2019-Audit

2019-Audit

Document Date: January 1, 2019 Document: 2019-Audit.pdf

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COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2019

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2019

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS

INTRODUCTORY SECTION

Page List of Elected and Appointed Officials … 1

FINANCIAL SECTION

Independent Auditors’ Report … 2-5

Exhibit Page Basic Financial Statements:

Government-wide Financial Statements: Statement of Net Position … 1 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 … 16-104

Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual General Fund … 11 105 Special Revenue Fund – Coal Road Fund … 12 106 Special Revenue Fund – Workforce Investment Board Fund … 13 107 Schedule of Employer’s Proportionate Share of Net Pension Liability … 14 108 Schedule of Changes in Net Pension Liability and Related Ratios – Component Unit School Board (nonprofessional) … 15 109 Schedule of Employer Contributions – Pension Plans … 16 110 Notes to Required Supplementary Information – Pension Plans … 17 111 Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios –
Primary Government … 18 112 Notes to Required Supplementary Information – County OPEB … 19 113

COouNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS

INTRODUCTORY SECTION Page List of Elected and Appointed Officials… 1 FINANCIAL SECTION Independent Auditors’ Report … 25 Exhibit Page Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position . 1 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 2B Statement of Cash Flows - Proprietary Funds. 9 14 Statement of Fiduciary Net Position - Fiduciary Funds 10 15

Notes to the Financial Statements … 16-104 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund . 11 105 Special Revenue Fund - Coal Road Fund 12 106 Special Revenue Fund - Workforce Investment Board Fund. 13 107 Schedule of Employer’s Proportionate Share of Net Pension Liability. 14 108 Schedule of Changes in Net Pension Liability and Related Ratios - Component Unit School Board (nonprofessional) . 15 109 Schedule of Employer Contributions - Pension Plans . 16 110 Notes to Required Supplementary Information - Pension Plans 7 4111 Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios - Primary Government … 18 112 Notes to Required Supplementary Information - County OPEB 19 113

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019

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 … 20 114 Notes to Required Supplementary Information - School OPEB … 21 115 Schedule of Employer’s Share of Net OPEB Liability – Group Life Insurance … 22 116 Schedule of Employer Contributions – Group Life Insurance … 23 117 Notes to Required Supplementary Information – Group Life Insurance … 24 118 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios –
Primary Government – Health Insurance Credit … 25 119 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios –
Component Unit School Board (nonprofessional) – Health Insurance Credit … 26 120 Schedule of Employer Contributions – Health Insurance Credit … 27 121 Notes to Required Supplementary Information – Health Insurance Credit … 28 122 Schedule of School Board’s Share of Net OPEB Liability – Teacher Employee Health Insurance Credit … 29 123 Schedule of Employer Contributions – Teacher Employee Health Insurance Credit … 30 124 Notes to Required Supplementary Information – Teacher Employee Health
Insurance Credit … 31 125 Schedule of Employer’s Share of Net LODA OPEB Liability … 32 126 Schedule of Employer Contribution - LODA … 33 127 Notes to Required Supplementary Information - LODA… 34 128

Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities – Agency Funds … 35 129 Discretely Presented Component Unit – School Board:

Balance Sheet – Governmental Funds … 36 130 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds … 37 131 Schedule of Revenues, Expenditures, and Changes in Fund Balances –

Budget and Actual … 38 132

Schedule Page Supporting Schedules:

Schedule of Revenues – Budget and Actual - Governmental Funds … 1 133-137

Schedule of Expenditures – Budget and Actual - Governmental Funds … 2 138-141

CouNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2019

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 … 20114 Notes to Required Supplementary Information - School OPEB . 2 115 Schedule of Employer’s Share of Net OPEB Liability - Group Life Insurance 2 116 Schedule of Employer Contributions - Group Life Insurance . 23 117 Notes to Required Supplementary Information - Group Life Insurance. 24 118 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios -

Primary Government - Health Insurance Credit . 2 119 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios -

Component Unit School Board (nonprofessional) - Health Insurance Credit 26 120 Schedule of Employer Contributions - Health Insurance Credit … 7 1m Notes to Required Supplementary Information - Health Insurance Credit 2 122 Schedule of School Board’s Share of Net OPEB Liability - Teacher Employee Health

Insurance Credit … 29 123 Schedule of Employer Contributions - Teacher Employee Health Insurance Credit 30. 124 Notes to Required Supplementary Information - Teacher Employee Health

Insurance Credit 31125 Schedule of Employer’s Share of Net LODA OPEB Liability 32126 Schedule of Employer Contribution - LODA 33127 Notes to Required Supplementary Information - LODA. 34128 Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities - Agency Funds … 35129 Discretely Presented Component Unit - School Board: Balance Sheet - Governmental Funds. 36130 Statement of Revenues, Expenditures, and Changes in Fund Balances ~ Governmental Funds … 37,131 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual . 38132 Schedule Page Supporting Schedules: Schedule of Revenues - Budget and Actual - Governmental Funds 1133-137 Schedule of Expenditures - Budget and Actual - Governmental Funds 2138-141

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Other Statistical Information:

Table Page Government-wide Information: Government-Wide Expenses by Function … 1 142 Government-Wide Revenues … 2 143

Fund Information:

General Governmental Expenditures by Function … 3 144 General Governmental Revenues by Source … 4 145 Property Tax Levies and Collections … 5 146

Assessed Value of Taxable Property … 6 147 Property Tax Rates … 7 148 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita … 8 149 Ratio of Annual Debt Service Expenditures for General Bonded Debt to
Total General Governmental Expenditures … 9 150

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 … 151-152

Independent Auditors’ Report on Compliance for Each Major Program and on Internal
Control over Compliance Required by the Uniform Guidance … 153-155

Schedule of Expenditures of Federal Awards … 156-157 Schedule of Findings and Questioned Costs … 158-160

COouNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Other Statistical Information: Table Page Government-wide Information:

Government-Wide Expenses by Function . 1 142 Government-Wide Revenues … 2 143 Fund Information: General Governmental Expenditures by Function . 3 144 General Governmental Revenues by Source 4 145 Property Tax Levies and Collections 5 146 Assessed Value of Taxable Property 6 147 Property Tax Rates … 7 148 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita… 8 149 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures. 9 150 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 … 151-152 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance… 153-155 Schedule of Expenditures of Federal Awards 156-157 Schedule of Findings and Questioned Costs 158-160

INTRODUCTORY SECTION

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Rebecca Dye, Chairman Steve Breeding, Vice Chairman Lou Wallace Carl Rhea David Eaton Tim Lovelace Harry Ferguson

COUNTY SCHOOL BOARD

Donnie Ramey, Chairman Wayne Bostic, Vice Chairman Charlie Collins Cynthia Compton Jeffrey Cook
Tim Ball Alex Zachwieja, Jr.

SOCIAL SERVICES BOARD

Brain Ferguson, Chairman Rebecca Dye, Vice Chairman Andrew Hensley Sharon Owens Laurel Rasnick

OTHER OFFICIALS

Clerk of the Circuit Court … Ann S. McReynolds Commonwealth’s Attorney … Zack A. Stoots Commissioner of the Revenue … Randy N. Williams Treasurer … Alicia McGlothlin Sheriff … Steve Dye Superintendent of Schools … Dr. Gregory A. Brown Director of Social Services … Patrick Brunty County Administrator … Lonzo Lester County Attorney … Matthew Crum

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COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Rebecca Dye, Chairman Steve Breeding, Vice Chairman Lou Wallace Carl Rhea David Eaton Tim Lovelace Harry Ferguson

COUNTY SCHOOL BOARD

Donnie Ramey, Chairman Wayne Bostic, Vice Chairman Charlie Coltins Cynthia Compton Jeffrey Cook Tim Ball Alex Zachwieja, Jr.

SOCIAL SERVICES BOARD

Brain Ferguson, Chairman Rebecca Dye, Vice Chairman Andrew Hensley Sharon Owens Laurel Rasnick

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 Alicia McGlothlin …Steve Dye Dr. Gregory A. Brown Patrick Brunty Lonzo Lester Matthew Crum

FINANCIAL SECTION

Independent Auditors’ Report

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

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit-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, 2019, and the related notes to the financial statements. These financial statements 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.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

Except for the matter described in the “Basis for Disclaimer of Opinion on the Discretely Presented Component Units-IDA and Russell County PSA” paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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ROBINSON, FARMER, Cox Associates, PLLC

Certified Public Accountants

CPAs | Consuttants

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

Auditor’s Responsibility

Summary of Opinions

Opinion Unit Type of Opinion

Governmental Activities Unmodified Business-Type Activities Unmodified Discretely Presented Component Unit-School Board Unmodified Discretely Presented Component Unit-IDA Disclaimer Discretely Presented Component Unit-Russell Co PSA Disclaimer General Fund Unmodified Coal Road Fund Unmodified Workforce Investment Board Fund Unmodified Dante Fund Unmodified Self Health Insurance Fund Unmodified Aggregate Remaining Fund Information Unmodified

Basis for Disclaimer of Opinion on the Discretely Presented Component Units-IDA and Russell County PSA

The financial statements of the Industrial Development Authority of the County of Russell, VA (IDA) and the Russell County Public Service Authority (Russell County PSA) have been omitted, and we were not engaged to audit the IDA and the Russell County PSA financial statements as part of our audit of the County’s basic financial statements as the IDA and the Russell County PSA are audited by another CPA firm. The amounts by which these omissions would affect the assets, deferred outflows of resources, liabilities, deferred inflow of resources, net position, revenues and expenses of the discretely presented component units-IDA and Russell County PSA have not been determined.

Disclaimer of Opinion

Because of the significance of the matter described in the “Basis for Disclaimer of Opinion on the Discretely Presented Component Units-IDA and Russell County PSA” paragraph, we have not been able to obtain sufficient appropriate audit evidence from other auditors to provide a basis for an audit opinion on the financial statements of the discretely presented component units-IDA and Russell County PSA. Accordingly, we do not express an opinion on these financial statements.

Unmodified Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the discretely presented component unit-School Board, and the aggregate remaining fund information of the County of Russell, Virginia as of June 30, 2019, 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 27 to the financial statements, in 2019, the County adopted new accounting guidance, GASB Statement No. 88 Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements. Our opinion is not modified with respect to this matter.

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Summary of Opinions

Opinion Unit Type of Opinion Governmental Activities Unmodified Business-Type Activities Unmodified Discretely Presented Component Unit-School Board — Unmodified Discretely Presented Component Unit-IDA Disclaimer Discretely Presented Component Unit-Russell Co PSA Disclaimer General Fund Unmodified Coal Road Fund Unmodified Workforce Investment Board Fund Unmodified Dante Fund Unmodified Self Health Insurance Fund Unmodified Aggregate Remaining Fund Information Unmodified

Basis for Disclaimer of Opinion on the Discretely Presented Component Units-IDA and Russell County PSA

Disclaimer of Opinion

Unmodified Opinions

Change in Accounting Principle

‘As described in Note 27 to the financial statements, in 2019, the County adopted new accounting guidance, GASB Statement No. 88 Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements. 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 105-107 and 108-128 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

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

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 expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. Because of the significance of the matter described in the basis for disclaimer of opinion paragraph, it is inappropriate to and we do not express an opinion on the supplementary information referred to above.

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.

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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 105-107 and 108-128 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do Not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

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

Supplementary and Other Information

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 31, 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 December 31, 2019

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Other Reporting Required by Government Auditing Standards

Proline, poses Lee OdseruKh

Blacksburg, Virginia December 31, 2019

Basic Financial Statements

Exhibit 1

Component Unit

Governmental Business-type Activities Activities Total School Board

ASSETS Cash and cash equivalents 6,714,540$ -$ 6,714,540$ 1,024,325$
Receivables (net of allowance for uncollectibles):

Taxes receivable 10,773,357 - 10,773,357 -
Accounts receivable 711,124 11,486 722,610 2,824

Due from component unit 1,161,535 - 1,161,535 -
Due from other governmental units 1,922,511 - 1,922,511 1,549,699
Internal balances (3,447) 3,447 - -
Prepaid items - - - 326,948
Restricted assets:

Cash and cash equivalents 674,435 49,575 724,010 -
Investments 360 - 360 -

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

Land 643,695 - 643,695 5,636,345
Buildings and improvements 16,243,350 - 16,243,350 9,682,614
Machinery and equipment 1,693,404 7,695 1,701,099 1,601,982
Utility plant in service - 2,468,507 2,468,507 -

Total assets 40,534,864$ 2,540,710$ 43,075,574$ 19,824,737$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 783,236$ 1,737$ 784,973$ 3,853,016$
OPEB related items 415,669 - 415,669 607,477

Total deferred outflows of resources 1,198,905$ 1,737$ 1,200,642$ 4,460,493$

LIABILITIES Accounts payable 1,367,318$ 3,447$ 1,370,765$ 288,978$
Accrued liabilities - - - 1,067,372
Accrued interest payable 150,853 1,404 152,257 -
Due to primary government - - - 961,535
Long-term liabilities:

Due within one year 1,736,396 23,960 1,760,356 548,105
Due in more than one year 20,408,567 565,142 20,973,709 45,797,861

Total liabilities 23,663,134$ 593,953$ 24,257,087$ 48,663,851$

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes 5,574,737$ -$ 5,574,737$ -$
Pension related items 790,472 26,508 816,980 3,648,168
OPEB related items 247,021 - 247,021 488,046

Total deferred inflows of resources 6,612,230$ 26,508$ 6,638,738$ 4,136,214$

NET POSITION Net investment in capital assets 8,112,355$ 1,896,120$ 10,008,475$ 16,920,941$
Restricted:

Coal Road 414,459 - 414,459 -
Asset forfeiture funds 336,738 - 336,738 -
Energy Lease Project 360 - 360 -
Debt service and bond covenants - 49,575 49,575 -

Unrestricted (deficit) 2,594,493 (23,709) 2,570,784 (45,435,776)
Total net position (deficit) 11,458,405$ 1,921,986$ 13,380,391$ (28,514,835)$

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, 2019

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County of Russell, Virginia Statement of Net Position

June 30, 2019

Exhibit 4

ASSETS Cash and cash equivatents Receivables (net of allowance for uncollectibles): Taxes receivable Accounts receivable Due from component unit Due from other governmental units Internal balances Prepaid items Restricted assets: Cash and cash equivalents Investments Noncurrent assets: Capital assets (net of accumulated depreciation): Land Buildings and improvements Machinery and equipment Utility plant in service Total assets

DEFERRED OUTFLOWS OF RESOURCES Pension related items OPEB related items

Total deferred outflows of resources

LIABILITIES Accounts payable Accrued liabilities Accrued interest payable Due to primary government Long-term liabilities:

Due within one year

Due in more than one year

Total liabilities

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes Pension related items OPEB related items

Total deferred inflows of resources

NET POSITION Net investment in capital assets Restricted:

Coal Road

Asset forfeiture funds

Energy Lease Project,

Debt service and bond covenants Unrestricted (deficit)

Total net position (deficit)

Component

Primary Government. Unit Governmental Business-type

Activities Activities Total School Board

S$ 6,714,540 § S 6,714,540 § 1,024,325

10,773,357 10,773,357 :

711,124 11,486 72,610 2,824

1,161,535, 1,161,535, :

41,922,511 11922\511 1,549,699

(3,447) 3,447 - -

. 326,948,

674,435, 49,575 724,010 :

360 360 .

