2018-Audit

2018-Audit

Document Date: January 1, 2018 Document: 2018-Audit.pdf

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COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2018

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2018

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018

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 … 16-126

Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual General Fund … 11 127 Special Revenue Fund – Coal Road Fund … 12 128 Special Revenue Fund – Workforce Investment Board Fund … 13 129 Schedule of Employer’s Proportionate Share of Net Pension Liability … 14 130 Schedule of Changes in Net Pension Liability and Related Ratios – Component Unit School Board (nonprofessional) … 15 131 Schedule of Employer Contributions – Pension Plans … 16 132 Notes to Required Supplementary Information – Pension Plans … 17 133 Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios –
Primary Government … 18 134 Notes to Required Supplementary Information – County OPEB … 19 135

COouNrTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2018

TABLE OF CONTENTS

INTRODUCTORY SECTION Page List of Elected and Appointed Officials. 1 FINANCIAL SECTION 2-4

Independent Auditors’ Report …

Exhibit Page Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position . 1 56 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 2B Statement of Cash Flows - Proprietary Funds. 9 14 Statement of Fiduciary Net Position - Fiduciary Funds 1015

Notes to the Financial Statements … 16-126 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund . 1127 Special Revenue Fund - Coal Road Fund 12 128 Special Revenue Fund - Workforce Investment Board Fund. 13 129 Schedule of Employer’s Proportionate Share of Net Pension Liability. 14 130 Schedule of Changes in Net Pension Liability and Related Ratios - Component Unit School Board (nonprofessional) . 15131 Schedule of Employer Contributions - Pension Plans . 16 132 Notes to Required Supplementary Information - Pension Plans 17 133 Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios - Primary Government … 18 134 Notes to Required Supplementary Information - County OPEB 19135

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Exhibit Page Required Supplementary Information:

Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios –
Component Unit School Board … 20 136 Notes to Required Supplementary Information - School OPEB … 21 137 Schedule of Employer’s Share of Net OPEB Liability – Group Life Insurance … 22 138 Schedule of Employer Contributions – Group Life Insurance … 23 139 Notes to Required Supplementary Information – Group Life Insurance … 24 140-141 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios –
Primary Government – Health Insurance Credit … 25 142 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios –
Component Unit School Board (nonprofessional) – Health Insurance Credit … 26 143 Schedule of Employer Contributions – Health Insurance Credit … 27 144 Notes to Required Supplementary Information – Health Insurance Credit … 28 145 Schedule of School Board’s Share of Net OPEB Liability – Teacher Health Insurance Credit … 29 146 Schedule of Employer Contributions – Teacher Health Insurance Credit … 30 147 Notes to Required Supplementary Information – Teacher Health Insurance Credit … 31 148 Schedule of Employer’s Share of Net LODA OPEB Liability … 32 149 Schedule of Employer Contribution - LODA … 33 150 Notes to Required Supplementary Information - LODA… 34 151

Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities – Agency Funds … 35 152 Discretely Presented Component Unit – School Board:

Balance Sheet – Governmental Funds … 36 153 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds … 37 154 Schedule of Revenues, Expenditures, and Changes in Fund Balances –

Budget and Actual … 38 155

Schedule Page Supporting Schedules:

Schedule of Revenues – Budget and Actual - Governmental Funds … 1 156-161

Schedule of Expenditures – Budget and Actual - Governmental Funds … 2 162-165

COouNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2018

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Exhibit Page Required Supplementary Information: Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios -

Component Unit School Board … 20 136 Notes to Required Supplementary Information - School OPEB . 2 137 Schedule of Employer’s Share of Net OPEB Liability - Group Life Insurance 22 138 Schedule of Employer Contributions - Group Life Insurance . 23 139 Notes to Required Supplementary Information - Group Life Insurance. 24140-141 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios -

Primary Government - Health Insurance Credit . 25 142 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios -

Component Unit School Board (nonprofessional) - Health Insurance Credit 26 143 Schedule of Employer Contributions - Health Insurance Credit 7 144 Notes to Required Supplementary Information - Health Insurance Credit 28 145 Schedule of School Board’s Share of Net OPEB Liability - Teacher Health

Insurance Credit … 29 146 Schedule of Employer Contributions - Teacher Health Insurance Credit 30. 147 Notes to Required Supplementary Information - Teacher Health Insurance Credit 31 148 Schedule of Employer’s Share of Net LODA OPEB Liability 32149 Schedule of Employer Contribution - LODA 33150 Notes to Required Supplementary Information - LODA… 34.151 Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities - Agency Funds … 35152 Discretely Presented Component Unit - School Board: Balance Sheet - Governmental Funds. 36153 Statement of Revenues, Expenditures, and Changes in Fund Balances ~ Governmental Funds … 37154 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual . 38155 Schedule Page Supporting Schedules: Schedule of Revenues - Budget and Actual - Governmental Funds … 1156-161 Schedule of Expenditures - Budget and Actual - Governmental Funds 2162-165

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Other Statistical Information:

Table Page Government-wide Information: Government-Wide Expenses by Function … 1 166 Government-Wide Revenues … 2 167

Fund Information:

General Governmental Expenditures by Function … 3 168 General Governmental Revenues by Source … 4 169 Property Tax Levies and Collections … 5 170

Assessed Value of Taxable Property … 6 171 Property Tax Rates … 7 172 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita … 8 173 Ratio of Annual Debt Service Expenditures for General Bonded Debt to
Total General Governmental Expenditures … 9 174

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 … 175-176

Independent Auditors’ Report on Compliance for Each Major Program and on Internal
Control over Compliance Required by the Uniform Guidance … 177-178

Schedule of Expenditures of Federal Awards … 179-180 Schedule of Findings and Questioned Costs … 181-182

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2018

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Other Statistical Information:

Table Page Government-wide Information: Government-Wide Expenses by Function … 1 166 Government-Wide Revenues . 2 167 Fund Information: General Governmental Expenditures by Function . 3 168 General Governmental Revenues by Source 4 169 Property Tax Levies and Collections 5 170 Assessed Value of Taxable Property 6 171 Property Tax Rates … 7 im Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita… 8 173 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures. 9 174 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 … . 175-176 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance 177-178 Schedule of Expenditures of Federal Awards 179-180 Schedule of Findings and Questioned Costs 181-182

INTRODUCTORY SECTION

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

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

COUNTY SCHOOL BOARD

Donnie Ramey, Chairman Wayne Bostic, Vice Chairman Charlie Collins Cynthia Compton Jeffrey Cook
Linda Garrett 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 … Zack A. Stoots 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

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS Rebecca Dye, Chairman

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

COUNTY SCHOOL BOARD

Donnie Ramey, Chairman Wayne Bostic, Vice Chairman Charlie Collins Cynthia Compton Jeffrey Cook Linda Garrett 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 Zack A. Stoots -Randy N. Williams Patrick Thompson …Steve Dye Dr. Gregory A. Brown Patrick Brunty Lonzo Lester Matthew Crum

FINANCIAL SECTION

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 aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

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

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Industrial Development Authority (IDA) or the Russell County Public Service Authority (PSA) which represents 29%, 25%, 4%, and 4%, respectively, of the assets and revenues of the discretely presented component units. 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 IDA and PSA is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

ROBINSON, FARMER, COX ASSOCIATES

A PROPESSIONAL 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

‘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

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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of June 30, 2018, 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.

Change in Accounting Principle

As described in Note 25 to the financial statements, in 2018, the County adopted new accounting guidance, GASB Statement Nos. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions and 85 Omnibus 2017. Our opinion is not modified with respect to this matter.

Restatement of Beginning Balances

As described in Note 25 to the financial statements, in 2018, the County restated beginning balances to reflect the requirements of GASB Statement No. 75. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the budgetary comparison information and schedules related to pension and OPEB funding on pages 127-129 and 130-151 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 and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

-3-

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

Opinions

Change in Accounting Principle

‘As described in Note 25 to the financial statements, in 2018, the County adopted new accounting guidance, GASB Statement Nos. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions and 85 Omnibus 2017. Our opinion is not modified with respect to this matter.

Restatement of Beginning Balances

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 127-129 and 130-151 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 and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

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

Supplementary and 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 introductory section, 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.

The other supplementary information and the schedule of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, 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 introductory section and statistical information have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 19, 2019, 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of County of Russell, Virginia’s 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 March 19, 2019

Supplementary and Other Information

Other Reporting Required by Government Auditing Standards

Blacksburg, Virginia March 19, 2019

Basic Financial Statements

Exhibit 1 Page 1 of 2

Governmental Business-type Activities Activities Total

ASSETS Cash and cash equivalents 6,101,553$ -$ 6,101,553$
Receivables (net of allowance for uncollectibles):

Taxes receivable 9,028,386 - 9,028,386
Accounts receivable 712,752 9,449 722,201
Grants receivable - - -

Due from component unit 1,308,691 - 1,308,691
Due from other governmental units 1,711,439 - 1,711,439
Inventories - - -
Prepaid items - - -
Restricted assets:

Cash and cash equivalents 702,085 49,575 751,660
Investments 2 - 2

Noncurrent assets: Net pension asset - - -

Capital assets (net of accumulated depreciation): Land 643,695 - 643,695
Land rights - - -
Buildings and improvements 17,373,871 - 17,373,871
Machinery and equipment 2,021,246 - 2,021,246
Utility plant in service - 2,599,524 2,599,524
Construction in progress - - -
Accumulated depreciation - - -

Total assets 39,603,720$ 2,658,548$ 42,262,268$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 911,501$ 3,287$ 914,788$
OPEB related items 113,151 - 113,151

Total deferred outflows of resources 1,024,652$ 3,287$ 1,027,939$

LIABILITIES Accounts payable 1,853,808$ 26,517$ 1,880,325$
Construction payables - - -
Accrued liabilities 1,805 - 1,805
Customer deposits - - -
Accrued interest payable 195,735 1,487 197,222
Reconciled overdraft - - -
Due to other funds - - -
Line of credit - - -
Due to primary government - - -
Long-term liabilities:

Due within one year 1,898,889 22,907 1,921,796
Due in more than one year 22,004,446 619,896 22,624,342

Total liabilities 25,954,683$ 670,807$ 26,625,490$

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes 5,479,451$ -$ 5,479,451$
Pension related items 1,132,368 8,514 1,140,882
OPEB related items 203,929 - 203,929

Total deferred inflows of resources 6,815,748$ 8,514$ 6,824,262$

NET POSITION Net investment in capital assets 7,929,664$ 1,996,539$ 9,926,203$
Restricted:

Coal Road 253,863 - 253,863
Construction - - -
Asset forfeiture funds 520,823 - 520,823
Debt service and bond covenants - 49,575 49,575
Environmental waste - - -

Unrestricted (deficit) (846,409) (63,600) (910,009)
Total net position (deficit) 7,857,941$ 1,982,514$ 9,840,455$

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, 2018

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age of 2 county of Ruse, Virginia Statement of Net Porton “Governmental Busines ype

assers Cash and cash eguatents S en01555 § 5 5.01553 Recenates (ret of llwance fr unesleces

“awe resale 008,306 908,16 ye fom component ant 1,308,681 1,300,681 Due am ater governement units trina9 tno Preps tons

Investments nT - 2 aa sets ret of accumulated depreciation

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ssn and srorxements vanen acrinery and equent 2antade ‘ate tae n service 2am D954 Censracton n proses

pecurate depreciation

Total ase = 7 aa Penson related tems Ss snisor $3287 $a (Fe rite tame

Total defection of esurces z usoures ecu peble S sassa08 $2517 $180.05 Construction payables eerie ites 1.05 ecrued terest payable 195,735 1a ra Record rere ne oes Duet pemary gorerment Lang er bes

‘ue in more than one year Y 619.696 22,624,342

Total abate SE s5s8s S670.) 5 26.65.00 ‘DEFERRED INFLOWS OF RESOURCES Detered reverse property ates S samast 5 sarsast ‘FEB reiatod toms 703.908 203,909

Total deferens of sources Sense asa 5 cee NET Postmon Netinvesinen in capital sets S T9r0H64 $ 1,995539 § 9.926.203 esr

oa fone 253.063 3.063 se forte ands so. soa Deb ance an bon covenants os 8575 wrested ae (216409) 163.4600) __ 10000)

Toa et positon (et). S757 Sei S195 59.80.05

‘The accompanying sto the nai Mates re an neg pt of th sateen

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 837,970$ 293,618$ 77,659$ -$
Receivables (net of allowance for uncollectibles):

Taxes receivable - - - -
Accounts receivable 12,344 57,697 334,756 184,077
Grants receivable - - 31,958 189,847

Due from component unit - - - -
Due from other governmental units 1,578,145 - - 34,056
Inventories - - 24,787 -
Prepaid items 356,575 - - 23,252
Restricted assets:

Cash and cash equivalents - - 308,212 166,536
Investments - - - -

Noncurrent assets: Net pension asset - - 49,783 -

Capital assets (net of accumulated depreciation): Land 5,636,345 3,063,017 110,332 130,080
Land rights - - - 12,292
Buildings and improvements 9,534,325 13,576,290 107,097 234,447
Machinery and equipment 1,825,650 - - 885,963
Utility plant in service - - 22,725,070 11,455,103
Construction in progress - 3,846,351 1,700,734 343,315
Accumulated depreciation - - (7,571,954) -

Total assets 19,781,354$ 20,836,973$ 17,898,434$ 13,658,968$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 4,193,849$ -$ 66,791$ 34,600$
OPEB related items 366,511 - - 4,334

Total deferred outflows of resources 4,560,360$ -$ 66,791$ 38,934$

LIABILITIES Accounts payable 145,068$ 13,947$ 166,278$ 136,080$
Construction payables - - - 231,557
Accrued liabilities 1,033,075 - 66,876 24,515
Customer deposits - - 18,898 84,035
Accrued interest payable - 62,106 6,782 7,746
Reconciled overdraft - - - 50,462
Due to other funds - - - -
Line of credit - - - 319,557
Due to primary government 1,108,691 200,000 - -
Long-term liabilities:

Due within one year 544,062 721,417 359,371 215,386
Due in more than one year 46,858,132 12,227,156 6,553,509 5,513,541

Total liabilities 49,689,028$ 13,224,626$ 7,171,714$ 6,582,879$

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes -$ -$ -$ -$
Pension related items 4,304,850 - 84,170 23,471
OPEB related items 545,606 - - 3,000

Total deferred inflows of resources 4,850,456$ -$ 84,170$ 26,471$

NET POSITION Net investment in capital assets 16,996,320$ 7,537,085$ 10,158,399$ 7,190,461$
Restricted:

Coal Road - - - -
Construction - - 687 -
Asset forfeiture funds - - - -
Debt service and bond covenants - - 91,312 82,501
Environmental waste - - 212,170 -

Unrestricted (deficit) (47,194,090) 75,262 246,773 (184,410)
Total net position (deficit) (30,197,770)$ 7,612,347$ 10,709,341$ 7,088,552$

County of Russell, Virginia Statement of Net Position

June 30, 2018

Component Units

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age 2012 county of Ruse, Virginia Statement of Net Porton Tndusiat Ruse Couiy Castewood Develpment Public Service Water and Sonage School board authorty Authority authority assevs ‘ash and ash equtalens Sars $ meus mus9 § Recenabes net of allowance fr uncolectbe) “aver recnble ‘rants receivable ” . 31958 Due fom eanperent unit Due fom ter goverment its 178.45 4056 Prepaid tome 386.575 - pas ‘ash and cash equates 3os.212 15,536 Investment Net persion asset rs opt sets (et of scamulted dereiton Le aes 2a Bangs an impeoveents 1.576.290 vo71037 Dear uty planta serie mmsom——11455,103 Constrctin in proarest 343,35

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Uuasiumies econ pale decries abies ‘aster pets ‘cere teres payable Recocied overeat Ln of cree Duct primary avert eng ter aes:

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exnbie2 county of Russell, Virgina Statement of Atv Forth Yeu Ended June 30, 2018

Propram Revenues

Net (Expene) Revenue and (Changes in Net Poston

operating Charges for Gants and

FunstonsProsrams famenses Series

PRIMARY GOVERNMENT: Goverment activities: ‘Genral goverment admiration Pubic safety Pubic wore cation Paks, recreation, and cultural Conant development Interest on on term debt

140,704 26,566

a7 soon

‘Contribations

Primary overnment

Tonponert Unite

copia industrial — Russell County Castlewood

Water and Sewage ‘Authority

Covernmental Bsines-type stvties Asti

Development Public Service ‘Authority

‘shorty

Ss oreasy §

“otal governmental aces wae

business type acter:

Dante Sever puege1 stam

“Tota prinary goverment ie at_5 5810

SaaS

‘COMPONENT UNITS: Seno Bord

Inds Development autorty uel County Public Service Authority Casewod Water and Sewage Athocty “Total component units

65,945 § 33,003,29

686.03 5589 PEK

TBs FORE)

General revenues: General property tases

Other lca taxes, Unrestricted evens from ute of meney and papery celaneout

Payents rom he County of Rss, Vigna

“rants an contbutions nat retrcted Yo sectc poss

‘renters “otal genera evens end trate

beslonng, ae restated ening

The accompanying notes othe ancl statements ore an nega par of

707.2%) §

13700

Tamas

5,000

TREES

wawsar § 5 irai6217

6910 2a 063 near

san

73568 6882979

ieee 5 9800.55 7008-552

Exhibit 3

Coal Workforce General Road Investment Board Total

ASSETS Cash and cash equivalents 4,336,366$ -$ 45,799$ 4,382,165$

Receivables (net of allowance for uncollectibles):

Taxes receivable 9,028,386 - - 9,028,386

Accounts receivable 101,529 22,838 - 124,367

Due from other funds 534,614 65,105 - 599,719

Due from component unit 1,308,691 - - 1,308,691

Due from other governmental units 1,429,321 - 282,118 1,711,439

Restricted assets:

Temporarily restricted:

Cash and cash equivalents 520,823 181,262 - 702,085

Investments 2 - - 2
Total assets 17,259,732$ 269,205$ 327,917$ 17,856,854$

LIABILITIES Accounts payable 518,302$ 15,342$ 221,895$ 755,539$

Accrued liabilities 1,805 - - 1,805

Due to other funds 65,105 - 111,220 176,325

Total liabilities 585,212$ 15,342$ 333,115$ 933,669$

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 8,971,375$ -$ -$ 8,971,375$

FUND BALANCES Restricted:

Coal Road -$ 253,863$ -$ 253,863$

Asset forfeiture funds 520,823 - - 520,823

Energy Lease Project 2 - - 2

Assigned:

Sheriff Funds 41,665 - - 41,665

Library Donations 37,124 - - 37,124

Knox Creek Coal Insurance 415 - - 415

Law Library 46,967 - - 46,967

Housing 12,124 - - 12,124

Health and Fitness 8,247 - - 8,247

Unassigned 7,035,778 - (5,198) 7,030,580

Total fund balances 7,703,145$ 253,863$ (5,198)$ 7,951,810$
Total liabilities, deferred inflows of resources, and fund balances 17,259,732$ 269,205$ 327,917$ 17,856,854$

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

County of Russell, Virginia Balance Sheet

Governmental Funds June 30, 2018

County of Russell, Virginia Balance Sheet Governmental Funds June 30, 2018

Exhibit 3

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

LIABILITIES Accounts payable ‘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:

Sheriff Funds

Library Donations

Knox Creek Coal Insurance

Law Library

Housing

Health and Fitness Unassigned

Total fund balances

Coal Workforce General Road Investment Board —‘Total

S 4,336,366 § 5 45,799 $4,382,165

9,028,386 9,028,386

101,529 22,838 124,367

534,614 65,105 599,719

41,308,691 1,308,691

41,429,321 rere 1,711,439

520,823 181,262 702,085

2 : : 2

317,259,732 $ 269,205 $ 37 917$ 17,886,854

S 518,302 § 15,3482 § 221,895 755,539

1,805 : : 1,805

65,105 111,220 176,325

Sse. S153 S 333,115 93,669,

S$ 3971,375_§ $ 8,971,375

s $253,863 § 253,863,

520,823 520,823,

2 2

41,665 41,665

37,124 37,124

415 415

46,967 46,967

12,124 12,124

8247 . 8.247

7,035,778 (5,198) 7,030,580

37,703,145 $753,863 _§ (5,198) $7,951,810

327.917 $17,856,854

Total liabilities, deferred inflows of resources, and fund balances S_17,259,732_§ 269,205 $

‘The accompanying notes to the financial statements are an integral part ofthis 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 7,951,810$

Land 643,695$
Buildings and improvements 17,373,871
Machinery and equipment 2,021,246 20,038,812

Unavailable revenue - property taxes 3,491,924

Deferred outflows of resources are not available to pay for current-period expenditures and, therefore, are not reported in the funds.

Pension related items 911,501$
OPEB related items 113,151 1,024,652

786,110

Bonds and literary loans (10,079,729)$
Capital leases (5,671,743)
Unamortized premium (182,491)
Accrued interest payable (195,735)
Landfill accrued closure and postclosure liability (286,910)
Net OPEB liabilities (2,166,808)
Compensated absences (579,384)
Net pension liability (4,936,270) (24,099,070)

Deferred inflows of resources are not due and payable in the current period and, therefore, are not reported in the funds.

Pension related items (1,132,368)$
OPEB related items (203,929) (1,336,297)

Net position of governmental activities 7,857,941$

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, 2018

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.

Exhibit 4 County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2018

Amounts reported for governmental activities in the statement of net position are different because: Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds $7,951,810

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

Land 5 643,695, Buildings and improvements 17,373,871 Machinery and equipment

20,038,812

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Unavailable revenue - property taxes 3,491,924

Deferred outflows of resources are not available to pay for current-period expenditures and, therefore, are not reported in the funds.

Pension related items $ 911,501

OPEB related items 113,151 1,024,652

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 $ (10,079,729) Capital leases (5,671,743) Unamortized premium (182,491) Accrued interest payable (195,735) Landfill accrued closure and postclosure liability (286,910) Net OPEB liabilities (2,166,808) Compensated absences (679,384)

Net pension liabitity

36,270) (24,099,070)

Deferred inflows of resources are not due and payable in the current period and, therefore, are not reported in the funds.

Pension related items S (1,132,368)

OPEB related items (203,929) (1,336,297)

Net position of governmental activities

‘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 16,390,872$ -$ -$ 16,390,872$

Other local taxes 3,025,550 364,639 - 3,390,189

Permits, privilege fees, and regulatory licenses 68,668 - - 68,668

Fines and forfeitures 16,708 - - 16,708

Revenue from the use of money and property 252,400 332 - 252,732

Charges for services 344,100 - - 344,100

Miscellaneous 233,890 - - 233,890

Recovered costs 601,532 - 117,140 718,672

Intergovernmental:

Commonwealth 8,494,082 - - 8,494,082

Federal 2,805,219 - 2,432,792 5,238,011

Total revenues 32,233,021$ 364,971$ 2,549,932$ 35,147,924$

EXPENDITURES Current:

General government administration 2,177,595$ -$ -$ 2,177,595$

Judicial administration 2,397,387 - - 2,397,387

Public safety 6,554,101 - - 6,554,101

Public works 3,137,540 193,840 - 3,331,380

Health and welfare 7,113,432 - 2,488,011 9,601,443

Education 7,878,848 - - 7,878,848

Parks, recreation, and cultural 566,272 - - 566,272

Community development 1,083,779 - - 1,083,779

Nondepartmental 158,828 - - 158,828

Capital projects 3,322,326 - - 3,322,326

Debt service:

Principal retirement 1,422,008 - - 1,422,008

Interest and other fiscal charges 471,413 - - 471,413

Total expenditures 36,283,529$ 193,840$ 2,488,011$ 38,965,380$

Excess (deficiency) of revenues over

(under) expenditures (4,050,508)$ 171,131$ 61,921$ (3,817,456)$

OTHER FINANCING SOURCES (USES) Transfers out (403,382)$ -$ -$ (403,382)$

Issuance of capital leases 321,811 - - 321,811

Total other financing sources (uses) (81,571)$ -$ -$ (81,571)$

Net change in fund balances (4,132,079)$ 171,131$ 61,921$ (3,899,027)$

Fund balances - beginning 11,835,224 82,732 (67,119) 11,850,837
Fund balances - ending 7,703,145$ 253,863$ (5,198)$ 7,951,810$

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, 2018

10 -

County of Russell, Virginia

Statement of Revenues, Expenditures, and Changes in Fund Balances

Governmental Funds

For the Year Ended June 30, 2018

Exhibit 5

Coal Workforce General Road Investment Board Total REVENUES General property taxes $ 16,390,872 $ -$ = $16,390,872 Other local taxes 3,025,550 364,639 = 3,390,189 Permits, privilege fees, and regulatory licenses 68,668 : : 68,668 Fines and forfeitures 16,708 : - 16,708 Revenue from the use of money and property 252,400 332 : 252,732 Charges for services 344,100 : : 344,100 Miscellaneous 233,890 - : 233,890 Recovered costs 601,532 : 417,140 718,672 Intergovernmental: Commonwealth 8,494,082 - - 8,494,082 Federal 2,805,219 : 2,432,792___ 5,238,011 Total revenues $32,233,001 S$ 364,971_~S 2,549,932 _$ 35,147,924 EXPENDITURES Current: General government administration $2,177,595 $ -$ = $2,177,595 Judicial administration 2,397,387 : + 2,397,387 Public safety 6,554,101 : + 6,554,101 Public works 3,137,540 193,840 = 3,331,380 Health and welfare 7,113,432 : 2,488,011 9,601,443 Education 7,878,848 : + 7,878,848 Parks, recreation, and cultural 566,272 - - 566,272 Community development 1,083,779 : = 1,083,779 Nondepartmentat 158,828 158,828 Capital projects 3,322,326 - = 3,322,326 Debt service: Principal retirement 1,422,008 : + 1,422,008 Interest and other fiscal charges 471,413 : : 471,413 Total expenditures $36,283,529 $193,840 _§ 7,488,011 $ 38,965,380 Excess (deficiency) of revenues over (under) expenditures $ (4,050,508) $ 171,131$ 61,921$ (3,817,456) ‘OTHER FINANCING SOURCES (USES) Transfers out S$ (403,382) $ “38 = $ (403,382) Issuance of capital leases 321,811 : : 321,811 Total other financing sources (uses) S e157 $ ~s — S157) Net change in fund balances $ (4,132,079) $171,131 $ 61,921 $ (3,899,027) Fund balances - beginning 11,835,224 82,732 (67,119) __ 11,850,837 Fund balances - ending 37,703,145 _$ 253,863 § (5,198) $7,951,810

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

10+

Exhibit 6

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

Net change in fund balances - total governmental funds (3,899,027)$

Capital outlay 4,319,237$
Reversion of assets back to the School Board (net) (175,436)
Depreciation expense (1,044,118) 3,099,683

The net effect of various miscellaneous transactions involving capital assets (I.e., sales, trade-ins, and donations) is to increase (decrease) net assets. (127,374)

Property taxes 1,055,345

Issuance of long-term obligations: Capital leases (321,811)$

Principal Payments: Bonds, literary loans, and notes 1,183,462
Capital leases 238,546

Decrease (increase) in estimated liability: Landfill closure and postclosure liability (5,073) 1,095,124

(Increase) decrease in compensated absences (24,963)$
(Increase) decrease in accrued interest payable (45,194)
OPEB expense (46,501)
Amortization of bond premiums 16,804
Pension expense 657,492 557,638

(236,599)

Change in net position of governmental activities 1,544,790$

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, 2018

County of Russell, Virginia Reconciliation of the 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 the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended June 30, 2018

‘Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds 5 (3,899,027)

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 whch capital outlays exceeded depreciation in the current period.

Capital outlay $4,319,237 Reversion of assets back to the School Board (net) (175,436) Depreciation expense (1,044,118) 3,099,683

‘The net effect of various miscellaneous transactions involving capital assets (Le., sales, trade-ins, and donations) is to increase (decrease) net assets. (127,374)

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

Property taxes 1,055,345,

‘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 Ss g21,811) Principal Payments: Bonds, literary loans, and notes 4,183,462 Capital leases 238,546 Decrease (increase) in estimated liability: Landfil closure and postclosure liability (5,073) 1,095,124

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 S (24,963) (Increase) decrease in accrued interest payable (45,194), OPEB expense (46,501), ‘Amortization of bond premiums 16,804 Pension expense 657,492 557,638

Change in net position of governmental activities 1 544,790

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

“Me

Exhibit 7

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

ASSETS Current assets:

Cash and cash equivalents -$ 1,719,388$
Interest receivable 48 -
Accounts receivable, net of allowance for uncollectibles 9,401 588,385

Total current assets 9,449$ 2,307,773$

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 (2,641,175) -
Total capital assets 2,599,524$ -$
Total noncurrent assets 2,649,099$ -$
Total assets 2,658,548$ 2,307,773$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 3,287$ -$

LIABILITIES Current liabilities:

Accounts payable 26,517$ 1,098,269$
Accrued interest payable 1,487 -
Due to other funds - 423,394 Revenue bonds - current portion 22,907 -

Total current liabilities 50,911$ 1,521,663$

Noncurrent liabilities: Revenue bonds - net of current portion 580,078$ -$
Net pension liability 39,818 -

Total noncurrent liabilities 619,896$ -$
Total liabilities 670,807$ 1,521,663$

DEFERRED INFLOWS OF RESOURCES Pension related items 8,514$ -$

NET POSITION Net investment in capital assets 1,996,539$ -$
Restricted for debt service and bond covenants 49,575 -
Unrestricted (63,600) 786,110

Total net position 1,982,514$ 786,110$

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, 2018

12 -

County of Russell, Virginia Statement of Net Position Proprietary Funds June 30, 2018

Exhibit 7

Enterprise Fund Dante Fund ASSETS Current assets: Cash and cash equivalents s -$

Interest receivable ‘Accounts receivable, net of allowance for uncollectibles

Total current assets 3 Noncurrent assets: Restricted assets: Cash and cash equivalents (in custody of others) 49,575 $ Capital assets: Utility plant in service S 5,240,699 § Less accumulated depreciation (2,641,175) Total capital assets 52,599,524 $ Total noncurrent assets s $ Total assets $ s DEFERRED OUTFLOWS OF RESOURCES Pension related items 3,287_$ LIABILITIES Current liabilities: ‘Accounts payable s 26,517 $ Accrued interest payable 1,487 Due to other funds. : Revenue bonds - current portion 22,907 Total current liabilities 50,911 Noncurrent liabilities: Revenue bonds - net of current portion s $ Net pension liability Total noncurrent liabilities s 3 Total liabilities s $ DEFERRED INFLOWS OF RESOURCES. Pension related items $ 8514 _§ NET POSITION Net investment in capital assets $1,996,539 Restricted for debt service and bond covenants 49,575 Unrestricted (63,600) Total net position 3

Internal Service Fund Self Health Insurance

1,719,388

588,385,

1,098,269

423,394

1,521,663

786,110 786,110

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 117,134$ -$
Insurance premiums - 7,026,688

Total operating revenues 117,134$ 7,026,688$

OPERATING EXPENSES Salaries and benefits 67,364$ -$
Professional services 18,033 -
Utilities 2,055 -
Materials and supplies 77,218 -
Office expenses 34,206 -
Insurance claims and expenses - 7,507,169 Depreciation 131,017 -

Total operating expenses 329,893$ 7,507,169$

Operating income (loss) (212,759)$ (480,481)$

NONOPERATING REVENUES (EXPENSES) Investment income -$ 1,806$
Contribution to Castlewood PSA (31,469) -
Interest expense (27,619) -

Total nonoperating revenues (expenses) (59,088)$ 1,806$
Income (loss) before transfers (271,847)$ (478,675)$

Transfers in 161,306$ 242,076$
Change in net position (110,541)$ (236,599)$

Total net position - beginning 2,093,055 1,022,709 Total net position - ending 1,982,514$ 786,110$

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, 2018

13 -

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

Proprietary Funds

For the Year Ended June 30, 2018

Exhibit 8

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

OPERATING EXPENSES. Salaries and benefits Professional services Utilities Materials and supplies Office expenses Insurance claims and expenses Depreciation

Total operating expenses

Operating income (loss)

NONOPERATING REVENUES (EXPENSES) Investment income Contribution to Castlewood PSA Interest expense Total nonoperating revenues (expenses) Income (loss) before transfers

Transfers in Change in net position

Total net position - beginning Total net position - ending

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance $ 117,134 § - : 7,026,688 $ 117,134 § 7,026,688 $ 67,364 $ : 18,033 : 2,055 : 77,218 - 34,206 : : 7,507,169 131,017 : $ 329,893 $ 7,507,169 $ (212,759) $ (480,481) $ -$ 1,806 (31,469) - (27,619) : $ (59,088) $ 1,806 $ (271,847) $ (478,675) $ 161,306 $ 242,076 $ (110,541) $ (236,599) 2,093,055 1,022,709 5 1,982,514 _$ 786,110

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

Exhibit 9

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users 114,981$ -$

Receipts for insurance premiums - 6,931,654

Payments to suppliers (128,552) -

Payments to employees (64,817) -

Payments for premiums - (7,338,101)

Net cash provided by (used for) operating activities (78,388)$ (406,447)$

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 161,306$ 665,470$

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds (23,775)$ -$

Contribution to Castlewood PSA (31,469) -

Interest payments (27,674) -

Net cash provided by (used for) capital and related

financing activities (82,918)$ -$

CASH FLOWS FROM INVESTING ACTIVITIES Interest income -$ 3,580$

Net increase (decrease) in cash and cash equivalents -$ 262,603$

Cash and cash equivalents - beginning 49,575 1,456,785
Cash and cash equivalents - ending 49,575$ 1,719,388$

Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) (212,759)$ (480,481)$

Adjustments to reconcile operating income (loss) to net cash

provided by (used for) operating activities:

Depreciation 131,017$ -$

(Increase) decrease in accounts receivable (2,153) (95,034)

(Increase) decrease in deferred outflows of resources 16,527 -

Increase (decrease) in accounts payable 2,960 169,068

Increase (decrease) in deferred inflows of resources 5,690 -

Increase (decrease) in net pension liability (19,670) -

Total adjustments 134,371$ 74,034$
Net cash provided by (used for) operating activities (78,388)$ (406,447)$

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, 2018

14 -

Exhibit 9 County of Russell, Virginia Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2018

Enterprise internal Fund Service Fund Dante Self Fund Health Insurance CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 114,981 $ : Receipts for insurance premiums : 6,931,654 Payments to suppliers (128,552) - Payments to employees (64,817) - Payments for premiums (7,338,101) Net cash provided by (used for) operating activities 3 (78,388) § (406,447) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 161,306 $ 665,470 ‘CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds $ (23,775) § Contribution to Castlewood PSA (31,469) - Interest payments (27,674) Net cash provided by (used for) capital and related financing activities (82,918) § ‘CASH FLOWS FROM INVESTING ACTIVITIES Interest income $ $ Net increase (decrease) in cash and cash equivalents s -$ 262,603 Cash and cash equivalents - beginning 49,575 1,456,785 Cash and cash equivalents - ending 3 9,575_$ 1,719,388

Reconciliation of operating income (oss) to net cash provided by (used for) operating activities: Operating income (loss) $ (212,759) $ (480,481) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities:

Depreciation $ 131,017 § : (Increase) decrease in accounts receivable (2,153) (95,034) (Increase) decrease in deferred outflows of resources 16,527 Increase (decrease) in accounts payable 2,960 169,068 Increase (decrease) in deferred inflows of resources 5,690 : Increase (decrease) in net pension liability (19,670) - Total adjustments 3 3 74,034

Net cash provided by (used for) operating activities $ (78,388) $ (206,447)

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

“14+

Exhibit 10

Agency Funds

ASSETS Cash and cash equivalents 72,638$

Total assets 72,638$

LIABILITIES Amounts held for Social Services clients 61,336$
Amounts held for VASAP 11,302

Total liabilities 72,638$

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, 2018

15 -

Exhibit 10 County of Russell, Virginia Statement of Fiduciary Net Position Fiduciary Funds June 30, 2018

Agency Funds ASSETS Cash and cash equivalents $ 72,638 Total assets $ 72,638 LIABILITIES Amounts held for Social Services clients $ 61,336 Amounts held for VASAP 11,302 Total liabilities $ 72,638

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

15+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2018

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.

16 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS June 30, 2018

Note 1-Summary of Significant Accounting Policies:

‘A. Financial Reporting Entity

Blended component units - None

16 =

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 $2,726,262 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.

17 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

“17+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 uncollectible 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.

18 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

Government-wide and Fund Financial Statements (Continued)

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

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.

18 =

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, Dog Tag, Damage Stamp, Law Library, Knox Creek, Cannery, Health and Fitness, Housing, CSA, Litter, Valley Heights Subdivision, and Road Improvements 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.

19 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

19+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

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.

20 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

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

Cash and Cash Equivalents

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.

-20-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 $740,835 at June 30, 2018 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.
Interest incurred during the construction phase of capital assets and business-type activities is included as part of the capitalized value of the assets constructed. No interest was capitalized during fiscal year 2018.

21 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

Property Taxes

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

Allowance for Uncollectible Accounts

Use of Estimates

Capital Assets

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

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets and business-type activities is included as part of the capitalized value of the assets constructed. No interest was capitalized during fiscal year 2018.

“U1.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

(Continued)

Capital Assets (Continued)

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

Utility plant in service 40

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 one item that qualifies for reporting in this category. It is comprised of certain items related to the measurement of net pension liability and net OPEB liabilities and contributions to the pension and OPEB plans made during the current year and subsequent to the net pension liability and net OPEB liabilities measurement date. For more detailed information on these items, reference the related notes.

