2014-Audit

2014-Audit

Document Date: January 1, 2014 Document: 2014-Audit.pdf

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COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2014

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

For THE YEAR ENDED JUNE 30, 2014

INTRODUCTORY SECTION

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

fOR THE YEAR ENDED JUNE 30, 2014

TABLE OF CONTENTS

Page List of Elected and Appointed Officials… 1

FINANCIAL SECTION

Independent Auditors’ Report 2-4

Exhibit Page Basic Financial Statements:

Government·wide Financial Statements: Statement of Net Position … … 1 5 Statement of Activities •. ., … … 2 6

Fund Financial Statements: Balance Sheet - Governmental Funds … … 3 7 Reconciliation of the Balance Sheet of Governmental Funds to the Statement

of Net Position … … 4 8 Statement of Revenues, Expenditures and Changes in Fund Balances -

Governmental Funds •••.•…•.•…•…•…••…•…••…•.••…••…•…•••…•.•… 5 9 Reconciliation of the Statement of Revenues, Expenditures, and Changes

in Fund Balances of Governmental Funds to the Statement of Activities … . 6 10 Statement of Net Position - Proprietary Funds … . 7 11 Statement of Revenues, Expenses, and Changes in Net Position -

Proprietary Funds … . 8 12 Statement of Cash Flows - Proprietary Funds … … 9 13 Statement of Fiduciary Net Position - Fiduciary Funds … . 10 14

Notes to Financial Statements … . 15-59

Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund …•… , •.•…•.•… 11 60 Special Revenue Fund - Coal Road • • … • … … … … … •• … … • • • ••••• •• •• … • • … •• • … ••. • . … . … 12 61 Special Revenue Fund - Workforce Investment Board • … • . … •• … … … . • • • • • … • … • ••• • .• • •• • • . 13 62

Schedule of Pension and OPEB Funding Progress… 14 63

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2014

TABLE OF CONTENTS

INTRODUCTORY SECTION

List of Elected and Appointed Officials.

FINANCIAL SECTION

Independent Auditors’ Report.

Basic Financial Statements:

Government-wide Financial Statements: Statement of Net Position … Statement of Activities

Fund Financial Statements:

Balance Sheet - Governmental Funds . ssepentnssnsngesevenennnnnneneseeeness Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position … Statement of Revenues, Exper Governmental Funds … Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activitfes Statement of Net Position - Proprietary Funds … Statement of Revenues, Expenses, and Changes in Net Position -

Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Position - Fiduciary Funds …

Notes to Financial Statements ., Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund… ee Special Revenue Fund - Coal Road Special Revenue Fund - Workforce Investment Board

‘Schedule of Penston and OPEB Funding Progress.

Naw

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2014

TABLE 01’ CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Other Supplementary Information:

Exhibit Page

Combined Statement of Changes 1n Assets and Liabil1tfes - Agency Funds … … … •• … • … •• … . 15 64

Discretely Presented Component Unit - School Board: Balance Sheet …•…•… , … , … , . . . . . . . . . . . . • . . • . . 16 65 Statement of Revenues, Expenditures, and Changes in Fund Balances -·

Governmental Funds . . . . . . . … . . . … . . . . . . . … . . . . . … . . … . … • .• . . . … … . . .• . … . … . . … . … . . … • . . . . . . 17 66 Schedule of Revenues, Expenditures, and Changes in Fund Balances -

Budget and Actual … , •• … 18 67

Schedule Page Supporting Schedules:

Schedule of Revenues - Budget and Actual • Governmental Funds • … . … • … • … •• • … • … … … • 1 68-73 Schedule of Expenditures - Budget and Actual - Governmental Funds … 2 74·77

Other Statistical Information:

Government-wide Information: Government-Wide Expenses by Function … 1 78 Government-Wide Revenues… 2 79

Fund Information: General Governmental Expenditures by Function • … • … … … • • • • … • … • • … … . … • … • … • … … • … … • 3 80 General Governmental Revenues by Source… 4 81 Property Tax Levies and Collections… 5 82 Assessed Value of Taxable Property • … • • … . •• … •• • … … ••• • ••• … • … •• •• … … • … … … … 6 83 Property Tax Rates • … • … • • • • … • • • • • … • • • • • … . … • … … • • … • … . … • • … • • . … • • . • … • • . • • … • . • • … … • • . … • • 7 84 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded

Debt Per Capita • . • … • … • … • • … • • . • … • … • … • • … • • … • • • • . • … • … • • … … • • •• • • • • • • … … . . • • • • • … … … … • 8 85 Ratio of Annual Debt Service Expenditures for General Bonded Debt to

Total General Governmental Expenditures… 9 86

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2014

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Exhibit Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities - Agency Funds .+…+0¥ 15

Discretely Presented Component Unit - School Boat Balance Sheet… sss Statement of Revenues, Expenditures, and Changes in Fund Balance:

Governmental Funds … Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual …

18 Schedule

Supporting Schedules:

Schedule of Revenues - Budget and Actual - Governmental Funds … Schedule of Expenditures - Budget and Actual - Governmental Funds .

Other Statistical information: Table

Government-wide Information: Government-Wide Expenses by Function Government-Wide Revenues …

Fund Information: General Governmental Expenditures by Function General Governmental Revenues by Source. Property Tax Levies and Collections. Assessed Value of Taxable Property Property Tax Rates . Ratio of Net General Bonded Debt to Assessed Value and Net Bonded

Debt Per Capita… Ratio of Annual Debt Service Expendi Total General Governmental Expenditures…

Page

68-73 1477

Page

78 9

COMPLIANCE SECTION

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2014

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… 87·88

Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A·133 … . … . … • … • … … … … • … • … … … … • 89·90

Schedule of Expenditures of Federal Awards … • … … … … … • … . • … … • … … • … … … … . … … • … … • 91 ·93 Schedule of Findings and Questioned Costs … … … … • … … … … • … … … … • … … … … • … • … • … … … … … … … 94·96

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2014

TABLE OF CONTENTS (CONTINUED)

COMPLIANCE SECTION

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 Required by OMB Circular A-133 , -

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

87-88

89-90

91-93 94-96

--------- … -~-~~··~· --------

INTRODUCTORY SECTION ------~----------. .,-·~–

“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

Robert D. Hillman

SOCIAL SERVICES BOARD

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

OTHER OFFICIALS

Fred A. Arrington Ernest (Shy) Kennedy

Danny L. Brown

Roger Glovier 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 •.••.••••••••••••.•••.••••.•••.••.•••.•••••••. James Anderson 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 Fred A. Arrington Bob Gibson Emnest (Shy) Kennedy Rebecca Dye Danny L. Brown

COUNTY SCHOOL BOARD

Charlie Collins, Chairman Carl Jackson, Vice Chairman Roger Glovier Wayne Bostic Linda Cross Tom Griffith Linda Garrett

Robert D. Hillman SOCIAL SERVICES BOARD Harry Ferguson, Jr., Chairman Roger Brown, Vice Chairman, Rebecca Dye Bill Hale Laurel Rasnick OTHER OFFICIALS

Clerk of the Circuit Court Ann S. McReynolds Commonwealth’s Attorney. «+ Brian Patton, Commissioner of the Revenue … sesesesees Randy N. Williams. ‘Treasurer. aeenaees » Patrick Thompson Sheriff . vcoveccssneceesanece, … Steve Dye

Superintendent of Schoots. r. Brenda Hess Director of Social Services. lames Anderson County Administrator sees Rufus Hood County Attomey … sataeeones Matthew Crum

FINANCIAL SECTION

ROBINSON, FARMER, Cox ASSOCIATJES A PROFESSIONAL L/MirED LIABILITY COMPANY

Independent Auditors’ Report

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

Report on the Financial Statements

CERTIFIEDPUBLICACCOUNTANIS

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, 2014, 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 Russell County Public Service Authority and The Industrial Development Authority of Russell County. 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 and The Industrial Development Authority of Russell County 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 auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers Internal control relevant to the entity’s preparation and fair presentation of the financial statements In order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s Internal control. Accordingly, we express no such opinion. An audit also Includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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ROBINSON, FARMER, COX ASSOCIATES

‘A PRORBSSIONAL LIMITBD LIABILITY COMPANY (CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors’ Report

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

Report on the Financial Statements

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financfal 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 Russell County Public Service Authority and The Industrial Development ‘Authority of Russell County. 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 and The Industrial Development Authority of Russell County 1s 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 financlal statements. ‘The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internat 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 bel1eve that the audit evidence we have obtained Is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, In all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of County of Russell, Virginia, as of June 30, 2014, 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.

Other Matters

Required Supplementary Information

Accounting principles generally accepted In the United States of America require that the budgetary comparison Information and schedule of pension and OPEB funding progress on pages 60·62, and 63, respectively, be presented to supplement the basic financial statements. Such Information, although not a part of the basic financial statements, Is required by the Governmental Accounting Standards Board, who considers It to be an essential part of financial reporting for placing the basic financial statements In an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary Information In accordance with auditing standards generally accepted In the United States of 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.

Management has omitted management’s discussion and analysis that accounting principles generally accepted In the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the bask financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the baste financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements Is not affected by this missing information.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise 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 baste financial statements. Such Information has been subjected Jo the auditing procedures applied in the audit of the bask 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

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

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the fespective financial position 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 June 30, 2014, 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 th the United States of America.

Other Matters Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the budgetary comparison information and schedule of pension and OPEB funding progress on pages 60-62, and 63, respectively, be presented to supplement the basic financiat statements, Such information, although not a part of the basic financial statements, {s required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of 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 inguirles, the baste 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 materfal respects in relation to the basic financial statements taken as a whole.

‘Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements, Such missing 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, Our opinion on the basic financial statements is not affected by this missing information.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise 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 schedute 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 respons{bility 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 apptied 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 wfth auditing standards generally accepted In the United States of America. In our opinion, the 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 audftfng procedures applied In the audft of the baste ffnancial 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 dated January 8, 2015, on our consideration of County of Russell, Virginia’s Internal control over ffnanclal reporting and on our tests of fts compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report ls 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 ts 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 January 8, 2015

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other additional procedures in accordance with auditing standards generally accepted in the United States of America, In our opinion, the 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 tssued our report dated January 8, 2015, ‘on our consideration of 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 fs to describe the scope of our testing of internat 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 1s 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.

Hobinam, Seon, ley lhsociers

Blacksburg, Virginia January 8, 2015

Basic Financial Statements

Exhibit t County of Rossell, Virgin la Statement of Net Position

@llrih4@•ql

Component Units Primary Government Industrial Russell County Castlewood

Governmental Businen•type Development Public Serv:lce Water and Sewage - Activities !2lO! School Board Al!!ll2rllx - -ASSETS Co sh and cash equivalents $ 1,012,4n $ 7,072,4n $ 180,ne $ 264,264 $ 127,216 $ 86,332 Receivables (net or allowance for uncollectfbles):

Taxes re<:elvable 8,262,339 B,262,339 Accounts rt!Cetr.ilile 149,n4 7,806 757,SJO 3,460 15,540 269,079 391,936

Due from component unit 1,148,626 1,348,626 Due from other governmental unlh 1,702,078 1,702,078 f,165,330 10,211 lnW!ntorl~ 22,391 Prepaid Items 746,910 Rll~Bnim

&ifuBnW@l!iiifiUMIJM mm Rimi - - ma Capital anets (net of accumulated depredtltlon):

Laod 568,695 568,695 5,636,345 2,303,397 106,332 130,080 land rights 13,716 I.and lmprovemmts 394,784 8u11dlnts and Improvements 15,087,963 15,087,963 10,378,724 10,(61,083 107,097 212,909 Machinery Md equipment 1,492,229 1,-492,229 1,436,490 758,649 2,288,755 142,1n Utttlty p!Mt In sefVice 3,123,593 3,123,593 17,007,790 9,369,495 Construction In proaren 4,922,034 2,723,993 2,085,961 Accumulated Depreciation {2,023,869) iS,165,442)

Total assets 36,839,019 J, 180,974 40,019,993 20, 149,987 $ 16,795,882 17,612,717 12,562,758

LIABlUTI~

Accounts payable 1,785,703 17,968 $ 1,803,671 $ 104,016 $ 711,045 $ 165,211 Jn,036 Accrued l!abltitles 2,802 2,802 886,935 693 103,191 23,807 Customer dep0$its 11,745 51,160 Accrued Interest payable 194,383 1,688 196,071 53,089 3,130 19,361 Lfne of credit 146,209 Due to primary gavemment 1,148,626 200,000 Long-term llabllltles:

Due witllln one year 2,0IM,758 21,015 2,025,773 620,t17 562,096 144,666 175,709 Due In more th<Yl ooe year 14,317,000 672,399 14,989,399 915,798 9,282,898 6,599,538 5,421,626

Total liabilities $ 18,304,6<16 7131070 $ 19,017,716 $ 3,6n.492 10,809,821 7,027,481 $ 6,209,928

DEFERRED INFLOWS OF RESOURCES OeferTed revenue· property talCes 5,286,587 $ $ 5,286,587 $ $ $

Ht:T POSITION Net investment In capital auets 6,868,426 $ 2,430,179 $ 9,298,605 $ 17,451,559 $ 6,026,560 $ 10,329,322 $ 6,054,538 Restrlcted:

Coal Raad 573,214 573,214 Debt service and bond covenants 49,575 "19,575 120,50(> 119,946

Unrestrleted (deficit) 5,806,146 (11,850) 5,794,296 (979,064) (40,499) 135,408 178,346 Total net p°’ltlon $ 13,247,786 $ 2,467,904 $ 15,715,690 $ 16,472,495 $ 5,986,061 $ 10,585,236 6,352,830

The accompany!ng notes tc the finantial 5tatements are an Integral part of thb statement.

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county of sel, Vga Staten of Ne Pelton

Component ts Tnaaaal Rise County tanowand Development Publ Service Water and Sevage

Tiel Scholten Authouty authority’ hurl assers ‘osnandeash equations $ mana $ $ Toman $ mame $ mam § mae Sta acto (a of wlawence for nce ts: “eye reehable ane decent recehatle ore 6 nd 1936 Die rem conpenet lt 6.6 De em ee goverment ns amar 1.165390 oat Instat nam Prepal ows e910 od RARE Cc : Co] aptal asets ft ef accurate depreciate): ‘an sas sees aes Lam7 te 39080 and aes ane be mpovements searee Buttes na tmervenents 15907988 sarge toarer—1,t6,003 ren 20909 Macteery and eget 18 wang 18600 TSHAM 2S 10877 ‘Wty saan ence SHB 3 : wooo 98 onstrcten oer - amo 2g 2088968 ezanaated Deprecen : : mm) 6.1840) ‘Totlasets TE 5 aii a Tape oa Sa uxwumes ‘Accontspaatie $ 17570 $78 SHAME —§ | NOHO SMS SMa § ‘ezved lbtites om me NS on 10,91 Ber Cistoner depos 108 si60 ‘Aezued terest payee 194388 se ion 08 30 feu Une of ret 620 eo einary goverment tesa 0000 Leng tem fetes ue vin oe year 204758 aor 05773 NTT eam ates 5309 Dueta more than oe year s470w___gn399__ asus is 758 ozs ass san “ott abies So eanuas Sig $007.76 “Foran waa 5700.0 a 8 DEFERRED NFLOWS OF RESOURCES Deere revenue -prpery tes Satter 5 28 samsw $s 5 : er postin et investment in ep sets 3 emus $ 2.00577 $ sane § TNS § GoUest $ tomNIM $ Ga Rested ‘ea Read sae sae : Deb sarc and bed onan oss wars : 9.906 19966 west (ett) ssa6s 1850) sae mee) a 135,08 es Total net palon Sia TSF SOk_ 55.715 080. “S_Te aS SS peg001 Fis Fro

‘The sceanpoyg tte the ancl ates re an rca par of statement

Exhibit 2. ColJnty of Russell, Virginia

Sbrtement of Activities

Forthe-Yeer Ended June> JO, 10t’4

Net (Expense) Revenue and

Progmn Ravenu.s: Changes In Net Pos!tfOh Pri…,. Component

°"“'”“”~’ IJn!a

“”“”“”’ Capital Industrial Russell County Ootlewood

“”-‘"’ Grants and “”“” and Governmental Bustness-typ• De’ll!lopment Public Servtc:e Water and Sewerage

Functfcns/Proinrm _,… - Contribut!gm Conl:rfbutfons Activities - I!!l!l School Board - - Authority

PRIMARY GOVERNMENT: Government.al acttvltles:

General government adrnini:stratfon ’ 1,702,984 \ 9,Ul \ 323,356 s 24,250 s (1,345,701) $ $ {1,3’15,701) Judicial administration 2,039,186 42,626 659;116

Public SafetY 6,005,354 99,627 1,677,2C 296,061 (3,932,419) (3,932,419)

Public; works 4,331,728 176,440 so.ooo (4, 125,288} (4,125,2!8)

Health and wet.fare 7,169,S83 6,150,822 (1,019,061) (1,019,061)

Educatior1 8,943,324 (8,943,324) (8,943,324)

Parks, recreation, and cultural 546,171 34,147 100,690 (411,334) {411,334)

Communfty development 1,687,42! (1,687,42!)) (1,687 ,428)

Interest on long-tenn debt 457,095 (457,095) {457,095: Tobit governmental actMtles s J.2,933,153 s 362.517 s 8,991,231 s 320.311 s {ZJ,259,094) $ s {23,259,094-’

Busfnes:s-type activities: • Servfce A.uthorlty s 403,848 $ 83.210 s s s s (J.Z0,638) s m • Total primary government s 31,337,001 s 445,727 s 8,991,211 s 320,311 s (23,259,~) $ (320,638) s

COM.PON ENT UNITS:

“”“”“”“” s 38,619,840 s S1Z,396 $ l0,104,.256 s (8,001,188)•-:::; ’ Industrial Developmi!nt Aut!mrfty 2,m,009 1,530,799 1,190,447 {51,763) Russell County Publfc Servfce AUthorlty 1,960,358 1,169,351 1,101,728 310,721 CastlE!wood Water and Sewer Authority 1,685,287 1,131,088 (554,199) Total component units s .fS,038,'494 s :Z.812,835 s 31,635,055 s 2,292,175 (8,00l, 18a) s 151,763) $ 310,n1 s (55’4,199)

General revenues: General property taxes s 15,749,617 s ’ 15,7’49,617 s $ s s Other local taxes=

LCClll sales and use taxes 1,736,895 1,736,895 coat road and s-evenstce taxes 1,922,826 1,922,82.6 Cons-umers’ ut!tity taxes 547, 137 547,137

Motor vehicle licenses 476,255 476,2.55 Other local taXl5 190,744 190,7’44

Unmtricted revenues from use of mooey and property 359,952 359,952 763 606,70! 2,715 536 ,.

86,115 86,115 221,283 48,438 127,182 183,813 Payments from the County of Russell, vr~ 8,350,658 1,054,432 107,687 Grants and com:rlbut£ons not. restricted to specific programs 2,562,116 2,562,116 Gafn on dfsposat of capital assets 3,531

“'”“”’ (212,7111) 212,781 Totai! general ~es: lUld tnmfcrs s 23,418,876 s 212,781 s 23,611,657 ’ 8,572.704 s 1,709,621 s 241,115 s 184,3+9

Chan11e fn net position s 159,782 $ (107.857) ’ 51,925 $ 569,516 $ 1,657,858 s 551,S36 S (369,.850) Net posftkln • beginning: fl,OBB,004 2,575,761 15,663,765 15,902,979 4,328,203 10,033,400 6,722,680 Net position "ending s 13,247,786 s 2,-467,904 s 15,715,690 $ 16,-t.n.495 s 5,986,061 s 10~BS,236 $ 6,352,830

The accompanying notes to the financial statements are an lnt911ral part of thfs statement.

– ~, ___ ~ -~ -~

cant fel, ia Fr the Your Ende Joe 30,2014

Progam Revenues

pecan: Capital Gepeter Gran Gansand Goverment

Functor ‘ememues Senders Gone Ganirbatone Actes Ac

RUA CovERMMERT:

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“ea poerineeal aces TE) a Se oT

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‘Sebat oa S morose § staan $ saouuse s

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tees lara se es cared tra

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“he acnmourig nee tthe anc statnntsae an itegra peof Ms satenen-

Exhibit 3 County of Russell, Virgin1a

Balance Sheet Governmental Funds

June 30, 2014

Coal Workforce

Qfillfil! l!2!!! Investment Board Total

ASSETS Cash and cash equivalents s 3,594,350 s s s 3,594,350 Receivables {net of allowance for uncollectlbles):

Taxes receivable 8,262,339 8,262,339 Accounts receivable 270,273 92,149 362,422

Due from other funds 111,220 65,105 176,325 Due from component unit 1,348,626 1,3"18,626 Due from other governmental units 1,300,ns 401,353 1,702,078 Restricted assets:

Cash and cash equivalents 554,693 554,893 Total assets s 14,887,533 s 712, 147 s 401,353 s 16,001,033

LIABILITIES Accounts payable s 794,290 $ 138,933 s 80,2.28 $ 1,013,451 Reconciled overdraft 166,506 166,506 Accrued llabilftfes 2,802 2,802 Due to other funds 65, 105 111,220 176,325

Total llab!Utfes $ 862, 197 138,933 $ 357,954 $ 1,359,084

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes $ 7,930,688 $ s - $ 7,930,888

FUND BALANCES Restrlded:

Coat Road $ s 573,214 $ $ 573,214 Committed:

Speclal revenue funds 43_.399 43,399 Unassigned: 6,094,448 6,094,448

Total fund balances: $ 6,094,448 $ 573,214 $ 43,399 s 6,711,061 Total liabllltles, deferred inflows of resources, and fund balanc:es $ 14,887,533 $ 712,147 s 401,353 s 16,001,033

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

-7-

Exhibits

County of Russell Virginia ‘Balance Sheet Governmental Funds June 30, 2014 oat Workforce Sonera Mond Investment Board Taal ASSETS Cash and cash eqolvatents $3,884,350 § 5 5 3594350 Receivables (ne of allowance for uncllectbes): “Texes recelvable 9,262,389 83262,399 ‘Accounts recevable 270,273 mt ‘362,422 Due fom other funds 114,220 65,105 176,325 Due frm component unit 1,348,626 1348626 ue from other governmental unis 1,300,725 ao1333 1,702,078 Rectricted assets: ‘Cash and cash equlvalents $94,693 354,893 “otal asets z mA HI S_16 001,053 ABILITIES ‘Accounts payable $4290 § AAR § so228 $1,013,251 Reconciled overdraft 166,505 166,506 Aocruod abies 2,802 2a02 Due to other funds 65,105, 14220176395, “otal abies eA RY 357 95431359, 084 DEFERRED INFLOWS OF RESOURCES ‘Unavallable revenue - property taxes S__ 793688 § s = $7,930,888 FUND BALANCES Reatrcteds ‘eal Road 5 Ss sma § Ss sna Committed: Special revenue funds a9 43399 Usasslmed: 6,604 a, 6,004,448 “otal fund balances 56648 5 sna S BS 6,711,061, “otal abies, deferred ieflows of resource, and fund balances 3145875338712 01,353 816,601,005,

‘The accompanying notes to the nancial statements are an Integral part of ths statement.

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

To the Statement of N-et Position June 30, 2014

Amounts reported for governmental activftfes in the statement of net posftfon are different because:

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

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

Land Bufldfngs and fmprovements Machinery and equipment

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

Internal service funds are used by management to charge the costs of certain acttvlties1 such as insurance and telecommunications, to tndfvldual funds. The assets and Uabllftfes of the Internal service funds are included in governmental actfvftfes in the statement of net positiori.

Long-tenn Uabilitfes, inctudlng bonds payable, are not due and payable In the current period and, therefore, are not reported in the funds.

Bonds and literary loans Capital leases Unamortized premium Accrued interest payable Landfill accrued closure and postclosure llablltty Net OPES obligation Compensated absences

Net position of governmental activities

The accompanying notes to the financial statements are an Integral part of thfs statement.

-8-

568,695 15,087,963

1,492,229

(14,596,349) (506,689) (249,707) (194,383) (271,663)

(76,673)

Exhibit 4

$ 6,711,061

17, 148,887

2,644,301

3,259,678

(620,6n) (16,516, 141)

$ 13,247,786

exhibit 4 County of Russel, Virginia Reconciliation ofthe Balance Sheet of Governmental Funds ‘To the Statement of Net Pesiton June 30, 2044

‘Amounts reported for governmental actWities inthe statement of net position are different because:

“Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds $ 67H1,061 Capital assets used in governmental activtles are not financlal resources and, therefore, are not reported in the funds,

Land 568,695

‘Buildings and improvements 15,087,963

Machinery and equipment 4,492,229 17,148,887

‘Other long-term assets are not avaflable to pay for current-period expenditures and, therefore, are deferred inthe funds. 2,644,301

Internal service funds are used by management to charge the costs of certain ecthties, such as Insurance and telecommuntcations, to individual funds. The assets and tlabilties of the internat service funds are included in governmental activities tn the statement of net position, 3,259,678

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

Bonds and titerary loans (14,596,349) Capital teases (506,639) ‘Unamortized premium (249,707) ‘Accrued interest payable (194,383) Landfill accrued closure and postelosure lability (271,663) Not OPEB obligation (76,873) Compensated absences (620,677) (16,516,141) et position of governmental activites EREPALS

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

Exhibit 5 County of Russell, Virginia

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

for the Year Ended June 30, 2014

Coal Workforce General Road Investment Board Total

REVENUES General property truces $ 16,011,500 $ $ $ 16,011,500 Other local taxes 3,912,444 961,413 4,873,857 Pennits, privilege fees, and regulatory licenses 40,292 40,292

Fines and forfeitures 31, 151 31,151 Revenue from the use of money and property 350,010 2,079 352,089 Charges for services 291,074 291,074

Miscellaneous 86, 115 86,115 Recovered costs 472,761 472,761 Intergovernmental;

Commonwealth 7,648,185 7,648, 185 Federal 2,448,161 1,777,312 4,225,473

Total revenues s 31,291,693 $ 963,492 s 1,m,312 s 34,032,497

EXPENDITURES Current:

General government admfnfstratlon s 1,651,589 s $ s 1,651,589 Jucllcfal administration 2,039,720 2,039,720 Public safety 5,955,754 5,955,754 Public works 3,220,849 1,280,045 4,500,894 Health and welfare 5,634,949 1,777,312 7,412,261 Education 7,776,917 7,776,917 Parks, recreation, and cultural 507,694 507,694 Community development 1,701,241 1,701,241 Nondepartmental 112,027 112,027

Capital projects Debt service:

Principal retirement 1,316,096 1,316,096 Interest and other fiscal charges 493,927 493,927

Total expendltures $ 30,410,763 s 1,280,045 s 1,m,312 $ 33,468, 120

Excess (deficiency) of revenues over (under) expenditures $ 880,930 s (316,553) s - $ 564,377

OTHER FINANCING SOURCES (USES) Transfers In $ $ $ $ Transfers out (212,781) (212,781) Issuance of capital leases 334, 164 334, 164

Total other financing sources (uses) $ 121,383 s $ s 121,383

Net change fn fund balances $ 1,002,313 $ (316,553) $ $ 685,760 Fund balances - beginning 5,092, 135 889,767 43,399 6,025,301 Fund balances - ending $ 6,094,448 $ 573,214 s 43,399 $ 6,711,061

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

-9-

County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balances ‘Governmental Funds For the Year Ended June 30, 2014

ont Workforce General Road Investment Board Total REVENUES General property taxes $ 16,011,500 § 23 = § 16,011,500 Other local taxes 3912,444 (861,413 + 473,887 Permits, privilege fees, and regulatory licenses 40,292, . . 40,292. Fines and forfeitures 34,151 . 34,151 Revenue from the use of money and property 330,010 2079 ~ 352,089 ‘Charges for services 291,074 - 291,074 ‘Miscellaneous: 86,115. . - 86,115, Recovered costs ana 764 . + ara Intergovernmental: ‘Commonwealth 7,648,185 > - 7,648,185 Federal 21448,161 - 177732 4,205,473 Total revenues $31,291,693 $ 963,492 $ 4,777,312 _ $34,032,497. EXPENDITURES Current: General government administration S$ 1,651,589 $ ~$ $1,651,589 Judicial administration 2,039,720 a - 2,039,720 Public safety 5,955,754 . + §,955,754 Public works 3,220,849 1,280,045, 7 4,500,894 Health and welfore 3,634,989 - Arman 712,264 Education 7776, 7 - : 716,97 Parks, recreation, and cultural 507,694 - . 507,694 Community development 4,708,241 sotzat Nondepartmental 112,027 : “anon Capital projects - : . : Debt service: Principat retirement 1,316,096 + 4,316,096. Interest and other fiscal charges 493,927 : 493,907 Total expenditures, ‘$30,410,763 _$ 1,280,045 $ 4,777,312 § 33,468,120 ‘Excess (deficiency) of revenues over (ender expenditures $880,930 § 616,553) § = $ se4gr7 ‘OTHER FINANCING SOURCES (USES) Transfers in $ .$ $ -$ : Transfers out (212,781) . . (212,781) Issuance of capital leases 334,164 : 334,164 ‘Total other financing sources (uses) $ 121,383 $ -~$ _ Ss 421,383 ‘Net change fn fund balances $ 1,002,313 $ (316,553) $ - $685,760 Fund balances - beginning 5,092,135, 889,767 43,399 6,025,301 Fund balances - ending $6,094,448 § 573,214 $ 43,399 $6,711,061

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

County of Russell, Virginia Reconcfltatlon of Statement of Revenues,

Expenditures, and Changes 1n Fund Balances of Governmental Funds To the Statement of Activities

For the Year Ended June 30, 2014

Amounts reported for governmental actMties 1n the statement of activities are different beca~e:

Net change fn fund balances • total govemrriental 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 whfch depreciation exceeded capital outlays In the current period.