643,695, 643,695 5,636,345

16,243,350 16,243,350 9,682,614

1,693,404 7,695 1,701,099 1,601,982

2,468,507 ___2,468,507 -

3 ASR we S 7,540,710 $43,075,574 8 19,824,757

$783,236 § 1737 $784,973 $3,853,016

415,669 415,669 607,477,

3 1198,905_5 TST 3 4,200,642_5 4,460,493

$1,367,318 § 3,447 $1,370,765 $288,978

1,067,372

150,853 1,404 152,257 :

: : 961,535,

1,736,396 23,960 1,760,356 548,105

20,408,567 565,142 20,973,709 __45,797,861

523,663,134 5 593,953 524,257,087 5 48,663,851

$5,574,737 § $5,974,737 § :

790,472 26,508 816,980 3,648,168

247,021 247,021 488,046

36,612,230 § 26,508 56,638,738 5 4,136,214

$8,112,355 § 1,896,120 $ 10,008,475 $ 16,920,941

414,459 414,459 -

336,738 336,738, :

360 360 -

49,575 49,575 :

2,594,493 (23,709) 2,570,784 (45,435,776)

71,458,405 $1,921,986 513,380,391 5 (28,514,835)

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

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Exhibit 3

Coal Workforce General Road Investment Board Total

ASSETS Cash and cash equivalents 3,254,619$ -$ 3,773$ 3,258,392$
Receivables (net of allowance for uncollectibles):

Taxes receivable 10,773,357 - - 10,773,357
Accounts receivable 117,862 22,222 - 140,084

Due from other funds - 65,105 - 65,105
Due from component unit 1,161,535 - - 1,161,535
Due from other governmental units 1,922,511 - - 1,922,511
Restricted assets:

Cash and cash equivalents 336,738 337,697 - 674,435
Investments 360 - - 360

Total assets 17,566,982$ 425,024$ 3,773$ 17,995,779$

LIABILITIES Accounts payable 492,016$ 10,565$ -$ 502,581$
Due to other funds 68,552 - - 68,552

Total liabilities 560,568$ 10,565$ -$ 571,133$

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 10,706,739$ -$ -$ 10,706,739$

FUND BALANCES Fund balances: Restricted:

Coal Road -$ 414,459$ -$ 414,459$
Asset forfeiture funds 336,738 - - 336,738
Energy Lease Project 360 - - 360

Assigned: Sheriff Funds 35,094 - - 35,094
Library Donations 43,378 - - 43,378
Law Library 52,537 - - 52,537
Commonwealth Attorney 500 - - 500
Housing 12,124 - - 12,124
Health and Fitness 8,247 - - 8,247

Unassigned 5,810,697 - 3,773 5,814,470
Total fund balances 6,299,675$ 414,459$ 3,773$ 6,717,907$
Total liabilities, deferred inflows of resources, and fund balances 17,566,982$ 425,024$ 3,773$ 17,995,779$

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

County of Russell, Virginia Balance Sheet

Governmental Funds June 30, 2019

-8-

County of Russell, Virginia Balance Sheet Governmental Funds June 30, 2019

Exhibit 3

Coat Workforce General Road Investment Board =Total ASSETS Cash and cash equivalents $3,254,619 § 5 3,773 $3,258,392 Receivables (net of allowance for uncollectibles): Taxes receivable 10,773,357 : 10,773,357 Accounts receivable 117,862 22,222 140,084 Due from other funds . 65,105 65,105 ‘Due from component unit 4,161,535, : 1,161,535, ‘Due from other governmental units 1,922,511 11922,511 Restricted assets: Cash and cash equivalents 336,738 337,697 674,435 Investments 360, - 360 Total assets 17,366,987 5,08 3773S 17,995,779 ABILITIES ‘Accounts payable S 492,016 $10,565 § S 302,581 Due to other funds 68,552 : 68,552 Total liabilities 360,568 10,565 SEE DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes $10,706,739 $ 38 $10,706,739 FUND BALANCES Fund balances: Restricted Coal Road $ $414,459 § S 414,459 Asset forfeiture funds 336,738 : 336,738 Energy Lease Project, 360 : 360 Assigned Sheri Funds 35,094 35,094 Library Donations 43,378 43,378 Law Library 52,537 : 52,537 Commonwealth Attorney 500 : '500 Housing 12,124 : 12,124 Health and Fitness 8,247 . 8,247 Unassigned 5,810,697 : 3.773__5,814,470 Total fund balances S__6:299,675_ $414,459 $ 3773S 6,717,907 Total liabilities, deferred inflows of resources, and fund balances, S$ 17,566,982 $425,024 $ 3 773$ 17,995,779

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

Exhibit 4

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

Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds 6,717,907$

Land 643,695$
Buildings and improvements 16,243,350
Machinery and equipment 1,693,404 18,580,449

Unavailable revenue - property taxes 5,132,002

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

Pension related items 783,236$
OPEB related items 415,669 1,198,905

3,162,451

Bonds and literary loans (8,841,904)$
Capital leases (5,392,020)
Unamortized premium (165,687)
Accrued interest payable (150,853)
Landfill accrued closure and postclosure liability (293,509)
Net OPEB liabilities (2,475,567)
Compensated absences (574,111)
Net pension liability (4,402,165) (22,295,816)

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

Pension related items (790,472)$
OPEB related items (247,021) (1,037,493)

Net position of governmental activities 11,458,405$

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, 2019

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.

-9-

Exhibit 4 County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2019

Amounts reported for governmental activities in the statement of net position are different because: Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds S$ 6,717,907

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

Land S 643,695 Buildings and improvements 16,243,350 Machinery and equipment 1,693,404 18,580,449

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Unavailable revenue - property taxes 5,132,002

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

Pension related items 5 783,236

OPEB related items 415,669 1,198,905

Internal service tunds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 3,162,451

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 S$ (8,841,904) Capital leases (6,392,020) Unamortized premium (165,687) Accrued interest payable (150,853) Landfill accrued closure and postclosure liability (293,509) Net OPEB liabilities (2,475,567) Compensated absences (674,111) Net pension liability (4,402,165) (22,295,816)

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

Pension related items 5 (790,472) OPEB related items (247,021) (1,037,493) Net position of governmental activities oes

‘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 15,901,393$ -$ -$ 15,901,393$
Other local taxes 2,890,062 360,434 - 3,250,496
Permits, privilege fees, and regulatory licenses 43,183 - - 43,183
Fines and forfeitures 13,545 - - 13,545
Revenue from the use of money and property 274,536 2,205 - 276,741
Charges for services 329,272 - - 329,272
Miscellaneous 210,687 - - 210,687
Recovered costs 1,172,919 - 52,566 1,225,485
Intergovernmental:

Commonwealth 8,773,771 - - 8,773,771
Federal 3,396,243 - 436,407 3,832,650

Total revenues 33,005,611$ 362,639$ 488,973$ 33,857,223$

EXPENDITURES Current:

General government administration 2,153,583$ -$ -$ 2,153,583$
Judicial administration 2,680,600 - - 2,680,600
Public safety 7,267,404 - - 7,267,404
Public works 2,691,470 202,043 - 2,893,513
Health and welfare 7,711,507 - 591,222 8,302,729
Education 7,365,945 - - 7,365,945
Parks, recreation, and cultural 543,499 - - 543,499
Community development 959,458 - - 959,458
Nondepartmental 421,793 - - 421,793

Capital projects 283,529 - - 283,529
Debt service:

Principal retirement 1,517,548 - - 1,517,548
Interest and other fiscal charges 549,292 - - 549,292

Total expenditures 34,145,628$ 202,043$ 591,222$ 34,938,893$

Excess (deficiency) of revenues over (under) expenditures (1,140,017)$ 160,596$ (102,249)$ (1,081,670)$

OTHER FINANCING SOURCES (USES) Transfers in -$ -$ 111,220$ 111,220$
Transfers out (263,453) - - (263,453)

Total other financing sources (uses) (263,453)$ -$ 111,220$ (152,233)$

Net change in fund balances (1,403,470)$ 160,596$ 8,971$ (1,233,903)$
Fund balances - beginning 7,703,145 253,863 (5,198) 7,951,810
Fund balances - ending 6,299,675$ 414,459$ 3,773$ 6,717,907$

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, 2019

-10-

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

Governmental Funds

For the Year Ended June 30, 2019

Exhibit 5

REVENUES General property taxes, Other local taxes Permits, privilege fees, and regulatory licenses Fines and forfeitures. Revenue from the use of money and property Charges for services Miscellaneous Recovered costs Intergovernmental:

Commonwealth

Federal

Total revenues

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

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers in Transfers out

Total other financing sources (uses)

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

Coat Workforce General Road Investment Board Total $15,901,393 $ “$ $15,901,393 2,890,062 360,434 3,250,496 43,183 : 43,183 13,545 : 13,545, 274,536 2,205 276,741 329,272 : 329,272 210,687 : : 210,687 4,172,919 : 52,566 1,225,485 8,773,771 : : 8,773,771 3,396,243 - 436,407 3,832,650 333,005,611 $362,639 § 488,973 9 33,857,223 S$ 2,153,583 $ “$ $2,153,583 2,680,600 : 2,680,600 7,267,404 : 7,267,404 2,691,470 202,043 : 2,893,513 7,711,507 : 591,222 8,302,729 7,365,945, : : 7,365,945 543,499 : 543,499 959,458 : 959,458 421,793 : 421,793 283,529 : 283,529 1,517,548 : 1,517,548 549,292 : : 549,292 334,145,628 5 202,083§ S229 34,938,893 S$ (1,140,017) $160,596 § (102,249) $ (1,081,670) s -$ “$ 111,220 $ 111,220 (263,453) - - (263,453) 5 (263,453) 5 —s TH,220§ (152,233) S (1,403,470) $160,596 § 8,971 $ (1,233,903) 7,703,145 253,863, (5,198) 7,951,810 6,299,675. 414,459 3,773 6,717,907

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

Exhibit 6

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

Net change in fund balances - total governmental funds (1,233,903)$

Capital outlay (2,704,381)$
Reversion of assets back to the School Board (net) (750,808)
Depreciation expense 2,159,213 (1,295,976)

The net effect of various miscellaneous transactions involving capital assets (I.e., sales, trade-ins, and donations) is to increase (decrease) net assets. (162,387)

Property taxes 1,640,078

Principal Payments: Bonds, literary loans, and notes 1,237,824$
Capital leases 279,724

Decrease (increase) in estimated liability: Landfill closure and postclosure liability (6,599) 1,510,949

(Increase) decrease in compensated absences 5,273$
(Increase) decrease in accrued interest payable 44,882
Change in OPEB related items (49,333)
Amortization of bond premiums 16,804
Change in pension related items 747,736 765,362

2,376,341

Change in net position of governmental activities 3,600,464$

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, 2019

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-

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, 2019

Exhibit 6

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

Net change in fund balances - total governmental funds

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

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

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

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

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

Decrease (increase) in estimated liabili Landfill closure and postclosure liability

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

(increase) decrease in compensated absences (increase) decrease in accrued interest payable Change in OPEB related items

‘Amortization of bond premiums

Change in pension related items

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.

CChange in net position of governmental activities

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

A1-

$ (1,233,903)

(2,704,381) (750,808)

2,159,213 (1,295,976)

(162,387)

1,640,078

1,237,824 279,724

(6,599) 1,510,949

5,273 44,882 (49,333) 16,804 167,736 765,362 2,376,341 ESOC

Exhibit 7

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

ASSETS Current assets:

Cash and cash equivalents -$ 3,456,148$
Interest receivable 48 -
Accounts receivable, net of allowance for uncollectibles 11,438 571,040 Due from other funds 3,447 -

Total current assets 14,933$ 4,027,188$

Noncurrent assets: Restricted assets:

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

Utility plant in service 5,240,699$ -$
Machinery and equipment 8,148 -
Less accumulated depreciation (2,772,645) -
Total capital assets 2,476,202$ -$
Total noncurrent assets 2,525,777$ -$
Total assets 2,540,710$ 4,027,188$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 1,737$ -$

LIABILITIES Current liabilities:

Accounts payable 3,447$ 864,737$
Accrued interest payable 1,404 -
Revenue bonds - current portion 23,960 -

Total current liabilities 28,811$ 864,737$

Noncurrent liabilities: Revenue bonds - net of current portion 556,122$ -$
Net pension liability 9,020 -

Total noncurrent liabilities 565,142$ -$
Total liabilities 593,953$ 864,737$

DEFERRED INFLOWS OF RESOURCES Pension related items 26,508$ -$

NET POSITION Net investment in capital assets 1,896,120$ -$
Restricted for debt service and bond covenants 49,575 -
Unrestricted (23,709) 3,162,451

Total net position 1,921,986$ 3,162,451$

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, 2019

-12-

Exhibit 7

County of Russell, Virginia Statement of Net Position

Proprietary Funds June 30, 2019

Enterprise internal Fund Service Fund Dante Self Fund Health Insurance ASSETS Current assets: Cash and cash equivalents $ -§ 3,456,148 Interest receivable 48 : Accounts receivable, net of allowance for uncollectibles 11,438 571,040 Due from other funds 3,447 - Total current assets $ 14,933_ 5 F027, 188 Noncurrent assets: Restricted assets: Cash and cash equivalents (in custody of others) $ 49,575_$ : Capital assets: Utility plant in service $ 5,240,699 $ : ‘Machinery and equipment 8,148 : Less accumulated depreciation (2,772,645) : Total capital assets $ 2,476,202_$ = Total noncurrent assets S_2,595,777_§ Total assets 2,540,710_$ 4,027,188 DEFERRED OUTFLOWS OF RESOURCES Pension related items 1,737_$ : LIABILITIES Current liabilities: Accounts payable $ 3,447 864,737 Accrued interest payable 1,404 : Revenue bonds - current portion 23,960 : Total current liabilities. $ 28,811 864,737 Noncurrent liabilities: Revenue bonds - net of current portion $ 556,122 $ : Net pension liability 9,020 Total noncurrent liabilities 565,142_§ Total liabilities $ 593,953_$ 864,737

