2017-Audit

2017-Audit

Document Date: January 1, 2017 Document: 2017-Audit.pdf

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COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2017

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2017

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017

TABLE OF CONTENTS

INTRODUCTORY SECTION

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 5-6 Statement of Activities … 2 7

Fund Financial Statements: Balance Sheet – Governmental Funds … 3 8

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position … 4 9 Statement of Revenues, Expenditures and Changes in Fund Balances –

     Governmental Funds ...........................................................................  5 10

Reconciliation of the Statement of Revenues, Expenditures, and Changes

     in Fund Balances of Governmental Funds to the Statement of Activities  .............  6 11

Statement of Net Position – Proprietary Funds … 7 12

Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds … 8 13

Statement of Cash Flows – Proprietary Funds … 9 14 Statement of Fiduciary Net Position – Fiduciary Funds … 10 15

Notes to the Financial Statements … 16-76

Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual General Fund … 11 77 Special Revenue Fund – Coal Road Fund … 12 78 Special Revenue Fund – Workforce Investment Board Fund … 13 79 Schedule of OPEB Funding Progress … 14 80 Schedule of Employer’s Proportionate Share of Net Pension Liability … 15 81 Schedule of Changes in Net Pension Liability and Related Ratios – Component Unit School Board (nonprofessional) … 16 82 Schedule of Employer Contributions … 17 83 Notes to Required Supplementary Information … 18 84

CouNrTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2017

TABLE OF CONTENTS

INTRODUCTORY SECTION Page List of Elected and Appointed Officials… 1 FINANCIAL SECTION Independent Auditors’ Report … 24 Exhibit Page Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position . 1 56 Statement of Activities 2 7 Fund Financial Statemen Balance Sheet - Governmental Funds … 3 8 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position … 4 9 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds … 5 10 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities . 6 ot Statement of Net Position - Proprietary Funds … 7 2 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds 8B Statement of Cash Flows - Proprietary Funds. 9 14 Statement of Fiduciary Net Position - Fiduciary Funds 10 15 Notes to the Financial Statements … 16-76 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual

General Fund . 7

Special Revenue Fund - Coal Road Fund 2 7B

Special Revenue Fund - Workforce Investment Boar B79 Schedule of OPEB Funding Progress . 1480 Schedule of Employer’s Proportionate Share of Net Pension Liability. 1581 Schedule of Changes in Net Pension Liability

and Related Ratios - Component Unit School Board (nonprofessional) . 16 82

Schedule of Employer Contributions … 17 BB Notes to Required Supplementary Information 1884

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Exhibit Page Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities – Agency Funds … 19 85

Discretely Presented Component Unit – School Board:

Balance Sheet … 20 86 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds … 21 87 Schedule of Revenues, Expenditures, and Changes in Fund Balances –

Budget and Actual … 22 88

Schedule Page Supporting Schedules:

Schedule of Revenues – Budget and Actual - Governmental Funds … 1 89-93

Schedule of Expenditures – Budget and Actual - Governmental Funds … 2 94-97

Other Statistical Information: Table Page

Government-wide Information: Government-Wide Expenses by Function … 1 98 Government-Wide Revenues … 2 99

Fund Information:
General Governmental Expenditures by Function … 3 100 General Governmental Revenues by Source … 4 101 Property Tax Levies and Collections … 5 102

Assessed Value of Taxable Property … 6 103 Property Tax Rates … 7 104 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita … 8 105 Ratio of Annual Debt Service Expenditures for General Bonded Debt to
Total General Governmental Expenditures … 9 106

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2017

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Exhibit Other Supplementary Information: Combined Statement of Changes in Assets and Liabilities - Agency Funds … 19 Discretely Presented Component Unit - School Board Balance Sheet … 20 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds a Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual . 2 Schedule Supporting Schedules: Schedule of Revenues - Budget and Actual - Governmental Funds… 1 Schedule of Expenditures - Budget and Actual - Governmental Funds 2 Other Statistical Information: Table Government-wide Information: Government-Wide Expenses by Function . 1 Government-Wide Revenues . 2 Fund Information: General Governmental Expenditures by Function . 3 General Governmental Revenues by Source 4 Property Tax Levies and Collections 5 Assessed Value of Taxable Property 6 Property Tax Rates … 7 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita… 8 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures. 9

86 87 88

Page

89-93 94-97

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017

TABLE OF CONTENTS (CONTINUED)

COMPLIANCE SECTION

Page

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 … 107-108

Independent Auditors’ Report on Compliance for Each Major Program and on Internal
Control over Compliance Required by the Uniform Guidance … 109-110

Schedule of Expenditures of Federal Awards … 111-112 Schedule of Findings and Questioned Costs … 113-115

CouNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2017

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 the Uniform Guidance

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

107-108

109-110

111-112 113-115

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Steve Breeding, Chairman David Eaton, Vice Chairman Tim Lovelace

Lou Wallace Carl Rhea Rebecca Dye Mark Mitchell

COUNTY SCHOOL BOARD

Donnie Ramey, Chairman Cynthia Compton, Vice Chairman Jeff Cook Wayne Bostic Linda Garrett
Charlie Collins Alex Zachwieja, Jr.

SOCIAL SERVICES BOARD

Bill Hale, Chairman Rebecca Dye, Vice Chairman Roger Brown Laurel Rasnick Brian Ferguson

OTHER OFFICIALS

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. Gregory A. Brown

Director of Social Services … Patrick Brunty County Administrator … Lonzo Lester County Attorney … Matthew Crum

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COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Steve Breeding, Chairman David Eaton, Vice Chairman Tim Lovelace Lou Wallace Carl Rhea Rebecca Dye Mark Mitchell

COUNTY SCHOOL BOARD

Donnie Ramey, Chairman Cynthia Compton, Vice Chairman Jeff Cook Wayne Bostic Linda Garrett Charlie Collins Alex Zachwieja, Jr.

SOCIAL SERVICES BOARD

Bill Hale, Chairman Rebecca Dye, Vice Chairman Roger Brown Laurel Rasnick Brian Ferguson

OTHER OFFICIALS

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

Ann S. McReynolds … Brian Patton -Randy N. Williams Patrick Thompson Steve Dye Dr. Gregory A. Brown Patrick Brunty Lonzo Lester Matthew Crum

ROBINSON, FARMER, COX ASSOCIATES

A PROFESSIONAL LIMITED 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

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 the County of Russell, Virginia, as of and for the year ended June 30, 2017, 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, Virginia. Those 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, Virginia, is based solely on the reports 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 PROFESSIONAL LIMITED 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

Auditors’ Responsibility

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

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

Opinions

In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of June 30, 2017, 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 schedules related to pension and OPEB funding on pages 77-79 and 80-84 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 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 the County of Russell, Virginia’s basic financial statements. The other supplementary information and other statistical information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.

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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

Other Matters Required Supplementary Information

Other Information

The other supplementary information and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the report of the other auditors, the other supplementary information and the 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 them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated January 31, 2018, on our consideration of the County of Russell, Virginia’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County of Russell, Virginia’s internal control over financial reporting and compliance.

Blacksburg, Virginia January 31, 2018

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Other Reporting Required by Government Auditing Standards

Pelvis, Forum, leg Cstersitot Blacksburg, Virginia January 31, 2018

Exhibit 1 Page 1 of 2

Governmental Business-type Activities Activities Total

ASSETS Cash and cash equivalents 6,369,602$ -$ 6,369,602$
Receivables (net of allowance for uncollectibles):

Taxes receivable 7,922,644 - 7,922,644
Accounts receivable 713,529 7,296 720,825
Grants receivable - - -

Due from component unit 1,718,483 - 1,718,483
Due from other governmental units 1,978,482 - 1,978,482
Inventories - - -
Prepaid items - - -
Restricted assets:

Cash and cash equivalents 192,472 49,575 242,047
Investments 5,418,538 - 5,418,538

Noncurrent assets: Capital assets (net of accumulated depreciation):

Land 568,695 - 568,695
Land rights - - -
Buildings and improvements 12,548,111 - 12,548,111
Machinery and equipment 1,860,550 - 1,860,550
Utility plant in service - 2,730,541 2,730,541
Construction in progress 2,089,147 - 2,089,147
Accumulated Depreciation - - -

Total assets 41,380,253$ 2,787,412$ 44,167,665$

DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date 712,485$ 5,748$ 718,233$
Items related to measurement of net pension liability 626,664 14,066 640,730

Total deferred outflows of resources 1,339,149$ 19,814$ 1,358,963$

LIABILITIES Accounts payable 1,573,885$ 23,557$ 1,597,442$
Construction payables 2,089,147 - 2,089,147
Accrued liabilities 1,805 - 1,805
Customer deposits - - -
Accrued interest payable 150,541 1,542 152,083
Reconciled overdraft - - -
Line of credit - - -
Due to primary government - - -
Long-term liabilities:

Due within one year 1,872,737 22,839 1,895,576
Due in more than one year 22,970,615 663,409 23,634,024

Total liabilities 28,658,730$ 711,347$ 29,370,077$

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes 5,338,788$ -$ 5,338,788$
Items related to measurement of net pension liability 377,961 2,824 380,785

Total deferred inflows of resources 5,716,749$ 2,824$ 5,719,573$

NET POSITION Net investment in capital assets 7,455,986$ 2,103,781$ 9,559,767$
Restricted:

Coal Road 82,732 - 82,732
Construction - - -
Asset forfeiture funds 192,472 - 192,472
Debt service and bond covenants - 49,575 49,575
Environmental waste - - -

Unrestricted (deficit) 612,733 (60,301) 552,432
Total net position (deficit) 8,343,923$ 2,093,055$ 10,436,978$

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

Primary Government

County of Russell, Virginia Statement of Net Position

June 30, 2017

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Exhibit 1 Page 1 of 2 County of Russell, Virginia Statement of Net Potton ‘June 20, 2017

Primary Government Governmental Business type

‘etivties — Activities Total Assers Cash and cash equivalents $6,309,602 $ $6,369,602 Receivables (net of allowance for uncollctbtes) Taxes receivable 792.644 7.922.644 Aecounts recewvable 73.509 7296 "720,825 Grants receivable : : ue fram component unit 41,718,483 41,718,483 Due from other governmental units 11978482 11978482 Inventories : Prepaid items Restricted ascets (Cash and cash equivalents 192,472 ‘57s 2non Investments 5418 538 5.418 538

Noncurent assets Capital asets (net of accumulated depreciation):

and 568,695, 568,695, {and rights ° : Bullen and improvements 12508,111 248,111 Machinery and equipment 1860, 550 186,550 ‘uit plant in service 270s 2,730,541 Construction in progress 2,089,147 089,147 Accumulated Depreciation

“otal assets SR WOES DIT ADS aT

DEFERRED OUTFLOWS OF RESOURCES

Pension contributions subsequent to measurement date Sng $58 $8233

Items related to measurement of net pension labilty 626.664 14066 "640,730

“otal deferred euttlows of resoures S739. S19 84S 358,963 uaBiLmies

‘Accounts payable S 1573885 § 23,557 § 1597.44

Construetion payables 2,089,147 2,069,147

‘Accrued abilities 105 : 1305,

Customer deposits

‘ecru interest payable 150,541 152 152,088

Reconciled overdraft : :

Une of credit : : Due to primary government Long-term lables:

‘Due within one year 187.737 289 1,895,576 ‘ue in more than one year z970.515 663.409 23.634.074 Total abies $26,658,730-§ 7H 37 S29, 370,077 DEFERRED INFLOWS OF RESOURCES Deferred revenue property taxes $5,338,788 $ + $5,338,708 Item related to measurement of net pension lability 377.961 24 "380.785 “otal defered inflows of resources SB 7679 SSS 79.573 NET POSITION. Net investment in capita assets $7485.90 $2,103,761 § 9,559,767 Restricte Coal Road are, are, Construction ° : Asst forfefture funds 192,472 192,472 ‘Debt service and bond covenants . 49575 49.575, Environmental waste Unrestricted (cect) 12.733, 0,301) __s52.432

“otal net poston (deficit)

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

Exhibit 1 Page 2 of 2

Industrial Russell County Castlewood Development Public Service Water and Sewage

School Board Authority Authority Authority

ASSETS Cash and cash equivalents 1,261,625$ 320,126$ 119,852$ -$
Receivables (net of allowance for uncollectibles):

Taxes receivable - - - -
Accounts receivable 56,524 28,859 332,587 144,474
Grants receivable - - 30,788 35,120

Due from component unit - - - -
Due from other governmental units 1,704,367 - - 16,329
Inventories - - 39,516 -
Prepaid items 365,331 31,829 - -
Restricted assets:

Cash and cash equivalents - - 231,125 203,652
Investments - -

Noncurrent assets: Capital assets (net of accumulated depreciation):

Land 5,636,345 2,394,539 110,332 130,080
Land rights - - - 12,648
Buildings and improvements 9,923,315 12,696,826 107,097 243,966
Machinery and equipment 1,743,573 - - 59,644
Utility plant in service - - 22,745,388 11,816,351
Construction in progress - 4,520,329 1,155,826 862,784
Accumulated Depreciation - - (7,106,820) -

Total assets 20,691,080$ 19,992,508$ 17,765,691$ 13,525,048$

DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date 3,064,088$ -$ -$ 23,973$
Items related to measurement of net pension liability 2,350,883 - 74,186 21,751

Total deferred outflows of resources 5,414,971$ -$ 74,186$ 45,724$

LIABILITIES Accounts payable 276,847$ -$ 223,521$ 105,040$
Construction payables - 50,004 - 91,492
Accrued liabilities 978,030 - 61,212 17,195
Customer deposits - - 14,398 82,509
Accrued interest payable - 39,323 9,057 7,433
Reconciled overdraft - - - 8,314
Line of credit - - - 230,653
Due to primary government 1,518,483 200,000 - -
Long-term liabilities:

Due within one year 537,842 570,093 201,221 221,153
Due in more than one year 40,293,997 12,359,909 6,585,414 5,672,116

Total liabilities 43,605,199$ 13,219,329$ 7,094,823$ 6,435,905$

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes -$ -$ -$ -$
Items related to measurement of net pension liability 1,872,684 - 8,002 5,668

Total deferred inflows of resources 1,872,684$ -$ 8,002$ 5,668$

NET POSITION Net investment in capital assets 17,303,233$ 6,631,688$ 10,262,384$ 7,237,034$
Restricted:

Coal Road - - - -
Construction - - 271 -
Asset forfeiture funds - - - -
Debt service and bond covenants - - 91,591 121,143
Environmental waste - - 139,263 -

Unrestricted (deficit) (36,675,065) 141,491 243,543 (228,978)
Total net position (deficit) (19,371,832)$ 6,773,179$ 10,737,052$ 7,129,199$

County of Russell, Virginia Statement of Net Position

June 30, 2017

Component Units

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Exhibit +

Page 2 of 2 County of Russell, Virginia Statement of Net Position ‘June 20, 2017 Component Units Trdustrial Russel County Castlewood Development Pubic Service Water and Sewage School Board Authority Authority ‘authority ASSETS Cash and cash equivalents S$ 1261,625 $320,126 $119,852 $ Receivables (net of allowance for uncollectibles): Taxes receivable Aecounts receivable 56.504 23.859 3.507 saaara Grants receivable 30.788 35,120, Due from component unit Due from other governmental units 4,704,367 16,329 Inventories 39,516 Prepaid items 365,331 319 Restricted aces: (Cash and cash equivalents 21,105, 203,652 Investments Nencurent assets: Capital assets (nt of accumulated deprecation): tana 5636345 2,394,539 110,332 130,080 {and rights 2608 Bulleing and improvements 9,923,315 12,696,825 107,097 243.966 Machinery and equipment 178,573 59,604 ULiity plant in service 22,745,388 19,816,351 Constriction in progress 4520,329 1,155,626 362,784 ‘Accumulated Depreciation (7,106,820) Total asets EGOS AMES 7.765.691 SS OE DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date 5 3064088. § 5 s Ber Item related to measurement of net pension labilty 2,350,883, 74,306 2751 Total defered cutis of resources S54 971_S Suess Bre uapiumies Accounts payable 5 6847 § 5 mass 108,000 Construction payables 50,004 o1een ecrued abilities 979,000 oa 17.395 Customer deposits 14,398 82/509 Accrued interest payable 203 9.057 7.433 Reconcile overdraft en Line of creat. 2305653. Due to primary government 4516,483 200,000 Long-term lables: ‘Due within one year 5x72 570.093 201,221 221,153, ‘Due in more than one year 40293,997__ 12,359,909 6 585,414 56716 Total abilities 55 605,199 $13,219,309-$ 7.094.823 $6. a88.905, DEFERRED INFLOWS OF RESOURCES Deferred revenue property taxes 5 os 5 a : Item related to measurement of net pension lability 1.572.684 8.002 568 Total defered inflows of resources S72.664_ 5 3005 pe NET POSTON Net investment in capital assets 5 17,303,233 $6,631,688 $10,262,388 $7,237,034 Restricted: Coal Road Consrtion m Asset forfefture funds ‘Debt service and bond covenants 91,591 18. Environmental waste 139263 Unrestricted (aetct) (36,675,065) 141.491 243543, (228,978) otal net positon (det) 109,371,832) §—6773,179_$—TO,737,052_ $7,129,199

Exhibit 2

Operating Capital Industrial Russell County Castlewood Charges for Grants and Grants and Governmental Business-type Development Public Service Water and Sewerage

Functions/Programs Expenses Services Contributions Contributions Activities Activities Total School Board Authority Authority Authority

PRIMARY GOVERNMENT: Governmental activities:

General government administration 2,085,083$ -$ 322,739$ -$ (1,762,344)$ -$ (1,762,344)$
Judicial administration 2,290,688 14,691 852,970 - (1,423,027) - (1,423,027) Public safety 6,395,713 96,981 1,984,547 - (4,314,185) - (4,314,185) Public works 3,152,142 160,412 19,891 - (2,971,839) - (2,971,839) Health and welfare 9,535,001 - 8,596,925 - (938,076) - (938,076) Education 9,519,958 - - - (9,519,958) - (9,519,958) Parks, recreation, and cultural 552,562 2,196 85,041 - (465,325) - (465,325) Community development 992,839 42,784 - - (950,055) - (950,055) Interest on long-term debt 515,428 - - - (515,428) - (515,428)

Total governmental activities 35,039,414$ 317,064$ 11,862,113$ -$ (22,860,237)$ -$ (22,860,237)$

Business-type activities: Dante Sewer 454,634$ 97,636$ -$ -$ -$ (356,998)$ (356,998)$

Total primary government 35,494,048$ 414,700$ 11,862,113$ -$ (22,860,237)$ (356,998)$ (23,217,235)$

COMPONENT UNITS: School Board 40,265,940$ 418,730$ 32,242,450$ -$ (7,604,760)$ -$ -$ -$
Industrial Development Authority 1,085,864 - - - - (1,085,864) - - Russell County Public Service Authority 2,191,838 1,548,906 - 164,482 - - (478,450) - Castlewood Water and Sewer Authority 1,881,192 1,460,186 - 234,505 - - - (186,501) Total component units 45,424,834$ 3,427,822$ 32,242,450$ 398,987$ (7,604,760)$ (1,085,864)$ (478,450)$ (186,501)$

General revenues: General property taxes 17,065,361$ -$ 17,065,361$ -$ -$ -$ -$
Other local taxes: Local sales and use taxes 1,853,633 - 1,853,633 - - - - Coal road and severence taxes 667,350 - 667,350 - - - - Consumers’ utility taxes 526,747 - 526,747 - - - - Motor vehicle licenses 48,098 - 48,098 - - - - Other local taxes 201,397 - 201,397 - - - - Unrestricted revenues from use of money and property 185,677 - 185,677 6,486 896,662 1,841 1,081 Miscellaneous 91,300 - 91,300 251,228 - 58,769 - Payments from the County of Russell, Virginia - - - 6,946,438 402,303 238,539 - Grants and contributions not restricted to specific programs 2,493,045 - 2,493,045 - - - - Gain on disposal of capital assets - - - - - 10,100 - Transfers (248,772) 248,772 - - - - - Total general revenues and transfers 22,883,836$ 248,772$ 23,132,608$ 7,204,152$ 1,298,965$ 309,249$ 1,081$
Change in net position 23,599$ (108,226)$ (84,627)$ (400,608)$ 213,101$ (169,201)$ (185,420)$
Net position (deficit) - beginning, as restated 8,320,324 2,201,281 10,521,605 (18,971,224) 6,560,078 10,906,253 7,314,619 Net position (deficit) - ending 8,343,923$ 2,093,055$ 10,436,978$ (19,371,832)$ 6,773,179$ 10,737,052$ 7,129,199$

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

County of Russell, Virginia Statement of Activities

For the Year Ended June 30, 2017

Net (Expense) Revenue and

Component UnitsGovernment

Program Revenues Changes in Net Position Primary

-7-

county of Ruse, Vigna Statement of Atte: For the Your Ended une 30, 2017

ext 2

Net (Expense) Revenve and

Proyram Revenues ‘Changes in Net Peston Primary Component Government Unis Operating Capital Tauri Russel County Castlewood Charges for Grantsand__Grants and Governmental Business-ype Development Publ Serve Water and Sewerage Functions 0 vices Conkrbutios Contrbuons Aviles «Actives «== Total_©—«—SchoolBoard Authority Authority ‘Authority Goverment sti: (General government amination 2085083 5 +5 mame s -$ armas $11,702,348) Jel aeminstration 2.50.88 wast 852970 (3.007) (123.007) use stety 6.395.713 96981 1984.47 (4304.85) a3t485) Pale woes Size wo.atz 91 9739) < eorsss) Heath and wettare 935,001 396.925 (938 075) 2“ gs.re) sucation 919.958 519.958), = 3519.98) Parks, rereatin, ae cultural 2156 5081 : (465.325) (465,303) Communty éeelopment aim : 1950.05), (930055 Interest on ong term debt (515.428) <_615,408) “Total governmental activites 3 is ses Sms ses. Businss-type activites: Dante Sewer $ssuae ¢ ors as Ls = §_086.998) $034,958 ‘Total pranary government Teue§ a 7w_s Tams Samar § — se 9 $7 COMPONENT UNIT: ‘chet Board Ss so2590 § 417 § RaMs0 § Ss 7.60760) § s s Inaistriat Development Autarty 1.0856 1.085.856) ssl County Publ Service autor 2918s 1 548.908 eae 470450) Ctsleweod Water and Sewer Author este 14,106 234505 86500) ‘Total component nts Seta § haan Sze w_S 9a 7 Samira) $e) Sara (seo) Genera reves “General property taxes S r.065 361 § S$ r.065361 § 8 8 8 : ‘ther oct tne Lal sales an se taxes 1.883.653 83.538 Consumers tity tes ‘ua7ar sue747 Noor vehi tenses 8.058 : 48.058 : : : : Othe lea aces 201,37 201387 : : : : Unrestricted evens frm us of money and propery 35.677 S877 ease 86682 fo 1.081 iscelaneous 1300 : 9300 28 sa Payents rm the Count f Rusa, Vegi : pains 02.305 ans Grants and contributions not reste to specif programs| 2493.06 2065 Gam on disposal of capa sets a : : 10,100 : Transfers ser) aa. : : - : Total general revenues and transfers Fe LA A 081 ‘change met positon Sam Sos. Seen) $—(aosoH $213.01 -§ —_qTen.aTH) S as a07 Net psi dei besioig, a restated sat0.ie4 2201251" 10.21.05 (97m) 6.550078 1.905.253, r31s19 Net postion eect) ending Sess S20 os SO. a97E_S HITS So STOO S Ti. 19

‘The accompanying notes othe nani statements ar a intel part of th statement

Exhibit 3

Coal Workforce General Road Investment Board Total

ASSETS Cash and cash equivalents 4,951,279$ -$ -$ 4,951,279$
Receivables (net of allowance for uncollectibles):

Taxes receivable 7,922,644 - - 7,922,644
Accounts receivable 186,892 31,512 - 218,404

Due from other funds 111,220 65,105 - 176,325
Due from component unit 1,718,483 - - 1,718,483
Due from other governmental units 1,695,870 - 282,612 1,978,482
Restricted assets:

Temporarily restricted: Cash and cash equivalents 192,472 - - 192,472
Investments 5,418,538 - - 5,418,538
Total assets 22,197,398$ 96,617$ 282,612$ 22,576,627$

LIABILITIES Accounts payable 430,750$ 13,885$ 200,049$ 644,684$
Construction payables 2,089,147 - - 2,089,147
Reconciled overdraft - - 38,462 38,462
Accrued liabilities 1,805 - - 1,805
Due to other funds 65,105 - 111,220 176,325

Total liabilities 2,586,807$ 13,885$ 349,731$ 2,950,423$

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 7,775,367$ -$ -$ 7,775,367$

FUND BALANCES Restricted:

Coal Road -$ 82,732$ -$ 82,732$
Asset forfeiture funds 192,472 - - 192,472
Energy Lease Project 3,329,391 - - 3,329,391

Assigned: Sheriff Funds 32,873 - - 32,873
Library Donations 35,450 - - 35,450
Knox Creek Coal Insurance 242,380 - - 242,380
Law Library 43,725 - - 43,725
Housing 12,124 - - 12,124
Health and Fitness 8,247 - - 8,247

Unassigned 7,938,562 - (67,119) 7,871,443
Total fund balances 11,835,224$ 82,732$ (67,119)$ 11,850,837$
Total liabilities, deferred inflows of resources, and fund balances 22,197,398$ 96,617$ 282,612$ 22,576,627$

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

County of Russell, Virginia Balance Sheet

Governmental Funds June 30, 2017

-8-

County of Russell, Virginia Balance Sheet Governmental Funds June 30, 2017

Exhibit 3

ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectibies): Taxes receivable Accounts receivable Due from other funds ue from component unit Due from other governmental units Restricted assets: Temporarily restricted: Cash and cash equivalents, Investments Total assets

ABILITIES ‘Accounts payable Construction payables Reconciled overdraft Accrued liabilities Due to other funds

Total liabilities

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes

FUND BALANCES

Restricted

Coal Road

Asset forfeiture funds

Energy Lease Project, Assigned

Sherif Funds

Library Donations

Knox Creek Coal Insurance

Law Library

Housing

Health and Fitness Unassigned

Total fund balances

Total liabilities, deferred inflows of resources, and fund balances, 5

Coal Workforce General Road investment Board Total $4,951,279 s 4,951,279

7,922,644 : 7,922,644 186,892 31,512 218,404 111,220 65,105 176,325 1,718,483, : 1,718,483, 11695,870 282,612 1,978,482. 192,472 - 192,472 5,418,538 - 5,418,538

322,197,398 96,017_S WTO S 22,576,627 S 430,750 $13,885. § 200,049 644,684 2,089,147 - 2,089,147

: - 38,462 38,462

1,805, : 1,805

65,105 : 411,220 176,325 37,586,807 5 13,8855 3497318 7,950,423 S__7,775,367_$ 8 7,775,367 s S$ TR s 92,732 192,472 - war

3,329,391 - 3,329,391 32,873 32,873 35,450 . 35,450 242,380 . 242,380 3,725 - 3.705 12,124 - 12,124 8,247 : 8,247

7,938,562 : (67.119) 7,871,443

311,835.04 5 wT _S (67,119) $11,850,837 72,197,398 _§ 96,617 282,612 $22,576,627,

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

Exhibit 4

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

Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds 11,850,837$

Land 568,695$
Buildings and improvements 12,548,111
Machinery and equipment 1,860,550
Construction in progress 2,089,147 17,066,503

Unavailable revenue - property taxes 2,436,579$
Deferred inflows - items related to measurement of net pension liability (377,961) 2,058,618

712,485

1,022,709

Bonds and literary loans (11,263,191)$
Capital leases (5,588,478)
Unamortized premium (199,295)
Accrued interest payable (150,541)
Landfill accrued closure and postclosure liability (281,837)
Net OPEB obligation (180,313)
Compensated absences (554,421)
Net pension liability (6,775,817)
Deferred outflows - items related to measurement of net pension liability 626,664 (24,367,229)

Net position of governmental activities 8,343,923$

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

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

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

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

To the Statement of Net Position June 30, 2017

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

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

Pension contributions subsequent to the measurement date will be a reduction to the net pension liability in the next fiscal year and, therefore, are not reported in the funds.