Capital outlay Reversion of ass¢ts back to the· School Board (net) Removal of capital asset (net) Depreciation expense

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

The Issuance of long-term obligations (e.g. bonds, Leases) provides current tinancial resources to gove_rnmental funds, while the repayment of the prfncfpal of long·term obligations consumes the current financial resources of government.al funds. N_efther transactton1 however, has any effect on net position. Also, government.al funds report the effect of premiums, discounts, and sfmllar items when obligations fs first issued, whereas these amounts are deferred and amortized In the statement of acttvttfes. lhis amount is the net effect of these differences fn the treatment of long-term oblfgatlons and related Items.

lssaunce of long-term obilgat1ons: Capital leases Landfill closure and postclosure Uablllty

Principal Payments: Bonds, literary loans, and notes Capital leases

Some expenses reported 1n the statement of activities do not require the use of current financial resources and, therefore are not reported as experlditures fn governmental funds.

(Increase) decrease In compensated absences (Increase) decrease In accrued interest payable (Increase) decrease In net OPES obligation Amortization of bond premiums

Internal service funds are used by management to charge tne costs of certain activities, sucn as Insurance and telecommunicattons1 to 1ndfvfdual funds. The net revenue (expense) of certafn Internal servfce funds ts reported with governmental activities.

Change fn net position of governmental activities

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

-10-

667,897 (992,638)

(4,265)

Exhibit 6

$ 685,760

(1,040,678) (1,369,684)

(334, 164)

(3,750)

(52, 191)

20,028 (35, 152) 16,804

(261,883)

978,182

(50,511)

$ 159,782

County of Russet, Virginia Reconelllation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds ‘To the Statement of Activites For the Year Ended June 30, 2014

Amounts reported for goveramental activities in the statement of activities are diferent because: Net change in fund balances» total govemmiental funds

‘Governmental funds report capital autlays as expenditures. However in the statement of activities the cost of those assets 1s allocated over their estimated useful lives and reported as depreciation expense. This isthe ‘amount by which depreciation exceeded capital outlays in the current partd,

Capital outlay

Reversion of assets back tothe School Board (net) Removal of capital asset (net)

Depreciation expense

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

“The Issuance of tong-term obligations (e.g. bonds, leases) provides curren tinenciat resources to governmental funds, while the repayment ofthe principal of long-term obligations consumes the current financal resources of overnmental funds. Netter transaction, however, has any effect on net postion. Also, governmental funds report the effect of premiums, discounts, and similar ftems when bigations s frst fssued, whereas these amounts are deferred and amartized in the statement of actities. This amount 1 the net effect of these siferences in the treatment of long-term obligations and related ttems.

Issaunce of long-term obigations: Capital leases Landi closure and postlosure tabilty Principat Payments: Bonds, erary loans, and notes Capital Leases

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

{locrease) decrease in compensated absences. {loctesse) decrease in accrued interest payable {Tocrease) decrease net OPEB obligation ‘Amarttzation of bond premiums.

Internal service funds are usod by management to cherge te costs of certain activities, such as insurance and telecommuntcatlons, to individual funds. ‘The net revonu (expense) of certain intemal service funds fs reported ‘ith governmental activities.

‘Change in net postion of govemmenta activities

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

$685,760

067,897 07638) 4.265)

a 2B), 348,608)

(261,883)

934,164) (3,750)

1,847,433

168,663 978,182

62,191)

20,008

5,152) 511) 198

Exhibit 7 County of Russell, Virginia Statement of Net Position

Proprietary Funds June 30, 2014

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

ASSETS Current assets:

Cash and cash equivalents $ s 3,644,628 Interest receivable 48 1,257 Accounts receivable, net of allowance for uncollectlbles 7,758 386,045

Total current assets s 7,806 $ 4,031,930

Noncurrent assets: Restricted assets:

Cash and cash equivalents (In custody of others) s 49,575 s Capital assets:

Utility plant in service $ 5,240,699 $ Less accumulated depreciation (2, 117, 106) Total capital assets $ 3, 123,593 $ Total noncurrent assets $ 3, 173, 168 s Total assets $ 3, 180,974 $ 4,031,930

LIABILITIES Current liabilities:

Accounts payable $ 17,968 s 772,252 Accrued interest payable 1,688 Revenue bonds · current portion 21,015

Total current Uabflftles $ 40,671 s 772,252

Noncurrent liabilities: Revenue bonds · net of current portion $ 672,399 $

Total liabilities $ 713,070 $ 772,252

NET POSITION Net Investment ln capital assets $ 2,430, 179 $ Restricted for debt service and bond covenants 49,575 Unrestricted (11,850) 3,259,678

Total net position $ 2,467,904 $ 3,259,678

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

-11-

Exhibit 7

‘County of Russell, Virginia Statement of Net Position Proprietary Funds June 30, 2014 Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance ASSETS Current assets: Cash and cash equivalents $ 7 $ 3,644,628 Interest receivable 48 4,257 Accounts receivable, net of allowance for uncollectibles 7,758 386,045, Total current assets 7,806 § Noncurrent assets: Restricted assets: Cash and cash equivalents {In custody of others) $ 49575 $ - Capital assets: Utility plant in service $ 5,240,699 $ . Less accumulated depreciation 2,117,106) : Total capital assets $ 3,123,593 § Total noncurrent assets S$ 3,173,168_$ zi Total assets S_ 3,180,974 $ LIABILITIES Current liabilities: ‘Accounts payable $ 17,968 $ 712252 ‘Accrued interest payable 1,688 : Revenue bonds - current portion 21,015 : Total current ltabitities 3 40,6715 T2252 Noncurrent tiabltties: Revenue bonds - net of current portion $ 672,399 $ 2 Total liabilities $ 713,070_$ 772,252 NET POSITION Net investment in capital assets $2,430,179 § . Restricted for debt service and bond covenants 49,575 : Unrestricted (11,850) 3,259,678 Total net position 7,467,904 _§ 3,259,678

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

Exhibit 8

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

Proprietary Funds For the Year Ended June 30, 2014

Enterprise Internal Fund Service Fund Dante Self

.EYlli! Health Insurance

OPERA TING REVENUES Charges for services:

Sewer revenues $ 83,210 $ Insurance premiums 5,547,202

Total operating revenues s 83,210 $ 5,547,202

OPERATING EXPENSES Salarfes and benefits $ 127,241 $ Professional services 15,593

Utilities 717

Materials and supplies 25,740

Office expenses 62,621

Repairs and maintenance 9,691

Insurance claims and expenses 5,377, 147

Depreciation 131,017

Total operating expenses $ 3n,620 $ 5,377, 147

Operating income (loss) s (289,410) $ 170,055

NONOPERATING REVENUES (EXPENSES) Investment income s $ 7,863

Interest expense (31,228) Total nonoperating revenues (expenses) $ (31,228) $ 7,863

Income before transfers s (320,638) s 177,918

Transfers in $ 212,781 $ Change In net position $ (107,857) s 177,918

Total net position - beginning 2,575,761 3,081,760

Total net position - ending s 2,467,904 $ 3,259,678

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

-12-

Exhibit 8

County of Russell, Virginia Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2044 Enterprise internal Fund Service Fund Dante Self Fund Health Insurance ‘OPERATING REVENUES ‘Charges for services: Sewer revenues $ 83,210 § : Insurance premiums : 5,547,202 ‘Total operating revenues $ 3,210 _§ 5,547,202 ‘OPERATING EXPENSES Salaries and benefits $ 127,21 § : Professional services 15,593 : Utilities 17 . Materials and supplies 25,740 : Office expenses 62,624 : Repairs and maintenance 9,691 : Insurance claims and expenses : 5,377,147 Depreciation 131,017 : Total operating expenses 3 372,620 $5,377,447 Operating income (loss) 8 (289,410) $ 470,055 NONOPERATING REVENUES (EXPENSES) Investment income $ -$ 7,863 Interest expense 1,228) - Tatal nonoperating revenues (expenses) 3 34,228) 5 7,868 Income before transfers $ (20,638) $ 77,918 ‘Transfers in $ 212,781 § : Change in net position 5 (107,857) $ T7718 Total net position - beginning 2,575,761 3,081,760 Total net position - ending 32,467,904 $3,259,678

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

Exhibit 9 County of Russell, Virginia Statement of Cash Flows

Proprietary Fun<& For the Year Ended June 30, 2014

Enterprb;e Internal

Fund Service Fund Dante Self Fund Health Insurance

CASH FLOWS FROM OPERATING ACTIVITIES Recefpts from customers and users $ 78,650 $ Recefpts for insurance premtums 5J501,865 Payments to suppliers (112,754) Payments to employees (127,241) Payments for premiums (5,059,268)

Net cash provided by (used for) operating activities $ (161,345) $ 442,597

CASH FLOWS FROM NONCAPIT AL FINANCING ACTIVITIES Transfers from other funds $ 212,781 $

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds $ (20, 172) $ Interest payments (31,274)

Net cash provided by (used for) capital and related f1nanc1ng activities $ (51,446) $

CASH FLOWS FROM INVESTING ACTIVITIES Interest income $ 10 $ a, 110

Net increase (decrease) in cash and cash equivalents $ $ 450,707

Cash and cash equtvalents - beginning 49,575 3,193,921 Cash and cash equtvalents - endfng $ 49,575 $ 3,644,628

Reconclltatlon of operatfne income (loss) to net cash provided by (used for) operating activities: Operatfng income (loss) $ (289,410) $ 170,055 Adjustments to reconcile operating income (loss) to net cash

provided Dy (used for) operatlng act1vltfes: Depreciation $ 131,017 $ (Increase) decrease fn accounts receivable (4,560) (45,337) Increase (decrease) in accounts payable 1,608 317,879 Total adjustments $ 128,065 $ 272,542

Net cash provided by (used for) operating activities $ (161,345) $ 442,597

The accompanying notes to the ffnanclal statements are an Integral part of this statement.

-13-

County of Russell, Virginia Statement of Cash Flows Proprietary Funds

Exhibie 9

For the Year Ended June 30, 2014

‘CASH FLOWS FROM OPERATING ACTIVITIES. Receipts from customers and users Receipts for insurance premiums Payments to supptiers Payments to employees Payments for premiums Net cash provided by (used for operating activities

‘CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES ‘Transfers fcom other funds

‘CASH FLOWS FROM CAPITAL AND RELATED FINANCING “ACTIVITIES Principal payments on bonds. Interest payments Not cash provided by (used for) capital and related financing activities

‘CASH FLOWS FROM INVESTING ACTIVITIES Interest income

Net increase (decrease) in cash and eash equivatents

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

Reconellation of operating income (loss) to net cash ‘provided by (ured for) operating activities: Operating income (loss) ‘Adjustments to reconcile operating Income (loss) to net cash provided by (used for) operating activities: Depreciation (tncrease) decrease tn accounts recetvable Increase (decrease) in accounts payable ‘Total adjustments et cash provided by used for) operating activities

Enterprise Taternal Fund Service Fund Dante Self

Fund Health Insurance

$ 78,650 § 5,501,865, (112,754) : (77,241) . (5,059,268) Wass) S M1597

Sma s

8 (20,17) $ (31,774

8 (51,446) §

10 $ 3110 5 “5 450,707 49,575 3,193,921, 9,573 5 3,644,628,

8 289,410) § 170,055.

8 131017 § 4560) (6,337) 1,608 397,879

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

ASSETS Cash and cash equivalents

Total assets

LIABILITIES

County of Russell, Virginia Statement of Fiduciary Net Position

Fiduciary Funds June 30, 2014

Amounts held for Social Services clients Amounts held for VASAP

Total liabilities

$ $

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

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Exhibit 10

Agency Funds

85, 121 85, 121

68,932 16,189 85,121

Exhibit 10

County of Russell, Virginia Statement of Fiduciary Net Position Fiductary Funds une 30, 2014 Agency Funds ASSETS Cash and cash equivalents $ 85,124 Total assets $ 85,421 LIABILITIES Amounts held for Social Services clients $ 68,932 ‘Amounts held for VASAP 16,189 Total liabilities 3 35,121

‘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, 2014

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2014

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 ate 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 fssuances of the School Board and provides significant funding to operate the public schools since the School Board does not have separate taxing powers, The School Board is presented as a governmental fund type. The School Board does not issue separate financial statements.

‘The Russell County 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,

COUNTY OF RUSSELL, VIRGltllA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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, 198,223 to the Regional Jail and $50,000 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, 2014

Note 4-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 goveming bodies of the participating jurisdictions. During the year, the County contributed $2,198,223 to the Regional Jail and $50,000 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 Tevenues, 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,

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 bya 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, 2014

Note 1 ·Summarv 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 bllled, 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, 2014

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

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

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 scon 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 fs 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 fs generally in the month preceding receipt by the County.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTIHUED) JUNE 30, 2014

Note 1-Summarv 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 spedfic 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 Fund consists of the Self Health Insurance Fund.

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 SSI 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, 2014

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:

Fiductary 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, oF other funds. Agency funds include the Special Welfare Fund and VASAP Fund, ‘The Special Welfare Fund includes activity of the Title XX and the SSI 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, 2014

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 nonoperating 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 noncurrent 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, 2014

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 of 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 nonoperating 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: 4, 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” (J.e., the current portion of interfund toans) or “advances to/from other funds” (i.e., the noncurrent 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 “intemal balances.”

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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 5th and December 5th. Personal property taxes are due and collectible on December 5th, The County bills and collects its own property taxes.

Allowance for Uncollectible Accounts

The County calculates its allowance for uncollectible accounts using historical collection data and, in certain cases, specific account analysis. The allowance amounted to approximately $858,415 at June 30, 2014 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 me.thod over the following estimated useful lives:

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

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Years 40 40

20·40 4·30

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain Teported amounts and disclosures. Accordingly, actual results could differ from those 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 aver the following estimated useful lives:

Assets Years Buildings 40 Building improvements 40 Structures, lines, and accessories 20-40 Machinery and equipment 4:30

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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, 2014.

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, 2014

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 tems 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.

8, 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, 2014,

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 periods) 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 recetvable ts reported in the governmental funds balance sheet. This amount is comprised of uncollected property taxes due prior to June 30, 2nd half installments tevied 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.

9, 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 l{ability 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, 2014

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

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, 2014

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

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.

‘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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 1-Summarv 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, 2014

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

D. Assets, deferred outflows/inflows of resources, liabitities, 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 concer, 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 batances 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 of 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. tis 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, 2014

Note 2-Stewardshlp, 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. 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

Numerous departments in the General Fund and the Coal Road Fund had excess expenditures over appropriations in the current year.

C. Deficit fund equity

At June 30, 2014, there were no funds which had deficit fund equity.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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. 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

Numerous departments in the General Fund and the Coal Road Fund had excess expenditures over appropriations in the current year.

C. Deficit fund equity At June 30, 2014, there were no funds which had deficit fund equity.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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, 2014, the County had no investments.

Note 4-Due from Other Governmental Units:

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

Primary Component Unit Government School Board

Commonwealth of Virginia: Local sales tax $ 293,730 $ State sales tax 692,510 Non-categorical aid 174,089 Categorical aid-shared expenses 202,946 Categorical aid-Virginia Public Assistance funds 146,480 Categorical aid·other 201,005 Categorical aid-Comprehensive Services Act funds 116,746

Federal Government: Categorical aid-Virginia Public Assistance funds 165,729 Categorical aid-Workforce Investment funds 401,353 School federal programs 472,820

Total Amount Due from Other Governmental Units $ 1,702,078 s 1, 165,330

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 3-Deposits and investmer

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 Commonwealth of Virginia:

Local sales tax $ 293,730 $ . State sales tax : 692,510 Non-categorical aid 174,089 : Categorical aid-shared expenses 202,946 Categorical aid-Virginia Public Assistance funds 146,480 Categorical aid-other 201,005 Categorical aid-Comprehensive Services Act funds 116,746 Federal Government Categorical aid-Virginia Public Assistance funds 165,729 - Categorical aid-Workforce investment funds 401,353 : School federal programs : 472,820 Total Amount Due from Other Governmental Units $__ 1,702,078 $1,165,330

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 5-lnterfund/Component-Unit Obligations:

Fund

Primary Government:

Due to Primary Due from Primari Government/ Government/

Component Unit Component Unit

General Fund $ $ 1,348,626 ======== =========

Component Unit: School Board IDA

Total

1, 148,626 $ 200,000

1,348,626 $ 1,348,626 ======= lnterfund transfers and remaining balances for the year ended June 30, 2014, 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

$ 212,782

Due From $ 111,220

65, 105

$ 176,325

Transfers Out

$ 212,782

Due To $ 65, 105

111,220 $ 176,325

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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I I , I

I ii II ’

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 5:

iterfund/Component-Unit Obligations:

Due to Primary Due from Primary

Government/ __ Government/ Fund Component Unit Component Unit

Primary Government:

General Fund $ ~__ $__1,348,626 Component Unit:

School Board S$ 1,148,626 § :

IDA 200,000 :

Total § 1,348,626 $ 1,348,626

Interfund transfers and remaining balances for the year ended June 30, 2014, consisted of the following:

Fund Transfers In ‘Transfers Out Primary Government:

General Fund $ . $ 212,782

Dante Fund 212,782 : Totat 212,782 212,782

Primary Government: Due From Due To General Fund $ 111,220 $ 65,105

Coal Road Fund 65,105 - Workforce Investment Board Fund : 141,220 Total 176,325 176,325

‘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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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 6-Long-Term Obligations:

Primary Government - Governmental Activities Indebtedness

The following is a summary of long-term obligation transactions of the County for the year ended June 30, 2014:

General obligation bonds S Literary loans Revenue bonds Literary anticipation note

Deferred Amounts:

Bond premiums Capital leases

Landfill closure/ postclosure liability

Net OPEB obligation

Compensated absences

Balance

July 1, 2013

8,753,677 s 2,095,423

4,877,995 16,687

266,511 341,188

267,913 41,521

568,486

Total s 17,229,401 s

Increases/ Issuances

334, 164

3,750

37,852 52, 191

Decreases/

Retirements

(611,026) s (282,792) (236,928) (16,687)

(16,804) (168,663)

(2,700)

Balance June 30, 2014

8, 142,651

1,812,631 4,641,067

249,707 506,689

271,663

76,673 620,677

427,957 $ (1,335,600) s 16,321,758

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

Year Ending June 30,

2015 $ 2016

2017

2018 2019

2020-2024 2025-2029 2030-2034

2035-2039

General Obligation Bonds Principal

627,696 $ 644,976 647,901

670,770

678,680

2,959,821 1,567,807

345,000

Interest

372,805 s 340,870 308,788

277,286 245,292

765,233 249,098

14,428

Literary Loans

Principal Interest

375,977 s 375,977

375,977 282,792

229,246 172,662

41,092 s 32, 130

23, 167

14,205 8,038

5,604

Revenue Bonds Principal

236,928 s 236,928 236,928

236,928

236,928 1, 184,641

1,115,746 911,901

244, 139

Interest

Totals S 8, 142,651 S 2,573,800 $ 1,812,631 $ 124,236 S 4,641,067 $ ----

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COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

Note 6-Long-Term Obligations:

Primary Government - Governmental Activities Indebtedness

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

30, 2014:

General obligation bonds

Literary loans Revenue bonds

Literary anticipation note Deferred Amounts: Bond premiums

Capital leases

Landfilt closure/ postclosure tiabitity

Net OPEB obligation

Compensated absences

Total

Balance Increases/ Decreases/ Balance duly 1, 2013 tssuances__Retirements__June 30, 2014 $ 8,753,677 $ ~ $ (611,026) $8,142,651 2,095,423 : (282,792) 1,812,631 4,877,995 (236,928) 4,641,067 16,687 (16,687) : 266,511 . (16,804) 249,707 341,188 334,164 (168,663) 506,689 267,913 3,750 : 271,663 1,521 37,852 (2,700) 76,673 568,486 52,191 : 620,677 $ 17,229,401 $427,957 $ (1,335,600) $_ 16,324,758

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

Year Ending __ General Obligation Bonds Literary Loans Revenue Bonds dune 30, Principal Interest Principal Interest _ Principal__interest 2015 $ 627,696 $ 372,805 $ 375,977 $41,092 $236,928 $ : 2016 644,976 340,870 375,977 32,130 236,928 2017 647,901 308,788 375,977 23,167 236,928 2018 670,770 277,286 282,792 14,205 236,928 2019 678,680 245,292 229,246 8,038 236,928 2020-2024 2,959,821 765,233 172,662 5,604 1,184,641 2025-2029 1,567,807 249,098 : 4,115,746 - 2030-2034 345,000 14,428 : : 911,901 2035-2039 : : : 244,139 Totals $8,142,651 $ 2,573,800 $_ 1,812,631 $ 124,236 $ 4,641,067 $

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 6-Long-Term Obligations: (continued)

Primary Government • Governmental Activities Indebtedness (continued)

Details of long-term indebtedness:

Final Amount of Balance Amount Interest Date Maturity Installment Original Governmental Due Within

~ Issued Date Amounts Issue Activities ~ General Oblfgatfon Bonds: General obligation bond 5.10%·6.10% 1995 2016 $15,000 a+ $ 325,000 $ 30,000 $ 15,000 General obligation bond 5.10%·6.10% 1997 2016 $5,000 a+ 140,000 20,000 5,000 General obligation bond 4.10%·>.23% 1999 2019 $25,000 a+ 510,000 1>0,000 25,000 General obligation bond 4.98%0 5.10% 2000 2021 $94,999·115,952 a+ 1,802,210 744,549 97,555

General obligation bond 2.35%·5.10% 2002 2023 $213,799-2n,102 a+ 4,382,954 2,205,462 219,313 General obligation bond 4.60%·5.10% 2006 2027 $147,228-197,458 a+ 3,205,190 2,247,640 150,828 General obligation bond 4.60%·5.10% 2009 2030 $55,000-110,000 a+ 1,485,000 1,285,000 55,000

General obligation bond 3.05%·5.0>% 2010 2031 $55,000·120,000 a+ 1,620,000 1,460,000 60,000

Total General Obligation Bonds $ 8, 142,651 $ 627,696

Revenue Bonds:

Revenue bond 0.00% 11/28/2001 2033 $15,595 sa $ 935,690 s 561,414 $ 31,190 Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 1,025, 197 55,416 Revenue bond 0.00% 11128/2001 2025 $8,612 sa 344,477 189,462 17,224

Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 507,125 27,412 Revenue bond 0.00% 3/10/2005 2036 $9,276 sa >56,538 398,8>2 18,551 Revenue bond 0.00% 10/14/2005 2036 $1,524 sa 91,439 67,055 3,048 Revenue bond 0.00% 10/14/2005 2037 $31,779 sa 1,906,717 1,430,039 63,557 Revenue bond 0.00% 4/28/2006 2037 $6,925 sa 415,513 311,634 13,851 Revenue bond 0.00% 3/3012007 2037 $3,340 sa 197,179 150,289 6,679

Total Revenue Bonds $ 4,641,067 $ 236,928

Plus: Unamortized Premium $ 249,707 $ 16,804

Total General Obligation and Revenue Bonds $ 13,033,425 $ 881,428

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COUNTY OF RUSSELL, VIRGINIA

NoTEs To FINANCIAL STATEMENTS (CONTINUED) June 30, 2014 Note 6-Long-Term Obligations: (continued) Primary Government - Governmental Activities indebtedness (continued) Details of long-term indebtedness: Final Amount of Balance Amount Interest Date ‘Maturity Anstatiment Original Governmental Due Within Rates sued ate ‘outs fue AatWiies One Year

General Obligation Bonds General obtigation bond 5.10%-6.10% 1995 2016 $15,000 a+ $ 325,000 $ 30,000 $ 15,000 ‘General obtgation bond SOAK 19972016 $5,000" 140,000 70,00 5,000 General obligation bond ANOES.2R 1999 2019 $25,000 ar 540,000 150,000 25,000 Generat obligation bond ABH AOE 2000 2021 $94,999-115,952 ar 1,802,210 TAA 5 97,555 Generai obligation bond 2.35%-5.108 2002 ‘2023 $213,799-272,702 a+ 4,382,954 2,205,462, 219,313 General obligation bond 4608-5.10% 2006 ‘2027 $147,228-197,45B a+ 3,205,190 2,247,640 150,828 General obligation bond 4.6085. 10% 2009 2030, /$55,000-110,000 ar 1,485,000 1,285,000 55,000 General obligation bond 3.05%-5.05% 2010 2031 '$55,000-120,000 a+ 1,620,000 1,460,000 60,000 ‘Total General Obligation Bonds $8,142,651 $ 627,696 avenue ands, Revenue bond 0.00% 11/28/2001, 2033 $15,595 sa $ 935,690 $ ‘S6t414 $31,190 Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 1,025,197 55,416 Rovenve bord oo 14/2/00 2005, sects MAATT 188,452.24 ‘Revenue bond 0.00% 11/1/2002, 2033 $13,707 sa 822,366 507,125 war Revenue bond 0.00% 3/10/2005 2036 $9,276 sa $56,538 398,652, 16,551 Revenue bond 0.00% 10/14/2005 2036, ‘$1,524 sa 91,439 67,055 3,048 Revenue band 0.00% 10/14/2005 2037, ‘$31,779 sa 1,906,717 1,430,039 63,557 Revenue bond 0.00% 412812006, 2037 $6,925 sa 415,513 311,634 13,851 Revenue bond 0.00% 3/30/2007, 2037 $3,340 sa 197,179 150,289 6,679 “otal Revere Bonds $464,067 $736,928 Pus:

‘Unamortized Premium $ 249,707 $ 16,804 Total General Obligation and Revenue Bonds. $13,033,425 $881,428

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINAHCIAL STATEMEHTS (CONTIHUED) JUNE 30, 2014

Note 6-Lomt-Term Obligations: (continued)

Primary Government • Governmental Activities 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 Llterarv loans: Literary loan 3.00% 7/15/1986 2017 S30,222 a+ $ 960,000 $ 90,666 $ 30,222

Literary loan 3.00% 7/15/1986 2017 $62,693 a+ 2,000,000 188,889 62,963

Literary loan 3.00% 2/1/1988 2018 $18,522 a+ 530,999 74,088 18,522

Literary loan 3.00% 2/1/1988 2018 $12,581 a+ 358, 151 50,324 12,581

Literary loan 3.00% 211/1988 2018 $3,005 a+ 84,805 12,020 3,005

Literary loan 3.00% 211/1988 2018 $9,995 a+ 281,079 39,980 9,995

Literary loan 3.00% 2/1/1988 2018 $6,989 a+ 196,873 27,956 6,989

Literary loan 2.00% 1/1/2000 2020 $57,757 a+ 1,155,140 346,542 57,757

Literary loan 2.00% 3/15/1999 2019 $55,700 a+ 1, 114,086 278,586 55,700

Literary loan 2.00% 3/15/1999 2019 $8,200 a+ 161,449 38,449 8,200

Literary loan 2.00% 6/15/1999 2019 $21, 134 a+ 422,680 105,670 21, 134

Literary loan 2.00% 6/15/1999 2019 $44,020 a+ 880,411 220,111 44,020

Literary loan 2.00% 11/15/2000 2021 $24,689 a+ 493,789 172,832 24,689

Literary loan 3.00% 12/15/2000 2021 $7,700 a+ 154, 118 54,018 7,700

Literary loan 2.00% 7/1/2003 2023 $12,500 a+ 250,000 112,500 12,500

Total Literary Loans s 1,812,631 s 375,977

Other Oblfgations:

Capital Leases (Note 7) s 506,689 s 281,845

Landf1ll Closure and Postclosure Liability 271,663

Net OPES Obligation 76,673

Compensated Absences 620,677 465,508

Total Other Obligations $ 1,475,702 s 747,353

Total Long-term Obligations s 16,321,758 $ 2,004,758

(a+) A annual principal jnstallments shown; does not Include semi-annual interest installments

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COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 6-Long-Term Obligations: (continued)

Primary Government - Governmental Activities Indebtedness (continued) Details of long-term indebtedness: (continued)

Final ‘Amountof balance Amount Interest Date —Naturfty Installment Original Governmental Due Within Rates dsued == Date Amounts sue Activities One Year Literary toans: Literary loan 3.00% 7115/1986 2017 $30,222a+ § 960,000 $ 90,666 $ 30,222 Literary loan 3.00% 7195/1986 2017 $62,693a+ 2,000,000 188,889 62,963 Literary loan 300K 2/1/1988 «2018 StB,S7Za+ 520,999 74,08 18,522 Literary loan 3.00% 24/1988 2018 = $12,581 ar 358,151 50,324 12,581 Literary loan 3.00% 21141988 2018 $3,005 at 84,805 12,020 3,005 LUterarytoan 3.00% 2/1/9988 2018 §9,995a+ © 281,079 39,900 9,995 Literary toan 3.00% 2/1/1988 «20186,968. at «196,873 27,956 6,989 Uterary toan 2.00% 14/2000 2020 $57,757 a+ 1,155,140 346,542 ‘57,757 Literary toan 2.00% 45/1999 2019 $55,700" 1,114,086 778,586 55,700 LUterarytoan 2.008 3/15/1999 2019 $8,200" 161,449 38,449 8,200 Literary loan 2.00%, 6/15/1999 2019 $21,134 ar (422,680 105,670 71,134 Uterary toan 2.00% 6/15/1959 2019 $44,020ar 880,411 m0,1 44,020 Literary loan 2.00% 11/15/2000 2021 $24,689 a+ 493,789 472,832 24,689 Literary toan ROOK 12/15/2000 2021 $7,700a+ 154,118 54,018 Literary loan 2.00% 71112003 2023 $12,500.a¥ 250,000 442,500 ‘Total Literary Loans $1,812,631 $ 375,977 ‘Otner Obtsations: Capital Leases (Note 7) 5 306,609 $281,645 Landfll Closure and Postclosure Liability 271,663 Net OPEB Obligation 76,673 Compensated Absences 620,677 465,508 ‘Total Other Obligations $1,475,702 § 747,353 ‘Total Long-term Obligations $ 16,321,758 $ 2,004,758

{a*) + annual principat installments shown; does not include semf-annual interest installments

‘The remainder of this page left blank intentionally.