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

22 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

Capital Assets (Continued) 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 Utility plant in service 40

Prepaid Items

Deferred Outflows/Inflows of Resources

-2-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

(Continued)

Deferred Outflows/Inflows of Resources (Continued)

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 pension liability and net OPEB liabilities are reported as deferred inflows of resources. For more detailed information on these items, reference the related notes.

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.

Other Postemployment Benefits (OPEB)

Group Life Insurance

The Virginia Retirement System (VRS) Group Life Insurance (GLI) Program provides coverage to state employees, teachers, and employees of participating political subdivisions. The GLI Program was established pursuant to §51.1-500 et seq. of the Code of Virginia, as amended, and which provides the authority under which benefit terms are established or may be amended. The GLI Program is a defined benefit plan that provides a basic group life insurance benefit for employees of participating employers. For purposes of measuring the net GLI Program OPEB liability, deferred outflows of resources and deferred inflows of resources related to the GLI OPEB, and GLI OPEB expense, information about the fiduciary net position of the VRS GLI Program OPEB and the additions to/deductions from the VRS GLI OPEB’s net fiduciary position have been determined on the same basis as they were reported by VRS. In addition, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

23 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

Deferred Outflows/Inflows of Resources (Continued)

Compensated Absences

Pensions

Other Postemployment Benefits (OPEB)

Group Life Insurance

The Virginia Retirement System (VRS) Group Life Insurance (GLI) Program provides coverage to state employees, teachers, and employees of participating political subdivisions. The GLI Program was established pursuant to 851.1-500 et seq. of the Code of Virginia, as amended, and which provides the authority under which benefit terms are established or may be amended. The GLI Program is a defined benefit plan that provides a basic group life insurance benefit for employees of participating employers. For purposes of measuring the net GLI Program OPEB liability, deferred outflows of resources and deferred inflows of resources related to the GLI OPEB, and GLI OPEB expense, information about the fiduciary net position of the VRS GLI Program OPEB and the additions to/deductions from the VRS GL! OPEB’s net fiduciary position have been determined on the same basis as they were reported by VRS. In addition, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

“Be

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

(Continued)

Other Postemployment Benefits (OPEB) (Continued)

Line of Duty Act Program

The Virginia Retirement System (VRS) Line of Duty Act Program (LODA) was established pursuant to §9.1-400 et seq. of the Code of Virginia, as amended, and which provides the authority under which benefit terms are established or may be amended. The LODA Program provides death and health insurance benefits to eligible state employees and local government employees, including volunteers, who die or become disabled as a result of the performance of their duties as a public safety officer. In addition, health insurance benefits are provided to eligible survivors and family members. For purposes of measuring the net LODA OPEB liability, deferred outflows of resources and deferred inflows of resources related to the LODA OPEB, and related LODA OPEB expense, information about the fiduciary net position of the VRS LODA Program OPEB Plan and the additions to/deductions from the VRS LODA Program OPEB Plan’s net fiduciary position have been determined on the same basis as they were reported by VRS. In addition, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Political Subdivision and Teacher Employee Health Insurance Credit Program

The County and Virginia Retirement System (VRS) Teacher Employee Health Insurance Credit (HIC) Programs were established pursuant to §51.1-1400 et seq. of the Code of Virginia, as amended, and which provides the authority under which benefit terms are established or may be amended. The Teacher Employee HIC Program is a defined benefit plan that provides a credit toward the cost of health insurance coverage for retired teachers. For purposes of measuring the net OPEB liabilities, deferred outflows of resources and deferred inflows of resources related to the Programs’ OPEB, and the related OPEB expenses, information about the fiduciary net position of the County and VRS Teacher Employee HIC Programs; and the additions to/deductions from the County and VRS Teacher Employee HIC Programs’ net fiduciary position have been determined on the same basis as they were reported by VRS. For this purpose, benefit payments 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.

24 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

Other Postemployment Benefits (OPEB) (Continued)

Line of Duty Act Program

Political Subdivision and Teacher Employee Health Insurance Credit Program

Long-term Obligations

-24-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

(Continued)

Long-term Obligations (Continued)

In the fund financial statements, governmental fund types recognize bond premiums and discounts, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses.

Fund Equity

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

 Nonspendable fund balance – amounts that are not in spendable form (such as inventory

and prepaid expenditures) or are required to be maintained intact (corpus of a permanent
fund);

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

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

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

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

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

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.

25 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

Long-term Obligations (Continued)

14, Fund Equity

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

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

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

= 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

(Continued)

Fund Equity (Continued)

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

Net Position

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

Net Position Flow Assumption

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

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.

26 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

Note 2-Stewardship, Compliance, and Accountabilit

14,

Fund Equity (Continued)

Net Position

Net Position Flow Assumption

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

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.

26+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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.

B. Excess of expenditures over appropriations

The CSA Fund, Litter Fund, and Law Library Fund had excess expenditures over appropriations in the current year.

C. Deficit fund equity

At June 30, 2018, 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).

27 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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.

B. Excess of expenditures over appropriations

The CSA Fund, Litter Fund, and Law Library Fund had excess expenditures over appropriations in the current year.

C. Deficit fund equity

At June 30, 2018, 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).

“27+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 3-Deposits and Investments: (Continued)

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 2$ 2$

Investment Maturities (in years)

Custodial Credit Risk (Investments): The County’s rated debt investments as of June 30, 2018 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 2$

Ratings County’s Rated Debt Investments’ Values

External Investment Pool:

The value of the positions in the external investment pool (State Non-Arbitrage Pool) is the same as the value of the pool shares. As SNAP is not SEC registered, regulatory oversight of the pool rests with the Virginia State Treasury. 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.

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28 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 3-Deposits and Investments: (Continued)

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.

lavestment Maturities (in years) Investment Type _ Fair Value ‘Tear SNAP

Custodial Credit Risk (Investments:

The County’s rated debt investments as of June 30, 2018 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

SNAP

External Investment Pool: The value of the positions in the external investment pool (State Non-Arbitrage Pool) is the same as the value of the pool shares. As SNAP is not SEC registered, regulatory oversight of the pool rests with the

Virginia State Treasury. 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 $ 51,605 $ ‐

People ‐ One Stop Partner 6,185 ‐

Commonwealth of Virginia:

Local sales tax 320,074 ‐

State sales tax ‐ 508,931

Non‐categorical aid 157,223 ‐

Categorical aid‐shared expenses 199,374 ‐

Categorical aid‐Virginia Public Assistance funds 181,221 ‐

Categorical aid‐Workforce Investment funds 22,315 ‐

Categorical aid‐other 73,546 ‐

Categorical aid‐Comprehensive Services Act funds 197,913 ‐

Federal Government:

Categorical aid‐Virginia Public Assistance funds 214,954 ‐

Categorical aid‐Workforce Investment funds 253,618 ‐

Categorical aid‐other 33,411 ‐

School federal programs ‐ 1,069,214

Total Amount Due from Other Governmental Units $ 1,711,439 $ 1,578,145

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary Government/ Government/

Component Unit Component Unit

Primary Government: General Fund $ - $ 1,308,691

Component Unit: School Board $ 1,108,691 $ -
IDA 200,000 -

Total $ 1,308,691 $ 1,308,691

Fund

29 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JuNE 30, 2018

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 $ 51,605 $ - People - One Stop Partner 6,185 -

Commonwealth of Virgini Local sales tax 320,074 - State sales tax - 508,931 Non-categorical aid 157,223 - Categorical aid-shared expenses 199,374 - Categorical aid-Virginia Public Assistance funds 181,221 - Categorical aid-Workforce Investment funds 22,315 - Categorical aid-other 73,546 - Categorical aid-Comprehensive Services Act funds 197,913 -

Federal Government: Categorical aid-Virginia Public Assistance funds 214,954 - Categorical aid-Workforce Investment funds 253,618 - Categorical aid-other 33,411 - School federal programs : 1,069,214

Total Amount Due from Other Governmental Units

14!

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary Government/ Government/ Fund Component Unit _Component Unit

Primary Government:

General Fund 1,308,691

Component Unit:

School Board S 1,108,691 - IDA 200,000 Total S___ 1,308,691 §

-29-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 5-Interfund/Component-Unit Obligations: (Continued)

Interfund transfers and remaining balances for the year ended June 30, 2018, consisted of the following:

Transfers In Transfers Out

Primary Government: General Fund -$ 403,382$
Dante Fund 161,306 -
Internal Service Fund - Health Insurance 242,076 -
Total 403,382$ 403,382$

Primary Government: Due From Due To General Fund 534,614$ 65,105$
Coal Road Fund 65,105 -
Workforce Investment Board Fund - 111,220
Internal Service Fund - Health Insurance - 423,394
Total 599,719$ 599,719$

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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30 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 5-Interfund/Component-Unit Obligations: (Continued)

Interfund transfers and remaining balances for the year ended June 30, 2018, consisted of the following:

Fund Transfers In___ Transfers Out

Primary Government:

General Fund $s - S$ 403,382 Dante Fund 161,306 : Internal Service Fund - Health Insurance 242,076 :

Total T_ Ba

Primary Government: Due From Due To General Fund S 534,614 S$ 65,105 Coal Road Fund 65,105 : Workforce Investment Board Fund : 111,220 Internal Service Fund - Health Insurance : 423,394

Total TTS _~i599,719

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018:

Balance July 1, 2017, Increases/ Decreases/ Balance as restated Issuances Retirements June 30, 2018

General obligation bonds $ 6,648,210 $ - $ (697,908) $ 5,950,302
Literary loans 684,700 - (282,792) 401,908
Revenue bonds 3,930,281 - (202,762) 3,727,519
Deferred Amounts:

Bond premiums 199,295 - (16,804) 182,491
Capital leases 5,588,478 321,811 (238,546) 5,671,743
Landfill closure/

postclosure liability 281,837 5,073 - 286,910
Net OPEB liabilities 2,298,527 188,314 (320,033) 2,166,808
Compensated absences 554,421 440,779 (415,816) 579,384
Net pension liability 6,775,817 2,989,367 (4,828,914) 4,936,270

Total $ 26,961,566 $ 3,945,344 $ (7,003,575) $ 23,903,335

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

Year Ending June 30, Principal Interest Principal Interest Principal Interest

2019 $ 707,390 $ 266,406 $ 229,246 $ 8,038 $ 231,187 $ -
2020 732,715 232,070 102,646 3,453 231,187 -
2021 728,164 198,108 45,016 1,400 231,187 -
2022 629,683 166,196 12,500 500 231,187 -
2023 648,148 135,946 12,500 250 231,187 -

2024-2028 1,889,237 362,840 - - 1,155,935 -
2029-2033 582,620 46,551 - - 1,065,842 -
2034-2038 28,315 4,265 - - 349,807 -

2039 4,030 64 - - - -

Totals $ 5,950,302 $ 1,412,446 $ 401,908 $ 13,641 $ 3,727,519 $ -

General Obligation Bonds Literary Loans Revenue Bonds

31 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018:

Balance

July 1, 2017, Increases/_—Decreases/ Balance

as restated Issuances___Retirements_ June 30, 2018 General obligation bonds $ 6,648,210 $ - $ (697,908) $ 5,950,302 Literary loans 684,700 : (282,792) 401,908 Revenue bonds 3,930,281 - (202,762) 3,727,519 Deferred Amounts:

Bond premiums 199,295 - (16,804) 182,491 Capital leases 5,588,478 321,811 (238,546) 5,671,743 Landfill closure/

postclosure liability 281,837 5,073 - 286,910 Net OPEB liabilities 2,298,527 188,314 (320,033) 2,166,808 Compensated absences 554,421 440,779 (415,816) 579,384 Net pension liability 6,775,817 2,989,367 __ (4,828,914) 4,936,270

Total $26,961,566 $ 3,945,344 $ (7,003,575) $__ 23,903,335

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

2019 $ 707,390 $ 266,406 $ 229,246 $ 8,038 $231,187 $

2020 732,715 232,070 102,646 3,453, 231,187 2021 728,164 198,108 45,016 1,400 231,187 2022 629,683, 166,196 12,500 500 231,187 2023 648,148 135,946 12,500 250 231,187

2024-2028 1,889,237 362,840 : 1,155,935

2029-2033 582,620 46,551 . - 1,065,842

2034-2038 28,315 4,265 : : 349,807 2039 4,030 64 :

Totals $5,950,302 $1,412,446 $ 401,908 $__ 13,641 $__3,727,519 $

-31-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 $13,063-41,261 a+ 672,000$ 311,521$ 26,076$
General obligation bond 4.50% 1999 2039 $2,518-6,183 a+ 119,530 87,471 2,634
General obligation bond 4.10%-5.23% 1999 2019 $25,000 a+ 510,000 50,000 25,000
General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210 337,624 109,186
General obligation bond 2.35%-5.10% 2002 2023 $213,799-272,702 a+ 4,382,954 1,292,167 244,407
General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 a+ 3,205,190 1,621,519 165,087
General obligation bond 4.60%-5.10% 2009 2030 $55,000-110,000 a+ 1,485,000 1,050,000 65,000
General obligation bond 3.05%-5.05% 2010 2031 $55,000-120,000 a+ 1,620,000 1,200,000 70,000

Total General Obligation Bonds 5,950,302$ 707,390$

Revenue Bonds: Revenue bond 0.00% 11/28/2001 2033 $15,595 sa 935,690$ 436,655$ 31,190$
Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 803,266 55,416
Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 155,015 11,483
Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 397,477 27,412
Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 324,647 18,551
Revenue bond 0.00% 10/14/2005 2036 $1,524 sa 91,439 54,863 3,048
Revenue bond 0.00% 10/14/2005 2037 $31,779 sa 1,906,717 1,175,810 63,557
Revenue bond 0.00% 4/28/2006 2037 $6,925 sa 415,513 256,233 13,851
Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 123,553 6,679

Total Revenue Bonds 3,727,519$ 231,187$

Plus: Unamortized Premium 182,491$ 16,804$

Total General Obligation and Revenue Bonds 9,860,312$ 955,381$

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

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32 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2018

Note 6-Long-Term Obligations: (Continued)

Primary Government - Governmental Activities Indebtedness (Continued)

Details of long-term indebtedness:

Final Amount of Balance Interest Date ‘Maturity Installment Original Governmental Rates Issued Date ‘Amounts fssue Activities

General Obligation Bonds:

General obligation bond 5.75% 1988 2028 $13,063-41,261 ar $672,000 § 311,521 General obligation bond 4.50% 1999 2039 —§2,518-6,183 a+ 119,530 87,471 General obligation bond A10%-5.23% 1999 2019 525,000 a+ 510,000 50,000 General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210, 337,624 General obligation bond 2.35%5.10% 2002 2023. §213,799-272,702 a+ 4,382,954 1,292,167 General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 ar 3,205,190 1,621,519 General obligation bond 4.60%-5.10% 2009 2030 $85,000-110,000 a+ 1,485,000 1,050,000 General obligation bond 3.05%-5.05% 2010 2031 $85,000-120,000 a+ 1,620,000, 200,000 Total General Obligation Bonds $5,950,302 $ Revenue Bonds: Revenue bond 00% 11/28/2001 2033 515,595sa «$935,690 436,655. $ Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 803,266 Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 155,015, Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 397,477 Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 324,647 Revenue bond 0.00% 10/14/2005. 2036 $1,524 5a 91,439 54,863 Revenue bond ©.00% 10/14/2005. 2037 $31,779 sa 1,906,717 4,475,810 Revenue bond 0.00% 4/28/2006 2037 $6,925 sa 415,513 256,233 Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 123,553, Total Revenue Bonds S 377519 § Plus:

Unamortized Premium S$ 192,491_ Total General Obligation and Revenue Bonds $9,860,312 §

(2+) - annual principal installments shown; does not include semi-annual interest installments (sa) - semi-annual installments including interest, if applicable

The remainder of this page left blank intentionally.

Amount Due Within One Year

26,076 2,634 25,000 109,186 244,407 165,087 65,000, 70,000

707,390

31,190 55,416 11,483 27,412 18,551

3,048 63,557 13,851

6,679

231,187

16,804

955,381

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 2.00% 1/1/2000 2020 $57,757 a+ 1,155,140$ 115,514$ 57,757$

Literary loan 2.00% 3/15/1999 2019 $55,700 a+ 1,114,086 55,786 55,786

Literary loan 2.00% 3/15/1999 2019 $8,200 a+ 161,449 5,649 5,649

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

Literary loan 2.00% 6/15/1999 2019 $44,020 a+ 880,411 44,031 44,031

Literary loan 2.00% 11/15/2000 2021 $24,689 a+ 493,789 74,076 24,689

Literary loan 3.00% 12/15/2000 2021 $7,700 a+ 154,118 23,218 7,700

Literary loan 2.00% 7/1/2003 2023 $12,500 a+ 250,000 62,500 12,500

Total Literary Loans 401,908$ 229,246$

Other Obligations: Capital Leases (Note 7) 5,671,743$ 279,724$
Landfill Closure and Postclosure Liability 286,910 -
Net OPEB Liabilities 2,166,808 -
Compensated Absences 579,384 434,538
Net Pension Liability 4,936,270 -

Total Other Obligations 13,641,115$ 714,262$

Total Long-term Obligations 23,903,335$ 1,898,889$

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33 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2018

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 2.00% 1/1/2000 «2020 $57,757a+ $ 1,155,140 $ 115,514 $57,757 Literary toan 2.00% 3/15/1999 2019——$55,700 a» 1,114,086 55,786 55,786 Literary loan 2.00% 3/15/1999 2019 $8,200 a+ 161,449 5,649 5,649 Literary loan 2.00% 6/15/1999 2019$21,134 ar 422,680 21,134 21,134 Literary loan 2.00% 6/15/1999 2019 $44,020 a+ 880,411 44,031 44,0301 Literary loan 2.00% 11/15/2000 2021 $24,689 ar 493,789 74,076 24,689 Literary toan 3.00% 12/15/2000 2021 $7,700 ar 154,118 23,218 7,700 Literary loan 2.00% 7/1/2003 2023. $12,500 a+ 250,000 62,500 12,500 Total Literary Loans 401,908 $229,246 Other Obtigations Capital Leases (Note 7) S 5,671,743 § 279,724 Landfill Closure and Postclosure Liability 286,910 Net OPEB Liabilities 2,166,808 : Compensated Absences 579,384 434,538 Net Pension Liability 4,936,270 Total Other Obligations $13,641,115 § 714,262 Total Long-term Obligations $23,903,335 _§ 1,898,889

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-33-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018:

Balance Balance July 1, 2017 Issuances Retirements June 30, 2018

Revenue bonds $ 626,760 $ - $ (23,775) $ 602,985
Net pension liability 59,488 23,698 (43,368) 39,818

Total $ 686,248 $ 23,698 $ (67,143) $ 642,803

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

Year Ending June 30, Principal Interest

2019 22,907$ 26,665$
2020 23,960 25,612
2021 25,060 24,512
2022 26,212 23,360
2023 27,416 22,156

2024-2028 157,168 90,691
2029-2033 196,743 51,117
2034-2036 123,519 7,723

Totals 602,985$ 271,836$

Revenue Bonds

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 4.50% 4/10/1996 2036 900,000$ 602,985$ 22,907$

Other Obligations:

Net pension liability 39,818$ -$

Total Long-term Obligations 642,803$ 22,907$

34 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018:

Balance Balance July 1, 2017 Issuances Retirements _June 30, 2018

Revenue bonds $626,760 $ = $ (23,775) $ 602,985 Net pension liability 59,488 23,698 (43,368) 39,818 Total $686,248 $ 23,698 $ (67,143) $ 642,803

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

Year Ending Revenue Bonds June 30, Principal Interest 2019 $ 22,907 $ 26,665 2020 23,960 25,612 2021 25,060 24,512 2022 26,212 23,360 2023 27,416 22,156 2024-2028 157,168 90,691 2029-2033 196,743 51,117 2034-2036 123,519 7,723

Totals $ 602,985 $ 271,836

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 4.50% 4/10/1996 2036 —-§ ~—-900,000 $602,985 $22,907

Other Obligations:

Net pension liability $39,818 $

Total Long-term Obligations $642,803 _§ 22,907

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018:

Balance July 1, 2017, Balance as restated Increases Decreases June 30, 2018

Net OPEB liabilities $ 13,490,296 $ 742,545 $ (1,379,046) $ 12,853,795
Compensated absences 717,123 546,135 (537,842) 725,416
Net pension liability 38,707,394 5,744,026 (10,628,437) 33,822,983

Total $ 52,914,813 $ 7,032,706 $ (12,545,325) $ 47,402,194

Details of long-term indebtedness:

Amount

Total Due Within

Amount One Year Other Obligations:

Net OPEB Liabilities 12,853,795$ -$

Compensated Absences 725,416 544,062

Net Pension Liability 33,822,983 -

Total Other Obligations 47,402,194$ 544,062$

The remainder of this page left blank intentionally.

35 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018:

Balance July 1, 2017, Balance as restated Increases Decreases June 30, 2018 Net OPEB liabilities $ 13,490,296 $ 742,545 $ (1,379,046) $ 12,853,795, Compensated absences 717,123 546,135 (537,842) 725,416 Net pension liability 38,707,394 5,744,026 (10,628,437) 33,822,983 Total $52,914,813 $ 7,032,706 $ (12,545,325) $__47,402,194 Details of long-term indebtedness: Amount Total Due Within Amount One Year Other Obligation: Net OPEB Liabilities $ 12,853,795 $ Compensated Absences 725,416 544,062 Net Pension Liability 33,822,983 Total Other Obligations $ 47,402,194 $ 544,062

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 7-Capital Leases:

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

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

Energy Savings School Equipment Bus Lease

Machinery and equipment $ 5,411,473 $ 421,811
Less: Accumulated depreciation - (23,843)

Net capital asset $ 5,411,473 $ 397,968

Energy savings equipment was placed in service at year end and will start depreciating in 2019.

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2018, were as follows:

Year Ending Capital June 30, Leases

2019 $ 515,449
2020 535,879
2021 539,722
2022 432,130
2023 435,842

2024-2028 2,190,596
2029-2033 2,101,475
2034-2037 1,726,153

Subtotal $ 8,477,246

Less, amount representing interest (2,805,503)

Present Value of Lease Agreement $ 5,671,743

36 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 7-Capital Leases:

Primary Government The County has entered into a lease agreement to finance energy savings equipment and school buses for

the School Board. These lease agreements qualify as a capital leases for accounting purposes and, therefore, have been recorded at the present value of minimum lease payments at the dates of

inception.

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

Energy Savings School Equipment Bus Lease Machinery and equipment $5,411,473 $ 421,811 Less: Accumulated depreciation : (23,843) Net capital asset $5,411,473, $ 397,968

Energy savings equipment was placed in service at year end and will start depreciating in 2019.

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2018, were as follows:

Year Ending Capital

June 30, Leases 2019 $ 515,449 2020 535,879 2021 539,722 2022 432,130 2023 435,842 2024-2028 2,190,596 2029-2033 2,101,475 2034-2037 1,726,153 Subtotal $8,477,246

Less, amount representing interest, (2,805,503)

Present Value of Lease Agreement $5,671,743

= 36-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

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.

About the Hybrid Retirement Plan
The Hybrid Retirement Plan combines the features of a defined benefit plan and a defined contribution plan.

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

37 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: Plan Description

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. based onamember’s __| service and average final age, creditable service _| compensation at retirement + The defined benefit is based on a

member’s age, creditable service and average final compensation at retirement using a formula.

and average final using a formula. compensation at retirement using a formula.

37+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, and they have not taken a refund.

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.

38 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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, and they have not taken a refund.

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.

-38-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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. 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
Employees contribute 5% of their compensation each month to their member contribution account through a pre-tax salary reduction.

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.

39 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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. 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 Employees contribute 5% of their

compensation each month to their member contribution

account through a pre-tax salary reduction.

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.

-39-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

40 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

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

41 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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 Contribution Component:

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

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

“Me

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN

Vesting (Cont.)

Vesting (Cont.) Defined Contribution 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.

42 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

Vesting (Cont.)

Defined Contribution 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 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.

42+

Calculating the Benefit

Defined Benefit Component See definition under Plan 1.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

43 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

Note 8-Pension Plan: (Continued)

Plan Description (Continued)

RETIREMENT PLAN PROVISIONS (CONTINUED)

PLAN 1

PLAN 2

HYBRID RETIREMENT PLAN

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%.

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 subd ion hazardous duty employees: Not applicable.

Defined Contribution Component: Not applicable.

-43-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

44 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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.

Unreduced Retirement ity

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

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

45 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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.

45+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

46 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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,

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

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

Exceptions to COLA Effective

Dates: Same as Plan 1.

46 -

Dates: Same as Plan 1 and Plan 2.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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.

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.

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. 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.

Defined Contribution Component:
Not applicable.

47 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

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.

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. 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.

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: sHybrid Retirement Plan members are ineligible for ported service.

Defined Contribution Component: Not applicable.

-47-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Plan Description Data

Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2017-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, 2018 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 $760,630 and $718,233 for the years ended June 30, 2018 and June 30, 2017, respectively.

Net Pension Liability

At June 30, 2018, the County reported a liability of $4,976,088 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2016, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017. 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, 2017 and 2016 was used as a basis for allocation to determine the County’s proportionate share of the net pension liability.
At June 30, 2018 and 2017, the County’s proportion was 99.2986% and 98.6202%, respectively.

48 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Plan Description Data

Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http: // www.varetire.org/Pdf /Publications/2017-annual-report.pdf or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Contributions

Net Pension Liability

At June 30, 2018, the County reported a liability of $4,976,088 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2016, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017. 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, 2017 and 2016 was used as a basis for allocation to determine the County’s proportionate share of the net pension liability. At June 30, 2018 and 2017, the County’s proportion was 99.2986% and 98.6202%, respectively.

= 48 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2016, 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, 2017.

Inflation 2.5%

Salary increases, including inflation 3.5% – 5.35%

Investment rate of return 7.0%, net of pension plan investment expenses, 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:

Largest 10 – Non-Hazardous Duty: 20% of deaths are assumed to be service related
Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

All Others (Non 10 Largest) – Non-Hazardous Duty: 15% of deaths are assumed to be service related
Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

49 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

expenses, 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:

Largest 10 - Non-Hazardous Duty: 20% of deaths are assumed to be service related Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement: RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

All Others (Non 10 Largest) - Non-Hazardous Duty: 15% of deaths are assumed to be service related Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to. 90.

-49-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Actuarial Assumptions – General Employees (Continued)

Mortality rates: (Continued)

Post-Disablement:
RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial assumptions as a result of the experience study are as follows:

Largest 10 – Non-Hazardous Duty:
Mortality Rates (pre-retirement, post-

retirement healthy, and disabled)

Updated to a more current mortality table - RP-

2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final

retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year

age and service through 9 years of service

Disability Rates Lowered rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 20%

All Others (Non 10 Largest) – Non-Hazardous Duty:

Mortality Rates (pre-retirement, post-

retirement healthy, and disabled)

Updated to a more current mortality table - RP-

2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final

retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year

age and service through 9 years of service

Disability Rates Lowered rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 15%

50 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

Largest 10 - Non-Hazardous Duty:

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-

retirement healthy, and disabled) 2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Lowered rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 20%

All Others (Non 10 Largest) - Non-Hazardous Duty: Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-

retirement healthy, and disabled) 2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Lowered rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 15%

-50-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Actuarial Assumptions – Public Safety Employees with Hazardous Duty Benefits

The total pension liability for Public Safety employees with Hazardous Duty Benefits in the County’s Retirement Plan was based on an actuarial valuation as of June 30, 2016, 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, 2017.

Inflation 2.5%

Salary increases, including inflation 3.5% – 4.75%

Investment rate of return 7.0%, net of pension plan investment expenses, 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:

Largest 10 – Hazardous Duty: 70% of deaths are assumed to be service related
Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year, 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

All Others (Non 10 Largest) – Hazardous Duty: 45% of deaths are assumed to be service related

Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year, 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

51 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note

ension Plan: (Continued) Actuarial Assumptions - Public Safety Employees with Hazardous Duty Benefits

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

expenses, 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:

Largest 10 - Hazardous Duty: 70% of deaths are assumed to be service related Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year, 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Post-Disablement: RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

All Others (Non 10 Largest) - Hazardous Duty: 45% of deaths are assumed to be service related Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year, 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

-51-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Actuarial Assumptions – Public Safety Employees with Hazardous Duty Benefits (Continued)

Mortality rates: (Continued)

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Largest 10 – Hazardous Duty:
Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered rates at older ages

Withdrawal Rates Adjusted rates to better fit experience

Disability Rates Increased rates Salary Scale No change Line of Duty Disability Increased rate from 60% to 70%

All Others (Non 10 Largest) – Hazardous Duty:
Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Increased age 50 rates, and lowered rates at older ages

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Adjusted rates to better fit experience
Salary Scale No change Line of Duty Disability Decreased rate from 60% to 45%

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52 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued) Actuarial Assumptions - Public Safety Employees with Hazardous Duty Benefits (Continued) Mortality rates: (Continued) Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years;

unisex using 100% male. The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial assumptions as a result of the experience study are as follows:

Largest 10 - Hazardous Duty:

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-2014 retirement healthy, and disabled) projected to 2020

Retirement Rates Lowered rates at older ages

Withdrawal Rates ‘Adjusted rates to better fit experience

Disability Rates Increased rates

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 70%

All Others (Non 10 Largest) - Hazardous Duty:

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-2014

retirement healthy, and disabled) projected to 2020

Retirement Rates Increased age 50 rates, and lowered rates at older ages ‘Adjusted rates to better fit experience at each year age

Withdrawal Rates and service through 9 years of service

Disability Rates ‘Adjusted rates to better fit experience

Salary Scale No change

Line of Duty Disability Decreased rate from 60% to 45%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.60% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% 1.43%

Total 100.00% 4.80%

Inflation 2.50% *Expected arithmetic nominal return 7.30%

The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into account the volatility present in each of the asset classes. In setting the long-term expected return for the system, stochastic projections are employed to model future returns under various economic conditions. The results provide a range of returns over various time periods that ultimately provide a median return of 6.83%, including expected inflation of 2.50%.

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53 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.60% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% Total 100.0% Inflation

“Expected arithmetic nominal return

The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into account the volatility present in each of the asset classes. In setting the long-term expected return for the system, stochastic projections are employed to model future returns under various economic conditions. The results provide a range of returns over various time periods that ultimately provide a median return of 6.83%, including expected inflation of 2.50%.

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-53-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2019, 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, 2019 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:

1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

County’s proportionate share of the County Retirement Plan Net Pension Liability $ 8,900,550 $ 4,976,088 $ 1,710,915

Rate

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54 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 7% Decrease Current Discount __ 1% Increase (6.00%) (7.00%) 8.00%) County’s proportionate share of the County Retirement Plan Net Pension Liability $ 8,900,550 $ 4,976,088 $ — 1,710,915

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018, the County recognized pension expense of $100,383. At June 30, 2018, 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 $ - $ 780,672

Net difference between projected and actual earnings on pension plan investments - 360,210

Change in proportionate share 23,273 -

Change in assumptions 130,885 -

Employer contributions subsequent to the measurement date 760,630 -

Total $ 914,788 $ 1,140,882

Primary Government

$760,630 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, 2019. 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

2019 $ (624,070)
2020 (135,288)
2021 19,934
2022 (247,300)

Thereafter -

55 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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 s > $780,672 Net difference between projected and actual earnings on pension plan investments : 360,210 Change in proportionate share 23,273, : Change in assumptions 130,885 Employer contributions subsequent to the measurement date 760,630 Total $914,788$ 1,140,882

Primary Year ended June 30 Government 2019 $ (624,070) 2020 (135,288) 2021 19,934 2022 (247,300) Thereafter -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2016 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 141

Inactive members: Vested inactive members 7

Non-vested inactive members 14

Inactive members active elsewhere in VRS 13

Total inactive members 34

Active members 119

Total covered employees 294

Contributions

The Component Unit School Board’s contractually required contribution rate for nonprofessional employees for the year ended June 30, 2018 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 $443,320 and $457,088 for the years ended June 30, 2018 and June 30, 2017, respectively.

56 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional)

Plan Description

Employees Covered by Benefit Terms

As of the June 30, 2016 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 141

Inactive members:

Vested inactive members 7 Non-vested inactive members 14 Inactive members active elsewhere in VRS 13 Total inactive members 34 Active members, 119 Total covered employees 294

Contributions

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 $443,320 and $457,088 for the years ended June 30, 2018 and June 30, 2017, respectively.

56°

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2017. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2016, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017.

Changes in Net Pension Liability

Total Plan Net Pension Fiduciary Pension Liability Net Position Liability

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

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

Changes for the year: Service cost $ 241,584 $ - $ 241,584
Interest 1,149,952 - 1,149,952
Changes of assumptions 32,003 - 32,003
Differences between expected

and actual experience 340,261 - 340,261
Contributions - employer - 450,897 (450,897)
Contributions - employee - 127,268 (127,268)
Net investment income - 1,325,272 (1,325,272)
Benefit payments, including refunds

of employee contributions (1,186,620) (1,186,620) -
Administrative expenses - (8,059) 8,059
Other changes - (1,167) 1,167

Net changes $ 577,180 $ 707,591 $ (130,411)

Balances at June 30, 2017 $ 17,598,372 $ 11,942,389 $ 5,655,983

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

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57 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2016 $ 17,021,192. § 11,234,798 $ 5,786,394 Changes for the year: Service cost $ 241,584 § $ 241,584 Interest 1,149,952 1,149,952 Changes of assumptions 32,003 32,003 Differences between expected and actual experience 340,261 : 340,261 Contributions - employer : 450,897 (450,897) Contributions - employee 127,268 (127,268) Net investment income 1,325,272 (1,325,272) Benefit payments, including refunds of employee contributions (1,186,620) (1,186,620) : Administrative expenses : (8,059) 8,059 Other changes : (1,167) 1,167 Net changes $ 377, 180_$ 707,597 $ 130,477) Balances at June 30, 2017 s 17,598,372 § 11,942,389 $ 5,655,983

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“57.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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:

1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

Component Unit School Board (nonprofessional) Net Pension Liability 7,529,767$ 5,655,983$ 4,067,054$

Rate

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

For the year ended June 30, 2018, the Component Unit School Board (nonprofessional) recognized pension expense of $446,006. At June 30, 2018, 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 $ 228,265 $ 84,471

Change in assumptions 21,264 -

Net difference between projected and actual earnings on pension plan investments - 153,379

Employer contributions subsequent to the measurement date 443,320 -

Total $ 692,849 $ 237,850

Board (nonprofessional)

Component Unit School

58 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (nonprofessional) (Continued)

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

Rate Te Decrease Current Discount __ 1% Increase (6.00%) (7.00%) 8.00%) Component Unit School Board (nonprofessional) Net Pension Liability $ 7,529,767 $ 5,655,983 $ 4,067,054

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 $228,265 $ 84,471 Change in assumptions 21,264 : Net difference between projected and actual earnings on pension plan investments : 153,379 Employer contributions subsequent to the measurement date 443,320 Total $692,849 $ 237,850

58 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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)

$443,320 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, 2019. 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)

2019 $ (66,558)
2020 181,535
2021 8,793
2022 (112,091)

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

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 provided to school divisions by the Virginia General Assembly. Employees are required to contribute 5.00% of their compensation toward their retirement.
Each School Division’s contractually required contribution rate for the year ended June 30, 2018 was 16.32% 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 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.
Contributions to the pension plan from the School Board were $2,958,000 and $2,607,000 for the years ended June 30, 2018 and June 30, 2017, respectively.

59 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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)

2019 $s (66,558)

2020 181,535

2021 8,793

2022 (112,091) 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

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 provided to school divisions by the Virginia General Assembly. Employees are required to contribute 5.00% of their compensation toward their retirement. Each School Division’s contractually required contribution rate for the year ended June 30, 2018 was 16.32% 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 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. Contributions to the pension plan from the School Board were $2,958,000 and $2,607,000 for the years ended June 30, 2018 and June 30, 2017, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018, the school division reported a liability of $28,167,000 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2017 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, 2017 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2017, the school division’s proportion was 0.22904% as compared to 0.23491% at June 30, 2016.

For the year ended June 30, 2018, the school division recognized pension expense of $1,718,000. 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, 2018, 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 $ - $ 1,995,000

Net difference between projected and actual earnings on pension plan investments - 1,023,000

Change of assumptions 411,000 -

Changes in proportion and differences between employer contributions and proportionate share of contributions 132,000 1,049,000

Employer contributions subsequent to the measurement date 2,958,000 -

Component Unit School Board (professional)

60 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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, 2018, the school division reported a liability of $28, 167,000 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2017 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, 2017 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2017, the school division’s proportion was 0.22904% as compared to 0.23491% at June 30, 2016.

At June 30, 2018, the school division reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Component Unit School Board (professional) Deferred Outflows Deferred Inflows of Resources of Resources

Differences between expected and actual experience $ - $ 1,995,000

Net difference between projected and actual earnings on pension plan investments - 1,023,000

Change of assumptions 411,000 :

Changes in proportion and differences between employer contributions and proportionate share of contributions 132,000 1,049,000

Employer contributions subsequent to the measurement date 2,958,000 -

60°

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

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

$2,958,000 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, 2019. 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

2019 $ (1,467,000)
2020 (322,000)
2021 (470,000)
2022 (1,076,000)

Thereafter (189,000)

Actuarial Assumptions

The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of June 30, 2016, 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, 2017.

Inflation 2.5%

Salary increases, including inflation 3.5% – 5.95%

Investment rate of return 7.0%, net of pension plan investment expenses, 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, 2018

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

2019 $ (1,467,000) 2020 (322,000) 2021 (470,000) 2022 (1,076,000) Thereafter (189,000)

Actuarial Assumptions

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

expenses, 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, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Mortality rates:

Pre-Retirement:
RP-2014 White Collar Employee Rates to age 80, White Collar Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020.