-9-

County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2017

Exhibit 4

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

Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds $11,850,837 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Land 5 568,695

Buildings and improvements 12,548,111

‘Machinery and equipment 1,860,550

Construction in progress 2,089,147 17,066,503 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds.

Unavailable revenue - property taxes $2,436,579

Deferred inflows - items related to measurement of net pension liability 377,961) 2,058,618 Pension contributions subsequent to the measurement date will be a reduction to the net pension liability in the next fiscal year and, therefore, are not reported in the funds. 712,485; Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. ‘The assets and liabilities of the internat service funds are included in governmental activities in the statement of net position. 4,022,709 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds.

Bonds and literary loans $11,263,191)

Capital leases (5,588,478)

Unamortized premium (199,295)

Accrued interest payable (150,541)

Landfill acerued closure and postclosure liability (281,837)

Net OPEB obligation (180,313)

Compensated absences (654,421)

Net pension liability (6,775,817)

Deferred outflows - items related to measurement of net pension liability 626,664 (24,367,229) Net position of governmental activities RE

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

Exhibit 5

Coal Workforce General Road Investment Board Total

REVENUES General property taxes 17,415,482$ -$ -$ 17,415,482$
Other local taxes 2,963,549 333,676 - 3,297,225
Permits, privilege fees, and regulatory licenses 32,009 - - 32,009
Fines and forfeitures 18,804 - - 18,804
Revenue from the use of money and property 179,690 221 - 179,911
Charges for services 266,251 - - 266,251
Miscellaneous 91,300 - - 91,300
Recovered costs 664,820 - 232,547 897,367
Intergovernmental:

Commonwealth 9,075,824 - - 9,075,824
Federal 2,899,049 - 2,380,285 5,279,334

Total revenues 33,606,778$ 333,897$ 2,612,832$ 36,553,507$

EXPENDITURES Current:

General government administration 1,829,925$ -$ -$ 1,829,925$
Judicial administration 2,326,471 - - 2,326,471
Public safety 7,012,800 - - 7,012,800
Public works 3,063,114 417,674 - 3,480,788
Health and welfare 7,316,474 - 2,633,615 9,950,089
Education 6,892,129 - - 6,892,129
Parks, recreation, and cultural 522,426 - - 522,426
Community development 1,008,002 - - 1,008,002
Nondepartmental 147,991 - - 147,991

Capital projects 2,482,783 - - 2,482,783
Debt service: -

Principal retirement 1,399,929 - - 1,399,929
Interest and other fiscal charges 535,261 - - 535,261

Total expenditures 34,537,305$ 417,674$ 2,633,615$ 37,588,594$

Excess (deficiency) of revenues over (under) expenditures (930,527)$ (83,777)$ (20,783)$ (1,035,087)$

OTHER FINANCING SOURCES (USES) Transfers in -$ 51,285$ -$ 51,285$
Transfers out (300,057) - - (300,057)
Issuance of capital leases 5,588,478 - - 5,588,478

Total other financing sources (uses) 5,288,421$ 51,285$ -$ 5,339,706$

Net change in fund balances 4,357,894$ (32,492)$ (20,783)$ 4,304,619$
Fund balances - beginning 7,477,330 115,224 (46,336) 7,546,218
Fund balances - ending 11,835,224$ 82,732$ (67,119)$ 11,850,837$

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

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

Governmental Funds For the Year Ended June 30, 2017

-10-

County of Russell, Virginia

Statement of Revenues, Expenditures, and Changes in Fund Balances

Governmental Funds For the Year Ended June 30, 2017

Exhibit 5

REVENUES General property taxes Other local taxes

Permits, privilege fees, and regulatory licenses

Fines and forfeitures

Revenue from the use of money and property

Charges for services Miscellaneous Recovered costs Intergovernmental: ‘Commonwealth Federal Total revenues

EXPENDITURES. Current: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural ‘Community development Nondepartmental Capital projects Debt service: Principal retirement Interest and other fiscal charges Total expenditures

Excess (deficiency) of revenues over (under) expenditures

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

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

Coal Workforce General Road Investment Board Total $17,415,482 $ “3s = $17,415,482

2,963,549 333,676 3,297,225 32,009 - 32,009 18,804 : 18,804 179,690 21 179,911 266,251 - 266,251 91,300 : 91,300 664,820 232,547 897,367

9,075,824 : : 9,075,824

2,899,049 : 2,380,285 5,279,334

$33,606,778 § 333,897§ 2,612,832 _$ 36,553,507 $1,829,925 $ “$ = $1,829,925

2,326,471 : 2,326,471

7,012,800 - - 7,012,800

3,063,114 417,674 : 3,480,788

7,316,474 : 2,633,615 9,950,089

6,892,129 - - 6,892,129 522,426 : : 522,426

1,008,002 : 1,008,002 147,991 - - 147,991

2,482,783 : : 2,482,783

1,399,929 : 1,399,929 535,264 : - 535,261

$34,537,305 § 417,674 8 7,633,015 $ 37,588,594 S$ (930,527) $_ (83,777) $ (20,783) $_ (1,035,087) s - $51,285 § S 51,285 (300,057) : (300,057) 5,588,478 : 5,588,478 35,288,421 § 51,2858 $5,339,706 S 4,357,894 § (32,492) § (20,783) $ 4,304,619 7,477,330 115,224 (46,336) 7,546,218 $11,835,224 § _82,732_5 (67,119) 5 11,850,837

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

Exhibit 6

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

Net change in fund balances - total governmental funds 4,304,619$

Capital outlay 2,926,656$
Reversion of assets back to the School Board (net) (146,258)
Depreciation expense (955,118) 1,825,280

Property taxes (350,121)$
Change in deferred inflows of resources related to the measurement of net pension liability 483,245 133,124

Issuance of long-term obligations: Capital leases (5,588,478)$
Landfill closure and postclosure liability (3,617)

Principal Payments: Bonds, literary loans, and notes 1,286,460
Capital leases 113,469 (4,192,166)

(Increase) decrease in compensated absences 70,487$
(Increase) decrease in accrued interest payable 3,029
(Increase) decrease in net OPEB obligation (33,588)
Amortization of bond premiums 16,804
(Increase) decrease in net pension liability (847,554)
Change in deferred outflows of resources related to pension payments subsequent to the measurement date (88,169)
Change in deferred outflows of resources related to the measurement of net pension liability 626,664 (252,327)

(1,794,931)

Change in net position of governmental activities 23,599$

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

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

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

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

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

For the Year Ended June 30, 2017

County of Russell, Virginia Reconciliation of Statement of Revenues,

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

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

-11-

Exhibit 6 County of Russell, Virginia Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended June 30, 2017

Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $4,304,619

Capital outlay S 2,926,656 Reversion of assets back to the School Board (net) (146,258) Depreciation expense (955,118) 1,825,280

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

Property taxes $50,121)

‘Change in deferred inflows of resources related to the measurement of net pension liability 483,245, 133,124

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

Issuance of long-term obligations:

Capital teases $5,588,478) Landfill closure and postelosure liability 617) Principal Payments: Bonds, literary loans, and notes 1,286,460 Capital leases 113,469 (4,192,166)

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

(Increase) decrease in compensated absences $ 70,487 (increase) decrease in accrued interest payable 3,029 (increase) decrease in net OPEB obligation (23,588) “Amortization of bond premiums 16,804 (increase) decrease in net pension liability (847,554) Change in deferred outflows of resources related to pension payments subsequent to the measurement date (68,169) Change in deferred outflows of resources related to the measurement of net pension liability 626,664 (252,327)

with governmental activities. (1,794,931) CChange in net position of governmental activities Tae

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

11-

Exhibit 7

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

ASSETS Current assets:

Cash and cash equivalents -$ 1,456,785$
Interest receivable 48 1,774 Accounts receivable, net of allowance for uncollectibles 7,248 493,351

Total current assets 7,296$ 1,951,910$

Noncurrent assets: Restricted assets:

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

Utility plant in service 5,240,699$ -$
Less accumulated depreciation (2,510,158) -
Total capital assets 2,730,541$ -$
Total noncurrent assets 2,780,116$ -$
Total assets 2,787,412$ 1,951,910$

DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date 5,748$ -$
Items related to measurement of net pension liability 14,066 -

Total deferred outflows of resources 19,814$ -$

LIABILITIES Current liabilities:

Accounts payable 23,557$ 929,201$
Accrued interest payable 1,542 -
Revenue bonds - current portion 22,839 -

Total current liabilities 47,938$ 929,201$

Noncurrent liabilities: Revenue bonds - net of current portion 603,921$ -$
Net pension liability 59,488 -

Total noncurrent liabilities 663,409$ -$
Total liabilities 711,347$ 929,201$

DEFERRED INFLOWS OF RESOURCES Items related to measurement of net pension liability 2,824$ -$

Total deferred inflows of resources 2,824$ -$

NET POSITION Net investment in capital assets 2,103,781$ -$
Restricted for debt service and bond covenants 49,575 -
Unrestricted (60,301) 1,022,709

Total net position 2,093,055$ 1,022,709$

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

County of Russell, Virginia Statement of Net Position

Proprietary Funds June 30, 2017

-12-

Exhibit 7 County of Russell, Virginia Statement of Net Position Proprietary Funds June 30, 2017

Enterprise internal Fund Service Fund Dante Self Fund Health Insurance ASSETS Current assets: Cash and cash equivalents $ -$ 1,456,785 Interest receivable 1,774 Accounts receivable, net of allowance for uncollectibles 493,351 Total current assets $ 7,951,010

Noncurrent assets: Restricted assets:

Cash and cash equivalents (in custody of others) $ 49,575 : Capital assets: Utility plant in service $ 5,240,699 $ - Less accumulated depreciation (2,510,158) Total capital assets 32,730,541 § 5 Total noncurrent assets $ $ Total assets $ $ DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date $ $ - Items related to measurement of net pension liability Total deferred outflows of resources s LIABILITIES Current liabilities ‘Accounts payable $ 23,557 $ 929,201 ‘Accrued interest payable 1,542 : Revenue bonds - current portion : Total current liabilities s 929,201 Noncurrent liabilities Revenue bonds - net of current portion $ 603,921 $ - Net pension liability : Total noncurrent liabilities $ s Total liabilities $ 7i1347§ 929,201 DEFERRED INFLOWS OF RESOURCES Items related to measurement of net pension liability $ $ : Total deferred inflows of resources $ $ NET POSITION Net investment in capital assets S 2,103,781 $ : Restricted for debt service and bond covenants 49,575 : Unrestricted (60,301) Total net position $2,093,055 _ 5.

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

“12+

Exhibit 8

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

OPERATING REVENUES Charges for services:

Sewer revenues 97,636$ -$
Insurance premiums - 5,986,587

Total operating revenues 97,636$ 5,986,587$

OPERATING EXPENSES Salaries and benefits 141,711$ -$
Professional services 4,303 -
Utilities 1,698 -
Materials and supplies 44,456 -
Office expenses 48,533 -
Insurance claims and expenses - 7,787,284 Depreciation 131,017 -

Total operating expenses 371,718$ 7,787,284$

Operating income (loss) (274,082)$ (1,800,697)$

NONOPERATING REVENUES (EXPENSES) Investment income -$ 5,766$
Contribution to Castlewood PSA (54,331) -
Interest expense (28,585) -

Total nonoperating revenues (expenses) (82,916)$ 5,766$
Income (loss) before transfers (356,998)$ (1,794,931)$

Transfers in 248,772$ -$
Change in net position (108,226)$ (1,794,931)$

Total net position - beginning 2,201,281 2,817,640
Total net position - ending 2,093,055$ 1,022,709$

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

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

Proprietary Funds For the Year Ended June 30, 2017

-13-

Exhibit 8 County of Russell, Virginia Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2017

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance OPERATING REVENUES Charges for services: Sewer revenues $ 97,636 $ : Insurance premiums : 5,986,587 Total operating revenues 97,6365 986,587

OPERATING EXPENSES

Salaries and benefits $ 141,711 $

Professional services 4,303

Utilities 1,698

‘Materials and supplies 44,456

Office expenses 48,533 :

Insurance claims and expenses : 7,787,284

Depreciation 131,017 : Total operating expenses 371,718 _§ 7,787,284 Operating income (loss) $ (274,082) $ (1,800,697)

NONOPERATING REVENUES (EXPENSES)

Investment income $ - $8 5,766

Contribution to Castlewood PSA (54,331) :

Interest expense (28,585) : Total nonoperating revenues (expenses) 5 (82,916) 5 5,766 Income (loss) before transfers $ (356,998) (1,794,931)

Transfers in $ 248,772_$ - Change in net position $ (108,226) $ (1,794,931)

Total net position - beginning 2,201,281 2,817,640

Total net position - ending 2,093,055 _$ 1,022,709

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

“13°

Exhibit 9

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users 97,731$ -$
Receipts for insurance premiums - 5,964,297
Payments to suppliers (99,703) -
Payments to employees (140,085) -
Payments for premiums - (7,541,403)

Net cash provided by (used for) operating activities (142,057)$ (1,577,106)$

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 248,772$ -$

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds (23,749)$ -$
Contribution to Castlewood PSA (54,331) -
Interest payments (28,635) -

Net cash provided by (used for) capital and related financing activities (106,715)$ -$

CASH FLOWS FROM INVESTING ACTIVITIES Interest income -$ 5,258$

Net increase (decrease) in cash and cash equivalents -$ (1,571,848)$

Cash and cash equivalents - beginning 49,575 3,028,633
Cash and cash equivalents - ending 49,575$ 1,456,785$

Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) (274,082)$ (1,800,697)$
Adjustments to reconcile operating income (loss) to net cash

provided by (used for) operating activities: Depreciation 131,017$ -$
(Increase) decrease in accounts receivable 95 (22,290)
(Increase) decrease in deferred outflows of resources (12,784) -
Increase (decrease) in accounts payable (713) 245,881
Increase (decrease) in deferred inflows of resources (3,252) -
Increase (decrease) in net pension liability 17,662 -
Total adjustments 132,025$ 223,591$

Net cash provided by (used for) operating activities (142,057)$ (1,577,106)$

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

County of Russell, Virginia Statement of Cash Flows

Proprietary Funds For the Year Ended June 30, 2017

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Exhibit 9 County of Russell, Virginia Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2017

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 97,731 $ : Receipts for insurance premiums : 5,964,297 Payments to suppliers (99,703) - Payments to employees (140,085) - Payments for premiums (7,541,403) Net cash provided by (used for) operating activities (142,057) $

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Transfers from other funds $ 248,772 $ CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds $ (23,749) $ - Contribution to Castlewood PSA (54,331) - Interest payments (28,635) Net cash provided by (used for) capital and related financing activities $ (106,715) $ CASH FLOWS FROM INVESTING ACTIVITIES Interest income $ _ 38 5,258 Net increase (decrease) in cash and cash equivalents $ - $ (1,571,848) Cash and cash equivalents - beginning 49,575 3,028,633

Cash and cash equivalents - ending

Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) $ (274,082) $ (1,800,697) Adjustments to reconcile operating income (loss) to net cash

provided by (used for) operating activities:

Depreciation $ 131,017 § - (Increase) decrease in accounts receivable 95 (22,290) (Increase) decrease in deferred outflows of resources (12,784) - Increase (decrease) in accounts payable (713) 245,881 Increase (decrease) in deferred inflows of resources (3,252) : Increase (decrease) in net pension liability 17,662 - Total adjustments 3 732,025_§ 223,591 Net cash provided by (used for) operating activities $ (142,057) $ (1,577,106)

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

Exhibit 10

Agency Funds

ASSETS Cash and cash equivalents 77,334$

Total assets 77,334$

LIABILITIES Amounts held for Social Services clients 66,789$
Amounts held for VASAP 10,545

Total liabilities 77,334$

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

County of Russell, Virginia Statement of Fiduciary Net Position

Fiduciary Funds June 30, 2017

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Exhibit 10 County of Russell, Virginia Statement of Fiduciary Net Position Fiduciary Funds June 30, 2017

Agency Funds

ASSETS

Cash and cash equivalents 77,334

Total assets

LIABILITIES

Amounts held for Social Services clients s 66,789

Amounts held for VASAP 10,545, Total liabilities 77,334

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2017

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, 2017

Note 1-Summary of Significant Accounting Policies:

A. Financial Reporting Entity

Blended component units - None

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 FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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 $2,654,078 to the Regional Jail and $39,996 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 (governmental 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, 2017

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

Financial Reporting Entity (Continued)

Government-wide and Fund Financial Statements

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

Statement of Net Position - The government-wide Statement of Net Position is designed to display the financial position of the primary government (governmental 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.

“A7-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

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

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

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

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

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

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

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

Government-wide and Fund Financial Statements (Continued)

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 inthe 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.

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, 2017

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, Law Library, Knox Creek, Cannery, Health and Fitness, Housing, CSA, Litter, and Valley Heights Subdivision 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, 2017

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

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

The government reports the following major governmental funds:

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:

Asa 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, 2017

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 nonoperating 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

Money market investments, participating interest-earning investment contracts (repurchase agreements) that have a remaining maturity at time of purchase of one year or less, nonparticipating interest-earning investment contracts (nonnegotiable certificates of deposit (CDs)) and external investment pools are measured at amortized cost. All other investments are reported at fair value.

Receivables and Payables

Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds” (i.e. the current portion of interfund loans). All other outstanding balances between funds are reported as “advances to/from other funds” (i.e. the noncurrent portion of interfund loans).

Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account 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, 2017

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

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

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 nonoperating revenues and expenses.

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

Cash and Cash Equivalents

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

Investments

Receivables and Payables

Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Advances between funds, as reported in the fund financial statements, are offset by a fund

balance nonspendable account 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, 2017

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 $807,480 at June 30, 2017 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 or business-type activities 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 acquisition value at the date of donation.

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

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

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

Assets Years

Buildings 40

Building improvements 40

Structures, lines, and accessories 20-40

Machinery and equipment 4-30

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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 5t” and December 5". Personal property taxes are due and collectible on December 5’". The County bills and collects its own property taxes.

Allowance for Uncollectible Accounts

Use of Estimates

Capital Assets

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

‘Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, equipment, and infrastructure of the primary government, as well as the

Component Unit - School Board, are depreciated using the straight-line method over the following estimated useful lives:

Assets Years Buildings 40 Building improvements 40 Structures, lines, and accessories 20-40 ‘Machinery and equipment 4330

“2

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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 (expenditure/expense) until then. The County has two items that qualify for reporting in this category. One item is comprised of certain items related to the measurement of the net pension liability. These include differences between projected and actual experience, change in proportionate share, and the net difference between projected and actual earnings on pension plan investments. The other item is comprised of contributions to the pension plan made during the current year and subsequent to the net pension liability measurement date, which will be recognized as a reduction of the net pension liability next fiscal year. For more detailed information on these items, reference the pension note.

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 two types of items that qualify 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 30th, 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. In addition, certain items related to the measurement of the net pension liability are reported as deferred inflows of resources. These include differences between expected and actual experience, change in proportionate share, and the net difference between projected and actual earnings on pension plan investments. For more detailed information on these items, reference the pension note.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

Prepaid Items

Deferred Outflows/Inflows of Resources

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

(Continued)

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.

Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the County’s Retirement Plan and the additions to/deductions from the County’s Retirement Plan’s net fiduciary position have been determined on the same basis as they were reported by the Virginia Retirement System (VRS). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

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);

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

Compensated Absences

Pensions

Long-term Obligations

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);

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

(Continued)

Fund Equity (Continued)

 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.

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 or 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30,

2017

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

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

14,

Fund Equity (Continued)

= 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 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 or deliberate circumstances.

Net Position

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

(Continued)

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.

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 departmental

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

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.

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 departmental 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 2-Stewardship, Compliance, and Accountability: (Continued)

B. Excess of expenditures over appropriations

The Solid Waste department, Social Services Fund, CSA Fund, Coal Road Fund, Cannery Fund, Litter Fund, and Law Library Fund had excess expenditures over appropriations in the current year.

C. Deficit fund equity

At June 30, 2017, the Workforce Investment Board Fund had deficit fund equity.

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).

Interest Rate Risk: The County has not adopted an investment policy for interest rate risk. Investments subject to interest rate risk are presented below along with their corresponding maturities.

Investment Type Fair Value 1 Year SNAP 5,418,538$ 5,418,538$

Investment Maturities (in years)

Custodial Credit Risk (Investments): The County’s rated debt investments as of June 30, 2017 were rated by Standard and Poor’s and/or an equivalent national rating organization and the ratings are presented below using the Standard and Poor’s rating scale.

Rated Debt Investments Aaam

SNAP 5,418,538$

Ratings County’s Rated Debt Investments’ Values

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 2-Stewardship, Compliance, and Accountability: (Continued)

B. Excess of expenditures over appropriations

The Solid Waste department, Social Services Fund, CSA Fund, Coal Road Fund, Cannery Fund, Litter Fund, and Law Library Fund had excess expenditures over appropriations in the current year.

C. Deficit fund equity

At June 30, 2017, the Workforce Investment Board Fund had deficit fund equity. 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).

Interest Rate Risk: The County has not adopted an investment policy for interest rate risk. Investments subject to interest rate risk are presented below along with their corresponding maturities.

Investment Maturities (in years)

Tavestment Type Fair Value Tear SNAP 55,418,538 “$5,418,538

Custodial Credit Risk (Investments The County’s rated debt investments as of June 30, 2017 were rated by Standard and Poor’s and/or an

equivalent national rating organization and the ratings are presented below using the Standard and Poor’s rating scale. County’s Rated Debt Investments’ Values

Rated Debt Investments. Ratings ‘Aaam. SNAP 5,418,538

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 3-Deposits and Investments: (Continued)

External Investment Pool: The State Non-Arbitrage Pool (SNAP) is an open-end management investment company registered with the Securities and Exchange Commission. In May 2016, the Board voted to convert the SNAP fund to an LGIP structure, which would be managed in conformance with GASB 79. On October 3, 2016, the Prime Series became a government money market fund and the name was changed to Government Select Series. The Government Select Series has a policy of investing at least 99.5% of its assets in cash, U.S. government securities (including securities issued or guaranteed by the U.S. government or its agencies or instrumentalities) and/or repurchase agreements that are collateralized fully.

The value of the positions in the external investment pool (State Non-Arbitrage Pool) is the same as the value of the pool shares. SNAP is an amortized cost basis portfolio under the provisions of GASB Statement No. 79. There are no withdrawal limitations or restrictions imposed on participants.

Note 4-Due from Other Governmental Units:

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

Primary Component Unit Government School Board

Local Government: Southwest Virginia Regional Jail $ 267,712 $ -

Commonwealth of Virginia: Local sales tax 309,734 -
State sales tax - 754,029
Non-categorical aid 333,870 -
Categorical aid-shared expenses 208,504 -
Categorical aid-Virginia Public Assistance funds 167,619 -
Categorical aid-other 49,449 -
Categorical aid-Comprehensive Services Act funds 166,801 -

Federal Government: Categorical aid-Virginia Public Assistance funds 185,961 -
Categorical aid-Workforce Investment funds 282,612 -
Categorical aid-Other 6,220 -
School federal programs - 950,338

Total Amount Due from Other Governmental Units $ 1,978,482 $ 1,704,367

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 3-Deposits and Investments: (Continued)

Note 4-Due from Other Governmental Units:

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

Primary Component Unit Government _ School Board Local Government TO

Southwest Virginia Regional Jail $267,712 $ Commonwealth of Virgi

Local sales tax 309,734 :

State sales tax : 754,029

Non-categorical aid 333,870 :

Categorical aid-shared expenses 208,504

Categorical aid-Virginia Public Assistance funds 167,619

Categorical aid-other 49,449

Categorical aid-Comprehensive Services Act funds 166,801 Federal Governmen

Categorical aid-Virginia Public Assistance funds 185,961

Categorical aid-Workforce Investment funds 282,612

Categorical aid-Other 6,220 :

School federal programs : 950,338 Total Amount Due from Other Governmental Units $1,978,482 $1,704,367

“27

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary Government/ Government/

Component Unit Component Unit

Primary Government: General Fund $ - $ 1,718,483

Component Unit: School Board $ 1,518,483 $ -
IDA 200,000 -

Total $ 1,718,483 $ 1,718,483

Fund

Interfund transfers and remaining balances for the year ended June 30, 2017, consisted of the following:

Transfers In Transfers Out

Primary Government: General Fund -$ 300,057$
Coal Road Fund 51,285 -
Dante Fund 248,772 -
Total 300,057$ 300,057$

Primary Government: Due From Due To General Fund 111,220$ 65,105$
Coal Road Fund 65,105 -
Workforce Investment Board Fund - 111,220
Total 176,325$ 176,325$

Fund

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, 2017

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary

Government/ Government/ Fund Component Unit _Component Unit

Primary Government:

General Fund $ __$ 1,718,483 Component Unit:

School Board $1,518,483 $

IDA 200,000

Total $ 1,718,483 $ 1,718,483

Interfund transfers and remaining balances for the year ended June 30, 2017, consisted of the following:

Fund Transfers In__ Transfers Out

Primary Government:

General Fund $ - $ 300,057 Coal Road Fund 51,285 : Dante Fund 248,772 -

Total 5 300,057 “$300,057

Primary Government: Due From Due To General Fund 3 11,20 «$65,105 Coal Road Fund 65,105 - Workforce Investment Board Fund - 111,220

Total 317635 3S __ 176,305

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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, 2017:

Balance July 1, 2016, Increases/ Decreases/ Balance as restated Issuances Retirements June 30, 2017

General obligation bonds $ 7,321,764 $ - $ (673,554) $ 6,648,210
Literary loans 1,060,677 - (375,977) 684,700
Revenue bonds 4,167,210 - (236,929) 3,930,281
Deferred Amounts:

Bond premiums 216,099 - (16,804) 199,295
Capital leases 113,469 5,588,478 (113,469) 5,588,478
Landfill closure/

postclosure liability 278,220 3,617 - 281,837
Net OPEB obligation 146,725 38,888 (5,300) 180,313
Compensated absences 624,908 398,194 (468,681) 554,421
Net pension liability 5,928,263 2,671,144 (1,823,590) 6,775,817

Total $ 19,857,335 $ 8,700,321 $ (3,714,304) $ 24,843,352

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

Year Ending

June 30, Principal Interest Principal Interest Principal Interest

2018 $ 697,910 $ 299,970 $ 282,792 $ 14,205 $ 236,928 $ -

2019 707,390 266,406 229,246 8,038 236,928 -

2020 732,715 232,069 102,646 3,453 236,928 -

2021 728,164 198,108 45,016 1,400 236,928 -

2022 629,683 166,196 12,500 500 236,928 -

2023-2027 2,315,374 463,685 12,500 250 1,150,194 -

2028-2032 799,689 80,076 - - 1,098,522 -

2033-2037 27,072 5,508 - - 496,925 -

2038-2039 10,213 397 - - - -

Totals $ 6,648,210 $ 1,712,415 $ 684,700 $ 27,846 $ 3,930,281 $ -

General Obligation Bonds Literary Loans Revenue Bonds

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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, 2017:

Balance July 1, 2016, Increases/-—Decreases/ Balance as restated Issuances__Retirements_ _June 30, 2017 General obligation bonds. $ 7,321,764 $ - $ (673,554) $ 6,648,210 Literary loans 1,060,677 - (375,977) 684,700 Revenue bonds 4,167,210 - (236,929) 3,930,281 Deferred Amounts:

Bond premiums 216,099 - (16,804) 199,295 Capital leases 113,469 5,588,478 (113,469) 5,588,478 Landfill closure/

postclosure liability 278,220 3,617 - 281,837 Net OPEB obligation 146,725 38,888 (5,300) 180,313, Compensated absences 624,908 398,194 (468,681) 554,421 Net pension liability 5,928,263, 2,671,144 (1,823,590) 6,775,817

Total $__ 19,857,335 $ 8,700,321 $ (3,714,304) $_ 24,843,352

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

Year Ending _ General Obligation Bonds Literary Loans Revenue Bonds June 30, Principal Interest Principal Interest _Principal—_Interest

2018 «=©$ 697,910 $299,970 $282,792 $ 14,205 $236,928 $ -

2019 707,390 266,406 229,246 8,038 236,928 - 2020 732,715 232,069 102,646 3,453 236,928 - 2021 728,164 198,108 45,016 1,400 236,928 2022 629,683 166,196 12,500 500 236,928

2023-2027 2,315,374 463,685 12,500 250 1,150,194,

2028-2032 799,689 80,076 - - 1,098,522

2033-2037 27,072 5,508 : - 496,925

2038-2039 10,213 397 : :

Totals $ 6,648,210 $1,712,415 $ 684,700 $__27,846 $ 3,930,281 $

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

Rates Issued Date Amounts Issue Activities One Year

General Obligation Bonds:

General obligation bond 5.75% 1988 2028 $13,063-41,261 a+ 672,000$ 336,141$ 24,622$

General obligation bond 5.10%-6.10% 1997 2018 $5,000 a+ 140,000 5,000 5,000

General obligation bond 4.50% 1999 2039 $2,518-6,183 a+ 119,530 89,989 2,518

General obligation bond 4.10%-5.23% 1999 2019 $25,000 a+ 510,000 75,000 25,000

General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210 443,676 106,052

General obligation bond 2.35%-5.10% 2002 2023 $213,799-272,702 a+ 4,382,954 1,529,813 237,646

General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 a+ 3,205,190 1,783,591 162,072

General obligation bond 4.60%-5.10% 2009 2030 $55,000-110,000 a+ 1,485,000 1,115,000 65,000

General obligation bond 3.05%-5.05% 2010 2031 $55,000-120,000 a+ 1,620,000 1,270,000 70,000

Total General Obligation Bonds 6,648,210$ 697,910$

Revenue Bonds:

Revenue bond 0.00% 11/28/2001 2033 $15,595 sa 935,690$ 467,845$ 31,190$

Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 858,948 55,416

Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 137,791 17,224

Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 424,889 27,412

Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 343,198 18,551

Revenue bond 0.00% 10/14/2005 2036 $1,524 sa 91,439 57,911 3,048

Revenue bond 0.00% 10/14/2005 2037 $31,779 sa 1,906,717 1,239,366 63,557

Revenue bond 0.00% 4/28/2006 2037 $6,925 sa 415,513 270,082 13,851

Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 130,251 6,679

Total Revenue Bonds 3,930,281$ 236,928$

Plus:

Unamortized Premium 199,295$ 16,804$

Total General Obligation and Revenue Bonds 10,777,786$ 951,642$

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

(sa) - semi-annual installments including interest, if applicable

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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 Rates Issued Date ‘Amounts Issue ‘Activities One Year

General Obligation Bonds: General obligation bond 5.75% 1988 2028 $13,063-41,261a+ $672,000 $336,141 $24,622 General obligation bond 5.10%-6.10% 1997 2018 $5,000 av 140,000 5,000 5,000 General obligation bond 450% 1999 2039 $2,518-6,183 a+ 119,530 89,989 2,518 General obligation bond 410%-5.23% 1999 2019 $25,000 at 510,000 75,000 25,000 General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210 443,676 106,052 General obligation bond 2.39%-5.108 2002 2023 $213,799-272,702a+ 4,382,954 1,529,813 237,646, General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 ar 3,205,190 1,783,591. 162,072 General obligation bond 4.60%-5.10% 2008 2030 $55,000-110,000 a+ 1,485,000 1,115,000 65,000 General obligation bond 3.05%-5.05% 2010 2031 —$55,000-120,000 a+ 1,620,000 __1,270,000 70,000 Total General Obligation Bonds $6,648,210 $ 697,910 Revenue Bond: Revenue bond 0.008 11/28/2001 2033, 515,595sa $935,690 $467,845 $31,190 Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 858,948 55,416 Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 137,791 17,224 Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 424,889 27,412 Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 343,198 18,551 Revenue bond 0.00% 10/14/2008 2036 $1,524 sa 91,439 57,911 3,048 Revenue bond 0.00% 10/14/2005 2037 531,779 5a 1,906,717 1,239,366 63,557 Revenue bond 0.00% 4/28/2008 2037 $6,925 sa 415,513 270,082 13,851 Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 130,251 6,679 Total Revenue Bonds $3,930,281 $ 236,928 Plus:

Unamortized Premium S 199,295 $16,804 Total General Obligation and Revenue Bonds $10,777,786 _$ _ 951,642

{a*) - annual principal installments shown; does not include semi-annual interest installments (sa) - semi-annual installments including interest, if applicable

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 6-Long-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

Literary loans:

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

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

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

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

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

Literary loan 2.00% 1/1/2000 2020 $57,757 a+ 1,155,140 173,271 57,757

Literary loan 2.00% 3/15/1999 2019 $55,700 a+ 1,114,086 111,486 55,700

Literary loan 2.00% 3/15/1999 2019 $8,200 a+ 161,449 13,849 8,200

Literary loan 2.00% 6/15/1999 2019 $21,134 a+ 422,680 42,268 21,134

Literary loan 2.00% 6/15/1999 2019 $44,020 a+ 880,411 88,051 44,020

Literary loan 2.00% 11/15/2000 2021 $24,689 a+ 493,789 98,765 24,689

Literary loan 3.00% 12/15/2000 2021 $7,700 a+ 154,118 30,918 7,700

Literary loan 2.00% 7/1/2003 2023 $12,500 a+ 250,000 75,000 12,500

Total Literary Loans 684,700$ 282,792$

Other Obligations:

Capital Leases (Note 7) 5,588,478$ 222,487$

Landfill Closure and Postclosure Liability 281,837 -

Net OPEB Obligation 180,313 -

Compensated Absences 554,421 415,816

Net Pension Liability 6,775,817 -

Total Other Obligations 13,380,866$ 638,303$

Total Long-term Obligations 24,843,352$ 1,872,737$

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 6-Long-Term Obligations: (Continued)

Primary Government - Governmental Activities Indebtedness (Continued)

Details of long-term indebtedness: (Continued)

Final Amount of Balance Interest Date Maturity Installment Original_—Governmental Rates Issued Date Amounts issue Activities Literary loan: Literary loan 3.00% 2/1/1988 2018—518,522ar $ 530,999 5 18,522, Literary loan 3.00% 2/1/1988 2018 $12,581 ae 358,151 12,581 Literary loan 3.00% 2/1/1988 2018——$3,005 a+ 84,805, 3,005 Literary loan 3.00% 2/1/1988 2018 $9,95 ar 281,079 9,995 Literary loan 3.00% 2/1/1988 2018——$6,989 ar 196,873 6,989 Literary loan 2.00% 1/1/2000 2020 $57,757 a+ 1,155,140 173,271 Literary loan 2.00% 3/15/1999 2019$55,700a+ 1,114,086 111,486 Literary loan 2.00% 3/15/1999 2019—$8,200 ar 161,449 13,849 Literary loan 2.00% 6/15/1999 2019 $21,134 422,680 42,268, Literary loan 2.00% 6/15/1999 2019-$44,020a+ 880,411 88,051 Literary loan 2.00% 11/15/2000 2021. $24,689 a+ 493,789 98,765, Literary loan 3.00% 12/15/2000 2021 $7,700 ar 154,118 30,918 Literary loan 2.00% 7/1/2003 2023.=$12,500a+ 250,000 75,000

Total Literary Loans $

Other Obligations

Capital Leases (Note 7) 55,588,478 Landfill Closure and Postclosure Liability 281,837 Net OPEB Obligation 180,313, Compensated Absences 554,421 Net Pension Liability 6,775,817 Total Other Obligations 513,380,866

Total Long-term Obligations $24,843,352

The remainder of this page left blank intentionally.

-31-

‘Amount

Due Within

One Year

18,522 12,581 3,005 9,995 6,989 57,757 55,700 8,200 21,134 44,020 24,689 7,700 12,500

222,487

415,816

638,303

4,872,737

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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, 2017:

Balance Balance July 1, 2016 Issuances Retirements June 30, 2017

Revenue bonds $ 650,509 $ - $ (23,749) $ 626,760
Net pension liability 41,826 33,322 (15,660) 59,488

Total $ 692,335 $ 33,322 $ (39,409) $ 686,248

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

Year Ending June 30, Principal Interest

2018 22,839$ 27,671$
2019 23,845 26,665
2020 23,960 25,612
2021 25,060 24,512
2022 26,212 23,360

2023-2027 150,265 97,595
2028-2032 188,101 59,758
2033-2036 166,478 14,334

Totals 626,760$ 299,507$

Revenue Bonds

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-32-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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, 2017:

Balance Balance July 1, 2016 Issuances Retirements June 30, 2017

Revenue bonds $ 650,509 § = $ (23,749) $ 626,760 Net pension liability 41,826 33,322 (15,660) 59,488 Total $692,335 $ 33,322. $__(39,409) $ 686,248

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

Year Ending Revenue Bonds

June 30, Principal Interest 2018 $22,839 $27,671 2019 23,845 26,665 2020 23,960 25,612 2021 25,060 24,512 2022 26,212 23,360

2023-2027 150,265 97,595

2028-2032 188,101 59,758

2033-2036 166,478 14,334

Totals $626,760 _$ 299,507

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-32-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 6-Long-Term Obligations: (Continued)

Primary Government – Business-type Activities Indebtedness: (Continued)

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$ 1,875$ 937$

Revenue bond 4.50% 4/10/1996 2036 900,000 624,885 21,902

Total Revenue Bonds 626,760$ 22,839$

Other Obligations:

Net pension liability 59,488$ -$

Total Long-term Obligations 686,248$ 22,839$

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-33-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 6-Long-Term Obligations: (Continued)

Primary Government - Business-type Activities Indebtedness: (Continued)

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 § = 1,875 § 937 Revenue bond 4.50% 4/10/1996 2036 900,000 624,885 21,902 Total Revenue Bonds 626,760 $22,839 Other Obligation: Net pension liability $59,488 § : Total Long-term Obligations $686,248 $22,839

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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, 2017:

Balance Balance July 1, 2016 Increases Decreases June 30, 2017

Net OPEB obligation $ 1,173,717 $ 948,605 $ (715,000) $ 1,407,322
Early retirement incentive 8,000 - (8,000) -
Compensated absences 706,408 540,521 (529,806) 717,123
Net pension liability 34,789,744 9,140,357 (5,222,707) 38,707,394

Total $ 36,677,869 $ 10,629,483 $ (6,475,513) $ 40,831,839

Details of long-term indebtedness:

Amount Total Due Within

Amount One Year Other Obligations:

Net OPEB Obligation 1,407,322$ -$
Compensated Absences 717,123 537,842
Net pension liability 38,707,394 -

Total Other Obligations 40,831,839$ 537,842$

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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, 2017:

Balance Balance July 1, 2016 Increases Decreases June 30, 2017 Net OPEB obligation $1,173,717 $ 948,605 $ (715,000) $1,407,322 Early retirement incentive 8,000 : (8,000) : Compensated absences 706,408 540,521 (529,806) 717,123 Net pension liability 34,789,744 9,140,357 __ (5,222,707) 38,707,394 Total $_ 36,677,869 $10,629,483 $ (6,475,513) $__ 40,831,839 Details of long-term indebtedness: Amount Total Due Within Amount: One Year Other Obligation: Net OPEB Obligation $ 1,407,322 $ : Compensated Absences 717,123 537,842 Net pension liability 38,707,394 : Total Other Obligations $ 40,831,839 _$ 537,842

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“34.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 7-Capital Leases:

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

The capital assets acquired through the capital lease is as follows:

Energy Savings

Equipment

Machinery and equipment $ 2,089,147

Less: Accumulated depreciation -

Net capital asset $ 2,089,147

At year end, energy savings assets were not in service.

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2017, were as follows:

Year Ending Capital June 30, Leases

2018 $ 338,169
2019 420,606
2020 424,506
2021 428,349
2022 432,130

2023-2027 2,214,790
2028-2032 2,087,419
2033-2037 2,151,857

Subtotal $ 8,497,826

Less, amount representing interest (2,909,348)

Present Value of Lease Agreement $ 5,588,478

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 7-Capital Leases:

Primary Government The County has entered into a lease agreement to finance energy savings equipment for the School

Board. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of minimum lease payments at the dates of inception. The capital assets acquired through the capital lease is as follows:

Energy Savings

Equipment ‘Machinery and equipment $ 2,089,147 Less: Accumulated depreciation : Net capital asset $ 2,089,147

At year end, energy savings assets were not in service.

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2017, were as follows:

Year Ending Capital June 30, Leases 2018 $338,169 2019 420,606 2020 424,506 2021 428,349 2022 432,130 2023-2027 2,214,790 2028-2032 2,087,419 2033-2037 2,151,857 Subtotal $8,497,826

Less, amount representing interest (2,909,348)

Present Value of Lease Agreement $ _5,588,478

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan:

Plan Description

All full-time, salaried permanent employees of the County and (nonprofessional) employees of the public school divisions are automatically covered by a VRS Retirement Plan upon employment. This is an agent multiple-employer plan administered by the Virginia Retirement System (the System) along with plans for other employer groups in the Commonwealth of Virginia. However, several entities whose financial information is not included in the primary government report, participate in the VRS plan through County of Russell, Virginia and the participating entities report their proportionate information on the basis of a cost-sharing plan.

All full-time, salaried permanent (professional) employees of public school divisions are automatically covered by the VRS Teacher Retirement Plan upon employment. This is a cost-sharing multiple employer plan administered by the Virginia Retirement System (the system).

Members earn one month of service credit for each month they are employed and for which they and their employer pay contributions to VRS. Members are eligible to purchase prior service, based on specific criteria as defined in the Code of Virginia, as amended. Eligible prior service that may be purchased includes prior public service, active military service, certain periods of leave, and previously refunded service.

The System administers three different benefit structures for covered employees – Plan 1, Plan 2, and, Hybrid. Each of these benefit structures has different eligibility criteria. The specific information for each plan and the eligibility for covered groups within each plan are set out in the table below:

RETIREMENT PLAN PROVISIONS

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

About Plan 1
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 Plan 1 if their membership date is before July 1, 2010, and they were vested as of January 1, 2013.

About Plan 2
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 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 January 1, 2013.

About the Hybrid Retirement Plan
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 Plan 1 and 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: Plan Description

‘Members earn one month of service credit for each month they are employed and for which they and their employer pay contributions to VRS. Members are eligible to purchase prior service, based on specific criteria as defined in the Code of Virginia, as amended. Eligible prior service that may be purchased includes prior public service, active military service, certain periods of leave, and previously refunded service.

The System administers three different benefit structures for covered employees - Plan 1, Plan 2, and, Hybrid. Each of these benefit structures has different eligibility criteria. The specific information for each plan and the eligibility for covered groups within each plan are set out in the table below:

RETIREMENT PLAN PROVISIONS.

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN About Plan 1 ‘About Plan 2 About the Hybrid Retirement Plan Plan 1 is a defined Plan 2 is a defined benefit plan. | The Hybrid Retirement Plan combines benefit plan. The The retirement benefit is based | the features of a defined benefit plan retirement benefit is on a member’s age, creditable | and a defined contribution plan, Most based onamember’s _| service and average final members hired on or after January 1, age, creditable service | compensation at retirement __| 2014 are in this plan, as well as Plan 1 and average final using a formula, Employees are | and Plan 2 members who were eligible compensation at eligible for Plan 2 if their and opted into the plan during a retirement using a membership date is on or after | special election window. (see “Eligible formula. Employees are | July 1, 2010, or their Members”)

eligible for Plan 1 if their | membership date is before July - ; membership date is 1, 2010, and they were not + The defined benefit is based on a before July 1, 2010, and | vested as of January 1, 2013. member’s age, creditable service they were vested ag of and average final compensation at January 1, 2013. retirement using a formula.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

About Plan 1 (Cont.)

About Plan 2 (Cont.)

About the Hybrid Retirement Plan (Cont.)

 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 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.

Eligible Members
Employees are in 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 January 1, 2013.

Hybrid Opt-In Election
Eligible 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.

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

• Political subdivision employees*

• School division employees • Members in Plan 1 or 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

About Plan 1 (Cont.)

Eligible Members Employees are in 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.

About Plan 2 (Cont.)

Eligible Members Employees are in 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 January 1, 2013.

Hybrid Opt-In Election

Eligible 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.

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About the Hybrid Retirement Plan (Cont.)

« 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:

Political subdivision employees*
School division employees
Members in Plan 1 or 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,

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

Hybrid Opt-In Election (Cont.) The Hybrid Retirement Plan’s effective date for eligible 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 Plan 1 were not eligible to elect the Hybrid Retirement Plan and remain as Plan 1 or ORP.

Hybrid Opt-In Election (Cont.) The Hybrid Retirement Plan’s effective date for eligible 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 Plan 2 were not eligible to elect the Hybrid Retirement Plan and remain as Plan 2 or ORP.

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

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

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 Plan 1 or Plan 2, they are not eligible to elect the Hybrid Retirement Plan and must select Plan 1 or Plan 2 (as applicable) or ORP.

Retirement Contributions
Employees contribute 5% of their compensation each month to their member contribution account through a pre-tax salary reduction. Some political subdivisions and school divisions elected to phase in the required 5% member contribution but all employees are paying the full 5% as of 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.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

Hybrid Opt-In Election (Cont.) The Hybrid Retirement Plan’s effective date for eligible Plan 1 members who opted in was July 1, 2014,

Hybrid Opt-In Election (Cont.) The Hybrid Retirement Plan’s effective date for eligible 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 Plan 2 were not eligible to elect the Hybrid Retirement Plan and remain as Plan 2 or ORP.

*Non-Eligible Members

Some employees are not eligible to participate in the Hybrid Retirement Plan. They include:

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

Retirement Contributions Employees contribute 5% of their compensation each month to their member contribution account through a pre-tax salary reduction. Some political subdivisions and school divisions elected to phase in the required 5% member contribution but all employees are paying the full 5% as of 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.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

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.

Creditable Service
Same as Plan 1.

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

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.

Creditable Service Same as Plan 1.

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 Contributions

Comp. Under the defined contribution component, creditable service is used to determine vesting for the employer contribution portion of the plan.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

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.

Vesting
Same as Plan 1.

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.
Plan 1 or 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 Contributions 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, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

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.

Vesting Same as Plan 1.

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. Plan 1 or 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.

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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

Vesting (Cont.)

Vesting (Cont.) Defined Contributions Component: (Cont.) 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, a member 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.

• 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 70½.

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. It is one of the benefit payout options available to a member at retirement.

Calculating the Benefit
See definition under Plan 1.

Calculating the Benefit
Defined Benefit Component:
See definition under Plan 1.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

Vesting (Cont.)

Defined Contributions Component: (Cont.)

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, a member 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.

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 707%.

Calculating the Benefit

The Basic Benefit is calculated | See definition under Plan 1.

based on a formula using the member’s average final compensation, a retirement multiplier and total service credit at retirement. It is one of the benefit payout options available to a member at retirement.

-A1-

Calculating the Benefit

Defined Benefit Component: See definition under Plan 1.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

Calculating the Benefit (Cont.) 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.

Calculating the Benefit (Cont.)

Calculating the Benefit (Cont.) 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
A member’s average final compensation is the average of the 36 consecutive months of highest compensation as a covered employee.

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

Average Final Compensation
Same as Plan 2. It is used in the retirement formula for the defined benefit component of the plan.

Service Retirement Multiplier
VRS: 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 1.70%.

Sheriffs and regional jail superintendents: The retirement multiplier for sheriffs and regional jail superintendents is 1.85%.

Political subdivision hazardous duty employees: The retirement multiplier of eligible political subdivision hazardous duty employees other than sheriffs and regional jail superintendents is 1.70% or 1.85% as elected by the employer.

Service Retirement Multiplier
VRS: Same as Plan 1 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.

Sheriffs and regional jail superintendents: Same as Plan 1.

Political subdivision hazardous duty employees: Same as Plan 1.

Service Retirement Multiplier
Defined Benefit Component:
VRS: The retirement multiplier for the defined benefit component is 1.00%.

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

Sheriffs and regional jail superintendents: Not applicable.

Political subdivision hazardous duty employees: Not applicable.

Defined Contribution Component:
Not applicable.

-42-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

Calculating the Benefit (Cont.)

Calculating the Benefit (Cont.) 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 Amember’s average final compensation is the average of the 36 consecutive months of highest compensation as a covered employee.

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

Average Final Compensation Same as Plan 2. It is used in the retirement formula for the defined benefit component of the plan.

Service Retirement Multiplier VRS: 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 1.70%.

Sheriffs and regional jail superintendents: The retirement multiplier for sheriffs and regional jail superintendents is 1.85%.

Service Retirement Multiplier

VRS: Same as Plan 1 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.

Sheriffs and regional jail superintendents: Same as Plan 1.

Political subdivision hazardous duty employees: Same as Plan 1.

Service Retirement Multiplier Defined Benefit Component:

VRS: The retirement multiplier for the defined benefit component is 1.00%.

Sheriffs and regional jail superintendents: Not applicable.

Political subdivision hazardous duty employees: Not applicable.

Defined Contribution Component: Not applicable.

-42-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

Normal Retirement Age
VRS: Age 65.

Political subdivisions hazardous duty employees: Age 60.

Normal Retirement Age
VRS: Normal Social Security retirement age.

Political subdivisions hazardous duty employees: Same as Plan 1.

Normal Retirement Age
Defined Benefit Component:
VRS: Same as Plan 2.

Political subdivisions hazardous duty employees: Not applicable.

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

Earliest Unreduced Retirement Eligibility
VRS: Age 65 with at least five years (60 months) of creditable service or at age 50 with at least 30 years of creditable service.

Political subdivisions hazardous duty employees: Age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service.

Earliest Unreduced Retirement Eligibility
VRS: Normal Social Security retirement age with at least five years (60 months) of creditable service or when their age and service equal 90.

Political subdivisions hazardous duty employees: Same as Plan 1.

Earliest Unreduced Retirement Eligibility
Defined Benefit Component:
VRS: Normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90.

Political subdivisions hazardous duty employees: Not applicable.

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

Earliest Reduced Retirement Eligibility VRS: Age 55 with at least five years (60 months) of creditable service or age 50 with at least 10 years of creditable service.

Earliest Reduced Retirement Eligibility VRS: Age 60 with at least five years (60 months) of creditable service.

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

Normal Retirement Age VRS: Age 65.

Political subdivisions hazardous duty employees: Age 60.

Normal Retirement Age VRS: Normal Social Security retirement age.

Political subdivisions hazardous duty employees: Same as Plan 1.

Normal Retirement Age

Defined Benefit Component: VRS: Same as Plan 2.

Political subdivisions hazardous duty employees: Not applicable.

Defined Contribution Component: Members are eligible to receive

distributions upon leaving employment, subject to restrictions.

Earliest Unreduced Retirement Eligibility

VRS: Age 65 with at least five years (60 months) of creditable service or at age 50 with at least 30 years of creditable service.

Political subdivisions hazardous duty employees: Age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service.

Earliest Unreduced Retirement Eligibility

VRS: Normal Social Security retirement age with at least five years (60 months) of creditable service or when their age and service equal 90.

Political subdivisions hazardous duty employees: Same as Plan 1.

Earliest Unreduced Retirement Eligibility

Defined Benefit Component: VRS: Normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90.

Political subdivisions hazardous duty employees: Not applicable.

Defined Contribution Component: Members are eligible to receive

distributions upon leaving employment, subject to restrictions.

Earliest Reduced Retirement Eligibility

VRS: Age 55 with at least five years (60 months) of creditable service or age 50 with at least 10 years of creditable service.

Earliest Reduced Retirement Eligibility

VRS: Age 60 with at least five years (60 months) of creditable service.

Earliest Reduced Retirement Eligibility

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

-43-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

Earliest Reduced Retirement Eligibility (Cont.)

Political subdivisions hazardous duty employees: 50 with at least five years of creditable service.

Earliest Reduced Retirement Eligibility (Cont.)

Political subdivisions hazardous duty employees: Same as Plan 1.

Earliest Reduced Retirement Eligibility (Cont.)

Political subdivisions hazardous duty employees: Not applicable.

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

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 (CPI-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.

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%), for a maximum COLA of 3%.

Eligibility:
Same as Plan 1.

Cost-of-Living Adjustment (COLA) in Retirement
Defined Benefit Component:
Same as Plan 2.

Defined Contribution Component:
Not applicable.

Eligibility:
Same as Plan 1 and Plan 2.

-44-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

Earliest Reduced Retirement Eligibility (Cont.)

Political subdivisions hazardous duty employees: 50 with at least five years of creditable service.

Earliest Reduced Retirement Eligibility (Cont.)

Political subdivisions hazardous duty employees: Same as Plan 1.

Earliest Reduced Retirement Eligibility (Cont.)

Political subdivisions hazardous duty employees: Not applicable.

Defined Contribution Component:

Members are eligible to receive distributions upon leaving employment, subject to restrictions.

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 (CPI-U) and half of any additional increase (up to 4%) up to a maximum COLA of 5%.

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.

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%), for a maximum COLA of 3%.

Eligibility: Same as Plan 1.

Cost-of-Living Adjustment (COLA) in Retirement

Defined Benefit Component: Same as Plan 2.

Defined Contribution

Component: Not applicable.

Eligibility: Same as Plan 1 and Plan 2.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

Cost-of-Living Adjustment (COLA) in Retirement (Cont.)

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.

Cost-of-Living Adjustment (COLA) in Retirement (Cont.)

Exceptions to COLA Effective Dates:
Same as Plan 1.

Cost-of-Living Adjustment (COLA) in Retirement (Cont.)

Exceptions to COLA Effective Dates:
Same as Plan 1 and Plan 2.

-45-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

Cost-of-Living Adjustment (COLA) in Retirement (Cont.)

Exceptions to COLA Effective

Cost-of-Living Adjustment (COLA) in Retirement (Cont.)

Exceptions to COLA Effective

Cost-of-Living Adjustment (COLA) in Retirement (Cont.)

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.

Dates: Same as Plan 1.

Dates: Same as Plan 1 and Plan 2.

-45-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

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.

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

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.

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

Disability Coverage
Employees of political subdivisions and School divisions (including Plan 1 and 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.

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

Purchase of Prior Service
Members may be eligible 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.