COUNTY Of RUSSEU, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 6-Long-Term Obligations: (continued)

Primary Government - Business-type Activities Indebtedness:

The following is a summary of long-term obligation transactions of the Enterprise Fund for the year ended June 30, 2014:

July 1, 2013 Issuances Retirements June 30, 2014

Revenue bonds S 713,586 $ s ----- <20, 112 > s __ c:…;69-‘-3:…:., 4…:…14’-

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

Year Ending Revenue Bonds June 30, Principal Interest

2015 s 21,015 s 30,432 2016 21,894 29,553 2017 22,814 28,633 2018 23,776 27,671 2019 23,845 26,665

2020-2024 131,323 116,537 2025·2029 164,390 83,471 2030-2034 205,782 42,079 2035-2037 78,575 3,085

Totals s 693,414 s 388, 126

Details of long-term indebtedness:

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

Revenue Bonds: Revenue bond 0.00% 3/24/1999 2019 $ 37,500 $ 8,438 $ 1,875 Revenue bond 4.50% 4/10/1996 2036 900,000 684,976 19, 140

Total Revenue Bonds s 693,414 $ 21,015

-30-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

Note 6-Long-Term Obligations: (continued)

Primary Government - Business-type Activities Indebtedness:

The following is a summary of long-term obligation transactions of the Enterprise Fund for the year ended June 30, 2014: July 1, 2013 issuances Retirements _ June 30, 2014

Revenue bonds $ 713,586 $. i$. (20,172) $ 693,414

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

Year Ending Revenue Bonds June 30, Principal interest 2015 $ 24,015 $ 30,432 2016 21,894 29,553 2017 22,814 28,633 2018 23,776 27,671 2019 23,845 26,665 2020-2024 131,323 116,537 2025-2029 164,390 83,474 2030-2034 205,782 42,079 2035-2037 78,575 3,085

Totals $693,414 $388,126

Details of long-term indebtedness:

Final Amount of Balance = Amount Interest Date = Maturity Original__-Business-Type Due Within

Rates Issued _Date Issue Activities One Year Revenue Bonds: Revenue bond 0.00% 3/24/1999 2019 $37,500 $ = 8A3B $1,875, Revenue bond 450% 4/10/1996 2036 900,000 684,976 19,140 Total Revenue Bonds 693,414 $21,015

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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, 2014:

Balance Balance July 1, 2013 Increases Decreases June 30, 2014

Net OPEB obligation s 427,536 s 910,457 s (631,300) $ 706,693 Early retirement incentive 178,680 (107,880) 70,800 Compensated absences 751,080 570,652 (563,310) 758,422

Total $ 1,357,296 $ 1,481, 109 s (1,302,490) $ 1,535, 915

Details of long-term indebtedness:

Amount Total Due Within

Amount One Year Other Obligations:

Early retirement Incentive $ 70,800 $ 51,300 Net OPEB Obligation 706,693 Compensated Absences 758,422 568,817

Total Other Obl1gations $ 1,535,915 $ 620, 117

The remainder of this page left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 6-Long-Term Obligations: (continued) Component Unit - School Board indebtedness

The following fs a summary of long-term obligation transactions of the discretely presented component unit for the year ended June 30, 2014:

Balance Balance July 1, 2013 _Increases__Decreases__June 30, 2014 Net OPEB obligation $ 427,536 $ 910,457 $ (631,300) $ 706,693 Early retirement incentive 178,680 : (107,880) 70,800 Compensated absences 751,080 570,652 (563,310) 758,422 Total $ 1,357,296 $1,481,109 $ (1,302,490) $___1,535,915

Details of long-term indebtedness: Amount

Total Due Within Amount____One Year

Other Obtigations: Early retirement incentive $ 70,800 $ 51,300 Net OPEB Obligation 706,693 : Compensated Absences 758,422 568,817 ‘Total Other Obligations $ 1,535,915 $ 620,117

‘The remainder of this page left blank intentionally.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 7-Capital Leases:

Primarv Government The County has entered into lease agreements to finance the acquisition of school buses for the School Board. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of minimum lease payments at the dates of inception.

The capital assets acquired through capital leases are as follows:

Machinery and equipment $ Less: Accumulated depreciation

Net capital asset $

Buses

565, 114 s (127, 150)

Buses

434, 164 (32,562)

437,964 s 401,602

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2014, were as follows:

Year Ending June 30,

2015 2016 2017

Subtotal Less, amount

representing interest

Present Value of Lease Agreement

Capital Leases

292,078 115,602 115,602

523,282

(16,593)

506,689

The remainder of this page left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

Note 7-Capital Leases:

Primary Government The County has entered into lease agreements to finance the acquisition of school buses for the School

Board. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of minimum lease payments at the dates of inception. ‘The capital assets acquired through capital leases are as follows:

Buses Buses

Machinery and equipment $365,114 $ 434,464 Less: Accumulated depreciation (127,150) (32,562) Net capital asset $___ 437,964 $__401,602

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2014, were as foltows:

Year Ending Capitat June 30, Leases 2015 $ 292,078 2016 115,602 2017 115,602 Subtotal $ 523,282 Less, amount

representing interest (16,593)

Present Value of Lease Agreement $506,689

‘The remainder of this page left blank intentionally.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan:

A. Plan Description

Name of Plan: Identification of Plan: Administering Entity:

Virginia Retirement System (VRS) Agent and Cost-Sharing Multiple-Employer 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. Members earn one month of service credit for each month they are employed and they and their employer are paying contributions to 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. Within the VRS Plan, the System administers three different benefit plans for local government employees - Plan 1, Plan 2, and, Hybrid. Each plan has different eligibility and benefit structures as set out below:

Plan Overview • VRS Plan 1 is a defined benefit plan. The retirement benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula. Employees are eligible for VRS Plan 1 if their membership date is before July 1, 2010, and they were vested as of January 1, 2013.
Eligible Members • Employees are in VRS Plan 1 if their membership date is before July 1, 2010, and they were vested as of January 1, 2013.
Hybrid Opt-In Election • VRS non-hazardous duty covered Plan 1 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014.

The Hybrid Retirement Plan’s effective date for eligible VRS Plan 1 members who opted in was July 1, 2014.

If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan.

Members who were eligible for an optional retirement plan (ORP) and had prior service under VRS Plan 1 were not eligible to elect the Hybrid Retirement Plan and remain as VRS Plan 1 or ORP.

Retirement Contributions • Members contribute up to 5% of their compensation each month to their member contribution account through a pre-tax salary reduction. Some school divisions and political subdivisions elected to phase in the required 5% member contribution; all employees will be paying the full 5% by July 1, 2016. Member contributions are tax-deferred until they are withdrawn as part of a retirement benefit or as a refund. The employer makes a separate actuarially determined contribution to VRS for all covered employees. VRS invests both member and employer contributions to provide funding for the future benefit payment.

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COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) une 30, 2014

jote 8-

Plan Description

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

AlLfull-time, salaried permanent (professional) employees of public school divisions and employees of participating employers are automatically covered by VRS upon employment. Members earn one month of service credit for each month they are employed and they and their employer are paying contributions to 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. Within the VRS Plan, the System administers three different benefit plans for local government. employees - Plan 1, Plan 2, and, Hybrid, Each plan has different eligibility and benefit structures as set out below:

4, Plan Overview - VRS Plan 1 is a defined benefit plan. The retirement benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula, Employees are eligible for VRS Plan 1 if their membership date is before July 1, 2010, and they were vested as of January 1, 2013.

Eligible Members - Employees are in VRS Plan 1 if their membership date fs before July 1, 2010, and they were vested as of January 1, 2013,
Hybrid Opt-in Election - VRS non-hazardous duty covered Plan 1 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014.

‘The Hybrid Retirement Plan’s effective date for eligible VRS Plan 1 members who opted in was July 1, 2014,

If eligible deferred members retumed to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan.

‘Members who were eligible for an optional retirement plan (ORP) and had prior service under ‘VRS Plan 4 were not eligible to elect the Hybrid Retirement Plan and remain as VRS Plan 1 or ORP.

4, Retirement Contributions - Members contribute up to 5% of their compensation each month to ‘their member contribution account through a pre-tax salary reduction, Some school divisions and political subdivisions elected to phase in the required 5% member contribution; all employees will be paying the full 5% by July 1, 2016. Member contributions are tax-deferred until they are withdrawn as part of a retirement benefit or as a refund. The employer makes a separate actuarially determined contribution to VRS for all covered employees. VRS invests both member and employer contributions to provide funding for the future benefit payment.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note B· Pension Plan: (continued)

A. Plan Description (continued)

Creditable Service - Creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member’s total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health Insurance credit.
Vesting • Vesting is the minimum length of service a member needs to qualify for a future retirement benefit. Members become vested when they have at least five years (60 months) of creditable service. Vesting means members are eligible to qualify for retirement if they meet the age and service requirements for their plan. Members also must be vested to receive a full refund of their member contribution account balance if they leave employment and request a refund.

Members are always 100% vested in the contributions that they make.

Calculating the Benefit· The Basic Benefit is calculated based on a formula using the member’s average final compensation, a retirement multiplier and total service creditat retirement. It is one of the benefit payout options available to a member at retirement.

An early retirement reduction factor is applied to the Basic Benefit if the member retires with a reduced retirement benefit or selects a benefit payout option other than the Basic Benefit.

Average Final Compensation - A member’s average final compensation is the average of the 36 consecutive months of highest compensation as a covered employee.
Service Retirement Multiplier - The retirement multiplier is a factor used in the formula to determine a final retirement benefit. The retirement multiplier for non-hazardous duty members is 1. 7%. The retirement multiplier for sheriffs and regional jail superintendents is 1.85%. The retirement multiplier of eligible political subdivision hazardous duty employees other than sheriffs and regional jail superintendents is 1. 7% or 1.85% as elected by the employer.

1 O. Normal Retirement Age • Age 65.

Earliest Unreduced Retirement Eligibility - Members who are not in hazardous duty positions are eligible for an unreduced retirement benefit at age 65 with at least five years (60 months) of creditable service or at age 50 with at least 30 years of creditable service.

Hazardous duty members are eligible for an unreduced retirement benefit at age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

A. Plan Description (continued)

INUED):

Creditable Service - Creditable service includes active service, Members earn creditable service for each month they are employed in a covered position, It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member’s total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit.

Vesting - Vesting is the minimum length of service a member needs to qualify for a future retirement benefit. Members become vested when they have at least five years (60 months) of creditable service. Vesting means members are eligible to qualify for retirement if they meet the age and service requirements for their plan. Members also must be vested to receive a full refund of their member contribution account balance if they leave employment and request a refund.

‘Members are always 100% vested in the contributions that they make. Calculating the Benefit - The Basic Benefit is calculated based on a formula using the member’s

average final compensation, a retirement multiplier and total service credit at retirement. itis ‘one of the benefit payout options available to a member at retirement.

‘An early retirement reduction factor ts applied to the Basic Benefit if the member retires witha reduced retirement benefit or selects a benefit payout option other than the Basic Benefit,

Average Final Compensation - A member’s average final compensation is the average of the 36 consecutive months of highest compensation as a covered employee.

Service Retirement Multiplier - The retirement multiplier is a factor used in the formula to determine a final retirement benefit. The retirement multiplier for non-hazardous duty members is 1.7%. The retirement multiplier for sheriffs and regional jail superintendents is 1.85%. The retirement multiplier of eligible political subdivision hazardous duty employees other than sheriffs and regional jail superintendents fs 1.7% or 1.85% as elected by the employer.

Normal Retirement Age - Age 65. Earliest Unreduced Retirement Eligibility - Members who are not in hazardous duty positions are eligible for an unreduced retirement benefit at age 65 with at least five years (60 months) of creditable service or at age 50 with at least 30 years of creditable service.

Hazardous duty members are eligible for an unreduced retirement benefit at age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8· Pension Plan: (continued)

A. Plan Description (continued)

Earliest Reduced Retirement Eligibility - Members may retire with a reduced benefit as early as age 55 with at least five years (60 months) of creditable service or age 50 with at least 10 years of creditable service.
Cost·of·Living Adjustment (COLA) in Retirement - The Cost-of-Living Adjustment (COLA) matches the first 3% increase In the Consumer Price Index for all Urban Consumers (CPl-U) and half of any additional increase (up to 4%) up to a maximum COLA of 5%.
Eligibility- For members who retire with an unreduced benefit or with a reduced benefit with at least 20 years of creditable service, the COLA will go into effect on July 1 after one full calendar year from the retirement date.

For members who retire with a reduced benefit and who have less than 20 years of creditable service, the COLA will go into effect on July 1 after one calendar year following the unreduced retirement eligibility date.

Exceptions to COLA Effective Dates - The COLA is effective July 1 following one fUll calendar year (January 1 to December 31) under any of the following circumstances:

• The member is within five years of qualifying for an unreduced retirement benefit as of January 1, 2013.

• The member retires on disability.

• The member retires directly from short-term or long-term disability under the Virginia Sickness and Disability Program (VSDP).

• The member is involuntarily separated from employment for causes other than job performance or misconduct and is eligible to retire under the Workforce Transition Act or the Transitional Benefits Program.

• The member dies in service and the member’s survivor or beneficiary is eligible for a monthly death-in-service benefit. The COLA will go into effect on July 1 following one full calendar year (January 1 to December 31) from the date the monthly benefit begins.

Disability Coverage - Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1.7% on all service, regardless of when it was earned, purchased or granted.

Most state employees are covered under the Virginia Sickness and Disability Program (VSDP), and are not eligible for disability retirement.

VSDP members are subject to a one-year waiting period before becoming eligible for non-work related disability benefits.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

‘A. Plan Description (continued)

_VRS— PLAN 1 (CONTINUED)

12,

14,

Earliest Reduced Retirement Eligibility - Members may retire with a reduced benefit as early as age 55 with at least five years (60 months) of creditable service or age 50 with at least 10 years of creditable service.

Cost-of-Living Adjustment (COLA) in Retirement - The Cost-of-Living Adjustment (COLA) matches the first 3% increase in the Consumer Price Index for alt Urban Consumers (CPI-U) and half of any additional increase (up to 4X) up to a maximum COLA of 5%.

Eligibility - For members who retire with an unreduced benefit or with a reduced benefit with at least 20 years of creditable service, the COLA will go into effect on July 1 after one full calendar year from the retirement date.

Exceptions to COLA Effective Dates - The COLA is effective July 1 following one full calendar year (January 1 to December 31) under any of the following circumstances:

The member is within five years of qualifying for an unreduced retirement benefit as of January 1, 2013.
The member retires on disability.

« The member js involuntarily separated from employment for causes other than job performance or misconduct and is eligible to retire under the Workforce Transition Act or the Transitional Benefits Program.

The member dies in service and the member’s survivor or beneficiary is eligible for a monthly death-in-service benefit. The COLA will go into effect on July 1 following one full calendar year (January 1 to December 31) from the date the monthly benefit begins.

Disability Coverage - Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1.7% on all service, regardless of when it was eared, purchased or granted.

Most state employees are covered under the Virginia Sickness and Disability Program (VSDP), and are not eligible for disability retirement.

SDP members are subject to a one-year waiting period before becoming eligible for non-work related disability benefits.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8· Pension Plan: (continued)

B. Plan Description (continued)

Purchase of Prior Service· Members may be elfgible to purchase service from previous public employment, active duty military service, an eligible period of leave or VRS refunded service as creditable service in their plan. Prior creditable service counts toward vesting, eligibility for retirement and the health insurance credit. Only active members are eligible to purchase prior service. When buying service, members must purchase their most recent period of service first. Members also may be eligible to purchase periods of leave without pay.

VRS- PLAN 2

Plan Overview • VRS Plan 2 is a defined benefit plan. The retirement benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula. Employees are eligible for VRS Plan 2 if their membership date ls on or after July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of January 1, 2013.
Eligible Members • Employees are in VRS Plan 2 if their membership date is on or after July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of January1,
Hybrid Opt-In Election - VRS Plan 2 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014.

The Hybrid Retirement Plan’s effective date for eligible VRS Plan 2 members who opted in was July 1, 2014.

If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan.

Members who were eligible for an optional retirement plan (ORP) and have prior service under VRS Plan 2 were not eligible to elect the Hybrid Retirement Plan and remain as VRS Plan 2 or ORP.

Retirement Contributions - Same as VRS Plan 1-Refer to Section 4.
Creditable Service - Same as VRS Plan 1- Refer to Section 5.
Vesting - Same as VRS Plan 1-Refer to Section 6.
Calculating the Benefit - Same as VRS Plan 1-Refer to Section 7.
Average Final Compensation· A member’s average final compensation is the average of their 60 consecutive months of highest compensation as a covered employee.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

Note 8- Pensfon Plan: (continued) B, Plan Description (continued)

17, Purchase of Prior Service - Members may be eligible to purchase service from previous pubtic employment, active duty military service, an eligible period of leave or VRS refunded service as creditable service in their plan. Prior creditable service counts toward vesting, eligibility for retirement and the health insurance credit. Only active members are eligible to purchase prior service. When buying service, members must purchase their most recent period of service first. Members also may be eligible to purchase periods of leave without pay.

VRS ~ PLAN 2

Plan Overview « VRS Plan 2 is a defined benefit plan. The retirement benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula, Employees are eligible for VRS Plan 2 if their membership date is on or after July 1, 2010, or their membership date fs before July 1, 2010, and they were not vested as of January 1, 2013,

2, Eligible Members - Employees are in VRS Plan 2 if their membership date is on o after July 4, 2010, or their membership date {s before July 1, 2010, and they were not vested as of January 1, 2013.

Hybrid Opt-In Election - VRS Plan 2 members wete allowed to make an irrevocable decision to ‘opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014.

‘The Hybrid Retirement Plan’s effective date for eligible VRS Plan 2 members who opted in was July 1, 2014,

If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan.

Members who were eligible for an optional retirement plan (ORP) and have prior service under YRS Plan 2 were not elgbe to elect the Hybrid Retirement Plan and remain as VRS Pan 2 or 4. Retirement Contributions - Same as VRS Plan 1-Refer to Section 4. 5. Creditable Service - Same as VRS Plan 1~ Refer to Section 5. 6. Vesting - Same as VRS Plan 1-Refer to Section 6, 7. Calculating the Benefit - Same as VRS Plan 1-Refer to Section 7.

Average Final Compensation - A member’s average final compensation fs the average of their 60 consecutive months of highest compensation as a covered employee.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

A. Plan Description (continued)

VRS - PLAN 2 (CONTINUED)

Service Retirement Multiplier· Same as Plan1 for service earned, purchased or granted prior to January 1, 2013. For non·hazardous duty members the retirement multiplier is 1.65% for creditable service earned, purchased or granted on or after January 1, 2013.
Normal Retirement Age· Normal Social Security retirement age.
Earliest Unreduced Retirement Eligibility ·Members who are not in hazardous duty positions are eligible for an unreduced retirement benefit when they reach normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90.

Hazardous duty members are eligible for an unreduced retirement benefit at age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service.

Earliest Reduced Retirement Eligibility· Members may retire with a reduced benefit as early as age 60 with at least five years (60 months) of creditable service.
Cost-of-Living Adjustment (COLA) in Retirement • The Cost-of-Living Adjustment (COLA) matches the first 2% increase in the CPl-U and half of any additional increase (up to 2%), for a maximum COLA of 3%.
Eligibility- Same as YRS Plan 1-Refer to Section 14.
Exceptions to COLA Effective Dates - Same as YRS Plan 1-Refer to Section 15.
Disability Coverage - Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1.65% on all service, regardless of when it was earned, purchased or granted.

Most state employees are covered under the Virginia Sickness and Disability Program (VSDP), and are not eligible for disability retirement.

VSDP members are subject to a one-year waiting period before becoming eligible for non-work related disabilfty benefits.

17, Purchase of Prior Service - Same as YRS Plan 1-Refer to Section 17.

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COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pensian Plan: (continued)

A. Plan Description (continued)

VRS - PLAN 2 (CONTINUED)

Service Retirement Multiplier - Same as Plant for service earned, purchased or granted prior to January 1, 2013. For non-hazardous duty members the retirement multiplier is 1.65% for creditable service earned, purchased or granted on of after January 1, 2013.
Normal Retirement Age ~ Normal Social Security retirement age.

11, Earliest Unreduced Retirement Eligibility - Members who are not in hazardous duty positfons are eligible for an unreduced retirement benefit when they reach normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90.

Hazardous duty members are eligible for an unreduced retirement benefit at age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service.

Earliest Reduced Retirement Eligibility - Members may retire with a reduced benefit as early as age 60 with at least five years (60 months) of creditable service.

13, Cost-of-Living Adjustment (COLA) in Retirement - The Cost-of-Living Adjustment (COLA) matches the first 2% increase in the CPI-U and half of any additional increase (up to 2%), fora maximum COLA of 3%.

14, Eligibility - Same as VRS Plan 1-Refer to Section 14.

Exceptions to COLA Effective Dates - Same as VRS Plan 1-Refer to Section 15.

16, Disability Coverage - Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1.65% on all service, regardless of when it was earned, purchased or granted.

Most state employees are covered under the Virginia Sickness and Disability Program (VSDP), and are not eligible for disability retirement,

\VSDP members are subject to a one-year waiting period before becoming eligible for non-work related disability benefits,

17, Purchase of Prior Service - Same as VRS Plan 1-Refer to Section 17.

-37-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (COlfflNUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

A. Plan Description (continued)

HYBRID RETIREMENT PLAN

Plan Overview - The Hybrid Retirement Plan combines the features of a defined benefit plan and a defined contribution plan. Most members hired on or after January 1, 2014 are in this plan, as well as VRS Plan 1 and VRS Plan 2 members who were eligible and opted into the plan during a special election window. (See “Eligible Members”)

• The defined benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula.

• The benefit from the defined contribution component of the plan depends on the member and employer contributions made to the plan and the investment performance of those contributions.

• In addition to the monthly benefit payment payable from the defined benefit plan at retirement, a member may start receiving distributions from the balance in the defined contribution account, reflecting the contributions, investment gains or losses, and any required fees.

Eligible Members - Employees are in the Hybrid Retirement Plan if their membership date is on or after January 1, 2014. This includes:

• State employees•

• School division employees

• Political subdivision employees•

• Judges appointed or elected to an original term on or after January 1, 2014

• Members in VRS Plan 1 or VRS Plan 2 who elected to opt into the plan during the election window held January 1-April 30, 2014; the plan’s effective date for opt-in members was July 1, 2014

•Non-Eligible Members - Some employees are not eligible to participate in the Hybrid Retirement Plan. They include:

• Members of the State Police Officers’ Retirement System (SPORS)

• Members of the Virginia Law Officers’ Retirement System (VaLORS)

• Political subdivision employees who are covered by enhanced benefits for hazardous duty employees

-38-

‘COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

Note 8- Pension Plan: (continued) A. Plan Description (continued)

HYBRID RETIREMENT PLAN

4, Plan Overview - The Hybrid Retirement Plan combines the features of a defined benefit plan and a defined contribution plan. Most members hired on or after January 1, 2014 are in this plan, as well as VRS Plan 1 and VRS Plan 2 members who were eligible and opted into the plan during a special election window. (See “Eligible Members”)

The defined benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula,

The benefit from the defined contribution component of the plan depends on the member and employer contributions made to the plan and the investment performance of those contributions,

‘+ In addition to the monthly benefit payment payable from the defined benefit plan at retirement, a member may start receiving distributions from the balance in the defined contribution account, reflecting the contributions, investment gains or losses, and any required fees.

2, Eligible Members - Employees are in the Hybrid Retirement Plan if their membership date is on or after January 1, 2014, This includes:

State employees*

‘* Political subdivision employees*

Judges appointed or elected to an original term on or after January 1, 2014

‘+ Members in VRS Plan 1 or VRS Plan 2 who elected to opt into the plan during the election Hire January 1-April 30, 2014; the plan’s effective date for opt-in members was

3, *Non-Eligible Members - Some employees are not eligible to participate in the Hybrid Retirement Plan. They include:

» Members of the State Police Officers’ Retirement System (SPORS) ‘+ Members of the Virginfa Law Officers’ Retirement System (VaLORS)

‘Political subdivision employees who are covered by enhanced benefits for hazardous duty employees

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

A. Plan Description (continued)

HYBRID RETIREMENT PLAN (CONTINUED)

"Non-Eltgible Members (continued)

Those employees eligible for an optional retirement plan (ORP) must elect the ORP plan or the Hybrid Retirement Plan. If these members have prior service under VRS Plan 1 or VRS Plan 2, they are not eligible to elect the Hybrid Retirement Plan and must select VRS Plan 1 or VRS Plan 2 (as applicable) or ORP.