Post-Retirement:
RP-2014 White Collar Employee Rates to age 49, White Collar Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males 1% increase compounded from ages 70 to 90; females set back 3 years with 1.5% increase compounded from ages 65 to 70 and 2.0% increase compounded from ages 75 to 90.

Post-Disablement:
RP-2014 Disability Mortality Rates projected with Scale BB to 2020; 115% of rates for males and females.

Mortality Rates (pre-retirement, post-

retirement healthy, and disabled)

Updated to a more current mortality table - RP-

2014 projected to 2020

Retirement Rates

Lowered rates at older ages and changed final

retirement from 70 to 75

Withdrawal Rates

Adjusted rates to better fit experience at each year

age and service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Mortality rates:

Pre-Retirement: RP-2014 White Collar Employee Rates to age 80, White Collar Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020.

Post-Retirement: RP-2014 White Collar Employee Rates to age 49, White Collar Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males 1% increase compounded from ages 70 to 90; females set back 3 years with 1.5% increase compounded from ages 65 to 70 and 2.0% increase compounded from ages 75 to 90.

Post-Disablement: RP-2014 Disability Mortality Rates projected with Scale BB to 2020; 115% of rates for males and females.

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-

retirement healthy, and disabled) 2014 projected to 2020

Lowered rates at older ages and changed final Retirement Rates retirement from 70 to 75

Adjusted rates to better fit experience at each year Withdrawal Rates age and service through 9 years of service Disability Rates Adjusted rates to better match experience Salary Scale No change

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

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, 2017, NPL amounts for the VRS Teacher Employee Retirement Plan is as follows (amounts expressed in thousands):

Teacher Employee Retirement Plan

Total Pension Liability $ 45,417,520
Plan Fiduciary Net Position 33,119,545
Employers’ Net Pension Liability (Asset) $ 12,297,975

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 72.92%

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.

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:

1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

School division’s proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability 42,063,000$ 28,167,000$ 16,673,000$

Rate

63 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Net Pension Liability

Teacher Employee

Retirement Plan

Total Pension Liability $ 45,417,520 Plan Fiduciary Net Position 33,119,545 Employers’ Net Pension Liability (Asset) $12, 297,975_

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability N2.92%

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 1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%) School division’s proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability $ 42,063,000 $ 28,167,000 § 16,673,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Pension Plan Fiduciary Net Position

Detailed information about the VRS Teacher Retirement Plan’s Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 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.

Note 9-Primary Government Other Postemployment Benefits-Health Insurance:

Plan Description

In addition to the pension benefits described in Note 8, the County administers a single-employer defined benefit healthcare plan, The Russell County OPEB Plan. The plan provides postemployment health care benefits to all eligible permanent employees who meet the requirements under the County’s pension plans. The plan does not issue a publicly available financial report.

Benefits Provided

Postemployment benefits are provided to eligible retirees to include Medical, Dental, and Vision insurance. The benefits that are provided for active employees are the same for eligible retirees, spouses and dependents of eligible retirees. All permanent employees of the County who meet eligibility requirements of the pension plan are eligible to receive postemployment health care benefits. Benefits for both the retiree and their dependent spouse are provided for their respective lifetimes. If the retiree predeceases the spouse, the spouse is eligible to continue their health coverage.

Plan Membership

At June 30, 2018 (measurement date), the following employees were covered by the benefit terms:

Active Employees 160
Retirees and Spouses 5

Total 165

Contributions

The board does not pre-fund benefits; therefore, no assets are accumulated in a trust fund. The current funding policy is to pay benefits directly from general assets on a pay-as-you-go basis. The funding requirements are established and may be amended by the Board of Supervisors. The amount paid by the County for OPEB as the benefits came due during the year ended June 30, 2018 was $18,508.

64 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 8-Pension Plan: (Continued)

Component Unit School Board (professional) (Continued)

Pension Plan Fiduciary Net Position

Detailed information about the VRS Teacher Retirement Plan’s Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 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.

Note 9-Primary Government Other Postemployment Benefits-Health Insurance:

Plan Description

Benefits Provided

Plan Membership

At June 30, 2018 (measurement date), the following employees were covered by the benefit terms:

Active Employees 160 Retirees and Spouses 5 Total 165

Contributions

64+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 9-Primary Government Other Postemployment Benefits-Health Insurance: (Continued)

Total OPEB Liability

The County’s total OPEB liability was measured as of June 30, 2018. The total OPEB liability was determined by an actuarial valuation as of July 1, 2017.

Actuarial Assumptions

The total OPEB liability in the July 1, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2017 and gradually declines to 4.20% by the year 2094.

Actuarial Cost Method Entry age normal, level percentage of pay Discount Rate 3.50% as of June 30, 2017; 3.87% as of June 30, 2018

Inflation 2.50%

Mortality Rates The mortality rates for active and healthy retirees were calculated using the RP-2014 Employee Rates Table with scale BB to 2020; males 90% of rates; females set forward 1 year. 35% of death are assumed to be service related. The mortality rates for disabled retirees were calculated using the RP-2014 Disabled Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male. The mortality rates for retirees were calculated using the RP- 2014 Post-Retirement Mortality Rates projected with scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Salary Increase Rates The salary increase rate starts at 5.35% for 1 year of service and gradually declines to 3.50% increase for 20 or more years of service.

Retirement Age The average age at retirement is 62.

The date of the most recent actuarial experience study for which significant assumptions were based is not available

Discount Rate The discount rates are based on the Bond Buyer 20-year Bond Go Index as of their respective measurement dates.

65 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2018

Note 9-Primary Government Other Postemployment Benefits-Health Insurance: (Continued)

Total OPEB Liability

The County’s total OPEB liability was measured as of June 30, 2018. The total OPEB liability was determined by an actuarial valuation as of July 1, 2017.

Actuarial Assumptions

‘Actuarial Cost Method Entry age normal, level percentage of pay

Discount Rate 3.50% as of June 30, 2017; 3.87% as of June 30, 2018

Inflation 2.50%

Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2017 and gradually declines to 4.20% by the year 2094,

‘Salary Increase Rates The salary increase rate starts at 5.35% for 1 year of service and gradually declines to 3.50% increase for 20 or more years of service.

Retirement Age The average age at retirement is 62.

‘Mortality Rates The mortality rates for active and healthy retirees were

‘calculated using the RP-2014 Employee Rates Table with scale BB to 2020; males 90% of rates; females set forward 1 year. 35% of death are assumed to be service related. The ‘mortality rates for disabled retirees were calculated using ‘the RP-2014 Disabled Mortality Rates projected with scale BB ‘to 2020; males set forward 2 years; unisex using 100% male. ‘The mortality rates for retirees were calculated using the RP- 2014 Post-Retirement Mortality Rates projected with scale BB ‘to 2020; males set forward 1 year with 1.0% increase ‘compounded from ages 70 to 90; females set forward 3 years.

The date of the most recent actuarial experience study for which significant assumptions were based is not available

Discount Rate

The discount rates are based on the Bond Buyer 20-year Bond Go Index as of their respective measurement dates.

65+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 9-Primary Government Other Postemployment Benefits-Health Insurance: (Continued)

Changes in Total OPEB Liability

Primary Government Total OPEB Liability

Balances at June 30, 2017 $ 364,554

Changes during Year: Service Cost 16,038
Interest on Total OPEB Liability 13,000
Effect of Assumptions Changes or Inputs (11,427)
Benefit Payments (18,508)
Net Changes $ (897)
Balances at June 30, 2018 $ 363,657

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

The following amounts present the total OPEB liability of the County, as well as what the total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.87%) or one percentage point higher (4.87%) than the current discount rate:

1% Decrease Current Discount 1% Increase (2.87%) Rate (3.87%) (4.87%)

$ 395,440 $ 363,657 $ 334,699

Rate

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates

The following presents the total OPEB liability of the County, as well as what the total OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower (5.00% decreasing to an ultimate rate of 3.20%) or one percentage point higher (7.00% decreasing to an ultimate rate of 5.20%) than the current healthcare cost trend rates:

Healthcare Cost 1% Decrease Trend 1% Increase

(5.00% decreasing (6.00% decreasing (7.00% decreasing to 3.20%) to 4.20%) to 5.20%)

$ 323,413 $ 363,657 $ 410,941

Rates

66 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 9-Primary Government Other Postemployment Benefits-Health Insurance: (Continued)

Changes in Total OPEB Liability Primary Government Total OPEB Liability

Balances at June 30, 2017 $ 364,554 Changes during Year:

Service Cost 16,038 Interest on Total OPEB Liability 13,000 Effect of Assumptions Changes or Inputs (11,427) Benefit Payments (18,508) Net Changes $ (897) Balances at June 30, 2018 $ 363,657

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

Rate 1% Decrease Current Discount 1% Increase (2.87%) Rate (3.87%) (4.87%) $ 395,440 § 363,657 § 334,699

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates

Rates Healthcare Cost 1% Decrease Trend 1% Increase (5.00% decreasing (6.00% decreasing (7.00% decreasing to 3.20%) to 4.20%) to 5.20%) $ 323,413 § 363,657 $ 410,941

66°

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 9-Primary Government Other Postemployment Benefits-Health Insurance: (Continued)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources

For the year ended June 30, 2018, the County recognized OPEB expense in the amount of $27,280. At June 30, 2018, the County reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resouces of Resources

Changes in assumptions $ - $ 9,669

Amounts reported as deferred inflows of resources related to the OPEB plan will be recognized in OPEB expense in future reporting periods as follows:

Year ended June 30

2019 $ (1,758)
2020 (1,758)
2021 (1,758)
2022 (1,758)

Thereafter (2,637)

Additional disclosures on changes in net OPEB liability, related ratios, and employer contributions can be found in the required supplementary information following the notes to the financial statements.

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance:

Plan Description

In addition to the pension benefits described in Note 8, the School Board administers a single-employer defined benefit healthcare plan, the Russell County Public Schools OPEB Plan. The plan provides postemployment health care benefits to all eligible permanent employees who meet the requirements under the Schools Board’s pension plans. The plan does not issue a publicly available financial report.

Benefits Provided

Postemployment benefits are provided to eligible retirees to include Medical, Dental, and Vision insurance. The benefits that are provided for active employees are the same for eligible retirees, spouses and dependents of eligible retirees. All permanent employees of the School Board who meet eligibility requirements of the pension plan are eligible to receive postemployment health care benefits. Benefits for both the retiree and their dependent spouse are provided for their respective lifetimes. If the retiree predeceases the spouse, the spouse is eligible to continue their health coverage.

67 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 9-Primary Government Other Postemployment Benefits-Health Insurance: (Continued)

OPEB Expense and Deferred Outflows of Resources and Deferred inflows of Resources

Deferred Outflows _ Deferred Inflows of Resouces of Resources Changes in assumptions $ -_ 3 9,669

Amounts reported as deferred inflows of resources related to the OPEB plan will be recognized in OPEB expense in future reporting periods as follows:

Year ended June 30

2019 $ (1,758) 2020 (1,758) 2021 (1,758) 2022 (1,758) Thereafter (2,637)

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance:

Plan Description

Benefits Provided

Postemployment benefits are provided to eligible retirees to include Medical, Dental, and Vision insurance. The benefits that are provided for active employees are the same for eligible retirees, spouses and dependents of eligible retirees. All permanent employees of the School Board who meet eligibility requirements of the pension plan are eligible to receive postemployment health care benefits. Benefits for both the retiree and their dependent spouse are provided for their respective lifetimes. If the retiree predeceases the spouse, the spouse is eligible to continue their health coverage.

67+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

Plan Membership

At June 30, 2018 (measurement date), the following employees were covered by the benefit terms:

Active employees 555
Retirees and Spouses 77

Total 632

Contributions

The School Board does not pre-fund benefits; therefore, no assets are accumulated in a trust fund. The current funding policy is to pay benefits directly from general assets on a pay-as-you-go basis. The funding requirements are established and may be amended by the School Board. The amount paid by the School Board for OPEB as the benefits came due during the year ended June 30, 2018 was $490,936.

Total OPEB Liability

The School Board’s total OPEB liability was measured as of June 30, 2018. The total OPEB liability was determined by an actuarial valuation as of July 1, 2017.

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68 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

Plan Membership

At June 30, 2018 (measurement date), the following employees were covered by the benefit terms:

Active employees 555 Retirees and Spouses 7 Total 2

Contributions The School Board does not pre-fund benefits; therefore, no assets are accumulated in a trust fund. The current funding policy is to pay benefits directly from general assets on a pay-as-you-go basis. The funding requirements are established and may be amended by the School Board. The amount paid by the School Board for OPEB as the benefits came due during the year ended June 30, 2018 was $490,936. Total OPEB Liability

The School Board’s total OPEB liability was measured as of June 30, 2018. The total OPEB liability was determined by an actuarial valuation as of July 1, 2017.

The remainder of this page is left blank intentionally.

= 68+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

Actuarial Assumptions

Discount Rate 3.50% as of June 30, 2017; 3.87% as of June 30, 2018 Actuarial Cost Method Entry age normal, level percentage of pay

Retirement Age The average age at retirement is 62. Mortality Rates The mortality rates for active and healthy retirees were

calculated using the RP-2014 Employee Rates Table with scale BB to 2020; males 90% of rates; females set forward 1 year. 35% of death are assumed to be service related. The mortality rates for disabled retirees were calculated using the RP-2014 Disabled Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male. The mortality rates for retirees were calculated using the RP- 2014 Post-Retirement Mortality Rates projected with scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Inflation 2.50% Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2017

and gradually declines to 4.20% by the year 2094. Salary Increase Rates The salary increase rate starts at 5.35% for 1 year of service

and gradually declines to 3.50% for 20 or more years of service.

The date of the most recent actuarial experience study for which significant assumptions were based is not available

Discount Rate

The discount rates are based on the Bond Buyer 20-Year Bond GO Index as of their respective measurement dates.

69 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

Actuarial Assumptions

[Actuarial Cost Method Entry age normal, level percentage of pay

Discount Rate 3.50% as of June 30, 2017; 3.87% as of June 30, 2018

Inflation 2.50%

Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2017 and gradually declines to 4.20% by the year 2094,

‘Salary Increase Rates ‘The salary increase rate starts at 5.35% for 1 year of service ‘and gradually declines to 3.50% for 20 or more years of service.

Retirement Age ‘The average age at retirement is 62.

‘Mortality Rates ‘The mortality rates for active and healthy retirees were

‘calculated using the RP-2014 Employee Rates Table with scale BB to 2020; males 90% of rates; females set forward 1 year. 35% of death are assumed to be service related. The ‘mortality rates for disabled retirees were calculated using the RP-2014 Disabled Mortality Rates projected with scale BB ‘to 2020; males set forward 2 years; unisex using 100% male. The mortality rates for retirees were calculated using the RP- 2014 Post-Retirement Mortality Rates projected with scale BB ‘to 2020; males set forward 1 year with 1.0% increase ‘compounded from ages 70 to 90; females set forward 3 years.

The date of the most recent actuarial experience study for which significant assumptions were based is not available

Discount Rate

The discount rates are based on the Bond Buyer 20-Year Bond GO Index as of their respective measurement dates.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

Changes in Total OPEB Liability

Component Unit School Board

Total OPEB Liability Balances at June 30, 2017 $ 7,892,296

Changes during Year: Service Cost 235,586
Interest on Total OPEB Liability 275,959
Effect of Assumptions Changes or Inputs (205,110)
Benefit Payments (490,936)
Net Changes $ (184,501)
Balances at June 30, 2018 $ 7,707,795

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

The following amounts present the total OPEB liability of the School Board, as well as what the total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.87%) or one percentage point higher (4.87%) than the current discount rate:

1% Decrease Current Discount 1% Increase (2.87%) Rate (3.87%) (4.87%)

$ 8,271,289 $ 7,707,795 $ 7,176,005

Rate

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates

The following presents the total OPEB liability of the School Board, as well as what the total OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower (5.00% decreasing to an ultimate rate of 3.20%) or one percentage point higher (7.00% decreasing to an ultimate rate of 5.20%) than the current healthcare cost trend rates:

Healthcare Cost 1% Decrease Trend 1% Increase

(5.00% decreasing (6.00% decreasing (7.00% decreasing to 3.20%) to 4.20%) to 5.20%)

$ 6,909,242 $ 7,707,795 $ 8,640,169

Rates

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

Changes in Total OPEB Liability Component Unit School Board Total OPEB Liability

Balances at June 30, 2017 $ 7,892,296 Changes during Year:

Service Cost 235,586 Interest on Total OPEB Liability 275,959 Effect of Assumptions Changes or Inputs (205,110) Benefit Payments (490,936) Net Changes $ (184,501) Balances at June 30, 2018 $ 7,707,795

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

Rate 1% Decrease Current Discount. 1% Increase (2.87%) Rate (3.87%) (4.87%) $ 8,271,289 $ 7,707,795 $ 7,176,005,

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates

Rates Healthcare Cost 1% Decrease Trend 1% Increase (5.00% decreasing (6.00% decreasing (7.00% decreasing to 3.20%) to 4.20%) to 5.20%) $ 6,909,242 § 7,107,795 § 8,640,169

70+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

For the year ended June 30, 2018, the School Board recognized OPEB expense in the amount of $477,360. At June 30, 2018, the School Board reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resouces of Resources

Changes in assumptions $ - $ 170,925

Amounts reported as deferred inflows of resources related to the OPEB plan will be recognized in OPEB expense in future reporting periods as follows:

Year ended June 30

2019 $ (34,185)
2020 (34,185)
2021 (34,185)
2022 (34,185)

Thereafter (34,185)

Additional disclosures on changes in School Board’s net OPEB liability, related ratios, and employer contributions can be found in the required supplementary information following the notes to the financial statements.

The remainder of this page is left blank intentionally.

71 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 10-Component Unit School Board Other Postemployment Benefits-Health Insurance: (Continued)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

Deferred Outflows Deferred Inflows of Resouces of Resources Changes in assumptions $ $s 170,925

Amounts reported as deferred inflows of resources related to the OPEB plan will be recognized in OPEB expense in future reporting periods as follows:

Year ended June 30

2019 § (34,185) 2020 (34,185) 2021 (34,185) 2022 (34,185) Thereafter (34,185)

The remainder of this page is left blank intentionally.

“Ne

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan):

Plan Description

All full-time, salaried permanent employees of the state agencies, teachers, and employees of participating political subdivisions are automatically covered by the VRS Group Life Insurance Program upon employment. This is a cost-sharing multiple-employer plan administered by the Virginia Retirement System (the System), along with pensions and other OPEB plans, for public employer groups in the Commonwealth of Virginia.

In addition to the Basic Group Life Insurance benefit, members are also eligible to elect additional coverage for themselves as well as a spouse or dependent children through the Optional Group Life Insurance Program. For members who elect the optional group life insurance coverage, the insurer bills employers directly for the premiums. Employers deduct these premiums from members’ paychecks and pay the premiums to the insurer. Since this is a separate and fully insured program, it is not included as part of the Group Life Insurance Program OPEB.

The specific information for Group Life Insurance Program OPEB, including eligibility, coverage and benefits is set out in the table below:

GROUP LIFE INSURANCE PROGRAM PLAN PROVISIONS

Eligible Employees

The Group Life Insurance Program was established July 1, 1960, for state employees, teachers and employees of political subdivisions that elect the program, including the following employers that do not participate in VRS for retirement:

 City of Richmond  City of Portsmouth  City of Roanoke  City of Norfolk  Roanoke City School Board

Basic group life insurance coverage is automatic upon employment. Coverage ends for employees who leave their position before retirement eligibility or who take a refund of their member contributions and accrued interest.

72 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan):

Plan Description

The specific information for Group Life Insurance Program OPEB, including eligibility, coverage and benefits is set out in the table below:

GROUP LIFE INSURANCE PROGRAM PLAN PROVISIONS.

Eligible Employees

City of Richmond
City of Portsmouth
City of Roanoke
City of Norfolk
Roanoke City School Board

Basic group life insurance coverage is automatic upon employment. Coverage ends for employees who

leave their position before retirement eligibility or who take a refund of their member contributions and accrued interest.

-T-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

GROUP LIFE INSURANCE PROGRAM PLAN PROVISIONS (CONTINUED)

Benefit Amounts

The benefits payable under the Group Life Insurance Program have several components.

 Natural Death Benefit - The natural death benefit is equal to the employee’s covered compensation rounded to the next highest thousand and then doubled.

 Accidental Death Benefit – The accidental death benefit is double the natural death benefit.  Other Benefit Provisions – In addition to the basic natural and accidental death benefits, the

program provides additional benefits provided under specific circumstances. These include: o Accidental dismemberment benefit o Safety belt benefit o Repatriation benefit o Felonious assault benefit o Accelerated death benefit option

Reduction in Benefit Amounts

The benefit amounts provided to members covered under the Group Life Insurance Program are subject to a reduction factor. The benefit amount reduces by 25% on January 1 following one calendar year of separation. The benefit amount reduces by an additional 25% on each subsequent January 1 until it reaches 25% of its original value.

Minimum Benefit Amount and Cost-of-Living Adjustment (COLA)

For covered members with at least 30 years of creditable service, there is a minimum benefit payable under the Group Life Insurance Program. The minimum benefit was set at $8,000 by statute. The amount is increased annually based on the VRS Plan 2 cost-of-living adjustment and is currently $8,111.

Contributions

The contribution requirements for the Group Life Insurance Program are governed by §51.1-506 and §51.1-508 of the Code of Virginia, as amended, but may be impacted as a result of funding provided to state agencies and school divisions by the Virginia General Assembly. The total rate for the Group Life Insurance Program was 1.31% of covered employee compensation. This was allocated into an employee and an employer component using a 60/40 split. The employee component was 0.79% (1.31% x 60%) and the employer component was 0.52% (1.31% x 40%). Employers may elect to pay all or part of the employee contribution; however, the employer must pay all of the employer contribution. Each employer’s contractually required employer contribution rate for the year ended June 30, 2018 was 0.52% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015. The actuarially determined rate, when combined with employee contributions, was expected to finance the costs of benefits payable during the year, with an additional amount to finance any unfunded accrued liability.

73 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

GROUP LIFE INSURANCE PROGRAM PLAN PROVISIONS (CONTINUED)

Benefit Amounts

The benefits payable under the Group Life Insurance Program have several components.

Natural Death Benefit - The natural death benefit is equal to the employee’s covered compensation rounded to the next highest thousand and then doubled.

Accidental Death Benefit - The accidental death benefit is double the natural death benefit.
Other Benefit Provisions - In addition to the basic natural and accidental death benefits, the program provides additional benefits provided under specific circumstances. These include:

‘© Accidental dismemberment benefit ©. Safety belt benefit

o Accelerated death benefit option

Reduction in Benefit Amounts

Minimum Benefit Amount and Cost-of-Living Adjustment (COLA)

Contributions

-B-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Contributions (Continued)

Contributions to the Group Life Insurance Program from the County were $32,161 and $29,665 for the years ended June 30, 2018 and June 30, 2017, respectively.

Contributions to the Group Life Insurance Program from the Component Unit School Board (nonprofessional) were $13,673 and $13,806 for the years ended June 30, 2018 and June 30, 2017, respectively.

Contributions to the Group Life Insurance Program from the Component Unit School Board (professional) were $95,556 and $93,780 for the years ended June 30, 2018 and June 30, 2017, respectively.

GLI OPEB Liabilities, GLI OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Group Life Insurance Program OPEB

At June 30, 2018, the County reported a liability of $465,000 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2018, the Component Unit School Board (nonprofessional) reported a liability of $216,000 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2018, the Component Unit School Board (professional) reported a liability of $1,471,000 for its proportionate share of the Net GLI OPEB Liability.

The Net GLI OPEB Liability was measured as of June 30, 2017 and the total GLI OPEB liability used to calculate the Net GLI OPEB Liability was determined by an actuarial valuation as of that date. The covered employer’s proportion of the Net GLI OPEB Liability was based on the covered employer’s actuarially determined employer contributions to the Group Life Insurance Program for the year ended June 30, 2017 relative to the total of the actuarially determined employer contributions for all participating employers.

At June 30, 2017, the County’s proportion was 0.03093% as compared to 0.03074% at June 30, 2016.

At June 30, 2017, the Component Unit School Board (nonprofessional) proportion was 0.01439% as compared to 0.01474% at June 30, 2016.

At June 30, 2017, the Component Unit School Board (professional) proportion was 0.09777% as compared to 0.09983% at June 30, 2016.

For the year ended June 30, 2018, the County recognized GLI OPEB expense of $8,000. Since there was a change in proportionate share between measurement dates, a portion of the GLI OPEB expense was related to deferred amounts from changes in proportion.

For the year ended June 30, 2018, the Component Unit School Board (nonprofessional) recognized GLI OPEB expense of $1,000. Since there was a change in proportionate share between measurement dates, a portion of the GLI OPEB expense was related to deferred amounts from changes in proportion.

74 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Contributions (Continued)

Contributions to the Group Life Insurance Program from the County were $32,161 and $29,665 for the years ended June 30, 2018 and June 30, 2017, respectively.

Contributions to the Group Life Insurance Program from the Component Unit School Board (nonprofessional) were $13,673 and $13,806 for the years ended June 30, 2018 and June 30, 2017, respectively.

Contributions to the Group Life Insurance Program from the Component Unit School Board (professional) were $95,556 and $93,780 for the years ended June 30, 2018 and June 30, 2017, respectively.

GLI OPEB Liabilities, GLI OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Group Life Insurance Program OPEB

At June 30, 2018, the County reported a liability of $465,000 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2018, the Component Unit School Board (nonprofessional) reported a liability of $216,000 for its proportionate share of the Net GL! OPEB Liability.

At June 30, 2018, the Component Unit School Board (professional) reported a liability of $1,471,000 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2017, the County’s proportion was 0.03093% as compared to 0.03074% at June 30, 2016.

At June 30, 2017, the Component Unit School Board (nonprofessional) proportion was 0.01439% as compared to 0.01474% at June 30, 2016.

At June 30, 2017, the Component Unit School Board (professional) proportion was 0.09777% as compared to 0.09983% at June 30, 2016.

For the year ended June 30, 2018, the Component Unit School Board (nonprofessional) recognized GLI

OPEB expense of $1,000. Since there was a change in proportionate share between measurement dates, a portion of the GL! OPEB expense was related to deferred amounts from changes in proportion.

Ths

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

GLI OPEB Liabilities, GLI OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Group Life Insurance Program OPEB (Continued)

For the year ended June 30, 2018, the Component Unit School Board (professional) recognized GLI OPEB expense of $10,000. Since there was a change in proportionate share between measurement dates, a portion of the GLI OPEB expense was related to deferred amounts from changes in proportion.

At June 30, 2018, the employer reported deferred outflows of resources and deferred inflows of resources related to the GLI OPEB from the following sources:

Deferred Outflows Deferred Inflows Deferred Outflows Deferred Inflows Deferred Outflows Deferred Inflows of Resouces of Resources of Resouces of Resources of Resouces of Resources

Differences between expected and actual experience $ - $ 10,000 $ - $ 5,000 $ - $ 33,000
Changes in proportion - - - 5,000 - 30,000
Changes in assumptions - 24,000 - 11,000 - 76,000
Net difference between projected and actual

earnings on OPEB plan investments - 18,000 - 8,000 - 55,000

Employer contributions subsequent to the measurement date 32,161 - 13,673 - 95,556 -
Total $ 32,161 $ 52,000 $ 13,673 $ 29,000 $ 95,556 $ 194,000

Primary Government (nonprofessional)

Component Unit School Board Component Unit School Board

(professional)

$32,161, $13,673, and $95,556 reported as deferred outflows of resources related to the GLI OPEB resulting from the County’s, Component Unit School Board (nonprofessional), and Component Unit School Board (professional), respectively, contributions subsequent to the measurement date will be recognized as a reduction of the Net GLI OPEB Liability in the fiscal year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the GLI OPEB will be recognized in the GLI OPEB expense in future reporting periods as follows:

Component Unit Component Unit Primary School Board School Board

Year Ended June 30 Government (nonprofessional) (professional)

2019 $ (11,000) $ (6,000) $ (40,000)
2020 (11,000) (6,000) (40,000)
2021 (11,000) (6,000) (40,000)
2022 (11,000) (6,000) (40,000)
2023 (6,000) (4,000) (26,000)

Thereafter (2,000) (1,000) (8,000)

75 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

GLI OPEB Liabilities, GLI OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Group Life Insurance Program OPEB (Continued)

For the year ended June 30, 2018, the Component Unit School Board (professional) recognized GL! OPEB expense of $10,000. Since there was a change in proportionate share between measurement dates, a portion of the GL! OPEB expense was related to deferred amounts from changes in proportion.

At June 30, 2018, the employer reported deferred outflows of resources and deferred inflows of resources related to the GLI OPEB from the following sources:

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$32,161, $13,673, and $95,556 reported as deferred outflows of resources related to the GLI OPEB resulting from the County’s, Component Unit School Board (nonprofessional), and Component Unit School Board (professional), respectively, contributions subsequent to the measurement date will be recognized as a reduction of the Net GL! OPEB Liability in the fiscal year ending June 30, 2019, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the GLI OPEB will be recognized in the GLI OPEB expense in future reporting periods as follows:

Component Unit Component Unit Primary School Board School Board Year Ended June 30 Government _(nonprofessional) (professional) 2019 $ (11,000) $ (6,000) $ (40,000) 2020 (11,000) (6,000) (40,000) 2021 (11,000) (6,000) (40,000) 2022 (11,000) (6,000) (40,000) 2023 (6,000) (4,000) (26,000) Thereafter (2,000) (1,000) (8,000)

-75 +

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions

The total GLI OPEB liability was based on an actuarial valuation as of June 30, 2016, 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, 2017.

General state employees 3.5% – 5.35% Teachers 3.5%-5.95% SPORS employees 3.5%-4.75% VaLORS employees 3.5%-4.75% JRS employees 4.5% Locality - General employees 3.5%-5.35% Locality - Hazardous Duty employees 3.5%-4.75%

Investment rate of return 7.0%, net of investment expenses, 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 OPEB liabilities.

Mortality Rates – General State Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase compounded from ages 70 to 85.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males 115% of rates; females 130% of rates.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions

General state employees 3.5% - 5.35% Teachers 3.5%-5.95% SPORS employees 3.5%-4,75% VaLORS employees 3.5%-4, 75% IRS employees 4.5% Locality - General employees 3.5%-5.35% Locality - Hazardous Duty employees 3.5%-4, 75% Investment rate of return 7.0%, net of investment expenses,

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 OPEB liabilities.

Mortality Rates - General State Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase compounded from ages 70 to 85.

Post-Disablement: RP-2014 Disability Mortality Rates projected with scale BB to 2020; males 115% of rates; females 130% of rates.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial

experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial assumptions as a result of the experience study are as follows:

76+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions (Continued)

Mortality Rates – General State Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 25%

Mortality Rates – Teachers

Pre-Retirement:

RP-2014 White Collar Employee Rates to age 80, White Collar Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020.

Post-Retirement:

RP-2014 White Collar Employee Rates to age 49, White Collar Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males 1% increase compounded from ages 70 to 90; females set back 3 years with 1.5% increase compounded from ages 65 to 70 and 2.0% increase compounded from ages 75 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; 115% of rates for males and females.

77 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions (Continued)

Mortality Rates - General State Employees (Continued)

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-2014 retirement healthy, and disabled) projected to 2020

Retirement Rates Lowered rates at older ages and changed final

retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year

age and service through 9 years of service

Disability Rates Adjusted rates to better match experience Salary Scale No change Line of Duty Disability Increased rate from 14% to 25%

Mortality Rates - Teachers

Pre-Retirement: RP-2014 White Collar Employee Rates to age 80, White Collar Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020.

Post-Retirement: RP-2014 White Collar Employee Rates to age 49, White Collar Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males 1% increase compounded from ages 70 to 90; females set back 3 years with 1.5% increase compounded from ages 65 to 70 and 2.0% increase compounded from ages 75 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; 115% of rates for males and females.

“17

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions (Continued)

Mortality Rates – Teachers (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Mortality Rates – SPORS Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions (Continued) Mortality Rates - Teachers (Continued)

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-2014 retirement healthy, and disabled) projected to 2020

Retirement Rates Lowered rates at older ages and changed final

retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year

age and service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Mortality Rates - SPORS Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

78+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions (Continued)

Mortality Rates – SPORS Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages

Withdrawal Rates Adjusted rates to better fit experience

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 85%

Mortality Rates – VaLORS Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

79 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions (Continued) Mortality Rates - SPORS Employees (Continued)

Mortality Rates (pre-retirement, post: Updated to a more current mortality table - RP-2014 retirement healthy, and disabled) projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted rates to better fit experience

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 85%

Mortality Rates - VaLORS Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Disablement: RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

-79-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – VaLORS Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled) Updated to a more current mortality table - RP-2014

projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 50% to 35%

Mortality Rates – JRS Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% compounding increase from ages 70 to 85.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males 115% of rates; females 130% of rates.

80 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates - VaLORS Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled) Retirement Rates

Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

Mortality Rates - JRS Employees

Pre-Retirement:

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Increased age 50 rates and lowered rates at older ages

Adjusted rates to better fit experience at each year age and service through 9 years of service

Adjusted rates to better match experience No change Decreased rate from 50% to 35%

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% compounding

increase from ages 70 to 85.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males 115% of rates; females

130% of rates.

-80-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – JRS Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP- 2014 projected to 2020

Retirement Rates Decreased rates at first retirement eligibility

Withdrawal Rates No change

Disability Rates Removed disability rates

Salary Scale No change

Mortality Rates – Largest Ten Locality Employers – General Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

81 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - JRS Employees (Continued) The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial

experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial assumptions as a result of the experience study are as follows:

Mortality Rates (pre-retirement, post: Updated to a more current mortality table - RP-

retirement healthy, and disabled) 2014 projected to 2020 Retirement Rates Decreased rates at first retirement eligibility Withdrawal Rates No change

Disability Rates Removed disability rates

Salary Scale No change

Mortality Rates - Largest Ten Locality Employers - General Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Largest Ten Locality Employers – General Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP- 2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Lowered disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 20%

Mortality Rates – Non-Largest Ten Locality Employers – General Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

82 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Largest Ten Locality Employers - General Employees (Continued)

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP- retirement healthy, and disabled) 2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Adjusted termination rates to better fit

Withdrawal Rates 5 experience at each age and service year

Disability Rates Lowered disability rates Salary Scale No change Line of Duty Disability Increased rate from 14% to 20%

Mortality Rates - Non-Largest Ten Locality Employers - General Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Non-Largest Ten Locality Employers – General Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP- 2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Lowered disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 15%

Mortality Rates – Largest Ten Locality Employers – Hazardous Duty Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

83 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Non-Largest Ten Locality Employers - General Employees (Continued)

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP- retirement healthy, and disabled) 2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Adjusted termination rates to better fit

Withdrawal Rates experience at each age and service year

Disability Rates Lowered disability rates Salary Scale No change Line of Duty Disability Increased rate from 14% to 15%

Mortality Rates - Largest Ten Locality Employers - Hazardous Duty Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Disablement RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

83+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Largest Ten Locality Employers – Hazardous Duty Employees (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP- 2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Increased disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 70%

Mortality Rates – Non-Largest Ten Locality Employers – Hazardous Duty Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

84 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Largest Ten Locality Employers - Hazardous Duty Employees (Continued)

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP- retirement healthy, and disabled) 2014 projected to 2020 Retirement Rates Lowered retirement rates at older ages

Adjusted termination rates to better fit

Withdrawal Rates 5 experience at each age and service year

Disability Rates Increased disability rates Salary Scale No change Line of Duty Disability Increased rate from 60% to 70%

Mortality Rates - Non-Largest Ten Locality Employers - Hazardous Duty Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Disablement: RP-2014 Disability Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Non-Largest Ten Locality Employers – Hazardous Duty Employees (Continued)

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Increased age 50 rates and lowered rates at older ages

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 60% to 45%

NET GLI OPEB Liability

The net OPEB liability (NOL) for the Group Life Insurance Program represents the program’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net position. As of June 30, 2017, NOL amounts for the Group Life Insurance Program is as follows (amounts expressed in thousands):

Group Life Insurance OPEB

Program

Total GLI OPEB Liability $ 2,942,426
Plan Fiduciary Net Position 1,437,586
Employers’ Net GLI OPEB Liability (Asset) $ 1,504,840

Plan Fiduciary Net Position as a Percentage of the Total GLI OPEB Liability 48.86%

The total GLI OPEB 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 GLI OPEB liability is disclosed in accordance with the requirements of GASB Statement No. 74 in the System’s notes to the financial statements and required supplementary information.

85 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Non-Largest Ten Locality Employers - Hazardous Duty Employees (Continued)

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates Increased age 50 rates and lowered rates at older ages

Updated to a more current mortality table - RP-2014 projected to 2020

Adjusted termination rates to better fit experience at

Withdrawal Rates each age and service year

Disability Rates Adjusted rates to better match experience Salary Scale No change Line of Duty Disability Decreased rate from 60% to 45%

NET GLI OPEB Liability

Group Life Insurance OPEB Program Total GLI OPEB Liability $ 2,942,426 Plan Fiduciary Net Position 1,437,586

Employers’ Net GLI OPEB Liability (Asset) $

Plan Fiduciary Net Position as a Percentage of the Total GL! OPEB Liability 48.86%

The total GL! OPEB 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 GLI OPEB liability is disclosed in accordance with the requirements of GASB Statement No. 74 in the System’s notes to the financial statements and required supplementary information.

85 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Long-Term Expected Rate of Return

The long-term expected rate of return on the System’s 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 System’s 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

Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.69% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% 1.43%

Total 100.00% 4.80%

Inflation 2.50% *Expected arithmetic nominal return 7.30%

*The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into account the volatility present in each of the asset classes. In setting the long-term expected return for the system, stochastic projections are employed to model future returns under various economic conditions. The results provide a range of returns over various time periods that ultimately provide a median return of 6.83%, including expected inflation of 2.50%.