DEFERRED INFLOWS OF RESOURCES Pension related items

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

Total net position

nants

$ 26,508_$ :

$ 1,896,120 $ -

49,575 : (23,709) 3,162,451 3 7,921,986 _$ 3,162,451

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

Exhibit 8

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

OPERATING REVENUES Charges for services:

Sewer revenues 111,780$ -$
Insurance premiums - 7,851,831

Total operating revenues 111,780$ 7,851,831$

OPERATING EXPENSES Salaries and benefits 18,857$ -$
Professional services 60,542 -
Utilities 7,351 -
Materials and supplies 48,604 -
Office expenses 28,777 -
Insurance claims and expenses - 5,481,064 Depreciation 131,470 -

Total operating expenses 295,601$ 5,481,064$

Operating income (loss) (183,821)$ 2,370,767$

NONOPERATING REVENUES (EXPENSES) Investment income -$ 5,574$
Contribution to Castlewood PSA (28,845) -
Interest expense (26,612) -

Total nonoperating revenues (expenses) (55,457)$ 5,574$
Income (loss) before transfers (239,278)$ 2,376,341$

Transfers in 152,233$ -$
Change in net position (87,045)$ 2,376,341$

Total net position - beginning, as restated 2,009,031 786,110 Total net position - ending 1,921,986$ 3,162,451$

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, 2019

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County of Russell, Virginia

Exhibit 8

Statement of Revenues, Expenses, and Changes in Net Position

Proprietary Funds

For the Year Ended June 30, 2019

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance OPERATING REVENUES Charges for services: Sewer revenues $ 111,780 $ - Insurance premiums - 7,851,831 Total operating revenues 117, 780 7,851,831 OPERATING EXPENSES Salaries and benefits $ 18,857 $ Professional services 60,542 Utilities 7,351 Materials and supplies 48,604 Office expenses 28,777 : Insurance claims and expenses : 5,481,064 Depreciation 131,470 : Total operating expenses $ 295,601 § 5,481,064 Operating income (loss) $ (183,821) $ 2,370,767 NONOPERATING REVENUES (EXPENSES) Investment income $ 7 $ 5,574 Contribution to Castlewood PSA (28,845) : Interest expense (26,612) : Total nonoperating revenues (expenses) (55,457) 5,574 Income (loss) before transfers 5 (239,278) 7,376,341 Transfers in $ 152,233 $ : Change in net position $ (87,045) $ 2,376,341 Total net position - beginning, as restated 2,009,031 786,110 Total net position - ending 7,921,986 5 3,162,451

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

-13-

Exhibit 9

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users 132,813$ -$
Receipts for insurance premiums - 8,292,570
Payments to suppliers (168,344) -
Payments to employees (30,111) -
Payments for premiums - (6,137,990)

Net cash provided by (used for) operating activities (65,642)$ 2,154,580$

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 152,233$ -$
Transfers to other funds - (423,394)

Net cash provided (used) by noncapital financing activities 152,233$ (423,394)$

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of assets (8,148)$ -$
Principal payments on bonds (22,903) -
Contribution to Castlewood PSA (28,845) -
Interest payments (26,695) -

Net cash provided by (used for) capital and related financing activities (86,591)$ -$

CASH FLOWS FROM INVESTING ACTIVITIES Interest income -$ 5,574$

Net increase (decrease) in cash and cash equivalents -$ 1,736,760$

Cash and cash equivalents - beginning 49,575 1,719,388
Cash and cash equivalents - ending 49,575$ 3,456,148$

Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) (183,821)$ 2,370,767$
Adjustments to reconcile operating income (loss) to net cash

provided by (used for) operating activities: Depreciation 131,470$ -$
(Increase) decrease in accounts receivable 24,480 17,345
(Increase) decrease in deferred outflows of resources 1,550 -
(Increase) decrease in due from other funds (3,447) -
Increase (decrease) in accounts payable (23,070) (233,532)
Increase (decrease) in deferred inflows of resources 17,994 -
Increase (decrease) in net pension liability (30,798) -
Total adjustments 118,179$ (216,187)$

Net cash provided by (used for) operating activities (65,642)$ 2,154,580$

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, 2019

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County of Russell, Virginia Statement of Cash Flows Proprietary Funds

Exhibit 9

For the Year Ended June 30, 2019

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

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Net cash provided (used) by noncapital financing activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING

ACTIVITIES

Purchase of assets

Principal payments on bonds

Contribution to Castlewood PSA

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

CASH FLOWS FROM INVESTING ACTIVITIES Interest income

Net increase (decrease) in cash and cash equivalents

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

Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:

Operating income (loss)

Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation (Increase) decrease in accounts receivable (Increase) decrease in deferred outflows of resources (Increase) decrease in due from other funds Increase (decrease) in accounts payable Increase (decrease) in deferred inflows of resources Increase (decrease) in net pension liability Total adjustments

Net cash provided by (used for) operating activities

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

s 132,813 $ -

8,292,570

(168,344) - 0,111) -

(6,137,990)

(65,642) $ 2,154,580

s 152,233 $ : : (423,394)

$ 152,233_$ (423,394) $ (8,148) $ - (22,903) :

(28,845) -

(26,695) :

$ (86,591) $ -

SSS

8 -$ 1,736,760

9,575 53,456, 148

$ (183,821) $ 2,370,767

s 131,470 $ :

724,480 17,345 1,550 - (3,447) : (23,070) (233,532) 17,994 : (30,798) - $ 118,179 _$ (216,187) $ (65,642) § 7, 154,580

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

Exhibit 10

Agency Funds

ASSETS Cash and cash equivalents 68,237$

Total assets 68,237$

LIABILITIES Amounts held for Social Services clients 57,630$
Amounts held for VASAP 10,607

Total liabilities 68,237$

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, 2019

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Exhibit 10 County of Russell, Virginia Statement of Fiduciary Net Position Fiduciary Funds June 30, 2019

Agency Funds

ASSETS

Cash and cash equivalents $ 68,237, Total assets $ 68,237,

LIABILITIES

Amounts held for Social Services clients $ 57,630

Amounts held for VASAP 10,607 Total liabilities $ 68,237,

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, 2019

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. Effective July 1, 2018, the PSA took over operations of the Water and
Sewer Authority. The transactions of the Authority are now part of the PSA.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS June 30, 2019

Note 1-Summary of Significant Accounting Policies:

‘A. Financial Reporting Entity

Blended component units - None

The Castlewood Water and Sewage Authority of Russell County provides water and sewer service to

residents of Russell County. Effective July 1, 2018, the PSA took over operations of the Water and Sewer Authority. The transactions of the Authority are now part of the PSA.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $2,985,743 to the Regional Jail and $39,996 to the Community Services Board. The County does not have any ongoing financial responsibility for these Organizations.

B. Government-wide and Fund Financial Statements

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

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

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

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

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

“AT.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 fund:

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, 2019

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 fund:

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, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $681,405 at June 30, 2019 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 2019.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 2019.

“2

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019

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

-22-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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. 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)

For purposes of measuring the net VRS related OPEB liabilities, deferred outflows of resources and deferred inflows of resources related to the OPEB, and OPEB expense, information about the fiduciary net position of the VRS GLI, HIC, Teacher HIC, and LODA OPEB Plans and the additions to/deductions from the VRS OPEB Plans’ 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.

In addition to the VRS related OPEB, the County and School Board allows their retirees to stay on the health insurance plan after retirement. The retiree is required to pay the blended premium cost creating and implicit subsidy OPEB liability. In addition, retirees receive a monthly stipend towards their health insurance cost until the retiree is Medicare eligible.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

11, Pensions

Other Postemployment Benefits (OPEB)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

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

(Continued)

Long-term Obligations

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

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

Fund Balance

The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

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

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

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

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

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

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

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

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

14,

Long-term Obligations

Fund Balance

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.

“24-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

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

(Continued)

Fund Equity (Continued)

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

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

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

Net Position

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

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:

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

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

14,

Note 2-Stewardship, Compliance, and Accountabilit

Fund Equity (Continued)

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

Net Position

Net Position Flow Assumption

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

A. Budgetary Information

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

A. Budgetary Information (Continued)

Prior to March 30, the County Administrator submits to the Board of Supervisors a proposed

operating and capital budget for the fiscal year commencing the following July 1. The operating and capital budget includes proposed expenditures and the means of financing them. All Funds of the County have legally adopted budgets with the exception of the Industrial Development Authority Fund and Agency Funds.

Public hearings are conducted to obtain citizen comments.
Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution.
The Appropriations Resolution places legal restrictions on expenditures at the departmental

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

Formal budgetary integration is employed as a management control device during the year for

the General Fund and the Special Revenue Funds. The School Fund is integrated only at the level of legal adoption.

All budgets are adopted on a basis consistent with generally accepted accounting principles

(GAAP).

Appropriations lapse on June 30, for all County units.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to commit that portion of the applicable appropriations, is not part of the County’s accounting system.

B. Excess of expenditures over appropriations

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

C. Deficit fund equity

At June 30, 2019, there were no funds with deficit fund equity.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

‘A. Budgetary Information (Continued)

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

Public hearings are conducted to obtain citizen comments. Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution.

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

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

All budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).

Appropriations lapse on June 30, for all County units. Encumbrance accounting, under which purchase orders, contracts, and other commitments for

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

B. Excess of expenditures over appropriations

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

C. Deficit fund equity

At June 30, 2019, there were no funds with deficit fund equity.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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). As of and for the year ending June 30, 2019, the County did not have any investments.

Note 4-Due from Other Governmental Units:

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

Primary Component Unit

Government School Board

Local Government:

Southwest Virginia Regional Jail $ 599,560 $ ‐

Commonwealth of Virginia:

Local sales tax 300,284 ‐

State sales tax ‐ 501,105

Non‐categorical aid 148,394 ‐

Categorical aid‐shared expenses 228,210 ‐

Categorical aid‐Virginia Public Assistance funds 173,942 ‐

Categorical aid‐other 68,355 ‐

Categorical aid‐Comprehensive Services Act funds 197,712 ‐

Federal Government:

Categorical aid‐Virginia Public Assistance funds 206,054 ‐

School federal programs ‐ 1,048,594

Total Amount Due from Other Governmental Units $ 1,922,511 $ 1,549,699

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 3-Deposits and Investment

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:

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 $599,560 $ - Commonwealth of Virginia: Local sales tax 300,284 - State sales tax - 501,105 Non-categorical aid 148,394 - Categorical aid-shared expenses 228,210 - Categorical aid-Virginia Public Assistance funds 173,942 - Categorical aid-other 68,355 - Categorical aid-Comprehensive Services Act funds 197,712 - Federal Government: Categorical aid-Virginia Public Assistance funds 206,054 - School federal programs : 1,048,594 Total Amount Due from Other Governmental Units $ 922,511 $ 549,699

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary Government/ Government/

Component Unit Component Unit

Primary Government: General Fund $ - $ 1,161,535

Component Unit: School Board $ 961,535 $ -
IDA 200,000 -

Total $ 1,161,535 $ 1,161,535

Fund

Interfund transfers and remaining balances for the year ended June 30, 2019, consisted of the following:

Transfers In Transfers Out

Primary Government: General Fund -$ 263,453$
Workforce Investment Board Fund 111,220 -
Dante Fund 152,233 -
Total 263,453$ 263,453$

Primary Government: Due From Due To General Fund -$ 68,552$
Coal Road Fund 65,105 -
Dante Fund 3,447 -
Total 68,552$ 68,552$

Fund

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary

Government/ Government/ Fund Component Unit _Component Unit Primary Government: General Fund $ __ S$ 1,161,535 Component Unit: School Board $ 961,535 $ IDA 200,000 Total

Interfund transfers and remaining balances for the year ended June 30, 2019, consisted of the following:

Fund Transfers In__Transfers Out

Primary Government:

General Fund $ : $263,453 Workforce Investment Board Fund 111,220 : Dante Fund 152,233 : Total 3 263,453 “5 263,453 Primary Government: Due From Due To General Fund 5 68,552 Coal Road Fund 65,105 : Dante Fund 3,447 : Total 368,552. 5 68,552

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019:

Balance Increases/ Decreases/ Balance July 1, 2018 Issuances Retirements June 30, 2019

Direct borrowings and placements General obligation bonds $ 5,950,302 $ - $ (777,387) $ 5,172,915
Literary loans 401,908 - (229,246) 172,662
Revenue bonds 3,727,519 - (231,191) 3,496,328
Deferred Amounts: -
Bond premiums 182,491 - (16,804) 165,687

Total direct borrowings and placements $ 10,262,220 $ - $ (1,254,628) $ 9,007,592

Other long-term obligations Capital leases 5,671,743 - (279,724) 5,392,019
Landfill closure/ -

postclosure liability 286,910 6,599 - 293,509
Net OPEB liabilities 2,166,808 674,585 (365,826) 2,475,567
Compensated absences 579,384 429,265 (434,538) 574,111
Net pension liability 4,936,270 2,824,816 (3,358,921) 4,402,165

Total other long-term obligations $ 13,641,115 $ 3,935,265 $ (4,439,009) $ 13,137,371

Total $ 23,903,335 $ 3,935,265 $ (5,693,637) $ 22,144,963

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

Year Ending June 30, Principal Interest Principal Interest Principal Interest

2020 $ 662,715 $ 208,742 $ 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 391,583 111,563 - - 231,187 -

2025-2029 1,716,783 275,829 - - 1,155,935 -
2030-2034 368,659 23,348 - - 940,342 -
2035-2039 27,180 2,980 - - 244,116 -

Totals $ 5,172,915 $ 1,122,712 $ 172,662 $ 5,603 $ 3,496,328 $ -

General Obligation Bonds Literary Loans Revenue Bonds Direct Borrowings and Placements

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019:

Balance Increases’ Decreases/ Balance July 1, 2018 Issuances__Retirements__June 30, 2019 Direct borrowings and placements General obligation bonds $ 5,950,302 $ - $ (777,387) $5,172,915 Literary loans 401,908 - (229,246) 172,662 Revenue bonds 3,727,519 : (231,191) 3,496,328 Deferred Amounts: : Bond premiums 182,491 : (16,804) 165,687 Total direct borrowings and placements $ 10,262,220 $ - $ (1,254,628) $ 9,007,592 Other long-term obligations Capital leases 5,671,743 : (279,724) 5,392,019 Landfill closure/ - postclosure liability 286,910 6,599 : 293,509 Net OPEB liabilities 2,166,808 674,585, (365,826) 2,475,567 Compensated absences 579,384 429,265 (434,538) 574,111 Net pension liability 4,936,270 2,824,816 (3,358,921) 4,402,165 Total other long-term obligations $_ 13,641,115 $__ 3,935,265 $__ (4,439,009) $__ 13,137,371 Total $23,903,335 $3,935,265 $ (5,693,637) $22,144,963

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

Direct Borrowings and Placements

Year Ending _ General Obligation Bonds Titerary Loans Revenue Bonds June 30, Principal interest Principal _Interest Principal ___ Interest 2020 $ 662,715 $ 208,742 $ 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 135,946 12,500 250 231,187 2024 111,563 : 2025-2029 275,829 2030-2034 23,348 : 940,342 2035-2039 2,980 : : 244,116

Totals $_5,172,915 $_1,122,712 $__172,662 $5,603 $ 3,496,328 §

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $13,063-41,261 a+ 672,000$ 285,448$ 27,615$
General obligation bond 4.50% 1999 2039 $2,518-6,183 a+ 119,530 84,837 2,755
General obligation bond 4.10%-5.23% 1999 2019 $25,000 a+ 510,000 25,000 25,000
General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210 228,438 112,484
General obligation bond 2.35%-5.10% 2002 2023 $213,799-272,702 a+ 4,382,954 1,047,760 251,522
General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 a+ 3,205,190 1,456,432 168,339
General obligation bond 4.60%-5.10% 2009 2030 $55,000-110,000 a+ 1,485,000 915,000 -
General obligation bond 3.05%-5.05% 2010 2031 $55,000-120,000 a+ 1,620,000 1,130,000 75,000

Total General Obligation Bonds 5,172,915$ 662,715$

Revenue Bonds: Revenue bond 0.00% 11/28/2001 2033 $15,595 sa 935,690$ 405,466$ 31,190$
Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 747,850 55,416
Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 143,532 11,483
Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 370,065 27,412
Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 306,096 18,551
Revenue bond 0.00% 10/14/2005 2036 $1,524 sa 91,439 51,816 3,048
Revenue bond 0.00% 10/14/2005 2037 $31,779 sa 1,906,717 1,112,252 63,557
Revenue bond 0.00% 4/28/2006 2037 $6,925 sa 415,513 242,382 13,851
Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 116,869 6,679

Total Revenue Bonds 3,496,328$ 231,187$

Plus: Unamortized Premium 165,687$ 16,804$

Total General Obligation and Revenue Bonds 8,834,930$ 910,706$

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 Goverrmental__Due Within Rates Issued Date ‘Amounts Issue ‘Activities One Year

General Obligation Bonds: General obligation bond 5.75% 1988 2028 $13,063-41,261 ar § 672,000 $ 285,448 $27,615 General obligation bond 4.50% 199 2039 §2,518-6,183 a+ 119,530 84,837 2,755 General obligation bond A 1065.28 1999 2019 525,000 a+ 510,000 25,000 25,000 General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952a+ 1,802,210 228,438 112,484 General obligation bond 2.35%5.10% 2002 2023 5S213,799-272,702 a+ 4,382,954 1,047,760 251,522 General obligation bond A.60%-5.10% 2006 2027 5147,228-197,458 ar 3,205,190 1,456,432 168,339 General obligation bond 460%-5.10% 2009 2030 $95,000-110,000 a+ 1,485,000, 915,000 General obligation bond 3.05%-5.05% 2010 2031 $55,000-120,000 a+ 1,620,000, 130,000 75,000 Total General Obligation Bonds $5,172,915 $662,715 Revenue Bonds: Revenue bond 0.00% 11/28/2001 2033 515,595sa «$= (935,690 $405,406 $ Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 747,850 Revenue bond 00% 11/28/2001 2025 $8,612 sa 344,477 143,532 Revenue bond 00x 11/1/2002 2033 $13,707 sa 822,366 370,065 Revenue bond 0.00% 3/10/2005 2036 99,276 sa 556,538 306,096 Revenue bond 0.00% 10/14/2005 2036 $1,524 5a 91,439 51,816 Revenue bond 0.00% 10/14/2005 2037 $31,779 5a 1,906,717 1,112,252 Revenue bond 0.00% 4/28/2006 2037 $6,925 sa 415,513 242,382 Revenue bond 0.00% 3/30/2007 2037 53,340 sa 197,179 116,869 Total Revenue Bonds $3,496,328 $ Plus:

UUnamortized Premium $165,687 $16,804 Total General Obligation and Revenue Bonds $8,834,930 $910,706

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $57,757 a+ 1,155,140$ 57,757$ 57,757$
Literary loan 2.00% 11/15/2000 2021 $24,689 a+ 493,789 49,387 24,689
Literary loan 3.00% 12/15/2000 2021 $7,700 a+ 154,118 15,518 7,700
Literary loan 2.00% 7/1/2003 2023 $12,500 a+ 250,000 50,000 12,500

Total Literary Loans 172,662$ 102,646$

Other Long-term Obligations: Capital Leases (Note 7) 5,392,019$ 292,461$
Landfill Closure and Postclosure Liability 293,509 -
Net OPEB Liabilities 2,475,567 -
Compensated Absences 574,111 430,583
Net Pension Liability 4,402,165 -

Total Other Long-term Obligations 13,137,371$ 723,044$

Total Long-term Obligations 22,144,963$ 1,736,396$

The County’s general obligation bonds/literary loans are subject to the State Aid Intercept Program. Under terms of the program, the County state aid is redirected to bond holders to cure any event(s) of default.

If an event of default occurs with the revenue bonds, the principal of the bond(s) may be declared immediately due and payable to the registered owner of the bond(s) by written notice to the County.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2019

Note 6-Long-Term Obligations: (Continued)

Primary Government - Governmental Activities Indebtedness (Continued)

Details of long-term indebtedness: (Continued)

Literary loan: Literary toan Literary toan Literary loan Literary loan

Total Literary Loans

Other Long-term Obligations: Capital Leases (Note 7)

Landfill Closure and Postclosure Liability

Net OPEB Liabilities Compensated Absences

Net Pension Liability

Total Other Long-term Obligations

Total Long-term Obligations

Final Amount of Balance Amount Interest Date Maturity Installment Original Governmental Due Within Rates Issued Date Amounts Issue Activities One Year 2.00% 1/1/2000 2020 $57,757 a+ $ 1,155,140 $ 57,757 $5,757 2.00% 11/15/2000 2021 $24,689 a+ 493,789 49,387 24,689 3.00% 12/15/2000 2021 $7,700 154,118 15,518 7,700 2.00% 7/1/2003 2023 $12,500 a+ 250,000 50,000 12,500 $172,662 _$ 102,646 5 5,392,019 § 292,461 293,509 :

2,475,567 574,111 430,583, 4,402,165. : $13,137,371 § 723,044 $22,144,963 $1,736,396

default.

If an event of default occurs with the revenue bonds, the principal of the bond(s) may be declared immediately due and payable to the registered owner of the bond(s) by written notice to the County.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019:

Balance Balance July 1, 2018 Issuances Retirements June 30, 2019

Direct borrowings and placements Revenue bonds $ 602,985 $ - $ (22,903) $ 580,082

Total direct borrowings and placements $ 602,985 $ - $ (22,903) $ 580,082

Net pension liability 39,818 5,730 (36,528) 9,020

Total $ 642,803 $ 5,730 $ (59,431) $ 589,102

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

Year Ending June 30, Principal Interest

2020 23,960$ 25,612$
2021 25,060 24,512
2022 26,212 23,360
2023 27,416 22,156
2024 28,675 20,897

2025-2029 164,389 83,471
2030-2034 205,781 42,079
2035-2036 78,589 3,085

Totals 580,082$ 245,172$

Revenue Bonds Direct Borrowings and Placements

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$ 580,082$ 23,960$

Other Obligations: Net pension liability 9,020$ -$

Total Long-term Obligations 589,102$ 23,960$

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019:

Balance Balance July 1, 2018 _Issuances__Retirements _June 30, 2019

Direct borrowings and placements

Revenue bonds $602,985 $ = $___ (22,903) § 580,082 Total direct borrowings and placements $602,985 $ - $ (22,903) $ 580,082 Net pension liability 39,818 5,730 (36,528) 9,020 Total $__ 642,803 $5,730 $__(59,431) $ 589,102

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

Direct Borrowings and Placements

Year Ending Revenue Bonds June 30, Principal Interest

2020 $ 23,960 $ 25,612 2021 25,060 24,512 2022 26,212 23,360 2023 27,416 22,156 2024 28,675 20,897

2025-2029 164,389 83,471

2030-2034 205,781 42,079

2035-2036 78,589 3,085 Totals $ 580,082 _$ 245,172

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 _$ 580,082 $ 23,960

Other Obligati

Net pension liability $9,020 $

Total Long-term Obligations $589,102 _$§ 23,960

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019:

Balance Balance July 1, 2018 Increases Decreases June 30, 2019

Net OPEB liabilities $ 12,853,795 $ 1,423,370 $ (1,218,834) $ 13,058,331
Compensated absences 725,416 549,453 (544,062) 730,807
Net pension liability 33,822,983 7,348,015 (8,614,170) 32,556,828

Total $ 47,402,194 $ 9,320,838 $ (10,377,066) $ 46,345,966

Details of long-term indebtedness:

Amount Total Due Within

Amount One Year Other Obligations:

Net OPEB Liabilities 13,058,331$ -$
Compensated Absences 730,807 548,105
Net Pension Liability 32,556,828 -

Total Other Obligations 46,345,966$ 548,105$

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019:

Balance Balance July 1, 2018 Increases Decreases June 30, 2019 Net OPEB liabilities $ 12,853,795 $ 1,423,370 $ (1,218,834) $13,058,331 Compensated absences 725,416 549,453 (544,062) 730,807 Net pension liability 33,822,983 7,348,015 (8,614,170) 32,556,828 Total $_ 47,402,194 $9,320,838$ (10,377,066) $ 46,345,966 Details of long-term indebtedness: Amount Total Due Within Amount __One Year

Other Obligation: Net OPEB Liabilities Compensated Absences Net Pension Liability

Total Other Obligations

$ 13,058,331 §

730,807 548,105, 32,556,828 : $ 46,345,966 $548,105

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 (270,574) (66,024)

Net capital asset $ 5,140,899 $ 355,787

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2019, were as follows:

Year Ending Capital June 30, Leases

2020 $ 535,879
2021 539,722
2022 432,130
2023 435,842
2024 439,482

2025-2029 2,165,780
2030-2034 2,114,983
2035-2037 1,281,921

Subtotal $ 7,945,739

Less, amount representing interest (2,553,720)

Present Value of Lease Agreement $ 5,392,019

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 S$ 5,411,473. $ 421,811 Less: Accumulated depreciation (270,574) (66,024) Net capital asset $___5,140,899 $ 355,787

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2019, were as follows:

Year Ending Capital June 3 Leases 2020 $s 535,879 2021 539,722 2022 432,130 2023 435,842 2024 439,482 2025-2029 2,165,780 2030-2034 2,114,983 2035-2037 1,281,921 Subtotal $7,945,739 Less, amount representing interest (2,553,720)

Present Value of Lease Agreement $__ 5,392,019

“34.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans:

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.

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.

Benefit Structures

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, as detailed below.

a. Employees hired before July 1, 2010, vested as of January 1, 2013, and have not taken a refund, are covered under Plan 1, a defined benefit plan. Non-hazardous duty employees are eligible for an unreduced retirement benefit beginning at age 65 with at least 5 years of creditable service or age 50 with at least 30 years of creditable service. Non-hazardous duty employees may retire with a reduced benefit as early as age 55 with at least 5 years of creditable service or age 50 with at least 10 years of creditable service. Hazardous duty employees (law enforcement officers, firefighters, and sheriffs) are eligible for an unreduced benefit beginning at age 60 with at least 5 years of creditable service or age 50 with at least 25 years of creditable service. Hazardous duty employees may retire with a reduced benefit as early as age 50 with at least 5 years of creditable service.

b. Employees hired 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 are covered under Plan 2, a defined benefit plan. Non-hazardous duty employees are eligible for an unreduced benefit beginning at their normal social security retirement age with at least 5 years of creditable service or when the sum of their age and service equals 90. Non-hazardous duty employees may retire with a reduced benefit as early as age 60 with at least 5 years of creditable service. Hazardous duty employees are eligible for an unreduced benefit beginning at age 60 with at least 5 years of creditable service or age 50 with at least 25 years of creditable service. Hazardous duty employees may retire with a reduced benefit as early as age 50 with at least 5 years of creditable service.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: Plan Description

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

Benefit Structures

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, as detailed below.

a. Employees hired before July 1, 2010, vested as of January 1, 2013, and have not taken a refund, are covered under Plan 1, a defined benefit plan. Non-hazardous duty employees are eligible for an unreduced retirement benefit beginning at age 65 with at least 5 years of creditable service or age 50 with at least 30 years of creditable service. Non-hazardous duty employees may retire with a reduced benefit as early as age 55 with at least 5 years of creditable service or age 50 with at least 10 years of creditable service. Hazardous duty employees (law enforcement officers, firefighters, and sheriffs) are eligible for an unreduced benefit beginning at age 60 with at least 5 years of creditable service or age 50 with at least 25 years of creditable service. Hazardous duty ‘employees may retire with a reduced benefit as early as age 50 with at least 5 years of creditable service.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Benefit Structures (Continued)

c. Non-hazardous duty employees hired on or after January 1, 2014 are covered by the Hybrid Plan

combining the features of a defined benefit plan and a defined contribution plan. Plan 1 and Plan 2 members also had the option of opting into this plan during the election window held January 1 – April 30, 2014 with an effective date of July 1, 2014. Employees covered by this plan are eligible for an unreduced benefit beginning at their normal social security retirement age with at least 5 years of creditable service, or when the sum of their age and service equal 90. Employees may retire with a reduced benefit as early as age 60 with at least 5 years of creditable service. For the defined contribution component, members are eligible to receive distributions upon leaving employment, subject to restrictions.