Retirement Contributions - A member’s retirement benefit is funded through mandatory and voluntary contributions made by the member and the employer to both the defined benefit and the defined contribution components of the plan. Mandatory contributions are based on a percentage of the employee’s creditable compensation and are required from both the member and the employer. Additionally, members may choose to make voluntary contributions to the defined contribution component of the plan, and the employer is required to match those voluntary contributions according to specified percentages.
Creditable Service

Defined Benefit Component • Under the defined benefit component of the plan, creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member’s total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit.

Defined Contribution Component· Under the defined contribution component, creditable service is used to determine vesting for the employer contribution portion of the plan.

Vesting

Defined Benefit Component • Defined benefit vesting is the minimum length of se_rvice a member needs to qualify for a future retirement benefit. Members are vested under the defined benefit component of the Hybrid Retirement Plan when they reach five years (60 months) of creditable service. VRS Plan 1 or VRS Plan 2 members with at least five years (60 months) of creditable service who opted into the Hybrid Retirement Plan remain vested in the defined benefit component.

Defined Contribution Component • Defined contribution vesting refers to the minimum length of service a member needs to be eligible to withdraw the employer contributions from the defined contribution component of the plan.

Members are always 100% vested in the contributions that they make.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

‘A. Plan Description (continued)

HYBRID RETIREMENT PLAN (CONTINUED)

*Non-Eligible Members (continued)

‘Those employees eligible for an optional retirement plan (ORP) must elect the ORP plan or the Hybrid Retirement Plan, If these members have prior service under VRS Plan 1 or VRS Plan 2, they are not eligible to elect the Hybrid Retirement Plan and must select VRS Plan 4 or VRS Plan 2 (as applicable) or ORP.

Retirement Contributions - A member’s retirement benefit is funded through mandatory and voluntary contributions made by the member and the employer to both the defined benefit and the defined contribution components of the plan. Mandatory contributions are based on a percentage of the employee’s creditable compensation and are required from both the member and the employer, Additionally, members may choose to make voluntary contributions to the defined contribution component of the plan, and the employer is required to match those voluntary contributions according to specified percentages.

Creditable Service

Defined Benefit Component - Under the defined benefit component of the plan, creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member’s total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit,

Defined Contribution Component - Under the defined contribution component, creditable service ‘is used to determine vesting for the employer contribution portion of the plan.

Vesting

Defined Benefit Component - Defined benefit vesting is the minimum length of service a member needs to qualify for a future retirement benefit. Members are vested under the defined benefit component of the Hybrid Retirement Plan when they reach five years (60 months) of creditable service. VRS Plan 1 or VRS Plan 2 members with at least five years (60 months) of creditable service who opted into the Hybrid Retirement Plan remain vested in the defined benefit ‘component.

a - Defined contribution vesting refers to the minimum length of service a member needs to be eligible to withdraw the employer contributions from the defined contribution component of the plan.

Members are always 100% vested in the contributions that they make.

COUNTY Of RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8· Pension Plan: (continued)

A. Plan Description (continued)

L HYBRID RETIREMENT PLAN (CONTINUED) -----------~

Vesting (continued)

Upon retirement or leaving covered employment, a member is el1gible to wlthdraw a percentage of employer contributions to the defined contribution component of the plan, based on service.

• After two years, a member is 50% vested and may wlthdraw 50% of employer contributions.

• After three years, a member is 75% vested and may withdraw 75% of employer contributions.

• After four or more years, a member is 100% vested and may withdraw 100% of employer contributions.

Distribution is not required by law until age 701h.

Calculating the Benefit

Defined Benefit Component - Same as VRS Plan 1-Refer to Section 7.

Defined Contribution Component • The benefit is based on contributions made by the member and any matching contributions made by the employer, plus net investment earnings on those contributions.

Average Final Compensation - Same as YRS Plan 2-Refer to Section 8. It is used in the retirement formula for the defined benefit component of the plan.
Service Retirement Multiplier • The retirement multiplier is 1.0%.

For members that opted into the Hybrid Retirement Plan from YRS Plan 1 or YRS Plan 2, the applicable multipliers for those plans will be used to calculate the retirement benefit for service credited in those plans.

1 O. Normal Retirement Age

Defined Benefit Component - Same as YRS Plan 2-Refer to Section 10.

Defined Contribution Component - Members are eligible to receive distributions upon leaving employment, subject to restrictions.

-4CJ…

County

OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued) A. Plan Description (continued)

HYBRID RETIREMENT PLAN (CONTINUED)

10,

Vesting (continued)

Upon retirement or leaving covered employment, a member is eligible to withdraw a percentage ‘of employer contributions to the defined contribution component of the plan, based on service.

After two years, amember is 50% vested and may withdraw 50% of employer contributions.
After three years, a member is 75% vested and may withdraw 75% of employer contributions.

Distribution is not required by law until age 70%. Calculating the Benefit Defined Benefit Component - Same as VRS Plan 1-Refer to Section 7.

Contri Component - The benefit is based on contributions made by the member and any matching contributions made by the employer, plus net investment earnings on those contributions,

Average Final Compensation - Same as VRS Plan 2-Refer to Section 8. It is used in the retirement formuta for the defined benefit component of the plan.

Service Retirement Multiplier The retirement multiplier is 1.0%. For members that opted into the Hybrid Retirement Plan from VRS Plan 1 or VRS Plan 2, the applicable multipliers for those plans will be used to calculate the retirement benefit for service credited in those plans.

Normal Retirement Age

Defined Benefit Component - Same as VRS Plan 2-Refer to Section 10.

Defined Contribution Component - Members are eligible to receive distributions upon leaving employment, subject to restrictions.

~40-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

A. Plan Description (continued)

HYBRID RETIREMENT PLAN (CONTINUED)

Earliest Unreduced Retirement Eligibility

Defined Benefit Component - Members are eligible for an unreduced retirement benefit when they reach normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90.

Defined Contribution Component - Members are eligible to receive distributions upon leaving employment, subject to restrictions.

Earliest Reduced Retirement Eligibility

Defined Benefit Component - Members may retire with a reduced benefit as early as age 60 with at least five years ( 60 months) of creditable service.

Defined Contribution Component - Members are eligible to receive distributions upon leaving employment, subject to restrictions.

Cost-of-Living Adjustment (COLA) in Retirement

Defined Benefit Component - Same as VRS Plan 2-Refer to Section 13.

Defined Contribution Component - Not Applicable.

Eliglbilfty - Same as VRS Plan 1 and VRS Plan 2 - Refer to Section 14.
Exceptions to COLA Effective Dates - Refer to YRS Plan 1 and VRS Plan 2 -Section 15.
Disability Coverage • Eligible political subdivision and school division members (including VRS Plan 1 and VRS Plan 2 opt-ins) participate in the Virginia Local Disability Program (VLDP) unless their local governing body provides an employer·paid comparable program for its members.

State employees (including VRS Plan 1 and VRS Plan 2 opt-ins) participating in the Hybrid Retirement Plan are covered under the Virginia Sickness and Disability Program (VSDP), and are not eligible for disability retirement.

Hybrid members (including VRS Plan 1 and VRS Plan 2 opt·ins) covered under VSDP or VLDP are subject to a one-year waiting period before becoming eligible for non-work related disability benefits.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued) ‘A. Plan Description (continued)

HYBRID RETIREMENT PLAN (CONTINUED)

14, 15.

Earliest Unreduced Retirement Eligibility Defined Benefit Component - Members are eligible for an unreduced retirement benefit when they reach normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90.

Defined Contribution Component - Members are eligible to receive distributions upon leaving employment, subject to restrictions.

Earliest Reduced Retirement Eligibility

Defined Benefit Component - Members may retire with a reduced benefit as early as age 60 with at least five years (60 months) of creditable service.

Defined Contribution Component - Members are eligible to receive distributions upon leaving employment, subject to restrictions,

Cost-of-Living Adjustment (COLA) in Retirement

Defined Benefit Component - Same as VRS Plan 2-Refer to Section 13,

Defined Contribution Component - Not Applicable.

Eligibility - Same as VRS Plan 1 and VRS Plan 2 ~ Refer to Section 14,

Exceptions to COLA Effective Dates - Refer to VRS Plan 1 and VRS Plan 2 ~Section 15, Disability Coverage - Eligible political subdivision and school division members (including VRS Plan 1 and VRS Plan 2 opt-ins) participate in the Virginia Local Disability Program (VLDP) unless their local governing body provides an employer-paid comparable program for its members. State employees (including VRS Plan 1 and VRS Plan 2 opt-ins) participating in the Hybrid Retirement Plan are covered under the Virginia Sickness and Disability Program (VSDP), and are not eligible for disability retirement.

Hybrid members (including VRS Plan 1 and VRS Plan 2 opt-ins) covered under VSDP or VLDP are

subject to a one-year waiting period before becoming eligible for non-work related disability benefits.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8- Pension Plan: (continued)

A. Plan Description (continued)

HYBRID RETIREMENT PLAN (CONTINUED)

Purchase of Prior Service

Defined Benefit Component -_Same as VRS Plan 1 and VRS Plan 2-Refer to Section 17.

Defined Contribution Component· Not Applicable.

The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. A copy of the most recent report may be obtained from the VRSwebsite at http: //www.varetire.org/Pdf /Publications/2013-annual· report.odf, 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 annual salary to the VRS. All or part of this 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 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 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’s contribution rate for the fiscal year ended 2014 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 annual salary to the VRS. All or part of this 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 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 2014 was 16.24% of annual covered payroll.

42-

COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

Note 8- Pension Plan: (continued) A. Plan Description (continued)

{ HYBRID RETIREMENT PLAN (CONTINUED)

17, Purchase of Prior Service

Defined Benefit Component -_Same as VRS Plan 1 and VRS Plan 2-Refer to Section 17.

Defined Contribution Component - Not Applicable.

‘The System issues a publicly available comprehensive annual 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/2013-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 annual salary to the VRS. All or part of this 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 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 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’s contribution rate for the fiscal year ended 2014 was 14.36% of annual covered payroll.

Discretely Presented C¢ vt Ur hoot Board (Non-P1 ial Empl Hi

Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their annual salary to the VRS. All or part of this 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 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 2014 was 16.24% of annual covered payrolt.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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

C. Annual Pension Cost

For fiscal year 2014, the County and School Board’s annual pension cost of $781,244 and $424,238 was equal to the County and School Board’s required and actual contributions for the County and the School Board Non-Professionals, respectively.

Three-Year Trend Information

Fiscal Year

Ending Primary Government:

County 6/30/2012 6/30/2013 6/30/2014

Discretely Presented-Component Unit: School Boart;I Non·Professional 6/3012012

1 Employer portion only

6/3012013 6/3012014

Annual Pension

Cost {APC) 1

s 576,628 800,479 781,244

$ 386,243 434,345 424,238

Percentage of APC

Contributed

100.00% 100.00% 100.00%

Net Pension

Obligation

The FY 2014 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% per year 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 and 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 County and School Board’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2011 for the Unfunded Actuarial Accrued Liability (UAAL) was 30 years.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8-Employee Retirement System and Pension Plan: (continued) C. Annual Pension Cost

Three-Year Trend Information

Fiscal Annual Percentage Net Year Pension of APC Pension Ending Cost (APC)’ Contributed _ Obligation

Primary Government:

County 6/30/2012 $576,628 100.00% 6/30/2013 800,479 400.0% 6/30/2014 781,244 00.00%

Discretely Presented-Component Unit: School Board Non-Professional 6/30/2012 $386,243 100.008 6/30/2013 434,345 100,00% - 6/30/2014 424,238 100.00% -

‘Employer portion only

The FY 2014 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% per year 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-tiving adjustment of 2.50% per year for Plan 4 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 and 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 County and School Board’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2011 for the Unfunded Actuarial Accrued Liability (UAAL) was 30 years,

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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

D. Funded Status and Funding Progress

Primary Government: As of June 30, 2013, the most recent actuarial valuation date, the plan was 70.13% funded. The actuarial accrued liability for benefits was $28,873,471, and the actuarial value of assets was $20,247, 742, resulting in an unfunded actuarial accrued liability (UAAL) of $8,625,729. The covered payroll (annual payroll of active employees covered by the plan) was $5,434,051, and ratio of the UAAL to the covered payroll was 158. 73%.

Discretely Presented Component Unit - School Board (Non-Professional Employees): As of June 30, 2013, the most recent actuarial valuation date, the plan was 61.34% funded. The actuarial accrued liability for benefits was $16,485,081, and the actuarial value of assets was $10, 112,448, resulting in an unfunded actuarial accrued liability (UAAL) of $6,372,633. The covered payroll (annual payroll of active employees covered by the plan) was $2,666,329, and ratio of the UAAL to the covered payroll was 239.00%.

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 for benefits.

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

Plan Description The Washington 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. YRS 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 119501. as amended, assigns the authority to establish and amend benefit provisions to the State legislature. The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for YRS. The most recent report may be downloaded from the System’s website at http://www.varetire.org/Pdf /Publications/2013-annuat· report.pdf or obtained by writing to the System’s Chief Financial Officer at P. O. Box 2500, Richmond, Virginia 23218·2500.

Funding Policy Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5.00% of their annual salary to the YRS. This 5.00% member contribution may be assumed by the employer. Beginning July 1, 2012 new employees were required to pay the 5% mem.ber 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 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. ln addition, the School Board is required to contribute the remaining amounts necessary to fund its participation in the YRS using the actuarial basis specified by the statute and approved by the VRS Board of Trustees. The School Board’s contribution to the statewide cost sharing pool for professional employees was $1,991,484, $2,037,610, and $1, 164, 108, for the fiscal years ended 2014, 2013, and 2012, respectively. Employer contributions represented 11.66%, 11.66%, and 6.33% of covered payroll for the fiscal years ended 2014, 2013, and 2011, respectively.

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‘COUNTY OF RUSSELL, VIRGINIA

NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 8-Employee Retirement System and Pension Plan: (continued) D. Funded Status and Funding Progress

Prim ment: As of June 30, 2013, the most recent actuarial valuation date, the plan was 70.13% funded. The actuarial accrued liability for benefits was $28,873,471, and the actuarial value of assets was $20,247,742, resulting in an unfunded actuarial accrued liability (UAAL) of $8,625,729. The covered payroll (annual payroll of active employees covered by the plan) was $5,434,051, and ratio of the UAAL to the covered payroll was 158.73%.

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

As of June 30, 2013, the most recent actuarial valuation date, the plan was 61.34% funded. The actuarial accrued liability for benefits was $16,485,081, and the actuarial value of assets was $10,112,448, resulting in an unfunded actuarial accrued liability (UAAL) of $6,372,633. The covered payroll (annual payroll of active employees covered by the plan) was $2,666,329, and rato of the UAAL to the covered payroll was 239.00%,

‘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 fs increasing or decreasing over time relative to the actuarial acctued liability for benefits.

E. Diseretely Presented Component Unit - School Board (Professional Employees)

Plan Description ‘The Washington 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 State legislature. The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. ‘The most recent report may be downloaded from the System’s website at http://www. varetire.org/Paf/Pubtications/2013-annual- report.pdf or obtained by writing to the System’s Chief Financial Officer at P. 0. Box 2500, Richmond, Virginia 23218-2500.

Funding Policy Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute

5.00% of their annual salary to the VRS, This 5.00% member contribution may be assumed by the employer. 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 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 shating pool for professional employees was $1,991,484, $2,037,610, and $1, 164,108, for the fiscal years ended 2014, 2013, and 2012, respectively. Employer contributions represented 11.66%, 11.66%, and 6,33% of covered payroll for the fiscal years ended 2014, 2013, and 2011, respectively,

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 9-Capital Assets:

Capital asset activity for the year ended June 30, 2014 was as follows:

Primary Government:

Beginning Balance Increases

Governmental Activities: Capital assets, not being depreciated:

Land $ 1,561,333 $ . $

Capital assets, being depreciated: Buildings and improvements $ 26,653,758 $ 160,542 $ Machinery and equipment 3,765,267 507,355

Total capital assets being depreciated s 30,419,025 $ 667,897 $

Accumulated depreciation: Buildings and improvements $ (11,088,471) $ (637,866) $ Machinery and equipment (2,373,316) (402,812)

Total accumulated depreciation s (13,461,787) s (1,040,678) $

Total capital assets being depreciated, net s 16,957,238 $ (372,781) s

Governmental activities capital assets, net $ 18,518,571 $ (372,781) $

The remainder of this page left blank intentionally.

-45-

Ending Decreases Balance

(992,638) s 568,695

$ 26,814,300 (157,637) 4, 114,985 (157,637) $ 30,929,285

$ (11, 726,337) 153,372 (2,622,756) 153,372 $ (14,349,093)

(4,265) s 16,580, 192

(996,903) $ 17, 148,887

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2014

Note 9-Capital Assets

Capital asset activity for the year ended June 30, 2014 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

Govemmental activities capital assets, net

(43,461,787) $

(1,040,678) $

Beginning Ending Balance Increases Decreases Balance 1,561,333. $ = $__ (992,638) $568,695, 26,653,758 $ 160,542 $ + $26,814,300 3765267 _ 507,355 (157,637) 4,114,985 30,419,025 $667,897 $__ (187,637) $30,929,285 (11,088,471) § (637,86) $ + $ (11,726,337) (2,373,316) (402,812) 153,372 (2,622,756)

753,372, $ (14,349,093)

16,957,238 $ (372,781) $ (4,265) $16,580,192 18,518,571 $ (372,781) $__ (996,903) $_17,148,887

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 301 2014

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 Balance

5,240,699 $

(1, 986,089) $

3,254,610 $

Increases Decreases

. $ .

(131,017) $

Ending Balance

5,240,699

(2,117,106)

3, 123,593

3,123,593

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

$ 15,600 753

253,524 44,595 27,690

652,480 38,222 7,814

$ 1,040,678

$ ==1=3=1,=0=17=

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-46-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JuNE 30, 2014

Note 9-Capital Assets: (continued) Primary Government: (continued)

Beginning Ending Balance Increases Decreases Balance Business-type Activities Capital assets, being depreciated: Utility plant. $___ 5,240,699 $ $. = $__ 5,240,699 Accumulated depreciation: Utility plant $(1,986,089) $ (131,017) $ -$@,117,106) Total capital assets being depreciated, net $ _ 3,254,610 $ (131,017) $ = $ 3,123,593 Business-type activities capital assets, net $—3,254,610 $__—(131,017) $ = $__3,123,593

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

Governmental activities: General government administration $ 15,600 Judicial administration 753 Public safety 253,524 Public works 44,595 Health and welfare 27,690 Education 652,480 Parks, recreation, and cultural 38,222 Community development 7,814 Total depreciation expense-governmental activities §_ 1,040,678 Business-type activities: ‘Sewer Authority

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 9-Caoital Assets: (continued)

Capital asset activity for the School Board for the year ended June 30, 2014 was as follows;

Discretely Presented Component Unit - School Board:

Beginning Balance Increases Decreases

Capital assets, not being depreciated: Land $ 4,643,707 $ 992,638 $ - $

Capital assets, being depreciated: Buildings and improvements $ 22,294,656 $ $ $ Machinery and equipment 6,361,819 374,031

Total capital assets being depreciated $ 28,656,475 $ 374,031 $ $

Accumulated depreciation: Buildings and Improvements $ (11,309,828) $ (606, 104) $ $ Machinery and equipment (4,967,586) (331,774)

Total accumulated depreciation $ (16,277,414) $ (937,878) $ $

Total capital assets being depreciated, net $ 12,379,061 $ (563,847) $ $

Governmental activities capital assets, net $ 17,022,768 $ 428,791 $ $

Note 10-Risk Management:

Ending Balance

5,636,345

22,294,656 6,735,850

29,030,506

(11,915,932) (5,299,360)

(17,215,292)

11,815,214

17,451,559

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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-47-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 9-Canital Assets: (continued) Capital asset activity for the School Board for the year ended June 30, 2014 was as follows:

Discretely Presented Component Unit - School Board:

Beginning Ending Balance Increases Decreases Balance

Capital assets, not being depreciated:

Land $ 4,643,707 $992,638 $ -$ 5,636,345 Capital assets, being depreciated:

Buildings and improvements $22,294,656 § 7 $ + $22,294,656

Machinery and equipment 6,361,819 374,034 : 6,735,850 Total capital assets being depreciated $28,656,475 $374,031 § = $___ 29,030,506 ‘Accumulated depreciation:

Buildings and improvements $ (11,309,828) $ (606,104) $ = $ (14,915,932)

Machinery and equipment (4,967,586) (331,774) ~ (6,299,360) ‘Total accumulated depreciation $16,277,404) $37,878) § = $07,215,792) Total capital assets heing depreciated, net §—*12,379,061 $__ (563,847) $ = $11,815,214 Governmental activities capital assets, net $17,022,768 § 428,791 §. 2 $17,451,559

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 alt available excess insurance, the pool may assess all members in the proportion to which the premium of each beats 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 toss. 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, VIRGIHIA

NOTES TO FINANCIAL STATEMEHTS (CONTINUED) JUNE 30, 2014

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. Whlle 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 8: 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 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. $271,663 is the total estimated closure and postclosure care liability at June 30, 2014. 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 2014. 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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-48-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

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

Govern \d_ Non nizations. Pursuant to the provisions of this circular all major programs and certain other programs were tested for compliance with applicable grant requirements.

White 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 cReynolds, 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 Al school employees: blanket bond 40,000

USFEG Insurance Co, - Surety: ‘All Social Services employees-blanket bond $ 100,000

Note 13-Landfill Closure and Postclosure Care Cost:

State and federal laws and regulations require the County to place a final cover on its landfill site when ‘it stops accepting waste and to perform certain maintenance and monitoring functions at the site after closure. $271,663 is the total estimated closure and postclosure care liability at June 30, 2014. 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 2014, 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 financfal 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, 2014

Note 14-Unavallable Revenue:

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

2nd half taxes due December 2014 Delinquent taxes due prior to June 30, 2014 Prepaid taxes Total unavailable revenue for governmental funds

Note 15-Self Health Insurance:

Gov’t·wide Statements Governmental Activities

5,206, 169

80,418 5,286,587

Balance Sheet Governmental Funds

$ 5,206, 169 2,644,301

80,418 $ 7,930,888

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 2014, 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, 2014, 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 $772,252 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 2014 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

2013-14 $ 454,373 s 5,695,026 s (5,377, 147) s 772,252

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-49-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 14-Unavailable Revenue:

Govt-wide Statements Balance Sheet Governmental Activities _Governmental Funds

2nd half taxes due December 2014 $ 5,206,169 $ 5,206, 169 Delinquent taxes due prior to June 30, 2014 : 2,644,301 Prepaid taxes 80,418 80,418

Total unavailable revenue for governmental funds $ 5,286,587 § 7,930,888

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 2014, 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, 2014, 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 $772,252 have been accrued asa 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 2014 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

2013-14 $ 454,373 $5,695,026 $__(5,377,147) $ 772,252.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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 thls 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 757 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:

Coun!Y:: Medical 8: Rx

Retiree Spouse Ret./Family PPO $ 421 $ 421 $ 1, 180 Medicare 135 135 NIA

Schools: Medical 8: Rx

Retiree Spouse Ret.IFamlly PPO $ 505 $ 505 $ 1,416 Medicare 135 135 NIA

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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.

Tobe eligible for this benefit a retiree must meet the following criteria: attained age 50 and 15 years of service and not eligible for Medicare and the last 10 years must be with the County or School Board prior to retirement. The benefits, employee contributtons 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 hot 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- g0 basis, The County and School Board currently have 757 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:

County: Medical & Rx Retiree Spouse Ret./Family PPO $ aS at § (4,180 Medicare 135 135 NUA ‘Schools: Medical & Rx Retiree Spouse Ret. /Family PPO 3 505 $ «505 S$ ~~~«,AIG Medicare 135 1350 N/A

60-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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 2014, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation during fiscal year 2014.

Annual required contribution $ 38,400 Interest on net OPEB obligation 1,661 Adjustment to annual required contribution (2,209)

Annual OPEB cost (expense) 37,852 Contributions made (2,700)

Increase (decrease) in net OPEB obligation 35, 152 Net OPEB obligation · beginning of year 41,521 Net OPEB obligation · end of year s 76,673

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2014 and the two preceding years were as follows:

Percentage of Fiscal Annual Annual OPEB Cost Net OPEB

Year Ended OPEB Cost Contributed Obligation

6/30/2012 $ 42,754 101.27% $ 6,609 6/30/2013 35,812 2.51% 41,521 6/30/2014 37,852 7.13% 76,673

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-51-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

16-Other Postemployment Ber Ith Insurance: (continue

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, fs 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 2014, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation during fiscal year 2014,

‘Annual required contribution $38,400 Interest on net OPEB obligation 1,661 ‘Adjustment to annual required contribution (2,209) Annual OPEB cost (expense) 37,652 Contributions made (2,700) Increase (decrease) in net OPEB obligation 35,152 Net OPEB obligation - beginning of year 44,521 Net OPEB obligation - end of year $76,673

‘The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2014 and the two preceding years were as follows:

Percentage of

Fiscal Annual Annual OPEB Cost Net OPEB Year Ended OPEB Cost __ Contributed _Obtigation 6/30/2012 § 42,754 101.27%$ 6,609 6/30/2013 35,812 2.51% 41,521 6/30/2014 37,852 713% 76,673

‘The remainder of this page is left blank intentionally,

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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 $ 916, 100 Interest on net OPEB obligation 17, 101 Adjustment to annual required contribution (22,744)

Annual OPEB cost (expense) 910,457 Contributions made (631,300)

Increase (decrease) in net OPEB obligation 279,157 Net OPEB obligation · beginning of year 427,536 Net OPEB obligation - end of year $ 706,693

The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2014 and the two preceding years were as follows:

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

6/3012012 $ 278,829 101.27% $ 44,828 6/30/2013 885,708 56.79% 427,536 6/30/2014 910,457 69.34% 706,693

D. Funded Status and Funding Progress

The funded status of the Plan for the County as of July 1, 2012, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (ML) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets I ML) Covered payroll (active plan members) UML as a percentage of covered payroll

-52-

$ $ $

198,600

198,600 0.00%

5,576,300 3.56%

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 16-Othe it Be Insurance: (contint

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

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

916,100

17,101 92,744)

910,457 (631,300) 279,157 427,536 706,693,

The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and ‘the net OPEB obligation for 2014 and the two preceding years were as follows:

Fiscal Annual Annual OPEB Cost

Year Ended _ OPEB Cost Contributed

Net OPEB Obligation

6/30/2012 $ 278,829 101.27% § 6/30/2013 885,708 56.79% 6/30/2014 910,457 69.34%

D. Funded Status and Funding Progress

44,828 427,536 706,693

‘The funded status of the Plan for the County as of July 1, 2012, the most recent actuarial valuation date,

‘is as follows:

‘Actuarial accrued liability (AL) Actuarial value of plan assets

Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets / AL) Covered payroll (active plan members)

UAAL as a percentage of covered payroll

52-

198,600

198,600 0.00%

5,576,300 3.56%

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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 (ML) Actuarial value of plan assets Unfunded actuarial accrued liability (UML) Funded ratio (actuarial value of plan assets I AAL) Covered payroll (active plan members) UML as a percentage of covered payroll

$ $ $

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.

-53-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2014

Note 16-Other Postem it Benefits-Heal -e: (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 plan assets § .

Unfunded actuarial accrued liability (VAAL) $ 8,991,400 Funded ratio (actuarial value of plan assets / AL) 0.00% Covered payroll (active plan members) $ 24,181,100 UAAL as a percentage of covered payroll ALAS

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, mortatity, 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.