Discount Rate

The discount rate used to measure the total GLI OPEB liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made per the VRS guidance 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, 2019, the rate contributed by the entity for the GLI OPEB will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly. From July 1, 2019 on, employers are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the GLI OPEB’s fiduciary net position was projected to be available to make all projected future benefit payments of eligible employees. Therefore the long-term expected rate of return was applied to all periods of projected benefit payments to determine the total GLI OPEB liability.

86 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB 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 Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.69% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% 1.43% Total 100.00% 4.80%

Inflation *Expected arithmetic nominal return

“The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into account the volatility present in each of the asset classes. In setting the long-term expected return for the system, stochastic projections are employed to model future returns under various economic conditions. The results provide a range of returns over various time periods that ultimately provide a median return of 6.83%, including expected inflation of 2.50%.

Discount Rate

The discount rate used to measure the total GLI OPEB liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made per the VRS guidance 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, 2019, the rate contributed by the entity for the GL! OPEB will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly. From July 1, 2019 on, employers are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the GLI OPEB’s fiduciary net position was projected to be available to make all projected future benefit payments of eligible employees. Therefore the long-term expected rate of return was applied to all periods of projected benefit payments to determine the total GLI OPEB liability.

= 86 =

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11―Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Sensitivity of the Employer’s Proportionate Share of the Net GLI OPEB Liability to Changes in the Discount Rate

The following presents the employer’s proportionate share of the net GLI OPEB liability using the discount rate of 7.00%, as well as what the employer’s proportionate share of the net GLI OPEB 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:

1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

Proportionate share of the Group Life Insurance Program Net OPEB Liability:

County 602,000$ 465,000$ 354,000$

Component Unit School Board (nonprofessional) 280,000$ 216,000$ 165,000$

Component Unit School Board (professional) 1,902,000$ 1,471,000$ 1,121,000$

Rate

Group Life Insurance Program Fiduciary Net Position

Detailed information about the Group Life Insurance Program’s Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2017-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

87 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 11—Group Life Insurance (GLI) Program (OPEB Plan): (Continued)

Sensitivity of the Employer’s Proportionate Share of the Net GLI OPEB Liability to Changes in the Discount Rate

Rate 1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

Proportionate

share of the Group Life

Insurance Program

Net OPEB Liability: County $ 602,000. _$ 465,000. _$ 354,000 Component Unit School Board

(nonprofessional) $ 280,000 _$ 216,000 _$ 165,000 Component Unit School Board

(professional) $ 1,902,000 _$ 1,471,000 $ 4,121,000

Group Life Insurance Program Fiduciary Net Position

Detailed information about the Group Life Insurance Program’s Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http: //www.varetire.org/Pdf /Publications/2017-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

-87-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program:

Plan Description

All full-time, salaried permanent employees of participating political subdivisions are automatically covered by the VRS Political Subdivision Health Insurance Credit Program upon employment. This is an agent multiple-employer plan administered by the Virginia Retirement System (the System), along with pension and other OPEB plans, for public employer groups in the Commonwealth of Virginia. Members earn one month of service credit toward the benefit for each month they are employed and for which their employer pays contributions to VRS. The health insurance credit is a tax-free reimbursement in an amount set by the General Assembly for each year of service credit against qualified health insurance premiums retirees pay for single coverage, excluding any portion covering the spouse or dependents. The credit cannot exceed the amount of the premiums and ends upon the retiree’s death.

The specific information about the Political Subdivision Health Insurance Credit Program OPEB, including eligibility, coverage and benefits is set out in the table below:

POLITICAL SUBDIVISION HEALTH INSURANCE CREDIT PROGRAM PLAN PROVISIONS Eligible Employees The Political Subdivision Retiree Health Insurance Credit Program was established July 1, 1993 for retired political subdivision employees of employers who elect the benefit and who retire with at least 15 years of service credit.

Eligible employees of participating employers are enrolled automatically upon employment. They include:

 Full-time permanent salaried employees of the participating political subdivision who are covered under the VRS pension plan.

Benefit Amounts The political subdivision’s Retiree Health Insurance Credit Program provides the following benefits for eligible employees:

 At Retirement – For employees who retire, the monthly benefit is $1.50 per year of service per month with a maximum benefit of $45.00 per month.

 Disability Retirement- For employees who retire on disability or go on long-term disability under the Virginia Local Disability Program (VLDP), the monthly benefit is $45.00 per month.

Health Insurance Credit Program Notes:  The monthly Health Insurance Credit benefit cannot exceed the individual premium amount.  No health insurance credit for premiums paid and qualified under LODA; however, the employee

may receive the credit for premiums paid for other qualified health plans.  Employees who retire after being on long-term disability under VLDP must have at least 15 years

of service credit to qualify for the health insurance credit as a retiree.

88 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program:

Plan Description

The specific information about the Political Subdivision Health Insurance Credit Program OPEB, including eligibility, coverage and benefits is set out in the table below:

POLITICAL SUBDIVISION HEALTH INSURANCE CREDIT PROGRAM PLAN PROVISIONS

Eligible Employees The Political Subdivision Retiree Health Insurance Credit Program was established July 1, 1993 for retired political subdivision employees of employers who elect the benefit and who retire with at least 15 years of service credit.

Eligible employees of participating employers are enrolled automatically upon employment. They

includ

Full-time permanent salaried employees of the participating political subdivision who are covered under the VRS pension plan.

Benefit Amounts The political subdivision’s Retiree Health Insurance Credit Program provides the following benefits for eligible employees:

At Retirement - For employees who retire, the monthly benefit is $1.50 per year of service per month with a maximum benefit of $45.00 per month.
Disability Retirement- For employees who retire on disability or go on long-term disability under the Virginia Local Disability Program (VLDP), the monthly benefit is $45.00 per month.

Health Insurance Credit Program Notes:

The monthly Health Insurance Credit benefit cannot exceed the individual premium amount.

No health insurance credit for premiums paid and qualified under LODA; however, the employee may receive the credit for premiums paid for other qualified health plans.

Employees who retire after being on long-term disability under VLDP must have at least 15 years of service credit to qualify for the health insurance credit as a retiree.

= 88 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Employees Covered by Benefit Terms

As of the June 30, 2016 actuarial valuation, the following employees were covered by the benefit terms of the HIC OPEB plan:

Component Unit Primary School Board

Government (nonprofessional)

Inactive members or their beneficiaries currently receiving benefits 14 65

Inactive members: Vested inactive members 2 -

Total inactive members 2 -

Active members 32 119

Total covered employees 48 184

Contributions

The contribution requirements for active employees is governed by §51.1-1402(E) 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. The County’s contractually required employer contribution rate for the year ended June 30, 2018 was 0.28% of covered employee compensation. The Component Unit School Board’s (nonprofessional) contractually required employer contribution rate for the year ended June 30, 2018 was 1.20% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015. The actuarially determined rate 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 from the County to the Health Insurance Credit Program were $4,374 and $3,736 for the years ended June 30, 2018 and June 30, 2017, respectively. Contributions from the Component Unit School Board (nonprofessional) to the Health Insurance Credit Program were $31,329 and $31,742 for the years ended June 30, 2018 and June 30, 2017, respectively.

89 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Employees Covered by Benefit Terms

As of the June 30, 2016 actuarial valuation, the following employees were covered by the benefit terms of the HIC OPEB plan:

Component Unit Primary School Board Government_ _(nonprofessional)

Inactive members or their beneficiaries currently receiving benefits 14 65

Inactive members:

Vested inactive members 2 Total inactive members Z Active members 32 119 Total covered employees a

Contributions

The contribution requirements for active employees is governed by 851.1-1402(E) 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. The County’s contractually required employer contribution rate for the year ended June 30, 2018 was 0.28% of covered employee compensation. The Component Unit School Board’s (nonprofessional) contractually required employer contribution rate for the year ended June 30, 2018 was 1.20% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015. The actuarially determined rate 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 from the County to the Health Insurance Credit Program were $4,374 and $3,736 for the years ended June 30, 2018 and June 30, 2017, respectively. Contributions from the Component Unit School Board (nonprofessional) to the Health Insurance Credit Program were $31,329 and $31,742 for the years ended June 30, 2018 and June 30, 2017, respectively.

89 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Net HIC OPEB Liability

The County and Component Unit School Board’s (nonprofessional) net Health Insurance Credit OPEB liability was measured as of June 30, 2017. The total Health Insurance Credit OPEB liability was determined by an actuarial valuation performed as of June 30, 2016, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017.

Actuarial Assumptions

The total HIC OPEB liability was based on an actuarial valuation as of June 30, 2016, 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, 2017.

Inflation 2.5%

Salary increases, including inflation: Locality - General employees 3.5%-5.35% Locality - Hazardous Duty employees 3.5%-4.75%

Investment rate of return 7.0%, net of investment expenses, including inflation*

90 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Net HIC OPEB Liability

Actuarial Assumptions The total HIC OPEB liability was based on an actuarial valuation as of June 30, 2016, 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, 2017.

Inflation 2.5% Salary increases, including inflation: Locality - General employees 3.5%-5.35%

Locality - Hazardous Duty employees 3.5%-4.75%

Investment rate of return 7.0%, net of investment expenses, including inflation*

-90-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Largest Ten Locality Employers – General Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Lowered disability rates Salary Scale No change Line of Duty Disability Increased rate from 14% to 20%

91 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Largest Ten Locality Employers - General Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

[Mortality Rates (pre-retirement, post- [Updated to a more current mortality table - RP-2014 retirement healthy, and disabled) projected to 2020 Retirement Rates Lowered retirement rates at older ages and extended

final retirement age from 70 to 75 [Adjusted termination rates to better fit experience

Withdrawal Rates lat each age and service year

Disability Rates Lowered disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 20%

-1-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Non-Largest Ten Locality Employers – General Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Lowered disability rates Salary Scale No change Line of Duty Disability Increased rate from 14% to 15%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Non-Largest Ten Locality Employers - General Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 95% of rates; females 105% of rates.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70 to 90.

Post-Disablement RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years, 110% of rates; females 125% of rates.

final retirement age from 70 to 75 [Adjusted termination rates to better fit experience

Withdrawal Rates lat each age and service year

Disability Rates Lowered disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 15%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Largest Ten Locality Employers – Hazardous Duty Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Increased disability rates Salary Scale No change Line of Duty Disability Increased rate from 60% to 70%

93 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Largest Ten Locality Employers - Hazardous Duty Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Disablement RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

[Mortality Rates (pre-retirement, post- [Updated to a more current mortality table - RP-2014

retirement healthy, and disabled) projected to 2020

Retirement Rates Lowered retirement rates at older ages

withdrawal Rates Adjusted termination rates to better fit experience lat each age and service year

Disability Rates Increased disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 70%

-93-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Non-Largest Ten Locality Employers – Hazardous Duty Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Increased age 50 rates and lowered rates at older ages

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Adjusted rates to better match experience Salary Scale No change Line of Duty Disability Decreased rate from 60% to 45%

94 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Non-Largest Ten Locality Employers - Hazardous Duty Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Disablement RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

[Mortality Rates (pre-retirement, post- [Updated to a more current mortality table - RP-2014

retirement healthy, and disabled) projected to 2020

Retirement Rates Increased age 50 rates and lowered rates at older ages

Withdrawal Rates Adjusted termination rates to better fit experience lat each age and service year

Disability Rates [Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 60% to 45%

94+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (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

Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.69% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% 1.43%

Total 100.00% 4.80%

Inflation 2.50% *Expected arithmetic nominal return 7.30%

Discount Rate

The discount rate used to measure the total HIC OPEB liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that 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, 2019, the rate contributed by the entity for the HIC OPEB will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly. From July 1, 2019 on, employers are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the HIC OPEB’s fiduciary net position was projected to be available to make all projected future benefit payments of eligible employees. Therefore the long-term expected rate of return was applied to all periods of projected benefit payments to determine the total HIC OPEB liability.

95 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (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 Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.69% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% 1.43% Total 100.00% 4.80%

Inflation *Expected arithmetic nominal return

Discount Rate

-95-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Changes in Net HIC OPEB Liability – Primary Government

Total Plan Net HIC OPEB Fiduciary HIC OPEB Liability Net Position Liability (Asset)

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

Balances at June 30, 2016 $ 107,364 $ 80,391 $ 26,973

Changes for the year: Service cost $ 1,785 $ - $ 1,785
Interest 7,343 - 7,343
Assumption changes (1,681) - (1,681)
Contributions - employer - 3,731 (3,731)
Net investment income - 9,214 (9,214)
Benefit payments (4,926) (4,926) -
Administrative expenses - (148) 148
Other changes - 472 (472)

Net changes $ 2,521 $ 8,343 $ (5,822)

Balances at June 30, 2017 $ 109,885 $ 88,734 $ 21,151

Increase (Decrease)

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Changes in Net HIC OPEB Liability - Primary Government

Increase (Decrease)

Total Plan Net HIC OPEB Fiduciary HIC OPEB Liability Net Position Liability (Asset) (a) (b) (a) - (b) Balances at June 30, 2016 $ 107,364 $ 80,391 § 26,973 Changes for the year: Service cost $ 1,785 $ - S$ 1,785 Interest 7,343 - 7,343 Assumption changes (1,681) : (1,681) Contributions - employer - 3,731 (3,731) Net investment income : 9,214 (9,214) Benefit payments (4,926) (4,926) - Administrative expenses : (148) 148 Other changes : 472 (472) Net changes $ 2,521 $ 8,343 $ 6,822) Balances at June 30, 2017 $ 109,885 $ 88,734 $ 21,151

The remainder of this page is left blank intentionally.

-96-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Changes in Net HIC OPEB Liability – Component Unit School Board (nonprofessional)

Total Plan Net HIC OPEB Fiduciary HIC OPEB Liability Net Position Liability (Asset)

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

Balances at June 30, 2016 $ 581,000 $ (33,000) $ 614,000

Changes for the year: Service cost $ 12,000 $ - $ 12,000
Interest 17,000 - 17,000
Assumption changes (42,000) - (42,000)
Contributions - employer - 32,000 (32,000)
Net investment income - - -
Benefit payments (34,000) (34,000) -

Net changes $ (47,000) $ (2,000) $ (45,000)

Balances at June 30, 2017 $ 534,000 $ (35,000) $ 569,000

Increase (Decrease)

Sensitivity of the County’s and Component Unit School Board’s (nonprofessional) Health Insurance Credit Net OPEB Liability to Changes in the Discount Rate

The following presents the County’s and Component Unit School Board’s (nonprofessional) Health Insurance Credit Program net HIC OPEB liability using the discount rate of 7.00%, as well as what the County’s and Component Unit School Board’s (nonprofessional) net HIC OPEB 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:

1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

County’s Net HIC OPEB Liability $ 30,698 $ 21,151 $ 12,909

Component Unit School Board’s (nonprofessional) Net HIC OPEB Liability $ 629,000 $ 569,000 $ 519,000

Rate

97 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Changes in Net HIC OPEB Liability - Component Unit School Board (nonprofessional)

Increase (Decrease)

Total Plan Net HIC OPEB Fiduciary HIC OPEB Liability Net Position Liability (Asset) (a) (b) (a) - (b) Balances at June 30, 2016 $ 581,000 § (33,000) $ 614,000 Changes for the year: Service cost $ 12,000 $ - $ 12,000 Interest 17,000 : 17,000 ‘Assumption changes (42,000) : (42,000) Contributions - employer : 32,000 (32,000) Net investment income - - - Benefit payments (34,000) (34,000) : Net changes $ (47,000) $ (2,000) $ (45,000) Balances at June 30, 2017 $ 534,000 $ (35,000) $ 569,000

Sensitivity of the County’s and Component Unit School Board’s (nonprofessional) Health Insurance Credit Net OPEB Liability to Changes in the Discount Rate

Rate 1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

County’s

Net HIC OPEB Liability $ 30,698 $ 21,151 $ 12,909 Component Unit School

Board’s (nonprofessional)

Net HIC OPEB Liability $ 629,000 $ 569,000 $ 519,000

-97-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Health Insurance Credit Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Health Insurance Credit Program OPEB

For the year ended June 30, 2018, the County and Component Unit School Board (nonprofessional) recognized Health Insurance Credit Program OPEB expense of $2,169 and $20,872, respectively. At June 30, 2018, the County and Component Unit School Board (nonprofessional) reported deferred outflows of resources and deferred inflows of resources related to the County’s and Component Unit School Board’s (nonprofessional) Health Insurance Credit Program from the following sources:

Deferred Outflows Deferred Inflows Deferred Outflows Deferred Inflows of Resources of Resources of Resources of Resources

Net difference between projected and actual earnings on HIC OPEB plan investments $ - $ 2,894 $ - $ 1,929

Change in assumptions - 1,366 - 36,752

Employer contributions subsequent to the measurement date 4,374 - 31,329 -

Total $ 4,374 $ 4,260 $ 31,329 $ 38,681

Primary Government (nonprofessional) Component Unit School Board

$4,374 and $31,329 reported as deferred outflows of resources related to the HIC OPEB resulting from the County and Component Unit School Board (nonprofessional) contributions subsequent to the measurement date will be recognized as a reduction of the Net HIC OPEB Liability in the fiscal year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the HIC OPEB will be recognized in the HIC OPEB expense in future reporting periods as follows:

Component Unit Primary School Board

Year Ended June 30 Government (nonprofessional

2019 $ (1,038) $ (10,283)
2020 (1,038) (10,283)
2021 (1,038) (10,283)
2022 (1,040) (7,832)
2023 (106) -

98 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Health Insurance Credit Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Health Insurance Credit Program OPEB

‘Component Unit School Board

Primary Government (conprofessional) Deferred Outflows Deferredinflows Deferred Outflows Deferred inflows of Resources cof Resources of Resources of Resources

Net difference between projected and actual

earnings on HIC OPEB plan investments 5 7 $ 2,894 § 3 1,99 Change in assumptions 1,366 36,752 Employer contribution subsequent tothe

measurement date 4374 31309

Total 5 4374 § 4260 § 31,309 § 38,681

Component Unit

Primary School Board Year Ended June 30 Government_(nonprofessional 2019 $ (1,038) $ (10,283) 2020 (1,038) (10,283) 2021 (1,038) (10,283) 2022 (1,040) (7,832) 2023 (106) :

98 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12―Health Insurance Credit (HIC) Program: (Continued)

Health Insurance Credit Program Plan Data

Information about the VRS Political Subdivision Health Insurance Credit Program is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2017-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

The remainder of this page is left blank intentionally.

99 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 12—Health Insurance Credit (HIC) Program: (Continued)

Health Insurance Credit Program Plan Data

Information about the VRS Political Subdivision Health Insurance Credit Program is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf /Publications/2017-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

The remainder of this page is left blank intentionally.

-99-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan):

Plan Description

All full-time, salaried permanent (professional) employees of public school divisions are automatically covered by the VRS Teacher Employee Health Insurance Credit Program. This is a cost-sharing multiple- employer plan administered by the Virginia Retirement System (the System), along with pension and other OPEB plans, for public employer groups in the Commonwealth of Virginia. Members earn one month of service credit toward the benefit for each month they are employed and for which their employer pays contributions to VRS. The health insurance credit is a tax-free reimbursement in an amount set by the General Assembly for each year of service credit against qualified health insurance premiums retirees pay for single coverage, excluding any portion covering the spouse or dependents. The credit cannot exceed the amount of the premiums and ends upon the retiree’s death.

The specific information for the Teacher Health Insurance Credit Program OPEB, including eligibility, coverage, and benefits is set out in the table below:

TEACHER EMPLOYEE HEALTH INSURANCE CREDIT PROGRAM PLAN PROVISIONS

Eligible Employees

The Teacher Employee Retiree Health Insurance Credit Program was established July 1, 1993 for retired Teacher Employees covered under VRS who retire with at least 15 years of service credit.

Eligible employees are enrolled automatically upon employment. They include:

 Full-time permanent (professional) salaried employees of public school divisions covered under VRS.

Benefit Amounts

The Teacher Employee Retiree Health Insurance Credit Program provides the following benefits for eligible employees:

 At Retirement – For Teacher and other professional school employees who retire, the monthly benefit is $4.00 per year of service per month with no cap on the benefit amount.

 Disability Retirement – For Teacher and other professional school employees who retire on disability or go on long-term disability under the Virginia Local Disability Program (VLDP), the monthly benefit is either:

o $4.00 per month, multiplied by twice the amount of service credit, or o $4.00 per month, multiplied by the amount of service earned had the employee been active

until age 60, whichever is lower.

Health Insurance Credit Program Notes:

 The monthly Health Insurance Credit benefit cannot exceed the individual premium amount.  Employees who retire after being on long-term disability under VLDP must have at least 15 years of

service credit to qualify for the health insurance credit as a retiree.

100 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan):

Plan Description

The specific information for the Teacher Health Insurance Credit Program OPEB, including eligibility, coverage, and benefits is set out in the table below:

TEACHER EMPLOYEE HEALTH INSURANCE CREDIT PROGRAM PLAN PROVISIONS

Eligible Employees

The Teacher Employee Retiree Health Insurance Credit Program was established July 1, 1993 for retired Teacher Employees covered under VRS who retire with at least 15 years of service credit.

Eligible employees are enrolled automatically upon employment. They include:

Full-time permanent (professional) salaried employees of public school divisions covered under VRS.

Benefit Amounts

The Teacher Employee Retiree Health Insurance Credit Program provides the following benefits for eligible employees:

At Retirement - For Teacher and other professional school employees who retire, the monthly benefit is $4.00 per year of service per month with no cap on the benefit amount.
Disability Retirement - For Teacher and other professional school employees who retire on disability or go on long-term disability under the Virginia Local Disability Program (VLDP), the monthly benefit is either:

Health Insurance Credit Program Notes:

The monthly Health Insurance Credit benefit cannot exceed the individual premium amount.
Employees who retire after being on long-term disability under VLDP must have at least 15 years of service credit to qualify for the health insurance credit as a retiree.

= 100 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Contributions

The contribution requirements for active employees is governed by §51.1-1401(E) of the Code of Virginia, as amended, but may be impacted as a result of funding provided to school divisions by the Virginia General Assembly. Each school division’s contractually required employer contribution rate for the year ended June 30, 2018 was 1.23% of covered employee compensation for employees in the VRS Teacher Employee Health Insurance Credit Program. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015. The actuarially determined rate 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 from the school division to the VRS Teacher Employee Health Insurance Credit Program were $225,953 and $199,561 for the years ended June 30, 2018 and June 30, 2017, respectively.

Teacher Employee Health Insurance Credit Program OPEB Liabilities, Teacher Employee Health Insurance Credit Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Teacher Employee Health Insurance Credit Program OPEB

At June 30, 2018, the school division reported a liability of $2,890,000 for its proportionate share of the VRS Teacher Employee Health Insurance Credit Program Net OPEB Liability. The Net VRS Teacher Employee Health Insurance Credit Program OPEB Liability was measured as of June 30, 2017 and the total VRS Teacher Employee Health Insurance Credit Program OPEB liability used to calculate the Net VRS Teacher Employee Health Insurance Credit Program OPEB Liability was determined by an actuarial valuation as of that date. The school division’s proportion of the Net VRS Teacher Employee Health Insurance Credit Program OPEB Liability was based on the school division’s actuarially determined employer contributions to the VRS Teacher Employee Health Insurance Credit Program OPEB plan for the year ended June 30, 2017 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2017, the school division’s proportion of the VRS Teacher Employee Health Insurance Credit Program was 0.22781% as compared to 0.23490% at June 30, 2016.

For the year ended June 30, 2018, the school division recognized VRS Teacher Employee Health Insurance Credit Program OPEB expense of $223,000. Since there was a change in proportionate share between June 30, 2016 and June 30, 2017, a portion of the VRS Teacher Employee Health Insurance Credit Program Net OPEB expense was related to deferred amounts from changes in proportion.

101 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Contributions

The contribution requirements for active employees is governed by 851.1-1401(E) of the Code of Virginia, as amended, but may be impacted as a result of funding provided to school divisions by the Virginia General Assembly. Each school division’s contractually required employer contribution rate for the year ended June 30, 2018 was 1.23% of covered employee compensation for employees in the VRS Teacher Employee Health Insurance Credit Program. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015. The actuarially determined rate 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 from the school division to the VRS Teacher Employee Health Insurance Credit Program were $225,953 and $199,561 for the years ended June 30, 2018 and June 30, 2017, respectively.

At June 30, 2018, the school division reported a liability of $2,890,000 for its proportionate share of the VRS Teacher Employee Health Insurance Credit Program Net OPEB Liability. The Net VRS Teacher Employee Health Insurance Credit Program OPEB Liability was measured as of June 30, 2017 and the total VRS Teacher Employee Health Insurance Credit Program OPEB liability used to calculate the Net VRS Teacher Employee Health Insurance Credit Program OPEB Liability was determined by an actuarial valuation as of that date. The school division’s proportion of the Net VRS Teacher Employee Health Insurance Credit Program OPEB Liability was based on the school division’s actuarially determined ‘employer contributions to the VRS Teacher Employee Health Insurance Credit Program OPEB plan for the year ended June 30, 2017 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2017, the school division’s proportion of the VRS Teacher Employee Health Insurance Credit Program was 0.22781% as compared to 0.23490% at June 30, 2016.

= 101

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

At June 30, 2018, the school division reported deferred outflows of resources and deferred inflows of resources related to the VRS Teacher Employee Health Insurance Credit Program OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources

Net difference between projected and actual earnings on Teacher HIC OPEB plan investments $ - $ 5,000

Change in assumptions - 30,000

Change in proportion - 78,000

Employer contributions subsequent to the measurement date 225,953 -

Total $ 225,953 $ 113,000

$225,953 reported as deferred outflows of resources related to the Teacher Employee HIC OPEB resulting from the school division’s contributions subsequent to the measurement date will be recognized as a reduction of the Net Teacher Employee HIC OPEB Liability in the fiscal year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Teacher Employee HIC OPEB will be recognized in the Teacher Employee HIC OPEB expense in future reporting periods as follows:

Year Ended June 30

2019 $ (18,000)
2020 (18,000)
2021 (18,000)
2022 (18,000)
2023 (16,000)

Thereafter (25,000)

102 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Teacher Employee Health insurance Credit Program OPEB Liabilities, Teacher Employee Health Insurance Credit Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Teacher Employee Health Insurance Credit Program OPEB: (Continued)

Deferred Outflows Deferred Inflows

of Resources of Resources Net difference between projected and actual earnings on Teacher HIC OPEB plan investments $ - $ 5,000 Change in assumptions - 30,000 Change in proportion - 78,000 Employer contributions subsequent to the measurement date 225,953

Total

Year Ended June 30

2019 $ (18,000) 2020 (18,000) 2021 (18,000) 2022 (18,000) 2023 (16,000) Thereafter (25,000)

= 102 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Actuarial Assumptions

The total Teacher Employee HIC OPEB liability for the VRS Teacher Employee Health Insurance Credit Program was based on an actuarial valuation as of June 30, 2016, 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, 2017.

Inflation 2.5%

Salary increases, including inflation: Teacher employees 3.5%-5.95%

Investment rate of return 7.0%, net of investment expenses, including inflation*

Mortality Rates – Teachers

Pre-Retirement:

RP-2014 White Collar Employee Rates to age 80, White Collar Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; 115% of rates for males and females.

103 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Actuarial Assumptions

Inflation 2.5% Salary increases, including inflation: Teacher employees 3.5%-5.95% Investment rate of return 7.0%, net of investment expenses,

including inflation*

Mortality Rates - Teachers

Pre-Retirement: RP-2014 White Collar Employee Rates to age 80, White Collar Healthy Annuitant Rates at ages 81 and older projected with scale BB to 2020.

Post-Retirement: RP-2014 White Collar Employee Rates to age 49, White Collar Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males 1% increase compounded from ages 70 to 90; females set back 3 years with 1.5% increase compounded from ages 65 to 70 and 2.0% increase compounded from ages 75 to 90.

Post-Disablement:

RP-2014 Disability Mortality Rates projected with scale BB to 2020; 115% of rates for males and females.

= 103 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Teachers: (Continued)

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Adjusted rates to better match experience Salary Scale No change

Net Teacher Employee HIC OPEB Liability

The net OPEB liability (NOL) for the Teacher Employee Health Insurance Credit Program represents the program’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net position. As of June 30, 2017, NOL amounts for the VRS Teacher Employee Health Insurance Credit Program is as follows (amounts expressed in thousands):

Teacher Employee HIC

OPEB Plan

Total Teacher Employee HIC OPEB Liability $ 1,364,702
Plan Fiduciary Net Position 96,091
Teacher Employee net HIC OPEB Liability (Asset) $ 1,268,611

Plan Fiduciary Net Position as a Percentage of the Total Teacher Employee HIC OPEB Liability 7.04%

The total Teacher Employee HIC OPEB liability is calculated by the System’s actuary, and the plan’s fiduciary net position is reported in the System’s financial statements. The net Teacher Employee HIC OPEB liability is disclosed in accordance with the requirements of GASB Statement No. 74 in the System’s notes to the financial statements and required supplementary information.

104 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Actuarial Assumptions: (Continued) Mortality Rates - Teachers: (Continued) The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial

experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial assumptions as a result of the experience study are as follows:

[Mortality Rates (pre-retirement, post- [Updated to a more current mortality table - RP-2014

retirement healthy, and disabled) projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

[Withdrawal Rates [Adjusted rates to better fit experience at each year lage and service through 9 years of service

Disability Rates [Adjusted rates to better match experience

Salary Scale No change

Net Teacher Employee HIC OPEB Liability

Teacher Employee HIC OPEB Plan Total Teacher Employee HIC OPEB Liability $ 1,364,702 Plan Fiduciary Net Position 96,091

Teacher Employee net HIC OPEB Liability (Asset) $1,268,611

Plan Fiduciary Net Position as a Percentage of the Total Teacher Employee HIC OPEB Liability 7.04%

= 104 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Long-Term Expected Rate of Return

The long-term expected rate of return on the VRS 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 VRS 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

Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.69% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% 1.43%

Total 100.00% 4.80%

Inflation 2.50% *Expected arithmetic nominal return 7.30%

Discount Rate

The discount rate used to measure the total Teacher Employee HIC OPEB was 7.00%. The projection of cash flows used to determine the discount rate assumed that employer contributions will be made in accordance with the VRS funding policy and at rates equal to the actuarially determined contribution rates adopted by the VRS Board of Trustees. Through the fiscal year ending June 30, 2019, the rate contributed by each school division for the VRS Teacher Employee Health Insurance Credit Program will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly. From July 1, 2019 on, all agencies are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the Teacher Employee HIC OPEB 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 Teacher Employee HIC OPEB liability.

105 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB 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 Public Equity 40.00% 4.54% 1.82% Fixed Income 15.00% 0.69% 0.10% Credit Strategies 15.00% 3.96% 0.59% Real Assets 15.00% 5.76% 0.86% Private Equity 15.00% 9.53% 1.43%

Total

Inflation “Expected arithmetic nominal return

Discount Rate

+105 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Sensitivity of the School Division’s Proportionate Share of the Teacher Employee HIC Net OPEB Liability to Changes in the Discount Rate

The following presents the school division’s proportionate share of the VRS Teacher Employee Health Insurance Credit Program net HIC OPEB liability using the discount rate of 7.00%, as well as what the school division’s proportionate share of the net HIC OPEB 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:

1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

School division’s proportionate share of the VRS Teacher

Employee HIC OPEB Plan Net HIC OPEB Liability $ 3,225,000 $ 2,890,000 $ 2,605,000

Rate

Teacher Employee HIC OPEB Fiduciary Net Position

Detailed information about the VRS Teacher Employee Health Insurance Credit Program’s Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/ Publications/2017-annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

The remainder of this page is left blank intentionally.

106 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Sensitivity of the School Division’s Proportionate Share of the Teacher Employee HIC Net OPEB Liability to Changes in the Discount Rate

Rate 1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%) School division’s proportionate share of the VRS Teacher Employee HIC OPEB Plan Net HIC OPEB Liability $ 3,225,000 $ 2,890,000 $ 2,605,000

Teacher Employee HIC OPEB Fiduciary Net Position

Detailed information about the VRS Teacher Employee Health Insurance Credit Program’s Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http: //www.varetire.ore/Pdf/ Publications/2017-annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

The remainder of this page is left blank intentionally.

+106 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program:

Plan Description

All paid employees and volunteers in hazardous duty positions in Virginia localities and hazardous duty employees who are covered under the Virginia Retirement System (VRS), the State Police Officers’ Retirement System (SPORS), or the Virginia Law Officers’ Retirement System (VALORS) are automatically covered by the Line of Duty Act Program (LODA). As required by statute, the Virginia Retirement System (the System) is responsible for managing the assets of the program. Participating employers made contributions to the program beginning in FY 2012. The employer contributions are determined by the System’s actuary using anticipated program costs and the number of covered individuals associated with all participating employers.

The specific information for the LODA Program OPEB, including eligibility, coverage and benefits is set out in the table below:

LINE OF DUTY ACT PROGRAM PLAN PROVISIONS

Eligible Employees

The eligible employees of the Line of Duty Act Program are paid employees and volunteers in hazardous duty positions in Virginia localities and hazardous duty employees who are covered under the Virginia Retirement System (VRS), the State Police Officers’ Retirement System (SPORS), or the Virginia Law Officers’ Retirement System (VALORS).

Benefit Amounts

The Line of Duty Act Program provides death and health insurance benefits for eligible individuals:

 Death – The Line of Duty Act program death benefit is a one-time payment made to the beneficiary or beneficiaries of a covered individual. Amounts vary as follows:

o $100,000 when a death occurs as the direct or proximate result of performing duty as of January 1, 2006, or after.

o $25,000 when the cause of death is attributed to one of the applicable presumptions and occurred earlier than five years after the retirement date.

o An additional $20,000 benefit is payable when certain members of the National Guard and U.S. military reserves are killed in action in any armed conflict on or after October 7, 2001.

 Health Insurance – The Line of Duty Act program provides health insurance benefits.
o Prior to July 1, 2017, these benefits were managed through the various employer plans and

maintained the benefits that existed prior to the employee’s death or disability. These premiums were reimbursed to the employer by the LODA program.

o Beginning July 1, 2017, the health insurance benefits are managed through the Virginia Department of Human Resource Management (DHRM). The health benefits are modeled after the State Employee Health Benefits Program plans and provide consistent, premium-free continued health plan coverage for LODA-eligible disabled individuals, survivors, and family members. Individuals receiving the health insurance benefits must continue to meet eligibility requirements as defined by the Line of Duty Act.

107 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program:

Plan Description

The specific information for the LODA Program OPEB, including eligibility, coverage and benefits is set out in the table below:

LINE OF DUTY ACT PROGRAM PLAN PROVISIONS

Eligible Employees

Benefit Amounts

The Line of Duty Act Program provides death and health insurance benefits for eligible individuals:

Death - The Line of Duty Act program death benefit is a one-time payment made to the beneficiary

or beneficiaries of a covered individual. Amounts vary as follows: © $100,000 when a death occurs as the direct or proximate result of performing duty as of

January 1, 2006, or after.

occurred earlier than five years after the retirement date. © Anadditional $20,000 benefit is payable when certain members of the National Guard and U.S. military reserves are killed in action in any armed conflict on or after October 7, 2001.

Health Insurance - The Line of Duty Act program provides health insurance benefits.

‘© Prior to July 1, 2017, these benefits were managed through the various employer plans and maintained the benefits that existed prior to the employee’s death or disability. These premiums were reimbursed to the employer by the LODA program.

© Beginning July 1, 2017, the health insurance benefits are managed through the Virginia Department of Human Resource Management (DHRM). The health benefits are modeled after the State Employee Health Benefits Program plans and provide consistent, premium-free continued health plan coverage for LODA-eligible disabled individuals, survivors, and family members. Individuals receiving the health insurance benefits must continue to meet eligibility requirements as defined by the Line of Duty Act.

+107 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program:

Contributions

The contribution requirements for the Line of Duty Act Program are governed by §9.1-400.1 of the Code of Virginia, as amended, but may be impacted as a result of funding provided to state agencies by the Virginia General Assembly. Each employer’s contractually required employer contribution rate for the Line of Duty Act Program for the year ended June 30, 2018 was $567.37 per covered full-time-equivalent employee. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015 and represents the pay-as-you-go funding rate and not the full actuarial cost of the benefits under the program. The actuarially determined pay-as-you-go rate was expected to finance the costs and related expenses of benefits payable during the year. Contributions to the Line of Duty Act Program from the entity were $53,616 and $54,041 for the years ended June 30, 2018 and June 30, 2017, respectively.

LODA OPEB Liabilities, LODA OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the LODA OPEB

At June 30, 2018, the entity reported a liability of $1,317,000 for its proportionate share of the Net LODA OPEB Liability. The Net LODA OPEB Liability was measured as of June 30, 2017 and the total LODA OPEB liability used to calculate the Net LODA OPEB Liability was determined by an actuarial valuation as of that date. The entity’s proportion of the Net LODA OPEB Liability was based on the entity’s actuarially determined pay-as-you-go employer contributions to the LODA OPEB plan for the year ended June 30, 2017 relative to the total of the actuarially determined pay-as-you-go employer contributions for all participating employers. At June 30, 2017, the entity’s proportion was 0.50108% as compared to 0.49189% at June 30, 2016.

For the year ended June 30, 2018, the entity recognized LODA OPEB expense of $119,000. Since there was a change in proportionate share between measurement dates, a portion of the LODA OPEB expense was related to deferred amounts from changes in proportion.

The remainder of this page is left blank intentionally.

108 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program:

Contributions

LODA OPEB Liabilities, LODA OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the LODA OPEB

The remainder of this page is left blank intentionally.