Average Final Compensation and Service Retirement Multiplier

The VRS defined benefit is a lifetime monthly benefit based on a retirement multiplier as a percentage of the employee’s average final compensation multiplied by the employee’s total creditable service. Under Plan 1, average final compensation is the average of the employee’s 36 consecutive months of highest compensation and the multiplier is 1.7% for non-hazardous duty employees, 1.85% for sheriffs and regional jail superintendents, and 1.7% or 1.85% for hazardous duty employees as elected by the employer. Under Plan 2, average final compensation is the average of the employee’s 60 consecutive months of highest compensation and the retirement multiplier is 1.65% for non-hazardous duty employees, 1.85% for sheriffs and regional jail superintendents, and 1.7% or 1.85% for hazardous duty employees as elected by the employer. Under the Hybrid Plan, average final compensation is the average of the employee’s 60 consecutive months of highest compensation and the multiplier 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.

Cost-of-Living Adjustment (COLA) in Retirement and Death and Disability Benefits

Retirees with an unreduced benefit or with a reduced benefit with at least 20 years of creditable service are eligible for an annual COLA beginning July 1 after one full calendar year from the retirement date. Retirees with a reduced benefit and who have less than 20 years of creditable service are eligible for an annual COLA beginning on July 1 after one calendar year following the unreduced retirement eligibility date. Under Plan 1, the COLA cannot exceed 5.00%. Under Plan 2 and the Hybrid Plan, the COLA cannot exceed 3.00%. The VRS also provides death and disability benefits. Title 51.1 of the Code of Virginia, as amended, assigns the authority to establish and amend benefit provisions to the General Assembly of Virginia.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued) Benefit Structures (Continued)

cc. Non-hazardous duty employees hired on or after January 1, 2014 are covered by the Hybrid Plan combining the features of a defined benefit plan and a defined contribution plan. Plan 1 and Plan 2 members also had the option of opting into this plan during the election window held January 1

April 30, 2014 with an effective date of July 1, 2014. Employees covered by this plan are eligible for an unreduced benefit beginning at their normal social security retirement age with at least 5 years of creditable service, or when the sum of their age and service equal 90. Employees may retire with a reduced benefit as early as age 60 with at least 5 years of creditable service. For the defined contribution component, members are eligible to receive distributions upon leaving employment, subject to restrictions.

Average Final Compensation and Service Retirement Multiplier

Cost-of-Living Adjustment (COLA) in Retirement and Death and Disability Benefits

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Contributions (Continued)

The County’s contractually required contribution rate for the year ended June 30, 2019 was 11.70% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017.

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 $681,397 and $760,630 for the years ended June 30, 2019 and June 30, 2018, respectively.

Net Pension Liability

At June 30, 2019, the County reported a liability of $4,411,185 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2017, and rolled forward to the measurement date of June 30, 2018. 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, 2019 and 2018, the County’s proportion was 99.2670% and 99.2986%, respectively.

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, 2017, 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, 2018.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued) Contributions (Continued)

Net Pension Liability

At June 30, 2019, the County reported a liability of $4,411,185 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2017, and rolled forward to the measurement date of June 30, 2018. 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, 2019 and 2018, the County’s proportion was 99.2670% and 99.2986%, respectively.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Actuarial Assumptions – General Employees (Continued)

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.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Actuarial Assumptions – General Employees (Continued)

Mortality rates: (Continued)

The actuarial assumptions used in the June 30, 2017 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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

The actuarial assumptions used in the June 30, 2017 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- 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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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, 2017, 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, 2018.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note

ension Plans: (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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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, 2017 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%

The remainder of this page is left blank intentionally.

-A1-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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%.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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. Consistent with the phased-in funding provided by the General Assembly for state and teacher employer contributions; the County and Component Unit School Board (nonprofessional) was also provided with an opportunity to use an alternative employer contribution rate. For the year ended June 30, 2018 the alternate rate was the employer contribution rate used in FY2012 or 90% of the actuarially determined employer contribution rate from the June 30, 2015 actuarial valuations, whichever was greater. Through the fiscal year ended June 30, 2018, the rate contributed by the school division for the VRS Teacher Retirement Plan was be subject to the portion of the VRS Board- certified rates that are funded by the Virginia General Assembly, which was 100% of the actuarially determined contribution rate. From July 1, 2018 on, participating employers and school divisions are assumed to continue 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 $ 8,360,236 $ 4,411,185 $ 1,122,935

Rate

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued) Discount Rate

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

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 $8,360,236 $ 4,411,185 $1,122,935

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

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

For the year ended June 30, 2019, the County recognized pension expense of $(77,637). At June 30, 2019, 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 $ - $ 588,276

Net difference between projected and actual earnings on pension plan investments - 206,236

Change in proportionate share 38,795 22,468
Change in assumptions 64,781 -

Employer contributions subsequent to the measurement date 681,397 -

Total $ 784,973 $ 816,980

Primary Government

$681,397 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 ending June 30, 2020. 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

2020 $ (286,806)
2021 (131,585)
2022 (272,642)
2023 (22,371)

Thereafter -

Pension Plan Data

Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2018-annual-report-pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA 23218-2500.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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 $ = $588,276 Net difference between projected and actual earnings on pension plan investments : 206,236 Change in proportionate share 38,795 22,468 Change in assumptions 64,781 : Employer contributions subsequent to the measurement date 681,397 : Total

Primary

Year ended June 30 Government 2020 $ (286,806) 2021 (131,585) 2022 (272,642)

2023 (22,371) Thereafter :

Pension Plan Data

Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be

downloaded from the VRS website at http: //www.varetire.org/Pdf/Publications/2018-annual-report-pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA 23218-2500.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Component Unit School Board (nonprofessional)

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, 2017 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 8

Non-vested inactive members 13

Inactive members active elsewhere in VRS 14

Total inactive members 35

Active members 115

Total covered employees 291

Contributions

The Component Unit School Board’s contractually required contribution rate for nonprofessional employees for the year ended June 30, 2019 was 17.55% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017.

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 $447,435 and $443,320 for the years ended June 30, 2019 and June 30, 2018, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Component Unit School Board (nonprofessional)

Employees Covered by Benefit Terms

As of the June 30, 2017 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 8 Non-vested inactive members B Inactive members active elsewhere in VRS 14 Total inactive members 35 Active members 115

Total covered employees

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 $447,435 and $443,320 for the years ended June 30, 2019 and June 30, 2018, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Component Unit School Board (nonprofessional) (Continued)

Net Pension Liability

The net pension liability (NPL) is calculated separately for each employer and represents that particular employer’s total pension liability determined in accordance with GASB Statement No. 68, less that employer’s fiduciary net position. The Component Unit School Board’s (nonprofessional) net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2017 rolled forward to the measurement date of June 30, 2018.

Changes in Net Pension Liability

Total Plan Net Pension Fiduciary Pension Liability Net Position Liability

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

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

Changes for the year: Service cost $ 222,182 $ - $ 222,182
Interest 1,189,675 - 1,189,675
Differences between expected

and actual experience 21,651 - 21,651
Contributions - employer - 443,319 (443,319)
Contributions - employee - 125,060 (125,060)
Net investment income - 860,829 (860,829)
Benefit payments, including refunds

of employee contributions (1,206,028) (1,206,028) -
Administrative expenses - (7,790) 7,790
Other changes - (755) 755

Net changes $ 227,480 $ 214,635 $ 12,845

Balances at June 30, 2018 $ 17,825,852 $ 12,157,024 $ 5,668,828

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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, 2017 $ 17,598,372. $ 11,942,389. $ 5,655,983 Changes for the year: Service cost $ 222,182 § - $ 222,182 Interest 1,189,675 - 1,189,675 Differences between expected and actual experience 21,651 : 21,651 Contributions - employer : 443,319 (443,319) Contributions - employee : 125,060 (125,060) Net investment income : 860,829 (860,829) Benefit payments, including refunds of employee contributions (1,206,028) (1,206,028) : Administrative expenses - (7,790) 7,790 Other changes : (755) 755 Net changes $ 227, 480_$ 714,635. $ 12,845 Balances at June 30, 2018 $ 17,825,852_$ 12,157,024 $ 5,668,828

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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 7,541,696$ 5,668,828$ 4,079,621$

Rate

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

For the year ended June 30, 2019, the Component Unit School Board (nonprofessional) recognized pension expense of $413,430. At June 30, 2019, 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 $ 126,056 $ 6,258

Change in assumptions 10,525 -

Net difference between projected and actual earnings on pension plan investments - 75,910

Employer contributions subsequent to the measurement date 447,435 -

Total $ 584,016 $ 82,168

Board (nonprofessional)

Component Unit School

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Component Unit School Board (nonprofessional) (Continued)

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

Rate 1% Decrease Current Discount__1% Increase (6.00%) (7.00%) (8.00%) Component Unit School Board (nonprofessional) Net Pension Liability $7,541,696 $ 5,668,828 $4,079,621

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 $ 126,056 $ 6,258 Change in assumptions 10,525, : Net difference between projected and actual earnings on pension plan investments : 75,910 Employer contributions subsequent to the measurement date 447,435 :

Total $ $ 82,168

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Component Unit School Board (nonprofessional) (Continued)

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

$447, 435 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, 2020. 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)

2020 $ 179,531
2021 5,964
2022 (121,587)
2023 (9,495)

Thereafter -

Component Unit School Board (professional)

Plan Description

All full time, salaries 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).

Additional information regarding the plan description 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, 2019 was 15.68% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. 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 $2,854,000 and $2,958,000 for the years ended June 30, 2019 and June 30, 2018, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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) 2020 $ 179,531 2021 5,964 2022 (121,587) 2023 (9,495) Thereafter :

Component Unit School Board (professional)

Plan Description

Additional information regarding the plan description 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, 2019 was 15.68% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. 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 $2,854,000 and $2,958,000 for the years ended June 30, 2019 and June 30, 2018, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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, 2019, the school division reported a liability of $26,888,000 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2018 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, 2018 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2018, the school division’s proportion was 0.22864% as compared to 0.22904% at June 30, 2017.

For the year ended June 30, 2019, the school division recognized pension expense of $1,304,000. 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, 2019, 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 $ - $ 2,300,000

Net difference between projected and actual earnings on pension plan investments - 570,000

Change of assumptions 321,000 -

Changes in proportion and differences between employer contributions and proportionate share of contributions 94,000 696,000

Employer contributions subsequent to the measurement date 2,854,000 -

Total $ 3,269,000 $ 3,566,000

Component Unit School Board (professional)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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, 2019, 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 — § - S$ 2,300,000 Net difference between projected and actual earnings on pension plan investments : 570,000 Change of assumptions 321,000 - Changes in proportion and differences between employer contributions and proportionate share of contributions 94,000 696,000 Employer contributions subsequent to the measurement date 2,854,000 - Total $ 3,269,000_§ 3,566,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Component Unit School Board (professional) (Continued)

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

$2,854,000 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 ending June 30, 2020. 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

2020 $ (570,000)
2021 (718,000)
2022 (1,323,000)
2023 (438,000)

Thereafter (102,000)

Actuarial Assumptions

The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of June 30, 2017, 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, 2018.

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, 2019

Note 8-Pension Plans: (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

2020 $ (570,000) 2021 (718,000) 2022 (1,323,000) 2023 (438,000) Thereafter (102,000)

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, 2019

Note 8-Pension Plans: (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 75 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, 2019

Note 8-Pension Plans: (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 75 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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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, 2018, NPL amounts for the VRS Teacher Employee Retirement Plan is as follows (amounts expressed in thousands):

Teacher Employee

Retirement Plan

Total Pension Liability $ 46,679,555
Plan Fiduciary Net Position 34,919,563
Employers’ Net Pension Liability (Asset) $ 11,759,992

Plan Fiduciary Net Position as a Percentage

of the Total Pension Liability 74.81%

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.

The long-term expected rate of return and discount rate information previously described also apply to this plan.

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 41,072,000$ 26,888,000$ 15,148,000$

Rate

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (Continued)

Component Unit School Board (professional) (Continued)

Net Pension Liability

Teacher Employee Retirement Plan

Total Pension Liability $ 46,679,555 Plan Fiduciary Net Position 34,919,563

Employers’ Net Pension Liability (Asset)

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 74.81%

The long-term expected rate of return and discount rate information previously described also apply to this plan.

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 $ 41,072,000 $ 26,888,000 $ 15,148,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2018-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, 2019 (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, 2019 was $17,342.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 8-Pension Plans: (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 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http: //www.varetire.org/Pdf /Publications/2018-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, 2019 (measurement date), the following employees were covered by the benefit terms:

Active Employees 160 Retirees and Spouses 5 Total 165

Contributions

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019. 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:

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.

Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2018 and gradually declines to 4.20% by the year 2095.

Actuarial Cost Method Entry age normal, level percentage of pay Discount Rate 3.87% as of June 30, 2018; 3.50% as of June 30, 2019

Inflation 2.50%

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, 2019

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, 2019. 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 3.87% as of June 30, 2018; 3.50% as of June 30, 2019 Inflation (2.50%

Healthcare Trend Rate ‘The healthcare trend rate assumption starts at 6.00% in 2018

and gradually declines to 4.20% by the year 2095.

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 'B 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, 2019

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

Changes in Total OPEB Liability

Primary Government Total OPEB Liability

Balances at June 30, 2018 $ 363,657

Changes during Year: Service Cost 15,523
Interest on Total OPEB Liability 14,342
Effect of Assumptions Changes or Inputs 11,569
Benefit Payments (17,342)
Net Changes $ 24,092
Balances at June 30, 2019 $ 387,749

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 (2.50%) or one percentage point higher (4.50%) than the current discount rate:

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

$ 420,941 $ 387,749 $ 357,362

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%)

$ 341,442 $ 387,749 $ 442,430

Rates

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Changes in Total OPEB Liability Primary Government Total OPEB Liability

Balances at June 30, 2018 $ 363,657 Changes during Year:

Service Cost 15,523 Interest on Total OPEB Liability 14,342 Effect of Assumptions Changes or Inputs 11,569 Benefit Payments (17,342) Net Changes $ 24,092 Balances at June 30, 2019 s 387,749

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

Rate 1% Decrease Current Discount T% Increase (2.87%) Rate (3.87%) (4.87%) $ 420,941 $ 387,749 § 357,362

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%) $ 341,442 § 387,749 $ 442,430

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019, the County recognized OPEB expense in the amount of $30,210. At June 30, 2019, 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 $ 9,466 $ 7,911

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

2020 $ 345
2021 345
2022 345
2023 345
2024 175

Thereafter -

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $ 9,466. 7,914

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

2020 $ 345 2021 345 2022 345 2023 345 2024 175 Thereafter -

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Plan Membership

At June 30, 2019 (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, 2019 was $496,549.