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 (CONTIHUED) JUNE 30, 2014

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 8.

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 2014 was 0.0143% 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 2014 was 0.51% 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, 2014 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.

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 fs 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 8,

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 2014 was 0.0143% of annual covered payroll.

tell Component Unit - joard (Non-Profe )s Asa 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 basts specified by the Code of Virginia and the VRS Board of Trustees. The School Board’s contribution rate for the fiscal year ended 2014 was 0.51% 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 1s 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, 2014

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

C. OPEB Cost and Net OPEB Obligation (continued)

Primary Government: (continued) For 2014, the County’s contribution of $778 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 2014 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 6/30/2012 $ 3,289 100.00% s 6/30/2013 1,764 100.00% 6/30/2014 778 100.00%

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 2014, the School Board’s contribution of $13,320 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 2014 and 2013 are shown below:

Fiscal Annual Percentage Net Year OPEB of ARC OPEB

Ending Cost (ARC) Contributed Obligation Discretely Presented Component Unit

School Board 6/3012013 s 15,780 100.00% s 6/30/2014 13,320 100.00%

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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

PEB Cost and Net OPEB

Primary Government: (continued) For 2014, the County’s contribution of $778 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 2014 and the two preceding years are shown below:

ition (continued)

Fiscal Annual Percentage Net

Year OPEB. ‘of ARC OPEB Ending Cost (ARC) Contributed _ Obligation

Primary Government: ‘County 6/30/2012 $ 3,289 100.00% $ - 6/30/2013 1,764 100.00% - 6/30/2014 78 100,00% : Discretel nted Com, Unit - School Board (Non-Profes Loy

‘The annual cost of OPEB under Governmental Accounting Standards Board (GASB) 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, fs based on the annual required contribution (ARC), The Schoot 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 2014, the School Board’s contribution of $13,320 was equal to the ARC and OPEB cost. The School Board’s annual OPEB cost, the percentage of annuat OPEB cost contributed to the plan, and the net OPEB obligation for 2014 and 2013 are shown below:

Discretely Presented Component Unit

School Board

Fiscal Annual Percentage Net

Year OPEB of ARC OPEB

Ending Cost (ARC) Contributed _ Obligation 6/30/2013 $ 15,780 10.00% s - 6/30/2014 13,320 10.00% :

The remainder of this page is left blank intentionally.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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

D. Funded Status and Funding Progress

Primarv Government: The funded status of the plan as of June 30, 2013, 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

$ $ $

118,770 81,083 37,687 68.27%

1, 110,563 3.39%

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, 2013, the most recent actuarial valuation date, is as follows:

$ $ $

376,778 379

376,399 0.10%

2,666,329 14.12%

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! i

I , I

I I i i j

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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, 2013, the most recent actuarial valuation date, is as follows:

‘Actuarial accrued liability (AL) $118,770 Actuarial vatue of plan assets $ 81,083 Unfunded actuarial accrued lability (UAL) $ 37,687 Funded ratio (actuarial value of plan assets/AAL) 68.27% Covered payroll (active plan members) $1,110,563 UAAL as a percentage of covered payroll 3.39%

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 ast 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 limitatfons.

Discretely Presented Ci nt School Professional Er 2 The funded status of the plan as of June 30, 2013, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL) $ 376,778 Actuarial value of plan assets $ 379 Unfunded actuarial accrued Wability (VAAL) $ 376,399 Funded ratio (actuarial value of plan assets/AAL) 0.40% Covered payroll (active plan members) $ 2,666,329 UAAL as a percentage of covered payrolt 14.12%

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 ast expectations and new estimates are made about the future.

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| | | |

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 17-0ther Postemployment Benefits-YRS 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, 2013 was 30 years.

Discretely Presented Component Unit · School Board (Non-Professional Emploveesl: 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, 2013 was 30 years.

F. Professional Employees - Discretely Presented Component Unit School Board

Plan Description

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, 2014 Note 17-Other 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 ot 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 ptan 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 re rofessional

Projections of benefits forinancial 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 actuariat 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, 2013 was 30 years.

F, Professional Employees - Discretely Presented Component Unit School Board

Plan Description

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 17-0ther Postemoloyment Benefits-YRS Health Insurance Credit: (continued)

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

Funding Policy

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 S 189, 624, $193,975, and $110,342 for the fiscal years ended 2014, 2013, and 2012, respectively. The School Board’s contributions represented 1.11%, 1.11%, and 0.60% of covered payroll for the fiscal years ended 2014, 2013, and 2012, respectively.

Note 18-Moral Obligation:

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 2014 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 2014, the County paid $320, 913 in debt service for the Russell County Public Service Authority.

Note 19-0peratlng 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, 2014, the outstanding balance of the loan was $4,862,800. Future required rent payments are as follows:

Year Ending Operating Lease June 30, Principal Interest

2015 $ 355, 100 $ 109,767 2016 363,300 101,621 Z017 372,100 92,744 2018 381,000 83,925 Z019 390,000 74,898

2020-2024 2,092,900 231,648 2025-2026 908,400 21,487

Totals $ 4,862,800 $ 716,090

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

Note 17-Other Pos men its. th Insurance Credit: F. Professional Employees - Discretely Presented Component Unit School Board (continued) i Poli

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, stich 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 (fi) the amount of creditable service they would have completed at age 60 if they had remained in service to that age.

‘The School Board fs 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 $189,624, $193,975, and $110,342 for the fiscal years ended 2014, 2013, and 2012, respectively. The School Board’s contributions represented 1.11%, 1.11%, and 0.60% of covered payroll for the fiscal years ‘ended 2014, 2013, and 2012, respectively.

Note 18-Moral Obligation:

‘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 2014 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 2014, the ‘County paid $320,913 in debt service for the Russell County Public Service Authority,

Note 19-Operating 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, 2014, the outstanding balance of the loan was $4,862,800. Future required rent payments are as follows:

Year Ending Operating Lease

June 30, Principal Interest 2015 § 355,100 $. 109,767 2016 363,300 101,621 2017 372,100 92,748 2018 381,000 83,925 2019 390,000 74,898

2020-2024 2,092,900 231,648

2025-2026 908,400 21,487 Totals 4,862,800 716,090

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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, 2014, there was one claim before the Virginia Tax Commissioner regarding the Commissioner of Revenue’s determination of machinery and tools tax. The case has been before the Virginia Tax Commissioner twice before. The appellant is seeking approximately $251,000 in tax refund and interest. The County’s attorney has assessed the risk of loss as moderate.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2014

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 ‘atrangements. 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, 2014, there was one claim before the Virginia Tax Commissioner regarding the Commissioner of Revenue’s determination of machinery and tools tax. The case has been before the Virginia Tax Commissioner twice before. The appellant is seeking approximately $251,000 in tax refund and interest, The County’s attorney has assessed the risk of loss as moderate.

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, 2014

Variance with Budgeted Amounts Final Budget •

Actual Positive Original Final Amounts !Negative}

REVENUES General property taxes $ 14,608,611 $ 14,608,611 $ 16,011,500 $ 1,402,889

Other local taxes 4,632,832 4,632,832 3,912,444 (720,388) Permits, privilege fees, and regulatory licenses 18,500 18,500 40,292 21,792 Fines and forfeitures 45,000 45,000 31, 151 (13,849) Revenue from the use of money and property 207,240 207,240 350,010 142,nO Charges for services 433,400 433,400 291,074 (142,326) Miscellaneous 86,200 86,200 86, 115 (85) Recovered costs 708,000 708,000 472,761 (235,239) Intergovernmental:

Commonwealth 8,582,798 8,626,857 7,648,185 (978,672) Federal 2,699,589 2,741,358 2,448, 161 (293, 197)

Total revenues $ 32,022, 170 $ 32,107,998 $ 31,291,693 $ (816,305)

EXPENDITURES Current:

General government administration $ 1,630,404 s 1,678,118 s 1,651,589 s 26,529 Judicial administration 2,093,488 2,024,088 2,039,720 (15,632) Public safety 5,086,789 5,857, 145 5,955,754 (98,609) Public works 3,416,446 3,144,n7 3,220,849 (76,072) Health and welfare 7,674,728 7,674,728 5,634,949 2,039,779 Education 7,576, 138 7,576, 138 7,n6,917 c200,n9) Parks, recreation, and cultural 466,207 506,207 507,694 (1,487) Community development 1,503,825 1,679,825 1,701,241 (21,416) Nondepartmental 234,000 214,400 112,027 102,373

Capital projects Debt service:

Principal retirement 1,579,643 1,579,643 1,316,096 263,547 Interest and other fiscal charges 352,481 352,481 493,927 (141,446)

Total expenditures s 31,614,149 $ 32,287,550 s 30,410,763 $ 1,876,787

Excess (deficiency) of revenues over (under) expenditures s 408,021 $ (179,552) $ 880,930 s 1,060,482

OTHER FINANCING SOURCES (USES) Transfers In $ s $ $ Transfers out (200,000) (150,000) (212,781) (62,781) Issuance of capital leases 334, 164 334,164

Total other financing sources (uses) s (200,000) $ (150,000) $ 121,383 $ 271,383

Net change in fund balances $ 208,021 $ (329,552) $ 1,002,313 s 1,331,865 Fund balances - beginning (123,021) 324,734 5,092, 135 4,767,401 Fund balances · ending s 85,000 $ (4,818) $ 6,094,448 $ 6,099,266

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County of Russell, Virginia General Fund

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2014

Exhibit 11

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 fotergovernmental:

Commonwealth

Federal

Total revenues

EXPENDITURES Current: General government administration sludical administration Public safety Public works Heatth and welfare Education Packs, recreation, and cultural ‘Community devetopment Nondepartmental Capital projects Debt service: Principal retirement Interest and other fiscal charges Total expencitures

Excess (deficiency) of revenues over (under) ‘expenditures

‘OTHER FINANCING SOURCES (USES) Transfers in “Transfers out Issuance of capital teases Total other financing sources (uses)

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

Varlance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) $14,608,611 $ 14,608,611 $ 16,011,500 $ 1,402,889 4,632,832 4,632,832 3,912,444 (720,388) 18,500 18,500 40,292 21,79 45,000 45,000 31,451 (13,849) 207,240 207,240 350,010 442,770 433,400 433,400 1,074 (142,326) 86,200 86,200 86,115 5) 708,000 708,000 472,761 235,239) 8,582,798 8,626,857 7,648,185 (978,672) 2,699,589 2,741,358 2,448,161 (293,197) $32,072,170 $32,107,998 § 31,293,693 § (616,305) $ 1,630,404 $ 1,678,118 $1,651,589 § 26,529 2,093,488 2,024,088 2,039,720 (15,632) 5,086,789 5,857,145 5,955,754 (98,609) 3,416,446 3,144,777 3,220,849 76,072) 7974728 7,874,728 5,634,949 7,039,779 7,576,138 7,576,138 7,776,917 (200,779) 486,207 506,207 307,694 (1,487) 1,503,825 1,679,825. 1,701,241 21,416) 234,000 214,400 112,027 402,373 1,579,643 1,579,643 1,316,096 263,547 352,481 352,481 493,927_(141,446) $31,614,149 §32,287,550$ 30,410,763 § 1,876,787 $408,021 $ (179,552) $ 880,930 _$ 1,060,482 s “S$ -$ -§ : (200,000) (150,000) 12,781) (62,781) : : 334,164 334,164 $__@00,000) $150,000) $121,383 S27, 363 $ 208,021 $ (829,552) $ 1,002,313 $1,331,865 (123,021) 324,734 5,002,135 4,767,401 $85,000 $4,818) $6,094,448 56,009,266

Exhibit 12 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, 2014

Variance with Budgeted Amounts Final Budget -

Actual Positive Original Final Amounts

REVENUES Other local taxes $ 900,000 $ 900,000 $ 961,413 $ 61,413 Revenue from the use of money and property 2,079 2,079

Total revenues $ 900,000 $ 900,000 $ 963,492 $ 63,492

EXPENDITURES Current:

Public works $ 900,000 $ 900,000 $ 1,280,045 $ (380,045)

Excess (deficiency) of revenues over (under) expenditures $ $ $ (316,553) $ (316,553)

Net·change In fund balances $ $ $ (316,553) $ (316,553) Fund balances - beginning 889,767 889,767 Fund balances - ending s $ s 573,214 $ 573,214

-61-

County of Russell, Virginia

Spectat Revenue Fund - Coal Road Fund

‘Schedule of Revenues, Expenditures, and Changes tn Fund Balances - Budget and Actual For the Year Ended June 30,2014

Exhibit 12

REVENUES

Other local taxes

Revenue from the use of money and property Total revenues

EXPENDITURES Currents Public works

Excess (deficiency) of revenues over (under) expenditures ‘Net change tn fund balances

Fund balances - beginning Faind balances - ending

Variance with Budgeted Amounts Final Budget - Actuat Positive

Original Final Amounts {Negative} 900,000 $ 900,000 $961,413 $ 61413 2,079 2,079 ‘900,000 $900,000 $963,492 § 63,492 900,000 $ 900,000 $ 1,280,045 $ (380,045) _ 8 = $ (316,553) $_ (316,553) -$ + $16,553) $16,553) : 889,767, 889,767, _s = S__573214 573,214

61-

Exhibit 13 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, 2014

Variance with Budgeted Amounts Final Budget -

Actual Positive Original Final Amounts {Negative)

REVENUES Intergovernmental:

Federal s 2,746,846 s 2,746,846 s 1,777,312 s (969,534) Total revenues $ 2,746,846 s 2,746,846 $ 1,777,312 $ (969,534)

EXPENDITURES Current:

Health and welfare $ 2,746,846 $ 2,746,846 $ 1,777,312 $ 969,534

Excess (deficiency) of revenues over (under) expenditures s s $ $

Net change in fund balances $ $ $ s Fund balances • beginning 43,399 43,399 Fund balances • ending $ $ $ 43,399 $ 43,399

-62-

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, 2014

Exhibit 13

REVENUES

Intergovernmental: 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 Final ‘Amounts (Negative) $2,746,846 $2,746,846 § 1,777312$ (969,534) $2,786,846 §2,746,846§ 1,777,312 § (068,534) $2,746,846 $2,746,846 $ 1,777,312 $ 969,534 8 : : _s $ : : -$ : - 43,399 £3,399 z zi = 3,395 43,399

Exhibit 14 County of Russell, Virginia

Schedule of Penston and OPED Funding Progress For the Year Ended June 30, 201"4

Primary Government

County Retirement Plan;

Actuar1al Actuarial Actuarial Unfunded UAAL as a Valuation Value of Accrued AAL (UAAL) Funded Ratlet Covered %ofCovered

as of “”'" Liability (ML} {3) - !2! {2)/(31 Payroll Payroll (4!1!6l (1) (2) (3) {4) (5) (6) (7)

June 30, 2013 $ 20,247,742 28,813,471 $ 8,625,729 70.11% $ 5,434,051 158.73% June 30, 20t2 19,894,452 28,359,443 8,464,991 70.15% 5,4811683 154.42% June30,2011 20,084,643 27,499,897 7,415,254 73.04% 5,413,451 136.98%

County Other Postemptoyment Beneflts·Health Insurance:

Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Value of Accrued AAL{UML) Funded Ratio Covered % of Covered

as of Assets Llabltlty (ML) {J) - {2) (2)1{3! PaX,!oll Payroll {4}/(6) {1) {2) (3) {4) {5) (6) {7)

July 11 2012 $ $ 198,600 198,600 0.00% $ 5,576,300 3.56% July 1, 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 Heat th Insurance Credit:

Actuarial Actuarial Actuarfat Unfunded UAALasa Valuation Value of Accrued AAL{UML) Funded Ratio Covered % of Covered

as of AS$ets Liability (AAL) (3). {2) 121113) Payroll Payroll (4)/(6) {1) {2) {J) (4) (5) {6) (7)

June 30, 2013 $ 81,083 $ 110,no 37,687 68.27% $ 1,110,563 3.39% 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%

Discretely Presented Component Unit:

School Board Non·Professfonal Retirement Plan:

Actuarial Actuarial Actuarial Unfunded UMLas a Valuation Value of Accrued ML{UML) Funded Ratio covered % of Covered

as <Jf “'”'~ Liabll!~ {AAL} {3). {2) {2)/{l! Payroll Payroll (4)/(6) {1) (2) (J) (4) {5) 16) {7)

June 30, 2013 $ f0,112,448 16,485,081 6,1n,631 61.34% $ 2,666,329 239.00% June 30, 2012 10,068,998 16,469,710 6,400,712 61.14% 2,689,457 237.99% June-30, 2011 10,328,276 16,067,1"6 5,738,870 64.28% 2,693,695 213.05%

SChOOI Board Other Postemployment BM&fits·Health Insurance:

Actuartat Actuarial Actual’fal Unrunded UMLasa Valuation Value of Accru~d AAL{UML) Funded Ratio Covered % of Covered

as or Assets Ltab!Uty (AAL) (J)-{2) (2)1(3) P’a.~roll PaY<oll (4)/{6) {1) (2) (3) {4) (5) (6) {7)

July 1, 2012 $ $ 8,991,400 $ B,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, 2003 3,755,059 3,755,059 O.OO:l 24,186,441 15.53%

School Board other Postemployment Beneffts·VRS Health Insurance Credit:

Actuarial Actuarial Actuarial Unfunded UAALasa Va\uilltlon Valueaf Accrued MJ…(UAAL} Funded Ratio Coveted % of Covered as of{*) Assets Uahtlity (ML) (3)- (2) {2)/{31 Payroll Payroll (4)/(6)

Ill (2) {J) {4) (5) {6) {7)

June 30, 2013 $ 379 $ 376,na $ 376,399 0.10% $ 2,666,329 14.12% June 30, 2012 161,463 161,-163 0,00% 2,689,4_57 6.00%

(*) • .line 30, 2012 was the initial yaluatfon as the School Board recently joined this plan.

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ent 4 County of Rust Vigna ‘Schedule of Pension and OPED Funding Progress Forth Your Ended June 40, 2014

Primary Government County Raement Par: Acuna cunt tuna ate alae Vantin ——_Yalueot ‘Accned ——AML(UARL)— “Funded alo Covered Xa Covad 50h assets _ ually (AAL)__()- ava) Payell___Payealt 8) a @ @ ® o 7 4one30,203 $ QU7R —§ WANAN $ BSD TO $B RKO ETE uno, 202 "BM DBA NsesONT TOI Sasies haan ‘ne, 2011 200466 Daa TNS Ta sated. 136908

County omer Posteptoyment Sens Healt surance:

‘Acuna dent earn tuned UelLas a Vavation ——Yaeot tecrved —-AAL(UAAL)— “Funded Rao vad Ko Covered Bet ssets___uabity AL) __Q)- Qh eve} yl —_—_Poiol (a6) Oi @ ° @ 8) 6 a says § $ 19s § spo oom mean k “hy 4 2010 aoe MNO. Ss ak cay 4 2008 BGs 637.0 41887 3.0%

county Other Postenployent Berets Rs Health Insaco Cred:

etwas Actua etarat tne uae Volusion ———ValuvoF ‘Acrued ——AALUAAL)—Punded ato covered of Covered er Aseis Abily WAL) _ 0) eo) Payell___Paeos 6/6) o a o @ 8) o a June30,208 $B tiyMS Tame § ts ak une 36, 2012 mat 01809 2616 fea 1K ‘ge 3, 2041 mam 01667 was am ase tam Discretaly Potent Component Unt

Sebel Board Non PofessnalRativenent sa

Aetuaral Actual taal unde UMbaca Vauatien Valea necrusd ——-AL(UAAL}— “Faded Rat Cvered Ke Covered Bal Assets tnbty Waly =) ave) Payrol— Pay 4/6) wT @ a a cc) 6) ow une30,208 $ 10,11246 § T6aBSOBL $63 —ataHR $e). Sune30, 20 “0,069” H6aes7t0 ata eins? 798% une30, 20111935276 1600746 S738 28 ene 18

‘schol Board ther Pstemplayart Benefit insurances

Jetwwisl Actual etuaat Unfunded UaLasa Vaaion ——alueof dened AL (VAAL) Famed ato avert Covered ot sols __ Laity WAL) G) GD aya) aylt_—_Pal a6) a @ o @ @ 6 a ays § oon § tao iy 1, 2010 0.005 mssea Tae My 32008 57507350990. ateea 15.588 Schoo! Board eter Pestenplayment Benes VS Heath inswance Cea: re ee eo) Walaa Yalonioe ——YalvoF peered AAL(UAAL}— “Pande Rat Covered Raf Coverad aso) desis Asbtiry My _)=Q) oye ayell___Fayrl 6) a @ @ @ @ o 2) June0,20 $=) SBT SEF eh une 30, 2012 nn 2876008

(= sine 3, 202 v8 the a valle asthe Shot Board recently one tla

Other Supplementary Information

Special Welfare - The Special Welfare fund accounts for those funds belonging to individuals entrusted to the local social services agency, such as foster care children.

FIDUCIARY FUNDS

Special Welfare - The Special Welfare fund accounts for those funds belonging to individuals entrusted to the local social services agency, such as foster care children.

Exhibit 15 County of Russell, Virginia

Combined Statement of Changes in Assets and Liabilities Agency Funds

For the Year Ended June 30, 2014

Balance Balance Beginning End of Year Additions Deletions of Year

Assets Current Assets

Cash and cash equivalents Special Welfare Fund $ 60,387 $ 80,952 $ (72,407) $ 68,932 VASAP Fund (9,717) 291,766 (265,860) 16, 189

Total Assets $ 50,670 $ 372,718 s (338,267) s 85, 121

Llabflities Amounts held for socfal services clients s 60,387 $ 80,952 $ (72,407) $ 68,932 Amounts held for V ASAP (9,717) 291,766 (265,860) 16, 189

Total Liabilities $ 50,670 $ 372,718 $ (338,267) $ 85,121

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Exhibit 15 County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities ‘Agency Funds For the Year Ended June 30, 2014

Beginning End

Assets Current Assets Cash and cash equivalents ‘Special Welfare Fund $ 60,387 $ 80,952 $ (72,407) $ 68,932 ASAP Fund (9,717) __ 291,766 __ (265,860) __ 16,189 Total Assets $50,670 “§ 372,718 § (938,267) “$85,421 Liabitities ‘Amounts held for soctal services clients $60,387 $ 80,952 § (72,407) $ 68,932 ‘Amounts held for VASAP (9,717) 291,766 (265,860) __ 16,189. Total Liabilities 530,670 —$ 372,718 _§ (338,267) § 85,121

DISCRETELY PRESENTED COMPONENT UNIT - SCHOOL BOARD

MAJOR GOVERNMENTAL FUNDS

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

DISCRETELY PRESENTED COMPONENT UNIT - SCHOOL BOARD

MAJOR GOVERNMENTAL FUNDS

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

ASSETS cash and cash equivalents

County of Russell, Vfrsfnfa Balance Sheet

Discretely Presented Component Unit· School Board June 30, 2014

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

Unasslgned: Total fund balances Total llabllitles and fund balances

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

Total fund balances per above

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

Land Buildings and Improvements Machinery and equipment

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

Compensated absences Early retirement incentfve Net OPEB obligation

Net position of governmental activities

-65-

5,636,345 10,378,724 1,436,490

(758,422) (70,800)

(706,693)

$ s

Exhibit 16

School Operating

f!!!

780,728

3,460 1,165,330

748,910 2,698,428

104,016 888,935

1, 148,626 2, 141,sn

748,910

12,924 224,583 (429,566) 556,851

2,698,428

556,851

17,451,559

(1,535,915)

$ 16,472,495

County of Russell, Virgina Balance Sheet

Discretoly Presented Component Unit - School Board June 30, 2014

Exhibit 16

ASSETS Cash and cash equivalents Recelvables (net of allowance for uncollectibles): ‘Accounts receivable Due from other governmental units Prepatd items Total assets

LIABILITIES AND FUND BALANCES Liabilttes:

‘Accounts payable

Salaries payable

Due to primary government. ‘otal liabilities

Fund balances: Nonspendable: Prepatd items ‘Committed: ‘Textbook purchases. Regional Adult Education Unassigned: ‘Total fund balances Total liabilities and fund balances

Amounts reported for governmental activities inthe statement of net position (Exhibit 1) are different because:

‘School

‘Operating Fund

104,016 888,935 8,626

241 577

“Total fund balances per above $556,051 Capita assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Land 5,636,346

Buiidings and improvements 10,378,724

‘Machinery and equipment 1,436,490 17,451,559 Long-term liabilities, including early retirement incentives, are not due and payable inthe current period and, therefore, are not reported inthe funds.

Compensated absences (738,422)

Early retirement incentive (70,800)

Net OPEB obligation (706,653) (1,535,915) ‘et position of governmental activities SC

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, 2014

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

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 activit1es the cost of those assets Is allocated over their estimated useful Uves 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 ex~nses reported in the statement of act1v1tles do not require the use of current financial resources and, therefore are not reported as expenditures in goVemmental funds.

374,031 992,638

(937,878)

(7,342) 107,880

Exhibit 17

School Operating

f.!m!!

$ 763 512,396 221,283 648,730

7,358,020 25,867,216 4,237,040

s 38,845,448

$ 38,526,104

s $

319,344

319,344 237,507 556,851

319,344

428,791

(Increase) decrease in compensated absences (Increase) decrease In early retirement incentive (Increase) decrease in net OPEB obligation (279, 157) (178,619)

Change In net position of governmental activities $ 569,516

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Exhibit 17 County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds - Discretaly Presented Component Unit » School Board.

For the Year Ended June 30, 2014 School Operating Fund

REVENUES Revenue from the use of money and property $ 763 Charges for services, 512,396 ‘iscellaneous 221,283 Recovered costs 648,730 Intergovernmentat:

Local government 7,358,000

Commonwealth 25,867,216

Federal 4,237,040

Total revenues 538,05 448

EXPENDITURES ‘current:

Education $38,526,104 Excess (deficiency) of revenues over (under)

expenditures 319,044 Net change in fund balances $319.8 Fund batances + begining 237,807 Fund balances - ending 5 __556,051 ‘Amounts reported for governmental activities tn the statement of actlites (Exhibit 2) are different because: Net change in fund balances - total governmental funds - per above $319.34 Governmental funds report capital outlays as expencitures. However, in the statement of activities the cost of those astets Is allocated over their estimated useful les and reported as deprecation expense. This isthe amount by which capital outlays exceeded depreciation in the current period,

capita outlays 374,031

Reversion of assets back to the School Board (net) 992,638

Depreciation expense (37.87%) 28,791 Some expenses reported in the statement of activities do not require the use of current finaical resources and, therefore are not reported as expenditures in governmental funds.

(Increase) decrease in compensated absences 7,382)

{Inctease) decrease tn early retirement incentive 107,880

\lncrease) decrease in net OPEB obligation 279,157), (178,619) ‘Change in net postion of governmental activities Tae

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, 2014

School Operating Fund

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

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

Budgeted Amounts Original Final

$ 1,500 $ 1,500 850,768 850,768 170,000 170,000 557,402 557,402

7,491,405 7,491,405 26,888,497 26,888,497 4,700,655 4,700,655

$ 40,660,227 s 40,660,227

$ 40,660,227 $ 40,660,227

$ $

-67-

Actual

$ 763 512,396 221,283 648,730

7,358,020 25,867,216 4,237,040

$ 38,845,448

$ 38,526, 104

$ 319,344

$ 319,344 237,507

$ 556,851

Variance with Final Budget

Positive (Nesative)

$ (737) (338,372)

51,283 91,328

(133,385) (1,021,281)

(463,615) $ (1,814,779)

$ 2, 134, 123

.$ 319,344

$ 319,344 237,507

$ 556,851

County of Russell, Virginia

Exhibit 18

‘Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Discretely Presented Component Unit - School Board For the Year Ended June 30, 2014

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

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

‘Griginal Final ‘Actual (Negative) $1500 § 1,500 763 § (737) 850,768 850,768 512,396 (338,372) 170,000 170,000 224,283, 51,283 357,402 557,402 648,730 11,328 7,491,405 7,491,405. 7,358,020 (133,385) 26,888,497 26,888,497 25,867,216 (1,021,281) 4,700,655 __4,700,655 4,237,040 (463,615) 540,660,227 $40,660,227 $38,845,448 § (1,814,779) $40,660,227 $ 40,660,227 $ 38,526,104 $2,134,123 $ ~$ = $319,344 $319,344 s “$8 + 8 319,84 $319,344 : : 237,507 237,507

$ ~$ = $556,851 $556,851

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Supporting Schedules

County of Russell, Virginia Schedule 1 Schedule of Revenues· Budget and Actual Page 1 of6

Governmental Funds For the Year Ended June 30, 2014

Variance with Final Budget

Orieinal Final l’osftfve Fund. Mafor and Minor Revenue Source Budget Budget Actual !Negative!