= 108 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

LODA OPEB Liabilities, LODA OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the LODA OPEB: (Continued)

At June 30, 2018, the entity reported deferred outflows of resources and deferred inflows of resources related to the LODA OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources

Net difference between projected and actual earnings on LODA OPEB plan investments $ - $ 2,000

Change in assumptions - 136,000

Change in proportion 23,000 -

Employer contributions subsequent to the measurement date 53,616 -

Total $ 76,616 $ 138,000

$53,616 reported as deferred outflows of resources related to the LODA OPEB resulting from the entity’s contributions subsequent to the measurement date will be recognized as a reduction of the Net LODA OPEB Liability in the fiscal year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the LODA OPEB will be recognized in LODA OPEB expense in future reporting periods as follows:

Year Ended June 30

2019 $ (14,000)
2020 (14,000)
2021 (14,000)
2022 (14,000)
2023 (14,000)

Thereafter (45,000)

109 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

LODA OPEB Liabilities, LODA OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the LODA OPEB: (Continued)

At June 30, 2018, the entity reported deferred outflows of resources and deferred inflows of resources related to the LODA OPEB from the following sources:

Deferred Outflows Deferred Inflows.

of Resources of Resources

Net difference between projected and actual

earnings on LODA OPEB plan investments $ - $ 2,000 Change in assumptions - 136,000 Change in proportion 23,000 Employer contributions subsequent to the

measurement date 53,616

Total $ 76,616 $ 138,000

Year Ended June 30

2019 $ (14,000) 2020 (14,000) 2021 (14,000) 2022 (14,000) 2023 (14,000) Thereafter (45,000)

= 109 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions

The total LODA OPEB liability was based on an actuarial valuation as of June 30, 2016, 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, 2017.

Inflation 2.5%

Salary increases, including inflation:

General state employees 3.50%-5.35%

SPORS employees 3.50%-4.75%

VaLORS employees 3.50%-4.75%

Locality employees 3.50%-4.75%

Medical cost trend rates assumption:

Under age 65 7.75%-5.00%

Ages 65 and older 5.75%-5.00%

Investment rate of return 3.56%, net of OPEB plan investment

expenses, 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 3.56%. However, since the difference was minimal, a more conservative 3.56% investment return assumption has been used. Since LODA is funded on a current-disbursement basis, the assumed annual rate of return of 3.56% was used since it approximates the risk-free rate of return.

110 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions The total LODA OPEB liability was based on an actuarial valuation as of June 30, 2016, 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, 2017.

Inflation 2.5%

Salary increases, including inflation:

General state employees 3.50%-5.35% SPORS employees 3.50%-4.75% VaLORS employees 3.50%-4.75% Locality employees 3.50%-4.75%

Medical cost trend rates assumption:

Under age 65 7.75%-5.00% Ages 65 and older 5.75%-5.00% Investment rate of return 3.56%, net of OPEB plan investment

expenses, 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 3.56%. However, since the difference was minimal, a more conservative 3.56% investment return assumption has been used. Since LODA is funded on a current-disbursement basis, the assumed annual rate of return of 3.56% was used since it approximates the risk-free rate of return.

-110-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality rates – General State Employees

Pre-Retirement: RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates; females 130% of rates.

Mortality Rates (pre-retirement, post-

retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014

projected to 2020

Retirement Rates Lowered rates at older ages and changed final

retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age

and service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 25%

111 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality rates - General State Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.

Post-Retirement:

RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase

compounded from ages 70 to 85.

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates;

females 130% of rates.

‘Mortality Rates (pre-retirement, post- [Updated to a more current mortality table - RP-2014

retirement healthy, and disabled) Retirement Rates

Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

projected to 2020

Lowered rates at older ages and changed final retirement from 70 to 75

Adjusted rates to better fit experience at each year age and service through 9 years of service

Adjusted rates to better match experience

No change

Increased rate from 14% to 25%

11+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality rates – SPORS Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted rates to better fit experience

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 85%

112 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued) Mortality rates - SPORS Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post-

Updated to a more current mortality table - RP-2014 retirement healthy, and disabled)

projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted rates to better fit experience

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 85%

2112+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality rates – VaLORS Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted rates to better fit experience at each year age and

service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 50% to 35%

113 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued) Mortality rates - VaLORS Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with

scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post-

Updated to a more current mortality table - RP-2014 retirement healthy, and disabled)

projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 50% to 35%

-113-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Largest Ten Locality Employers with Public Safety Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages Withdrawal Rates Adjusted termination rates to better fit experience at each

age and service year

Disability Rates Increased disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 70%

114 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates - Largest Ten Locality Employers with Public Safety Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement: RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with

scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

Post-Disablemen’

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-2014 retirement healthy, and disabled) projected to 2020 Retirement Rates Lowered retirement rates at older ages

Withdrawal Rates Adjusted termination rates to better fit experience at each

age and service year

Disability Rates Increased disability rates Salary Scale No change Line of Duty Disability Increased rate from 60% to 70%

-114-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates – Non-Largest Ten Locality Employers with Public Safety Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablement:

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted termination rates to better fit experience at each

age and service year

Disability Rates Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 60% to 45%

115 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions: (Continued)

Mortality Rates - Non-Largest Ten Locality Employers with Public Safety Employees

Pre-Retirement:

RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with scale BB to 2020; males 90% of rates; females set forward 1 year.

Post-Retirement:

Post-Disablemen’

RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2 years; unisex using 100% male.

Mortality Rates (pre-retirement, post- Updated to a more current mortality table - RP-2014 retirement healthy, and disabled) projected to 2020

Retirement Rates Increased age 50 rates and lowered rates at older ages

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Adjusted rates to better match experience Salary Scale No change Line of Duty Disability Decreased rate from 60% to 45%

2115+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Changes to the LODA Program Associated with HB 1345 (2016) and HB 2243 (2017)

The following changes were made to the LODA Program as a result of legislation in 2016 and 2017, but were specifically not considered in the June 30, 2016 actuarial valuation results which were rolled forward to the measurement date of June 30, 2017. There was no current actuarial experience on which to base the adjustments and the combined impact of the changes was not considered to be material to the final results. These changes will be factored into future actuarial valuations for the LODA Program.

The discontinuance of spouse health care coverage, if a covered spouse divorces a disabled employee or a covered surviving spouse remarries.
The potential for VRS’s periodic review of the disability status of a disabled employee.
For those beneficiaries who become eligible for health care benefits as the result of a disability

occurring after June 30, 2017, the suspension of health care benefits in years when VRS certifies current income exceeds salary at the time of the disability, indexed for inflation.

The extension of health care benefits for dependent children to age 26.
The expansion of the definition of presumption of death or disability to include infectious

diseases.

Net LODA OPEB Liability

The net OPEB liability (NOL) for the Line of Duty Act Program represents the program’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net position. As of June 30, 2017, NOL amounts for the Line of Duty Act Program is as follows (amounts expressed in thousands):

LODA Program

Total LODA OPEB Liability $ 266,252

Plan Fiduciary Net Position 3,461

Employers’ Net OPEB Liability (Asset) $ 262,791

Plan Fiduciary Net Position as a Percentage

of the Total LODA OPEB Liability 1.30%

The total LODA OPEB 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 OPEB liability is disclosed in accordance with the requirements of GASB Statement No. 74 in the System’s notes to the financial statements and required supplementary information.

116 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Changes to the LODA Program Associated with HB 1345 (2016) and HB 2243 (2017)

The discontinuance of spouse health care coverage, if a covered spouse divorces a disabled employee or a covered surviving spouse remarries.

The potential for VRS’s periodic review of the disability status of a disabled employee.

For those beneficiaries who become eligible for health care benefits as the result of a disability occurring after June 30, 2017, the suspension of health care benefits in years when VRS certifies current income exceeds salary at the time of the disability, indexed for inflation.

The extension of health care benefits for dependent children to age 26.

The expansion of the definition of presumption of death or disability to include infectious diseases.

Net LODA OPEB Liability The net OPEB liability (NOL) for the Line of Duty Act Program represents the program’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net

position. As of June 30, 2017, NOL amounts for the Line of Duty Act Program is as follows (amounts expressed in thousands):

LODA Program

Total LODA OPEB Liability $ 266,252 Plan Fiduciary Net Position 3,461 Employers’ Net OPEB Liability (Asset) $ 262,791

Plan Fiduciary Net Position as a Percentage of the Total LODA OPEB Liability 1.30%

-116-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Long-Term Expected Rate of Return

The long-term expected rate of return on LODA OPEB Program’s investments was set at 3.56% for this valuation. Since LODA is funded on a current-disbursement basis, it is not able to use the VRS Pooled Investments 7.00% assumption. Instead, the assumed annual rate of return of 3.56% was used since it approximates the risk-free rate of return. This Single Equivalent Interest Rate (SEIR) is the applicable municipal bond index rate based on the Bond Buyer General Obligation 20-year Municipal Bond Index published monthly by the Board of Governors of the Federal Reserve System as of the measurement date of June 30, 2017.

Discount Rate

The discount rate used to measure the total LODA OPEB liability was 3.56%. The projection of cash flows used to determine the discount rate assumed that employer contributions will be made per the VRS Statutes and that they will be made in accordance with the VRS funding policy and at rates equal to the actuarially determined contribution rates adopted by the VRS Board of Trustees. Through the fiscal year ending June 30, 2019, the rate contributed by participating employers to the LODA OPEB Program will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly.

Sensitivity of the Covered Employer’s Proportionate Share of the Net LODA OPEB Liability to Changes in the Discount Rate

The following presents the covered employer’s proportionate share of the net LODA OPEB liability using the discount rate of 3.56%, as well as what the covered employer’s proportionate share of the net LODA OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.56%) or one percentage point higher (4.56%) than the current rate:

1% Decrease Current 1% Increase (2.56%) (3.56%) (4.56%)

County’s proportionate share of the total LODA Net OPEB Liability $ 1,493,000 $ 1,317,000 $ 1,170,000

Discount Rate

117 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Long-Term Expected Rate of Return

Discount Rate

Sensitivity of the Covered Employer’s Proportionate Share of the Net LODA OPEB Liability to Changes in the Discount Rate

Discount Rate

1% Decrease Current 1% Increase (2.56%) (3.56%) (4.56%) County’s proportionate share of the total LODA Net OPEB Liability $ 1,493,000 $ 1,317,000 $ 1,170,000

-117-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14―Line of Duty Act (LODA) Program: (Continued)

Sensitivity of the Covered Employer’s Proportionate Share of the Net LODA OPEB Liability to Changes in the Health Care Trend Rate

Because the Line of Duty Act Program contains a provision for the payment of health insurance premiums, the liabilities are also impacted by the health care trend rates. The following presents the covered employer’s proportionate share of the net LODA OPEB liability using the health care trend rate of 7.75% decreasing to 5.00%, as well as what the covered employer’s proportionate share of the net LODA OPEB liability would be if it were calculated using a health care trend rate that is one percentage point lower (6.75% decreasing to 4.00%) or one percentage point higher (8.75% decreasing to 6.00%) than the current rate:

1% Decrease Current 1% Increase (6.75% decreasing (7.75% decreasing (8.75% decreasing

to 4.00%) to 5.00%) to 6.00%)

County’s proportionate share of the total LODA Net OPEB Liability $ 1,118,000 $ 1,317,000 $ 1,564,000

Health Care Trend Rates

LODA OPEB Fiduciary Net Position

Detailed information about the Line of Duty Act Program Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2017-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

The remainder of this page is left blank intentionally.

118 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 14—Line of Duty Act (LODA) Program: (Continued)

Sensitivity of the Covered Employer’s Proportionate Share of the Net LODA OPEB Liability to Changes in the Health Care Trend Rate

Health Care Trend Rates

1% Decrease Current 1% Increase (6.75% decreasing (7.75% decreasing (8.75% decreasing to 4.00%) to 5.00%) to 6.00%) County’s proportionate share of the total LODA Net OPEB Liability $ 1,118,000 $ 1,317,000 $ 1,564,000

LODA OPEB Fiduciary Net Position

Detailed information about the Line of Duty Act Program Fiduciary Net Position is available in the separately issued VRS 2017 Comprehensive Annual Financial Report (CAFR). A copy of the 2017 VRS CAFR may be downloaded from the VRS website at http: / /www.varetire.org/Pdf/Publications/2017-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

The remainder of this page is left blank intentionally.

-118-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 15-Capital Assets:

Capital asset activity for the year ended June 30, 2018 was as follows:

Primary Government:

Beginning Ending

Balance Increases Decreases Balance

Governmental Activities:

Capital assets, not being depreciated:

Land $ 568,695 $ 75,000 $ - $ 643,695

Construction in progress 2,089,147 - (2,089,147) -

Total capital assets not being depreciated $ 2,657,842 $ 75,000 $ (2,089,147) $ 643,695

Capital assets, being depreciated:

Buildings and improvements $ 24,572,095 $ 5,411,473 $ - $ 29,983,568

Machinery and equipment 4,957,781 921,911 (565,980) 5,313,712

Total capital assets being depreciated $ 29,529,876 $ 6,333,384 $ (565,980) $ 35,297,280

Accumulated depreciation:

Buildings and improvements $ (12,023,984) $ (585,713) $ - $ (12,609,697)

Machinery and equipment (3,097,231) (458,405) 263,170 (3,292,466)

Total accumulated depreciation $ (15,121,215) $ (1,044,118) $ 263,170 $ (15,902,163)

Total capital assets being depreciated, net $ 14,408,661 $ 5,289,266 $ (302,810) $ 19,395,117

Governmental activities capital assets, net $ 17,066,503 $ 5,364,266 $ (2,391,957) $ 20,038,812

During the fiscal year, the County transferred five buses to the Component Unit - School Board with an original cost of $334,164 and accumulated depreciation of $158,728 (net book value of $175,436).

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 $ (2,510,158) $ (131,017) $ - $ (2,641,175)

Total capital assets being depreciated, net $ 2,730,541 $ (131,017) $ - $ 2,599,524

Business-type activities capital assets, net $ 2,730,541 $ (131,017) $ - $ 2,599,524

119 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2018

Note 15-Capital Asset

Capital asset activity for the year ended June 30, 2018 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

Beginning Ending Balance Increases Decreases Balance 568,695 $ 75,000 $ $643,695 2,089,147 = (2,089,147) : 2,657,842_$ 75,000 $_ (2,089,147) $___ 643,695 24,572,095 $ 5,411,473 $ $29,983,568 4,957,781 921,911 (565,980) 5,313,712 29,529,876 $6,333,384 $ (565,980) $ 35,297,280 (12,023,984) $ (585,713) $ $ (12,609,697) (3,097,231) (458,405) 263,170 (3,292,466) (15,121,215) $ (1,044,118) $263,170 $ (15,902,163) 14,408,661 $5,289,266 $ (302,810) $__ 19,395,117 17,066,503 $5,364,266 $ _ (2,391,957) $_ 20,038,812

During the fiscal year, the County transferred five buses to the Component Unit - School Board with an original cost of $334,164 and accumulated depreciation of $158,728 (net book value of $175,436).

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

Accumulated depreciation: Utility plant

Total capital assets being depreciated, net

Business-type activities capital assets, net

Beginning Ending Balance Increases Decreases Balance

5,240,699 $ $ 5,240,699 (2,510,158) §___ (131,017) $ (2,641,175) 2,730,541 $ (131,017) $ 2,599,524 2,730,541 $___(131,017) $ 2,599,524

119+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 15-Capital Assets: (Continued)

Primary Government: (Continued)

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

Governmental activities: General government administration $ 18,623
Judicial administration 11,581
Public safety 274,776
Public works 96,808
Health and welfare 34,441
Education 573,063
Parks, recreation, and cultural 31,152
Community development 3,674

Total depreciation expense-governmental activities $ 1,044,118

Business-type activities: Sewer Authority $ 131,017

Capital asset activity for the School Board for the year ended June 30, 2018 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

Capital assets, being depreciated: Buildings and improvements $ 25,313,576 $ 301,868 $ - $ 25,615,444
Machinery and equipment 7,435,332 682,781 (461,235) 7,656,878

Total capital assets being depreciated $ 32,748,908 $ 984,649 $ (461,235) $ 33,272,322

Accumulated depreciation: Buildings and improvements $ (15,390,261) $ (690,858) $ - $ (16,081,119)
Machinery and equipment (5,691,759) (600,704) 461,235 (5,831,228)

Total accumulated depreciation $ (21,082,020) $ (1,291,562) $ 461,235 $ (21,912,347)

Total capital assets being depreciated, net $ 11,666,888 $ (306,913) $ - $ 11,359,975

Governmental activities capital assets, net $ 17,303,233 $ (306,913) $ - $ 16,996,320

During the fiscal year, the County transferred five buses to the Component Unit - School Board with an original cost of $334,164 and accumulated depreciation of $158,728 (net book value of $175,436).

120 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2018

Note 15-Capital Assets: (Continued)

Primary Government: (Continued) Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities:

General government administration $18,623 Judicial administration 11,581 Public safety 274,776 Public works 96,808 Health and welfare 34,441 Education 573,063 Parks, recreation, and cultural 31,152 Community development 3,674 Total depreciation expense-governmental activities $1,044,118

Business-type activities: Sewer Authority

Capital asset activity for the School Board for the year ended June 30, 2018 was as follo\

Discretely Presented Component Unit - School Board:

Beginning Ending Balance Increases Decreases Balance

Capital assets, not being depreciated:

Land S__ 5,636,345 $ $ S__ 5,636,345 Capital assets, being depreciated:

Buildings and improvements $25,313,576 $ 301,868 $ $25,615,444

Machinery and equipment 7,435,332 682,781 (461,235) 7,656,878 Total capital assets being depreciated $32,748,908 $984,649 $_ (461,235) $__ 33,272,322 ‘Accumulated depreciatic

Buildings and improvements S (15,390,261) $ (690,858) $ $ (16,081,119)

Machinery and equipment (6,691,759) (600,704) 461,235, 6,831,228) Total accumulated depreciation $21,082,020) $1,797,562) $467,235 $21,912,347) Total capital assets being depreciated, net $—*11,666,888 $__(306,913) $ = $11,359,975 Governmental activities capital assets, net $17,303,233. $(306,913) $ = $ 16,996,320

During the fiscal year, the County transferred five buses to the Component Unit - School Board with an original cost of $334,164 and accumulated depreciation of $158,728 (net book value of $175,436).

= 120-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 16-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 17-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, future disallowances of current grant program expenditures, if any, would be immaterial.

Note 18-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$

121 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 16-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 17-Contingent Liab’ 5:

Note 18-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

-121-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 19-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, 2018 is $286,910. 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 2018. 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 20-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.

Statement of Net Position Balance Sheet

Governmental Activities Governmental Funds

2nd half taxes due December 2018 $ 5,213,068 $ 5,213,068

Delinquent taxes due prior to June 30, 2018 - 3,413,211

Prepaid taxes 209,470 209,470

Prorated tax 56,913 56,913

Special assessment - 78,713
Total deferred/unavailable revenue $ 5,479,451 $ 8,971,375

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122 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 19-Landfill Closure and Postclosure Care Cost:

Note 20-Deferred/Unavailable Revenue:

Statement of Net Position Balance Sheet Governmental Activities Governmental Funds 2nd half taxes due December 2018 $ 5,213,068 $ 5,213,068 Delinquent taxes due prior to June 30, 2018 : 3,413,211 Prepaid taxes 209,470 209,470 Prorated tax 56,913, 56,913, Special assessment : 78,713, Total deferred/unavailable revenue $ 5,479,451 $ 8,971,375

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-122-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 21-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 2018, a total of $8,007,169 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, 2018, 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 $1,098,269 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 2018 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

2017-18 $ 929,201 $ 7,676,237 $ (7,507,169) $ 1,098,269
2016-17 683,320 8,033,165 (7,787,284) 929,201
2015-16 888,250 5,756,196 (5,961,126) 683,320

Note 22-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.

In addition, the Board of Supervisors also provides financing guarantees to the Castlewood Water and Sewage Authority.

Note 23-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, 2018, the outstanding balance of the loan was $3,391,300.

123 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 21-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 2018, a total of $8,007,169 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, 2018, 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 $1,098,269 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 2018 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

2017-18 $§ 929,201 $ 7,676,237 $ (7,507,169) $1,098,269 2016-17 683,320 8,033,165 (7,787,284) 929,201 2015-16 888,250 5,756,196 (5,961,126) 683,320

Note 22-Moral Obligation:

In addition, the Board of Supervisors also provides financing guarantees to the Castlewood Water and Sewage Authority.

Note 23-Operating Lease:

123 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 23-Operating Lease: (Continued)

Future required rent payments are as follows:

Year Ending

June 30, Principal Interest 2019 390,000$ 74,898$
2020 399,100 65,825
2021 408,700 56,199
2022 418,400 46,514
2023 428,300 36,600

2024-2026 1,346,800 47,997
Totals 3,391,300$ 328,033$

Operating Lease

Note 24-Litigation:

As of June 30, 2018, the County’s Attorney reports one matter to be disclosed as a possible liability to the County. A company, located in the County, has appealed its 2014 business personal property tax assessment issued by the Commissioner of the Revenue of Russell County, Virginia. The company claims the assessment is based on equipment that is used to support manufacturing and is therefore non- taxable. The company is seeking a refund of their payment in the amount of $677,914.11.

The same company has also appealed its 2017 business personal property tax of $1,192,915.82 making a similar claim as noted above. As of June 30, 2018, this amount had not been paid but was included in property tax receivables of the County.

The County’s attorney estimates the risk of loss to the County on both claims to be low to fair and therefore, no liability has been booked for either amount.

The remainder of this page left blank intentionally.

124 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 23-Operating Lease: (Continued)

Future required rent payments are as follows:

Year Ending Operating Lease

June 30, Principal Interest 2019 3 390,000 74,898 2020 399,100 65,825 2021 408,700 56,199 2022 418,400 46,514 2023 428,300 36,600

2024-2026 1,346,800 47,997

Totals 53,391,300 5 328,033

Note 24-Litigati

The County’s attorney estimates the risk of loss to the County on both claims to be low to fair and therefore, no liability has been booked for either amount.

The remainder of this page left blank intentionally.

-124-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 25-Adoption of Accounting Principles:

The County and Component Unit School Board implemented the financial reporting provisions of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions during the fiscal year ended June 30, 2018. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures related to postemployment benefits other than pensions (other postemployment benefits or OPEB). Note disclosure and required supplementary information requirements about OPEB are also addressed. The requirements of this Statement will improve accounting and financial reporting by state and local governments for OPEB. In addition, the County and Component Unit School Board implemented Governmental Accounting Standards Board Statement No. 85, Omnibus 2017 during the fiscal year ended June 30, 2018. This Statement addresses practice issues identified during implementation and application of certain GASB statements for a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits (OPEB)). The implementation of these Statements resulted in the following restatement of net position:

Governmental Activities

Component Unit School Board

Net Position, July 1, 2017, as previously stated 8,343,923$ (19,371,832)$
GASB 75 Implementation (2,030,772) (11,744,085)
Net Position, July 1, 2017, as restated 6,313,151$ (31,115,917)$

Note 26-Upcoming Pronouncements:

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.

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. 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

125 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 25-Adoption of Accounting Principles:

The County and Component Unit School Board implemented the financial reporting provisions of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions during the fiscal year ended June 30, 2018. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expense/ expenditures related to postemployment benefits other than pensions (other postemployment benefits or OPEB). Note disclosure and required supplementary information requirements about OPEB are also addressed, The requirements of this Statement will improve accounting and financial reporting by state and local governments for OPEB. In addition, the County and Component Unit School Board implemented Governmental Accounting Standards Board Statement No. 85, Omnibus 2017 during the fiscal year ended June 30, 2018. This Statement addresses practice issues identified during implementation and application of certain GASB statements for a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits (OPEB). The implementation of these Statements resulted in the following restatement of net position:

Governmental _ Component Unit Activities School Board Net Position, July 1, 2017, as previously stated 5 8,343,923 $ (19,371,832) GASB 75 Implementation (2,030,772) (11,744,085) Net Position, July 1, 2017, as restated S___ 6,313,151 $ (31,115,917)

Note 26-Upcoming Pronouncements:

+125 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 26-Upcoming Pronouncements: (Continued)

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.

Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, clarifies which liabilities governments should include when disclosing information related to debt. It defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established. The Statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. For notes to financial statements related to debt, it requires that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018.

Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and simplifies accounting for interest cost incurred before the end of a construction period. Such interest cost includes all interest that previously was accounted for in accordance with the requirements of paragraphs 5-22 of Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, which are superseded by this Statement. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. This Statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. 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.

126 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2018

Note 26-Upcoming Pronouncements: (Continued)

Management is currently evaluating the impact these standards will have on the financial statements when adopted.

+126 -

Required Supplementary Information

Exhibit 11

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES General property taxes 16,347,862$ 16,347,862$ 16,390,872$ 43,010$

Other local taxes 3,072,069 3,082,999 3,025,550 (57,449)

Permits, privilege fees, and regulatory licenses 33,200 33,200 68,668 35,468

Fines and forfeitures 14,400 14,400 16,708 2,308

Revenue from the use of money and property 343,000 343,000 252,400 (90,600)

Charges for services 336,200 336,200 344,100 7,900

Miscellaneous 216,600 216,600 233,890 17,290

Recovered costs 438,500 438,500 601,532 163,032

Intergovernmental:

Commonwealth 8,610,491 8,610,491 8,494,082 (116,409)

Federal 3,002,559 3,002,559 2,805,219 (197,340)

Total revenues 32,414,881$ 32,425,811$ 32,233,021$ (192,790)$

EXPENDITURES Current:

General government administration 1,803,077$ 2,052,508$ 2,177,595$ (125,087)$

Judicial administration 2,196,775 2,056,435 2,397,387 (340,952)

Public safety 6,067,997 5,726,378 6,554,101 (827,723)

Public works 3,068,494 3,829,041 3,137,540 691,501

Health and welfare 7,748,121 8,223,076 7,113,432 1,109,644

Education 8,004,850 8,450,204 7,878,848 571,356

Parks, recreation, and cultural 541,486 556,488 566,272 (9,784)

Community development 924,972 916,987 1,083,779 (166,792)

Nondepartmental 377,268 544,673 158,828 385,845

Capital projects - - 3,322,326 (3,322,326)

Debt service:

Principal retirement 1,232,709 1,232,709 1,422,008 (189,299)

Interest and other fiscal charges 471,413 471,413 471,413 -

Total expenditures 32,437,162$ 34,059,912$ 36,283,529$ (2,223,617)$

Excess (deficiency) of revenues over (under)

expenditures (22,281)$ (1,634,101)$ (4,050,508)$ (2,416,407)$

OTHER FINANCING SOURCES (USES) Transfers out (200,000)$ (223,877)$ (403,382)$ (179,505)$

Issuance of capital leases - - 321,811 321,811

Total other financing sources (uses) (200,000)$ (223,877)$ (81,571)$ 142,306$

Net change in fund balances (222,281)$ (1,857,978)$ (4,132,079)$ (2,274,101)$

Fund balances - beginning 222,281 1,857,978 11,835,224 9,977,246
Fund balances - ending -$ -$ 7,703,145$ 7,703,145$

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, 2018

127 -

County of Russell, Virginia

General Fund

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2018

Exhibit 11

Variance with Budgeted Amounts Final Budget - Actual Positive origi Final Amounts Negative) REVENUES General property taxes, $ 16,347,862 $ 16,347,862 $ 16,390,872 $ 43,010 Other local taxes 3,072,069 3,082,999 3,025,550 (57,449) Permits, privilege fees, and regulatory licenses 33,200 33,200 68,668 35,468 Fines and forfeitures 14,400 14,400 16,708 2,308 Revenue from the use of money and property 343,000 343,000 252,400 (90,600) Charges for services 336,200 336,200 344,100 7,900 Miscellaneous 216,600 216,600 733,890 17,290 Recovered costs 438,500 438,500 601,532 163,032 Intergovernmental: ‘Commonwealth 8,610,491 8,610,491 8,494,082 (116,409) Federal 3,002,559 3,002,559 ___ 2,805,219 (197,340) Total revenues $32,414,881 $32,425,811 _§ 32,233,021 $ (192,790) EXPENDITURES Current: General government administration $1,803,077 $ 2,052,508 $ 2,177,595 $ (125,087) Judicial administration 2,196,775 2,056,435 2,397,387 (640,952) Public safety 6,067,997 5,726,378 6,554,101 (827,723) Public works 3,068,494 3,829,041, 3,137,540 691,501 Health and welfare 7,748,121 8,223,076 7,113,432. +1, 109,644 Education 8,004,850 8,450,204 7,878,848 571,356 Parks, recreation, and cultural 541,486 556,488 566,272 (9,784) Community development 924,972 916,987 1,083,779 (166,792) Nondepartmental 377,268 544,673 158,828 385,845 Capital projects : = 3,322,326 (3,322,326) Debt service: Principal retirement 4,232,709 1,232,709 1,422,008 (189,299) Interest and other fiscal charges 471,413 471,413 471,413 : Total expenditures $32,437,162 _$ 34,059,912 § 36,283,529 § (2,223,617) Excess (deficiency) of revenues over (under) expenditures S$ (22,281) $ (1,634,101) $ (4,050,508) $ (2,416,407) OTHER FINANCING SOURCES (USES) Transfers out, $ (200,000) $ (223,877) $ (403,382) $ (179,505) Issuance of capital leases : 321,811 321,811 Total other financing sources (uses) (200,000) $ (223,877) § (81,571) § 142,306 Net change in fund balances $ (222,281) $ (1,857,978) $ (4,132,079) § (2,274,101) Fund balances - beginning 222,281 1,857,978 11,835,224 9,977,246 Fund balances - ending $ — 3 =§7,703,145§ 7,703,145

127+

Exhibit 12

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Other local taxes 150,000$ 150,000$ 364,639$ 214,639$
Revenue from the use of money and property - - 332 332

Total revenues 150,000$ 150,000$ 364,971$ 214,971$

EXPENDITURES Current:

Public works 150,000$ 192,390$ 193,840$ (1,450)$

Excess (deficiency) of revenues over (under) expenditures -$ (42,390)$ 171,131$ 213,521$

Net change in fund balances -$ (42,390)$ 171,131$ 213,521$
Fund balances - beginning - 42,390 82,732 40,342
Fund balances - ending -$ -$ 253,863$ 253,863$

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, 2018

128 -

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, 2018

Exhibit 12

REVENUES Other local taxes

Revenue from the use of money and property Total revenues

EXPENDITURES. Current: Public works

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

Fund balances - beginning Fund balances - ending

Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) $150,000 150,000 $ 364,639 $ 214,639 : : 332 332 $150,000 150,000 $364,971 $214,971 $150,000 192,390 $ 193,840 $ (1,450) $ : (42,390) $171,131 $213,521 $ : (42,390) $171,131 $213,521 : 42,390 82,732 40,342 5 i $253,863 § 253,863

= 128 -

Exhibit 13

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Recovered costs -$ -$ 117,140$ 117,140$

Intergovernmental:

Federal 2,969,127 2,969,127 2,432,792 (536,335)

Total revenues 2,969,127$ 2,969,127$ 2,549,932$ (419,195)$

EXPENDITURES Current:

Health and welfare 2,746,846$ 2,746,846$ 2,488,011$ 258,835$

Excess (deficiency) of revenues over (under) expenditures 222,281$ 222,281$ 61,921$ (160,360)$

Net change in fund balances 222,281$ 222,281$ 61,921$ (160,360)$

Fund balances (deficit) - beginning - - (67,119) (67,119)
Fund balances (deficit) - ending 222,281$ 222,281$ (5,198)$ (227,479)$

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, 2018

Budgeted Amounts

129 -

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, 2018

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) $ -$ - $ 117,140 $ 117,140 2,969,127 2,969,127 2,432,792 (536,335) 52,969,127 $2,969,127 $2,549,932 $ (419,195) $2,746,846 _§ 2,746,846 $2,488,011 $258,835 $222,281 $222,281 $61,921 $ (160,360) $222,281 § 222,281 $61,921 $160,360) : - (67,119) (67,119) $22,281 § 222,281 SF (5,198) $ (227,479)

= 129 -

Exhibit 14

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 2017 99.2986% 4,976,088$ 4,808,206$ 103.49% 84.04%

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) 2017 0.22904% 28,167,000$ 17,982,879$ 156.63% 72.92%

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, 2018

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.

130 -

County of Russel, Virginia ‘Schedule of Employer’s Proportionate Share of the Net Pension Liability For the Years Ended June 30, 2015 through June 30, 2018,

Exhibit 14

Proportionate Pension Plan’s Share of the NPL Fiduciary Net Proportion of ‘asa Percentage of Position as a the Net Pension Proportionate Covered Covered Payrol Percentage of Total Date Liability (NPL) Share of the NPL. Payrol away Pension Liability o @ e “ 6) o Primary Government - County Retirement Plan 2017 99.2986% § 4,976,088 $ 4,808,206 103.49% 84.08% 2016 9e.6202% 6,835,305 5,467,426 25.02% 77.80% 2015, 9.11798 5,970,089 5,368,165 an. 20.39% rove 99.1179 5,782,839 5,440,419 106.29% 80.53% ‘Component Unit School Board (professional) 2017 0.229048 § 28,167,000 $ 17,982,879 156.638 IR 2016 0.234918 32,921,000 17,914,579 183.7% 68.28% 2015, o2aa7s 29,373,000 17,363,701 169.10% 70.68% ora 0.233608 28,229,000 17,083,236 165.24% 70.88%

Schedule is intended to show information for 10 years. Information prior to the 2014 valuation fs nat available. However, additional years will be

Included as they become available.

130 -

Exhibit 15

2017 2016 2015 2014 Total pension liability Service cost $ 241,584 $ 228,855 $ 261,697 $ 263,958
Interest 1,149,952 1,151,059 1,132,997 1,116,022
Differences between expected and actual experience 340,261 (240,897) 20,402 -
Changes in assumptions 32,003 - - -
Benefit payments, including refunds of employee contributions (1,186,620) (1,123,037) (1,191,112) (1,083,833)
Net change in total pension liability $ 577,180 $ 15,980 $ 223,984 $ 296,147
Total pension liability - beginning 17,021,192 17,005,212 16,781,228 16,485,081
Total pension liability - ending (a) $ 17,598,372 $ 17,021,192 $ 17,005,212 $ 16,781,228

Plan fiduciary net position Contributions - employer $ 450,897 $ 460,715 $ 425,544 $ 423,435
Contributions - employee 127,268 128,274 120,010 130,388
Net investment income 1,325,272 187,821 515,108 1,629,758
Benefit payments, including refunds of employee contributions (1,186,620) (1,123,037) (1,191,112) (1,083,833)
Administrative expense (8,059) (7,361) (7,577) (9,166)
Other (1,167) (82) (108) 86
Net change in plan fiduciary net position $ 707,591 $ (353,670) $ (138,135) $ 1,090,668
Plan fiduciary net position - beginning 11,234,798 11,588,468 11,726,603 10,635,935
Plan fiduciary net position - ending (b) $ 11,942,389 $ 11,234,798 $ 11,588,468 $ 11,726,603

School Division’s net pension liability - ending (a) - (b) $ 5,655,983 $ 5,786,394 $ 5,416,744 $ 5,054,625

Plan fiduciary net position as a percentage of the total pension liability 67.86% 66.00% 68.15% 69.88%

Covered payroll $ 2,147,811 $ 2,648,956 $ 2,434,577 $ 2,612,301

School Division’s net pension liability as a percentage of covered payroll 263.34% 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, 2018

131 -

County of Russell, Virginia

‘Schedule of Changes in Net Pension Liability and Related Ratios ‘Component Unit School Board (nonprofessional) For the Vears Ended June 30, 2015 through June 30, 2018,

Exhibit 15

‘Total pension lability Service cost

Interest

Differences between expected and actual experience

Changes in assumptions

Benefit payments, including refunds of employee contributions Nt change in total pension liability

‘Total pension ability - beginning

‘Total pension ibility - ending (a)

Plan fiduciary net postion Contributions - employer

Contributions - employee

Net investment income

Benefit payments, including refunds of employee contributions Administrative expense

other

Net change in plan flducary net position

Plan fiduciary net postion - beginning

Plan fiduciary net postion - ening (b)

School Division’s net pension lability - ending (a) (b)

Plan fiduciary net position as a percentage of the total pension ability

Covered payroll,

School Division’s net pension lability asa percentage of covered payroll

2017 2016 2015 2014 s 2a1,s84 § 28,855 § 261,687 § 263,958 1,149,952 1,151,059 1,132,997 1,116,022 aos (20,897) 20,402 32,003 4,186,620) (1.123.037) csg1) 1,083,833) s 377,180 § 75,960 $ 723,984 § 296,147 7.001.192 17,005,212 16,781.28 16,485,081 $7388.37 $7.21 92 $17,005,272 $16,781,228 s 450,897 § 460,715 § 25544 § 423,495 127,268 128,274 ‘20,010 130,388 1,325,272 187,821 515,108 1,629,758 (1,186,620) 1,123,037) c.s9117) (1,083,833), (8,059), 7361) wm (9.168), (1.167) 2) (108), a6 s 707.51 § (353,670) § 138,135) 5 1,090,668 11,234,798 11,588,468 11,726,603, 10,635,935 $i saz 359” § 1.734.795 § 1.588.468 § 11,725,603 s 5,655,983 $ 5,786,394 § 5,416,744 § 5,054,605, 67.86% 66.00% 68.19% 69.88% $ air § 2,648,956. $ 244,577 § 2612,301 263.348 28.46% 2.49%, 193.49%

Schedule i intended to show information for 10 years. Information prior to the 2014 valuation isnot available. However, additional years will be Incloded as

they become available,

2131+

Exhibit 16

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 2018 $ 760,630 $ 760,630 $ - $ 6,125,536 12.42%

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) 2018 $ 443,320 $ 443,320 $ - $ 2,610,768 16.98%

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%

Component Unit School Board (professional) 2018 $ 2,958,000 $ 2,958,000 $ - $ 18,374,518 16.10%

2017 2,607,000 2,607,000 - 17,982,879 14.50%

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%

County of Russell, Virginia Schedule of Employer Contributions - Pension Plans

For the Years Ended June 30, 2009 through June 30, 2018

Contributions are from County records.