Purchase of Prior Service
Same as Plan 1.

Purchase of Prior Service
Defined Benefit Component:
Same as Plan 1, with the following exceptions:

 Hybrid Retirement Plan members are ineligible for ported service.

 The cost for purchasing refunded service is the higher of 4% of creditable compensation or average final compensation.

 Plan members have one year from their date of hire or return from leave to purchase all but refunded prior service at approximate normal cost. After that one-year period, the rate for most categories of service will change to actuarial cost.

Defined Contribution Component:
Not applicable.

-46-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

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.

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

Purchase of Prior Service Members may be eligible 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.

PLAN 2

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.

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

Purchase of Prior Service Same as Plan 1.

HYBRID RETIREMENT PLAN

Disability Coverage

Employees of political subdivisions and School divisions (including Plan 1 and 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.

Hybrid members (including Plan 1 and Plan 2 opt-ins) covered under VLOP are subject to a one-year waiting period before becoming eligible for non-work-related

| disability benefits.

Purchase of Prior Service

Defined Benefit Component: Same as Plan 1, with the following

exceptions:

Hybrid members are ported service.

*The cost for _ purchasing refunded service is the higher of 4% of -—_ creditable compensation or average final compensation.

*Plan members have one year from their date of hire or return from leave to purchase all but refunded prior service at approximate normal cost. After that one-year period, the rate for most categories of service will change to actuarial cost.

Defined Contribution Component: Not applicable.

Retirement Plan ineligible for

-46-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description Data

Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2016 Comprehensive Annual Financial Report (CAFR). A copy of the 2016 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2016-annual-report.pdf or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Contributions

The contribution requirement for active employees is governed by §51.1-145 of the Code of Virginia, as amended, but may be impacted as a result of funding options provided to political subdivisions by the Virginia General Assembly. Employees are required to contribute 5.00% of their compensation toward their retirement. Prior to July 1, 2012, all or part of the 5.00% member contribution may have been 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 5.00% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee- paid member contribution.

The County��s contractually required contribution rate for the year ended June 30, 2017 was 12.68% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015.

This rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the pension plan from the County were $718,233 and $807,684 for the years ended June 30, 2017 and June 30, 2016, respectively.

Net Pension Liability

At June 30, 2017, the County reported a liability of $6,835,305 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2015, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016. In order to allocate the net pension liability to all employers included in the plan, the County is required to determine its proportionate share of the net pension liability. Credible compensation as of June 30, 2016 and 2015 was used as a basis for allocation to determine the County’s proportionate share of the net pension liability.
At June 30, 2016 and 2015, the County’s proportion was 98.6202% and 99.1179%, respectively.

The remainder of this page is left blank intentionally.

-47-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Plan Description Data

Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2016 Comprehensive Annual Financial Report (CAFR). A copy of the 2016 VRS CAFR may be downloaded from the VRS website at http://www. varetire.org/Pdf/Publications/2016-annual-report.pdf or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Contributions

The County’s contractually required contribution rate for the year ended June 30, 2017 was 12.68% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015.

Net Pension Liability

At June 30, 2017, the County reported a liability of $6,835,305 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2015, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016. In order to allocate the net pension liability to all employers included in the plan, the County is required to determine its proportionate share of the net pension liability. Credible compensation as of June 30, 2016 and 2015 was used as a basis for allocation to determine the County’s proportionate share of the net pension liability. At June 30, 2016 and 2015, the County’s proportion was 98.6202% and 99.1179%, respectively.

The remainder of this page is left blank intentionally.

-47-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Actuarial Assumptions – General Employees

The total pension liability for General Employees in Russell County’s Retirement Plan and the Russell County Public Schools Retirement Plan was based on an actuarial valuation as of June 30, 2015, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016.

Inflation 2.5%

Salary increases, including inflation 3.5% – 5.35%

Investment rate of return 7.0%, net of pension plan investment expense, including inflation*

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

Mortality rates: 14% of deaths are assumed to be service related

Largest 10 – Non-LEOS:
Pre-Retirement:

RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 4 years and females set back 2 years

Post-Retirement:
RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

Post-Disablement:

RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

All Others (Non 10 Largest) – Non-LEOS:

Pre-Retirement:
RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 4 years and females set back 2 years

Post-Retirement:

RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

-48-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued) Actuarial Assumptions - General Employees

Inflation 2.5% Salary increases, including inflation 3.5% - 5.35% Investment rate of return 7.0%, net of pension plan investment

expense, including inflation*

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

Mortality rates: 14% of deaths are assumed to be service related

Largest 10 - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 4 years and females set back 2 years

Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

Al Others (Non 10 Largest) - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 4 years and females set back 2 years

Post-Retirement:

RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

-48-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Actuarial Assumptions – General Employees (Continued)

Post-Disablement:
RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows:

Largest 10 – Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement
Reduce rates of salary increase by 0.25% per year

All Others (Non 10 Largest) – Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement
Reduce rates of salary increase by 0.25% per year

Actuarial Assumptions – Public Safety Employees

The total pension liability for Public Safety employees in Russell County’s Retirement Plan was based on an actuarial valuation as of June 30, 2015, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016.

Inflation 2.5%

Salary increases, including inflation 3.5% – 4.75%

Investment rate of return 7.0%, net of pension plan investment expense, including inflation*

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

-49-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Actuarial Assumptions - General Employees (Continued)

Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

Largest 10 - Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement

~ Reduce rates of salary increase by 0.25% per year

All Others (Non 10 Largest) - Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement
Reduce rates of salary increase by 0.25% per year

Actuarial Assumptions - Public Safety Employees

Inflation 2.5% Salary increases, including inflation 3.5% - 4.75% Investment rate of return 7.0%, net of pension plan investment

expense, including inflation*

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Actuarial Assumptions – Public Safety Employees (Continued)

Mortality rates: 60% of deaths are assumed to be service related

Largest 10 – Non-LEOS:
Pre-Retirement:

RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 2 years

Post-Retirement:
RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

Post-Disablement:

RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

All Others (Non 10 Largest) – Non-LEOS:

Pre-Retirement:
RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 2 years

Post-Retirement:

RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

Post-Disablement:
RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

Largest 10 – LEOS:

Update mortality table
Decrease in male rates of disability

All Others (Non 10 Largest) – LEOS:

Update mortality table
Adjustments to rates of service retirement for females
Increase in rates of withdrawal
Decrease in male and female rates of disability

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued) Actuarial Assumptions - Public Safety Employees (Continued) Mortality rates: 60% of deaths are assumed to be service related

Largest 10 - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 2 years

Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

All Others (Non 10 Largest) - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 2 years

Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year

Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement

Largest 10 - LEOS:

Update mortality table
Decrease in male rates of disability

Al Others (Non 10 Largest) - LEOS:

Update mortality table
Adjustments to rates of service retirement for females
Increase in rates of withdrawal
Decrease in male and female rates of disability

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Long-Term Expected Rate of Return

The long-term expected rate of return on pension System investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension System investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the following table:

Weighted Arithmetic Average Long-Term Long-Term

Target Expected Expected Asset Class (Strategy) Allocation Rate of Return Rate of Return

U.S. Equity 19.50% 6.46% 1.26% Developed Non U.S. Equity 16.50% 6.28% 1.04% Emerging Market Equity 6.00% 10.00% 0.60% Fixed Income 15.00% 0.09% 0.01% Emerging Debt 3.00% 3.51% 0.11% Rate Sensitive Credit 4.50% 3.51% 0.16% Non Rate Sensitive Credit 4.50% 5.00% 0.23% Convertibles 3.00% 4.81% 0.14% Public Real Estate 2.25% 6.12% 0.14% Private Real Estate 12.75% 7.10% 0.91% Private Equity 12.00% 10.41% 1.25% Cash 1.00% -1.50% -0.02%

Total 100.00% 5.83%

Inflation 2.50%

*Expected arithmetic nominal return 8.33%

Using stochastic projection results provides an expected range of real rates of return over various time horizons. Looking at one year results produces an expected real return of 8.33% but also has a high standard deviation, which means there is high volatility. Over larger time horizons the volatility declines significantly and provides a median return of 7.44%, including expected inflation of 2.50%.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued) Long-Term Expected Rate of Return

Weighted Arithmetic Average Long-Term Long-Term Target Expected Expected Asset Class (Strategy) Allocation _Rate of Return _ Rate of Return

Total 100.00%

Inflation “Expected arithmetic nominal return

Using stochastic projection results provides an expected range of real rates of return over various time horizons. Looking at one year results produces an expected real return of 8.33% but also has a high standard deviation, which means there is high volatility. Over larger time horizons the volatility dectines significantly and provides a median return of 7.44%, including expected inflation of 2.50%.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Discount Rate

The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that System member contributions will be made per the VRS Statutes and the employer contributions will be made in accordance with the VRS funding policy at rates equal to the difference between actuarially determined contribution rates adopted by the VRS Board of Trustees and the member rate. Through the fiscal year ending June 30, 2018, the rate contributed by the employer for the Russell County Retirement Plan, Russell County School Board Retirement Plan, and the VRS Teacher Retirement Plan will be subject to the portion of the VRS Board- certified rates that are funded by the Virginia General Assembly. From July 1, 2018 on, participating employers are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore the long-term expected rate of return was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the County’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents County’s proportionate share of the net pension liability using the discount rate of 7.00%, as well as what the County’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate:

(6.00%) (7.00%) (8.00%)

County’s proportionate share of the County Retirement Plan Net Pension Liability $ 10,715,691 $ 6,835,305 $ 3,605,617

Rate

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued) Discount Rate

Sensitivity of the County’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

Rate (6.00%) (7.00%) (8.00%) County’s proportionate share of the County Retirement Plan Net Pension Liability $ 10,715,691 $ 6,835,305 $ 3,605,617

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

For the year ended June 30, 2017, the County recognized pension expense of $546,272. At June 30, 2017, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources

Differences between expected and actual experience $ - $ 348,906

Net difference between projected and actual earnings on pension plan investments 632,832 -

Change in proportionate share 7,898 31,879

Employer contributions subsequent to the measurement date 718,233 -

Total $ 1,358,963 $ 380,785

Primary Government

$718,233 reported as deferred outflows of resources related to pensions resulting from the County’s contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability in the fiscal year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future reporting periods as follows:

Primary Year ended June 30 Government

2018 $ (209,899)
2019 (131,642)
2020 352,002
2021 249,484

Thereafter -

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

Primary Government

Deferred Deferred Outflows of Inflows of Resources _ Resources Differences between expected and actual experience $ = $348,906 Net difference between projected and actual earnings on pension plan investments 632,832 Change in proportionate share 7,898 31,879 Employer contributions subsequent to the measurement date 718,233 Total $1,358,963 $380,785

Primary

Year ended June 30 Government 2018 $ (209,899) 2019 (131,642) 2020 352,002 2021 249,484

Thereafter -

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional)

Plan Description

Additional information related to the plan description, plan contribution requirements, actuarial assumptions, long-term expected rate of return, and discount rate is included in the first section of this note.

Employees Covered by Benefit Terms

As of the June 30, 2015 actuarial valuation, the following employees were covered by the benefit terms of the pension plan:

Component Unit School Board

Nonprofessional Inactive members or their beneficiaries currently

receiving benefits 137

Inactive members: Vested inactive members 10

Non-vested inactive members 14

Inactive members active elsewhere in VRS 12

Total inactive members 36

Active members 113

Total covered employees 286

Contributions

The Component Unit School Board’s contractually required contribution rate for nonprofessional employees for the year ended June 30, 2017 was 17.28% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015. This rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the pension plan from the Component Unit School Board’s nonprofessional employees were $457,088 and $464,892 for the years ended June 30, 2017 and June 30, 2016, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional)

Plan Description

Employees Covered by Benefit Terms

As of the June 30, 2015 actuarial valuation, the following employees were covered by the benefit terms of the pension plat

Component Unit School Board

Nonprofessional Inactive members or their beneficiaries currently receiving benefits 137 Inactive members: Vested inactive members 10 Non-vested inactive members 14 Inactive members active elsewhere in VRS 12 Total inactive members 36 Active members 113 Total covered employees 286

Contributions

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional) (Continued)

Net Pension Liability

The Component Unit School Board’s (nonprofessional) net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2015, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016.

Changes in Net Pension Liability

Total Plan Net Pension Fiduciary Pension Liability Net Position Liability

(a) (b) (a) - (b)

Balances at June 30, 2015 $ 17,005,212 $ 11,588,468 $ 5,416,744

Changes for the year: Service cost $ 228,855 $ - $ 228,855
Interest 1,151,059 - 1,151,059
Differences between expected

and actual experience (240,897) - (240,897)
Contributions - employer - 460,715 (460,715)
Contributions - employee - 128,274 (128,274)
Net investment income - 187,821 (187,821)
Benefit payments, including refunds

of employee contributions (1,123,037) (1,123,037) -
Administrative expenses - (7,361) 7,361
Other changes - (82) 82

Net changes $ 15,980 $ (353,670) $ 369,650

Balances at June 30, 2016 $ 17,021,192 $ 11,234,798 $ 5,786,394

Increase (Decrease) Component Unit-School Board (nonprofessional)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional) (Continued)

Net Pension Liability

Changes in Net Pension Liability

Component Unit-School Board (nonprofessional) Increase (Decrease)

Total Plan Net Pension Fiduciary Pension Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2015 $ 17,005,212. $ 11,588,468 $ 5,416,744 Changes for the year: Service cost $ 228,855 $ S$ 228,855 Interest 1,151,059 : 1,151,059 Differences between expected and actual experience (240,897) : (240,897) Contributions - employer : 460,715 (460,715) Contributions - employee : 128,274 (128,274) Net investment income - 187,821 (187,821) Benefit payments, including refunds of employee contributions (1,123,037) (1,123,037) : Administrative expenses : (7,361) 7,361 Other changes : (82) 82 Net changes $ 15,980_$ (353,670) $ 369,650 Balances at June 30, 2016 $ 17,021,192. $ 11,234,798 $ 5,786,394

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional) (Continued)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the net pension liability of the Component Unit School Board (nonprofessional) using the discount rate of 7.00%, as well as what the Component Unit School Board’s (nonprofessional) net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate:

(6.00%) (7.00%) (8.00%)

Component Unit School Board (nonprofessional) Net Pension Liability (Asset) 7,597,409$ 5,786,394$ 4,251,783$

Rate

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

For the year ended June 30, 2017, the Component Unit School Board (nonprofessional) recognized pension expense of $391,341. At June 30, 2017, the Component Unit School Board (nonprofessional) reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources

Differences between expected and actual experience $ 8,258 $ 162,684

Net difference between projected and actual earnings on pension plan investments 291,625 -

Employer contributions subsequent to the measurement date 457,088 -

Total $ 756,971 $ 162,684

Board (nonprofessional)

Component Unit School

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional) (Continued)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

Rate (6.00%) (7.00%) (8.00%) Component Unit School Board (nonprofessional) Net Pension Liability (Asset) $ 7,597,409 $5,786,394 $4,251,783

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

Component Unit School Board (nonprofessional)

Deferred Deferred Outflows of Inflows of Resources _ Resources Differences between expected and actual experience $ 8,258 §$ 162,684 Net difference between projected and actual earnings on pension plan investments 291,625 Employer contributions subsequent to the measurement date 457,088 Total S___756,971_$

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional) (Continued)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

$457,088 reported as deferred outflows of resources related to pensions resulting from the Component Unit School Board’s (nonprofessional) contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability in the fiscal year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future reporting periods as follows:

Component Unit School Board

Year ended June 30 (nonprofessional)

2018 $ (75,501)
2019 (79,388)
2020 171,204
2021 120,884

Thereafter -

Component Unit School Board (professional)

Plan Description

Additional information related to the plan description, plan contribution requirements, long-term expected rate of return, and discount rate is included in the first section of this note.

Contributions

Each School Division’s contractually required contribution rate for the year ended June 30, 2017 was 14.66% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015 and reflects the transfer in June 2015 of $192,884,000 as an accelerated payback of the deferred contribution in the 2010-12 biennium. The actuarial rate for the Teacher Retirement Plan was 16.32%. The actuarially determined rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Based on the provisions of §51.1-145 of the Code of Virginia, as amended the contributions were funded at 89.84% of the actuarial rate for the year ended June 30, 2017. Contributions to the pension plan from the School Board were $2,607,000 and $2,503,615 for the years ended June 30, 2017 and June 30, 2016, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional) (Continued)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

Component Unit School Board

Year ended June 30 (nonprofessional) 2018 $ (75,501) 2019 (79,388) 2020 171,204 2021 120,884 Thereafter :

Component Unit School Board (professional)

Plan Description

Additional information related to the plan description, plan contribution requirements, long-term expected rate of return, and discount rate is included in the first section of this note.

Contributions

Each School Division’s contractually required contribution rate for the year ended June 30, 2017 was 14.66% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015 and reflects the transfer in June 2015 of $192,884,000 as an accelerated payback of the deferred contribution in the 2010-12 biennium. The actuarial rate for the Teacher Retirement Plan was 16.32%. The actuarially determined rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Based on the provisions of $51.1-145 of the Code of Virginia, as amended the contributions were funded at 89.84% of the actuarial rate for the year ended June 30, 2017. Contributions to the pension plan from the School Board were $2,607,000 and $2,503,615 for the years ended June 30, 2017 and June 30, 2016, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2017, the school division reported a liability of $32,921,000 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2016 and the total pension liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. The school division’s proportion of the Net Pension Liability was based on the school division’s actuarially determined employer contributions to the pension plan for the year ended June 30, 2016 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2016, the school division’s proportion was 0.23491% as compared to 0.23337% at June 30, 2015.

For the year ended June 30, 2017, the school division recognized pension expense of $2,603,000. Since there was a change in proportionate share between measurement dates, a portion of the pension expense was related to deferred amounts from changes in proportion and from differences between employer contributions and the proportionate share of employer contributions.

At June 30, 2017, the school division reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources

Differences between expected and actual experience $ - $ 1,067,000

Net difference between projected and actual earnings on pension plan investments 1,881,000 -

Changes in proportion and differences between employer contributions and proportionate share of contributions 170,000 643,000

Employer contributions subsequent to the measurement date 2,607,000 -

Total $ 4,658,000 $ 1,710,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred inflows of Resources Related to Pensions

‘At June 30, 2017, the school division reported a liability of $32,921,000 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2016 and the total pension liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. The school division’s proportion of the Net Pension Liability was based on the school division’s actuarially determined employer contributions to the pension plan for the year ended June 30, 2016 relative to the total of the actuarially determined employer contributions for all participating employers. ‘At June 30, 2016, the school division’s proportion was 0.23491% as compared to 0.23337% at June 30, 2015.

‘At June 30, 2017, the school division reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows

of Resources of Resources

Differences between expected and actual experience $ - $ 1,067,000 Net difference between projected and actual

earnings on pension plan investments 1,881,000 Changes in proportion and differences between

employer contributions and proportionate

share of contributions 170,000 643,000 Employer contributions subsequent to the

measurement date 2,607,000

Total

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

$2,607,000 reported as deferred outflows of resources related to pensions resulting from the school division’s contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability in the fiscal year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future reporting periods as follows:

Year ended June 30

2018 $ (448,000)
2019 (448,000)
2020 723,000
2021 567,000

Thereafter (53,000)

Actuarial Assumptions

The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of June 30, 2015, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016.

Inflation 2.5%

Salary increases, including inflation 3.5% – 5.95%

Investment rate of return 7.0%, net of pension plan investment expense, including inflation*

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred inflows of Resources Related to Pensions

Year ended June 30

2018 $ (448,000) 2019 (448,000) 2020 723,000 2021 567,000 Thereafter (53,000)

Actuarial Assumptions

The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of, June 30, 2015, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016.

Inflation 2.5% Salary increases, including inflation 3.5% - 5.95% Investment rate of return 7.0%, net of pension plan investment

expense, including inflation*

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Mortality rates:

Pre-Retirement:
RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 3 years and females set back 5 years

Post-Retirement:
RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 3 years

Post-Disablement:
RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 1 year and no provision for future mortality improvement

Update mortality table
Adjustments to the rates of service retirement
Decrease in rates of withdrawals for 3 through 9 years of service
Decrease in rates of disability
Reduce rates of salary increase by 0.25% per year

Net Pension Liability

The net pension liability (NPL) is calculated separately for each system and represents that particular system’s total pension liability determined in accordance with GASB Statement No. 67, less that system’s fiduciary net position. As of June 30, 2016, NPL amounts for the VRS Teacher Employee Retirement Plan is as follows (amounts expressed in thousands):

Teacher Employee Retirement Plan

Total Pension Liability $ 44,182,326
Plan Fiduciary Net Position 30,168,211
Employers’ Net Pension Liability (Asset) $ 14,014,115

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 68.28%

The total pension liability is calculated by the System’s actuary, and each plan’s fiduciary net position is reported in the System’s financial statements. The net pension liability is disclosed in accordance with the requirements of GASB Statement No. 67 in the System’s notes to the financial statements and required supplementary information.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Mortality rates:

Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 3 years and females set back 5 years

Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 3 years

Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 1 year and no provision for future mortality improvement

Update mortality table
Adjustments to the rates of service retirement
Decrease in rates of withdrawals for 3 through 9 years of service
Decrease in rates of disability
Reduce rates of salary increase by 0.25% per year

Net Pension Liability

Total Pension Liability $ 44,182,326 Plan Fiduciary Net Position 30,168,211 Employers’ Net Pension Liability (Asset) $ 14,014,115

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 68.28%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Sensitivity of the School Division’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the school division’s proportionate share of the net pension liability using the discount rate of 7.00%, as well as what the school division’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate:

(6.00%) (7.00%) (8.00%)

School division’s proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability 46,929,000 32,921,000 21,382,000

Rate

Pension Plan Fiduciary Net Position

Detailed information about the VRS Teacher Retirement Plan’s Fiduciary Net Position is available in the separately issued VRS 2016 Comprehensive Annual Financial Report (CAFR). A copy of the 2016 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2016-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Sensitivity of the School Division’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the school division’s proportionate share of the net pension liability using the discount rate of 7.00%, as well as what the school division’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or ‘one percentage point higher (8.00%) than the current rate:

Rate (6.00%) (7.00%) (8.00%) School division’s proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability 46,929,000 32,921,000 21,382,000

Pension Plan Fiduciary Net Position

Detailed information about the VRS Teacher Retirement Plan’s Fiduciary Net Position is available in the separately issued VRS 2016 Comprehensive Annual Financial Report (CAFR). A copy of the 2016 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf /Publications/2016-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 9-Capital Assets:

Capital asset activity for the year ended June 30, 2017 was as follows:

Primary Government:

Beginning Ending Balance Increases Decreases Balance

Governmental Activities: Capital assets, not being depreciated:

Land $ 568,695 $ - $ - $ 568,695
Construction in progress - 2,089,147 - 2,089,147

Total capital assets not being depreciated $ 568,695 $ 2,089,147 $ - $ 2,657,842

Capital assets, being depreciated: Buildings and improvements $ 24,897,095 $ - $ (325,000) $ 24,572,095
Machinery and equipment 4,120,272 837,509 - 4,957,781

Total capital assets being depreciated $ 29,017,367 $ 837,509 $ (325,000) $ 29,529,876

Accumulated depreciation: Buildings and improvements $ (11,606,878) $ (595,848) $ 178,742 $ (12,023,984)
Machinery and equipment (2,737,961) (359,270) - (3,097,231)

Total accumulated depreciation $ (14,344,839) $ (955,118) $ 178,742 $ (15,121,215)

Total capital assets being depreciated, net $ 14,672,528 $ (117,609) $ (146,258) $ 14,408,661

Governmental activities capital assets, net $ 15,241,223 $ 1,971,538 $ (146,258) $ 17,066,503

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 $ (2,379,141) $ (131,017) $ - $ (2,510,158)

Total capital assets being depreciated, net $ 2,861,558 $ (131,017) $ - $ 2,730,541

Business-type activities capital assets, net $ 2,861,558 $ (131,017) $ - $ 2,730,541

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 9-Capital Assets:

Capital asset activity for the year ended June 30, 2017 was as follows:

Primary Government:

Governmental Activities:

Capital assets, not being depreciated: Land

Construction in progress Total capital assets not being depreciated

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

Total capital assets being depreciated

Accumulated depreciation: Buildings and improvements Machinery and equipment

Total accumulated depreciation

Total capital assets being depreciated, net

Governmental activities capital assets, net

Business-type Activities: Capital assets, being depreciated: Utility plant

Accumulated depreciation: Utility plant

Total capital assets being depreciated, net

Business-type activities capital assets, net

Beginning Ending Balance Increases Decreases Balance $ 568,695 $ -$ -$ 568,695 : 2,089,147 2,089,147 $3080 $7,089,147 § — $2,657,842 $ 24,897,095 $ $ (325,000) $24,572,095 4,120,272 837,509 4,957,781 $29,017,367 $ 837,509 $ (325,000) $ 29,529,876 $ (11,606,878) $ (595,848) $178,742 $ (12,023,984) (2,737,961) (359,270) (3,097,231) $14,344,839) $~__ (955,118) $178,742$~ (15,121,215) $_ 14,672,528 $ (117,609) $___ (146,258) $14,408,661 $15,241,223 $ 1,971,538 $ (146,258) $__ 17,066,503 Beginning Ending Balance Increases Decreases Balance $5,240,699 § $ $5,240,699 $ (2,379,141) $ (131,017) $ - $ (2,510,158) $2,861,558 $ (131,017) $ = $2,730,541 $2,861,558 $ (131,017) $ = $2,730,541

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 9-Capital Assets: (Continued)

Primary Government: (Continued)

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

Governmental activities: General government administration $ 21,391
Judicial administration 11,581
Public safety 214,232
Public works 83,068
Health and welfare 33,379
Education 557,343
Parks, recreation, and cultural 31,152
Community development 2,972

Total depreciation expense-governmental activities $ 955,118

Business-type activities: Sewer Authority $ 131,017

Capital asset activity for the School Board for the year ended June 30, 2017 was as follows:

Discretely Presented Component Unit – School Board:

Beginning Ending Balance Increases Decreases Balance

Capital assets, not being depreciated: Land $ 5,636,345 $ - $ - $ 5,636,345
Construction in progress 17,071 - (17,071) -

Total capital assets not being depreciated $ 5,653,416 $ - $ (17,071) $ 5,636,345

Capital assets, being depreciated: Buildings and improvements $ 24,495,854 $ 817,722 $ - $ 25,313,576
Machinery and equipment 7,463,393 108,868 (136,929) 7,435,332

Total capital assets being depreciated $ 31,959,247 $ 926,590 $ (136,929) $ 32,748,908

Accumulated depreciation: Buildings and improvements $ (14,554,591) $ (835,670) $ - $ (15,390,261)
Machinery and equipment (5,366,435) (460,266) 134,942 (5,691,759)

Total accumulated depreciation $ (19,921,026) $ (1,295,936) $ 134,942 $ (21,082,020)

Total capital assets being depreciated, net $ 12,038,221 $ (369,346) $ (1,987) $ 11,666,888

Governmental activities capital assets, net $ 17,691,637 $ (369,346) $ (19,058) $ 17,303,233

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2017

Note 9-Capital Assets: (Continued)

Primary Government: (Continued)

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

Capital asset activity for the School Board for the year ended June 30, 2017 was as follows:

Discretely Presented Component Unit - School Board:

Capital assets, not being depreciated: Land Construction in progress

Total capital assets not being depreciated

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

Total capital assets being depreciated

Accumulated depreciation: Buildings and improvements Machinery and equipment

Total accumulated depreciation

Total capital assets being depreciated, net

Governmental activities capital assets, net

21,391 11,581 214,232 83,068 33,379 557,343 31,152 2,972

955,118

131,017

Beginning Ending

Balance Increases Decreases Balance 5,636,345 : 5,636,345, 47,071 : (17,071) : 5,053,416 = (7,071) 3,636,345 24,495,854 817,722 : 25,313,576 7,463,393 108, 868 (136,929) 7,435,332 31,959,247 926,590 (136,929) 32,748,908 (14,554,591) (635,670) : (15,390,261) (6,366,435) (460,266) 134,942 (5,691,759) (19,921,026) $~ (1,295,936) 134,942 (21,082,020) 12,038,221 (369,346) (1,987) 11,666,888 17,691,637 (369,346) (19,058) 17,303,233

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 10-Risk Management:

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

Note 11-Contingent Liabilities:

Federal programs in which the County and its component units participate were audited in accordance with the provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Pursuant to the provisions of this guidance all major programs and certain other programs were tested for compliance with applicable grant requirements. While no matters of noncompliance were disclosed by 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 S. McReynolds, Clerk of the Circuit Court 1,010,000$
Patrick Thompson, Treasurer 400,000
Randy N. Williams, Commissioner of the Revenue 3,000
Steve Dye, Sheriff 30,000
All constitutional officers’ employees: blanket bond 50,000

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

USF&G Insurance Co. - Surety:

All Social Services employees-blanket bond 100,000$

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 10-Risk Management:

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

Note 12-Surety Bond:

Fidelity & Deposit Company of Maryland-Surety:

‘Ann S. McReynolds, Clerk of the Circuit Court $ 1,010,000 Patrick Thompson, Treasurer 400,000 Randy N. Williams, Commissioner of the Revenue 3,000 Steve Dye, Sheriff 30,000 All constitutional officers’ employees: blanket bond 50,000

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

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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. The total estimated closure and postclosure care liability at June 30, 2017 is $281,837. 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 2017. 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.