General Fund: Revenue from local sources:

General property taxes; Real Property Tax $ 8, 100,000 $ 8,100,000 $ 7i146,411 $ (953,589) Real and Personal PSC Tax 1,184,500 1, 184,500 1,885,239 700,739 Personal Property Tax 2,722,000 2,722,000 3,444,163 722.163 Mobile Home Tax 110,000 110,000 114,574 4,574 Machinery and Tools Tax 1,202,111 1,202,111 1,509,054 306,9-43 Merchants Capital 25,000 25,000 34,415 9,415 Mfneral Tax 940,000 940,000 1,346,745 406,745 Penaltfes 100,000 100,000 153,016 53,016 Interest 225,000 225,000 377,883 152,883

Total genel’al property taxes $ 14,608,611 $ 14,608,611 $ 16,011,500 $ 1,402,889

Other local taxes: Local Sales and Use Tax $ 1.925,517 $ 1,925,517 $ 1,736,895 $ (188,622) Consumers’ Utility Tax 600,000 600,000 547,137 (52,863) consumption Taxes 90,000 90,000 83,841 (6,159) Franchise License Tax 15,000 15,000 2,617 (12,383) Coal Severance Tax 1,500,000 1,500,000 961,413 (538,587) Bank Stock Tax 9,489 9,489 Grantee tax 60,000 60,000 94,197 34,797 Motor Vehfcle Licenses 417,315 417,315 -476,255 58,940 Taxes on Recordation and Wills 25,000 25,000 (25,000)

Total other local taxes $ 4,632,832 $ 4,632,832 $ 3,912,444 $ (720,388}

Permits, pr1vflege fees, and regulatory Ucenses: Animal licenses $ 1,700 $ 1,700 $ 3,057 $ 1,357 Building permits 15,000 151000 34,431 19,431 Other pennfts and other licenses 1,600 1,800 2.804 1,004

Total permits, privilege fees, and regulatory licenses $ 18,500 $ 18,500 $ 40,292 $ 21,792

fines and forfeitures: Coult fines and forfeitures $ 45,000 $ 45,000 s 31, 151 s (13,849}

Revenue from use of money and property: Revenue from use of money s 35,000 $ 35,000 $ 33,643 $ (1,357) Revenue from use of property 1n 240 172,240 316,367 144,127

Total revenue from use of money and property $ 207,240 $ 207,240 $ 350,010 $ 142,770

Charges for setvices: Charges for san1tation and waste removal $ 360,000 $ 360,000 $ 166, 185 $ (193,815) Charges for courthouse secur1ty 40,000 40,000 54,495 14,495 Charges for cannery operations 31,225 31,225 Charges for commonwealth attorney 2,000 2,000 9,174 7,174 Charges for courthouse maintenance 7,000 7,000 10,255 3,255 Charges for jatl and Inmate fees 6,000 6,000 4,840 (1, 160) Charges for district court 2,301 2,301 Charges for library 1-4,500 14,500 2,922 (11,578) Other charges for servtces 3,900 3,900 9,677 5,m

Total charges for services $ 433,400 $ 433,400 $ 291,074 $ (142,326)

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County of Russell, Virgata

Schedule +

Schedule of Revenues - Budget and Actual Page tof ‘Governmental Funds For the Year Endad June 30, 2014 Varlance with inal Budget Original Final Positive ‘Fund, aor and Minor Revenue Source Budget Budget Actual Megatv) ‘General Fund: Revenue fram local sources: General propery taxes: Real Property Tax $ 8,100,000 $ 8,100,000 $7145.11 $053,589) Real and Personal PSC Tax 1184500 1,184,500 885,239 700,739 Personal Property Tax 27000 27,000 3444163 722,163 Hobie Home Tax 110,000 "110,000 "144874 4574 Machinery and Tools Tax vain 4amayttt 508.054 308,903 Merchants Capital 25,000 25,000 Mts 95 Miveral Tax 940,000 940,000 1,6,745 8,745, Penalties 100,000 100,000 153,016 33016 Interest 723,00 725,000 57788 10,888 Total general property taxes peags11§Taena 611 Feo, 5005 740,089 ‘ther focal taxes: Local Sates and Use Tox $ ost $ msst7 $ 760 $ (88D Consumers Uety Tax ooo "e00,000’s0y.37 883) Consumption Taxes 90,00 0,000 3.84 (6159 Franchise cense Tax 15,000, 15,000 2617 (12383) ‘Cal Severance Tex 1300,000 1,500,000 961,413 38587) Bank Stock Tax : : 9,489 949 Grantee tax 2,00 £0,000 4797 3497 ‘Motor Vehicle Lenses 417315 A715 476,255 58,940 “Toxes on Rocordation and Wis 25,000 25,000 35,00) Total other local taxes 3 Asse AGE SSAA $070,386) Permits, pivege fees, and regulatory Ucenses: ‘nial icenses $ ym $4700 307 § 4,357 Buldng permits 15,000 15,000 40 15,81 ‘ther permits and ober censes 4,800 1,800 2,804 1,004 Tota pemits, privilege fees, nd epuatry Uoanses 1.500 § 7a, 300| Ey CE) Fines and forfetures: ‘Court ines and fofatures $s 45000 § 45,000 3151 $3.80) Revenue from use of money and propery: Revenue from use of money $ 35000 § 35,000 us $4357) Revenue from us of property tmgm 16.367 tant “otal revenue from use of money and property $27 0S 707 0 F 0,010 F a7, Charges for services: Charges fr sanitation and waste removal $ 360.000 $ © Mo,000 $ 166185 $93,815) Charges for courthouse secrty 4000 40,000 085 485, Charges for canary operations 305 ans Charges for commenwealt attorney 2,000 2,000 9nt74 717% Charges for courthouse maintenance 7,00 7,900 10235 325 Charges for all ad inmate oes 6,000 6000 4840 5360) Charges for dst court 2,301 2301 Charges for tibrary 14300 14,00 29.18 578) (Other charges fr services 3500 3300 9,677 S77 Tota charges for services 83.400 B3,400_F_ BO Sa

County of Russell, Virginia Schedule 1

Schedule of Revenues· Budget and Actu21I Page 2 of 6

Ciovernmental funds For the Year Ended June 30, 2014

Variance with Final Budget

Original Final Positive Fund. Ma1or and Mfnor Revenue Source Budget .!!!l1lli Actual (Negative)

General Fund: (Continued) Revenue from local sources: (Continued)

Miscellaneous revenue: Other miscellaneous revenue $ 76,200 $ 76,200 $ 76,306 $ 106 Sate of property/surplus 10,000 10,000 9,809 (191)

Total miscellaneous revenue $ 86,200 $ 86,200 $ 86,115 $ (85)

Recovered costs: Soc.fat services $ $ $ 80, 195 $ 80,195 Health department 184,913 184,913 School resource officer 48,000 48,000 67,855 19,855 Insurance recoveries 15,487 15,487 Regional jail 70,767 70,767 Industrial development 21,627 21,621 Other Recovered Costs 660,000 660,000 31,917 (628,083)

Total recovered costs $ 708,000 $ 708,000 $ 472,761 $ (235,239)

Total revenue from local sources $ 20,739,783 $ 20,739,783 $ 21,195,347 $ 455,564

Intergovernmental: Revenue from the Commonwealth:

Noncategorte.al afd: Motor veh1cles carriers’ tax $ 150,000 $ 150,000 $ 147,463 $ (2,537) Mobile home titling tax 100,000 100,000 80,293 (19,707) Motor vehicle rental tax 2,500 2,500 2,244 (256) State budget reduction (282,317) (282,317) 282,317 Communications tax 900,000 900,000 866,078 (33,922) State recordatlon tax 20,000 20,000 29,035 9,035 Personal property tax reltef act funds 1,437,003 1,437,003 1,437,003

Total noncategor1cal aid $ 2,327,186 $ 2,327, 186 $ 21562,116 $ 234,930

Categorical aid: Shared expenses:

Commonwealth’s attorney $ 333,441 $ 333,441 $ 351, 123 $ 17,682 Sheriff 1,352,618 1,352,618 1,366,051 13,433 Commfssloner of revenue 184,329 184,329 172,919 (11,410) Treasurer 107,314 107,314 108,969 1,655 Medical examiner 400 400 (400) Registrar/electoral board 43,439 43,439 41,018 (2,421) Clerk of the Circuit Court 253,161 253, 161 269,322 16,161 Total Shared Expenses $ 2,274,702 $ 2,274,702 $ 2 309,402 $ 34,700

Other categorical aid: VfcUm witness grant $ 40,000 s 40,000 $ 30,859 $ (9, 141) GIS 450 450 E911 state funds 50,000 50,000 45,140 (4,860) Law enforcement grants 105,000 135,680 31,467 (104,213) Asset forfeiture funds 8,546 8,546

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county of Russell, Virginia Schedule 1 Schodule of Revenues = Budget and Actual Page 20f6 Governmental Funds For the Year Ended June 30, 2014 Variance with Final Budget Original Final Positive und, Malor and Minor Revenus Source Budget Budget ‘Actual ——(egative) General Fund: (Continued) Revenue from local sources: (Continued) ‘Miscellaneous revenve: Other miscetaneousreverue $ 76200 $ 78,200 $76,306 § 106 Sale of property/surpus 40,000 10,000, 5,809. on, ‘otal miscallaneousrevenve S200 § 8,100 § 84,118 5 @ Recovered costs: Social services s -§ S 80195 $80,185 Health cepartment. : + 18493” ta,883 School resource officer 48,000 48,000 67,855 19,855, Insurance recoveries 15,487 15.457 Regional jit : 70,767 70,767 Industral development 21,627 21,87 Other Recovered Costs 680,000 660,000 31,917 ___ (628,083) “otal recovered costs 3 708,00 $708,000 $ —a7a,761§ 235,230) “Total rovenve from local sources $20,739,783 _$ 20,739,763 § 21,195,467 $455,564 {ntergovernmental: Revenue from the Commonwealth: Noncateporca ald: ‘Hotor vehicles carters tax S 150,000 $ 150,00 § 147463 § 837) ‘Mobile home titing tax 100,000 100,000 20,283 994707) ‘Motor vehicle rental tax 2,500 2,500 2,244 258) State budget reducttn 232,317) 28,317) 282317 Communications tax 00,000 900,000 866,078 (33,922) State recordation tax 720,000 20,000 29,035 93085 Personal property tax rll act fds 4,437,003 4497,003_1,437,003. “Total noncategorcal aid 52,307,186 $2,327,186 82,582,116 -§ 234080 categorical aid: ‘Shared expenses: Commonwealtisattomey S aaa § KRM § 351123 $17,682 Sherif 1,352,618 1,352,618 1,366,051 1349 Commissioner of revenue 74379184329 172,919 (4410) “Treasurer forsts 10714 108,969 1655 ‘edical examiner 0 400 ‘400 Reglstrar/lectoral board 848 349 41,018 ean) Clerk ofthe Cir Court 253,161 253,164 269,302 16.461 “Total Shared Bqpenses S_274;70 57,274,700 _§ 2300,402 $34,700 (ther categorical aids Vict witness grant $900 $00 $30.89 $I) 6s 460 60 £941 tate funds 50,000 0,000 45140 4.840) ay enforcement grants 105,000 135,680 31467 (104,213), Asso frfettue funds 8,546 86

County of Russell, Virginia Schedule 1 Schedule of Revenues ~ Budget and At;:tual Page3of6

Governmental Funds For.the Year Ended June 30, 2014

Variance with Final Budget

Original Ffnal Positive Fund. Mafor and Mfnor Revenue Sou…ce Budget Budget ~ <Negative)

G&nera1 Fund: (Continued) Intergovernmental: (continued) Revenue from the Commonwealth: {Contfnued)

categorical aid: (Continued) other categor1cal aid: (Continued)

EMS grants $ $ $ 29,245 $ 29,245 Fire Program Funds 60,000 60,000 71,545 11,545 Lfbrory gronts 97,677 97,6n 100,690 3,013 Litter control grants 13,379 13,379 Clerk of the circuit court grants 7,812 7,812 Public asststance 2,220,198 2,220,198 1,715,991 (504,207) Comprehensive servtces act 1,408,035 1,408,035 571,006 (837,029) School resource officer grants 70,537 70,537 VDOT revenue sharfng 80,000 80,000 Total other categorical afd $ 3,980,910 $ 4,024,969 $ 2,776,667 $ (1,248, 302)

Total categortcat afd $ 6,255,612 $ 6,299,671 $ 5,086,069 $ (1,213,602)

Total revenue from the Commonwet11lth $ 8,582,798 $ 8,626,857 $ 7,648,185 $ (978,672!

Revenue from the federal government: Categorical afd:

Forfeited Assets $ $ $ 296,061 $ 296,061 Emergency management grants 41,769 6,769 (35,000) Violence against women 20,860 20,860 ARRA • Watershed protection grant 24,250 24,250 DMV ground transportation safety grant 13,708 13,708 Public assistance 2,699,589 2,699,589 2,086,513 (613,076}

Total categor1cal afd $ 2,699,589 $ 2,741,358 $ 2,448, 161 $ (293, 197)

'Total revenue from the federal government $ 2,699,589 $ 2,741,358 $ 2,448, 161 $ (293, 197}

Total General Fund $ 32,022,170 $ 32,107,998 $ 31,291,693 $ (816,305)

Specfal Revenue Funds: Coal Road Fund: Revenue from local sources:

Other local taxes: Coal road taxes $ 900,000 $ 900,000 $ 961,413 $ 61,413

Revenue from use of money and property: Revenue from the use of money $ $ 2,079 $ 2,079

Total revenue from local sources $ 900,000 $ 900,000 $ 963,492 $ 63,492

Total Coal Road Fund $ 900,000 $ 900,000 $ 963,492 $ 63,492

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County of Russel, Virginia

Schedule 1

Schedule of Revenues - Budget and Actual Page 3 of 6 ‘Governmental Funds For the Year Ended June 30, 2014 Variance with Final Budget Original Finat Positive und, Mafor end itinor Revenue Source, Budget ‘Bude ‘Actual ——Megative) ‘General Fund: (Continued) Inergovornmentat: (continued) Revenue from the Cemamanwealth: (Continued) {Categorical ai: (Continued) (Other categorical aid: (Continued) EMS grants $ -$ a Fire Program Funds 0,000 60,000 71546 11,546, Lorasy grants 767 167 100,690 303 Litter control grants Ban 2am Clerc of the circuit cour grants : 7812 7812 Public assstance 2,220,198 2,200,198 «4,715,991 (504,207) ‘Comprehensive services act 4)408,035 1408085 57,006 (637,029) ‘Sehoot resource officer grants . : 757 70,537 ‘VDOT revenue sharing : 30,000 80,000, ‘otal other categorical ald SS WHO $4024 969 §—2:776,667 3 C248, 302) Total categorical ad $6,255,612 § 6.209671 $ 5,006,069 $ (1,213,602) “Total revenue from the Commonwealth § 8,587,798 § 8,626,857 $ 7,688,105 $ (978,672) Revenue from the federal government: Categorical nics Forfelted Assets $ 8 S$ 296,061 $296,061 Emergency management grants A768 6,769 25,000) Viotence against women 20,860 720,860 ARRA - Watershed protection grant 24250 4,250 DA ground transportation safety grant 13,708 13,708 Public asistance 2,699,509 2,699,589 2,086,513 (613,076) “Total categorical ald 52,699,509 $2,761,358 8 2,448,f61§ (93,497) “Total revenue from the federal government $2,699,509 $2,741,358 § 2448161 § 093,197) ‘Total General Fund $32,072,170§32,107,998§ 31,291,693. §_ (816,309) ‘Spectal Revenue Funds: Coal Road Fund: Revenue trom tocal sources: Other local taxes: Coat road taxes $3 900,000 § 900,000 § 961,613 § 61,413 Revenue from use of maney and property: Revenue from the use of money 8 § $2079 § 2.079 “Total revenue from local sources $900,000 § 900,000 §_96aioz§ 63,492 ‘otal Coal Road Fund $900,000 $ 900,000 $ 963,452 $63,492

County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 4 of 6

Governmental Funds For the Year Ended June 30, 2.014

Variance with Final Budget

Original Final Positive Fund. Ma1or and Minor ltevenue Soui-ce ~ Jl.YJ!8!! Actual tNesativel

Special Revenue Funds: (Continued) Workforce Investment Board Fund: Intergovernmental: Revenue from the federal government:

Categorical afd: Workforce Investment s 2,746,846 s 2,746,846 s 1,m,312 s (969,534)

Total revenue from the federal government $ 2,746,846 $ 2,746,846 $ 11m,312 $ (969,534)

Total Workforce Investment Board Fund $ 2,746,846 $ 2,746,846 $ 1,m,312 $ (969,534)

Total Primary Government $ 35,669,016 $ 35,754,844 s 34,032,497 $ (1,722,347)

Discretely Presented Component Untt - School Board: School Operating Fund: Revenue from local sources:

Revenue from use of money and property~ Revenue from the use of money $ $ $ 13 $ 13 Revenue from the use of property 1,500 1,500 750 (750)

Total revenue from use of money and property $ 1,500 $ 1,500 $ 763 s (737)

Charges for services: Cafeteria sales s 682,214 $ 682,214 $ 412,238 $ (269,976) Tuition payments 5,000 5JOOO 4,216 (784) Drivers Ed fees 14,000 14,000 11,640 (2,360) Other chai"ges for services 1,000 1,000 1,431 431 Reg1onal Adult Education 138,554 138,554 78,775 (59,779) GED Testing fees 10 000 10,000 4,096 (5,904)

Total charges for services s 850,768 s 850,768 $ 512,396 s (338,372)

Miscellaneous revenue: Other mlsc:ellaM?aus $ 170,000 s 170,000 $ 221,283 $ 51,283

Recovered costs: Insurance recoveries $ $ $ 27,825 $ 27,825 Extra duties revenue 23i000 23,000 14,704 (8,296) Dual Enrollment 350,000 350,000 280,877 (69, 123) ConsorJ.lum Clerical 1,725 1,ns Sale of Equfpment and Suppl1es 20,000 20,000 (20,000J Refmburse Health Services 80,000 80,000 249,000 169,000 Other recovered costs 84,402 84,402 74,599 (9,803)

Total recovered costs $ 557,402 $ 557,402 $ 648,730 $ 911328

Total revenue from local sources $ 1,579,670 $ 1,579,670 $ 1,Js3,1n $ (196,498)

Intergovernmental; Revenues rrom Local sovemments:

Contribution from County of Russell, Virginia $ 7,491,405 $ 7,491,405 $ 7,358,020 s (133,385) Total revenues from local governments $ 7,491,405 $ 7,491,405 $ 1,358,020 $ (133,385)

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‘County of russell, Virginia Schedule

Schedule of Revenues - Budget and Actual Page 40f 6 ‘Governmental Funds For th Year Ended June 30, 2014 ‘Vartance with Final Budget Originat Final Positive und, Halor and, Source Suda udgat ‘Actual ——Megative) Spectal Revenue Funds: (Continued) ‘Workforce Investment Board Fund: Intergovemmentat: Revenue trom the federal government: Categorical alts Workforce investment S 2745806 § 2.746846 $1,777,312 $ (69,534) “otal revenue from the federal ovement $2,746,846 § 2,745,846 § 4777312 § (063,534) Total Workforce investment Board Fund $2,766,046 § 2,746,846 § L77P312§ (969.534) “Total Primary Government $35,669,016 $35,748 § 24032457 § (1,722,340

Discretely Presentod Component Unt ~ School Board: ‘Schoo! Operating Fund:

Revenue from local sources: Rovenve fom use of money and property: Revenue from the use of money $ s $ a § 8 Revenve from the use of property 1,900 4.500 70 50) Total revenue fram use of money and property Zio 400_$ 33) Charges for services: Cateterfa sles $ etna § maze $412,238 § (269,976) “Tuition payments 5,000 5,000 4216 7s) Drivers Ed fees 14,000 1,000 11640 2360) ‘Other changes for services +00 44000 tat ‘an Regional Adit Eacaton 1854 138,554 yams (3.77) ‘GED Testing fees 10,000 40,000 4096 (6,904) “otal charges or services 3_o7es Boke 55,35 G.I) Miscellaneous revenue: ‘Other miscalianeaus $1700 $_omo $m § 51283 Recovered costs: Tesurancerecoverles $ $ sma $ mes tra duties revenue 23,000 23,000 14,704 (6238) Dual Enrolment 350,000 350,000 2,877,823) ‘Consortium Clerical 175 75 Sale of Equipe and Supplies 20,00 20,000 (20,000 Reimburse Health Services, 2,000 0,00 0,000 19,000 Other recovered costs 84402 84,402 7559 (9,903) “otal recovered costs Ea 5 s57.dit 5 eas, 70 or) “Tal revenue tom cal sources $ 15794670 $1579.67 § 13817 § 196,498) Intergorernental Revers from local governments: Contribution from County f Russel Virginia 7AM H0s $7405 § 735800 § (133785) “otal revenues from local governments $7A Os § 7A §—7358,000$ (133385)

County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actuill Page 5of6

Governmental Funds For the Year Ended June 30, 2014

Variance with Final Budget

Original Final Positive Fund. Mator and Minor Revenue Source Budget Budget Actual (Negative)

Discretely Presented Component Unit - School Board: (Continued} School Operating Fund: (Continued) Intergovernmental; (Continued) Revenue from the Commonwealth:

Categorical aid: Share of state sales tax $ 4, 127,666 $ 4,127,666 $ 3,979,798 $ (147,868) Basic Aid 13,206,829 13,206,829 12,350,501 (856,328) Remedial summer education 185,118 185,118 160,411 (24,707) Regular foster care 1,836 1,836 (1,836) Gifted and talented 142,525 142,525 134,267 (8,258) Remedial education 495,738 495,738 467,017 (28,721) Special education 1,697,903 1,697,903 1,599,533 (98,370) Textbook payment 278,016 278,016 261,909 (16,107) Career and Technical Education 77,404 n,404 33,281 (44, 123) Alternative education 814,785 814,785 838,759 23,974 Algebra readiness 72,814 72,814 89,657 16,843 Mentor teacher program 2,943 2,943 1,590 (1,353) Social security fringe benefits 855,148 855,148 805,604 (49,544) Group lffe 52,6n 52,672 49,621 (3,051) Retirement fringe benefits 1,431,444 1,431,444 1,348,511 (82,933) Supplemental support 323,984 323,984 305,155 (18,829) Early reading intervention 82,720 82,720 96.901 14, 181 Adult Educatfon 6,338 6,338 31,563 25,225 Homebound education 16,411 16,411 32,224 15,813 Vocation education 399,689 399,689 432,624 32,935 At lisk payments 541,270 541,270 509,853 {31,417) Primary class size 659,938 659,938 658,961 {977) Technology 414,000 414,000 552,217 138,217 Jobs for Virginia Graduates 21,000 21,000 21,000 Industry Certification Costs 4,502 4,502 At lisk four-year olds 485,994 485,994 485,994 School Food 40,620 40,620 34,084 (6,536) English as a second language 18,957 18,957 3,160 (15,797) Security equfpment 60,555 60,555 60,555 Project graduation 21,597 21,597 GED prep programs 17,217 17,217 80,737 63,520 Lottery payments 214,436 214,436 (214,436) Tobacco Commission 30,000 30,000 n,1os 47,705 Adult literacy 99,595 99,595 99,595 Addftfonal assistance preschool 0 0 214,436 214.436 Plugged In Virginia 0 0 10,000 10,000 Other state funds 12,932 12,932 13,894 962

Total categorfcal aid $ 26,8881497 $ 26,888,497 $ 25,867,216 $ (1,021,281)

Total revenue from the Commonwealth s 26,888.497 s 26,888,497 $ 25,867,216 $ (1,021,281)

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County of Russell, Virgina Schedule 1 ‘Schedule of Revenues - Budget and Actual Page 5 0f6 Governmental Funds For the Vear Ended June 30, 2014

Variance with Final Budget Original Firat Positive Fund, Malor and Minor Revenue Source Buadaet Bade Actual (Negative) Discrately Presented Component Unlt-Schoot Board: (Continued) School Operating Fund: (Continued) Intergovernmenta: (Cantinued) Revenue from the Commonwealth: ‘Categorical aid: Share of state Sales tax 5 4127666 $ 4,27606 $3,979,798 (147,88) Basle Ald 13,206,829 13,206,828 12,360,001 (856,228) Remedial summer edation 185,118 185,118 160,444 4,707) Regular foster care 1,636 1836 : 1.836) (Gifted and talented 14nses aS 134,267 6.258) Remedial education 495,738 495,798 ASTON RTA) Specie education 41,697,903 1,697,903 1,599,533 198,370) “Textbook payment ‘73016 = 278,016» 261,809 16,107) Career and Technicat Education 77.404 aod 33,281 (44,123) ‘iterative education 81478584785 838,798 239% ‘Algebra readiness 72814 mai 09,657 1608 ‘Mentor teacher progam 298 2,98 1,590 (1353) Socal security fringe benefits 855,148 855148805 604 (954) Group fe $2,672 52,672 0,624 051) Retirement fing benefits 1a 1AM 1, 248,511 22,933) ‘Supplemental support 373984323984 305,155, (98,829) Early reading intervention 2,720 70 95,901, 14,181 ‘Adult Education 6.338 6338 31,563 2n5 Homebound education 16411 t6att 32724 15,88 ‘Vocation education 397,089 399,689 8,604, 2,995 At risk payments 54,770 5,270 509,853. 1412) Primary clas size 659938 659,998 658,961, Ca Technology 414000 414,000 52,217 138,217 obs for Virginia Graduates 21,000 21,000 21,000 Industry Certfcation Costs 4,502 4pm ‘At isk four-year ods 4599485994 485,958 School Food 49,620 40,620 34004 6536) English asa second language 18,957 18,957 3.160 15,797) Securty equipment 60,585 0.555 60,585 Project graduation : 2,97 297 {GED prep programs 17217 207 80737 63,820 Lottery payments 214,06 214,436 214,236) “Tobacco Commission 30,000 30,000 7,708 4705 Adult teracy 99,595 99,595 99,995 Additonal assistance preschool 0 (ee ee Plaged in Virginia ° 0 10,000 10,000 Other state funds 12,932 12932 13,94 962 otal categorical ald $ 2m 4973 Heias 97S ewe 216 5 (aR AHY “otal revenue frm the Commonwealth $26,888,097 $ 25,808497 $25,867,216 § (1,024,281)

County of Russell, Virginia Schedule 1

Schedule of Revenues • Budget and Actual Page 6 of 6 Governmental Funds

For the Year Ended June 30, 2014

Variance with ffnal Budget

Original final Positive Fund. Major and Minor Revenue Source Budget Budget ~

Dhi;i:retely Presented Component Unit • School Board: (Continued) School Operating Fund: (Continued) Intergovernmental: (Continued) Revenue from the federal government:

Categorical aid: Basic Adult Education $ 325,848 s 325,848 $ 342,762 s 16,914 Title I 1,161,222 1,161,222 1,141,451 (19,771) Special Education 932,668 932,668 780,818 (151,850) Title Vl·B, preschool 341297 34,297 34,297 Vocational education 82,578 82,578 82,578 School Food Program 1,295,000 1,295,000 1,278,520 (16,480) Improving teacher quality 252,379 252,379 194,022 (58,357) 21st century grant 322,384 322,384 350,561 28,177 Learn and serve America 25,000 25,000 (25,000) Rural and low income schools 75,465 75,465 32,031 (43,434) other federal funds 193,814 193,814 (193,814)

Total categorical aid s 4,700,655 s 4,700,655 s 4,237,040 $ (463,615)

Total revenue from the federal government s 4,700,655 s 4,700,655 $ 4,237,040 s (463,615)

Total Dlsctetely Presented Component Unit ·School Board $ 40,660,227 s 40,660,2l7 s 38,845,448 s (1,814,779)

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County of Russell, Virgnla

Schedule 1

‘Schedule of Revenues ~ Budget and Actual Page 6 0f6 Governmental Funds For the Vear Ended June 20, 2014 Varfance with Final Budget Original Final Positive

und, Mafor and Minor Revenue Source.