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.

132 -

Exhibit 16 County of Russell, Virginia ‘Schedule of Employer Contributions - Pension Plans For the Years Ended June 30, 2009 through June 30, 2018

Contributions in

Relation to Contributions

Contractually Contractually Contribution Employer’s asa % of

Required Required Deficiency Covered Covered

Contribution Contribution (Excess) Payroll Payroll

Date fo} Q) @) (4) (6) Primary Government

2018S 760,630 $ 760,630 $ - $6,125,536 12.42% 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)

2018 $ 443,320 § 443,320 $ - $ 2,610,768 16.98% 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%

Component Unit School Board (professional)

2018 = $ ~—2,958,000 $ —2, 958,000 $ - $18,374,518 16.10% 2017 2,607,000 2,607,000 : 17,982,879 14.50% 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%

Contributions are from County records.

132 -

Exhibit 17

Largest 10 – Non-Hazardous Duty:

Largest 10 – Hazardous Duty:

All Others (Non 10 Largest) – Non-Hazardous Duty:

All Others (Non 10 Largest) – Hazardous Duty:

Component Unit School Board - Professional Employees

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, 2017 is not material.

Changes of assumptions – The following changes in actuarial assumptions were made effective June 30, 2016 based on the most recent experience study of the System for the four-year period ending June 30, 2016:

County of Russell, Virginia Notes to Required Supplementary Information - Pension Plans

For the Year Ended June 30, 2018

Disability Rates

Salary Scale

Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates

Withdrawal Rates

Salary Scale

Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates

Withdrawal Rates

Disability Rates

Withdrawal Rates

Disability Rates

Salary Scale

Line of Duty Disability

Lowered rates

No change

Increased rate from 14% to 15%

Adjusted rates to better fit experience at each year age and service through 9 years of service

Retirement Rates

Withdrawal Rates

Updated to a more current mortality table - RP-2014 projected to 2020

Increased age 50 rates, and lowered rates at older ages

Adjusted rates to better fit experience at each year age and service through 9 years of service

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates

Withdrawal Rates

Disability Rates

Lowered rates at older ages and changed final retirement from 70 to 75

Adjusted rates to better fit experience at each year age and service through 9 years of service

Adjusted rates to better match experience

Disability Rates

Salary Scale

Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Adjusted rates to better fit experience

No change

Decreased rate from 60% to 45%

Updated to a more current mortality table - RP-2014 projected to 2020

No changeSalary Scale

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered rates at older ages and changed final retirement from 70 to 75

Adjusted rates to better fit experience at each year age and service through 9 years of service

Lowered rates

No change

Increased rate from 14% to 20%

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered rates at older ages

Adjusted rates to better fit experience

Increased rates

No change

Increased rate from 60% to 70%

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered rates at older ages and changed final retirement from 70 to 75

133 -

Exhibit 17 County of Russel, Virginia

Notes to Required Supplementary Information - Pension Plans For the Year Ended June 30, 2018

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 Hybria Retirement Plan members forthe 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, 2017 is not material

Changes of assumptions - The following changes in actuarial assumptions were made effective June 30, 2016 based on the most recent experience study of the System for the four-year period ending June 30, 2016:

Largest 10 Non-Hazardous Duty: ‘Mortality Rates (pre-retirement, post-retirement healthy, and disabled) Retirement Rates ‘Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

Largest 10 - Hazardous Duty: ‘Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates Withdrawal Rates Disability Rates Salary Scale

Line of Duty Disability

All Others (Non 10 Largest) - Non-Hazardous Duty: ‘Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

All Others (Non 10 Largest) - Hazardous Duty: ‘Mortality Rates (pre-retirement, post-retirement healthy, and disabled) Retirement Rates ‘Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

‘Component Unit School Board - Professional Employees ‘Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates. ‘witharawal Rates

Disability Rates Salary Scale

Updated to a more current mortality table - RP-2014 projected to 2020,

Lowered rates at older ages and changed final retirement from 70 to 75 ‘Adjusted rates to better fit experience at each year age and service through 9 years of service

Lowered rates

No change

Increased rate from 14% to 20%

Updated to a more current mortality table - RP-2014 projected to 2020,

Lowered rates at older ages ‘Adjusted rates to better fit experience Increased rates

‘No change

Increased rate from 60% to 70%

Updated to a more current mortality table - RP-20t4 projected to 2020

Lowered rates at older ages and changed final retirement from 70 to 75 ‘Adjusted rates to better fit experience at each year age and service through 9 years of service

Lowered rates

‘No change

Increased rate from 14% to 15%

Updated to a more current mortality table - RP-2014 projected to 2020

Increased age 50 rates, and lowered rates at older ages

‘Adjusted rates to better fit experience at each year age and service through 9 years of service

Adjusted rates to better fit experience No change Decreased rate from 60% to 45%

Updated to a more current mortality table -RP-2014 projected to 2020,

Lowered rates at older ages and changed final retirement from 70 to 75. ‘Adjusted rates to better fit experience at each year age and service through 9 years of service

Adjusted rates to better match experience No change

133 -

Exhibit 18

2018 Total OPEB liability Service cost $ 16,038
Interest 13,000
Changes in assumptions (11,427)
Benefit payments (18,508)
Net change in total OPEB liability $ (897)
Total OPEB liability - beginning 364,554
Total OPEB liability - ending $ 363,657

Covered payroll $ 6,190,566

County’s total OPEB liability (asset) as a percentage of covered payroll 5.87%

County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios

Primary Government For the Year Ended June 30, 2018

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

134 -

Exhibit 18 County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios Primary Government For the Year Ended June 30, 2018

2018

Total OPEB liability

Service cost $ 16,038 Interest 13,000 Changes in assumptions (11,427) Benefit payments (18,508) Net change in total OPEB liability $ (897) Total OPEB liability - beginning 364,554 Total OPEB liability - ending $

Covered payroll $ 6,190,566

County’s total OPEB liability (asset) as a percentage of covered payroll 5.87%

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

134-

Exhibit 19

Valuation Date: 7/1/2017 Measurement Date: 6/30/2018

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

Methods and assumptions used to determine OPEB liability:

Salary Increase Rates The salary increase rate starts at 5.35% salary increase for 1 year of service and gradually declines to 3.50% salary increase for 20 or more years of service.

Retirement Age The average age at retirement is 62.

County of Russell, Virginia Notes to Required Supplementary Information - County OPEB

For the Year Ended June 30, 2018

Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2017 and gradually declines to 4.20% by the year 2094.

Actuarial Cost Method Entry age normal, level percentage of pay

Discount Rate 3.50% as of June 30, 2017;
3.87% as of June 30, 2018

Inflation 2.50%

135 -

Exhibit 19

County of Russell, Virginia Notes to Required Supplementary Information - County OPEB For the Year Ended June 30, 2018

Valuation Date: ‘Measurement Date:

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

‘Methods and assumptions used to determine OPEB liabilit

Actuarial Cost Method Discount Rate

Inflation Healthcare Trend Rate

Salary Increase Rates

Retirement Age Mortality Rates

Entry age normal, level percentage of pay 3.50% as of June 30, 201 3.87% as of June 30, 2018

2.50%

‘The healthcare trend rate assumption starts at 6.00% in 2017 and gradually declines to 4.20% by the year 2094,

The salary increase rate starts at 5.35% salary increase for 1 year of service and gradually declines to 3.50% salary increase for 20 or more years of service.

‘The average age at retirement is 62.

The mortality rates for active and healthy retirees were calculated using the RP-2014 Employee Rates Table with scale BB to 2020; males 90% of rates; females set forward 1 year. 35% of death are assumed to be service related. The mortality rates for disabled retirees were calculated using the RP-2014 Disabled Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male. The mortality rates for retirees were calculated using the RP- 2014 Post-Retirement Mortality Rates projected with scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

+135 -

Exhibit 20

2018 Total OPEB liability Service cost $ 235,586
Interest 275,959
Changes in assumptions (205,110)
Benefit payments (490,936)
Net change in total OPEB liability $ (184,501)
Total OPEB liability - beginning 7,892,296
Total OPEB liability - ending $ 7,707,795

Covered payroll $ 20,503,347

School Board’s total OPEB liability (asset) as a percentage of covered payroll 37.59%

County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios

Component Unit School Board For the Year Ended June 30, 2018

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

136 -

Exhibit 20 County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios Component Unit School Board For the Year Ended June 30, 2018

2018 Total OPEB liability Service cost $ 235,586 Interest 275,959 Changes in assumptions (205,110) Benefit payments (490,936) Net change in total OPEB liability $ (184,501)

Total OPEB liability - beginning Total OPEB liability - ending

Covered payroll $ 20,503,347

School Board’s total OPEB liability (asset) as a percentage of covered payroll 37.59%

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

136 -

Exhibit 21

Valuation Date: 7/1/2017 Measurement Date: 6/30/2018

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

Methods and assumptions used to determine OPEB liability:

Discount Rate 3.50% as of June 30, 2017;
3.87% as of June 30, 2018

County of Russell, Virginia Notes to Required Supplementary Information - School OPEB

For the Year Ended June 30, 2018

Actuarial Cost Method Entry age normal, level percentage of pay

Retirement Age The average age at retirement is 62.

Inflation 2.50% Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2017

and gradually declines to 4.20% by the year 2094. Salary Increase Rates The salary increase rate starts at 5.35% salary increase for 1

year of service and gradually declines to 3.50% salary increase for 20 or more years of service.

137 -

Exhibit 21

County of Russell, Virginia Notes to Required Supplementary Information - School OPEB For the Year Ended June 30, 2018

Valuation Date: ‘Measurement Date:

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

‘Methods and assumptions used to determine OPEB liabilit

Actuarial Cost Method Discount Rate

Inflation Healthcare Trend Rate

Salary Increase Rates

Retirement Age Mortality Rates

Entry age normal, level percentage of pay 3.50% as of June 30, 201 3.87% as of June 30, 2018

2.50%

‘The healthcare trend rate assumption starts at 6.00% in 2017 and gradually declines to 4.20% by the year 2094,

The salary increase rate starts at 5.35% salary increase for 1 year of service and gradually declines to 3.50% salary increase for 20 or more years of service.

‘The average age at retirement is 62.

‘The mortality rates for active and healthy retirees were calculated using the RP-2014 Employee Rates Table with scale BB to 2020; males 90% of rates; females set forward 1 year. 35% of death are assumed to be service related. The mortality rates for disabled retirees were calculated using the RP-2014 Disabled Mortality Rates projected with scale BB to 2020; males set forward 2 years; unisex using 100% male. ‘The mortality rates for retirees were calculated using the RP- 2014 Post-Retirement Mortality Rates projected with scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to 90; females set forward 3 years.

137-

Exhibit 22

Employer’s Proportionate Share

Employer’s of the Net GLI OPEB Employer’s Proportionate Liability (Asset) Plan Fiduciary

Proportion of the Share of the Employer’s as a Percentage of Net Position as a Net GLI OPEB Net GLI OPEB Covered Covered Payroll Percentage of Total

Liability (Asset) Liability (Asset) Payroll (3)/(4) GLI OPEB Liability (2) (3) (4) (5) (6)

Primary Government 0.0309% $ 465,000 $ 5,704,306 8.15% 48.86%

Component Unit School Board (nonprofessional) 0.0144% $ 216,000 $ 2,654,927 8.14% 48.86%

Component Unit School Board (professional) 0.0978% $ 1,471,000 $ 18,034,586 8.16% 48.86%

County of Russell, Virginia Schedule of Employer’s Share of Net OPEB Liability

Group Life Insurance Program For the Year Ended June 30, 2018

2017

Date (1)

2017

Schedule is intended to show information for 10 years. Information prior to the 2017 valuation is not available. However, additional years will be included as they become available.

138 -

Exhibit 22 County of Russell, Virginia ‘Schedule of Employer’s Share of Net OPEB Liability Group Life Insurance Program For the Year Ended June 30, 2018

Employer’s Proportionate Share Employer’s of the Net GL! OPEB Employer’s Proportionate Liability (Asset) Plan Fiduciary Proportion of the Share of the Employer’s _ asa Percentage of Net Position as a Net GLI OPEB Net GLI OPEB Covered Covered Payroll Percentage of Total Date Liability (Asset) Liability (Asset) Payroll ea) GLI OPEB Liability a @ @) “ GO) (6) Primary Government 2017 0.0309% § 465,000 § 5,704,306 8.15% 48.86% ‘Component Unit School Board (nonprofessional) 2017 0.014% § 216,000 $ 2,654,927 8.14% 48.86% Component Unit School Board (professional) 2017 0.0978% § 1,471,000 $ 18,034,586 8.16% 48.86%

Schedule is intended to show information for 10 years. Information prior to the 2017 valuation is not available, However, additional years will be included as they become available.

138 -

Exhibit 23

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 2018 $ 32,161 $ 32,161 $ - $ 6,184,666 0.52%

2017 29,665 29,665 - 5,704,306 0.52%

2016 26,515 26,515 - 5,524,027 0.48%

2015 26,057 26,057 - 5,428,571 0.48%

2014 26,130 26,130 - 5,443,723 0.48%

2013 26,774 26,774 - 5,577,961 0.48%

2012 15,361 15,361 - 5,486,088 0.28%

2011 15,435 15,435 - 5,512,595 0.28%

2010 11,068 11,068 - 5,497,130 0.20%

2009 14,652 14,652 - 5,426,743 0.27%

Component Unit School Board (nonprofessional) 2018 $ 13,673 $ 13,673 $ - $ 2,629,348 0.52%

2017 13,806 13,806 - 2,654,927 0.52%

2016 12,715 12,715 - 2,648,956 0.48%

2015 11,849 11,849 - 2,468,575 0.48%

2014 12,548 12,548 - 2,614,141 0.48%

2013 12,838 12,838 - 2,674,538 0.48%

2012 7,686 7,686 - 2,745,156 0.28%

2011 7,652 7,652 - 2,735,933 0.28%

2010 5,527 5,527 - 2,832,847 0.20%

2009 7,816 7,816 - 2,894,798 0.27%

Component Unit School Board (professional) 2018 $ 95,556 $ 95,556 $ - $ 18,376,099 3.63%

2017 93,780 93,780 - 18,034,586 3.53%

2016 86,114 86,114 - 17,940,378 3.25%

2015 83,384 83,384 - 17,371,656 3.38%

2014 82,222 82,222 - 17,129,577 3.15%

2013 83,953 83,953 - 14,490,261 3.14%

2012 51,461 51,461 - 18,378,975 1.87%

2011 49,914 49,914 - 17,826,341 1.82%

2010 36,866 36,866 - 19,131,926 1.30%

2009 54,144 54,144 - 20,053,407 1.87%

County of Russell, Virginia Schedule of Employer Contributions

Group Life Insurance Program For the Years Ended June 30, 2009 through June 30, 2018

139 -

County of Russell, Virginia

Schedule of Employer Contributions

Group Life Insurance Program For the Years Ended June 30, 2009 through June 30, 2018

Exhibit 23

Contributions in

Relation to Contributions Contractually Contractually Contribution Employer’s asa % of Required Required Deficiency Covered Covered Contribution Contribution (Excess) Payroll Payroll Date a @ 8) (4) (5) Primary Government 2g $ 32,161 $ 32,161 - 6,184,666 0.52% 2017 29,665 29,665 5,704,306 0.52% 2016 26,515 26,515 5,524,027 0.48% 2015 26,057 26,057 5,428,571 0.48% 2014 26,130 26,130 : 5,443,723 0.48% 2013, 26,774 26,774 - 5,577,961 0.48% 2012 15,361 15,361 - 5,486,088 0.28% 2011 15,435 15,435 5,512,595 0.28% 2010 11,068 11,068 5,497,130 0.20% 2009 14,652 14,652 5,426,743 0.27% Component Unit School Board (nonprofessional) 2018 13,673 $ 13,673 - 2,629,348 0.52% 2017 13,806 13,806 2,654,927 0.52% 2016 12,715 12,715 2,648,956 0.48% 2015 11,849 11,849 2,468,575 0.48% 2014 12,548 12,548 : 2,614,141 0.48% 2013, 12,838 12,838 - 2,674,538 0.48% 2012 7,686 7,686 - 2,745,156 0.28% 2011 7,652 7,652 2,735,933 0.28% 2010 5,527 5,527 2,832,847 0.20% 2009 7,816 7,816 2,894,798 0.27% Component Unit School Board (professional) 218 S$ 95,556 $ 95,556 : 18,376,099 3.63% 2017 93,780 93,780 18,034,586 3.53% 2016 86,114 86,114 17,940,378 3.25% 2015 83,384 83,384 17,371,656 3.38% 2014 82,222 82,222 : 17,129,577 3.19% 2013, 83,953 83,953 - 14,490,261 3.14% 2012 51,461 51,461 : 18,378,975, 1.87% 2011 49,914 49,914 17,826,341 1.82% 2010 36,866 36,866 19,131,926 1.30% 2009 54,144 54,144 20,053,407 1.87%

= 139 -

Exhibit 24 Page 1 of 2

General State Employees

Teachers

SPORS Employees

VaLORS Employees

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Salary Scale Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Adjusted rates to better match experience No change Increased rate from 14% to 25%

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted rates to better fit experience

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Salary Scale

Adjusted rates to better match experience No change

Disability Rates Salary Scale Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates and lowered rates at older ages

Adjusted rates to better match experience No change Increased rate from 60% to 85%

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates Salary Scale Line of Duty Disability

Adjusted rates to better fit experience
No change

County of Russell, Virginia Notes to Required Supplementary Information

Group Life Insurance Program For the Year Ended June 30, 2018

Decreased rate from 50% to 35%

140 -

Exhibit 24 Page 1 of 2

County of Russell, Virginia Notes to Required Supplementary Information Group Life Insurance Program For the Year Ended June 30, 2018

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the

prior actuarial valuation.

General State Employees Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

Teachers Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates

Withdrawal Rates

Disability Rates Salary Scale

SPORS Employees Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates Withdrawal Rates Disability Rates Salary Scale

Line of Duty Disability

‘VaLORS Employees Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered rates at older ages and changed final retirement from 70 to 75

‘Adjusted rates to better fit experience at each year age and service through 9 years of service

‘Adjusted rates to better match experience

No change

Increased rate from 14% to 25%

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered rates at older ages and changed final retirement from 70 to 75

‘Adjusted rates to better fit experience at each year age and service through 9 years of service

‘Adjusted rates to better match experience

No change

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Increased age 50 rates and lowered rates at older ages ‘Adjusted rates to better fit experience

‘Adjusted rates to better match experience

No change

Increased rate from 60% to 85%

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Increased age 50 rates and lowered rates at older ages ‘Adjusted rates to better fit experience at each year age and service through 9 years of service

‘Adjusted rates to better fit experience No change Decreased rate from 50% to 35%

= 140 -

Exhibit 24 Page 2 of 2

JRS Employees

Largest Ten Locality Employers - General Employees

Non-Largest Ten Locality Employers - General Employees

Largest Ten Locality Employers - Hazardous Duty Employees

Non-Largest Ten Locality Employers - Hazardous Duty Employees

Retirement Rates Decreased rates at first retirement eligibility Withdrawal Rates No change Disability Rates Salary Scale

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

For the Year Ended June 30, 2018

Disability Rates Salary Scale Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Salary Scale Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered disability rates No change Increased rate from 14% to 15%

Disability Rates Salary Scale Line of Duty Disability

County of Russell, Virginia Notes to Required Supplementary Information

Group Life Insurance Program

Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted termination rates to better fit experience at each age

and service year

Increased rate from 60% to 70%

Retirement Rates Lowered retirement rates at older ages Withdrawal Rates Adjusted termination rates to better fit experience at each age

and service year

Disability Rates Salary Scale

Adjusted rates to better match experience No change Decreased rate from 60% to 45%

Removed disability rates No change

Lowered disability rates No change Increased rate from 14% to 20%

Increased disability rates No change

141 -

Exhibit 24 Page 2 of 2

County of Russell, Virginia Notes to Required Supplementary Information Group Life Insurance Program For the Year Ended June 30, 2018

IRS Employees Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates Withdrawal Rates Disability Rates Salary Scale

Largest Ten Locality Employers - General Employees Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates

Withdrawal Rates Disability Rates

Salary Scale Line of Duty Disability

Updated to a more current mortality table - RP-2014 projected to 2020

Decreased rates at first retirement eligibility

No change

Removed disability rates

No change

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered retirement rates at older ages and extended final retirement age from 70 to 75

‘Adjusted termination rates to better fit experience at each age and service year

Lowered disability rates

No change

Increased rate from 14% to 20%

Non-Largest Ten Locality Employers - General Employees

Mortality Rates (pre-retirement, post-retirement healthy, and disabled) Retirement Rates

Withdrawal Rates Disability Rates

Salary Scale Line of Duty Disability

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered retirement rates at older ages and extended final retirement age from 70 to 75

‘Adjusted termination rates to better fit experience at each age and service year

Lowered disability rates

No change

Increased rate from 14% to 15%

Largest Ten Locality Employers - Hazardous Duty Employees

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates

Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered retirement rates at older ages

‘Adjusted termination rates to better fit experience at each age and service year

Increased disability rates

No change

Increased rate from 60% to 70%

Non-Largest Ten Locality Employers - Hazardous Duty Employees

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Retirement Rates

Withdrawal Rates

Disability Rates Salary Scale Line of Duty Disability

Updated to a more current mortality table - RP-2014 projected to 2020

Increased age 50 rates and lowered rates at older ages ‘Adjusted termination rates to better fit experience at each age and service year

‘Adjusted rates to better match experience

No change

Decreased rate from 60% to 45%

2141 -

Exhibit 25

2017 Total HIC OPEB Liability Service cost $ 1,785
Interest 7,343
Changes in assumptions (1,681)
Benefit payments (4,926)
Net change in total HIC OPEB liability $ 2,521
Total HIC OPEB Liability - beginning 107,364
Total HIC OPEB Liability - ending (a) $ 109,885

Plan fiduciary net position Contributions - employer $ 3,731
Net investment income 9,214
Benefit payments (4,926)
Administrative expense (148)
Other 472
Net change in plan fiduciary net position $ 8,343
Plan fiduciary net position - beginning 80,391
Plan fiduciary net position - ending (b) $ 88,734

Employer’s net HIC OPEB liability - ending (a) - (b) $ 21,151

Plan fiduciary net position as a percentage of the total HIC OPEB liability 80.75%

Covered payroll $ 1,332,239

Employer’s net HIC OPEB liability as a percentage of covered payroll 1.59%

County of Russell, Virginia Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios

Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

Primary Government

Schedule is intended to show information for 10 years. Information prior to the 2018 valuation is not available. However, additional years will be included as they become available.

142 -

Exhibit 25

County of Russell, Virginia

Schedule of Changes in the

Employer’s Net OPEB Liability and Related Ratios Primary Government

Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

2017

Total HIC OPEB Liability Service cost $s 1,785 Interest 7,343 Changes in assumptions (1,681) Benefit payments (4,926) Net change in total HIC OPEB liability $ 2,521 Total HIC OPEB Liability - beginning 107,364 Total HIC OPEB Liability - ending (a) $ 109,885 Plan fiduciary net position Contributions - employer $ 3,731 Net investment income 9,214 Benefit payments (4,926) Administrative expense (148) Other 47 Net change in plan fiduciary net position $ 8,343 Plan fiduciary net position - beginning 80,391 Plan fiduciary net position - ending (b) $ 88,734 Employer’s net HIC OPEB liability - ending (a) - (b) s 24,151 Plan fiduciary net position as a percentage of the total

HIC OPEB liability 80.75% Covered payroll s 1,332,239 Employer’s net HIC OPEB liability as a percentage of

covered payroll 1.59%

Schedule is intended to show informati

‘ion for 10 years. Information prior to the 2018 valuation is

not available. However, additional years will be included as they become available.

-142-

Exhibit 26

2017 Total HIC OPEB Liability Service cost $ 12,000
Interest 17,000
Changes in assumptions (42,000)
Benefit payments (34,000)
Net change in total HIC OPEB liability $ (47,000)
Total HIC OPEB Liability - beginning 581,000
Total HIC OPEB Liability - ending (a) $ 534,000

Plan fiduciary net position Contributions - employer $ 32,000
Benefit payments (34,000)
Net change in plan fiduciary net position $ (2,000)
Plan fiduciary net position - beginning (33,000)
Plan fiduciary net position - ending (b) $ (35,000)

Employer’s net HIC OPEB liability - ending (a) - (b) $ 569,000

Plan fiduciary net position as a percentage of the total HIC OPEB liability -6.55%

Covered payroll $ 2,645,183

Employer’s net HIC OPEB liability as a percentage of covered payroll 21.51%

County of Russell, Virginia Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios

Component Unit School Board (nonprofessional) Health Insurance Credit Program (HIC)

For the Year Ended June 30, 2018

Schedule is intended to show information for 10 years. Information prior to the 2018 valuation is not available. However, additional years will be included as they become available.

143 -

Exhibit 26 County of Russell, Virginia Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios Component Unit School Board (nonprofessional) Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

2017

Total HIC OPEB Liability Service cost $s 12,000 Interest 17,000 Changes in assumptions (42,000) Benefit payments (34,000) Net change in total HIC OPEB liability $ (47,000) Total HIC OPEB Liability - beginning 581,000 Total HIC OPEB Liability - ending (a) $ 534,000 Plan fiduciary net position Contributions - employer $ 32,000 Benefit payments (34,000) Net change in plan fiduciary net position s (2,000) Plan fiduciary net position - beginning (33,000) Plan fiduciary net position - ending (b) s (35,000) Employer’s net HIC OPEB liability - ending (a) - (b) $ 569,000 Plan fiduciary net position as a percentage of the total

HIC OPEB liability -6.55% Covered payroll $ 2,645,183 Employer’s net HIC OPEB liability as a percentage of

covered payroll 21.51%

Schedule is intended to show information for 10 years. Information prior to the 2018 valuation is not available. However, additional years will be included as they become available.

+143

Exhibit 27

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 2018 $ 4,374 $ 4,374 $ - $ 1,562,251 0.28%

2017 3,736 3,736 - 1,332,239 0.28%

2016 3,572 3,572 - 1,190,516 0.30%

2015 3,321 3,321 - 1,106,909 0.30%

2014 757 757 - 1,081,402 0.07%

2013 3,902 3,902 - 5,574,375 0.07%

2012 3,289 3,289 - 5,481,250 0.06%

2011 3,304 3,304 - 5,506,789 0.06%

2010 7,661 7,661 - 5,472,384 0.14%

2009 7,576 7,576 - 5,411,426 0.14%

Component Unit School Board (nonprofessional) 2018 $ 31,329 $ 31,329 $ - $ 2,610,768 1.20%

2017 31,742 31,742 - 2,645,183 1.20%

2016 25,165 25,165 - 2,648,956 0.95%

2015 23,128 23,128 - 2,434,577 0.95%

2014 15,413 15,413 - 2,612,301 0.59%

2013 15,780 15,780 - 2,674,538 0.59%

County of Russell, Virginia Schedule of Employer Contributions

Health Insurance Credit Program (HIC) For the Years Ended June 30, 2009 through June 30, 2018

144 -

County of Russell, Virginia Schedule of Employer Contributions Health Insurance Credit Program (HIC)

For the Years Ended June 30, 2009 through June 30, 2018

Exhibit 27

Contributions in

Relation to Contributions

Contractually Contractually Contribution Employer’s asa % of

Required Required Deficiency Covered Covered

Contribution Contribution (Excess) Payroll Payroll

Date (1) (2) (3) (4) (5) Primary Government 2018 $ 4,374 § 4374 $ 1,562,251 0.28% 2017 3,736 3,736 1,332,239 0.28% 2016 3,572 3,572 1,190,516 0.30% 2015 3,321 3,321 1,106,909 0.30% 2014 757 757 1,081,402 0.07% 2013, 3,902 3,902 5,574,375 0.07% 2012 3,289 3,289 5,481,250 0.06% 2011 3,304 3,304 5,506,789 0.06% 2010 7,661 7,661 5,472,384 0.14% 2009 7,576 7,576 5,411,426 0.14% Component Unit School Board (nonprofessional)

2018 $ 31,329 $ 31,329 $ 2,610,768 1.20% 2017 31,742 31,742 2,645,183 1.20% 2016 25,165 25,165 2,648,956 0.95% 2015 23,128 23,128 2,434,577 0.95% 2014 15,413 15,413 2,612,301 0.59% 2013 15,780 15,780 2,674,538 0.59%

144 -

Exhibit 28

Largest Ten Locality Employers - General Employees

Non-Largest Ten Locality Employers - General Employees

Largest Ten Locality Employers - Hazardous Duty Employees

Non-Largest Ten Locality Employers - Hazardous Duty Employees

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Disability Rates Salary Scale

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Salary Scale Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Lowered disability rates No change Increased rate from 14% to 20%

Lowered disability rates No change

Salary Scale Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Increased age 50 rates and lowered rates at older ages

County of Russell, Virginia Notes to Required Supplementary Information

Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

Disability Rates

Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered retirement rates at older ages Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 to 75

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Salary Scale Line of Duty Disability

No change Decreased rate from 60% to 45%

Increased rate from 14% to 15%

Increased disability rates No change Increased rate from 60% to 70%

Adjusted rates to better match experience

145 -

Exhibit 28 County of Russell, Virginia Notes to Required Supplementary Information Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation

Largest Ten Locality Employers - General Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020, healthy, and disabled)

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 1075

Withdrawal Rates ‘Adjusted termination rates to better fit experience at each age and service year

Disability Rates Lowered disability rates

Salary Scale ‘No change

Line of Duty Disability, Increased rate from 14% to 20%

Non-Largest Ten Locality Employers - General Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020, healthy, and disabled)

Retirement Rates Lowered retirement rates at older ages and extended final retirement age from 70 1075

‘Withdrawal Rates ‘Adjusted termination rates to better fit experience at each age and service year

Disability Rates Lowered disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 14% to 15%

Largest Ten Locality Employers - Hazardous Duty Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020, healthy, and disabled)

Retirement Rates Lowered retirement rates at older ages

‘Withdrawal Rates, ‘Adjusted termination rates to better fit experience at each age and service year Disability Rates Increased disability rates

Salary Scale No change

Line of Duty Disability Increased rate from 60% to 70%

Non-Largest Ten Locality Employers - Hazardous Duty Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020, healthy, and disabled)

Retirement Rates Increased age 50 rates and lowered rates at older ages,

‘Withdrawal Rates ‘Adjusted termination rates to better fit experience at each age and service year Disability Rates ‘Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability, Decreased rate from 60% to 45%

2145 -

Exhibit 29

Employer’s Proportionate Share

Employer’s of the Net HIC OPEB Employer’s Proportionate Liability (Asset) Plan Fiduciary

Proportion of the Share of the Employer’s as a Percentage of Net Position as a Net HIC OPEB Net HIC OPEB Covered Covered Payroll Percentage of Total

Liability (Asset) Liability (Asset) Payroll (3)/(4) HIC OPEB Liability (2) (3) (4) (5) (6)

0.22781% $ 2,890,000 $ 17,978,510 16.07% 7.04%

County of Russell, Virginia Schedule of School Board’s Share of Net OPEB Liability

Teacher Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

Schedule is intended to show information for 10 years. Information prior to the 2017 valuation is not available. However, additional years will be included as they become available.

Date (1)

2017

146 -

Exhibit 29 County of Russell, Virginia Schedule of School Board’s Share of Net OPEB Liability Teacher Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

Employer’s Proportionate Share Employer’s of the Net HIC OPEB Employer’s Proportionate Liability (Asset) Plan Fiduciary Proportion of the Share of the Employer’s as a Percentage of Net Position as a Net HIC OPEB Net HIC OPEB Covered Covered Payroll Percentage of Total Date Liability (Asset) _Liability (Asset) Payroll ea) HIC OPEB Liability (a) @ @) (4) 5) 6 2017 0.22781% $ 2,890,000 $ 17,978,510 16.07% 7.04%

‘Schedule is intended to show information for 10 years. Information prior to the 2017 valuation is not available. However, additional years will be included as they become available.

= 146 -

Exhibit 30

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) 2018 $ 225,953 $ 225,953 $ - $ 18,370,145 1.23% 2017 199,561 199,561 - 17,978,510 1.11% 2016 189,859 189,859 - 17,911,244 1.06% 2015 183,923 183,923 - 17,351,215 1.06% 2014 189,622 189,622 - 17,083,023 1.11% 2013 193,975 193,975 - 17,475,216 1.11% 2012 110,342 110,342 - 18,390,325 0.60% 2011 106,958 106,958 - 17,826,341 0.60% 2010 142,001 142,001 - 19,131,926 0.74% 2009 216,577 216,577 - 20,053,407 1.08%

County of Russell, Virginia Schedule of Employer Contributions

Teacher Health Insurance Credit Program (HIC) For the Years Ended June 30, 2009 through June 30, 2018

147 -

County of Russell, Virginia Schedule of Employer Contributions

Teacher Health Insurance Credit Program (HIC) For the Years Ended June 30, 2009 through June 30, 2018

Exhibit 30

Contributions in

Relation to Contributions Contractually Contractually Contribution Employer’s asa % of Required Required Deficiency Covered Covered Contribution Contribution (Excess) Payroll Payroll Date O) (2) @) (4) (6) 2018 225,953 $ 225,953 $ 18,370,145 1.23% 2017 199,561 199,561 17,978,510 1.11% 2016 189,859 189,859 17,911,244 1.06% 2015 183,923, 183,923, 17,351,215 1.06% 2014 189,622 189,622 17,083,023 1.11% 2013, 193,975 193,975 17,475,216 1.11% 2012 110,342 110,342 18,390,325 0.60% 2011 106,958 106,958 17,826,341 0.60% 2010 142,001 142,001 19,131,926 0.74% 2009 216,577 216,577 20,053,407 1.08%

+147 -

Exhibit 31 County of Russell, Virginia

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates

Salary Scale

Notes to Required Supplementary Information Teacher Health Insurance Credit Program (HIC)

For the Year Ended June 30, 2018

Adjusted rates to better match experience

No change

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

148 -

Exhibit 31 County of Russell, Virginia Notes to Required Supplementary Information Teacher Health Insurance Credit Program (HIC) For the Year Ended June 30, 2018

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected

healthy, and disabled) to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

Withdrawal Rates ‘Adjusted rates to better fit experience at each year age and service through 9 years of service

Disability Rates ‘Adjusted rates to better match experience

Salary Scale No change

= 148 -

Exhibit 32

Employer’s Proportionate Share

Employer’s of the Net LODA OPEB Employer’s Proportionate Liability (Asset) Plan Fiduciary

Proportion of the Share of the Covered- as a Percentage of its Net Position as a Net LODA OPEB Net LODA OPEB Employee Covered-Employee Payroll Percentage of Total Liability (Asset) Liability (Asset) Payroll * (3)/(4) LODA OPEB Liability

(2) (3) (4) (5) (6)

0.50108% $ 1,317,000 N/A N/A 1.30%

County of Russell, Virginia Schedule of Employer’s Share of Net LODA OPEB Liability

Line of Duty Act Program (LODA) For the Year Ended June 30, 2018

*The contributions for the Line of Duty Act Program are based on the number of participants in the Program using a per capita-based contribution versus a payroll-based contribution. Therefore, covered-employee payroll is the relevant measurement, which is the total payroll of the employees in the OPEB plan. However, when volunteers and part-time employees make up a significant percentage of the employer’s members in the plan, the employer may determine that covered-employee payroll is misleading and, therefore, not applicable for disclosure.

Date (1)

2017

Schedule is intended to show information for 10 years. Since 2018 is the first year for this presentation, only one year of data is available. However, additional years will be included as they become available.

149 -

County of Russell, Virginia Schedule of Employer’s Share of Net LODA OPEB Liability Line of Duty Act Program (LODA)

For the Year Ended June 30, 2018

Exhibit 32

Employer’s Employer’s Proportionate

Employer’s

Proportionate Share

of the Net LODA OPEB Liability (Asset)

Plan Fiduciary

Proportion of the Share of the Covered as a Percentage of its Net Position as a Net LODA OPEB Net LODAOPEB Employee Covered-Employee Payroll Percentage of Total Date Liability (Asset) Liability (Asset) Payroll’ * yea) LODA OPEB Liability a) @ 8 4) © © 2017 0.50108% § 4,317,000 N/A N/A 1.30%

“The contributions for the Line of Duty Act Program are based on the number of participants in the Program using a per capita-based contribution versus a payroll-based contribution. Therefore, covered-employee payroll is the relevant measurement, which is the total payroll of the employees in the OPEB plan. However, when volunteers and part-time employees make up a significant percentage of the ‘employer’s members in the plan, the employer may determine that covered-employee payrall is misleading and, therefore, nat applicable

for disclosure,

Schedule is intended to show information for 10 years. Since 2018 isthe first year for this presentation, only one year of data is available. However, additional years will be included as they become available.

=149-

Exhibit 33

Contributions in Contributions Relation to as a % of

Contractually Contractually Contribution Covered- Covered - Required Required Deficiency Employee Employee

Contribution Contribution (Excess) Payroll * Payroll (1) (2) (3) (4) (5)

$ 53,616 $ 53,616 $ - N/A N/A 54,041 54,041 - N/A N/A 47,993 47,993 - N/A N/A

Schedule is intended to show information for 10 years. Information prior to the 2016 valuation is not available. However, additional years will be included as they become available.