Note 14-Deferred/Unavailable Revenue:

Deferred revenue/unavailable revenue represent amounts for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. Under the modified accrual basis of accounting, such amounts are measurable, but not available. Under the accrual basis, assessments for future periods are deferred.

Government-wide Statements Balance Sheet

Governmental Activities Governmental Funds 2nd half taxes due December 2017 $ 4,988,411 $ 4,988,411
Delinquent taxes due prior to June 30, 2017 - 2,357,830
Prepaid taxes 309,616 309,616
Prorated tax 40,761 40,761
Special assessment - 78,749
Total deferred/unavailable revenue $ 5,338,788 $ 7,775,367

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 13-Landfill Closure and Postclosure Care Cost:

Note 14-Deferred/Unavailable Revenue:

Government-wide

Statements Balance Sheet

Governmental Activities _Governmental Funds

2nd half taxes due December 2017 $ 4,988,411 $ 4,988,411 Delinquent taxes due prior to June 30, 2017 - 2,357,830 Prepaid taxes 309,616 309,616 Prorated tax 40,761 40,761 Special assessment : 78,749 Total deferred/unavailable revenue $ 5,338,788 $ 7775 367

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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 2017, a total of $7,787,284 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, 2017, 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 $929,201 have been accrued as a liability based primarily on actual cost incurred prior to June 30 but paid after year-end. Interfund premiums are based primarily upon the insured funds’ claims experience and are reported as quasi- external interfund transactions. Changes in the claims liability during fiscal year 2017 and the two preceding fiscal years 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

2016-17 $ 683,320 $ 8,033,165 $ (7,787,284) $ 929,201
2015-16 888,250 5,756,196 (5,961,126) 683,320
2014-15 772,252 5,839,951 (5,723,953) 888,250

Note 16-Other Postemployment Benefits-Health Insurance:

A. Plan Description

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

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

B. Funding Policy

The County and School Board currently pay for the post-retirement health care benefits on a pay-as-you- go basis. The County and School Board currently have 138 and 523 employees that are eligible, respectively, for the program. In addition, 100 percent of premiums are the responsibility of the retiree.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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 2017, a total of $7,787,284 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, 2017, 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 $929,201 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 2017 and the two preceding fiscal years 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

2016-17 $ 683,320 $ 8,033,165 $ (7,787,284) $ 929,201 2015-16 888,250 5,756,196 (5,961,126) 683,320 2014-15 772,252 5,839,951 (5,723,953) 888,250

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.

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 138 and 523 employees that are eligible, respectively, for the program. In addition, 100 percent of premiums are the responsibility of the retiree.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

B. Funding Policy (Continued)

Health benefits include Medical 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:

Retiree

Retiree & Spouse

Retiree & Child

Retiree & Family

PPO 421$ 1,103$ 1,030$ 1,180$

Medicare 135 270 N/A N/A

Medical & Rx

Schools Board:

Retiree

Retiree & Spouse

Retiree & Child

Retiree & Family

PPO 505$ 1,324$ 1,236$ 1,416$

Medicare 135 135 N/A N/A

Medical & Rx

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 2017, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation during fiscal year 2017.

Annual required contribution $ 41,700
Interest on net OPEB obligation 5,135
Adjustment to annual required contribution (7,947)
Annual OPEB cost (expense) $ 38,888
Contributions made (5,300)
Increase (decrease) in net OPEB obligation $ 33,588
Net OPEB obligation - beginning of year 146,725
Net OPEB obligation - end of year $ 180,313

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

B. Funding Policy (Continued)

Health benefits include Medical 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 & Retiree@ Retiree & Retiree Spouse Child Family PPO $ ai § 1,103 § 1,030 § 1,180 Medicare 135 270 N/A N/A ‘Schools Board: Medical & Rx Retiree @ Retiree@ Retiree @ Retiree Spouse Child Family PPO $ 505 $ 1,324 $ 1,236 $ 1,416 Medicare 135 13500 NA N/A

C. Annual OPEB Cost and Net OPEB Obligation

Annual required contribution $41,700 Interest on net OPEB obligation 5,135 ‘Adjustment to annual required contribution (7,947) ‘Annual OPEB cost (expense) $38,888 Contributions made (5,300) Increase (decrease) in net OPEB obligation $33,588 Net OPEB obligation - beginning of year 146,725 Net OPEB obligation - end of year $180,313

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 and the two preceding years were as follows:

Percentage of Fiscal Annual Annual OPEB Cost Net OPEB

Year Ended OPEB Cost Contributed Obligation

6/30/2015 $ 39,988 13.00% 111,461
6/30/2016 37,164 5.11% 146,725
6/30/2017 38,888 13.63% 180,313

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 $ 971,100
Interest on net OPEB obligation 41,080
Adjustment to annual required contribution (63,575)
Annual OPEB cost (expense) $ 948,605
Contributions made (715,000)
Increase (decrease) in net OPEB obligation $ 233,605
Net OPEB obligation - beginning of year 1,173,717
Net OPEB obligation - end of year $ 1,407,322

The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 and the two preceding years were as follows:

Percentage of Fiscal Annual Annual OPEB Cost Net OPEB

Year Ended OPEB Cost Contributed Obligation

6/30/2015 $ 920,856 71.74% $ 966,949
6/30/2016 935,368 77.89% 1,173,717
6/30/2017 948,605 75.37% 1,407,322

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 and the two preceding years were as follows:

Percentage of

Fiscal Annual Annual OPEB Cost Net OPEB Year Ended __ OPEB Cost Contributed Obligation 6/30/2015 $ 39,988 13.00% 111,461 6/30/2016 37,164 5.11% 146,725 6/30/2017 38,888 13.63% 180,313

Annual required contribution $ 971,100 Interest on net OPEB obligation 41,080 Adjustment to annual required contribution (63,575)

‘Annual OPEB cost (expense) $ 948,605 Contributions made (715,000)

Increase (decrease) in net OPEB obligation $ 233,605 Net OPEB obligation - beginning of year 4,173,717 Net OPEB obligation - end of year $1,407,322,

The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 and the two preceding years were as follows:

Percentage of

Fiscal Annual Annual OPEB Cost. Net OPEB Year Ended __ OPEB Cost Contributed Obligation 6/30/2015 $ 920,856 71.74% $ 966,949 6/30/2016 935,368 77.89% 1,173,717 6/30/2017 948,605, 75.37% 1,407,322

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

D. Funded Status and Funding Progress

The funded status of the Plan for the County as of July 1, 2015, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL) $ 304,800

Actuarial value of plan assets $ -

Unfunded actuarial accrued liability (UAAL) $ 304,800

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

Covered payroll (active plan members) $ 5,435,900

UAAL as a percentage of covered payroll 5.61%

The funded status of the Plan for the School Board as of July 1, 2014, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL) $ 9,357,000

Actuarial value of plan assets $ -

Unfunded actuarial accrued liability (UAAL) $ 9,357,000

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

Covered payroll (active plan members) $ 18,961,700

UAAL as a percentage of covered payroll 49.35%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

D. Funded Status and Funding Progress

The funded status of the Plan for the County as of July 1, 2015, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL) s 304,800 Actuarial value of plan assets $ :

Unfunded actuarial accrued liability (UAL) $ 304,800 Funded ratio (actuarial value of plan assets / AL) 0.00% Covered payroll (active plan members) $5,435,900 UAAL as a percentage of covered payroll 5.61%

The funded status of the Plan for the School Board as of July 1, 2014, the most recent actuarial valuation date, is as follows:

‘Actuarial accrued liability (AAL) $ 9,357,000 Actuarial value of plan assets $ :

Unfunded actuarial accrued liability (UAL) $ 9,357,000 Funded ratio (actuarial value of plan assets / AL) 0.00% Covered payroll (active plan members) $ 18,961,700 UAAL as a percentage of covered payroll 49.35%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

E. Actuarial Methods and Assumptions (Continued)

Primary Government As of July 1, 2015, 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: investment rate of return at 3.50 percent and a health care trend rate of 7.40 percent graded to 4.10 percent over 60 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2015 was 20 years.

Discretely Presented Component Unit – School Board: As of July 1, 2014, 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: investment rate of return at 3.50 percent and a health care trend rate of 5.60 percent graded to 4.50 percent over 80 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2014 was 20 years.

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, 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

E, Actuarial Methods and Assumptions (Continued)

Primary Government

As of July 1, 2015, 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: investment rate of return at 3.50 percent and a health care trend rate of 7.40 percent graded to 4.10 percent over 60 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2015 was 20 years.

Discretely Presented Component Unit - School Board:

As of July 1, 2014, 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: investment rate of return at 3.50 percent and a health care trend rate of 5.60 percent graded to 4.50 percent over 80 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2014 was 20 years.

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

A. Plan Description

‘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 851.1-145, 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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 2017 was 0.28% of annual covered payroll.

Discretely Presented Component Unit - School Board (Non-Professional Employees): As a participating local political subdivision, the Russell 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 2017 was 1.20% 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.

For 2017, the County’s contribution of $3,736 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 2017 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 6/30/2015 $ 3,321 100.00% $ -
6/30/2016 3,571 100.00% -
6/30/2017 3,736 100.00% -

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

B. Funding Policy

Primary Governmen’ 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 2017 was 0.28% 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.

Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending Cost (ARC) Contributed —_ Obligation Primary Government: County 6/30/2015 $ 3,321 100.00% $ : 6/30/2016 3,571 100.00% - 6/30/2017 3,736 100.00% -

o7e

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

For 2017, the School Board’s contribution of $31,765 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 2017 and the two preceding years are shown below:

Fiscal Annual Percentage Net Year OPEB of ARC OPEB

Ending Cost (ARC) Contributed Obligation Discretely Presented Component Unit

School Board 6/30/2015 $ 23,128 100.00% $ -
6/30/2016 25,165 100.00% -
6/30/2017 31,765 100.00% -

D. Funded Status and Funding Progress

Primary Government:
The funded status of the plan as of June 30, 2016, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL) $ 107,364
Actuarial value of plan assets $ 80,391
Unfunded actuarial accrued liability (UAAL) $ 26,973
Funded ratio (actuarial value of plan assets/AAL) 74.88% Covered payroll (active plan members) $ 1,264,630
UAAL as a percentage of covered payroll 2.13%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

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

Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending Cost (ARC) Contributed _ Obligation Discretely Presented Component Unit School Board 6/30/2015 $ 23,128 100.00% § 6/30/2016 25,165 100.00% : 6/30/2017 31,765 100.00% -

D. Funded Status and Funding Progress

Primary Governmen The funded status of the plan as of June 30, 2016, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AL) $ 107,364 Actuarial value of plan assets $ 80,391 Unfunded actuarial accrued liability (UAL) $ 26,973 Funded ratio (actuarial value of plan assets/AAL) 74.88% Covered payroll (active plan members) $ 1,264,630 UAAL as a percentage of covered payroll 2.13%

T-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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): The funded status of the plan as of June 30, 2016, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AAL) $ 397,056
Actuarial value of plan assets $ (33,377)
Unfunded actuarial accrued liability (UAAL) $ 430,433
Funded ratio (actuarial value of plan assets/AAL) -8.41% Covered payroll (active plan members) $ 2,697,033
UAAL as a percentage of covered payroll 15.96%

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, 2016 was 18-27 years.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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): The funded status of the plan as of June 30, 2016, the most recent actuarial valuation date, is as follows:

Actuarial accrued liability (AL) $397,056 Actuarial value of plan assets $ (33,377) Unfunded actuarial accrued liability (UAL) $ 430,433 Funded ratio (actuarial value of plan assets/AAL) “8.41% Covered payroll (active plan members) $ 2,697,033 UAAL as a percentage of covered payroll 15.96%

E, Actuarial Methods and Assumptions

Primary Governmen

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.

“PB

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

E. Actuarial Methods and Assumptions (Continued)

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

The entry age normal cost method was used to determine the plan’s funding liabilities and costs. The actuarial assumptions included a 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2016 was 18-27 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.

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 $199,511, $189,895, and $184,055, for the fiscal years ended 2017, 2016, and 2015, respectively. The School Board’s contributions represented 1.11%, 1.06%, and 1.06%, of covered payroll for the fiscal years ended 2017, 2016, and 2015, 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

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

E, Actuarial Methods and Assumptions (Continued)

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

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

The entry age normal cost method was used to determine the plan’s funding liabilities and costs. The actuarial assumptions included a 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2016 was 18-27 years.

F. Professional Employees - Discretely Presented Component Unit School Board

Plan Description

Funding Policy

Note 18-Moral Obligation:

The

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 18-Moral Obligation: (Continued)

In addition, the Board of Supervisors also provides financing guarantees to the Castlewood Water and Sewage 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, 2017, the outstanding balance of the loan was $3,772,300. Future required rent payments are as follows:

Year Ending

June 30, Principal Interest 2018 381,000$ 83,925$
2019 390,000 74,898
2020 399,100 65,825
2021 408,700 56,199
2022 418,400 46,514

2023-2026 1,775,100 84,597
Totals 3,772,300$ 411,958$

Operating Lease

Note 20-Upcoming Pronouncements:

Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension, improves accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. This Statement is effective for fiscal years beginning after June 15, 2017.

Statement No. 81, Irrevocable Split-Interest Agreements, improves accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2016, and should be applied retroactively.

Statement No. 83, Certain Asset Retirement Obligations, addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. This Statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for AROs. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 18-Moral Obligation: (Continued)

In addition, the Board of Supervisors also provides financing guarantees to the Castlewood Water and Sewage Authority.

Note 19-Operating Lease:

Year Ending Operating Lease

June 30, Principal Interest 2078 3 387,000 83,905 2019 390,000 74,898 2020 399,100 65,825 2021 408,700 56,199 2022 418,400 46,514

2023-2026 1,775,100 84,597

Totals 33,772,300. 5 758

Note 20-Upcoming Pronouncements

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 20-Upcoming Pronouncements: (Continued)

Statement No. 84, Fiduciary Activities, establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. This Statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018.

Statement No. 86, Certain Debt Extinguishment Issues, improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources—resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The requirements of this Statement are effective for reporting periods beginning after June 15, 2017.

Statement No. 87, Leases, increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019.

Management is currently evaluating the impact these standards will have on the financial statements when adopted.

Note 21-Litigation:

As of June 30, 2017, there were no matters of litigation involving the County which would materially affect the County’s financial position should court decisions on pending matters not be favorable.

Note 22-Restatement of Net Position:

Governmental Activities

Beginning Net Position, July 1, 2016, as previously stated 8,772,109$

Rural development loans (451,785)

Beginning Net Position, July 1, 2016, as restated 8,320,324$

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2017

Note 20-Upcoming Pronouncements: (Continued)

Management is currently evaluating the impact these standards will have on the financial statements when adopted.

Note 21-Litigatior

Note 22-Restatement of Net Position:

Governmental

Activities Beginning Net Position, July 1, 2016, as previously stated $8,772,109 Rural development loans (451,785) Beginning Net Position, July 1, 2016, as restated $ 8,320,324

-T6-

Exhibit 11

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES General property taxes 16,292,862$ 16,292,862$ 17,415,482$ 1,122,620$
Other local taxes 3,038,000 3,026,771 2,963,549 (63,222)
Permits, privilege fees, and regulatory licenses 33,200 33,200 32,009 (1,191)
Fines and forfeitures 16,000 16,000 18,804 2,804
Revenue from the use of money and property 343,000 343,000 179,690 (163,310)
Charges for services 351,200 351,200 266,251 (84,949)
Miscellaneous 216,600 216,600 91,300 (125,300)
Recovered costs 438,500 438,500 664,820 226,320
Intergovernmental:

Commonwealth 8,454,047 8,454,047 9,075,824 621,777
Federal 2,579,729 2,579,729 2,899,049 319,320

Total revenues 31,763,138$ 31,751,909$ 33,606,778$ 1,854,869$

EXPENDITURES Current:

General government administration 1,843,264$ 1,784,262$ 1,829,925$ (45,663)$
Judicial administration 2,166,984 2,313,741 2,326,471 (12,730)
Public safety 6,152,501 6,915,059 7,012,800 (97,741)
Public works 3,208,317 3,750,041 3,063,114 686,927
Health and welfare 6,946,566 6,812,853 7,316,474 (503,621)
Education 7,679,850 7,679,850 6,892,129 787,721
Parks, recreation, and cultural 556,755 528,805 522,426 6,379
Community development 1,176,496 1,155,605 1,008,002 147,603
Nondepartmental 348,518 523,504 147,991 375,513

Capital projects - - 2,482,783 (2,482,783)
Debt service:

Principal retirement 1,483,887 1,422,876 1,399,929 22,947
Interest and other fiscal charges - - 535,261 (535,261)

Total expenditures 31,563,138$ 32,886,596$ 34,537,305$ (1,650,709)$

Excess (deficiency) of revenues over (under) expenditures 200,000$ (1,134,687)$ (930,527)$ 204,160$

OTHER FINANCING SOURCES (USES) Transfers out (200,000)$ (128,473)$ (300,057)$ (171,584)$
Issuance of capital leases - - 5,588,478 5,588,478

Total other financing sources (uses) (200,000)$ (128,473)$ 5,288,421$ 5,416,894$

Net change in fund balances -$ (1,263,160)$ 4,357,894$ 5,621,054$
Fund balances - beginning - 1,263,160 7,477,330 6,214,170
Fund balances - ending -$ -$ 11,835,224$ 11,835,224$

Budgeted Amounts

County of Russell, Virginia General Fund

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2017

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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, 2017

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 Intergovernmental:

‘Commonwealth

Federal

Total revenues

EXPENDITURES Current: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Community development Nondepartmental Capital projects Debt service: Principal retirement Interest and other fiscal charges Total expenditures

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers out Issuance of capital leases

Total other financing sources (uses)

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

Budgeted Amounts

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative) $ 16,292,862 $ 16,292,862 $ 17,415,482 § 1,122,620 3,038,000 3,026,771 2,963,549 (63,222) 33,200 33,200 32,009 (1,191) 16,000 16,000 18,804 2,804 343,000 343,000 179,690 (163,310) 351,200 351,200 266,251 (84,949) 216,600 216,600 91,300 (125,300) 438,500 438,500 664,820 226,320 8,454,047 8,454,047 9,075,824 621,777 2,579,729 2,579,729 2,899,049 319,320 531,763,138 $31,751,909 $33,606,778 _§ 1,854,869 S 1,843,264 $1,784,262 $ 1,829,925 $ (45,663) 2,166,984 2,313,741 2,326,471 (12,730) 6,152,501 6,915,059 7,012,800 (97,741) 3,208,317 3,750,041 3,063,114 686,927 6,946,566 6,812,853 7,316,474 (503,621) 7,679,850 7,679,850 6,892,129 787,721 556,755 528,805 522,426 6,379 1,176,496 1,155,605 1,008,002 147,603 348,518 523,504 147,991 375,513

: : 2,482,783 (2,482,783)

1,483,887 1,422,876 1,399,929 22,947

: - 535,261 (535,261) $31,563,138 $32,886,596 5 34,537,305 _$ (1,650,709) $200,000 _$ (1,134,687) $ (930,527) $___204,160 $ (200,000) $ (128,473) $ (300,057) $ (171,584)

: 5,588,478 5,588,478

S$ (200,000) $ (128,473) $5,288,421 $ 5,416,894 $ - $ (1,263,160) $ 4,357,894 $ 5,621,054 : 4,263,160 7,477,330 6,214,170

3 3 = $11,835,224 $11,835,224

Exhibit 12

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Other local taxes 150,000$ 150,000$ 333,676$ 183,676$
Revenue from the use of money and property - - 221 221

Total revenues 150,000$ 150,000$ 333,897$ 183,897$

EXPENDITURES Current:

Public works 150,000$ 150,000$ 417,674$ (267,674)$

Excess (deficiency) of revenues over (under) expenditures -$ -$ (83,777)$ (83,777)$

OTHER FINANCING SOURCES (USES)

Transfers in -$ -$ 51,285$ 51,285$

Total other financing sources and uses -$ -$ 51,285$ 51,285$

Net change in fund balances -$ -$ (32,492)$ (32,492)$
Fund balances - beginning - - 115,224 115,224
Fund balances - ending -$ -$ 82,732$ 82,732$

Budgeted Amounts

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, 2017

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County of Russell, Virginia

Special Revenue Fund - Coal Road Fund

Exhibit 12

‘Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2017

REVENUES

Other local taxes

Revenue from the use of money and property Total revenues

EXPENDITURES Current: Public works

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers in Total other financing sources and uses

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

Variance with Budgeted Amounts Final Budget -

Actual Positive

Original Final ‘Amounts (Negative) $150,000 $ 150,000 $ 333,676 $ 183,676

- 24 224 $150,005 150,000 $333,897 $183,897 $150,000 $ 150,000 $ 417,674 $ (267,674) s s S (83,77) $_ (83,777) s s S 51,285 $51,285. A _$ = $51,285 $51,285 5 5 $ (32,492) $ (32,492) : : 115,224 115,224 : 82,732 82,732

Exhibit 13

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES

Recovered costs -$ -$ 232,547$ 232,547$
Intergovernmental:

Federal 2,746,846 2,746,846 2,380,285 (366,561)
Total revenues 2,746,846$ 2,746,846$ 2,612,832$ (134,014)$

EXPENDITURES Current:

Health and welfare 2,746,846$ 2,746,846$ 2,633,615$ 113,231$

Excess (deficiency) of revenues over (under) expenditures -$ -$ (20,783)$ (20,783)$

Net change in fund balances -$ -$ (20,783)$ (20,783)$
Fund balances (deficit) - beginning - - (46,336) (46,336)
Fund balances (deficit) - ending -$ -$ (67,119)$ (67,119)$

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, 2017

Budgeted Amounts

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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, 2017

Exhibit 13

REVENUES Recovered costs Intergovernmental: Federal Total revenues

EXPENDITURES Current: Health and welfare

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

Fund balances (deficit) - beginning Fund balances (deficit) - ending

Variance with

Budgeted Amounts Final Budget - Actual Positive Original Final ‘Amounts (Negative| $ - - 232,547 $232,547 2,746,846 2,746,846 2,380,285 (366,561) $2,746,846 § 2,746,846 $2,612,832 $ (134,014) $2,746,846 $2,746,846 $2,633,615 $113,231 $ - - (20,783) $§ (20,783) s (20,783) $20,783) : - (46,336) (46,336) = (7,119) (7,119)

Exhibit 14

Primary Government

County Other Postemployment Benefits-Health Insurance:

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

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

July 1, 2015 -$ 304,800$ 304,800$ 0.00% 5,435,900$ 5.61% July 1, 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%

County Other Postemployment Benefits-VRS Health Insurance Credit:

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

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

June 30, 2016 80,391$ 107,364$ 26,973$ 74.88% 1,264,630$ 2.13% June 30, 2015 83,531 106,243 22,712 78.62% 1,227,848 1.85% June 30, 2014 84,614 123,274 38,660 68.64% 1,182,479 3.27%

Discretely Presented Component Unit - School Board:

School Board Other Postemployment Benefits-Health Insurance:

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

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

July 1, 2014 - 9,357,000 9,357,000 0.00% 18,961,700 49.35% July 1, 2012 - 8,991,400 8,991,400 0.00% 21,181,100 42.45% July 1, 2010 - 3,030,967 3,030,967 0.00% 20,559,274 14.74%

School Board Other Postemployment Benefits-VRS Health Insurance Credit:

Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered % of Covered as of (*) Assets Liability (AAL) (3) - (2) (2)/(3) Payroll Payroll (4)/(6)

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

June 30, 2016 (33,377)$ 397,056$ 430,433$ -8.41% 2,697,033$ 15.96% June 30, 2015 (24,715) 389,279 413,994 -6.35% 2,437,539 16.98% June 30, 2014 (15,285) 382,648 397,933 -3.99% 2,639,711 15.07%

County of Russell, Virginia Schedule of OPEB Funding Progress For the Year Ended June 30, 2017

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County of Russell, Virginia Schedule of OPEB Funding Progress For the Year Ended June 30, 2017

Exhibit 14

Primary Government

County Other Postemployment Benefits-Health Insurance:

Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Value of Accrued AAL (UAL) Funded Ratio Covered % of Covered as of Assets Liability (AL) _(3)- 2) 2G) Payroll Payroll (4)/(6) ( @ 8) @ 6) ) i) July1, 2015 § = $304,800 $304,800 0.00% $5,435,900 5.61% duty 1, 2012 : 198,600 198,600 0.00% 5,576,300 3.56% duly 1, 2010 464,748, 464,748, 0.00% 5,581,443, 8.33% County Other Postemployment Benefits-VRS Health Insurance Credit: Actuarial ‘Actuarial Actuarial Unfunded UAALas a Valuation Value of Accrued AAL(UAAL) Funded Ratio Covered %% of Covered asof Assets Liability (MAL) _(3)- 2) (/@) Payroll Payroll (4)/(6)

@ @) @ 6) © a June 30,2016 $80,391 $107,364 $26,973 74.88% $1,264,630 213% dune 30, 2015 83,531 106,243 2,712 78.62% 1,227,848 1.85% dune 30, 2014 84,614 123,274 38,660 68.64% 1,182,479 3.27% Discretely Presented Component Unit - School Board: School Board Other Postemployment Benefits-Health Insurance: Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Value of ‘Accrued AAL(UAAL) Funded Ratio Covered % of Covered as of Assets Liability (AL) _(3)- 2) 2G) Payroll Payroll (4)/(6) 0 @ 8) @ 6) ) i) July 1, 2014 9,357,000 9,357,000 0.00% 18,961,700 49.35% July 1, 2012 : 8,991,400 8,991,400 0.00% 21,181,100 42.45% July 1, 2010 3,030,967 3,030,967 0.00% 20,559,274 14.74% ‘School Board Other Postemployment Benefits-VRS Health Insurance Credit: Actuarial ‘Actuarial Actuarial Unfunded UAALas a Valuation Value of Accrued AAL (UAL) Funded Ratio Covered % of Covered asof () Assets Liability (AL) __(3)- @) 2/3) Payroll Payroll (4)/(6) o) @ 8) @ 6) ) 7) June 30,2016 § (33,377) $397,056 $430,433, 8.41% $2,697,033 15.96% dune 30, 2015 (24,715) 389,279 413,994 “6.35% 21,437,539 16.98% dune 30, 2014 (15,285) 382,648 397,933 3.99% 2,639,711 15.07%

Exhibit 15

Proportionate Pension Plan’s Share of the NPL Fiduciary Net

Proportion of as a Percentage of Position as a the Net Pension Proportionate Covered Covered Payroll Percentage of Total

Date Liability (NPL) Share of the NPL Payroll (3)/(4) Pension Liability (1) (2) (3) (4) (5) (6)

Primary Government - County Retirement Plan 2016 98.6202% 6,835,305$ 5,467,426$ 125.02% 77.80% 2015 99.1179% 5,970,089 5,368,165 111.21% 80.39% 2014 99.1179% 5,782,839 5,440,419 106.29% 80.53%

Component Unit School Board (professional) 2016 0.23491% 32,921,000$ 17,914,579$ 183.77% 68.28% 2015 0.23337% 29,373,000 17,363,701 169.16% 70.68% 2014 0.23360% 28,229,000 17,083,236 165.24% 70.88%

County of Russell, Virginia Schedule of Employer’s Proportionate Share of the Net Pension Liability

For the Years Ended June 30, 2015 through June 30, 2017

Schedule is intended to show information for 10 years. Information prior to the 2014 valuation is not available. However, additional years will be included as they become available.