Discretely Prasented Component Unit - School Board: (Continued) School Operating Fund: (Continued)

Intergovernmental: (Continued)

Revenue from the federal goverment:

Speci Education Tele VEB, preschool Vocational education School Food Program Improving teacher quality, 24st century grant ‘Lear and serve America ural and tow tacome schoo’s (Other federal funds

‘Total categorical aid

‘Total revenue from the federal government

‘Total Discretely Presented Component Unit - School Board

Budget Budget Actual (Megatve)

a $161,722 1,164,222 844451 19,77) 932,668 922,668 720,618 (151,850)

34,297 34297 327

2,578 22,578 32,578 4,285,000 1,295,000 1,278,520 (16,460) 252,379 252,379 194,022 (68,357) 3223s 322,384 350,564 28,17 35,000 25,000 (25,000) 75,465 75,465 32,01 (83,434) 193,814 193,814, <___193,414) 5 4700.65 §4700,655$ 4257.04 (463,615) S$ 4700655 $4,700,655 § 4,757,040 § (463,615)

$40,860,227 $40,660,207 $36,805.44 _$ (1,814,779)

County of Russell, Virginia Sch£tdule 2 Schedule of Expenditures" Budget and Actual Page1of4

Governmental Funds For the Year Ended June 30, 2014

Variance with Final Budget

Original Final Positive Fund. Func:tton. Activity and Element Budget Budget Actual (Nsgativel

General Fund: General government admfnlstratfon:

Legislative: Board of supervisors $ 184,956 $ 209, 170 $ 2011542 s 71628

General and financial admlnfstration: county administrator $ 297,817 s 327,817 $ 320,326 $ 7,491 Independent auditor 65,000 65,000 67,150 (2, 150) Commissfoner of the revenue 288,342 288,342 298,445 (10, 103) Real estate assessor 109,336 109,336 107,821 1,515 Treasurer 374,525 374,525 404,816 (30,291) Data pracessinQ 56,000 56,000 39,668 16,332 Procurement 65,371 58,671 61,175 (2,304)

Total general and financial administration $ 1,256,391 $ 1,279,891 s 1,Z99,4Q1 $ (19,510)

Board of elections: Electoral Board s 82,668 $ 82,668 $ 43,212 $ 39,456 General ~eglstrar 106,389 106,389 107,434 {1,045)

Total board of elections $ 189,057 $ 189,057 $ 150,646 $ 38,411

Total general government administration $ 1,630,404 $ 1,678,118 $ 1,651,589 $ 26,529

Judicial administration: Courts:

Circuit Court $ 115,598 $ 125,198 $ 120,457 $ 4,741 General District Court 9,300 9,300 8,471 629 Special Magistrates 8,650 6,650 8,118 732 Clerk’s Office 363,996 372,996 390,319 (17,323) Sheriff Courts 1,016,701 965,701 965,710 (9) Victim and Wltness Assistance 33,003 33,003 34,403 (1,400) Law Library 6,819 (6,819)

Total courts $ 1,547,448 $ 1,515,048 $ 1,534,297 $ (19,249)

Commonwealth’s attorney: Commonwealth’s Attorney $ 546,040 $ 509,040 $ 505,423 $ 3,617

Total judicial administration $ 2,093,488 $ 2,024,088 $ 2,039,720 $ (15,632)

Publ1c safety; Law enforcement and traffic control:

She"ff $ 1,549,404 $ 1,836,672 $ 2,040,502 $ (203,830) Dare program 3,000 3,000 85,073 (82,073)

Total Law enforcement and traffic control $ 1,552,404 $ 1,839,672 $ 2, 125,575 $ (285,903)

Fire and rescue services: Volunteer Fire Departments $ 2661891 $ 266,891 $ 281,653 $ (14,762) Ambulance Rescue Squad 187,075 187,075 187,115 (4Q)

Total ftre and rescue services $ 453,966 $ 453,966 $ 468,768 $ (14,602)

Correction and detention: Operation of Jail $ 2,013,904 $ 2,339,904 s 2,198,223 $ 141,681 Probation Office 193,693 193,693 199,415 (5,722)

Total correction and detention $ 2,207,597 $ 2,533,597 $ 2,397,638 $ 135,959

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County of Russel, Virginia Schedule 2

Schedule of Expenditures - Budget and Actual Page 1 of 4

‘Governmontal Funds For the Year Ended June 30, 2014

Fund, Fune

General Fund: ‘General government administration: Leglstatve: ‘Board of supervisors

General and financial administration: County adrinstrator Independent auditor ‘Commissioner of the revenue Real estate assessor Treasurer Data processing Procurement “Total general and fnanciatadoiistration

Board of etections: Electoral Board

General Reglstrar ‘Total board of elections

‘Total general government administration

Judit administra Courts: ‘Clreuit Cour: General District Court Spocal Magistrates Clerks Office Sheriff Courts Victim and Witness Assistance Law Library Total courts

Commonwealth’ atomey: Commmonwealths Attomey

Total judicial administration

Pali safety: Law enforcement and traffic control: Sheriff Dare program “Total law enforcement and trafic control

Fro and rescue services: ‘Volunteer Fire Departments Aribulance Rescue Squad

“Tota fire and rescue services

‘Correction and detention: ‘Operation of alt Probation Office “Total corection and detention

Vartance with

Final Budget Original Final Positive

Budget = Budget = Actual = Megative)

$184 956 $209,170 § 201,52 § 7628

$ mre7 § — 3a78t7 § Om $74

65,000 65,000 67,150 0,150) 708342832 28,45 (10,103) 109,336 109,33 107,82 41,515 amass (374,525 404,816 20,291) 56,000 136,000 39,668 16,332 65,371 58,871 64,175, @,

356.3915 1279.01 § 199,401 S_(19,510)

S$ 1630408 § 1,678,118 $1,654,589 $26,509

8,850 8118 TL 369,996 372,996 390319 97,329) 4,016,701 965,701 965,710 8) 33,003, 33,003, 34,403 (400)

6,819 6319 SAAB S155 OE ST 4,297_§ 19,240)

546,040 $509,040 § 20803 $3,617

52093409 $ 2,024,088 § 2,039,720 $ (15,632)

$ 1509404 $1,836,672 § 2,040,502 § 203,830) 3,¢00 3,000, 85,073 (82,073) Tena $fi9,erh_$_Tizs.s7s 5 (85,503)

S$ B68 § — 266,895 $281,653 § (14,762) 197,075 187,075, 187,15, 0)

"E83,966F__483,966 Sao 768_ ay

$2,013,904 $ 2,339,904 $2,198,223 $141,681 193,693 193,69, 199,415, 72) $207,597 $7,533,597 $2,997,698 $135,999

County of Russell, Virginia Schedule 2 Schedule of Expenditures M Budget and Actual Paga 2of4

Governmental Funds For the Year Ended June 30, 2014

Variance with Final Budget

Original Final Positive Fund. Function. Activity and Element Budget Budget ~ fNes:ativel

General Fund; (Continued) Public safety: (Continued)

Inspections: Building fnspector s 107,483 $ 10!,583 $ 1001904 s 679

other protection: forestry Service s 12,098 s 12,098 s 11,804 s 294 ·Enhanced 911 469,423 589,842 597,171 (7,329) Medical Exanlfner 400 400 480 (80) Emergency Services 83,314 120,083 73,372 46,711 Animal Control 200,104 2051904 180,042 25,862

Total other protection $ 765,339 $ 928,327 $ 862,869 $ 651458

Total public safety $ 5,086,789 $ 5,857,145 $ 5,955,754 $ (98,609)

Public works: Sanitation and waste removal:

Landfill s 2,417,610 $ 1,982,221 $ 2,079,015 $ (96,794) Refuse collection 220,000 166,9l7 160,542 6,395

Total sanitation and waste removal $ 2,637,610 $ 2, 149, 158 s 2,246,656 $ (97,498)

Maintenance of general buildings and grounds: General ptoperties $ nB,836 s 995,619 s 974,19l s 21,426

Total public works s 3,416,446 $ 3,144,m $ 3,220,849 $ (76,072)

Health and welfare: Health:

Health Depertmerit $ 353.211 $ l53,2! 1 $ 353,211 $

Mental health and mental retardation; Cumberland Mountain Community Services Board $ 52,000 s 52,000 $ 50,000 $ 2,000

Welfare/Social Services; Social servfces $ 4,919,787 $ 4,919,787 $ 4,234,532 $ 685,255 Comprehensive Services Act 1,727,339 1,727,339 893,738 833,601 Appalachian Agency for Senfor Citizens 87,263 87,263 91,998 (4,735) LebMon Speech and Hearing 9,870 9,870 9,870 Other health and welfare 525,258 525,258 1,600 523)658

Total welfare $ 7,269,517 $ 7,269,517 $ 5,231,738 $ 2,0J1,n9

Total health and welfare $ 7,674,728 $ 7,674,728 s 5,634,949 $ 2,039,779

Educatfon: Contributions to County School Board $ 7,491,405 $ 7,-491,405 s 7,692,184 $ (200,779) SVCC Contribution 84,733 84,733 84,73l

Total education s 7,576,138 $ 7,576, 138 $ 7,776,917 $ (200,779)

Parks, recreatton~ and cultural: Parks and recreatlon:

Recreation Park s 157,059 s 187,059 s 176,323 s 10,736

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‘County of Russell, Virgina Schedute 2

Schedule of txpenditures - Budget and Actual Page 20f4 Governmental Funds For the Year Ended June 30, 204 Variance wth Finat Budget Original Firat Positive Fund, Function, petty and Element ‘Budget ——Budaet Actual ——(Noratived ‘General Fund: (Continued) Publ safety: (Continued) Inapections: Bulg inspector $ 107483 § rors 5 toosos $69 ‘other protectons oresty Service $1208 § 108 tHBOH $04 hanced 911 wa” HATA a3 Nedical Examiner 400 400 480 (80) Emergency Services a4 mon man ath Animal Control 200,104 5,904 tanoae 5,82 “Total other protection T__7en 939,307 $0.00 5 68 Tota publ safety 5006769 $5R57.145 $5,985,754 § 95,005) Public works: Sanitation and waste removals ana $ Darr 10 § 1,962,221 § 2,079,015 § (967) Refuse callection ano "66937160502 6.395 “otal sartation and waste removal F_Ras7,10§ 1,188 S706, 68657) Natntenance of general bulngs and grounds: ‘General properties S779 § 995619 § 974193 § 6 ‘Total public works $3,416,446 $3,144,777 $3,220,849 _$ (76,072) Heath and wetore: Heath: Health Department sui $ssuzn §aazn $ ‘ental health and mental retardation; ‘Cumberland Mountain Community Series Boerd $52,000 § 57,000 § 50,000 $2,000 Wettare/Sodal Serves: ‘Social services: $4,919,787 § $4,234,532 $ 685,255 Comprehensive Services et 1739 93,728 8601 Aopatachian Agency for Senior Ctzens 7283 91,958 an {ebanon Speech and Hearing 93870 9.870 Other health end welfare 525,288, 4600523658, Tota welore 7269517 § $e me Sow. ‘Total health and welfare 7,674,728 $ $5,634,949$ 2,039,779 Education: ‘Contributions to County School Board $ 740,405 $ 7,491,405 $ 7,692,184 $ (200,779) SNC Contribution 2733 24783 24733 Tota eduction Wie, te_5 Fare eS 7776917 5 _ BOTS ari, creator acuta: Pats ad recreation: Recreation Pak $1705) $107.05 $7603 § "10,736

County of Russell, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 3 of4

Governmental fund’ For the Year Ended June 30, 2014

Variance with Final Budget

Ortslnal Final Positive Fund. fynction. Activity and Element Budget BudQet Actual (Negattvel

General Fund: (Continued) Parks, recreation, and cultural: (Continued)

Library: Public library $ 309, 148 $ 319) 148 $ 331,371 $ (12,223)

l’otal parks, recreation, and cultural $ 466,207 $ 506,207 $ 507,694 $ (1,487)

Community development: Planning and community development:

Plannfng Commtssfon $ 12,900 $ 12,900 s 5,200 $ 7,700 Community Development 38,000 38,000 49,946 (11,946) Industrial Development 938,210 1,046,210 1,053,696 (7,486) PSA Contributions 381,011 449,011 320,913 128,098 Cumbertand Plateau 35,000 35,000 40,427 (5,427) H1ghway Safety Commfss1on (160) 160 Cannerfes 118,824 (118,824)

l’otal plann1ng and community development $ 11405,121 $ 1,581,121 s 1,588,846 $ (7,725)

EnVironmental management: Sofl and Water Conservation $ 34,236 $ 34,236 $ 34,236 $

Cooperative extension program: VPI Extenston $ 64,466 $ 64,468 $ 781159 $ (13,691)

Total cornmoolty development $ 1,503,825 $ 1,679,825 $ 1,701,241 $ (21,416)

Nondepartmental: Nondepartmental $ 234,000 s 214,400 s 112,027 $ 102,373

capital projects: Other cap1tal projects $ $ $ s

Debt service: Principal payments $ 11579,643 s 1,579,643 $ 1,316,096 $ 263,547 Interest Expense 352,481 352,481 4931927 (141,446)

Total debt service $ 1,932,124 $ 1,932.124 s 1,810,023 $ 122,101

Total General Fund $ 31,614,149 $ 32,287,550 s 30,410,763 s 1,876,787

Special Revenue Funds: Coal Road Fund: Public Works:

Maintenance of highways, streets, bridges and sidewalks: Maintenance of highways. streets, bridges and Sidewalks $ 750,000 $ 750,000 $ 894,783 $ (144,783) Virginia coalfield 150,000 150,000 385,262 (235,262)

Total Public Works $ 900,000 $ 900,000 s 1,280,045 $ (380,045)

Total Coat Road Fund $ 900,000 $ 900,000 $ 1,280,045 s (380,045)

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County of Russell, Virginia

Schedule 2

Schedule of Expenditures - Budget and Actual Page 3 of 4 Governmental Funds For the Yaor Ended June 30, 2014 Variance with Final Budget Original Firat Positive

Fund, Function, Activity and Element

‘General Fund: (Continued) Parks, recreation, and cultural; (Continued) brane Public Library

“otal pais, recreation, and cultural

‘Community development: Planning and community development: Planning Commision ‘Community Development Industral Development SA Contributions ‘Cumberiand Plateau Highway Safety Commésston Canneries “Total planaing and communlty devetopment

“Environmental management: Soll and Water Conservation

‘Cooperative extension program: ‘VP Extension

‘otal community development

Nondepartmental: ondepartmental

Capa projects: (Other capital projects

Debt service: Principal payments Interest Expense

‘Tota debt service

‘Total General Fund

Special Revenue Funds: ‘Coal Road Fund: Public Works:

‘Maintenance of highways, streets, bridges and sidewalls: ‘Maintenance of highways, streets, bridges and sidewalks ‘Waginla coalfield

“Total Public Works

“Total Coat Road Fund

Budat ‘dee Actual ——_egative)

Syne § 3148 § 3371S (12229 $466,207 § 506,207 § 807504 § (1487)

S 12.90 $ 13,900 § 520 § «700

38,000 38,000 8,546 9,946) 98,210 1,046,210 4,083,696, 786) 301,011 “469,011 320,913, 128,098 35,000 35,000 “Aa7 (5427)

(160) 160

119,824 (116,824) Saas v5 Tat S58 46S 7)

S 34236 $ 342% § 4796 :

36446 $646 § 78859 $03,691)

S4503,825 $1,679,825 $ 17024 §—_ @t.416)

$234,000 § 214400 § 112,027 $ 102,373.

$1,579,643 $1,579,643 $ 1,316,096 § 263,547 ses aeststeera

$31,614,149 $32,287,550 $30,410,763. § 1,876,767

$750,000 § 750,000 § 894,783 § (144,783) 10,000 130,000 385,262 235,262) 900,000 5 900,000 $7,260,045 $380,045)

$900,000 $ 900000 $ 1,280,045 $ (380,045)

County of Russell, Virglnfa Schedule 2 Schedule of Expenditures - Budget and Actual Pase 4 of 4

GoVernmental Funds For the Year Ended June 30, 2014

Variance with Final Budget

Or1gfnal Ffnal Positive Fund. Function. Actlvltv and Element Buds:et Budget Actual

Special Revenue Funds: (Continued) Workforce rnvestment Board Fund: Health and Welfare

Welfare Workforce Investment $ 2,746,846 $ 2,746,846 $ 1,777,312 $ 9691534

Total Primary Government $ 35,260,995 $ 35,934,396 $ 33,468,120 $ 2,4661276

Discretely Presented Component Unit - School Board: School Operating Fund: Education:

Admfnfstratfon of schools: Adminlstratfon and health services $ 1,697,266 $ 1,697,266 $ 1,853,061 $ (155,795)

Instruction costs: Instructional c.osts $ 28,728,713 $ 28,nS,713 $ 26,971,511 s 1,757,202 Technology 742,775 7421ns 655,347 87,428

Total instruction costs $ 29,471,488 $ 29,471,488 $ 27,626,858 $ 1,844,630

Operating costs: Pupil transportatfon $ 3,058,955 $ 3,058,955 $ 2,599, 193 $ 459,762 Operation and mafntenance of school plant 4,517,281 4,517,281 4,589;832 (72,551) Food servfce and noh·fnstructfonal 1,915,237 1,915,237 11657,160 58,077

Total operating costs $ 9,491,473 s 9,491,473 $ 9,046,185 $ 4451288

Total education $ 40,660,227 s 40,660,227 $ 36,526,104 $ 2,134,123

Total School Operatfng Fund s 40,660,227 $ 40,660,227 $ 38,526t104 $ 2,134,123

Total Dfscretely Presented Component Unit· School Board $ 40,660,227 $ 40,660,227 $ 38,526,104 $ 2, 134, 123

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County of Russel, Virginia Schedule 2 ‘Schedule of Expenditures - Budget and Actual Page 4 of 4 ‘Governmental Funds For the Year Ended June 30, 2014

‘Bund, Function, Activity and Element

Spoefal Revenue Funds: (Continued) ‘Workforce tnvestment Board Funds Health and Wetfare Weltare ‘Workforce Investment.

‘otal Primary Government

Discretely Presented Component Unit - Schoo! Board: ‘Schoo! Operating Fun Education: ‘Adminstratlon of shor ‘Administration and heatth services

Instruction costs: Tastructonal costs Technology

“Total instruction costs Operating costs: Pupil transportation ‘Operation and maintenance of choot plant Foad service and non instructenal Total operating costs Tota education Total School Operating Fund

‘otal Discrtely Presented Component Unit - School Board

T-

52,746,846 $276,846 $4777, § 969,594

$35,260,995 $ 35,934,396 _$ 33,468,120 $2,466,276

31697 266 $ _14697,266 $1,853,061 _§ (155,795)

$ 28,728,713 $ 28,728,713 $ 26,971,511 § 1,757,202 742,777,715 655,367 87,08

5 B47 4885 29,471 A883 27,600,858 5 1044,630

$ 3058,955 $ 3,058,955 $ 2,599,193 § 459,762 437,26” 4517;28 4,589,832 72,551) 4,915,237 1,915,237 1,857,160 58,077

EG SLATS $9,065,105 45,288

$40,660,707 $ 40,660,227 $ 36,526,104 § 2,134,123

$40,660,227 _§ 40,660,227 _$ 38,526,104 § 2,134,123

$40,660,207 $40,660,227 $38,526,104 § 2,134,123,

Other Statistical Section

.!, cp

General Flscal Government Judicial Public Year Administration Administration Safety

2013-14 $ 1,702,984 s 2,039,186 $ 6,005,354 2012·13 1,269,473 2,097,469 5,908,601 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

(1) Information has only been available for 8 years.

County of Russell,. Virginia Government-Wide Expenses by Function

Last Ten Fiscal Years (1)

Parks, Public Health and Recreation, Works Welfare (2) Educat!or and Cultural

$ 4,381,n8 $ 7, 169,883 $ 8,943,324 $ 546, 171 4,592,807 8,285,584 7,484,972 529,959 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 inctuded.

" … ~.“”“”~~~~= .,.,~ .,"_

Table 1

Interest

Community on Long· service Development Term Debt Authority Total

$ 1,687,428 $ 457,095 s 403,848 $ 33,337,001 2,173,719 498,401 441,349 33,282,334 3,493,655 522,300 410,664 33,697,478 3, 191,256 756,064 423,945 32,107,061 1,491,157 n8,202 434,552 29,014,899 4,826,n1 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

Table 1

County of Russell, Virginia Government-Wide Expenses by Function. Last Ten Fiscal Years (1) Generat Parks, interest

Fiscal Goverment Jucciat Pubic Public Health and Recreation, Community on Long» Service

Year Administration Administration _Safety Works __Welfare @) Education _and Cultural_Development_Term Debt_Authority _ Total 23-14 § 1,702,984 $ 2,039,186 $ 6,005,354 § 4,381,728 § 7,169,883 $ 8,963,324 § 546,171 § 1,687,428 $ 457,095 $ 33,337,001 21213 14269,473 2,007,469 5,908,601 4,597,807 8,285,584 7,494,972 529,959 2473719 198,401 33,282,334 2OIIZ —«2,267,145 «2,119,900 5,296,188 6,060,973 8,397,896 4,589,631 539,126 3,493,655, 522,300 33,697,478 2010-11 1,694,031. 2,112,758 5,091,612 4,003,987 8,592,062 5,681,243 563,123 3,191,256 736,064 32,107,061 2009-10 1,828,631 «2,219,865 4,734,145 5,549,934 6,070,001 5,897,486 560,735 1,491,257 728,202 29,014,899 2008-09 1,706,342 «2,243,005 «4,013,947 6,055,307 5,982,456 5,471,573 541,087 4,816,721 758,753 32,006,426 2007-08 1,411,595 2,070,008 4,025,383 5,386,506 5,395,204 4,508,131 423,946 5,549,375 321,965 29,997,952 2006-07 1,465,480 1,710,751 3,667,580 7,867,007 4,880,408 © 3,884,301 477,515 3,246,100 352,493 23,474,060

(1) Information has only been available for 8 years. (2) 2010-2011 fs the first year the Workforce investment Board is included,

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

2013-14 $ 445,n7 $ 8,991,231 s 320,311 s 15,749,617 s 4,873,857 $ 359,952 s 86, 115 s 2,562, 116 s 33,388, 926 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,m 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 'P 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 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 8 years. (2) 2009-10 is the first year State Communications tax is classified as grants and contributions not restricted to specific programs.

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 2013-14 § 445,727 $ 8,991,231 $ 320,311 $ 15,749,617 $ 4,873,857 $ 359,952 $ 86,115 $2,562,116 $ 33,388,926 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 77,228 138,135 2,445,435 33,612,501 2010-11 337,064 10,635,876 = 13,683,476 6,340,919 89,819 17,669 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 4,771,674 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 4,881,802 31,216,330

(1) Information has only been available for 8 years. (2) 2009-10 is the first year State Communications tax is classified as grants and contributions not restricted to specific programs.

• CX)

General Fiscal Government Judicial Public Year Administration Administration Safety

2013-14 $ 1,651,589 s 2,039,720 s 5,955,754 s 2012-13 1,777,929 2,096,382 5,742, 101 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 1,314,649 4,022,185 2004-05 1,471,o.43 1,059,566 3,977,841

County of Russell, Virginia General Governmental Expenditures by function (1)

Last Ten Fiscal Years

Parl<s, Public Health and Recreation, Worl<$ Welfare (3) Education (2) and Cultural

4,500,894 s 7,412,261 s 38,945,001 s 507,694 4,744,331 8,334,736 40,161,416 488,706 61515,152 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 4W,417 6,093,232 6,6n,387 42,452,183 547,104 5,083,514 5,398,035 39,724,130 433,946 3,205,718 5,126,034 41,3’46,518 493,366 3,605,915 5,003,511 39,574,345 438,198 3,434,569 4,943,270 33,030,292 339,244

Community Non- Debt Development (4) departmental Service

s 1,7011241 s 112,027 s 1,810,023 2,283,910 423,737 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

(1) Includes Generai and Special Revenue funds of the Primary Government and the operating fund of its Discretely Presented Component Unit • School Board. Excludes Capital Projects. (2) Excludes contribution from Primary Government to Discretely Presented Component Unit - School Board. (3) 2010~2011 is the fim year the Workforce Investment Board is induded. (4) In 2010-2011 the County pakl S1 ,508,677 towards the IOA debt.

.Table3

Total

s 64,636,204 68,943,068 71,017,651 67,593,280 66,185,342 70,616,832 66,m,351 65,517,828 66,468,920 56,151,677

08"

County of Ruse, Virginia General Governmental Expenditures by Function (1) [Last Ten Fiscal Years

Table?

General Paris, Fecal Gavernment Jutta Pattie Public Health and Recreation, Community Nore bebe

‘Year ___ Adminstration Administration _Safety Works Welfare @)_Etucation @) and Cultural Development (4) departmental Serdice Tora 201344 $4,651,589 $2,038,720 $5,956,794 S 4.500.e4 $ 7,412,261 $ 38945001 $ 507,64 S 1y7OLLIM S$ 1120 $1,810,003 § 64,636,204 201243 A779 0863857 ATMS 838K,736HO,18Y AE 498,706 7,283,910 ABT 868,820 68,348,068 pote 2,060,280 2134057 5,500,998 6 S15,152 518.5 40,540,127 ABA. 2,40, 386 305,904 2826,001 74,017,651 2o1041 ‘y7mss0 2105641 526,797 © 4102.79 ee2,0520.72,094 556,723 2;311,048, 103,00 2)857,576 67,598,280 20090 4,837.90 «2213, 4AO0,276 SANTA —6,906,994 41,066,862 AIT AIT 1,557,445 910852504631 66,185,242 200809 170193 2736,651 4,383,789 093 6672,387 2,482,183 5a7104 3,535,736 56083 2,507,404 70,616,832 2007-98 17sa17 — LOTOASS «53057495 SORE 5,308,035 39,724,130 43,545 5,50,375 45508 2,668,081 6,7, 351, 20607 1597966 1,805,418 3,863,960 3,205,778 5,126,034 YH, 3,365 5,699,361, 229487 65,517,08 2008-06 1810230 1814607 © 4)002,185 3,605,913 5,003,511 9,574,345 8198 7,653,814 2,586,073 66,488,920 200405 LATOR 1,059,566 «BOTTA 3.434507 4.948,270 33,020,252 339246 5,186,187 2,704,665 36,151,677

(1) cludes General ard Spectat Revenue funds of the Primary Goverment and the operating fund ofits Diseretely Presented Component Unit» School Board. Excludes Capital Projects. (2) Excludes cantribution from Primary Goverament to Discretely Presented Component Urit- School Board.

(@) 20102011 iste fist year the Workforce Investment Board is included. (4) Im 2010-2011 the County paid $1,508,677 towards the IDA debt.