*The contributions for the Line of Duty Act Program are based on the number of participants in the Program using a per capita-based contribution versus a payroll-based contribution. Therefore, covered-employee payroll is the relevant measurement, which is the total payroll of employees in the OPEB plan. However, when volunteers and part-time employees make up a significant percentage of the employer’s members in the plan, the employer may determine that covered-employee payroll is misleading and, therefore, not applicable for disclosure.

County of Russell, Virginia Schedule of Employer Contributions

Line of Duty Act Program (LODA) For the Years Ended June 30, 2016 through June 30, 2018

Date

2018

2016 2017

150 -

County of Russell, Virginia

Schedule of Employer Contributions Line of Duty Act Program (LODA)

For the Years Ended June 30, 2016 through June 30, 2018

Exhibit 33

Contributions in Contributions

Relation to asa % of

Contractually Contractually Contribution Covered- Covered -

Required Required Deficiency Employee Employee

Contribution Contribution (Excess) Payroll * Payroll

Date (1) (2) (3) (4) (5) 2018 53,616 53,616 NIA NIA 2017 54,041 54,041 NIA NIA 2016 47,993 47,993 NIA N/A

relevant measurement, which is the total payroll of employees in the OPEB plan.

However, when volunteers and part-time employees make up a significant percentage of the employer’s members in the plan, the employer may determine that covered-employee payroll is misleading and, therefore, not applicable for disclosure.

Schedule is intended to show information for 10 years. Information prior to the 2016 valuation is not available. However, additional years will be included as they become available.

150 -

Exhibit 34

General State Employees

SPORS Employees

VaLORS Employees

Employees in the Largest Ten Locality Employers with Public Safety Employees

Employees in the Non-Largest Ten Locality Employers with Public Safety Employees

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

County of Russell, Virginia

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75 Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of

service

Disability Rates Salary Scale Line of Duty Disability

Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service

Increased rate from 60% to 85%

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted rates to better fit experience Disability Rates Salary Scale

Adjusted rates to better match experience No change

Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020 and reduced margin for future improvement in accordance with experience

Retirement Rates Increased age 50 rates, and lowered rates at older ages

Retirement Rates Lowered retirement rates at older ages

Adjusted rates to better match experience No change Decreased rate from 50% to 35%

Disability Rates Salary Scale Line of Duty Disability

Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020

Mortality Rates (pre-retirement, post-retirement healthy, and disabled)

Updated to a more current mortality table - RP-2014 projected to 2020

Increased disability rates No change Increased rate from 60% to 70%

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year Disability Rates Salary Scale Line of Duty Disability

Decreased rate from 60% to 45%Line of Duty Disability

Notes to Required Supplementary Information Line of Duty Act Program (LODA)

For the Year Ended June 30, 2018

Adjusted rates to better match experience No change Increased rate from 14% to 25%

Retirement Rates Increased age 50 rates and lowered rates at older ages Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year Disability Rates Salary Scale

Adjusted rates to better match experience No change

151 -

Exhibit 34 County of Russell, Virginia Notes to Required Supplementary Information Line of Duty Act Program (LODA) For the Year Ended June 30, 2018

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

CChanges of assumptions - The following changes in actuarial assumptions were made effective June 30, 2016 based on the most recent ‘experience study of the System for the four-year period ending June 30, 2016:

General State Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020, healthy, and disabled)

Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75 ‘Withdrawal Rates ‘Adjusted rates to better fit experience at each year age and service through 9 years of service Disability Rates ‘Adjusted rates to better match experience Salary Seale No change Line of Duty Disability Increased rate from 14% to 25% ‘SPORS Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020 and reduced healthy, and disabled) ‘margin for future improvement in accordance with experience Retirement Rates Increased age 50 rates and lowered rates at older ages ‘Withdrawal Rates ‘Adjusted rates to better fit experience Disability Rates ‘Adjusted rates to better match experience Salary Scale No change Line of Duty Disability Increased rate from 60% to 85%

‘VaLORS Employees Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020 and reduced

healthy, and disabled) ‘margin for future improvement in accordance with experience Retirement Rates Increased age 50 rates, and lowered rates at older ages

‘withdrawal Rates ‘Adjusted rates to better fit experience at each year age and service through 9 years of Disability Rates ‘Adjusted rates to better match experience

Salary Seale 'No change

Line of Duty Disability Decreased rate from 50% to 35%

Employees in the Largest Ten Locality Employers with Public Safety Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020,

Retirement Rates Lowered retirement rates at older ages ‘Withdrawal Rates ‘Adjusted termination rates to better fit experience at each age and service year Disability Rates Increased disability rates,

Salary Seale No change

Line of Duty Disability Increased rate from 60% to 70%

Employees in the Non-Largest Ten Locality Employers with Public Safety Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020, healthy, and disabled)

Retirement Rates Increased age 50 rates and lowered rates at older ages ‘withdrawal Rates ‘Adjusted termination rates to better fit experience at each age and service year Disability Rates ‘Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 60% to 45%

2151+

Other Supplementary Information

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 35

Balance Balance Beginning End of Year Additions Deletions of Year

Assets Cash and cash equivalents Special Welfare Fund 66,789$ 74,014$ (79,467)$ 61,336$
VASAP Fund 10,545 171,682 (170,925) 11,302
Total Assets 77,334$ 245,696$ (250,392)$ 72,638$

Liabilities Amounts held for Social Services clients 66,789$ 74,014$ (79,467)$ 61,336$
Amounts held for VASAP 10,545 171,682 (170,925) 11,302
Total Liabilities 77,334$ 245,696$ (250,392)$ 72,638$

County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities

Agency Funds For the Year Ended June 30, 2018

152 -

County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities

Agency Funds

For the Year Ended June 30, 2018

Exhibit 35

Assets Cash and cash equivalents Special Welfare Fund VASAP Fund Total Assets

Liabilities Amounts held for Social Services clients Amounts held for VASAP

Total Liabilities

Balance Balance Beginning End of Year Additions —_Deletions of Year $ 66,789 $ 74,014 $ (79,467) $ 61,336 10,545, 171,682 (170,925) 11,302 $77,334 _§ 245,696 _$ (250,392) $ 72,638 S$ 66,789 $ 74,014 $ (79,467) $ 61,336 10,545 171,682 (170,925) 11,302 $77,334 _$ 245,696 _§ (250,392) $ 72,638

+152 -

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 36

School Operating

Fund

ASSETS Cash and cash equivalents 837,970$

Receivables (net of allowance for uncollectibles):

Accounts receivable 12,344 Due from other governmental units 1,578,145
Prepaid items 356,575

Total assets 2,785,034$

LIABILITIES Accounts payable 145,068$
Accrued liabilities 1,033,075 Due to primary government 1,108,691

Total liabilities 2,286,834$

FUND BALANCES Nonspendable:

Prepaid items 356,575$
Committed:

Textbook purchases 345,940
Regional Adult Education 287,676

Unassigned (491,991)
Total fund balances 498,200$
Total liabilities and fund balances 2,785,034$

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

Total fund balances per above 498,200$

Land 5,636,345$
Buildings and improvements 9,534,325
Machinery and equipment 1,825,650 16,996,320

Pension related items 4,193,849$
OPEB related items 366,511 4,560,360

Compensated absences (725,416)$
Net OPEB liabilities (12,853,795)
Net pension liability (33,822,983) (47,402,194)

Pension related items (4,304,850)$
OPEB related items (545,606) (4,850,456)

Net position of governmental activities (30,197,770)$

Deferred inflows of resources are not due and payable in the current period and, therefore, are not reported in the funds.

County of Russell, Virginia Balance Sheet

Governmental Funds - Discretely Presented Component Unit - School Board June 30, 2018

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.

Deferred outflows of resources are not available to apy for current period expenditures and, therefore, are not reported in the funds.

153 -

County of Russell, Vit Balance Sheet

Governmental Funds -Discretely Presented Component Unit» School Board

June 30, 2018,

exhibit 36

Asser Cash and cash equivalents Receivables (net of allowance for uncollectibles) Accounts receivable Due from other governmental units Prepaid items Total azote

ABILITIES

‘Accounts payable

Acerved liabilities

Due to primary government Total liabilities

FUND BALANCES Nonspendable: Prepaid items Committed: Textbook purchases Regional Adult Education Unassigned Total fund balances Total abilities and fund balances

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

“Total fund balances per above

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

Land Bullings and improvements Nachinery and equipment

Deferred outflows of resources are not available to apy for current period expenditures and, therefore, are not reported inthe funds

Pension related items (OPEB celated items

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

Compensated absences Net OPEB liabilities Net pension ability

Deferred inflows of resources are not due and payable in the current period and, therefore, are not reported inthe funds.

Pension related items (OPEB celated items.

Nt position of governmental activities

+153 -

55,636,345 9,534,325

1825,650

5 4193.89

366,511

5 (725,416) (12,853,795),

(3,822,983)

$ (4,304,850)

(585,606)

300,197.70)

Schoo!

operating Fund

837,970

rae 1,578,145 396,575

145,088 1,033,075

1,108,691,

396,575,

445,940 287,675

491,991)

498,200,

2785.4

498,200

16,996,320

4,560,360,

(47,402,198)

(4,850,456)

Exhibit 37

School Operating

Fund REVENUES Revenue from the use of money and property 6,910$
Charges for services 365,945
Miscellaneous 301,063
Recovered costs 812,746
Intergovernmental:

Local government 7,457,037
Commonwealth 27,460,759
Federal 5,542,370

Total revenues 41,946,830$

EXPENDITURES Current:

Education 42,063,117$

Excess (deficiency) of revenues over (under) expenditures (116,287)$

Net change in fund balances (116,287)$
Fund balances - beginning 614,487
Fund balances - ending 498,200$

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 (116,287)$

Capital outlays 650,485$
Reversion of assets back to the School Board (net) 175,436
Depreciation expense (1,132,834) (306,913)

(Increase) decrease in compensated absences (8,293)$
OPEB expense 118,517
Pension expense 1,231,123 1,341,347

Change in net position of governmental activities 918,147$

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, 2018

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.

154 -

Exhibit 37 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, 2018

Schoo! Operating und REVENUES Revenue from the use of money and property $6,910 CCharges for services 365,945 Miscellaneous 301,063 Recovered costs 812,746 Intergovernmental: Local government 7,457,037 Commonwealth 27,460,759 Federal 5,542,370 Total revenues 541,946,830 EXPENDITURES Current: Education

Excess (deficiency) of revenues over (under)

expenditures S__ (116,287) Net change in fund balances S$ (116,287) Fund balances - beginning 614,487 Fund balances - ending S__ 498,200

‘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 S$ (116,287)

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 S 650,485 Reversion of assets back to the School Board (net) 175,436 Depreciation expense (1,132,834) (206,913)

‘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 S (8,293) OPEB expense 118,517 Pension expense 4,231,123 1,341,347

Change in net position of governmental activities

154-

Exhibit 38

Variance with Final Budget

Positive Original Final Actual (Negative)

REVENUES Revenue from the use of money and property 6,000$ 6,000$ 6,910$ 910$
Charges for services 559,554 559,554 365,945 (193,609)
Miscellaneous 165,000 165,000 301,063 136,063
Recovered costs 571,914 571,914 812,746 240,832
Intergovernmental:

Local government 7,912,901 7,912,901 7,457,037 (455,864)
Commonwealth 27,823,930 27,823,930 27,460,759 (363,171)
Federal 5,053,907 5,777,427 5,542,370 (235,057)

Total revenues 42,093,206$ 42,816,726$ 41,946,830$ (869,896)$

EXPENDITURES Current:

Education 42,093,206$ 42,816,726$ 42,063,117$ 753,609$

Excess (deficiency) of revenues over (under) expenditures -$ -$ (116,287)$ (116,287)$

Net change in fund balances -$ -$ (116,287)$ (116,287)$
Fund balances - beginning - - 614,487 614,487
Fund balances - ending -$ -$ 498,200$ 498,200$

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, 2018

School Operating Fund

155 -

County of Russell, Virginia

Exhibit 38

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

Discretely Presented Component Unit - School Board

For the Year Ended June 30, 2018

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 riginal Final ‘Actual (Negative) $ 6,000 § 6,000 6,910 $ 110 559,554 559,554 365,945 (193,609) 165,000 165,000 301,063 136,063, 571,914 571,914 812,746 240,832 7,912,901 7,912,901 7,457,037 (455,864) 27,823,930 27,823,930 27,460,759 (363,171) 5,053,907 5,777,427 5,542,370 (235,057) S_42,093,206 $42,816,726 $ 41,946,830 $ (869,896) $42,093,206 $42,816,726 $ 42,063,117 $ 753,609 $ -$ - (116,287) $ (116,287) $ -§ - (116,287) $ (116,287) : : 614,487 614,487 $ — 5 498,200$ 498,200

+155 -

Supporting Schedules

Schedule 1 Page 1 of 6

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$ 8,061,640$ 61,640$

Real and Personal PSC Tax 1,650,000 1,650,000 2,237,147 587,147

Personal Property Tax 4,240,000 4,240,000 3,617,799 (622,201)

Mobile Home Tax 114,000 114,000 116,223 2,223

Machinery and Tools Tax 810,000 810,000 881,655 71,655

Merchants Capital 35,000 35,000 37,192 2,192

Mineral Tax 1,050,000 1,050,000 991,838 (58,162)

Penalties 145,000 145,000 143,713 (1,287)

Interest 303,862 303,862 303,665 (197)

Total general property taxes 16,347,862$ 16,347,862$ 16,390,872$ 43,010$

Other local taxes:

Local Sales and Use Tax 2,052,169$ 2,063,099$ 1,852,781$ (210,318)$

Consumers’ Utility Tax 550,000 550,000 533,653 (16,347)

Consumption Taxes 85,000 85,000 75,614 (9,386)

Coal Severance Tax 250,000 250,000 364,637 114,637

Bank Stock Tax 10,900 10,900 23,838 12,938

Grantee tax 94,000 94,000 133,942 39,942

Motor Vehicle Licenses - - 21,162 21,162

Taxes on Recordation and Wills 30,000 30,000 19,923 (10,077)

Total other local taxes 3,072,069$ 3,082,999$ 3,025,550$ (57,449)$

Permits, privilege fees, and regulatory licenses:

Animal licenses 1,900$ 1,900$ 1,579$ (321)$

Building permits 30,000 30,000 64,340 34,340

Other permits and other licenses 1,300 1,300 2,749 1,449

Total permits, privilege fees, and regulatory licenses 33,200$ 33,200$ 68,668$ 35,468$

Fines and forfeitures:

Court fines and forfeitures 14,400$ 14,400$ 16,708$ 2,308$

Revenue from use of money and property:

Revenue from use of money 28,000$ 28,000$ 88,720$ 60,720$

Revenue from use of property 315,000 315,000 163,680 (151,320)

Total revenue from use of money and property 343,000$ 343,000$ 252,400$ (90,600)$

Charges for services:

Charges for sanitation and waste removal 185,000$ 185,000$ 207,328$ 22,328$

Charges for courthouse security 51,000 51,000 39,740 (11,260)

Charges for cannery operations 65,000 65,000 48,233 (16,767)

Charges for commonwealth attorney 6,000 6,000 11,271 5,271

Charges for courthouse maintenance 10,000 10,000 9,238 (762)

Charges for jail and inmate fees 4,000 4,000 14,072 10,072

Charges for district court - - 3,066 3,066

Charges for library 11,700 11,700 6,887 (4,813)

Other charges for services 3,500 3,500 4,265 765

Total charges for services 336,200$ 336,200$ 344,100$ 7,900$

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2018

Fund, Major and Minor Revenue Source

156 -

County of Russel, Virginia

Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2018

Schedule 1 Page 1 of 6

Fund, Major and Minor Revenue Source

General Fund: Revenue from local sources: General property taxes Real Property Tax Real and Personal PSC Tax Personal Property Tax Mobile Home Tax. Machinery and Tools Tax Merchants Capital Mineral Tax Penalties Interest Total general property taxes

Other local taxes: Local Sales and Use Tax Consumers Utility Tax Consumption Taxes Coal Severance Tax Bank Stock Tax Grantee tax otor Vehicle Licenses ‘Taxes on Recordation and Wills

Total other local taxes

Permits, privilege fees, and regulatory licenses Animal licenses Buiiéing permits Other permits and other licenses Total permits, privilege fees, and regulatory licenses

Fines and forfeitures: Court fines and forfeitures

Revenue from use of money and property: Revenue from use of money Revenue from use of property Total revenue from use of money and property

Charges for services CCharges for sanitation and waste removal Charges for courthouse security Charges for cannery operations CCharges for commonwealth attorney CCharges for courthouse maintenance CCharges for jail and inmate fees Charges for district court Charges for Ubrary Other charges for services,

Total charges for services

Variance with

Final Budget Original Final Positive Budget Budget Actual (Negative)

$ 8,000,000 $ 8,000,000 $ 8,061,640 $61,640 1,650,000 1,650,000 2,237,147, 587,147 4,240,000 4,240,000 3,617,799. (622,201)

114,000 114,000 116,223 2,223 810,000 810,000 281,655 71,655 35,000 35,000 37,192 2,192 1,050,000 1,050,000, 991,838 (68,162) 145,000 145,000 143,713 (1,287) 303,862 303,862 303,665. (197) 316,347,862 _§ 16,347,862 $16,390,872 § 43,010 5 2,052,169 $ 2,063,099 $ 1,852,781 $ (210,318) 550,000 550,000 533,653, (16,347) 85,000 85,000 75,614 (9,386) 250,000 250,000 364,637 114,637 10,900, 10,900, 23,838 12,938 94,000 94,000 133,982 39,982 21,162 21,162

30,000 30,000 19,923 (19,97) 3,072,069 $ 3,082,999 3,025,550 § (57,449) 51,900 1,900 1579 § 2) 30,000 30,000 64,340 34,340

1,300 1,300 2,749 1.408

333,200 33,200 8.6685 35.468,

Ss 14.400 14,400 16,708 § 2,308

$28,000 28,000 88,720 § 60,720

315,000 315,000 163,680 (151,320)

5 __ 343,000 343,000 252,400 (90,600) $185,000 185,000 207,328 $22,328 51,000 51,000 39,740 (11,260) 65,000 65,000 48,233 (16,767)

6,000, 6,000, ta 5271

10,000 10,000 9,238 762)

4,000 4,000 1407 10,072

3,066 3,066

11,700 11,700 6,887 (4813)

3,500 3,500 4,265 765. 336,200 336,200 344,100_§ 7,900

156 -

Schedule 1 Page 2 of 6

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, 2018

Fund, Major and Minor Revenue Source

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

Miscellaneous:

Other miscellaneous revenue 206,600$ 206,600$ 68,023$ (138,577)$

Sale of property/surplus 10,000 10,000 164,380 154,380

Valley Heights revenue - - 1,487 1,487

Total miscellaneous 216,600$ 216,600$ 233,890$ 17,290$

Recovered costs:

Social services 246,000$ 246,000$ 61,440$ (184,560)$

Health department 50,000 50,000 40,500 (9,500)

School resource officer 88,000 88,000 101,557 13,557

Insurance recoveries - - 20,262 20,262

Industrial development 20,000 20,000 29,880 9,880

Other Recovered Costs 34,500 34,500 347,893 313,393

Total recovered costs 438,500$ 438,500$ 601,532$ 163,032$

Total revenue from local sources 20,801,831$ 20,812,761$ 20,933,720$ 120,959$

Intergovernmental:

Revenue from the Commonwealth:

Noncategorical aid:

Motor vehicles carriers’ tax 157,000$ 157,000$ 3$ (156,997)$

Mobile home titling tax 60,000 60,000 77,782 17,782

Motor vehicle rental tax 8,100 8,100 3,476 (4,624)

Communications tax 900,000 900,000 787,213 (112,787)

State recordation tax 17,800 17,800 34,838 17,038

Personal property tax relief act funds 1,437,003 1,437,003 1,437,003 -

Total noncategorical aid 2,579,903$ 2,579,903$ 2,340,315$ (239,588)$

Categorical aid:

Shared expenses:

Commonwealth’s attorney 364,000$ 364,000$ 404,433$ 40,433$

Sheriff 1,400,000 1,400,000 1,448,468 48,468

Commissioner of revenue 181,050 181,050 159,992 (21,058)

Treasurer 113,000 113,000 113,767 767

Medical examiner 400 400 - (400)

Registrar/electoral board 43,800 43,800 42,321 (1,479)

Clerk of the Circuit Court 269,300 269,300 307,369 38,069

Total Shared Expenses 2,371,550$ 2,371,550$ 2,476,350$ 104,800$

Other categorical aid:

Victim witness grant 35,000$ 35,000$ 9,840$ (25,160)$

E911 Grant - - 19,041 19,041

GIS 3,500 3,500 4,700 1,200

E911 state funds 45,000 45,000 49,559 4,559

Asset forfeiture funds - - 270,318 270,318

EMS grants - - 29,040 29,040

Fire Program Funds 71,000 71,000 79,640 8,640

Library grants 98,000 98,000 89,421 (8,579)

Litter control grants 30,000 30,000 12,359 (17,641)

157 -

County of Russell, Virginia Schedule 1 ‘Schedule of Revenues - Budget and Actual Page 2 of 6 Governmental Funds For the Year Ended June 30, 2018

Variance with

Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative) General Fund: (Continued) Revenue from local sources: (Continved) Niscellaneous: Other miscellaneous revenue $206,600 $ 206,600 $68,023. § (138,577) Sale of property/surplus 10,000 10,000, 164,380 154,380 Valley Heights revenue : . 1.487 1,487 Total miscellaneous S216.600 $716,600 $733,690 § 17,290 Recovered costs: Social services $246,000 $ 246,000 $61,440 § (184,560) Health department 50,000 50,000 40,500 (9,500) School resource officer 188,000 188,000 101,557 13,587 Insurance recoveries : . 20,262 20,262 Industrial development 20,000 20,000 29,880 9,880 Other Recovered Costs 34,500 34,500 347.693, 313,393, Total recovered costs S433,500_$ 438,500 601,532 § 163,032 Total revenue from local sources $20,801,831 _$ 20,812,761 $ 20,933,720 $120,959 Intergovernmental: Revenue from the Commonwealth: Noncategorical aid: Motor vehicles carriers tax $157,000 $ 157,000 $ 3 $ (156,997) ‘Mobile home titling tax 60,000 60,000 m2 17.782 ‘Motor vehicle rental tax 8,100 8,100 3,476 (4,624) Communications tax 900,000 900,000 787,213 (112,787) State recordation tax 17,800 17,800 34.838 1708 Personal property tax relief act funds 4,437,003 1,437,003 1,437,003 : Total noncategorica aid 32,579,903 $2,579,903 $2,340,315 § (239,588) Categorical aid: Shared expenses: Commonwealth attorney $364,000 $ 364,000 $404,433 § 40,433 Sheriff 1,400,000 1,400,000 1,448,468 48,468 Commissioner of revenue 181,050 181,050 159,992 (21,058) Treasurer 113,000 113,000 43767 167 Medical examiner 400 400 . (400) Registrar/electoral board 43,800 43,800 422,321 (1,479) Clerk ofthe Circuit Court 269,300 269,300 307,369 38,069 Total Shared Expenses $2,371,550 § 2,371,550 § 2,476,350 § 104,800 Other categorical aid Victim witness grant $ 35,00 $ 35,000 $9,840 $25,160 E911 Grant 19,041 19,041 ais 3,500 3,500 4,700 1,200 E91 state funds 45,000 45,000 49,59 4559 Asset forfeiture funds 270,318 270,318 ENS grants 29,040 29,040 Fire Program Funds 71,000 71,000 79,640 8,640 brary grants 98,000 9,000 89,421 (6,579) Litter control grants 130,000 30,000 12,359 (17,641)

157-

Schedule 1 Page 3 of 6

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, 2018

Fund, Major and Minor Revenue Source

General Fund: (Continued) Intergovernmental: (Continued)

Revenue from the Commonwealth: (Continued)

Categorical aid: (Continued)

Other categorical aid: (Continued)

Public assistance 2,262,807$ 2,262,807$ 2,132,469$ (130,338)$

Comprehensive services act 1,088,731 1,088,731 892,952 (195,779)

School resource officer grants - - 67,465 67,465

Workforce investment 25,000 25,000 - (25,000)

Health department - - 15,719 15,719

Other state funds - - 4,894 4,894

Total other categorical aid 3,659,038$ 3,659,038$ 3,677,417$ 18,379$

Total categorical aid 6,030,588$ 6,030,588$ 6,153,767$ 123,179$

Total revenue from the Commonwealth 8,610,491$ 8,610,491$ 8,494,082$ (116,409)$

Revenue from the federal government:

Categorical aid:

Emergency management grants 114,000$ 114,000$ 9,996$ (104,004)$

Law enforcement grants - - 9,979 9,979

Violence against women - - 24,882 24,882

Victim witness grant - - 31,310 31,310

DMV ground transportation safety grant - - 6,875 6,875

Public assistance 2,888,559 2,888,559 2,722,177 (166,382)

Total categorical aid 3,002,559$ 3,002,559$ 2,805,219$ (197,340)$

Total revenue from the federal government 3,002,559$ 3,002,559$ 2,805,219$ (197,340)$

Total General Fund 32,414,881$ 32,425,811$ 32,233,021$ (192,790)$

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

Other local taxes:

Coal road taxes 150,000$ 150,000$ 364,639$ 214,639$

Revenue from use of money and property:

Revenue from the use of money -$ -$ 332$ 332$

Total revenue from local sources 150,000$ 150,000$ 364,971$ 214,971$

Total Coal Road Fund 150,000$ 150,000$ 364,971$ 214,971$

158 -

County of Russell, Virginia Schedule 1 ‘Schedule of Revenues - Budget and Actual Page 3 of 6 Governmental Funds For the Year Ended June 30, 2018

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 Commonwealth: (Continued) Categorical aid: (Continued) (Other categorical ai: (Continued) Public assistance $2,262,807 $ 2,262,807 $2,132,469 § (130,338) Comprehensive services act, 41,088,731 1,088,731 892,952 (195,779) School resource officer grants : 67.465 67.465 Workforce investment 25,000 25,000 (25,000) Health department 15,719 15,719 (Other state funds . . 4,894 4,894 Total other categorical aid S350 $3650 Sa. § 18379 Total categorical aid $6,030,588 $ 6,030,588 $ 6,153,767 $123,179 Total revenue from the Commonwealth S_s,610,491 $8,610,491 $8,494,082 $ (116,409) Revenue from the federal government: Categorical ad Emergency management grants $114,000 $ 114,000 $ 9,998 $ (104,004) Law enforcement grants 9.979 9.979 Violence against women 24,882 24,882 Victim witness grant 31,310 31,310 DMV ground transportation safety grant 6.875, 6,875 Public assistance 2,888,559 2,888,559 2,722,177 (166,382). Total categorical aid 3,002,559 $3,002,559 $2,805,219 § (197.340) Total revenue from the federal government 53,002,559 $3,002,559 $2,805,219 $ (197.340) Total General Fund $_32,414,881$ 32,425,811 $32,233,021 $ (192,790) Special Revenue Funds: Coal Road Fund: Revenue from local sources: (Other local taxes Coal road taxes $150,000 $ 150,000 $ 264,639 $214,639 Revenue from use of money and property: Revenue from the use of money s -s .s3 332$ 332 Total revenue from local sources $130,000 $ 150,000 $ 464,971 $214,971 Total Coal Road Fund $150,000 $150,000 $364,971 $214,971

+158

Schedule 1 Page 4 of 6

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, 2018

Fund, Major and Minor Revenue Source

Special Revenue Funds: (Continued) Workforce Investment Board Fund: Revenue from local sources:

Recovered costs:

Other recovered costs -$ -$ 117,140$ 117,140$

Intergovernmental:

Revenue from the federal government:

Categorical aid:

Workforce Investment 2,969,127$ 2,969,127$ 2,432,792$ (536,335)$

Total revenue from the federal government 2,969,127$ 2,969,127$ 2,432,792$ (536,335)$

Total Workforce Investment Board Fund 2,969,127$ 2,969,127$ 2,549,932$ (419,195)$

Total Primary Government 35,534,008$ 35,544,938$ 35,147,924$ (397,014)$

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 -$ -$ 410$ 410$

Revenue from the use of property 6,000 6,000 6,500 500

Total revenue from use of money and property 6,000$ 6,000$ 6,910$ 910$

Charges for services:

Cafeteria sales 400,000$ 400,000$ 319,347$ (80,653)$

Tuition payments 5,000 5,000 - (5,000)

Drivers Ed fees 14,000 14,000 11,580 (2,420)

Other charges for services - - 127 127

Regional Adult Education 138,554 138,554 34,057 (104,497)

GED Testing fees 2,000 2,000 834 (1,166)

Total charges for services 559,554$ 559,554$ 365,945$ (193,609)$

Miscellaneous:

Other miscellaneous 165,000$ 165,000$ 301,063$ 136,063$

Recovered costs:

Insurance recoveries -$ -$ 92,298$ 92,298$

Extra duties revenue 23,000 23,000 18,588 (4,412)

Dual Enrollment 300,000 300,000 402,489 102,489

Sale of Equipment and Supplies 10,000 10,000 32,098 22,098

Reimburse Health Services 187,414 187,414 223,316 35,902

Other recovered costs 51,500 51,500 43,957 (7,543)

Total recovered costs 571,914$ 571,914$ 812,746$ 240,832$

Total revenue from local sources 1,302,468$ 1,302,468$ 1,486,664$ 184,196$

Intergovernmental:

Revenues from local governments:

Contribution from County of Russell, Virginia 7,912,901$ 7,912,901$ 7,457,037$ (455,864)$

159 -

County of Russell, Virginia Schedule 1 ‘Schedule of Revenues - Budget and Actual Page 4 of 6 Governmental Funds For the Year Ended June 30, 2018

Variance with

Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual (Negative) Special Revenue Funds: (Continued) Workforce Investment Board Fund: Revenue from local sources: Recovered costs: Other recovered costs s $ S$ t7.140_$ 117,140 Intergovernmental: Revenue from the federal government: Categorical aid Workforce Investment $2,969,127 $ 2,969,127 $2,432,792 $ (536,335) Total revenue from the federal government $2,969,127 $ 2,969,127 $2,432,792 $ (536,335) Total Workforce Investment Board Fund $2,969,127 $2,969,127 _$ 2,549,932 _$ (419,195) Total Primary Government $35,534,008 _$ 35,544,938 _$ 35,147,924 § (397,014) 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 maney s s s 410 § 410 Revenue from the use of property 6,000 6,000 6,500 500 Total revenue from use of money and property 36000 $6,000 $6,910 § 310 Charges for services Cafeteria sales $400,000 $ 400,000 $319,347 § (80,653) Tuition payments 5,000 5,000 (6,000) Drivers Ed fees 14,000 14,000 11,580 (2,420) Other charges for services a7 a7 Regional Adult Education 138,554 138,554 34057 (104,497) GED Testing fees 2,000 2,000 834 (1,166) Total charges for services 3 __559,554 5 559,554 $305,945 § (193,609) Miscellaneous Other miscellaneous $165,000 $ 165,000 $ 301,063 $136,063 Recovered costs: Insurance recoveries s 5 5 92,298 $ 92,298 Extra duties revenue 23,000 23,000 18,588 (4412) Dual Enrotiment 300,000 300,000 402,489 102,489 Sale of Equipment and Supplies 10,000, 10,000, 32,098 22,098 Reimburse Health Services 167,414 167,414 223,316 35,902 Other recovered costs 51,500 51,500 43,957 7,583) Total recovered costs 3 s7gie § S791 § 12746 _§ 240,832 Total revenue from local sources $1,302,468 $1,302,468 $1,486,664 $184,196 Intergovernmentat: Revenues from local governments: Contribution from County of Russell, Virginia $7,912,901 $ 7,912,901 $ 7.457.037 $455,864)

+159

Schedule 1 Page 5 of 6

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, 2018

Fund, Major and Minor Revenue Source

Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Intergovernmental: (Continued)

Revenue from the Commonwealth:

Categorical aid:

Share of state sales tax 4,206,002$ 4,206,002$ 3,976,978$ (229,024)$

Basic Aid 12,953,476 12,953,476 12,666,525 (286,951)

Remedial summer education 221,185 221,185 212,781 (8,404)

Regular foster care 31,828 31,828 11,700 (20,128)

Gifted and talented 135,023 135,023 132,832 (2,191)

Remedial education 599,164 599,164 589,444 (9,720)

Special education 1,639,966 1,639,966 1,613,360 (26,606)

Textbook payment 308,809 308,809 303,799 (5,010)

Career and Technical Education 95,391 95,391 47,366 (48,025)

Alternative education 909,505 909,505 937,977 28,472

Algebra readiness 65,598 65,598 67,818 2,220

Mentor teacher program 2,738 2,738 2,689 (49)

Social security fringe benefits 812,950 812,950 799,762 (13,188)

Group life 56,260 56,260 55,347 (913)

Retirement fringe benefits 1,862,191 1,862,191 1,831,980 (30,211)

Supplemental support - - 128,378 128,378

Early reading intervention 87,140 87,140 84,650 (2,490)

Adult Education 31,563 31,563 31,197 (366)

Homebound education 26,501 26,501 26,685 184

Vocation education 213,626 213,626 251,479 37,853

Advanced placement incentive 130,480 130,480 - (130,480)

At risk payments 628,606 628,606 639,291 10,685

Primary class size 793,433 793,433 764,004 (29,429)

Technology 463,600 463,600 638,636 175,036

Jobs for Virginia Graduates 25,000 25,000 25,000 -

Industry Certification Costs 3,135 3,135 3,278 143

At risk four-year olds 565,108 565,108 565,108 -

School Food 24,642 24,642 26,322 1,680

English as a second language 4,997 4,997 6,996 1,999

Project graduation 8,981 8,981 8,980 (1)

GED prep programs 15,717 15,717 77,839 62,122

Lottery payments 771,093 771,093 759,275 (11,818)

Tobacco Commission 30,000 30,000 69,348 39,348

Adult literacy 99,595 99,595 82,515 (17,080)

Special education-foster care - - 9,193 9,193

Other state funds 627 627 12,227 11,600

Total categorical aid 27,823,930$ 27,823,930$ 27,460,759$ (363,171)$

Total revenue from the Commonwealth 27,823,930$ 27,823,930$ 27,460,759$ (363,171)$

Revenue from the federal government:

Categorical aid:

Basic Adult Education 325,848$ 325,848$ 308,902$ (16,946)$

Title I 1,095,188 1,095,188 1,319,925 224,737

Special Education 1,156,775 1,156,775 1,009,359 (147,416)

Title VI-B, preschool 35,432 35,432 35,432 -

Vocational education 72,648 72,648 84,109 11,461

160 -

County of Russel, Virginia

‘Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2018

Schedule 1 Page 5 of 6

Fund, Major and Minor Revenue Source

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

Share of state sales tax

Basic Aid

Remedial summer education

Regular foster care

Gifted and talented

Remedial education

Special education

“Textbook payment

Career and Technical Education

Alternative education

Algebra readiness

Nentor teacher program

Social security fringe benefits

Group tite

Retirement fringe benefits

Supplemental support

Early reading intervention

Adult Education

Homebound education

Vocation education

‘Advanced placement incentive

At risk payments

Primary clas size

Technology

40bs for Virginia Graduates

Industry Certification Costs,

At risk four-year olds

School Food

English as a second language:

Project graduation

‘GED prep programs

Lottery payments

Tobacco Commission

Adult iteracy

Special education-foster care

Other state funds

Total categorical aid

Total revenue from the Commonwealth

Revenue from the federal government: Categorical aid Basic Adult Education Title | Special Education Title VIB, preschool Vocational education

Variance with

Final Budget Original Final Positive Budget Budget Actual (Negative)

$ 4,206,002 $ 4,206,002 $ 3,976,978 $29,024) 12,953,478 12,953,476 12,666,525, (26,951)

221,185 221,185 212,781 (6.404) 31,828 31,828 11,700 (20,128) 135,023 135,003 132,832 2,191) 599,168 599,168 589,448 (9,720) 1,639,966 1,639,966 1,613,360 (26,606) 308,809 308,809 303,799 6,010) 95,391 95,391 47,366 (48,025) 909,505 909,505 937.977 28,472 65,598 65,598 67818 2,220, 2738 2.738 2,689 09) 812,950 812,950 799,762 (13,188) 56,260 56,260 55,347 (13) 1,862,191 1,862,191 1,831,980, (60,211) 128,378 128,378 87,140 87,140 84,650 (2,490) 31,563, 31,563 31,197 (366) 26,501 26,501 26,685 184 213,66 213,626 251,479 37,853, 130,480 130,480 : (130,480) 628,606 628,606 639,291 10,685 793,483 793,483 764,008 (29,429) 43,600 43,600 638,636 175,036 25,000 25,000 25,000 3,135 3,135 3,278 143 565,108 565,108 565,108 24,602 24,602 26,32 1,680 4997 4997 6,996 1,999 8,981 8,981 8,980 oO 15,717 15,717 77,839 62,12 771,093 771,093 759,275 (1.818) 30,000 30,000 69,348 39,348 99,595 99,595 82,515 (17,080) 9,193 9,193 a7 7 12.207 11,600

3_27,823,990_$77,823,930§ 27,460,759 § (963.171)

$77,823,990 _$ 77,823,930$ 27,460,759 $§ (363.171)

5 375,848 $ 325,848 $ 308,902 $ (16,946) 1,095,188 1,095,188 1,319,925, 224,737 1,136,775 1,136,775 1,008,359 (147,416)

35,432 35,432 35,432 72,648 72,648 84,109 11,461

= 160 -

Schedule 1 Page 6 of 6

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, 2018

Fund, Major and Minor Revenue Source

Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Intergovernmental: (Continued)