Total OPEB Liability

The School Board’s total OPEB liability was measured as of June 30, 2019. The total OPEB liability was determined by an actuarial valuation as of July 1, 2017.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Plan Membership

At June 30, 2019 (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, 2019 was $496,549. Total OPEB Liability

The School Board’s total OPEB liability was measured as of June 30, 2019. The total OPEB liability was determined by an actuarial valuation as of July 1, 2017.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Actuarial Assumptions

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 2018

and gradually declines to 4.20% by the year 2095. 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.

Discount Rate 3.87% as of June 30, 2018; 3.50% as of June 30, 2019 Actuarial Cost Method Entry age normal, level percentage of pay

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, 2019

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 3.87% as of June 30, 2018; 3.50% as of June 30, 2019 inflation 2.50%

Healthcare Trend Rate ‘The healthcare trend rate assumption starts at 6.00% in 2018 and gradually declines to 4.20% by the year 2095.

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 i 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 88 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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2018 $ 7,707,795

Changes during Year: Service Cost 226,831
Interest on Total OPEB Liability 297,553
Effect of Assumptions Changes or Inputs 201,429
Benefit Payments (496,549)
Net Changes $ 229,264
Balances at June 30, 2019 $ 7,937,059

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 (2.50%) or one percentage point higher (4.50%) than the current discount rate:

1% Decrease Current Discount 1% Increase (2.50%) Rate (3.50%) (4.50%)

$ 8,498,925 $ 7,937,059 $ 7,402,125

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%)

$ 7,043,974 $ 7,937,059 $ 8,983,619

Rates

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2018 $ 7,107,795

Changes during Year:

Service Cost 226,831

Interest on Total OPEB Liability 297,553

Effect of Assumptions Changes or Inputs 201,429

Benefit Payments (496,549) Net Changes g 229,264

Balances at June 30, 2019 Hy 7,937,059

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

Rate 1% Decrease Current Discount T% Increase (2.50%) Rate (3.50%) (4.50%) $ 8,498,925 $ 7,937,059 $ 7,402,125

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%) $ 7,043,974 § 7,937,059 § 8,983,619

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019, the School Board recognized OPEB expense in the amount of $529,695. At June 30, 2019, 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 $ 161,933 $ 136,740

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

2020 $ 5,311
2021 5,311
2022 5,311
2023 5,311
2024 3,949

Thereafter -

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $ 161,933 $ 136,740

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

2020 $5,311 2021 5,311 2022 5,311 2023 5,311 2024 3,949 Thereafter :

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Plan Description

The Group Life Insurance (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. All full-time, salaried permanent employees of the state agencies, teachers, and employees of participating political subdivisions are automatically covered by the VRS GLI 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 GLI benefit, members are also eligible to elect additional coverage for themselves as well as a spouse or dependent children through the Optional GLI 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 GLI Program OPEB.

The specific information for GLI OPEB, including eligibility, coverage and benefits is described below:

Eligible Employees

The GLI Program was established July 1, 1960, for state employees, teachers, and employees of political subdivisions that elect the program. Basic GLI coverage is automatic upon employment. Coverage ends for employees who leave their position before retirement eligibility or who take a refund of their accumulated retirement member contributions and accrued interest.

Benefit Amounts

The GLI Program is a defined benefit plan with several components. The natural death benefit is equal to the employee’s covered compensation rounded to the next highest thousand and then doubled. The accidental death benefit is double the natural death benefit. In addition to basic natural and accidental death benefits, the program provides additional benefits provided under specific circumstances that include the following: accidental dismemberment benefit, safety belt benefit, repatriation benefit, felonious assault benefit, and accelerated death benefit option. The benefit amounts 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. For covered members with at least 30 years of creditable service, the minimum benefit payable was set at $8,000 by statute. This amount is increased annually based on the VRS Plan 2 cost-of-living adjustment and was increased to $8,279 effective July 1, 2018.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Plan Description

The Group Life Insurance (GL!) 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. All full-time, salaried permanent employees of the state agencies, teachers, and employees of participating political subdivisions are automatically covered by the VRS GLI 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.

The specific information for GLI OPEB, including eligibility, coverage and benefits is described below: Eligible Employees

Benefit Amounts

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Contributions

The contribution requirements for the GLI 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 GLI 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, 2019 was 0.52% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. 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.

Contributions to the GLI Program from the County were $31,276 and $32,161 for the years ended June 30, 2019 and June 30, 2018, respectively.

Contributions to the GLI Program from the Component Unit School Board (nonprofessional) were $13,543 and $13,673 for the years ended June 30, 2019 and June 30, 2018, respectively.

Contributions to the GLI Program from the Component Unit School Board (professional) were $96,000 and $95,556 for the years ended June 30, 2019 and June 30, 2018, respectively.

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

At June 30, 2019, the County reported a liability of $494,000 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2019, the Component Unit School Board (nonprofessional) reported a liability of $210,000 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2019, the Component Unit School Board (professional) reported a liability of $1,468,000 for its proportionate share of the Net GLI OPEB Liability.

The Net GLI OPEB Liability was measured as of June 30, 2018 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 GLI Program for the year ended June 30, 2018 relative to the total of the actuarially determined employer contributions for all participating employers.

At June 30, 2018, the County’s proportion was 0.03252% as compared to 0.03093% at June 30, 2017.

At June 30, 2018, the Component Unit School Board (nonprofessional) proportion was 0.01383% as compared to 0.01439% at June 30, 2017.

At June 30, 2018, the Component Unit School Board (professional) proportion was 0.09777% as compared to 0.09664% at June 30, 2017.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Contributions

The contribution requirements for the GLI 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 GLI 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, 2019 was 0.52% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. 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.

Contributions to the GLI Program from the County were $31,276 and $32,161 for the years ended June 30, 2019 and June 30, 2018, respectively.

Contributions to the GLI Program from the Component Unit School Board (nonprofessional) were $13,543 and $13,673 for the years ended June 30, 2019 and June 30, 2018, respectively.

Contributions to the GLI Program from the Component Unit School Board (professional) were $96,000 and $95,556 for the years ended June 30, 2019 and June 30, 2018, respectively.

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

At June 30, 2019, the County reported a liability of $494,000 for its proportionate share of the Net GLI OPEB Liability.

‘At June 30, 2019, the Component Unit School Board (nonprofessional) reported a liability of $210,000 for its proportionate share of the Net GL! OPEB Liability.

At June 30, 2019, the Component Unit School Board (professional) reported a liability of $1,468,000 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2018, the County’s proportion was 0.03252% as compared to 0.03093% at June 30, 2017.

At June 30, 2018, the Component Unit School Board (nonprofessional) proportion was 0.01383% as compared to 0.01439% at June 30, 2017.

At June 30, 2018, the Component Unit School Board (professional) proportion was 0.097% as compared to 0.09664% at June 30, 2017.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 GLI Program OPEB (Continued)

For the year ended June 30, 2019, the County recognized GLI OPEB expense of $7,000. 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, 2019, 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.

For the year ended June 30, 2019, the Component Unit School Board (professional) 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.

At June 30, 2019, 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 $ 24,000 $ 9,000 $ 10,000 $ 3,000 $ 72,000 $ 26,000
Changes in proportion 23,000 - - 12,000 - 40,000
Changes in assumptions - 21,000 - 9,000 - 61,000
Net difference between projected and actual

earnings on OPEB plan investments - 16,000 - 7,000 - 48,000
Employer contributions subsequent to the

measurement date 31,276 - 13,543 - 96,000 -
Total $ 78,276 $ 46,000 $ 23,543 $ 31,000 $ 168,000 $ 175,000

Primary Government (nonprofessional)

Component Unit School Board Component Unit School Board

(professional)

$31,276, $13,543, and $96,000 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, 2020. 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)

2020 $ (3,000) $ (5,000) $ (31,000)

2021 (3,000) (5,000) (31,000)

2022 (3,000) (5,000) (31,000)

2023 1,000 (3,000) (17,000)

2024 6,000 - 1,000

Thereafter 3,000 (3,000) 6,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 GLI Program OPEB (Continued)

For the year ended June 30, 2019, 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.

For the year ended June 30, 2019, the Component Unit School Board (professional) 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.

At June 30, 2019, the employer reported deferred outflows of resources and deferred inflows of resources related to the GLI OPEB from the following sources:

Camponet Unit Schel Board Camponet Uni Schl aad Prinary Goverment (oonofsional (oroesnal) Deferred Outons —Defered fons DeferedOutfovs Deerediniows Deferred Outfows —_Deferredlifions cfesouces __of Reseces cfResouces __of Resmrces ofResnces of Resources

Dierecesbetneen expected and acu perce § mt0o § sou 0100 § 3.000 § mn § 1600 hangs proprion Bo ‘0 0 hangs in asomtons 00 00 61.000 Net dfrec beeen projected and acti ening on OPE plan meses ‘00 7000 Ero) Erle corrtons teen tthe ease dle Ut 1358 46,00, Tal 5 76 § Bie Bae § Te 5) 000. § 0)

$31,276, $13,543, and $96,000 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, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the GL! 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) 2020 $ (3,000) $ (5,000) $ (31,000) 2021 (3,000) (5,000) (31,000) 2022 3,000) (5,000) (31,000) 2023 1,000 (3,000) (17,000) 2024 6,000 : 1,000 Thereafter 3,000 (3,000) 6,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2017, 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, 2018. The assumptions include several employer groups as noted below. Mortality rates included herein are for relevant employer groups. Information for other groups can be referenced in the VRS CAFR.

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 – 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

Actuarial Assumptions

The total GL! OPEB liability was based on an actuarial valuation as of June 30, 2017, 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, 2018. The assumptions include several employer groups as noted below. Mortality rates included herein are for relevant employer groups. Information for other groups can be referenced in the VRS CAFR.

General state employees 3.5% - 5.35% Teachers 3.5%-5.95% SPORS employees 3.5%-4.75% VaLORS employees 3.5%-4.75% RS 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 - 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-Disablemen’ RP-2014 Disabil females.

'y Mortality Rates projected with scale BB to 2020; 115% of rates for males and

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 – 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 - 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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:

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, 2019

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-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, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 GLI Program represents the program’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net position. As of the measurement date of June 30, 2018, NOL amounts for the GLI Program is as follows (amounts expressed in thousands):

GLI OPEB Program

Total GLI OPEB Liability $ 3,113,508
Plan Fiduciary Net Position 1,594,773
Employers’ Net GLI OPEB Liability (Asset) $ 1,518,735

Plan Fiduciary Net Position as a Percentage of the Total GLI OPEB Liability 51.22%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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

GLI OPEB Program Total GLI OPEB Liability $ 3,113,508 Plan Fiduciary Net Position 1,594,773 Employers’ Net GL! OPEB Liability (Asset) $ 1,518,735 Plan Fiduciary Net Position as a Percentage of the Total GLI OPEB Liability 51.22%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 ended June 30, 2018, 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, which was 100% of the actuarially determined contribution rate. From July 1, 2018 on, employers are assumed to continue 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 GL! 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 ended June 30, 2018, 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, which was 100% of the actuarially determined contribution rate. From July 1, 2018 on, employers are assumed to continue 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 645,000$ 494,000$ 370,000$

Component Unit School Board (nonprofessional) 274,000$ 210,000$ 157,000$

Component Unit School Board (professional) 1,918,000$ 1,468,000$ 1,102,000$

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 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2018-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $ 645,000. _$ 494,000. _$ 370,000 Component Unit School Board

(nonprofessional) $ 274,000 _$ 210,000 $ 157,000 Component Unit School Board

(professional) $ 1,918,000 _$ 1,468,000 _$ 41,102,000

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 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http: //www.varetire.org/Pdf /Publications/2018-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan):

Plan Description

The Political Subdivision Health Insurance Credit (HIC) Program was 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. All full-time, salaried permanent employees of participating political subdivisions are automatically covered by the VRS Political Subdivision HIC 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 HIC 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 HIC Program OPEB, including eligibility, coverage and benefits is described below:

Eligible Employees

The Political Subdivision Retiree HIC Program was established July 1, 1993 for retired political subdivision employees of employers who elect the benefit and retire with at least 15 years of service credit. Eligible employees include full-time permanent salaried employees of the participating political subdivision who are covered under the VRS pension plan. These employees are enrolled automatically upon employment.

Benefit Amounts

The Political Subdivision Retiree HIC Program is a defined benefit plan that provides a credit toward the cost of health insurance coverage for retired political subdivision employees of participating employers. 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. 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.

HIC Program Notes

The monthly HIC benefit cannot exceed the individual premium amount. There is no HIC 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 HIC as a retiree.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan):

Plan Description

The Political Subdivision Health Insurance Credit (HIC) Program was 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. All full-time, salaried permanent employees of participating political subdivisions are automatically covered by the VRS Political Subdivision HIC 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 HIC 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 HIC Program OPEB, including eligibility, coverage and benefits is described below:

Eligible Employees

Benefit Amounts

HIC Program Notes

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Employees Covered by Benefit Terms

As of the June 30, 2017 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 15 66

Inactive members: Vested inactive members 2 -

Total inactive members 17 66

Active members 39 115

Total covered employees 56 181

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, 2019 was 0.21% of covered employee compensation. The Component Unit School Board’s (nonprofessional) contractually required employer contribution rate for the year ended June 30, 2018 was 1.23% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. 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 HIC Program were $2,763 and $4,374 for the years ended June 30, 2019 and June 30, 2018, respectively. Contributions from the Component Unit School Board (nonprofessional) to the Health Insurance Credit Program were $32,001 and $31,329 for the years ended June 30, 2019 and June 30, 2018, respectively.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Employees Covered by Benefit Terms

As of the June 30, 2017 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 15 66 Inactive members: Vested inactive members 2 Total inactive members | Active members 39 115 Total covered employees eC

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, 2019 was 0.21% of covered employee compensation. The Component Unit School Board’s (nonprofessional) contractually required employer contribution rate for the year ended June 30, 2018 was 1.23% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. 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 HIC Program were $2,763 and $4,374 for the years ended June 30, 2019 and June 30, 2018, respectively. Contributions from the Component Unit School Board (nonprofessional) to the Health Insurance Credit Program were $32,001 and $31,329 for the years ended June 30, 2019 and June 30, 2018, respectively.

