs

Financial Statement Findings 2012-1, 2012-2, and 2012-3 recurred during fiscal year 2013. Financial Statement Finding 2012-4 was corrected during fiscal year 2013, Federal Award Findings and Questioned Costs 2012-5 was corrected during fiscal year 2012.

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