Revenue from the federal government: (Continued)

Categorical aid: (Continued)

School Food Program 1,195,000$ 1,195,000$ 1,702,432$ 507,432$

Improving teacher quality 222,330 222,330 142,090 (80,240)

Title IV part A - - 25,915 25,915

21st century grant 609,237 1,332,757 846,870 (485,887)

Rural and low income schools 81,449 81,449 67,336 (14,113)

Other federal funds 260,000 260,000 - (260,000)

Total categorical aid 5,053,907$ 5,777,427$ 5,542,370$ (235,057)$

Total revenue from the federal government 5,053,907$ 5,777,427$ 5,542,370$ (235,057)$

Total Discretely Presented Component Unit - School Board 42,093,206$ 42,816,726$ 41,946,830$ (869,896)$

161 -

County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 6 of 6 Governmental Funds For the Year Ended June 30, 2018

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 federal government: (Continued) Categorical aid: (Continued) School Food Program $1,195,000 $ 1,195,000 $ 1,702,432 $507,432 Improving teacher quality 222,330 222,330 142,090 (80,240) Title IV part & 25,915 25,915 2st century grant 609,237 1,332,757 846,870 (485,887) Rural and low income schools 81,449 81,409 67,336 4.13) Other federal funds 260,000 260,000 (260,000) Total categorical aid $_5.053,907§ 5.777.427 § 5.542370§ (35.057) Total revenue from the federal government 5,053,907 § 5,77.427$ 5,542,370 $ (235,057) Total Discretely Presented Component Unit - School Board $42,093,206 $42,816,726 $ 41,946,830$ (869,896)

= 161-

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 211,935$ 184,665$ 242,355$ (57,690)$

General and financial administration:

County administrator 335,441$ 322,581$ 356,337$ (33,756)$

Independent auditor 69,500 69,500 69,400 100

Commissioner of the revenue 307,704 304,166 316,253 (12,087)

Real estate assessor 127,247 274,305 210,992 63,313

Treasurer 427,040 392,235 469,081 (76,846)

Auto decals - - 1,035 (1,035)

Procurement 124,502 90,331 158,414 (68,083)

Total general and financial administration 1,391,434$ 1,453,118$ 1,581,512$ (128,394)$

Board of elections:

Electoral Board 84,883$ 299,435$ 236,966$ 62,469$

General Registrar 114,825 115,290 116,762 (1,472)

Total board of elections 199,708$ 414,725$ 353,728$ 60,997$

Total general government administration 1,803,077$ 2,052,508$ 2,177,595$ (125,087)$

Judicial administration:

Courts:

Circuit Court 124,223$ 132,471$ 118,143$ 14,328$

General District Court 15,800 16,895 14,600 2,295

Special Magistrates 9,400 10,794 7,994 2,800

Clerk’s Office 411,039 402,166 427,740 (25,574)

Sheriff Courts 934,165 868,071 1,018,049 (149,978)

Victim and Witness Assistance 60,556 59,012 63,384 (4,372)

Law Library - - 1,334 (1,334)

Total courts 1,555,183$ 1,489,409$ 1,651,244$ (161,835)$

Commonwealth’s attorney:

Commonwealth’s Attorney 641,592$ 567,026$ 746,143$ (179,117)$

Total judicial administration 2,196,775$ 2,056,435$ 2,397,387$ (340,952)$

Public safety:

Law enforcement and traffic control:

Sheriff 2,014,904$ 1,784,822$ 2,304,354$ (519,532)$

Dare program 3,000 3,103 2,685 418

Total law enforcement and traffic control 2,017,904$ 1,787,925$ 2,307,039$ (519,114)$

Fire and rescue services:

Volunteer Fire Departments 203,200$ 199,300$ 286,740$ (87,440)$

Ambulance Rescue Squad 189,875 193,672 186,073 7,599

Total fire and rescue services 393,075$ 392,972$ 472,813$ (79,841)$

Correction and detention:

Operation of Jail 2,488,745$ 2,251,227$ 2,726,262$ (475,035)$

County of Russell, Virginia Schedule of Expenditures - Budget and Actual

Governmental Funds For the Year Ended June 30, 2018

Fund, Function, Activity and Element

162 -

County of Russell, Veginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 1 of 4 Governmental Funds For the Year Ended June 30, 2018

Variance with Final Budget Original Final Positive Fund, Function, Activity and Element Budget Budget Actual (Negative) General Fund: General government administration: Letistatve: Board of supervisors $211,935 $ 184,665§ 242,355 $ (57,690) General and financial administration County administrator S 335,441 § 322,581 $356,337 5 (33,756) Independent auditor 69,500 69,500 69,400 100 Commissioner of the revenve 307,704 304,166 316,253 12,087) Real estate asessor wT 274,305 210,992 62,313 Treasurer 427,040 392,235 459,081, (76,846) Auto decals . 1,035 (1,035) Procurement 124,502 90,331 158,414 (68,083) Total general and financial administration $1391,434 § 1453,118 § 1,581,512 § (128,394) Board of elections: Electoral Board S 84883 $299,435 $286,966 $62,469 General Registrar 114,825 115,290 116,762 (ary Total board of elections 3 199,708 §a14,725$ 353,728 $60,997 Total general government administration $1,803,077 $ 2,052,508 $2,177,598 $ (125,087) Julia administration: Courts: Circuit Court S 124203 § — taRaTt $118,143 $14,328 General District Court 15,800, 16,895 14,600 2,295 Special Magistrates 9,400 10,794 7,994 2,800 Clerks office 411,039 402,166 407,740 (25,574) Sheriff Courts 934,165 assio71 1,018,089 (149,978) ‘Victim and Witness Assistance 60,56 59,012, 63,384 (4372) Law Library - . 134 1,334) Total courts 5 1.555,183$ 1.489.409 S$ 1,651244 5 (161,835) Commonwealths attorney: Commonwealths Attorney S$ 641,592$ 567,026 $746,143 $ (179,117) Total judicial administration $2,196,775 $ 2,056,435 $2,397,387 $ (340,952) Public safety Law enforcement and traffic contol sheriff S 2,014,904 $1,784,822 $ 2,304,954 $ (519,532) Dare program 3,000 3,103 2,685 418 Total law enforcement and traffic contrat S_2007,908 $1,767,925 $2,307,039 § (519,114) Fire and cescue services: Volunteer Fire Departments $203,200 § 199,300 $ 286,740 (87,440) Ambulance Rescue Squad 189,875 193,672 186,073 7,599 Total fire and rescue services 393,075 § 392,972 § 472,813 § (79,841) Correction and detention: Operation of Jail. S 2,488,745 $2,251,227 $2,726,262 $ (475,035)

162-

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, 2018

Fund, Function, Activity and Element

General Fund: (Continued) Public safety: (Continued)

Correction and detention: (Continued)

Probation Office 283,477$ 346,743$ 220,206$ 126,537$

Total correction and detention 2,772,222$ 2,597,970$ 2,946,468$ (348,498)$

Inspections:

Building inspector 115,240$ 111,268$ 121,189$ (9,921)$

Other protection:

Forestry Service 11,804$ 11,804$ 11,804$ -$

Enhanced 911 580,439 638,800 522,029 116,771

Medical Examiner 400 260 560 (300)

Emergency Services 112,113 137,782 90,346 47,436

Animal Control 64,800 47,597 81,853 (34,256)

Total other protection 769,556$ 836,243$ 706,592$ 129,651$

Total public safety 6,067,997$ 5,726,378$ 6,554,101$ (827,723)$

Public works:

Sanitation and waste removal:

Landfill 1,814,396$ 2,173,254$ 1,421,596$ 751,658$

Refuse collection 214,029 214,029 169,114 44,915

Litter Coordinator - - 94,342 (94,342)

Total sanitation and waste removal 2,028,425$ 2,387,283$ 1,685,052$ 702,231$

Maintenance of general buildings and grounds:

General properties 1,040,069$ 1,441,758$ 1,452,488$ (10,730)$

Total public works 3,068,494$ 3,829,041$ 3,137,540$ 691,501$

Health and welfare:

Health:

Health Department 340,000$ 340,000$ 339,860$ 140$

Mental health and mental retardation:

Cumberland Mountain Community Services Board 42,000$ 44,000$ 39,996$ 4,004$

Welfare:

Social services 6,192,365$ 6,386,913$ 5,166,426$ 1,220,487$

Comprehensive Services Act 1,088,731 1,365,218 1,481,326 (116,108)

Appalachian Agency for Senior Citizens 85,025 86,945 85,024 1,921

Other health and welfare - - 800 (800)

Total welfare 7,366,121$ 7,839,076$ 6,733,576$ 1,105,500$

Total health and welfare 7,748,121$ 8,223,076$ 7,113,432$ 1,109,644$

Education:

Other instructional costs:

Contributions to County School Board 7,912,901$ 8,343,774$ 7,457,037$ 886,737$

Capital Outlay - Lease purchase payment - - 421,811 (421,811)

163 -

County of Russell, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 2 of 4 Governmental Funds For the Year Ended June 30, 2018

Variance with Final Budget Original Final Positive Fund, Function, Activity and Element Budget Budget Actual (Negative) General Fund: (Continued) Public safety: (Continued) Correction and detention: (Continued) Probation Office S$ m3,477 $6,703 $220,206 § 126,537 Total correction and detention $2,772,222 § 7,597,970 § 2,946,468 _§ (348,498) Inspections: Building inspector S$ 115,240 $111,268 $121,189 § 9.92) Other protection: Forestry Service S 11,804 § 11,804 $11,804 § - Enhanced 911 580,429 38,200 522,029 116,771 Nedical Examiner 400 260 560 (200) Emergency Services 112,113, 137,782 90,346 47436 Animal Control 64,800 47,597 81,853 (34,256) Total other protection 769,556 § 836,243 -§ 706,592 § 129,651 Total public safety $6,067,997 $5,726,378 $ 6,554,101 $ (627,723) Public works: Sanitation and waste removal: Landi S 1,814,396 $2,173,254 $1,401,596 $751,658 Refuse collection 214,029 214,029 169,114 44.915 Litter Coordinator . 94,342 (94,342) Total sanitation and waste removal $2,028,405 § 7,387,283 $ 1,685,052 § 702,231 ‘Maintenance of general buildings and grounds: General properties $1,040,069 $1,481,758 $1,452,488 § (10,730) Total public works S 3,068,494 $3,879,041 $3,137,540 $691,501 Health and welfare: Health: Health Department $340,000 $ 340,000 $ 339,840 $ 140 Mental health and mental retardation: ‘Cumberland Mountain Community Services Board $42,000 § 44,000 $ 39,996 § 4,004 Welfare: Social services S 6,192,365 $6,386,913 $5,166,426 $1,220,487 Comprehensive Services Act 1,088,731 1,365,218 1,481,326 (116,108) Appalachian Agency for Senior Citizens 85,025 86,945 5,024 41,921 Other health and welfare - - 800 (800) Total welfare 37,366,101 § 7,838,076 $6,733,576 § 1,105,500 Total health and welfare $7,748,121 $8,223,078 $7,113,432 $1,109,644 Education: Other instructional costs Contributions to County School Board S 7,912,901 $8,343,774 $7,457,037 $886,737 Capital Outlay - Lease purchase payment : : 42,811 (42.811)

= 163-

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, 2018

Fund, Function, Activity and Element

General Fund: (Continued) Education: (Continued)

Other instructional costs: (Continued)

SVCC Contribution 91,949$ 106,430$ -$ 106,430$

Total education 8,004,850$ 8,450,204$ 7,878,848$ 571,356$

Parks, recreation, and cultural:

Parks and recreation:

Recreation Park 157,157$ 153,483$ 182,734$ (29,251)$

Health and fitness 64,387 77,354 63,993 13,361

Total parks and recreation 221,544$ 230,837$ 246,727$ (15,890)$

Library:

Public Library 319,942$ 325,651$ 319,545$ 6,106$

Total parks, recreation, and cultural 541,486$ 556,488$ 566,272$ (9,784)$

Community development:

Planning and community development:

Planning Commission 18,250$ 18,250$ 13,650$ 4,600$

Community Development - - 14,000 (14,000)

Industrial Development 504,930 504,930 524,249 (19,319)

PSA Contributions 230,765 230,765 350,494 (119,729)

Cumberland Plateau 30,000 25,000 35,000 (10,000)

Highway Safety Commission 3,500 2,025 4,975 (2,950)

Canneries 30,000 30,000 43,707 (13,707)

Tourism 6,000 6,000 1,568 4,432

Total planning and community development 823,445$ 816,970$ 987,643$ (170,673)$

Environmental management:

Soil and Water Conservation 35,236$ 35,236$ 34,236$ 1,000$

Cooperative extension program:

VPI Extension 66,291$ 64,781$ 61,900$ 2,881$

Total community development 924,972$ 916,987$ 1,083,779$ (166,792)$

Nondepartmental:

Nondepartmental 377,268$ 544,673$ 158,828$ 385,845$

Capital projects:

School projects -$ -$ 3,322,326$ (3,322,326)$

Debt service:

Principal payments 1,232,709$ 1,232,709$ 1,422,008$ (189,299)$

Interest Expense 471,413 471,413 471,413 -

Total debt service 1,704,122$ 1,704,122$ 1,893,421$ (189,299)$

Total General Fund 32,437,162$ 34,059,912$ 36,283,529$ (2,223,617)$

164 -

County of Russel, Virginia

Schedule 2

Schedule of Expenditures - Budget and Actual Page 3 of 4 Governmental Funds For the Year Ended June 30, 2018 Variance with Final Budget Original Final Positive Fund, Function, Activity and Element Budget Budget Actual (Negative) General Fund: (Continued) Education: (Continued) Other instructional costs: (Continued) SVCC Contribution S_ 91,949 § 106,430 S$ 106,430 Total education S8,004,850_§ 6,450,204 $7,878,848 $571,356 Parks, recreation, and cultural: Parks and recreation: Recreation Park S 157,197 $153,483 182,734 $29,251) Health and fitness 64,387 7.354 63,993 13,361 Total parks and recreation Sms $230,837 246,727_§ (15,890) Library: Public Library S 319,92 $35,650 319,545 $6,106 Total parks, recreation, and cultural S$ s41,486 $556,488 566,27 $ (9,784) Community development: Planning and community development: Planning Commission S 18250 $ 18,250 13650 $4,600 Community Development - - 14,000 (14,000) Industrial Development 504,930 504,920 524,249 (19,319) 5A Contributions 230,765 230,765 350,494 (119,729) Cumberland Plateau 30,000 25,000 35,000 (10,000) Highway Safety Commission 3,500 2,025 4975 (2,950) Canneries 30,000 30,000 43,707 (13,707) Tourism 6,000, 6,000, 1,568 4432 Total planning and community development 5 m3405 § 816,970 987,643 _§ (170,673) Environmental management: Soil and Water Conservation $35,236 § 35.236 34236 $1,000 ‘Cooperative extension program: PI Extension S$ e5201 $64,781 61,900 $2,881 Total community development S 924972 $§ 916,987 $1,083,779 $ (166,792) Nondepartmental: Nondepartmental S_37.268 § 544673 158,828 $385,845, Capital projects: School projects s s 3,322,326 $3,322,326) Debt service: Principal payments $1,232,709 § 1,232,709 $1,422,008 $ (189,299) Interest Expense 47,413 471413 471413 Total debt service $1,704,102 $1,704,122 $1,893,421 _5 (189,299) Total General Fund $32,437,162$ 34,059,912 $36,283,529 § (2,223,617)

= 164 -

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, 2018

Fund, Function, Activity and Element

Special Revenue Funds: Coal Road Fund: Public Works:

Maintenance of highways, streets, bridges and sidewalks:

Maintenance of highways, streets, bridges and sidewalks 125,000$ -$ -$ -$

Virginia coalfield 25,000 192,390 193,840 (1,450)

Total Public Works 150,000$ 192,390$ 193,840$ (1,450)$

Total Coal Road Fund 150,000$ 192,390$ 193,840$ (1,450)$

Workforce Investment Board Fund: Health and Welfare:

Welfare:

Workforce Investment 2,746,846$ 2,746,846$ 2,488,011$ 258,835$

Total Primary Government 35,334,008$ 36,999,148$ 38,965,380$ (1,966,232)$

Discretely Presented Component Unit - School Board: School Operating Fund: Education:

Administration of schools:

Administration and health services 1,830,324$ 1,830,324$ 1,941,927$ (111,603)$

Instruction costs:

Instructional costs 30,394,390$ 31,117,910$ 30,413,607$ 704,303$

Technology 852,906 852,906 826,275 26,631

Total instruction costs 31,247,296$ 31,970,816$ 31,239,882$ 730,934$

Operating costs:

Pupil transportation 2,773,923$ 2,773,923$ 2,485,201$ 288,722$

Operation and maintenance of school plant 4,447,743 4,447,743 4,427,461 20,282

Food service and non-instructional 1,793,920 1,793,920 1,968,646 (174,726)

Total operating costs 9,015,586$ 9,015,586$ 8,881,308$ 134,278$

Total education 42,093,206$ 42,816,726$ 42,063,117$ 753,609$

Total School Operating Fund 42,093,206$ 42,816,726$ 42,063,117$ 753,609$

Total Discretely Presented Component Unit - School Board 42,093,206$ 42,816,726$ 42,063,117$ 753,609$

165 -

County of Russell, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 4 of 4 Governmental Funds For the Year Ended June 30, 2018

Variance with Final Budget Original Final Positive Fund, Function, Activity and Element Budget Budget Actual (Negative) Special Revenue Funds: Coal Road Fund: Public Works: ‘Maintenance of highways, streets, bridges and sidewalks: Maintenance of highways, streets, bridges and sidewalks $125,000 $ “38 “38 : Virginia coalfield 25,000 192,390 193,840, (1.450) Total Public Works $150,000 $192,390 $193,840 5 (1.450) Total Coal Road Fund $130,000 § 192,390 $193,840 § (1.450) Workforce investment Board Fund: Health and Welfare: Welfare: Workforce Investment $2,746,846 $2,746,846 $2,488,011 $258,835 Total Primary Government $35,334,008 $36,999,148 $38,965,380 _§ (1,966,232) Discretely Presented Component Unit - School Boar School Operating Fund: Education: Administration of schools: ‘Administration and health services S 1,830,324 $1,830,324 $1,941,927 $ (111,603) Instruction costs Instructional costs $30,394,390 § 31,117,910 $ 30,413,607 $ 704,303 Technology 852,906 852,906 826,275 26,631, Total instruction costs $31,247,296 $31,970,816 $31,239,882 _§ 730,934 Operating costs: Pupil transportation S 2,773,923 $§ 2,773,923 $2,485,201 $288,722 Operation and maintenance of school plant 4,447,743 4,447,743 4,427,461 20,282 Foad service and non instructional 1,793,920 __1,793,920__1,968,646 (174,726) Total operating costs $9,015,586 $9,015,586 $6,981,308 § 134,278 Total education $42,093,206 $42,816,726 $42,063,117 § 753,609 Total Schoo! Operating Fund $42,093,206 _§ 42,816,726 _$42,063,17§__753.609 Total Discretely Presented Component Unit» School Board $42,093,206 $42,816,726 _$42,063,117$ 753,609

+165 -

Other Statistical Information

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166 -

Table 1

Government-Wide Expenses by Function Last Ten Fiscal Years

General Parks, Interest Fiscal Government Judicial Public Public Health and Recreation, Community con Long- Sewer Year Administration Administration _Safety Works Welfare (1) Education _and Cultural__Development__TermDebt __Authority Total

201 $2,003,925 $ 2,259,365 $ 6,409,699 § 2016-17 2,085,083 2,290,688 6,395,713 2015-16 2,099,001 2,080,921 5,999,917, 2014-15 1,945,227 6,352,397 2013-14 6,005,354

297 $ 8,613,945 $ 583,009 $ 957,043 $ 499,803 $ 388,981 $ 34,169,288, 9,535,001 9,519,958 552,562 515,428 454,634 35,494,048 8,926,570 7,744,464 481,145 342,729 441,642 32,689,577 359 7,596,324 514,678 385,445 430,426 31,861,030 7,169,883 8,943,324 546,171 457,095 403,848 33,337,001 2012-13 5,908,601 8,285,584 7,484,972 529,959 498,401 33,282,334 5,296,188 8,397,896 4,589,631 522,300 5,091,612 4,003,987 8,592,042 5,681,243 756,064 4,234,145 5,549,934 6,070,001 5,897,486 728,202 434,552 2,243,008 4,013,947 6,085,397 5,982,456 5,471,573 4,826,721 758,753 407,145 32,006,426

2, 2009-10

(1) 2010-2011 is the first year the Workforce Investment Board fs included.

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167 -

County of Russell, Virginia Government-Wide Revenues Last Ten Fiscal Years

Table 2

Fiscal Year

PROGRAM REVENUES

GENERAL REVENUES.

Charges for Services

Operating Grants and Contributions

Capital Grants and Contributions

General Property Taxes

Other Local Taxes (2)

Unrestricted Revenue from use of Money and Property

Miscellaneous

Grants and Contributions Not Restricted to Specific Programs (1)

Total

2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09

+167 -

$ 546,610 414,700 430,589 468,117 445,727 398,711 488,408 337,064 393,362 481,092

$11,391,778 11,862,113 10,616,989 9,648,228 8,991,231 9,822,073 9,677,480 10,635,876 7,473,127 7,376,521

61,200

320,311

761,738

17,446,217 $ 3,390,189 $ 254,538

17,065,361 15,198,122 15,762,013 15,749,617 14,686,993 13,142,777 13,683,476 13,004,381 12,889,357

3,297,225 3,781,925 4,635,427 4,873,857 5,079,612 6,881,302 6,340,919 6,123,807 7,779,265

185,677 223,008 257,108 359,952 45,865 77,226 89,819 106,848 153,807

233,890

91,300 180,343 226,621

86,115

60,479 138,135 177,669 173,322 346,880

$2,340,315

2,493,045, 2,501,627 2,553,497 2,562,116 2,580,839 2,445,435 2,638,202 2,465,451 1,771,674

(1) 2009-10 is the first year State Communications tax is classified as grants and contributions not restricted to specific programs.

$35,603,537 35,409,421 32,993,803 33,551,011 33,388,926 32,674,572 33,612,501 33,903,025 29,740,298 30,798,596

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168 -

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s17-

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

2017-18 $ 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09

1,437,419,342 $ 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

321,810,049 $ 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

56,429,665 $ 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

(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.

5,992,268 $ 20,380,636 $ 288,824,827 $ 2,130,856,787

5,716,770 5,876,008 6,084,205 6,061,014 5,631,601 5,340,902 5,136,529 5,402,115 5,501,882

20,726,176 21,377,908 21,500,580 21,820,581 23,486,868 23,401,571 23,320,148 22,864,821 23,139,220

265,575,303 243,897,231 240,244,298 315,700,293 230,027,520 269,503,982 326,871,285, 253,750,196 234,196,018,

2,100,993,238 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

Table 7

Fiscal Real Personal Machinery Merchant’s Mobile Year Estate (2) Property & Tools Capital Homes

2017-18 $ 0.63 $ 1.95 $ 1.65 $ 0.65 $ 0.63
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

(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

172 -

Table 7 County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Fiscal Real Personal Machinery Merchant’s Mobile

Year Estate (2) Property & Tools Capital Homes

2017-18 § 0.63 $ 1.95 § 1.65 $ 0.65 § 0.63 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

(1) Per $100 of assessed value. (2) 2nd half due December/1st half due June of fiscal year.

172+

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

2017-18 28,897 2,130,857$ 6,534,701$ 6,534,701$ 0.31% 226$
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

(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

173 -

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 2017-18 28,897 $ 2,130,857 § 6,534,701 § 6,534,701 0.31% $ 226 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

(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.

+173 -

Table 9

Ratio of Total Debt Service

Total General to General Fiscal Debt Governmental Governmental Year Service Expenditures Expenditures

2017-18 1,893,421$ 70,249,134$ 2.70% 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%

(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

174 -

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 2017-18 $ 1,893,421 $ 70,249,134 2.70% 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%

(1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board.

-174-

COMPLIANCE SECTION

ROBINSON, FARMER, COX ASSOCIATES

A PROFESSIONAL LIMITED LIABILITY COMPANY CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards

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

We have audited, in accordance with the auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia, the financial statements of the governmental activities, the business-type activities, the discretely presented component units – School Board, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia as of and for the year ended June 30, 2018, 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 March 19, 2019. Our report includes a reference to other auditors who audited the financial statements of the Industrial Development Authority and the Russell County Public Service Authority, 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 the 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 have not been 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 [2018-001].

175 -

ROBINSON, FARMER, COX ASSOCIATES

A PROFESSIONAL LIMITED LIABILITY COMPANY

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

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

We have audited, in accordance with the auditing standards generally accepted in the United States of ‘America; the 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 - School Board, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia as of and for the year ended June 30, 2018, 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 March 19, 2019. Our report includes a reference to other auditors who audited the financial statements of the Industrial Development Authority and the Russell County Public Service Authority, 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 the 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.

175 -

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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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 March 19, 2019

176 -

Compliance and Other Matters

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

Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Prliar, Irnes, lope Odseuratee

Blacksburg, Virginia March 19, 2019

+176 -

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, 2018. 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, 2018.

177 -

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

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, 2018.

177-

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 a 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 March 19, 2019

178 -

Report on Internal Control over Compliance

Palin, Fpnash lox Oise kK

Blacksburg, Virginia March 19, 2019

+178 -

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 0950116, 0950117 29,482$             -$                      

  Temporary Assistance for Needy Families 93.558 0400117, 0400118 326,650             -                        

  Refugee and Entrant Assistance - State Administered Programs 93.566 0500117, 0500118 490                    -                        

  Low-Income Home Energy Assistance 93.568 0600417, 0600418 47,088               -                        

  Child Care Mandatory and Matching Funds of the 93.596 0760117, 0760118 54,677               -                        

      Child Care and Development Fund

  Refugee and Entrant Assistance-Discretionary Grants 93.576 9160116 1,480                 -                        

  Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900116, 0900117 1,171                 -                        

  Foster Care - Title IV-E 93.658 1100117, 1100118 510,030             -                        

  Adoption Assistance 93.659 1120117, 1120118 593,561             -                        

  Social Services Block Grant 93.667 1000117, 1000118 406,141             -                        

  Chafee Foster Care Independence Program 93.674 9150117, 9150118 5,015                 -                        

  Children's Health Insurance Program 93.767 0540117, 0540118 14,214               -                        

  Medical Assistance Program 93.778 1200117, 1200118 370,446             -

Total Department of Health and Human Services 2,360,445$ -$

Department of Agriculture:

Pass Through Payments:

Child Nutrition Cluster:

    Department of Agriculture:

      Food Distribution-Schools (Note 3) 10.555 Not available 111,698$    

    Department of Education:

      National School Lunch Program 10.555 40623, 40254 1,033,946   1,145,644$   
      School Breakfast Program 10.553 40591, 40253 319,158        

      Summer Feeding Program 10.559 Not available 210,553        1,675,355$         

    Department of Education:

      Child and Adult Care Food Program 10.558 Not available 27,077               

Department of Social Services:

      State Administrative Matching Grants for the Supplemental 10.561 0010117, 0010118

          Nutrition Assistance Program 0040117, 0040118 361,732             -

Total Department of Agriculture 2,064,164$ -$

Department of Justice:

Pass Through Payments:

Department of Criminal Justice Services:

  Violence Against Women Formula Grants 16.588 Not available 24,882$             -$                      

  Edward Byrne Memorial Justice Assistance Grant Program 16.738 Not available 9,979                 -                        
  Crime Victim Assistance 16.575 Not available 31,310               -

Total Department of Justice 66,171$ -$

Department of Transportation:

Pass Through Payments:

Department of Motor Vehicles:

  Alcohol Open Container Requirements 20.607 Not available 6,875$               -$

Department of Education:

Pass Through Payments:

Department of Education:

  Adult Education - Basic Grants to States 84.002 42801, 61111 308,902$            -$                      

  Title I:   Grants to Local Educational Agencies 84.010 42901 1,319,925           -                        

  Special Education Cluster:

  Special Education - Grants to States 84.027 43071 1,009,359$   -                        

  Special Education - Preschool Grants 84.173 62521 35,432          1,044,791           -                        

  Career and Technical Education:  Basic Grants to States 84.048 61095 84,109               -                        

  Twenty-First Century Community Learning Centers 84.287 60565 846,870             -                        

  State Grants for Innovative Programs 84.298 Not available 10,681               -                        

  Rural Education 84.358 43481 56,655               -                        

  Supporting Effective Instruction State Grant 

        (formerly Improving Teacher Quality State Grants) 84.367 61480 142,090             -

Student Support and Academic Enrichment Program 84.424 60281 25,915 -

Total Department of Education 3,839,938$ -$

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2018

179 -

‘County o Russel Vga ‘Senet of Expenses of Feet! Avares

Fetes tty Federal Granta Pass Trough rate! ‘roe lees eset pendaresto Program cero le Naer unter apertures _Sutrecpients Departnent of Heat and Human Serves romeung Sf a Sale Fait uss ovr, oson7 5 pans ‘emornsistance fr Nowa aries S358 wor ouort8 a0 etage and Eran ance = Sate tered Pane Shee sat, omrt8 ‘° had Cre Honan Wat Fd te sas onan, onrt8 er hi Care nd Ceeapmen Fund ‘Nephnc Tie ens Cllr eres Progam Shas part, oor? tu acon stance Sess thant tote sre {haere hur ram sure osir, os sau “ea Deparment ot Hest an Hanan Services S204 s Doerner rete: Deparment fare Food btn Scans te 3) 10598 sorweatabe $1166 aoa Scho inch rar 10595 sows, arse _s.9us $15.4 Sco bene Pega oss) ‘asst om) fee ‘mer Feeding Pram tose Nex aasie 2039 1ersass “Sat tmnt tng Gat fr he Supe ose cour, corre oar of tie: Pu Tough Paye: "lence Axi Wan Fura rats 6508 vex aie 5 mans watdbjne Menai Ace Assan Gat Pogam 78 rec vatoie Bal Doerner Trager ‘aco pen Conte Rares nos sex aataie oan Deparment faction iad cations Cents ott, on aay ait Ss ossea s {letras to Local Ector Agoces per) a0) saves Speci cation Chater Special Eucaton rant Sates or oon 5 10359 Special Eaton Preset Cats Bu est 3a sours “wont Ft Cory Caney Laing Centers tas sis pred Suppetig tect Isrctin Sate Gat ‘trmeryimroving Teacer sty Sate Gant) sass evo 12.90 ‘tet Sapp ad ese Eicher eae ass 8 “wa Doprment of eto Ss _sam0 s

179

Page 2 of 2

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2018

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 Labor:

Pass Through Payments:

Virginia Community College System:

  Workforce Investment Act Cluster:

      WIOA Adult Program 17.258 LWA 1-16-02, 1-17-02 647,162$            390,054$            

      WIOA Youth Activities 17.259 LWA 1-16-02, 1-17-02 618,871             373,003             

      WIOA Dislocated Worker Formula Grants 17.278 LWA 1-16-02, 1-17-02 659,891             397,726             

  Workforce Investment Act Cluster Total 1,925,924$         1,160,783$         

      WIOA National Dislocated Worker Grants/WIA National Emergency Grants 17.277 Not available 397,292             -                        

      H-1B Job Training Grants 17.268 Not available 83,622               -

Total Department of Labor 2,406,838$ 1,160,783$

Appalachian Regional Commission:

Pass Through Payments:

Virginia Community College System:

  Appalachian Regional Development 23.002 Not available 25,954$             -$

Department of Homeland Security:

Pass Through Payments:

Department of Emergency Management:

  Homeland Security Grant Program 97.004 Not available 9,996$               -$                      

Total Expenditures of Federal Awards 10,780,381$       1,160,783$

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 4 – 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 2,805,219$         

  Workforce Investment Board Fund 2,432,792           

Total primary government 5,238,011$         

Component Unit School Board:

  School Operating Fund 5,542,370$

Total expenditures of federal awards per the basic financial statements 10,780,381$

(3) The County did not elect the 10% de minimis indirect cost rate because they only request direct costs for reimbursement.

(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, 2018, 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 award activity of County of Russell, Virginia under programs of the federal government for the year ended June 30, 2018. 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.

180 -

counyo Russet Vga ‘Senet of Expenses of Feet! Avares Tor th Year Ended June 30,2018

Federal Granta Pass - Trough rato! ‘re leertos Fecerat — Gpendtures to Program Caster ele amber ‘unter ipendtures _Subrecpients Deparment of aber: “ego Cony Cale Sten "oa ads Peg vase ma ti6en, aren 5 wna s were eset At late Tota cameo “oa Deparment abr Ss rosme s 2eplcin Renal Cons: Vso Community Coleg Ste ‘sepaenin Sept Development now Not tae sss s Deparment of HorlanaScurty eprint of Emergency Hooper: ‘onelndSecity Cnt Pram sr ot tae sm

Text agendas of Federal Avade

esto Sel of xpendtes of Fedral Ans

‘The acompanig shel of expenses offer awards Oe Scedle)ubestefderal ava acy of Canty of Rs, ia der poyans fhe federal government oe or ede June, 2018. Theinfraton fs Scales peered scree with Ue regents of Tile 2 US. Code of Federal Regantos Pst 200, Ue arnt equrenents, Ct Pcie and hue Regent fr Federal Avra (Dom Gases) Basse the Sense prensa uted parton ofthe peat f Cau Ral, ‘gin tnd to and dae ont pes te fan tion ger nt psn, ah awe Cory of ase, a,

oe 2 Surmary signa Aco Plies

peratures repro he eet reputed ao te cca asso account. Sich expends fe reco flowing the cast pence conte erm Gulce, ween [a Fasethou enty ering umber reset where alae. 1B} he Cty eet he 108 mri neck a te ease ey ext feast et cs fr enter

sonnet asstanc ieee nthe shed atthe far market alu of th conde rected and red At in 32, 208 Ral County, Vga hd fond commode ting $2

esr erence, ees ad cata conto re repaid ihe Cans acl statement flows

SchuetOpertog Fund ssa.

= 180 -

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? No

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 10.553/10.555/10.559 Child Nutrition Cluster

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, 2018

181 -

County of Russell, Virginia

Schedule of Findings and Questioned Costs For The Year Ended June 30, 2018

Section | - Summary of Auditors’ Results

inancial 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 |: Grants to Local Educational Agencies 10.553/10.555/10.559 Child Nutrition Cluster 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?

= 181-

Unmodified

Yes

None reported

Unmodified

$750,000

Section II - Financial Statement Findings

2018-001

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s
Response:

Section III - Federal Award Findings and Questioned Costs

None

Section IV - Status of Prior Audit Findings and Questioned Costs

The County Administrator will review the auditors’ proposed audit adjustments for 2018 and will develop a plan of action with the Treasurer to ensure that all adjusting entries are made prior to final audit fieldwork next year.

Findings 2017-001 was repeated in the current year as 2018-001. Finding 2017-002 was removed in fiscal year 2018 due to the excess of expenditures not being materials to the financial statements.

The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP). As such, the auditor proposed adjustments that were material to the financial statements.

The County does not have proper controls in place to detect and correct errors in closing their year-end financial statements.

There is a reasonable possibility that a misstatement of the County’s financial statements that is more than inconsequential will not be prevented or detected by the County’s internal controls over financial reporting.

Per Statement on Auditing Standards 115 (SAS 115), identification of a material adjustment to the financial statements that was not detected by the entity’s internal controls indicates that a material weakness exists.

The County should review the auditors’ proposed audit adjustments for 2018 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) For The Year Ended June 30, 2018

182 -

County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) For The Year Ended June 30, 2018

Section Il - Financial Statement Findings

2018-001

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

The County does not have proper controls in place to detect and correct errors in closing their year-end financial statements,

‘The County should review the auditors’ proposed audit adjustments for 2018 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

Section Ill - Federal Award Findings and Questioned Costs

None

Section IV - Status of Prior Audit Findings and Questioned Costs

Findings 2017-001 was repeated in the current year as 2018-001. Finding 2017-002 was removed in fiscal year 2018 due to the excess of expenditures not being materials to the financial statements.

182 -

Dividers Audit opinion_ref to other aud Financial Statements Exh1 Exh3 1to3worksheet Exh4 Exh2 Exh5 2to5worksheet Exh6 Exh7 Exh8 Exh9 Exh10 Exh11 Exh12 Exh13 Exh35 Exh36 Exh37 Exh38 Sch1 Sch2 Table1 Table2 Table3 Table4 Table5 Table6 Table7 Table8 Table9 fed unused exh and tables—>>> Exh12unused Exh15unused Exh16no report Exh17no report Not Used - Exh22 Not Used - Exh23 Not Used - Exh24 Not Used - Exh28 Not Used - Exh29 Not Used - Exh30 Exh11unused Exh21unused Exh22unused Exh23unused Exh24unused Exh25unused Exh26unused Exh27unused Exh28unused Exh39unused Exh40unused Exh41unused Exh42unused Exh43unused Table10 Table12 Table13 Table14 Table15 Table11

Notes to the Financials Russell RSI Schedules Pension 1 Pension 2 Pension 3 Pension Notes OPEB-County-Standalone1 OPEB-County-Standalone2 OPEB-Schools-Standalone1 OPEB-Schools-Standalone2 GLI 1 GLI 2 GLI Notes HIC1 HIC2 HIC3 HIC Notes Teacher HIC1 Teacher HIC2 Teacher HIC Notes LODA1 LODA2 LODA Notes

Schedule 1 Schedule 2 CCT Yellow Book Opinion Uniform Guidance SEFA Schedule of findings and questioned costs Schedule of findings and questioned costs Findings

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