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County of Russell, Virginia Schedule of Employer’s Proportionate Share of the Net Pension Liability For the Years Ended June 30, 2015 through June 30, 2017

Exhibit 15

Proportionate Pension Plan’s Share of the NPL Fiduciary Net Proportion of asa Percentage of __—Position as a the Net Pension Proportionate Covered Covered Payroll Percentage of Total Date Liability (NPL) Share of the NPL Payroll aay Pension Liability ) @ @) ay (6) 6) Primary Government - County Retirement Plan 2016 98.6202% § 6,835,305. § 5,467,426 125.02% 7.80% 2015 99.1179% 5,970,089 5,368,165 an1.21% 80.39% 2014 99.1179% 5,782,839 5,440,419 106.29% 80.53% ‘Component Unit School Board (professional) 2016 0.23491% § 32,921,000 $ 17,914,579 183.7% 68.28% 2015 0.23337% 29,373,000 17,363,701 169.165 70.68% 2014 0.23360% 28,229,000 17,083,236 165.24% 70.88%

Schedule is intended to show information for 10 years. Information prior to the 2074 valuation isnot available. However, additional years

will be included as they become available.

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Exhibit 16

2016 2015 2014 Total pension liability Service cost $ 228,855 $ 261,697 $ 263,958
Interest 1,151,059 1,132,997 1,116,022
Changes of benefit terms - - -
Differences between expected and actual experience (240,897) 20,402 -
Changes in assumptions - - -
Benefit payments, including refunds of employee contributions (1,123,037) (1,191,112) (1,083,833)
Net change in total pension liability $ 15,980 $ 223,984 $ 296,147
Total pension liability - beginning 17,005,212 16,781,228 16,485,081
Total pension liability - ending (a) $ 17,021,192 $ 17,005,212 $ 16,781,228

Plan fiduciary net position Contributions - employer $ 460,715 $ 425,544 $ 423,435
Contributions - employee 128,274 120,010 130,388
Net investment income 187,821 515,108 1,629,758
Benefit payments, including refunds of employee contributions (1,123,037) (1,191,112) (1,083,833)
Administrative expense (7,361) (7,577) (9,166)
Other (82) (108) 86
Net change in plan fiduciary net position $ (353,670) $ (138,135) $ 1,090,668
Plan fiduciary net position - beginning 11,588,468 11,726,603 10,635,935
Plan fiduciary net position - ending (b) $ 11,234,798 $ 11,588,468 $ 11,726,603

School Division’s net pension liability - ending (a) - (b) $ 5,786,394 $ 5,416,744 $ 5,054,625

Plan fiduciary net position as a percentage of the total pension liability 66.00% 68.15% 69.88%

Covered payroll $ 2,648,956 $ 2,434,577 $ 2,612,301

School Division’s net pension liability as a percentage of covered payroll 218.44% 222.49% 193.49%

Schedule is intended to show information for 10 years. Information prior to the 2014 valuation is not available. However, additional years will be included as they become available.

County of Russell, Virginia Schedule of Changes in Net Pension Liability and Related Ratios

Component Unit School Board (nonprofessional) For the Years Ended June 30, 2015 through June 30, 2017

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Exhibit 16 County of Russell, Virginia

‘Schedule of Changes in Net Pension Liability and Related Ratios Component Unit School Board (nonprofessional) For the Years Ended June 30, 2015 through June 30, 2017

2016 2015 2014 Total pension liability

Service cost $ 728,855 § 261,697 § 263,958 Interest 4,151,059 1,132,997 41,116,022 Changes of benefit terms : . Differences between expected and actual experience (240,897) 20,402 : CChanges in assumptions : :

Benefit payments, including refunds of employee contributions (1,123,037) 0,191,112) (1,083,833) Net change in total pension liability 8 75,980 $ 723,984 § 296,147 Total pension liability - beginning 17,005,212 16,781,228 16,485,081 Total pension liability - ending (a) $ TOR 19_ $ 77,005,212. $ 16,781,728 Plan fiduciary net position

Contributions - employer 5 400,715 § 45,544 § 423,435 Contributions - employee 128,274 120,010 130,388 Net investment income 187,821 515,108 1,629,758 Benefit payments, including refunds of employee contributions (1,123,037) (1,191,112) (1,083,833) Administrative expense (7,361) 577) (9,166) Other (82) (108) 86 Net change in plan fiduciary net position 5 53,670) $ (38,135) $ 1,090,668 Plan fiduciary net position - beginning 11,588,468 11,726,603, 10,635,935. Plan fiduciary net position - ending (b) 8 11,234,798_ $ 17,588,468_ $ 11,726,003 ‘School Division’s net pension liability - ending (a) -(b) 5 5,786,394 § 5,416,744 § 5,054,625 Plan fiduciary net position as a percentage of the total

pension liability 66.00% 68.15% 69.88% Covered payroll 5 2,648,956 $ 2,434,577 § 2,612,301 School Division’s net pension liability as a percentage of

covered payroll 218.44% 22.49% 193.495,

Schedule is intended to show information for 10 years. Information prior to the 2014 valuation is not available. However, additional years will be included as they become available.

Exhibit 17

Contributions in Relation to Contributions

Contractually Contractually Contribution Employer’s as a % of Required Required Deficiency Covered Covered

Contribution Contribution (Excess) Payroll Payroll Date (1) (2) (3) (4) (5)

Primary Government 2017 $ 718,233 $ 718,233 $ - $ 4,808,206 14.94% 2016 807,684 807,684 - 5,467,426 14.77% 2015 794,360 794,360 - 5,368,165 14.80%

Component Unit School Board (nonprofessional) 2017 $ 457,088 $ 457,088 $ - $ 2,147,811 21.28% 2016 464,892 464,892 - 2,648,956 17.55% 2015 425,544 425,544 - 2,434,577 17.48% 2014 424,238 424,238 - 2,612,301 16.24% 2013 434,345 434,345 - 2,674,538 16.24% 2012 386,243 386,243 - 2,745,156 14.07% 2011 384,524 384,524 - 2,732,933 14.07% 2010 412,281 412,281 - 2,823,842 14.60% 2009 422,641 422,641 - 2,894,798 14.60% 2008 416,704 416,704 - 2,624,078 15.88%

Component Unit School Board (professional) 2017 $ 2,607,000 $ 2,607,000 $ - $ 15,964,829 16.33% 2016 2,503,615 2,503,615 - 17,914,579 13.98% 2015 2,509,000 2,509,000 - 17,363,701 14.45% 2014 1,991,484 1,991,484 - 17,083,236 11.66% 2013 2,037,610 2,037,610 - 17,475,216 11.66% 2012 1,164,108 1,164,108 - 18,390,325 6.33% 2011 700,575 700,575 - 17,826,341 3.93% 2010 1,685,523 1,685,523 - 19,131,926 8.81% 2009 1,766,705 1,766,705 - 20,053,407 8.81% 2008 1,853,860 1,853,860 - 17,998,643 10.30%

County of Russell, Virginia Schedule of Employer Contributions

For the Years Ended June 30, 2008 through June 30, 2017

Current year contributions are from County records and prior year contributions are from the VRS actuarial valuation performed each year.

Schedule is intended to show information for 10 years. Prior to 2015, VASAP’s information was consolidated in the County’s totals and presented in the County report. Therefore, sufficient information to allocate the prior year balances is not available. Additional years will be included as they become available.

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Exhibit 17 County of Russell, Virginia Schedule of Employer Contributions For the Years Ended June 30, 2008 through June 30, 2017

Contributions in

Relation to Contributions Contractually Contractually Contribution Employer’s asa% of Required Required Deficiency Covered Covered Contribution Contribution (Excess) Payroll Payroll Date () (2) QB) (4) (5) Primary Government 2017 $ 718,233 $ 718,233 § - $4,808,206 14.94% 2016 807,684 807,684 - 5,467,426 14.77% 2015 794,360 794,360 : 5,368,165 14.80%

Component Unit School Board (nonprofessional)

2017 S$ 457,088 $ 457,088 $ - $2,147,811 21.28% 2016 464,892 464,892 : 2,648,956 17.55% 2015 425,544 425,544 : 2,434,577 17.48% 2014 424,238 424,238 : 2,612,301 16.24% 2013 434,345 434,345 : 2,674,538 16.24% 2012 386,243 386,243 : 2,745,156 14.07% 2011 384,524 384,524 : 2,732,933 14.07% 2010 412,281 412,281 - 2,823,842 14.60% 2009 422,641 422,641 : 2,894,798 14.60% 2008 416,704 416,704 : 2,624,078 15.88% Component Unit School Board (professional) 2017 $ ~—«-2,607,000 $ 2,607,000 $ = $ 15,964,829 16.33% 2016 2,503,615 2,503,615 : 17,914,579 13.98% 2015 2,509,000 2,509,000 - 17,363,701 14.45% 2014 1,991,484 1,991,484 : 17,083,236 11.66% 2013 2,037,610 2,037,610 : 17,475,216 11.66% 2012 1,164,108 1,164,108 - 18,390,325 6.33% 2011 700,575 700,575 : 17,826,341 3.93% 2010 1,685,523 1,685,523 : 19,131,926 8.81% 2009 1,766,705 1,766,705 : 20,053,407 8.81% 2008 1,853,860 1,853,860 : 17,998,643 10.30%

Current year contributions are from County records and prior year contributions are from the VRS actuarial valuation performed each year.

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Exhibit 18

Largest 10 – Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement
Reduce rates of salary increase by 0.25% per year

Largest 10 – LEOS:

Update mortality table
Decrease in male rates of disability

All Others (Non 10 Largest) – Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement
Reduce rates of salary increase by 0.25% per year

All Others (Non 10 Largest) – LEOS:

Update mortality table
Adjustments to rates of service retirement for females
Increase in rates of withdrawal
Decrease in male and female rates of disability

Component Unit School Board - Professional Employees

Update mortality table
Adjustments to the rates of service retirement
Decrease in rates of withdrawals for 3 through 9 years of service
Decrease in rates of disability retirement
Reduce rates of salary increase by 0.25% per year

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation. The 2014 valuation includes Hybrid Retirement Plan members for the first time. The hybrid plan applies to most new employees hired on or after January 1, 2014 and not covered by enhanced hazardous duty benefits. Because this is a fairly new benefit and the number of participants was relatively small, the impact on the liabilities as of the measurement date of June 30, 2016 is not material.

Changes of assumptions – The following changes in actuarial assumptions were made effective June 30, 2013 based on the most recent experience study of the System for the four-year period ending June 30, 2012:

County of Russell, Virginia Notes to Required Supplementary Information

For the Year Ended June 30, 2017

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Exhibit 18 County of Russell, Virginia Notes to Required Supplementary Information For the Year Ended June 30, 2017

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation. The 2014 valuation includes Hybrid Retirement Plan members for the first time. The hybrid plan applies to most new employees hired on or after January 1, 2014 and not covered by enhanced hazardous duty benefits. Because this is a fairly new benefit and the number of participants was relatively small, the impact on the liabilities as of the measurement date of June 30, 2016 is not material.

Changes of assumptions - The following changes in actuarial assumptions were made effective June 30, 2013 based on the most recent experience study of the System for the four-year period ending June 30, 2012:

Largest 10 - Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement ~ Reduce rates of salary increase by 0.25% per year

Largest 10 - LEOS:

Update mortality table
Decrease in male rates of disability

All Others (Non 10 Largest) - Non-LEOS:

Update mortality table
Decrease in rates of service retirement
Decrease in rates of disability retirement ~ Reduce rates of salary increase by 0.25% per year

All Others (Non 10 Largest) - LEOS:

Update mortality table
Adjustments to rates of service retirement for females
Increase in rates of withdrawal
Decrease in male and female rates of disability

Component Unit School Board - Professional Employees

Update mortality table
Adjustments to the rates of service retirement
Decrease in rates of withdrawals for 3 through 9 years of service
Decrease in rates of disability retirement ~ Reduce rates of salary increase by 0.25% per year

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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.

VASAP – The VASAP fund accounts for those funds belonging to the Southwest Virginia Alcohol Safety Action Program. The County is the fiscal agent for this program.

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.

VASAP - The VASAP fund accounts for those funds belonging to the Southwest Virginia Alcohol Safety Action Program. The County is the fiscal agent for this program.

Exhibit 19

Balance Balance Beginning End of Year Additions Deletions of Year

Assets Current Assets Cash and cash equivalents Special Welfare Fund 67,837$ 140,226$ (141,274)$ 66,789$
VASAP Fund (7,589) 193,012 (174,878) 10,545
Total Assets 60,248$ 333,238$ (316,152)$ 77,334$

Liabilities Amounts held for Social Services clients 67,837$ 140,226$ (141,274)$ 66,789$
Amounts held for VASAP (7,589) 193,012 (174,878) 10,545
Total Liabilities 60,248$ 333,238$ (316,152)$ 77,334$

County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities

Agency Funds For the Year Ended June 30, 2017

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Exhibit 19 County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2017

Balance Balance Beginning End ofYear Additions Deletions of Year Assets Current Assets Cash and cash equivalents Special Welfare Fund $ 67,837 $ 140,226 $ (141,274) $ 66,789 VASAP Fund (7,589) __193,012 (174,878) 10,545 Total Assets $60,248 $333,238 $ (316,152) $77,334 Liabilities Amounts held for Social Services clients $ 67,837 $ 140,226 $ (141,274) $ 66,789 ‘Amounts held for VASAP (7,589) __193,012 (174,878) 10,545 Total Liabilities $60,248 —$ 333,238 “§ (316,152) _$ 77,334

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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:

Exhibit 20

School Operating

Fund

ASSETS Cash and cash equivalents 1,261,625$

Receivables (net of allowance for uncollectibles):

Accounts receivable 56,524 Due from other governmental units 1,704,367
Prepaid items 365,331

Total assets 3,387,847$

LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable 276,847$
Accrued liabilities 978,030 Due to primary government 1,518,483

Total liabilities 2,773,360$

Fund balances: Nonspendable:

Prepaid items 365,331$
Committed:

Textbook purchases 345,940
Regional Adult Education 287,676

Unassigned (384,460)
Total fund balances 614,487$
Total liabilities and fund balances 3,387,847$

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

Total fund balances per above 614,487$

Land 5,636,345$
Buildings and improvements 9,923,315
Machinery and equipment 1,743,573 17,303,233

Deferred inflows - items related to measurement of net pension liability (1,872,684)

3,064,088

Compensated absences (717,123)$
Net OPEB obligation (1,407,322)
Net pension liability (38,707,394)
Deferred outflows related to measurement of net pension liability 2,350,883 (38,480,956)

Net position of governmental activities (19,371,832)$

County of Russell, Virginia Balance Sheet

Discretely Presented Component Unit - School Board June 30, 2017

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

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

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

Pension contributions subsequent to the measurement date will be a reduction to the net pension liability in the next fiscal year and, therefore, are not reported in the funds.

-86-

County of Russell, Virginia Balance Sheet

Discretely Presented Component Unit - School Board June 30, 2017

Exhibit 20

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

LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable ‘Accrued liabilities

Due to primary government Total liabilities

Fund balances:

Nonspendable:

Prepaid items Committed:

Textbook purchases

Regional Adult Education Unassigned

Total fund balances

Total liabilities and fund balances

‘Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Total fund balances per above

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

Land $5,636,345 Buildings and improvements, 9,923,315, Machinery and equipment 1,743,573

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Deferred inflows - items related to measurement of net pension liability

Pension contributions subsequent to the measurement date will be a reduction to the net pension liability in the next fiscal year and, therefore, are not reported in the funds.

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

School

Operating Fund

$1,261,625

56,524 1,704,367 365,331 3,387,847

S 276,847 978,030 4,518,483,

2.773, 360-

S 365,331

345,940 287,676 (384,460) 3 614,487 57, aT

$614,487

17,303,233

(1,872,684)

3,064,088,

Compensated absences $717,123) Net OPEB obligation (1,407,322) Net pension liability (38,707,394) Deferred outflows related to measurement of net pension liability 2,350,883,

Net position of governmental activities

-86-

(38,480,956)

STD,

Exhibit 21

School Operating

Fund REVENUES Revenue from the use of money and property 6,486$
Charges for services 418,730
Miscellaneous 251,228
Recovered costs 753,633
Intergovernmental:

Local government 6,800,180
Commonwealth 27,233,541
Federal 5,008,909

Total revenues 40,472,707$

EXPENDITURES Current:

Education 40,305,546$

Excess (deficiency) of revenues over (under) expenditures 167,161$

Net change in fund balances 167,161$
Fund balances - beginning 447,326
Fund balances - ending 614,487$

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 167,161$

Capital outlays 584,519$
Reversion of assets back to the School Board (net) 146,258
Depreciation expense (1,117,194)
Disposal of capital assets (net) (1,987) (388,404)

Change in deferred inflows of resources related to the measurement of net pension liability 1,542,471

(Increase) decrease in compensated absences (10,715)$
(Increase) decrease in early retirement incentive 8,000
(Increase) decrease in net OPEB obligation (233,605)
(Increase) decrease in net pension liability (3,917,650)

95,581
Change in deferred outflows of resources related to the measurement of net pension liability 2,336,553 (1,721,836)

Change in net position of governmental activities (400,608)$

Change in deferred outflows of resources related to pension payments subsequent to the measurement date

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, 2017

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

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

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

-87-

Exhibit 21 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, 2017

School Operating Fund

REVENUES Revenue from the use of money and property 5 6,486 Charges for services 418,730 Niscellaneous 251,228, Recovered costs 753,633, Intergovernmental:

Local government 6,800, 180

Commonwealth 27,233,541

Federal 5,008,909

Total revenues

EXPENDITURES, Current:

Education $40,305,546 Excess (deficiency) of revenues over (under)

expenditures $167,161 Net change in fund balances $167,161 Fund balances - beginning 447,326 Fund balances - ending CCN

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 $167,161 Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost

of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period.

Capital outlays $584,519 Reversion of assets back to the School Board (net) 146,258 Depreciation expense (1,117,194) Disposal of capital assets (net) (1,987) (388,404)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Change in deferred inflows of resources related to the measurement of net pension liability 4,542,471

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

(increase) decrease in compensated absences (10,715)

(increase) decrease in early retirement incentive 8,000

(increase) decrease in net OPEB obligation (233,605)

(Increase) decrease in net pension liability (3,917,650)

Change in deferred outflows of resources related to pension payments subsequent to the measurement date 95,581

Change in deferred outflows of resources related to the measurement of net pension liability 2,336,553 (1,721,836) Change in net position of governmental activities COS

-87-

Exhibit 22

Variance with Final Budget

Positive Original Final Actual (Negative)

REVENUES Revenue from the use of money and property 1,500$ 1,500$ 6,486$ 4,986$
Charges for services 559,554 559,554 418,730 (140,824)
Miscellaneous 190,000 190,000 251,228 61,228
Recovered costs 571,914 571,914 753,633 181,719
Intergovernmental:

Local government 7,587,901 7,587,901 6,800,180 (787,721)
Commonwealth 27,637,943 27,637,943 27,233,541 (404,402)
Federal 5,754,438 5,754,438 5,008,909 (745,529)

Total revenues 42,303,250$ 42,303,250$ 40,472,707$ (1,830,543)$

EXPENDITURES Current:

Education 42,303,250$ 42,303,250$ 40,305,546$ 1,997,704$

Excess (deficiency) of revenues over (under) expenditures -$ -$ 167,161$ 167,161$

Net change in fund balances -$ -$ 167,161$ 167,161$
Fund balances - beginning - - 447,326 447,326
Fund balances - ending -$ -$ 614,487$ 614,487$

Budgeted Amounts

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, 2017

School Operating Fund

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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, 2017

Exhibit 22

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 Original Final ‘Actual (Negative) $ 1,500 $ 1,500 $ 6,486 $ 4,986 559,554 559,554 418,730 (140,824) 190,000 190,000 251,228 61,228 571,914 571,914 753,633 181,719 7,587,901 7,587,901 6,800,180 (787,721) 27,637,943 27,637,943 27,233,541 (404,402) 5,754,438 5,754,438 5,008, 909 (745,529) 342,303,250 _$ 42,303,250 $ 40,472,707 _$ (1,830,543) $ 42,303,250 _$ 42,303,250 $ 40,305,546 $ 1,997,704 $ -$ - $167,161 $ 167,161 $ “3s - $167,161 $ 167,161 : - 447,326 447,326

3 —$ 5 614,487_$ 614,487

-88-

Schedule 1 Page 1 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

General Fund: Revenue from local sources:

General property taxes: Real Property Tax 8,000,000$ 8,000,000$ 7,930,197$ (69,803)$
Real and Personal PSC Tax 1,650,000 1,650,000 1,672,349 22,349 Personal Property Tax 4,240,000 4,240,000 4,751,629 511,629 Mobile Home Tax 114,000 114,000 110,974 (3,026)
Machinery and Tools Tax 755,000 755,000 1,388,660 633,660 Merchants Capital 35,000 35,000 37,478 2,478 Mineral Tax 1,050,000 1,050,000 1,058,880 8,880 Penalties 145,000 145,000 146,977 1,977 Interest 303,862 303,862 318,338 14,476

Total general property taxes 16,292,862$ 16,292,862$ 17,415,482$ 1,122,620$

Other local taxes: Local Sales and Use Tax 2,018,100$ 2,006,871$ 1,853,633$ (153,238)$
Consumers’ Utility Tax 550,000 550,000 526,747 (23,253)
Consumption Taxes 85,000 85,000 72,654 (12,346)
Franchise License Tax - - 4,640 4,640
Coal Severance Tax 250,000 250,000 333,674 83,674
Bank Stock Tax 10,900 10,900 11,216 316
Grantee tax 94,000 94,000 67,911 (26,089)
Motor Vehicle Licenses - - 48,098 48,098
Taxes on Recordation and Wills 30,000 30,000 44,976 14,976

Total other local taxes 3,038,000$ 3,026,771$ 2,963,549$ (63,222)$

Permits, privilege fees, and regulatory licenses: Animal licenses 1,900$ 1,900$ 1,789$ (111)$
Building permits 30,000 30,000 27,455 (2,545) Other permits and other licenses 1,300 1,300 2,765 1,465

Total permits, privilege fees, and regulatory licenses 33,200$ 33,200$ 32,009$ (1,191)$

Fines and forfeitures: Court fines and forfeitures 16,000$ 16,000$ 18,804$ 2,804$

Revenue from use of money and property: Revenue from use of money 28,000$ 28,000$ 46,066$ 18,066$
Revenue from use of property 315,000 315,000 133,624 (181,376)

Total revenue from use of money and property 343,000$ 343,000$ 179,690$ (163,310)$

Charges for services: Charges for sanitation and waste removal 185,000$ 185,000$ 152,881$ (32,119)$
Charges for courthouse security 51,000 51,000 40,801 (10,199)
Charges for cannery operations 80,000 80,000 40,019 (39,981)
Charges for commonwealth attorney 6,000 6,000 8,842 2,842
Charges for courthouse maintenance 10,000 10,000 7,531 (2,469)
Charges for jail and inmate fees 4,000 4,000 4,843 843
Charges for district court - - 3,816 3,816
Charges for library 11,700 11,700 2,196 (9,504)
Other charges for services 3,500 3,500 5,322 1,822

Total charges for services 351,200$ 351,200$ 266,251$ (84,949)$

Miscellaneous: Other miscellaneous revenue 206,600$ 206,600$ 76,236$ (130,364)$

Sale of property/surplus 10,000 10,000 - (10,000)
Knox Creek Coal - - 1,005 1,005

Valley Heights revenue - - 14,059 14,059

Total miscellaneous 216,600$ 216,600$ 91,300$ (125,300)$

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Major and Minor Revenue Source

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county of Russel, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 1 of 5 Governmental Funds For the Year Ended June 30, 2017

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative) General Fund: Revenue from local sources: General property taxes Real Property Tax 5 8,000,000 $ 8,000,000 $ 7,930,197 $ (69,803) Real and Personal PSC Tax 1,650,000 1,650,000 1,672,349, 22,349 Personal Property Tax 4,240,000 4,240,000 4,751,629 511,629 ‘Mobile Home Tax 114,000 114,000 110,974 2,026) ‘machinery and Toots Tax 755,000 755,000 1,388,660 633,60 ‘Merchants Capital 35,000 35,000 37,478 2.478 Mineral Tax 1,050,000 1,050,000 1,058,880, 8,880 Penalties 145,000 145,000 146,97 197 Interest 303,862 303,862 318,338 14.476, “Total general property taxes $16,292,862 $16,292,862 _§ 17,415,482§ 1,172,620 Other local taxes: Local Sales and Use Tax S 2,018,100 $ 2,006,871 $1,853,633 $ (153,238) Consumers Utility Tax 350,000 350,000 526,747 (23,253) Consumption Taxes 85,000 85,000 72,654 (12,346) Franchise License Tax 4640 4,640 Coal Severance Tax 250,000 20,000 333,674 83,674 Bank Stock Tax 10,900 10,900 11.216 316 Grantee tax 94,000 94,000 ort (26,089) ‘Motor Vehicle Licenses 48,098 48,098 Taxes on Recordation and Wills 30,000 30,000 44,976 14,976, “Total other local taxes $3,038,000 $3,026,771 $7,963,549 163.22) Permits, privilege fees, and regulatory licenses “Animal licenses S 4,900 $ 1,900 $1,789 § ay Biting permits 30,000 30,000 27455 2,545) (ther permits and other licenses 1,300 1,300 2.765, 1465 “Total permits, privilege fees, and regulatory licenses $33,200 § 33,200 § 32,009 $1.19) Fines and forfeitures: Court fines and forfeitures S$ 16,000 $ 16,000 $ 18,8608 $2,804 Revenue from use of money and property: Revenue from use of money S 28,000 $ 28,000 $46,066 $18,066 Revenue from use of property 315,000. 315,000 133,64 (181,376) ‘Total revenue from use of money and property $343,000 §343,000§ 179,690 (163.310) Charges for services Charges for sanitation and waste removal S 185,000 $ 185,000 $152,881 $32,119) Charges for courthouse security 51,000 51,000 49,801 (10,199), Charges for cannery operations 80,000 80,000 40,019 (39,981) Charges for commonwealth attorney 6,000, 6,000, 3802 2,842 Charges for courthouse maintenance 10,000 10,000 7531 2469) Charges for jail and inmate fees 4,000, 4,000, 4363 oy Charges for district court : : 3.816 3,816 Charges for library 11,700 11,700 2196 (9,504) Other charges for services 31500 3,500, 5,322 1,822 “Total charges for services 5 351,200 §__351,200§ 766,251 184,949) Miscellaneous: Other miscellaneous revenue S 206,600 $ 206,600 $ 76,236 $ (130,364) Sale of property/surplus 10,000 10,000 (10,000) Knox Creek Coal 1,005 1,005 Valley Heights revenue : : 14,059, 14,059 Total miscellaneous S_216,600 $216,600 $91,300 § (125,300)