“TB

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Net HIC OPEB Liability

The County and Component Unit School Board’s (nonprofessional) net HIC OPEB liability was measured as of June 30, 2018. The total HIC OPEB liability was determined by an actuarial valuation performed as of June 30, 2017, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018.

Actuarial Assumptions

The total HIC OPEB liability was based on an actuarial valuation as of June 30, 2017, 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, 2018.

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*

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Net HIC OPEB Liability

The County and Component Unit School Board’s (nonprofessional) net HIC OPEB liability was measured as. of June 30, 2018. The total HIC OPEB liability was determined by an actuarial valuation performed as of June 30, 2017, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018.

Actuarial Assumptions

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*

The

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (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%

-T5-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (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, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (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%

-T6-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (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%

T7-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―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 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 ended June 30, 2018, 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, which was 100% of the actuarially determined contribution rate. From July 1, 2018 on, employers are assumed to continue 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—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% 454% 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 100.0% 4.80% Inflation 2.50% “Expected arithmetic nominal return 7.30%

Discount Rate

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (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, 2017 $ 109,885 $ 88,734 $ 21,151

Changes for the year: Service cost $ 1,884 $ - $ 1,884
Interest 7,367 - 7,367
Differences between expected

and actual experience (4,641) - (4,641)
Contributions - employer - 4,374 (4,374)

Net investment income - 6,182 (6,182)

Benefit payments (9,286) (9,286) -

Administrative expenses - (141) 141

Other changes - (472) 472

Net changes $ -4,676 $ 657 $ (5,333)

Balances at June 30, 2018 $ 105,209 $ 89,391 $ 15,818

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, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (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, 2017 $ 109,885 $ 88,734 $ 21,151 Changes for the year: Service cost $ 1,884 $ - S$ 1,884 Interest 7,367 - 7,367 Differences between expected and actual experience (4,641) : (4,641) Contributions - employer : 4,374 (4,374) Net investment income - 6,182 (6,182) Benefit payments (9,286) (9,286) : Administrative expenses - (141) 141 Other changes : (472) 4m Net changes $ 4,676 $ 657 $ (5,333) Balances at June 30, 2018 $ 105,209 $ 89,391 $ 15,818

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (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, 2017 $ 534,000 $ (35,000) $ 569,000

Changes for the year: Service cost $ 9,113 $ - $ 9,113
Interest 18,227 - 18,227
Differences between expected

and actual experience (1,089) - (1,089)
Contributions - employer - 31,329 (31,329)
Net investment income - - -
Benefit payments (33,696) (33,696) -
Other changes (5,145) (495) (4,650)

Net changes $ (12,590) $ (2,862) $ (9,728)

Balances at June 30, 2018 $ 521,410 $ (37,862) $ 559,272

Increase (Decrease)

Sensitivity of the County’s and Component Unit School Board’s (nonprofessional) HIC Net OPEB Liability to Changes in the Discount Rate

The following presents the County’s and Component Unit School Board’s (nonprofessional) HIC 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 $ 25,231 $ 15,818 $ 7,684

Component Unit School Board’s (nonprofessional) Net HIC OPEB Liability $ 616,736 $ 559,272 $ 510,528

Rate

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

June 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Changes in Net HIC OPEB Liability - Component Unit School Board (nonprofessional)

Balances at June 30, 2017

Changes for the year: Service cost Interest Differences between expected and actual experience Contributions - employer Net investment income Benefit payments Other changes Net changes

Balances at June 30, 2018

Increase (Decrease)

Total Plan Net HIC OPEB Fiduciary HIC OPEB Liability Net Position Liability (Asset)

(a) (b) (a) - (b) $ 534,000 $ (35,000) $ 569,000 $ 9,113 $ “S$ 9,113, 18,227 : 18,227 (1,089) : (1,089) : 31,329 (31,329) (33,696) (33,696) (5,145) (495) (4,650) $ (12,590) $ (2,862) $ (9,728) $ 521,410 $ (37,862) $ 559,272

Sensitivity of the County’s and Component Unit School Board’s (nonprofessional) HIC Net OPEB Liability to Changes in the Discount Rate

rate: Rate 1% Decrease Current Discount 1% Increase (6.00%) (7.00%) (8.00%)

County’s

Net HIC OPEB Liability $ 25,231 $ 15,818 $ 7,684 Component Unit School

Board’s (nonprofessional)

Net HIC OPEB Liability $ 616,736 $ 559,272 $ 510,528

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

HIC Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to HIC Program OPEB

For the year ended June 30, 2019, the County and Component Unit School Board (nonprofessional) recognized Health Insurance Credit Program OPEB expense of $1,891 and $18,876, respectively. At June 30, 2019, 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) HIC Program from the following sources:

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

Differences between expected and actual experience $ - $ 3,757 $ - $ 854

Net difference between projected and actual earnings on HIC OPEB plan investments - 2,302 - 3,501

Change in assumptions - 1,051 - 26,951

Employer contributions subsequent to the measurement date 2,763 - 32,001 -

Total $ 2,763 $ 7,110 $ 32,001 $ 31,306

Primary Government (nonprofessional)

Component Unit School Board

$2,763 and $32,001 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, 2020. 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

2020 $ (1,955) $ (11,032)
2021 (1,955) (11,032)
2022 (1,957) (8,581)
2023 (1,022) (661)
2024 (221) -

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

HIC Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to HIC Program OPEB

‘Component Unit School Board

Primary Government (conprofessional) Deferred Outflows Deferredinfiows Deferred Outflows Deferred inflows of Resources of Resources of Resources of Resources

Differences between expected and actual experience § 5 3757 § $ a4 Net ciference between projected and actual

earnings on HIC OPEB plan investments 2,302 3,501 Change in assuptions 1,051 16,951 Employer contributions subsequent to the

measurement date 2163 : 22,001

Total 5 1763 $ 7,110 § 2001 $ 31,306

Year Ended June 30__Government_ _(nonprofessional

2020 $ (1,955) $ (11,032) 2021 (1,955) (11,032) 2022 (1,957) (8,581) 2023 (1,022) (661) 2024 (221) :

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12―Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Health Insurance Credit Program Plan Data

Information about the VRS Political Subdivision Health Insurance Credit Program is available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2018-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan):

Plan Description

The Virginia Retirement System (VRS) Teacher Employee Health Insurance Credit (HIC) Program was 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. All full-time, salaried permanent (professional) employees of public school divisions are automatically covered by the VRS Teacher Employee HIC 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 HIC 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 HIC Program OPEB, including eligibility, coverage, and benefits is described below:

Eligible Employees

The Teacher Employee Retiree HIC 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 include full- time permanent (professional) salaried employees of public school divisions covered under VRS. These employees are enrolled automatically upon employment.

Benefit Amounts

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 Teacher and other professional school employees who retire with at least 15 years of service credit, the monthly benefit is $4.00 per year of service per month with no cap on the benefit amount. 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: $4.00 per month, multiplied by twice the amount of service credit, or $4.00 per month, multiplied by the amount of service earned had the employee been active until age 60, whichever is lower.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 12—Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

Health Insurance Credit Program Plan Data

Information about the VRS Political Subdivision Health Insurance Credit Program is available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf /Publications/2018-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan):

Plan Description

The specific information for the Teacher HIC Program OPEB, including eligibility, coverage, and benefits is described below:

Eligible Employees

Benefit Amounts

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

HIC Program Notes

The monthly HIC 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 HIC as a retiree.

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, 2019 was 1.20% of covered employee compensation for employees in the VRS Teacher Employee HIC Program. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. 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 HIC Program were $222,000 and $225,953 for the years ended June 30, 2019 and June 30, 2018, respectively.

Teacher Employee HIC Program OPEB Liabilities, Teacher Employee HIC Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Teacher Employee HIC Program OPEB

At June 30, 2019, the school division reported a liability of $2,884,000 for its proportionate share of the VRS Teacher Employee HIC Program Net OPEB Liability. The Net VRS Teacher Employee HIC Program OPEB Liability was measured as of June 30, 2018 and the total VRS Teacher Employee HIC Program OPEB liability used to calculate the Net VRS Teacher Employee HIC Program OPEB Liability was determined by an actuarial valuation as of that date. The school division’s proportion of the Net VRS Teacher Employee HIC Program OPEB Liability was based on the school division’s actuarially determined employer contributions to the VRS Teacher Employee HIC Program OPEB plan for the year ended June 30, 2018 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2018, the school division’s proportion of the VRS Teacher Employee HIC Program was 0.27150% as compared to 0.22781% at June 30, 2017.

For the year ended June 30, 2019, the school division recognized VRS Teacher Employee HIC Program OPEB expense of $222,000. Since there was a change in proportionate share between measurement dates, a portion of the VRS Teacher Employee HIC Program Net OPEB expense was related to deferred amounts from changes in proportion.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

HIC Program Notes

Contributions

-B4-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 13―Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

At June 30, 2019, the school division reported deferred outflows of resources and deferred inflows of resources related to the VRS Teacher Employee HIC Program OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources

Differences between expected and actual experience $ - $ 14,000

Net difference between projected and actual earnings on Teacher HIC OPEB plan investments - 2,000

Change in assumptions - 25,000

Change in proportion - 73,000

Employer contributions subsequent to the measurement date 222,000 -

Total $ 222,000 $ 114,000

$222,000 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, 2020. 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

2020 $ (21,000)
2021 (21,000)
2022 (21,000)
2023 (19,000)
2024 (20,000)

Thereafter (12,000)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 13—Teacher Employee Health Insurance Credit (HIC) Program (OPEB Plan): (Continued)

‘At June 30, 2019, the school division reported deferred outflows of resources and deferred inflows of resources related to the VRS Teacher Employee HIC Program OPEB from the following sources:

Deferred Outflows —_ Deferred Inflows

of Resources of Resources

Differences between expected and actual experience $ - S$ 14,000 Net difference between projected and actual

earnings on Teacher HIC OPEB plan investments : 2,000 Change in assumptions : 25,000 Change in proportion : 73,000 Employer contributions subsequent to the

measurement date 222,000

Total s 222,000_$ 114,000

Year Ended June 30

2020 $ (21,000) 2021 (21,000) 2022 (21,000) 2023 (19,000) 2024 (20,000) Thereafter (12,000)

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 HIC Program was based on an actuarial valuation as of June 30, 2017, 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, 2018.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 HIC 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, 2018, NOL amounts for the VRS Teacher Employee HIC Program is as follows (amounts expressed in thousands):

Teacher Employee HIC

OPEB Plan

Total Teacher Employee HIC OPEB Liability $ 1,381,313
Plan Fiduciary Net Position 111,639
Teacher Employee net HIC OPEB Liability (Asset) $ 1,269,674

Plan Fiduciary Net Position as a Percentage of the Total Teacher Employee HIC OPEB Liability 8.08%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2017 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 $ 1,381,313 Plan Fiduciary Net Position 111,639

Teacher Employee net HIC OPEB Liability (Asset) $

Plan Fiduciary Net Position as a Percentage of the Total Teacher Employee HIC OPEB Liability 8.08%

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 ended June 30, 2018, the rate contributed by each school division for the VRS Teacher Employee HIC Program will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly, which was 100% of the actuarially determined contribution rate. From July 1, 2018 on, all agencies are assumed to continue 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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% 454% 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 100.0% 80% Inflation 2.50% “Expected arithmetic nominal return 7.30%

Discount Rate

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $ 3,221,000 $ 2,884,000 $ 2,597,000

Rate

Teacher Employee HIC OPEB Fiduciary Net Position

Detailed information about the VRS Teacher Employee HIC Program’s Fiduciary Net Position is available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/ Publications/2018- annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Note 14―Line of Duty Act (LODA) Program:

Plan Description

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. 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 described below:

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $ 3,221,000 $ 2,884,000 $ 2,597,000

Teacher Employee HIC OPEB Fiduciary Net Position

Detailed information about the VRS Teacher Employee HIC Program’s Fiduciary Net Position is available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http: //www.varetire.org/Pdf/ Publications/2018- annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Note 14—Line of Duty Act (LODA) Program:

Plan Description

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. 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 described below:

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 14―Line of Duty Act (LODA) Program: (Continued)

Eligible Employees

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.

Benefit Amounts

The LODA 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; $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; or 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.

The LODA program also 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 LODA.

Contributions

The contribution requirements for the LODA 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 LODA Program for the year ended June 30, 2019 was $705.77 per covered full-time-equivalent employee. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017 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 LODA Program from the entity were $72,164 and $53,616 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, 2019, the entity reported a liability of $1,578,000 for its proportionate share of the Net LODA OPEB Liability. The Net LODA OPEB Liability was measured as of June 30, 2018 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, 2018 relative to the total of the actuarially determined pay-as-you-go employer contributions for all participating employers. At June 30, 2018, the entity’s proportion was 0.50337% as compared to 0.50108% at June 30, 2017.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 14—Line of Duty Act (LODA) Program: (Continued)

Eligible Employees

Benefit Amounts

Contributions

The contribution requirements for the LODA Program are governed by 89.1-400.1 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 LODA Program for the year ended June 30, 2019 was $705.77 per covered full-time-equivalent employee. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017 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 LODA Program from the entity were $72,164 and $53,616 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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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)

For the year ended June 30, 2019, the entity recognized LODA OPEB expense of $130,000. 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.

At June 30, 2019, 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

Differences between expected and actual experience $ 227,000 $ -

Net difference between projected and actual earnings on LODA OPEB plan investments - 4,000

Change in assumptions - 182,000

Change in proportion 26,000 -

Employer contributions subsequent to the measurement date 72,164 -

Total $ 325,164 $ 186,000

$72,164 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, 2020. 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

2020 $ 8,000
2021 8,000
2022 8,000
2023 9,000
2024 9,000

Thereafter 25,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2019, 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 Differences between expected and actual experience $ 227,000 $ Net difference between projected and actual earnings on LODA OPEB plan investments - 4,000 Change in assumptions - 182,000 Change in proportion 26,000 Employer contributions subsequent to the measurement date 72,164 Total $ 325,164 $ 186,000

Year Ended June 30

2020 $ 8,000 2021 8,000 2022 8,000 2023 9,000 2024 9,000 Thereafter 25,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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, 2017, 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, 2018. The assumptions include several employer groups as noted below. Mortality rates included herein are for relevant employer groups. Information for other groups can be referenced in the VRS CAFR.