’ CX> ~

•

County of Russell, Virginia General Governmental Revenues by Source (1}

Last Ten Fiscal Years

Revenue Pennit:s, from the

General Other Privilege Fees, Fines use of Charges

F"lScal Property local Regulatory and Money and for Recovered Inter~

Year Taxes Taxes (3) Ucenses Forfeitures Property Services Miscellaneous Costs governmental (2), (3)

2013·14 $ 16,011,500 $ 4,873,857 $ 40,292 $ 31,151 $ 352,852 $ 803,470 $ 307,398 $ 1, 121,491 s 2012·13 14,696,587 5,079,612 34,152 14~955 39,878 951,229 352,993 1,588,307

Z011-12 12,813,407 6,881,30Z 28,272 24,567 65,238 1, 162,800 394,657 1,139,070 2010-11 13,54$,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 12,5401392 7,779,265 39,662 1, i68 117,983 1,148,414 643,861 1,884,165 2007·08 11,826,325 7,976,046 44,933 321 501,144 1,023,84B 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 52,7rJ7 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

(1) Includes General and Special Revenue funds of the Primary Government and tts Discretely Presented Component Unit - School Board. Excludes capital Projects. (2) Excludes contribution from Primary Government to Discretely Presented Component Unit-School Board. (3) 2009~1 D is the first year State communications tax 1s classified as noncategorical state aid.

41,9n,914 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

Table4

Total

$ 65,519,925 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

Tables

County of Russell, Virginia ‘General Governmental Revenues by Source (1) Last Ten Fiscal Yours Revenue Permits, from the Gereral Other Privilege Fees, Fines Use of charges

Fiscal Property Local Reguatory and money and for Recovered Inter Year Taxes Taxes @) ___Licenses_Forfetuwes__Property Services _—Miscellaneous___Costs_goverrmental @2).(3)___Totat 2013-14 $16,011,500 $4,873,857 $ — 40.ze2 $ «HTT $352,852 $ — BUBATO § 307,398 $1,121,401 § MOTTON $65,519,995, 2012-13, 14696587 5,079,612 AID 14,955, 39,878 951,229 352,993 4,588,307 MA819 67,176,532 ror 12813407 6,881,302, azn 24,567 65238 1,162,800 394,657 1,139,070 46,119,628 68,628,941 2010-11 13,508,896 6,240,919 22834 1,206 T3514 1,101,993 416,868 998,299 AUIT7O9 70,122,353, 2008-10 129614857 6,123,807 45877 1.089 7478 938,548 23467 732.861 8,856,378 65,967,723, 2008-09 12540392 7,779,265 39,662 1,368 197,983 3,148,414 60851 1,884,165 45,428,652 69,593,542 2007-08 11,826,325 7,976,046 44.933 at so1jiee 003,848 510972 796,913 851997 66,199,999 2006-07 11,566,874 6,869,060, 146 482 730 7a365 1m. 729,980 276,806 48,169,588 69,220,895, 2005-06 12337123 6,713,083 52,707 5781 660,142 378,017 310,534 187,855, 2,906,554 64,054,176, 2004-05, r2304465 5,981,937 35,700 9430 231,701 5 AM6 192,988 266,222 38,060,000 57,737,890,

& (a) nctues General and Spectat Revenue funds of the Primary Goverment and ts Discretely Presented Cornponent Unit - School Board. Excludes Capital Projects.

{@) Excludes contribution from Primary Government to Discretely Presented Component Unit = School Board. £2) 2009-40 5 the fist year State Communications tax ts classified as noncategorical state aid.

Table 5 County of Russell, Virginia

Property Tax Levies and Collections Last Ten Fiscal Years

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 Levy (1) Collections (1) Collected Collections ( 1 ) Collections to Tax Levy Taxes (1) Tax Levy

2013-14 $ 17,616,878 $ 16,022,072 90.95% s 895,532 s 16,917,604 96.03% $ 3,914,585 22.22% 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%

(1) Exclusive of penalties and interest.

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. Tex of Levy Tax Tax Collections Delinquent = Taxes to Year___lew(1) Collections (1)__ Collected Collections (1) Collections _toTaxLew Taxes (1) Tax Levy 2013-14 $ 17,616,878 $ 16,022,072 90.95% $ 895,532 $16,917,604 96.03% $ 3,914,585 2.22% 2012-13 16,328,495 14,812,738 90.72% 953,671 15,766,409 96.56% 4,786,523, 29.31% O12 — 14,681,089 13,185,991 89.82% 723,190 13,909,181 94.74% 4,693,121 31.97% 2010-44 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 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 16.3% 2004-05 10,576,870 9,740,619 92.09% 537,362 10,277,981 STATE 1,849,194 17.48%

(1) Exclusive of penalties and interest.

Co ‘(’

Fiscal Real Personal Year Estate (1) Property

2013-14 $ 1,420,301,334 $ 297,609,286 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

county of Russell, Virginia Assessed Value of Taxable Property

Last Ten Fiscal Years

Machinery and Merchant’s Mobile

Tools Capital Homes

$ 92,212,643 s 6,061,014 $ 21,820,581 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,%0,621 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

(1) Real estate is assessed at 100% of fair market value.

Public Service (2)

$ 315,700,293 230,027,520 269,503,982 326,871,285 253,750,196 234, 196,018 231, 981,492 199,922,460 206,306,945 222,627 ,640

(2) Assessed values are established by the State Corporation Commission-includes all property types.

Table6

Total

$ 2, 153,705, 151 1,%1,414,147 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

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Bes, TOSS USL IST ‘Ausadoid aigexey, so enjea passessy ‘eUIBatA ‘wassmy Jo AguN0D 91g,

Fiscal Real Year Estate (2)

2013-14 s 0.56/0.63 2012-13 0.70/0.56 2011-12 0.61/0.70 2010-11 0.61 2009·10 0.61

2008·09 0.61 2007-08 0.56/0.61 2006-07 0.65/0.56 2005-06 0.65 2004·05 0.60

(1) Per $100 of assessed value.

County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Personal Machinery Property ft Toots

1.65 s 2.00 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.45 2.45

(2) 2nd half due December/1st half due June of fiscal year.

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Table 7

Merchant’s Mobile Capital Homes

s 0.65 s 0.56 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

Table 7

County of Russell, Virginia. Property Tax Rates (1) Last Ten Fiscal Years Fiscal Real Personal Machinery -Merchant’s Mabie Year Estate (2) Property & Tools Capital Homes S$ 0.56/0.63 § 1.65 § 2.00 § 0.65 $ 0.56 0.7070.56 1.65 1.65 0.65 0.70 0.6170.70 1.65 1.65 0.65 0.61 ost 1.65 1.65 0.65 O64 0.61 1.65 1.65 0.65 0.64 0.61 1.65 1.65 0.65 0.64 0.56/0.61 1.65 1.65 0.65 0.56 0.65/0.56 1.65 1.65 NA 0.64 0.65 1.65 1.65 NA 0.64 0.60 145 2.45 NA NA

(1) Per $100 of assessed value, (2) 2nd half due December/ st half due June of fiscal year.

Table 8 County of Russell, Virslnla

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

2013·14 28,897 $ 2,153,705 $ 9,955,282 s 9,955,282 0.46% $ 345 2012·13 28,897 1,961,414 10,865,788 10,865,788 0.55% 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

(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 lfabflity, capital leases, and compensated absences.

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Table 8 County of Russell, Virglnta Ratio of Net General Bondad Debt to Assessed Value and Net Bonded Debt Per Capfta

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 2013-14 28,897 § 2,153,705 $ 9,955,282 $ 9,955,282 0.46% $ 445 2012-13 28,897 1,961,414 10,865,788 10,865,788 0.55% 376 2011-12 28,897 1,825,051 12,666,629 12,666,629 0.69% 438 2010-11 28,897 187,111 14,066,729 14,066,729 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% 5t7 2007-08 28,790 1,743,019 14,584,265 14,584,265 0.84% 507 2006-07 28,790 1AN1,1B 14,636,061 14,836,861 1.05% 515 2005-06 28,790 4,499,709 12,594,094 12,594,094 0.84% 47 2004-05 28,830 1,480,134 13,633,304 13,633,304 0.92% ra)

(1) Bureau of the Census.

(2) Real property assessed at 100% of the fair market value.

{@) Includes all (ong-term general obligation bonded debt, bonded anticipation notes, and literary fund loans. Excludes revenue bonds, landfiti closure/post-closure care lability, capital leases, and compensated absences,

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

2013-14 $ 1,810,023 s 64,636,204 2.80% 2012-13 2,869,820 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%

(1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit·School Board.

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County of Russell, Virginia

Ratio of Annual Debt Service Expenditures for General Bonded

Debt to Tatal General Governmental Expenditures (1) Last Ten Fiscal Years

Table 9

Ratio of Total Debt Service Total General to General

Fiscal Debt Governmental Governmental

Year Service Expenditures Expenditures 20144 1,810,023 $ 64,636,204 2.80% 2012-13 2,869,820 68,943,068, 410K 2011-12 2,526,021 71,017,651 3.56% 2010-114 2,537,376 67,593,280 3.78% 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 65,517,628 37K 2005-06 2,546,073 66,468,920 3.83% 2004-05 1,775,036 56,151,677 3.16%

(1) Inctudes alt governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board,

COMPLIANCE SECTION

ROBINSON, FARMER, Cox ASSOCIATES A PROFESSIONAL LIMITED LIABILITY COMPANY CERTIFIED PUBLIC ACCOUNTANTS

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 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, 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, 2014, 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 January 8, 2015. Our report Includes a reference to other auditors who audited the financial statements of Russell County Public Service Authority and The Industrial Development Authority of Russell County, 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.

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 tl)e 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 deficiency described in the accompanying schedule of findings and questioned costs to be a material weakness [2014-001].

-87-

ROBINSON, FARMER, COX ASSOCIATES

‘A PROFESSIONAL LIMITED LIABILITY COMPANY (CBANIFIED PUBLIC ACCOUNTANTS

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compiiance 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 standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptrolter General of the United States; and the Specifications for Audits of Countles, Cities and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia, 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, 2014, and the related notes to the financlal statements, which collectively comprise County of Russell, Virginia’s basic financial statements and have issued our report thereon dated January 8, 2015. Our report includes a reference to other auditors who audited the financial statements of Russell County Public Service Authority and The Industrial Development Authority of Russell County, as described in our report on County of Russell, Virginta’s financiat 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.

Internal Control over Financial Reporting

in planning and performing our audit of the financial statements, We considered County of Russell, Virginia’s internat 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 defictencies may exist that were

not Identified, However, as described in the accompanying schedule of findings and questioned costs, We

beta certain deficiencies in internal controt that we consider to be material weaknesses and significant fictencies.

A deficiency in internal control exists when the design or operation of a control does not allow management. or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs to be a material weakness [2014-001],

87-

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 Instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described In the accompanying schedule of findings and questioned costs as Item 2014-002.

County of Russell, Virginia’s Response to Findings

County of Russell, Virginia’s response to the findings Identified In our audit ls 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 ls not suitable for any other purpose.

if~,~. 4,-~4\tA- Blacksburg, Virginia January 8, 2015

-88-

Compliance and Other Matters

As part of obtaining reasonable assurance about whether County of Russell, Virginta’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 pravistons was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as item 2014-002,

County of Russell, Virginia’s Response to Findings

County of Russell, Virginia’s response to the findings identified in our audit ts 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 sotely 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 ontrot or on compliance. This report 1s an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communtcation is not suitable for any other purpose.

Waleinom., Shans, ty lasoaater- Blacksburg, Virginia January 8, 2015

ROBINSON9 FARMJER9 Cox ASSOCIATES A PROFESSIONAL LIMITED LIABILITY COMPANY CERTIFIED PUBLIC ACCOUNTANTS

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, Virginia’s major federal programs for the year ended June 30, 2014. County of Russell, Virginia’s major federal programs are identified in the summary of auditors’ 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.

Auditors’ 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, 2014.

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ROBINSON, FARMER, COX ASSOCIATES

‘A PROFESSIONAL LIMITED LIABILITY COMPANY (CERTIFIED PUBLIC ACCOUNTANTS

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, Virginia’s major federal programs for the year ended June 30, 2014. County of Russell, Virginla’s major federal programs are identified in the summary of auditors’ 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on compliance for each of County of Russell, Virginta’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

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, 2014.

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 complfance requirements referred to above. ln 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 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 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 ls 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 January 8, 2015

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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 compltance 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 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 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 deficlency in internal control over comptiance exists when the design or operation of a control over comptiance 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 internat control over compliance ts a deficiency, ‘or combination of deficiencies, in internal control over compliance, such that there is a reasonable Possibility that materiat noncomptiance 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 contrat over compliance with a type of compliance requirement of a federal program that fs less severe than a material weakness in internat 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 internat 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,

Habeineon, Shensr, le Lasccster-

Blacksburg, Virginia January 8, 2015

County of Runell, Vlrgfnta Paga 1of3 Schedule of Expenditures of Fedtoral Awards

For the Year Ended June 30, 2014

Pass-through Federal Entity

Federal Grantor/SUite Pass· Through Grantor/ CFDA Identifying Feder41 Program Cluster or Title Number Nuri’lbet Expenditures

Department of Health and Human Servlces: Pass Through Payments: bepartment of Social Services: Promoting Safe and Stable Famllles 93.556 950, 113 s 20,892 Temporary Assistance for Needy Fam\lfes 93.558 0400113, 0400114 368,518 Refugee and Entrant Assistance· State Administered Programs 93.566 0500113, 0500114 1,924 low-Income Home Energy Assistance 93.568 0600413, 0600414 38,834 Child Care- Mandatory and Matchfng Funds of the 93.596 0760111, 0760114 51,255

Child Care and Development Fund Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900113., 0900114 2,566 foster care· Title- IV·E 93.658 1100113, 1100114 251,553 Adoption Assistance 93.659 1120113, 1120114 391,421 Social Serv’lces Block Grant 93.667 1000113, 1000114 336,363 Chafee Foster Care Independence Program 93.674 9150113, 9150114 12,150 Children’s Health Insurance Program 93.767 0540113, 0540114 9,545 Medical Assbtance Program 93.778 1200113, f2D0114 281,936

Total Department of Health and Human Services s 1,767,957

Dei>4trttn&nt of Agriculture: Direct Payments:

COmmuntty Facilities Loans and Grants 10.766 No_t applkable $ 24,250

Pass Through Payments: Child Nutrition Cluster:

Department of Agriculture: Food Dlsttihution·Schools (~te 3) 10,555 Not available s 101,336

Department of Education: National School LUnch Program f0.555 40623 877,635 979,971

Department of Education: School Breakfart Program 10.553 40591 298,549

Department of Social Services: State Administrative Matching Grants for the Supplemental 10.561 001()113, 0010114 318,556

Nulrltton Assistance Program 0040t13, 0040114

Total Department of Agriculture s 1,621,326

Department of Justice: Past Through Payments: Department of Criminal Justice Services: Violence Against Women Formula Grants 16.588 56500, 66500 s 2.0,860

Department of Transportation: Pass Through Payments: Department of Motor Vehicles:

Alcohol Open Container Requirements 20.607 154AL·13·53020, s 13,708 154Al.·14-54261

R~malnlng portion of this page ll!!ft blank intentionally

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County of Raxgll, Vesna Page tof3 ‘Schedule of Expenditures of Federat Avards For the Year Ended June 30,2014

Pusthrough Federal Entity Fedral Grantor/Sate Pass-Through Grantor! ‘CFDA (eentitying Federit Program Cluster of To umber Number Expenditures Department of Health and Human Services: Pass Trough Payments: Department of Socal Services: Promating Ste and Stable Fares 93.56 950,412 Sma Temporary Asitance for Needy Famles 3.558 00113, eats 360518 Refugee and Entrant Asstance - State Adminstered Programs 93.66 00413, as00514 4924 owlncome Home Energy Asistance 93568 ‘00413, 0600444 sma (hil Care Mandatory and Matching Fueds ofthe 3.596 760143, o7s0rt4 2255 ‘Chl Care and Development Fund Stephane Tubbs ones Child Wellare Services Program 35 700113, an00114 Foster Care ~The WE 93.88 100113, sto0tt4 Adoption Assistance 93.659 ‘120113, 120144 Soca Series Block Grant ner ‘00013, sooo ‘Chafoe Foster Care dependence Progam 93.674 130113, 9150114 ‘hdres Health surance Progra 93.67 540113, 0340114 Medea Aeslstence Program a8 ‘moat, 1200114 ‘otal Department of Heath and Hunan Series 8 Department of Agere: Direct Payment: Community Facies Laan and Grants 10.16 ot applicable 5 0 as Trough Payments ‘hd Natron Custer: Department of Asteture: oad Distro Sehals (te 3) toss Nocavaable — § 107,236 Department of Eaton: ‘atlnal Scheel Lunch Program 10335 090 76% oman Department of Edenton: ‘Schoo Breckfost Program 103583 an 298,549 Department of Sota Serves: State AdmlostrativeNatching Grants forthe Supplemental 10.561 os0113, conor 319556 Nuttin Asstance Progam (070113, cosorta “Total Department of Apeuture $ 162.326 Department of Justin: Pas Through Payments: Departnet of Criminal susie Services: llenceAgalst Women Formula Grants 1658 sao, 600 Ss _ 70,860 Department of Transportation: Pass Through Payeents: Department of Matr Vehicles: ‘Alcohol Open CentanerRequremens mer ssaLss3000, 13708 AOL-145081

‘Remaining portion ofthis age ft lank ntentionaly

county of Russell, Vlrstnfa Page 2 of 3 Schedule of Expenditures of Federal Awards

For the Year Ended June 30~ 2014

Pass-throush Federal Entity

Federal Granter/State l’ass • lhrough Grantor/ CFDA Identifying Federal Program Cluster or Title Number Number Expenditures

Department of Education: PassThrough Payments: Department of Eduaitlon: Adult Education - Basic Grants to States 84.002 42801 $ 342,762 Title I: Grants to Local Educational Agencies 84.010 42901 1,1’41,451 Special Education Cluster:

Special Education - Grants to States 84.027 <43071 780,818 Special Education • Preschool Grants 84.173 62521 3-4,297

Career and Teehnlc:al Education: Basic Grants to States 84.048 61095 82,578 Twenty·Ffrst Century Commurifty Learning Centers 84.287 60565 350,561 Rural Education 84.358 43’181 32,031 Improving Teacher Quality State Grants 84.367 61480 19-4,021

Total Department of Education $ 2,958,520

Departmimt of Labor: Pass Through Payments:

Virginia Community Coltege System: Workforce Investment Act Cluster:

WIA Adult Program 17.258 LWA 1·12·04, 1·13·03 $ 769,5-45 WIA Youth ActlVitfes 17.259 LWA 1~12·041 1·13·03 751,198 WIA Dislocated Worker Formula Grants 17.278 LWA 1·12-04, 1~13-03 256,569

Total Department of Labor $ 1,m,312

Department of Homeland Security: Pass Through Payments: l>epartment of Emerge11cy Management:

Emergency Management Performance G~ts 97.042 52742 $ 6,769

Department of Treasury: Direct Payments: Equitable Sharing Program 21.000 Not applfcable $ 296,061

Total Expenditures of Federal Awards $ 8,462,513

Remaining portion of this page left blank intentionally

·92·

County of Rust, Virgins Page 20f3 Schedule of Expenditures of Federal Avards For the Year Ended June 30,2014 as-through Federal Entty Federal Grantorstat Pos -Theough Grantor! OA entitying Federat Program Cluster or Tle Number Number Expenditures Department of Education: ass Though Payments: Department of Education: ‘Adult Edueation- Basic Grant to States ana 5 anne Tle Grants to Local Béveaional Agences 1301 ian Special Education Carters ‘Special @veaton- Grats to tates eon 70818 spect Edueatlon- Preschool Grants rset 37 Career and Tectnenl Education: Basle Grant to States 61095 2578 ‘Twenty-First Century Community Leaming Centers 0365 280.61 url Edcaton ast Improving Teacher Qual State Grants 1480 “otal Department of Auction Department of Labor: Pass Through Payments: ‘Venta Community College System: Workforce Investment Act lu ‘Wa Adult Progam 17258 wWA204, 113.408 S848 ‘Waa Youth Activites 97259 BWAL-ATO4, 143.408 731,98 ‘Wa Disicate Worker Formula Grants 7278 LWA T204, 143.03 256,568 “otal Department of Labor Department of Hometand Seouty: as Tivaugh Payments: Department of Emergency Management: Emergency Management Peformance Grants vr08 sa S609 Department of Treasury: Direct Payments: Egultable Sharing rogram 21.000 Not apetcable 3296061 “Total Bxpenttures of Federal Awards

Remaining portion of tls pag eft blank tentonay

Notes to schedule of Expenditures of fedaral Awards:

Note 1 •• Basis of Presentation

County of Russell, Vfrgtnm Schad ult of Expenditures of Federal Awards

For the Year Ended June JO~ 2014

Page 3 of 3

The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of County of Russell, Virginia under programs of the- federal government for the year ended June 30, 2014. The infonnatlon In this Schedule fs presented 1n accordance with the requirements of OMB Clrc:utar A· 133, Audits of States, Lncal Governments, 011d Non-Profit oraanfzattons. Because the Schedule presents only a selected portion Of the operations of County of Rusrell, Virginia, It fs not intended to and does not present the financial position, changes fn net position, or cash flows of County of Russell, Vlrg(nia.

Note z •. Summary of Slgnifkant Accounting Policies

(1) Expenditures reported on the Schedule are reported on the accrual basis of accounting. SUch expenditures are recognized following; the cost pr1nciples 4:0ntalned In OMB Ciroolar A·87, Cost Prlndples for State, Local, and Indian Tt1bol Governments, wherefn certafn types of expenditures are not allowable or are limited as to reimbursement. (2) Pass-through entity identifying numbers are presenb!d where available.

Note 3 •• Food Dtttrlbutlon

Nonmonetary assistance fs reported In the schedule at the fafr market value of the commodities received and di$bursed. At June 30, 2014, Russell County, Vfrgfnla had food commodities totaling SO In Inventory.

Note 4 -· Subreclplents Of the federal expendftures presented ln the Schedule, Russell County, Virgln1a provided federal awards to subrnclpfents ai:i follow:;:

CFDA Number Pro!i!ram Name Amount 17.258, 17,259, 17.278 Workforce Investment Act Cluster 1,777,312

Note 5 •• R.elat1onshfp to the Financial Statements Federal expenditures, revenues and capital contributions are reported 1n the CountYs basic financial statelTlents as follows:

Intergovernmental federal revenues per the basic financial statements: Primary government: General F’und $ 2,448, 161 Workforce Investment Board Fund 1,m,112

Total primary government: s 4,225,-473

Component Unit School Board: School Operating Fund s 4,237,040

Total expenditures of fedeiql awards per the basic financial statements s 8,462,SfJ

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county of Russo, Vins Page 30f3 Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2044

Notes to Schedule of Expenditures of Federal Avards: Note + Bass of Presentation

‘Te acenmpanyng sched of expenditures of federal awards (the Schedule) includes the federal grant activty of County of Russell, Vina under programs of he federal goverment fr the yeor ended ne 30, 214. The lvormation i thi Sched ts presented tn accordance withthe requirements of OMS Crear fe 135, Auats af Stter, Local Goverment, and Non-Profit Orgonzotions. Because te Schedule presets enya selected portion ofthe operations of County of Ausil, Vila ts ot intended to and does nt present the nail poston, changes in net poston or eash flows of County of Russel, Vina.

Note 2 ~ Sumary of Sguinnt Accounting Plies ‘(1 Bxpendtres reported on the Schedule are reported onthe acrit asl of accounting. Such expenditures are recognized fllowing the cost princes <antaned tn OMB Croar 87, Cost Principles for State, Lect, and indian Tribal Governments, whecln certain types of expenditures ar not allowable or are liked as to reinbusement.

‘@)Pasc-through entity Idontitying unbers are presented where salable.

ote 3 Food pistbutln Nononetary asistance ts reported inthe schedule atthe far market value of the commodltes received and ditursed, At June 30, 2044, Russell County, \egina had food commodtistotalag $0 lventry.

Note 4 Subrectpnts (Of the federal expenditures presented in the Schedule, Rusell Coury, Vrgla provided feerat nar to subeciplents as follows:

rpANumber Program Name ‘noun 17.28, 17.259, 17.278 Werkfore investment Act Custer wma

Noto ~ Relattonship tothe Fanci statements Federal expenditures, revenues and cpltal contributions ar reported inthe County bast ancl statement as fellows:

Intergvernmestal federal cevenses por the basic finan statements:

Primary govetnment: ‘Genel Fund ‘orkforeo Investment Board Fund “otal primary goverment: Sansa ‘Component Unt choot Board: ‘School Opealing Fond sA2700 “Tota expenses of federal awards perth baste ancl statements S862 3

County of Russell, Virginia

Schedule of Findings and Questioned Costs Year Ended June 30, 2014

Section I • Summary of Auditors’ Results

Financial Statements

Type of auditors’ report Issued:

Internal control over financial reporting: Material weakness(es) identified?

Significant deficlency(les) Identified?

Noncompliance material to financial statements noted?

Federal Awards

Internal control over financial reporting: Material weakness(es) identified?

Significant deficiency(les) identified?

Type of auditors’ report issued on compliance for major programs:

Any audit findings disclosed that are required to be reported in accordance w1th Circular A-133, Section .510 (a)?

Identification of major programs:

CFDA# Name of Federal Program or Cluster

84.010 10.553/10.555

10.561

17.258/17.259/17.278

Title I: Grants to Local Educational Agencies Child Nutrition Cluster State Administrative Matching Grants for the Supplemental

Nutrition Assistance Program Workforce Investment Act Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qual1fled as low-risk auditeel

.94.

Unmodified

Yes

None reported

Yes

None reported

Unmodified

$300,000

County of Russell, Virginia

Schedule of Findings and Questioned Costs Year Ended June 30, 2014

Section | - Summary of Auditors’ Results

Financial ‘Type of auditors’ report issued: Unmodified Internat control over financial reporting:

‘Material weakness(es) identified? Yes

Significant deficiency(les) identified? None reported Noncompliance material to financial statements noted? Yes Federal Awards Internal control over financial reporting:

Material weakness(es) identified? No

‘Significant deficiency(tes) identified? None reported ‘Type of auditors’ report fssued on compliance for major programs: Unmodified

‘Any audit findings disclosed that are required to be reported in accordance with Cireular A-133, Section .510 (a)? No

Identification of major programs:

CFDA Name of Federal Program or Cluster 84,010 Title I: Grants to Local Educational Agencies 10.553/10.555 Child Nutrition Cluster 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program

17.258/17.259/17.278 Workforce Investment Act Cluster

Dollar threshold used to distinguish between Type A and Type B programs: $300,000

Auditee qualified as low-risk auditee? No

County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2014

Section II • Financial Statement Findings

2014-001

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

2014-002

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 C"Ot;ttPmPnt~.

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 2014 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 2014 and will develop a plan of action to ensure that all adjusting entries are made prior to final audit fieldwork next year.

The Code of Virginia, (1950), as amended requires that an appropriation exists prior to the expenditure of funds.

The Coal Road Fund overspent the budget. Numerous departments within the General fund also overspent the 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.

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County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued)

Year Ended June 30, 2014

Section It - Financial Statement Findings

2014-004

Criteriar

Condition:

‘Cause of Condition:

Effect of Condition:

Recommendation:

‘Management’s,

Response:

2014-002

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 far 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 fs more than a remote likelihood that a misstatement of the County’s financlat statements that is more than inconsequential will not be prevented or detected by the County’s internat controls aver financial reporting.

‘The County should review the auditors’ proposed audit adjustments for 2014 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 2014 and will develop a plan of action to ensure that all adjusting entries are made prior to final audit fieldwork next year.

Griteri

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 Coal Road Fund overspent the budget. Numerous departments within the General fund also overspent the 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.

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County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) Year Ended June JO, 2014

Section Ill • Federal Award Findings and Questioned Costs

None

Section IV • Status of Prior Audit Findings and Questioned Costs

Financial Statement Findings 2013·1 and 2013-3 were recurring during fiscal year 2014. Financial Statement Finding 2013-2 was corrected during the current year.

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County of Russell, Virginia

Schedule of Findings and Questioned Casts (Continued) Year Ended June 30, 2014

Section Ill - Federal Award Findings and Questioned Costs

None Section IV - Status of Prior Audit Findings and Questioned Costs

Financial Statement Findings 2013-1 and 2013-3 were recurring during fiscal year 2014. Financial Statement. Finding 2013-2 was corrected during the current year.

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