Schedule 1 Page 2 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Major and Minor Revenue Source

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

Recovered costs: Social services 246,000$ 246,000$ 86,536$ (159,464)$
Health department 50,000 50,000 40,500 (9,500)
School resource officer 88,000 88,000 111,861 23,861
Insurance recoveries - - 14,073 14,073
Regional jail - - 267,712 267,712
Industrial development 20,000 20,000 18,135 (1,865)
Other Recovered Costs 34,500 34,500 126,003 91,503

Total recovered costs 438,500$ 438,500$ 664,820$ 226,320$

Total revenue from local sources 20,729,362$ 20,718,133$ 21,631,905$ 913,772$

Intergovernmental: Revenue from the Commonwealth:

Noncategorical aid: Motor vehicles carriers’ tax 157,000$ 157,000$ 134,601$ (22,399)$
Mobile home titling tax 60,000 60,000 83,650 23,650
Motor vehicle rental tax 8,100 8,100 1,795 (6,305)
Communications tax 900,000 900,000 812,618 (87,382)
State recordation tax 17,800 17,800 23,378 5,578
Personal property tax relief act funds 1,437,003 1,437,003 1,437,003 -

Total noncategorical aid 2,579,903$ 2,579,903$ 2,493,045$ (86,858)$

Categorical aid: Shared expenses:

Commonwealth’s attorney 364,000$ 364,000$ 482,627$ 118,627$
Sheriff 1,400,000 1,400,000 1,402,368 2,368
Commissioner of revenue 181,050 181,050 165,554 (15,496)
Treasurer 113,000 113,000 111,389 (1,611)
Medical examiner 400 400 - (400)
Registrar/electoral board 43,800 43,800 41,896 (1,904)
Clerk of the Circuit Court 269,300 269,300 307,693 38,393
Total Shared Expenses 2,371,550$ 2,371,550$ 2,511,527$ 139,977$

Other categorical aid: Victim witness grant 35,000$ 35,000$ 15,655$ (19,345)$

E911 Grant - - 120,656 120,656
GIS 3,500 3,500 3,900 400
E911 state funds 45,000 45,000 45,076 76
Asset forfeiture funds - - 109,058 109,058
EMS grants - - 56,187 56,187
Fire Program Funds 71,000 71,000 77,306 6,306
Library grants 98,000 98,000 85,041 (12,959)
Litter control grants 30,000 30,000 19,891 (10,109)
Public assistance 2,106,363 2,106,363 2,229,000 122,637
Comprehensive services act 1,088,731 1,088,731 1,122,472 33,741
School resource officer grants - - 125,482 125,482

Workforce investment 25,000 25,000 27,197 2,197

Health department - - 34,331 34,331
Total other categorical aid 3,502,594$ 3,502,594$ 4,071,252$ 568,658$

Total categorical aid 5,874,144$ 5,874,144$ 6,582,779$ 708,635$

Total revenue from the Commonwealth 8,454,047$ 8,454,047$ 9,075,824$ 621,777$

-90-

‘County of Russel, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 2 of 5 Governmental Funds For the Year Ended June 30, 2017

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget ‘Actual (Negative) General Fund: (Continued) Revenue from local sources: (Continued) Recovered costs: Social services $246,000 § 246,000 $86,835 § (159,464) Health department 50,000 50,000 40,500 0,500) School resource officer 88,000 88,000 111861 23,861 Insurance recoveries 14973 14,073 Regional ai : : w7.712 w7.7i2 Industral development 20,000 20,000 18,135 (11865), Other Recovered Costs 34’500 34500 126,003 91,503 Total recovered costs $438,505 438.5005 664,820 5 726,320 “otal revenue from local sources $20,729,362 $ 20,718,133 $21,631,905 $913,772 Intergovernmental Revenue from the Commonwealth: Noncategorical ai: ‘Motor vehicles caries tax $157,000 § 157,00 $134,601 § (22,369) ‘Mobile home tttng tax 0,000 0,000 83,650 23,650 ‘Motor vehicle rental tax 8,100 8,100 13795 (6,305) Communications tax 900,000 90,060 812,618 (67.382) State recordation tax 17,800 17,800 23,378 5578 Personal property tax relief act funds 41487,003___1,437,003 1,487,003, - Total noneategorcal aid $2,579,903 $2,579,903 _§ 2,493,045 8 (66,058) Categorical ad: Shared expenses Commonwealth attorney S 364,000 § 364,000 § 482,627 $118,627 Sheritt 1,400,000 1,400,000 1,402,368, 2,368 Commissioner of revenue 181,050 181,050 165,354 (15,496) Treasurer 113,000 113,000 111,389 (ert) ‘Medical examiner 400 400 : (00) Resistrar/electoral board 43,800 43,800 41,896 (1,304) Clerk ofthe Circuit Court 269,300 269,300 307,693 38,393 “Total Shared Expenses $371,550 5 7,371,550 $_Ts1n,s27§_139.977 Other categorical aid: Victim witness grant S 35,000 § 35,00 $15,685 $119,345) £911 Grant 120,656 120,656 ois 3,500 3,500 3,900 400 911 state funds 45,000 45,000 45,076 % ‘Asset forfeiture funds 109,058 109,058 EMS grants 56,187 56,187 Fire Program Funds 71,000 71,000 77.306 6,306 Library grants 98,000 98,000 85,041 (12,959) Litter control grants 30,000 30,000 19,891 (10,105) Public asistance 2,106,363 2,106,363 2,229,000 122,637 Comprehensive services act 088.731 188,731 1,122,472 33741 School resource officer grants 125,482 125,482 Workforce investment 25,000 25,000 297 2.197 Health department 34,331 34.331 Total other categorical ald S SSO 554 50S S 4072525 568.658 Total categorical aid S 5.874144 § 5,874,148 § 6,582,779 $ 708,635 Total revenue from the Commonwealth S 8.454047 § 8,454,067 § 9,075,828 $621,777

Schedule 1 Page 3 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Major and Minor Revenue Source

General Fund: (Continued) Intergovernmental: (Continued) Revenue from the federal government:

Categorical aid:

Emergency management grants 114,000$ 114,000$ 12,096$ (101,904)$

Law enforcement grants - - 2,791 2,791
Violence against women - - 22,236 22,236

Victim witness grant - - 46,964 46,964
DMV ground transportation safety grant - - 11,322 11,322
Comprehensive services act - - 238,609 238,609
Public assistance 2,465,729 2,465,729 2,565,031 99,302

Total categorical aid 2,579,729$ 2,579,729$ 2,899,049$ 319,320$

Total revenue from the federal government 2,579,729$ 2,579,729$ 2,899,049$ 319,320$

Total General Fund 31,763,138$ 31,751,909$ 33,606,778$ 1,854,869$

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

Other local taxes: Coal road taxes 150,000$ 150,000$ 333,676$ 183,676$

Revenue from use of money and property: Revenue from the use of money -$ -$ 221$ 221$

Total revenue from local sources 150,000$ 150,000$ 333,897$ 183,897$

Total Coal Road Fund 150,000$ 150,000$ 333,897$ 183,897$

Workforce Investment Board Fund:

Revenue from local sources:

Recovered costs:

Other recovered costs -$ -$ 232,547$ 232,547$

Total recovered costs -$ -$ 232,547$ 232,547$

Intergovernmental: Revenue from the federal government:

Categorical aid: Workforce Investment 2,746,846$ 2,746,846$ 2,380,285$ (366,561)$

Total revenue from the federal government 2,746,846$ 2,746,846$ 2,380,285$ (366,561)$

Total Workforce Investment Board Fund 2,746,846$ 2,746,846$ 2,612,832$ (134,014)$

Total Primary Government 34,659,984$ 34,648,755$ 36,553,507$ 1,904,752$

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

Revenue from use of money and property: Revenue from the use of money -$ -$ 66$ 66$
Revenue from the use of property 1,500 1,500 6,420 4,920

Total revenue from use of money and property 1,500$ 1,500$ 6,486$ 4,986$

-91-

‘County of Russel, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 3 of 5 Governmental Funds For the Year Ended June 30, 2017

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative) General Fund: (Continued) Intergovernmental: (Continued Revenue from the federal government: Categorical aid: Emergency management grants S 114,000 $ 114,000 $ 12,09 $ (101,904) Law enforcement grants 2791 2,791 Viotence against women : : 22% 22236 Victim witness grant 46,964 46,964 DNV ground transportation safety grant 11322 11,322 Comprehensive services act 238,609 238,609 Public assistance 2.465.729 2,465,729 2,565,031 99,302 ‘Total categorical aid S_2579,729S 2,579,729 $2,899,049 § 319,320 “Total revenue from the federal government $2,579,729 $2,579,729 $ 2,899,049 § 319,320 ‘Total General Fund $31,763,138 $31,751,909$33,606,78$ 1,854,869 Special Revenue Funds: Coal Road Fund: Revenue from local sources: (Other local taxes: Coal road taxes S_150,000_$ _150,000$ 333,676 $183,676 Revenue from use of money and property: Revenue from the use of money s s 8 ais 2 Total revenue from local sources $150,000 $150,000 $ 333,897 $183,897 “Total Coal Road Fund $150,000 _$150,000$333,897$ 183,897 Workforce Investment Board Fund: Revenue from local sources: Recovered costs: Other recovered costs s s S_232,547 $232,547 Total recovered costs s s S 232,547 $232,547 Intergovernmental Revenue from the federal government: Categorical aié: Workforce Investment S 2,746,846 $2,746,846 $2,380,285 $ (266,561) ‘Total revenue from the federal government S 2,746,846 $2,746,846 $2,380,285 $ (266,561) Total Workforce Investment Board Fund $2,746,846 $2,746,846 $2,612,832 $ (124,014) ‘Total Primary Government $34,659,984 $34,648,755 _$36,553,507$ 1,904,752 Discretely Presented Component Unit - School Board: School Operating Funé: Revenue from local sources: Revenue from use of money and property: Revenue from the use of money s s 5 06S 66 Revenue from the use of property 1,500 1,500 6420, 4920 ‘Total revenue from use of money and property S500 1,500 6,486 986

Schedule 1 Page 4 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Major and Minor Revenue Source

Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Revenue from local sources: (Continued)

Charges for services: Cafeteria sales 400,000$ 400,000$ 357,789$ (42,211)$
Drivers Ed fees 14,000 14,000 9,560 (4,440)
Other charges for services - - 367 367
Regional Adult Education 138,554 138,554 50,271 (88,283)
GED Testing fees 2,000 2,000 743 (1,257)

Total charges for services 559,554$ 559,554$ 418,730$ (140,824)$

Miscellaneous: Other miscellaneous 190,000$ 190,000$ 251,228$ 61,228$

Recovered costs: Insurance recoveries -$ -$ 19,920$ 19,920$
Extra duties revenue 23,000 23,000 17,532 (5,468)
Dual Enrollment 300,000 300,000 370,609 70,609
Sale of Equipment and Supplies 10,000 10,000 5,237 (4,763)
Reimburse Health Services 187,414 187,414 332,992 145,578
Other recovered costs 51,500 51,500 7,343 (44,157)

Total recovered costs 571,914$ 571,914$ 753,633$ 181,719$

Total revenue from local sources 1,322,968$ 1,322,968$ 1,430,077$ 107,109$

Intergovernmental: Revenues from local governments:

Contribution from County of Russell, Virginia 7,587,901$ 7,587,901$ 6,800,180$ (787,721)$
Total revenues from local governments 7,587,901$ 7,587,901$ 6,800,180$ (787,721)$

Revenue from the Commonwealth: Categorical aid:

Share of state sales tax 4,227,672$ Basic Aid 13,355,688 Remedial summer education 179,928 Regular foster care 13,982 Gifted and talented 138,787 Remedial education 615,868 Special education 1,685,686 Textbook payment 317,418 Career and Technical Education 89,201 Alternative education 897,330 Algebra readiness 74,230 Mentor teacher program 1,581 Social security fringe benefits 835,615 Group life 57,828 Retirement fringe benefits 1,720,383 Early reading intervention 89,630 Adult Education 31,563 Homebound education 26,513 Vocation education 221,082 At risk payments 644,947 Primary class size 805,935 Technology 464,800 Jobs for Virginia Graduates 25,000 Industry Certification Costs 3,344 At risk four-year olds 579,119 School Food 23,637 English as a second language 6,904 4,227,672$ 4,144,760$ (82,912)$
13,355,688 13,265,979 (89,709)
179,928 187,568 7,640
13,982 21,131 7,149
138,787 137,344 (1,443)
615,868 609,466 (6,402)
1,685,686 1,668,163 (17,523)
317,418 314,118 (3,300)
89,201 31,823 (57,378)
897,330 880,456 (16,874)
74,230 69,250 (4,980)
1,581 2,738 1,157
835,615 826,928 (8,687)
57,828 57,227 (601)
1,720,383 1,702,499 (17,884)
89,630 89,630 -
31,563 31,563 -
26,513 25,981 (532)
221,082 252,147 31,065
644,947 638,280 (6,667)
805,935 796,950 (8,985)
464,800 417,572 (47,228)
25,000 25,000 -
3,344 3,135 (209)
579,119 579,119 -
23,637 30,606 6,969
6,904 6,099 (805)

-92-

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Schedule 1 Page 5 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Major and Minor Revenue Source

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

Categorical aid: (Continued) Project graduation -$ -$ 15,730$ 15,730$
GED prep programs 15,717 15,717 79,214 63,497
Lottery payments 151,567 151,567 150,392 (1,175)
Tobacco Commission 30,000 30,000 34,340 4,340
Adult literacy 99,595 99,595 99,595 -
Special education-foster care - - 8,909 8,909
Share our strength grant - - 8,200 8,200
Other state funds 1,073 1,073 21,629 20,556

Total categorical aid 27,637,943$ 27,637,943$ 27,233,541$ (404,402)$

Total revenue from the Commonwealth 27,637,943$ 27,637,943$ 27,233,541$ (404,402)$

Revenue from the federal government: Categorical aid:

Basic Adult Education 325,848$ 325,848$ 282,635$ (43,213)$
Title I 1,382,601 1,382,601 1,116,534 (266,067)
Special Education 1,164,552 1,164,552 857,211 (307,341)
Title VI-B, preschool 34,335 34,335 69,794 35,459
Vocational education 79,108 79,108 72,648 (6,460)
School Food Program 1,195,000 1,195,000 1,316,744 121,744
Improving teacher quality 275,330 275,330 229,389 (45,941)
21st century grant 1,220,003 1,220,003 1,030,052 (189,951)
Rural and low income schools 77,661 77,661 33,902 (43,759)

Total categorical aid 5,754,438$ 5,754,438$ 5,008,909$ (745,529)$

Total revenue from the federal government 5,754,438$ 5,754,438$ 5,008,909$ (745,529)$

Total Discretely Presented Component Unit - School Board 42,303,250$ 42,303,250$ 40,472,707$ (1,830,543)$

-93-

‘County of Russel, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 5 of 5 Governmental Funds For the Year Ended June 30, 2017

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative) Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Intergovernmental: (Continued) Revenue from the Commonwealth: (Continued) Categorical aid: (Continued) Project graduation s a +S 15,730 $ 15,730 GED prep programs 15,717 15,717 73,214 63,497 Lottery payments 151,567 151,567 150,392 (1.173) “Tobacco Commission 30,000 30,000 34,340 4340 ‘Adult Weracy 99,595, 99,595, 99,595 . Special education-foster care 8,909 5,909 Share our strength grant : : 8,200 8,200 Other state funds 1.073 1.073 21,629 20,556 Total categorical ald 327,637,943 $ 27,037,943 $27,233,541 § (404,402) Total revenue from the Commonwealth $27,637,943 $27,637,943 $ 27,233,541$ (404,402) Revenue from the federal government: Categorical aid Basic Adult Education S 325,848 $325,848 $282,635 $143,213) Title 1,382,601 1,382,601 1,116,534 (266,067) Special Education 1164552 1,164,552. 857,211 (007,341) Title VIB, preschoot 34,335 34,35, 69,794 35,459 Vocational education 79,108 79,108 7,648 (6,460) School Food Program 1,195,000 1,195,000 1,316,744, wa74a Improving teacher quality 275,330 275,330 229,389 (45.941) 2st century grant 1,220,003 1,220,003 1,030,052 (189,951) Rural and tow income schools 77,661 77,661 33,902 (3,759) “Total categorical aid $5,754,438 $5,754,438 $5,008,909 § (745,529) ‘Total revenue from the federal government S5,754438 $ 5.754438 $ 5,008,909 $ (745,529) ‘Total Discretely Presented Component Unit - School Boare S_42,303,250$ 42,303,250$ 40,472,707$ (1,830,543)

Schedule 2 Page 1 of 4

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

General Fund: General government administration:

Legislative: Board of supervisors 200,371$ 213,263$ 222,034$ (8,771)$

General and financial administration: County administrator 364,153$ 313,848$ 316,820$ (2,972)$
Independent auditor 69,500 68,252 64,450 3,802
Commissioner of the revenue 307,704 305,478 310,223 (4,745)
Real estate assessor 142,784 112,993 116,804 (3,811)
Treasurer 427,042 449,449 476,667 (27,218)

Procurement 124,502 159,073 159,977 (904) Total general and financial administration 1,435,685$ 1,409,093$ 1,444,941$ (35,848)$

Board of elections: Electoral Board 92,383$ 67,635$ 67,702$ (67)$
General Registrar 114,825 94,271 95,248 (977)

Total board of elections 207,208$ 161,906$ 162,950$ (1,044)$

Total general government administration 1,843,264$ 1,784,262$ 1,829,925$ (45,663)$

Judicial administration: Courts:

Circuit Court 125,823$ 116,556$ 116,449$ 107$
General District Court 9,800 13,801 13,856 (55)
Special Magistrates 9,400 7,249 7,458 (209)
Clerk’s Office 411,039 406,979 422,021 (15,042)
Sheriff Courts 934,165 1,037,999 1,051,758 (13,759)
Victim and Witness Assistance 35,165 62,619 61,093 1,526
Law Library - - 1,033 (1,033)

Total courts 1,525,392$ 1,645,203$ 1,673,668$ (28,465)$

Commonwealth’s attorney: Commonwealth’s Attorney 641,592$ 668,538$ 652,803$ 15,735$

Total judicial administration 2,166,984$ 2,313,741$ 2,326,471$ (12,730)$

Public safety: Law enforcement and traffic control:

Sheriff 1,931,745$ 2,273,500$ 2,214,414$ 59,086$
Dare program 3,000 3,209 3,260 (51)

Total law enforcement and traffic control 1,934,745$ 2,276,709$ 2,217,674$ 59,035$

Fire and rescue services: Volunteer Fire Departments 254,200$ 207,100$ 291,956$ (84,856)$
Ambulance Rescue Squad 186,875 186,875 186,854 21

Total fire and rescue services 441,075$ 393,975$ 478,810$ (84,835)$

Correction and detention: Operation of Jail 2,488,745$ 2,654,078$ 2,654,078$ -$
Probation Office 283,477 283,614 283,525 89

Total correction and detention 2,772,222$ 2,937,692$ 2,937,603$ 89$

Inspections: Building inspector 106,546$ 115,248$ 116,541$ (1,293)$

County of Russell, Virginia Schedule of Expenditures - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Function, Activity and Element

-94-

County of Russel, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 1 of 4 Governmental Funds For the Year Ended June 30, 2017

Variance with Final Budget Final Positive Fund, Function, Activity and Element Budaet Actual (Negative) General Fund: General government administration: Legislative: Board of supervisors $200,371 § 213,263 § 222004 § 8.771) General and financial administration: County acminstrator $364,153 $313,848 $316,820 § (2.972) Independent auditor 691500 68,252 64,480 3.802 Commissioner of the revenue 307,704 305,478 310,223 4.745) Real estate assessor 442\784 112,993 116,804 Gai) Treasurer aaron 49.49 476,667 erase) Procurement 124,502 159,073 159,97 (904) Total general and financial administration T_1.435,685 51,409,093 51,444,941 5 05,848) Board of elections: Electoral Board 5 92,383 § 67635 $67,702 S cn General Resistrar 114,825 94271 95,248 (7) Total board of elections $207,208 $161,506 5 162,950 § 11,044) Total general government administration 51,063,264 § 1,784,262 $1,829,925 $45,663) Judicial administration Courts: Circuit Court 5 125823 § 116,556 $116,449 § 107 General District Court 91800 13,801 13,856 65) Special Magistrates 9400 7209 7.488 (209) Clerks Office 411,038 406,979 42,001 (15,08) Sheriff Courts 934,165 1,037,999 1,051,738 (03.738) Victim and Witness Assistance 35,165 621619 61,093 1,526 Law Library - : 11033 (033) Total courts 31553 $1645 203 5 1,673,668 5 28.465) Commonwealth’s attorney Commonweatths Attorney S_o4nse2 § 668,538 § 652.803 $15,735 Total juticial administration $2,166,984 § 2,313,761 § 2,326.471 $12,730) Public safety Law enforcement and traffic control Sheritt $ 1931.74 $ 2,273,500 § 2214414 § 59,086 Dare program 3,000 3,208 3.260 1) Total law enforcement and traffic control $ipia, 745 $2,776,709 8 TF. 64S 55035. Fire and reseve services Volunteer Fire Departments $ 254,200 § 207,100 $291,956 § (84,856) Ambulance Rescve Squad 186,875 486,875 186,854 2 Total fre and rescue services T4075 5 393.975 5 478,810 5 (64835) Correction and detention Operation of Jail 5 2488,745 § 2,654,078 $2,654,078 $ Probation office 283,47 283,614 283,525 89 Total correction and detention 3 Uymm $7937 62 $7,937,603 o Inspections: Building inspector S 106,546 § 115,248 § 16.541 § 1.293)

-94-

Schedule 2 Page 2 of 4

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Expenditures - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Function, Activity and Element

General Fund: (Continued) Public safety: (Continued)

Other protection: Forestry Service 11,804$ 23,608$ 23,608$ -$
Enhanced 911 580,439 512,913 646,745 (133,832)
Medical Examiner 400 340,660 340,640 20
Emergency Services 114,113 144,878 86,719 58,159
Animal Control 191,157 169,376 164,460 4,916

Total other protection 897,913$ 1,191,435$ 1,262,172$ (70,737)$

Total public safety 6,152,501$ 6,915,059$ 7,012,800$ (97,741)$

Public works: Sanitation and waste removal:

Landfill 1,925,174$ 1,653,709$ 1,854,953$ (201,244)$
Refuse collection 254,113 188,553 11,980 176,573
Litter Coordinator - - 94,029 (94,029)

Total sanitation and waste removal 2,179,287$ 1,842,262$ 1,960,962$ (118,700)$

Maintenance of general buildings and grounds: General properties 1,029,030$ 1,907,779$ 1,102,152$ 805,627$

Total public works 3,208,317$ 3,750,041$ 3,063,114$ 686,927$

Health and welfare: Health:

Health Department 340,000$ -$ -$ -$

Mental health and mental retardation: Cumberland Mountain Community Services Board 42,000$ 40,000$ 39,996$ 4$

Welfare: Social services 5,097,092$ 5,097,092$ 5,244,600$ (147,508)$
Comprehensive Services Act 1,153,649 1,133,195 1,942,923 (809,728)
Appalachian Agency for Senior Citizens 85,025 86,961 86,961 -
Other health and welfare 228,800 455,605 1,994 453,611

Total welfare 6,564,566$ 6,772,853$ 7,276,478$ (503,625)$

Total health and welfare 6,946,566$ 6,812,853$ 7,316,474$ (503,621)$

Education: Contributions to County School Board 7,587,901$ 7,587,901$ 6,800,180$ 787,721$
SVCC Contribution 91,949 91,949 91,949 -

Total education 7,679,850$ 7,679,850$ 6,892,129$ 787,721$

Parks, recreation, and cultural: Parks and recreation:

Recreation Park 174,427$ 148,804$ 145,764$ 3,040$
Health and fitness 62,387 66,555 67,158 (603)$

Total parks and recreation 236,814$ 215,359$ 212,922$ 2,437$

Library: Public Library 319,941$ 313,446$ 309,504$ 3,942$

Total parks, recreation, and cultural 556,755$ 528,805$ 522,426$ 6,379$

-95-

Lonzo Lester Highlight

County of Russel, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 2 of 4 Governmental Funds For the Year Ended June 30, 2017

Variance with Final Budget Final Positive Fund, Function, Activity and Element Budaet Actual (Negative) c Public safety: (Continued) Other protection: Forestry Service $11,808 § 23,608 § 23,408 § : Enhanced 911 580,439 512913 646,745 (133,832) Medical Examiner “400 340,660 340,640 20 Emergency Services 114,113 144.978 86,719 58,159 Animal Contr 491,187 169,376 164,460 4916 Tota other protection 5 e975 1191.45 5 1.262,172_§ 70.737) Total public safety $6,152,501 $ 6,915,059 $7,012,800 § (97,741) Public works: Sanitation and waste remo. Lanett $1,925,174 $1,653,709 $1,854,953 $ (201,244) Refuse collection 254,13 188,583 11,980 176573 Litter Coordinator : - 94,009 (94,029) Total sanitation and waste removal Rie eT _§ 1,865 1,360,962 S (178,700) Naintenance of general buildings and grounds: General properties $1,029,030 $ 1,907,779 $1,102,152 $805,627 Total pubic works $3,208,317 $ 3,750,041 $ 3,063,114 § 686,927 Health and welfare: Health: Health Department $340,000 $ 58 s ental health and mental retardation: Cumberland Mountain Community Services Board $42,000 § 40,000 $39,996 4

Total health and welfare Education: Contributions to County School Board $7,587,901 $7,587,901 § 6,800,180 $787,721 SVCC Contribution 91,949 91,949 91,949 Total education $7.079,850§ 7,679,850 $ 6892,129§ 787,72

Parks, recreation, and cultural: Parks and recreation:

Recreation Park S 174,427 § 148,804 $145,764 § 3,040 Health and fitness 62,387 66,555 67,158_$ (603) Total parks and recreation 3 Desig $215,359 SDM SAT brary Public Library $319,941 § 313.446 $309,500 5 3.942 Total parks, recreation, and cultural, $956,755 § 578,805 § 572,426 § 6,379

-95-

Schedule 2 Page 3 of 4

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Expenditures - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Function, Activity and Element

General Fund: (Continued) Community development:

Planning and community development: Planning Commission 18,250$ 12,976$ 12,975$ 1$
Community Development 25,250 17,770 16,250 1,520
Industrial Development 504,930 497,430 537,835 (40,405)
PSA Contributions 451,000 451,000 240,954 210,046
Cumberland Plateau 30,000 35,000 35,000 -
Highway Safety Commission 2,000 4,250 4,250 -
Canneries 30,000 30,000 52,667 (22,667)
Tourism 6,000 6,614 6,789 (175)

Total planning and community development 1,067,430$ 1,055,040$ 906,720$ 148,320$

Environmental management: Soil and Water Conservation 35,236$ 34,237$ 34,236$ 1$

Cooperative extension program: VPI Extension 73,830$ 66,328$ 67,046$ (718)$

Total community development 1,176,496$ 1,155,605$ 1,008,002$ 147,603$

Nondepartmental: Nondepartmental 348,518$ 523,504$ 147,991$ 375,513$

Capital projects: School projects -$ -$ 2,482,783$ (2,482,783)$

Total capital projects -$ -$ 2,482,783$ (2,482,783)$

Debt service: Principal payments 1,483,887$ 1,422,876$ 1,399,929$ 22,947$
Interest Expense - - 535,261 (535,261)

Total debt service 1,483,887$ 1,422,876$ 1,935,190$ (512,314)$

Total General Fund 31,563,138$ 32,886,596$ 34,537,305$ (1,650,709)$

Special Revenue Funds: Coal Road Fund: Public Works:

Maintenance of highways, streets, bridges and sidewalks: Maintenance of highways, streets, bridges and sidewalks 125,000$ 125,000$ 250,000$ (125,000)$
Virginia coalfield 25,000 25,000 167,674 (142,674)

Total Public Works 150,000$ 150,000$ 417,674$ (267,674)$

Total Coal Road Fund 150,000$ 150,000$ 417,674$ (267,674)$

Workforce Investment Board Fund: Health and Welfare:

Welfare: Workforce Investment 2,746,846$ 2,746,846$ 2,633,615$ 113,231$

Total Primary Government 34,459,984$ 35,783,442$ 37,588,594$ (1,805,152)$

-96-

Lonzo Lester Highlight

County of Russell, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 3 of 4 Governmental Funds For the Year Ended June 30, 2017 Variance with Final Budget Final Positive Fund, Function, Activity and Element Budaet Actual (Negative) General Fund: (Continued) Community development: Planning and community development: Planning Commission S 18250 § 12,978 § 12875 1 Community Development 25,250 17,770 16,250 1,520 Industrial Development 504,930 497,430 537,835 (40,405) SA Contributions 451,000 451,000 240,954 210,046 Cumbertand Plateau 30,000 35,000 35,000 : Highway Safety Commision 2,000 4.250 4.250 Canneries 30,000 30,000 52,667 (22,667) Tourism 6,000 6.614 6.789 (175) “otal planning and community development. $1,067 430 $1,055,040 5 906,720_§ 148,320 Environmental management: Soil and Water Conservation $35.26 § 34257 534238 1 Cooperative extension program: VPI Extension S$ 73830 $66,328 $67,048 8) Total community development $1,176.49 $1,185,605 § 1,008,002 _§ 147,603, Nondepartmental: Nondepartmental S$ 38.518 $523,504 § 147,991 § 375.513, orto. & §8 86 gyszi7s § (2s2;783) Total capital projects: SSS SS 2asnres $48,783) Debt service:

Principal payments Interest Expense Total debt service

Total General Fund

Special Revenue Funds: Coal Road Func Public Work: Naintenance of highways, streets, bridges and sidewalks Maintenance of highways, streets, bridges and sidewalks Virginia coalfield Total Public Works

Total Coal Road Fund

Workforce Investment Board Fund: Health ana Welfare:

Weitar

Workforce investment

Total Primary Government

-96-

S 1,483,807 $1,422,876 $1,399,929 $22,947

- 535,261 (535,261)

31a ga STATES 7,935,190 5 512.314) $31,563,138 _$ 32,886,596 $34,537,305 _$ (1,650,709) $125,000 $ 125,000 $280,000 $125,000) 25,000 25,000 167,674 142,674) $150,000§150,000§__at7,674$ 267,674) $130,000 150,000$17,674$ (267,674) $2,746,846 _$ 2,746,846 $2,633,615 $113,231 $34,459,984 $35,783,442 $37,588,594 _$ (1,805,152)

Schedule 2 Page 4 of 4

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Expenditures - Budget and Actual

Governmental Funds For the Year Ended June 30, 2017

Fund, Function, Activity and Element

Discretely Presented Component Unit - School Board: School Operating Fund: Education:

Administration of schools: Administration and health services 1,824,955$ 1,824,955$ 1,809,777$ 15,178$

Instruction costs: Instructional costs 30,581,636$ 30,581,636$ 28,876,463$ 1,705,173$
Technology 833,735 833,735 1,018,046 (184,311)

Total instruction costs 31,415,371$ 31,415,371$ 29,894,509$ 1,520,862$

Operating costs: Pupil transportation 2,831,713$ 2,831,713$ 2,507,733$ 323,980$
Operation and maintenance of school plant 4,413,201 4,413,201 4,293,679 119,522
Food service and non-instructional 1,818,010 1,818,010 1,799,848 18,162

Total operating costs 9,062,924$ 9,062,924$ 8,601,260$ 461,664$

Total education 42,303,250$ 42,303,250$ 40,305,546$ 1,997,704$

Total School Operating Fund 42,303,250$ 42,303,250$ 40,305,546$ 1,997,704$

Total Discretely Presented Component Unit - School Board 42,303,250$ 42,303,250$ 40,305,546$ 1,997,704$

-97-

CCounty of Russel, Virginia

Schedule 2

Schedule of Expenditures - Budget and Actual Page 4 of 4 Governmental Funds For the Year Ended June 30, 2017 Variance with Final Budget Final Positive Fund, Function, Activity and Element Budget Actual (Negative) Discretely Presented Component Unit - School Board: ‘School Operating Fund: Education: ‘Administration of schools: ‘Administration and health services $1,824,955 $1,824,955 $1,809,777 $15,178 Instruction costs Instructional costs $30,581,636 $ 30,581,636 $28,876,463 $1,705,173 Technology 833,735 833,735 1,018,046 (184,311) Total instruction costs $315,371 $31,415,371 $29,894,509 § 1,520,862 Operating costs: Pupil transportation $2,831,713 $2,831,713 $2,507,733 § 323,980 Operation and maintenance of school plant 4,413,201 4,413,201 4,293,679 119,522 Food service and non-instructional 1,818,010 ___1,818,010__1,799.848 18,162 Total operating costs 39,062,924 39,062,924 5 8,601,200 3 461,664 Total education $42,303,250 $§ 42,303,250 § 40,305,546 $1,997,704 Total School Operating Fund $42,303,250$ 42,303,250$ 40,305,546 1,997,704 Total Discretely Presented Component Unit - School Board $42,303,250 _§ 42,303,250 $40,305,546 _§ 1,997,704

-97-

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-102-

County of Russell, Virginia Property Tax Levies and Collections Last Ten Fiscal Years

Table 5

Fiscal Year

Total Tax Levy (1)

Current Tax

Collections (1)

Percent of Levy Collected

Delinquent Tax

Collections (1)

Total Tax Collections

Percent of Total Tax Collections

to Tax Levy

Outstanding Delinquent Taxes (1)

Percent of Delinquent Taxes to Tax Levy

2016-17 $ 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08

18,121,006 $ 17,361,249 17,704,326 17,616,878 16,328,495 14,681,089 14,682,949 14,169,807 14,091,178 13,784,900

16,441,108 14,744,908 15,716,165 16,022,072 14,812,738 13,185,991 13,329,182 13,038,906 13,212,582 12,618,969

(1) Exclusive of penalties and interest.

90.73% $ 84.93% 88.77% 90.95% 90.72% 89.82% 90.78% 92.02% 93.76% 91.54%

1,946,062 1,312,236 994,555 895,532 953,671 723,190 1,330,697 886,480 496,787 411,887

18,387,170 16,057,144 16,710,720 16,917,604 15,766,409 13,909,181 14,659,879 13,925,386 13,709,369 13,030,856

101.47% $ 92.49% 94.39% 96.03% 96.56% 94.74% 99.84% 98.28% 97.29% 94.53%

3,734,590 4,096,565, 3,823,404 3,914,585, 4,786,523 4,693,121 3,847,456 3,624,318 3,506,132 3,234,367

20.61% 23.60% 21.60% 22.22% 29.31% 31.97% 26.20% 25.58% 24.88% 23.46%

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-103-

County of Russell, Virginia

Assessed Value of Taxable Property Last Ten Fiscal Years

Table 6

Fiscal Year

Real Estate (1)

Personal Property

Machinery

and Merchant’s

Tools

Capital

Mobile Homes

Public Service (2)

Total

2016-17 $ 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08

1,424,285,595 $ 1,435,763,539 1,426,948,990 1,420,301,334 1,323,141,655, 1,214,673,535, 1,197,720,260 1,181,352,276 1,153,488,246 1,130,643,127

327,638,704 $ 298,654,470 300,976,802 297,609,286 292,809,049 251,383,699 235,114,151 224,871,200 239,254,757 243,837,948

57,050,690 $ 58,791,092 71,451,300 92,212,643 86,317,454 60,747,073 82,948,411 96,552,183 93,960,621 107,205,468

(1) Real estate is assessed at 100% of fair market value.

(2) Assessed values are established by the State Corporation Commission-includes all property types.

5,716,770 $ 20,726,176 $ 265,575,303 $ 2,100,993,238

5,876,008 6,084,205 6,061,014 5,631,601 5,340,902 5,136,529 5,402,115 5,501,882 5,742,600

21,377,908 21,500,580 21,820,581 23,486,868 23,401,571 23,320,148 22,864,821 23,139,220 23,608,064

243,897,231 240,244,298 315,700,293 230,027,520 269,503,982 326,871,285 253,750,196 234,196,018 231,981,492

2,064,360,248 2,067,206, 175 2,153,705, 151 1,961,414,147 1,825,050, 762 1,871,110,784 1,784,792,791 1,749,540,744 1,743,018,699

Table 7

Fiscal Real Personal Machinery Merchant’s Mobile Year Estate (2) Property & Tools Capital Homes

2016-17 $ 0.63 $ 1.95 $ 1.65 $ 0.65 $ 0.63
2015-16 0.63 1.65 1.65 0.65 0.63
2014-15 0.63 1.65 1.65 0.65 0.63
2013-14 0.56/0.63 1.65 2.00 0.65 0.56
2012-13 0.70/0.56 1.65 1.65 0.65 0.70
2011-12 0.61/0.70 1.65 1.65 0.65 0.61
2010-11 0.61 1.65 1.65 0.65 0.61
2009-10 0.61 1.65 1.65 0.65 0.61
2008-09 0.61 1.65 1.65 0.65 0.61
2007-08 0.56/0.61 1.65 1.65 0.65 0.56

(1) Per $100 of assessed value. (2) 2nd half due December/1st half due June of fiscal year.

County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

-104-

County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Table 7

Fiscal Real Personal Machinery Merchant’s Mobile Year Estate (2) Property & Tools Capital Homes 2016-17 $ 0.63 $ 1.95 $ 1.65 0.65 $ 0.63 2015-16 0.63 1.65, 1.65 0.65 0.63 2014-15 0.63 1.65 1.65 0.65 0.63 2013-14 0.56/0.63 1.65 2.00 0.65 0.56 2012-13 0.70/0.56 1.65 1.65 0.65 0.70 2011-12 0.61/0.70 1.65, 1.65 0.65 0.61 2010-11 0.61 1.65 1.65 0.65 0.61 2009-10 0.61 1.65 1.65 0.65 0.61 2008-09 0.61 1.65 1.65 0.65 0.61 2007-08 0.56/0.61 1.65, 1.65 0.65 0.56

(1) Per $100 of assessed value.

(2) 2nd half due December/1st half due June of fiscal year.

-104-

Table 8

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

2016-17 28,897 2,100,993$ 7,532,205$ 7,532,205$ 0.36% 261$
2015-16 28,897 2,064,360 7,930,656 7,930,656 0.38% 274 2014-15 28,897 2,067,206 8,951,609 8,951,609 0.43% 310 2013-14 28,897 2,153,705 9,955,282 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

(1) Bureau of the Census. (2) Real property assessed at 100% of the fair market value. (3) Includes all long-term general obligation bonded debt, bonded anticipation notes, and literary fund loans.

Excludes revenue bonds, landfill closure/post-closure care liability, capital leases, and compensated absences.

County of Russell, Virginia Ratio of Net General Bonded Debt to

Last Ten Fiscal Years Assessed Value and Net Bonded Debt Per Capita

-105-

Table 8 County of Russell, Virginia Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years

Ratio of Net Bonded Net

Assessed Gross Net Debt to Bonded Fiscal Value (in Bonded Bonded Assessed Debt per Year Population (1) thousands) (2) Debt (3) Debt Value Capita 2016-17 28,897 § 2,100,993 $ 7,532,205 § 7,532,205 0.36% $ 261 2015-16 28,897 2,064,360 7,930,656 7,930,656 0.38% 274 2014-15 28,897 2,067,206 8,951,609 8,951,609 0.43% 310 2013-14 28,897 2,153,705 9,955,282 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 4,749,541 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

(1) Bureau of the Census.

(2) Real property assessed at 100% of the fair market value.

(3) Includes all long-term general obligation bonded debt, bonded anticipation notes, and literary fund loans. Excludes revenue bonds, landfill closure/post-closure care liability, capital leases, and compensated absences.

-105-

Table 9

Ratio of Total Debt Service

Total General to General Fiscal Debt Governmental Governmental Year Service Expenditures Expenditures

2016-17 1,935,190$ 68,611,177$ 2.82% 2015-16 1,747,721 67,289,189 2.60% 2014-15 1,946,577 65,792,171 2.96% 2013-14 1,810,023 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%

(1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board.

County of Russell, Virginia Ratio of Annual Debt Service Expenditures for General Bonded

Debt to Total General Governmental Expenditures (1) Last Ten Fiscal Years

-106-

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 2016-17 § 1,935,190 $ 68,611,177 2.82% 2015-16 1,747,724 67,289,189 2.60% 2014-15 1,946,577 65,792,171 2.96% 2013-14 1,810,023 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%

(1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board.

-106-

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 the County of Russell, Virginia as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the County of Russell, Virginia’s basic financial statements and have issued our report thereon dated January 31, 2018. 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 the 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 the County of Russell, Virginia’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County of Russell, Virginia’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia’s internal control.

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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section 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 [2017-001].

-107-

ROBINSON, FARMER, COX ASSOCIATES

4 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

Internal Control over Financial Reporting

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether the 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 [2017-002].

County of Russell, Virginia’s Response to Findings

County of Russell, Virginia’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. County of Russell, Virginia’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Blacksburg, Virginia January 31, 2018

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Compliance and Other Matters.

‘As part of obtaining reasonable assurance about whether the 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 [2017-002].

County of Russell, Virginia’s Response to Findings

auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

Prdbisee, Srooe, lope Assnesits

Blacksburg, Virginia January 31, 2018

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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 the Uniform Guidance

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 the County of Russell, Virginia’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the County of Russell, Virginia’s major federal programs for the year ended June 30, 2017. 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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditors’ Responsibility

Our responsibility is to express an opinion on compliance for each of the 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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County of Russell, Virginia’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the County of Russell, Virginia’s compliance.

Opinion on Each Major Federal Program

In our opinion, the 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, 2017.

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ROBINSON, FARMER, COX ASSOCIATES

4 PROFESSIONAL LIMITED LIABILITY COMPANY CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance

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

Report on Compliance for Each Major Federal Program

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditors’ Responsibility

Opinion on Each Major Federal Program

In our opinion, the 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, 2017.

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Report on Internal Control over Compliance

Management of the County of Russell, Virginia is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the 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 the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Blacksburg, Virginia January 31, 2018

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Report on Internal Control over Compliance

The purpose of this report on internal control over compliance is solely to describe the scope of our testing

of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Palen, Sn’, ba Ossurith

Blacksburg, Virginia January 31, 2018

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Page 1 of 2

Pass-through Federal Entity

Federal Grantor/State Pass - Through Grantor/ CFDA Identifying Federal Expenditures to Program Cluster or Title Number Number Expenditures Subrecipients

Department of Health and Human Services: Pass Through Payments: Department of Social Services: Promoting Safe and Stable Families 93.556 0950115, 0950116 20,644$ -$
Temporary Assistance for Needy Families 93.558 0400116, 0400117 312,054 -
Refugee and Entrant Assistance - State Administered Programs 93.566 0500116, 0500117 1,120 -
Low-Income Home Energy Assistance 93.568 0600416, 0600417 36,344 -
Child Care Mandatory and Matching Funds of the 93.596 0760116, 0760117 51,422 -
Child Care and Development Fund Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900116, 0900117 613 -
Foster Care - Title IV-E 93.658 1100116, 1100117 690,299 -
Adoption Assistance 93.659 1120116, 1120117 501,432 -
Social Services Block Grant 93.667 1000116, 1000117 461,882 -
Chafee Foster Care Independence Program 93.674 9150116, 9150117 7,861 -
Children’s Health Insurance Program 93.767 0540116, 0540117 12,453 -
Medical Assistance Program 93.778 1200116, 1200117 396,281 -

Total Department of Health and Human Services 2,492,405$ -$

Department of Agriculture: Pass Through Payments: Child Nutrition Cluster: Department of Agriculture: Food Distribution-Schools (Note 3) 10.555 Not available 82,208$

    Department of Education:
      National School Lunch Program 10.555 40623, 40254 914,486     996,694$      

      School Breakfast Program 10.553 40591, 40253 320,050        1,316,744$         -$                      

Department of Social Services:
      State Administrative Matching Grants for the Supplemental 10.561 0010116, 0010117 311,235             -                        
          Nutrition Assistance Program 0040116, 0040117

Total Department of Agriculture 1,627,979$ -$

Department of Justice: Pass Through Payments: Department of Criminal Justice Services: Violence Against Women Formula Grants 16.588 46500 22,236$ -$
Crime Victim Assistance 16.575 17-Q3590VW15 46,964 -

Total Department of Justice 69,200$ -$

Department of Transportation: Pass Through Payments: Department of Motor Vehicles: Alcohol Open Container Requirements 20.607 154AL-15-55273 11,322$ -$
National Priority Safety Programs 20.616 Not available 2,791 -

Total Department of Transportation 14,113$ -$

Department of Education: Pass Through Payments: Department of Education: Adult Education - Basic Grants to States 84.002 42801 282,635$ -$
Title I: Grants to Local Educational Agencies 84.010 42901 1,116,534 -
Special Education Cluster:

  Special Education - Grants to States 84.027 43071, 61134 857,211$      -                        
  Special Education - Preschool Grants 84.173 62521 69,794         927,005             -                        

  Career and Technical Education:  Basic Grants to States 84.048 61095 72,648               -                        
  Twenty-First Century Community Learning Centers 84.287 60565, 61111 1,030,052          -                        
  Rural Education 84.358 43481 33,902               -                        
  Supporting Effective Instruction State Grant 
        (formerly Improving Teacher Quality State Grants) 84.367 61480 229,389             -

Total Department of Education 3,692,165$ -$

Department of Labor: Pass Through Payments: Virginia Community College System: Workforce Investment Act Cluster: WIA/WIOA Adult Program 17.258 LWA 1-15-02, 1-16-02 674,228$ 584,476$
WIA/WIOA Youth Activities 17.259 LWA 1-15-02, 1-16-02 678,415 551,134
WIA/WIOA Dislocated Worker Formula Grants 17.278 LWA 1-15-02, 1-16-02 646,872 328,464
Workforce Investment Act Cluster Total 1,999,515$ 1,464,074$

      WIOA National Dislocated Worker Grants/WIA National Emergency Grants 17.277 Not available 359,394             -                        
      WIOA National Dislocated Worker Grants/WIA 17.281 Not available 15,000               -

Total Department of Labor 2,373,909$ 1,464,074$

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2017

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‘sere expenses of Feel nares

reset ad Feral GrnorState Pas - Trout rr cron ection Federal Exendturesto roam te o The seme ‘same apentures_‘Stivecplet Ceprinerf Heth an ian Sei: Pos eo Papen Deoartnet f cSeres: remain 356 onous.onoe 5 mes ‘ged tn otc. ter aan nie ns "i ‘had cae on orvopnest ane suerte tb oes hs Were eres oan 65 one. ono o Sousa tsk Bip semen a ‘erat fate Foner cr teens Progam Dew soe son “ast fecal kone Powe m= Sane non? we ‘tl Depend Haman Serves sans eprnent of Art: seo amet ot oer eons te 3 10s ocantisie $2208 Nota Sh Leh roam 10555 osm, 4ast_ouisae $54 Seto rest Param 055) sos, 4059 sma 5131670 5 Deoarment fc Serves: Sa Ash aig Gore ple rose aus Toul Donen of rete sensn 5 cepa Jaen se ats Department fre Se ‘otc igs nomen Frat ras es san supe s Cine vin saree 1858 sons ‘oie tl eprint of ice sea s Deparment of Transat: Pos eo Payments Sepa of tr Yes: ett open Contes Reitenents pow suisse 5 s ana Prony Stet rare ste evan ‘tl Depeient fTrapraton sins cepa ot Eaxaton os Tee arent Cena fast: estonia ttt on am Soames i ont res moe ‘oot re “Specs aan Cos to Staten ao om, 5 exan Sen. Cony ont ceing ates pend ose sonst Tirmecy nro eser Gy Sate Gs) won evan me “etalon of aaton sans § eprint: es Teoh amen: "weg Conrunty Clg pen: "naroron ka rg ras wa ttsan, 6m 5S eum ssa ‘aro fut tes Trae Gwatisor tear teas) tne ‘armen bose Water erm Grants tae Gwattsar, tear ica ta ont eset At te Toa oss Sra tl eprint Late agnor ssa

Ane

Page 2 of 2

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2017

Pass-through Federal Entity

Federal Grantor/State Pass - Through Grantor/ CFDA Identifying Federal Expenditures to Program Cluster or Title Number Number Expenditures Subrecipients

Appalachian Regional Commission: Pass Through Payments: Virginia Community College System: Appalachian Regional Development 23.002 Not available 6,376$ -$

Department of Homeland Security: Pass Through Payments: Department of Emergency Management: Emergency Management Performance Grants 97.042 62744, 52703 7,500$ -$
Homeland Security Grant Program 97.067 Not available 4,596 -

Total Department of Homeland Security 12,096$ -$

Total Expenditures of Federal Awards 10,288,243$       1,464,074$

Notes to Schedule of Expenditures of Fedaral Awards:

Note 1 – Basis of Presentation

Note 2 – Summary of Significant Accounting Policies

Note 3 – Food Distribution

Note 5 – Relationship to the Financial Statements Federal expenditures, revenues and capital contributions are reported in the County’s basic financial statements as follows:

Intergovernmental federal revenues per the basic financial statements: Primary government: General Fund 2,899,049$
Workforce Investment Board Fund 2,380,285

Total primary government 5,279,334$         

Component Unit School Board:
  School Operating Fund 5,008,909$

Total expenditures of federal awards per the basic financial statements 10,288,243$

(1) Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Uniform Guidance , wherein certain types of expenditures are not allowable or are limited as to reimbursement.

Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and disbursed. At June 30, 2017, Russell County, Virginia had food commodities totaling $0 in inventory.

(2) Pass-through entity identifying numbers are presented where available.

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, 2017. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of County of Russell, Virginia, it is not intended to and does not present the financial position, changes in net position, or cash flows of County of Russell, Virginia.

(3) The County did not elect the 10% de minimis indirect cost rate because they only request direct costs for reimbursement.

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County o ssl, Ye ‘seneule xpentres of Feel Anas

Fear ad Federal Gant ae Tout rte? toe vein Fecerl_— Spend t Troan cute ore ber ‘ine ‘eomaares_‘Sibecpte -gsochin Reger aii: Fes our Ramen tga Coenety Cale Stn ‘opaanan Repl rope noo roxaraie eam eprint ono ey cut Pree amen Erne Mss: yey hago Protas aoa sara. s270 5 rm0 5 Fernand cry at Pon wo Nestle i ‘ott eprint ena ect ome “al eet ar And someae $i

Notes to ches of gers of esr bar:

‘The acompaying sel of expends of ede awards he Sea) nudes te eral anata Coty of use, Vi unde rege fhe eer eer oe erent 30,207. The tformation otha Scewe rset acrrcance wih the egies Tle 2S Coe of Federal Regt Part 200, erm saminsratne [Ergoromens, Cart Pre, nd hast Requements fe Fara ars (nor Gus), Bena he eb preset aly snared orton of the aprons Cay fsa ‘rans, tient tend tan oe ot peat ternal prion, change net pono, ath awe of Cuno Rae, ra.

Note 2 Sunmary f Siar counting Paice

(1) pend epatdon he Sheds are eee onthe acilasofaecoig, Such eget se eagnae follwing the cx pres ote nUnform Glee, where ean per of espns ra alone or aimed 00 reburener

ese expend, ener dpa cntrbwn re rprted a he Cys sana ater flows:

‘epee eral eft i rn tee

‘oneal nd 5 289.08

112+

Section I - Summary of Auditors’ Results

Financial Statements

Type of auditors’ report issued: Unmodified

Internal control over financial reporting: Material weakness(es) identified? Yes

Significant deficiency(ies) identified? None reported

Noncompliance material to financial statements noted? Yes

Federal Awards

Internal control over financial reporting: Material weakness(es) identified? No

Significant deficiency(ies) identified? None reported

Type of auditors’ report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with 2 CFR section 200.516(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

93.778 Medical Assistance Program 84.027/84.173 Special Education Cluster

84.287 Twenty-First Century Community Learning Centers

Dollar threshold used to distinguish between Type A and Type B programs: $750,000

Auditee qualified as low-risk auditee? No

County of Russell, Virginia

Schedule of Findings and Questioned Costs For The Year Ended June 30, 2017

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County of Russell, Virginia

Schedule of Findings and Questioned Costs For The Year Ended June 30, 2017

Section | - Summary of Auditors’ Results Financial Statements ‘Type of auditors’ report issued:

Internal control over financial reporting: Material weakness(es) identified?

Significant deficiency(ies) identified? Noncompliance material to financial statements noted? Federal Awards

Internal control over financial reporting: Material weakness(es) identified?

Significant deficiency(ies) identified?

‘Type of auditors’ report issued on compliance for major programs:

Any audit findings disclosed that are required to be reported in accordance with 2 CFR section 200.516(a)?

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 93.778 Medical Assistance Program 84,027/84.173 Special Education Cluster 84,287 ‘Twenty-First Century Community Learning Centers

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

“113+

Unmodified

Yes

None reported

Yes

None reported

Unmodified

$750,000

Section III - Federal Award Findings and Questioned Costs

None

Section IV - Status of Prior Audit Findings and Questioned Costs

Schedule of Findings and Questioned Costs (Continued)

County of Russell, Virginia

There were no Federal Findings in the prior year.

For The Year Ended June 30, 2017

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County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) For The Year Ended June 30, 2017

Section Ill - Federal Award Findings and Questioned Costs

None

Section IV - Status of Prior Audit Findings and Questioned Costs

There were no Federal Findings in the prior year.

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