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%

Year of ultimate trend rate Fiscal year ended 2024

Investment rate of return 3.89%, 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 3.89%. However, since the difference was minimal, a more conservative 3.89% investment return assumption has been used. Since LODA is funded on a current-disbursement basis, the assumed annual rate of return of 3.89% was used since it approximates the risk-free rate of return.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 14—Line of Duty Act (LODA) Program: (Continued)

Actuarial Assumptions

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% Year of ultimate trend rate Fiscal year ended 2024 Investment rate of return 3.89%, 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 3.89%. However, since the difference was minimal, a more conservative 3.89% investment return assumption has been used. Since LODA is funded on a current-disbursement basis, the assumed annual rate of return of 3.89% was used since it approximates the risk-free rate of return.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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%

Net LODA OPEB Liability

The net OPEB liability (NOL) for the LODA Program represents the program’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net position. As of the measurement date of June 30, 2018, NOL amounts for the LODA Program is as follows (amounts expressed in thousands):

LODA Program

Total LODA OPEB Liability $ 315,395

Plan Fiduciary Net Position 1,889

Employers’ Net OPEB Liability (Asset) $ 313,506

Plan Fiduciary Net Position as a Percentage

of the Total LODA OPEB Liability 0.60%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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-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 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 LODA OPEB Liability

LODA Program

Total LODA OPEB Liability $ 315,395 Plan Fiduciary Net Position 1,889 Employers’ Net OPEB Liability (Asset) $ 313,506

Plan Fiduciary Net Position as a Percentage of the Total LODA OPEB Liability 0.60%

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 14―Line of Duty Act (LODA) Program: (Continued)

Net LODA OPEB Liability (Continued)

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.

Long-Term Expected Rate of Return

The long-term expected rate of return on LODA OPEB Program’s investments was set at 3.89% 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 3.89% 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 as of the measurement date of June 30, 2018.

Discount Rate

The discount rate used to measure the total LODA OPEB liability was 3.89%. 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 ended June 30, 2018, 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 3.89%, 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 (2.89%) or one percentage point higher (4.89%) than the current rate:

1% Decrease Current 1% Increase (2.89%) (3.89%) (4.89%)

County’s proportionate share of the total LODA Net OPEB Liability $ 1,808,000 $ 1,578,000 $ 1,392,000

Discount Rate

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 14—Line of Duty Act (LODA) Program: (Continued)

Net LODA OPEB Liability (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 (2.89%) (3.89%) (4.89%) County’s proportionate share of the total LODA Net OPEB Liability $ 1,808,000 $ 1,578,000 $ 1,392,000

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 LODA 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 $ 1,344,000 $ 1,578,000 $ 1,868,000

Health Care Trend Rates

LODA OPEB Fiduciary Net Position

Detailed information about the LODA Program Fiduciary Net Position is available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2018-annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Note 15-Aggregate Pension Information:

Deferred Deferred Net Pension Pension Deferred Deferred Net Pension Pension Outflows Inflows Liability Expense Outflows Inflows Liability Expense

RS Pension Plans: Primary Government $ 784,973 $ 816,980 $ 4,411,185 $ (77,637) $ - $ - $ - $ -
School Board Nonprofessional - - - - 584,016 82,168 5,668,828 413,430
School Board Professional - - - - 3,269,000 3,566,000 26,888,000 1,304,000 Totals $ 784,973 $ 816,980 $ 4,411,185 $ (77,637) $ 3,853,016 $ 3,648,168 $ 32,556,828 $ 1,717,430

Primary Government Component Unit School Board

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

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 $ 1,344,000 $ 1,578,000 $ 1,868,000

LODA OPEB Fiduciary Net Position

Detailed information about the LODA Program Fiduciary Net Position is available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be downloaded from the VRS website at http: / /www.varetire.org/Pdf/Publications/2018-annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Note 15-Aggregate Pension Informatio

Primary Government Component Unit School Board. Deferred Deferred Net Pension Pension Deferred Deferred Net Pension Pension Outflows __inflows __Liabilty Expense _Outflows__nflows Liability _ Expense

'S Pension Plans

Primary Government S 734973 $ 816,980 § 4,411,185 § (77,637) 5 - 5 5 s

School Board Nonprofessiona 584,016 87,168 5,668,828 413,430

School Board Professional 3,269,000__3,566,000__26,888,000__ 1,304,000,

Totals TBA 97S $816,980 §—4aT1, 18S $_T7E) $3,853,016 § 3.608, 168 $32,556,828 $1,717.40

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 16-Aggregate OPEB Information:

Deferred Deferred Net OPEB OPEB Deferred Deferred Net OPEB OPEB Outflows Inflows Liability Expense Outflows Inflows Liability Expense

County Stand-Alone Plan (Note 9) $ 9,466 $ 7,911 $ 387,749 $ 30,210 $ - $ - $ - $ -

School Stand-Alone Plan (Note 10) - - - - 161,933 136,740 7,937,059 529,695

VRS OPEB Plans:

Group Life Insurance Program (Note 11):

County 78,276 46,000 494,000 7,000 - - - -

School Board Nonprofessional - - - - 23,543 31,000 210,000 (1,000)

School Board Professional - - - - 168,000 175,000 1,468,000 1,000

County Health Insurance Credit Program (Note 12) 2,763 7,110 15,818 1,891 32,001 31,306 559,272 18,876

Teacher Health Insurance Credit Program (Note 13) - - - - 222,000 114,000 2,884,000 222,000

Line of Duty Act (LODA) Program (Note 14) 325,164 186,000 1,578,000 130,000 - - - -
Totals $ 415,669 $ 247,021 $ 2,475,567 $ 169,101 $ 607,477 $ 488,046 $ 13,058,331 $ 770,571

Primary Government Component Unit School Board

Note 17-Capital Assets:

Capital asset activity for the year ended June 30, 2019 was as follows:

Primary Government:

Beginning Ending Balance Increases Decreases Balance

Governmental Activities: Capital assets, not being depreciated:

Land $ 643,695 $ - $ - $ 643,695
Total capital assets not being depreciated $ 643,695 $ - $ - $ 643,695

Capital assets, being depreciated: Buildings and improvements $ 29,983,568 $ 78,028 $ (3,100,000) $ 26,961,596
Machinery and equipment 5,313,712 317,591 (199,449) 5,431,854

Total capital assets being depreciated $ 35,297,280 $ 395,619 $ (3,299,449) $ 32,393,450

Accumulated depreciation: Buildings and improvements $ (12,609,697) $ (779,049) $ 2,670,500 $ (10,718,246)
Machinery and equipment (3,292,466) (483,046) 37,062 (3,738,450)

Total accumulated depreciation $ (15,902,163) $ (1,262,095) $ 2,707,562 $ (14,456,696)

Total capital assets being depreciated, net $ 19,395,117 $ (866,476) $ (591,887) $ 17,936,754

Governmental activities capital assets, net $ 20,038,812 $ (866,476) $ (591,887) $ 18,580,449

During the fiscal year, the County transferred three buildings to the Component Unit - School Board with an original cost of $3,100,000 and accumulated depreciation of $2,670,500 (net book value of $429,500).

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 16-Aggregate OPEB Information:

Primary Government

Component Uni School Boar

Deferred Deferred Net OPEB OPEB

COutfows Inflows __Liality __Expense__Outflows Inflows _Liabity__Expense County Stand-Alone Plan Note 9) $9466 § 7911 § see § sO. § s s s Schoo Stand-Alone Plan (Note 10) 161953 136700 7.997.059 529,695 {Group Lite Insurance Program (Note 1) county 7216 00094000 7,000, Schoo Boars Nonprofesionl B58 3,00 210,000,000) School Bara Professional ‘wg.oo0 175,000 «1,468,000 3,000 ‘County Health insurance Credit Program (Note 12) 27 70158888 mon 31,306 = Seze8.876 ‘Teacher Health narance Credit Program (Note 13) wom 14000 2.88400 22,000 Une of Duty Act (LODA) Program Note 14) 525,164, 185,000 _ 1,578,000 130,000

Totals $5 669 § “2a 0a1 $2,475,567 $168,108

Note 17-Capital Assets:

SGT aT sows ss TOT

Capital asset activity for the year ended June 30, 2019 was as follows:

Primary Government:

Beginning Ending Balance Increases Decreases Balance

Governmental Activities:

Capital assets, not being depreciated:

Land $ 643,695 $. $ i$ 643,695, Total capital assets not being depreciated §__—643,095-$ $ = $7 643,695 Capital assets, being depreciated:

Buildings and improvements $29,983,568 $ 78,028 $ (3,100,000) $ 26,961,596

Machinery and equipment 5,313,712 317,591 (199,449) 5,431,854 Total capital assets being depreciated $35,297,280. $395,619 $ (3,299,449) $32,393,450 ‘Accumulated depreciation:

Buildings and improvements $ (12,609,697) $ (779,049) § 2,670,500 $ (10,718,246)

Machinery and equipment 3,292,466) (483,046) 37,062 3,738,450) Total accumulated depreciation $ 115,902,163) $11,262,095) $2,707,562 $114, 456,696) Total capital assets being depreciated, net $ 19,395,117 $ (866,476) $(591,887) $_ 17,936,754 Governmental activities capital assets, net $20,038,812 $ (866,476) $(591,887) $__ 18,580,449

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 17-Capital Assets: (Continued)

Primary Government: (Continued)

Beginning Ending Balance Increases Decreases Balance

Business-type Activities: Capital assets, being depreciated:

Utility plant $ 5,240,699 $ - $ - $ 5,240,699
Machinery and equipment - 8,148 - 8,148

Total capital assets being depreciated $ 5,240,699 $ 8,148 $ - $ 5,248,847

Accumulated depreciation: Utility plant $ (2,641,175) $ (131,017) $ - $ (2,772,192)
Machinery and equipment - (453) - (453)

Total accumulated depreciation $ (2,641,175) $ (131,470) $ - $ (2,772,645)

Total capital assets being depreciated, net $ 2,599,524 $ (123,322) $ - $ 2,476,202

Business-type activities capital assets, net $ 2,599,524 $ (123,322) $ - $ 2,476,202

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

Governmental activities: General government administration $ 26,780
Judicial administration 11,916
Public safety 278,675
Public works 122,772
Health and welfare 35,760
Education 750,808
Parks, recreation, and cultural 31,152
Community development 4,232

Total depreciation expense-governmental activities $ 1,262,095

Business-type activities: Sewer Authority $ 131,470

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 17-Capital Assets: (Continued)

Primary Government: (Continued)

Beginning Ending Balance Increases Decreases Balance Business-type Activities: Capital assets, being depreciated: Utility plant S 5,240,699 § -$ ~ $5,240,699 ‘Machinery and equipment 8,148 : 8,148, Total capital assets being depreciated SS TAO § 3148 $ 95.248, 847 ‘Accumulated depreciation: Utility plant $2,641,175) § (131,017) § $2,772,192) ‘Machinery and equipment (453) (453) Total accumulated depreciation S$ ean 75) $13,470) § = $ TE 77z, 645) Total capital assets being depreciated, net $_ 2,599,524 §__(123,322) $ $2,476,202 Business-type activities capital assets, net $2,599,524 §(123,322) $ $_2,476,202

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

Governmental activities:

General government administration $26,780 Judicial administration 11,916 Public safety 278,675 Public works 122,772 Health and welfare 35,760 Education 750,808 Parks, recreation, and cultural 31,152 Community development 4,232 Total depreciation expense-governmental activities $

Business-type activities: Sewer Authority

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 17-Capital Assets: (Continued)

Capital asset activity for the School Board for the year ended June 30, 2019 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 $ 25,615,444 $ 3,611,348 $ - $ 29,226,792
Machinery and equipment 7,656,878 243,619 - 7,900,497

Total capital assets being depreciated $ 33,272,322 $ 3,854,967 $ - $ 37,127,289

Accumulated depreciation: Buildings and improvements $ (16,081,119) $ (3,463,059) $ - $ (19,544,178)
Machinery and equipment (5,831,228) (467,287) - (6,298,515)

Total accumulated depreciation $ (21,912,347) $ (3,930,346) $ - $ (25,842,693)

Total capital assets being depreciated, net $ 11,359,975 $ (75,379) $ - $ 11,284,596

Governmental activities capital assets, net $ 16,996,320 $ (75,379) $ - $ 16,920,941

Note 18-Risk Management:

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 17-Capital Assets: (Continued) Capital asset activity for the School Board for the year ended June 30, 2019 was as follows:

Discretely Presented Component Unit - School Board:

Beginning Ending Balance Increases Decreases Balance

Capital assets, not being depreciated:

Land S___ 5,636,345 $ $ 2 S__ 5,636,345 Capital assets, being depreciated:

Buildings and improvements $25,615,444 $3,611,348 $ $ 29,226,792

Machinery and equipment 7,656,878 243,619 7,900,497 Total capital assets being depreciated $3327.32 $3,854,967 $ $37,127,289 ‘Accumulated depreciation:

Buildings and improvements $ (16,081,119) $ (3,463,059) $ $ (19,544,178)

Machinery and equipment (6,831,228) (467,287) (6,298,515) Total accumulated depreciation $B1,912.347)_ $—B,930,346) $ $85,842,693) Total capital assets being depreciated, net $—*11,359,975. $__—(75,379) $ = $_11,284,596 Governmental activities capital assets, net $ 16,996,320 $(75,379) $ $_ 16,920,941

Note 18-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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 19-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 20-Surety Bonds:

Fidelity & Deposit Company of Maryland-Surety: Ann S. McReynolds, Clerk of the Circuit Court 1,010,000$
Alicia McGlothlin, Treasurer 400,000
Randy N. Williams, Commissioner of the Revenue 3,000
Steve Dye, Sheriff 30,000
All constitutional officers’ employees: blanket bond 50,000

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

USF&G Insurance Co. - Surety:

All Social Services employees-blanket bond 100,000$

Note 21-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, 2019 is $293,509. 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 2019. Actual costs for closure and postclosure monitoring may change due to inflation, deflation, changes in technology or changes in regulations. The County uses the Commonwealth of Virginia’s financial assurance mechanism to meet the Department of Environmental Quality’s assurance requirements for landfill closure and postclosure costs.

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 19-Contingent Liabilities:

Note 20-Surety Bonds:

Fidelity & Deposit Company of Maryland-Surety:

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

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

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

Note 21-Landfill Closure and Postclosure Care Cost

The County demonstrated financial assurance requirements for closure, post-closure care, and corrective

action costs through the submission of a Local Government Financial Test to the Virginia Department of Environmental Quality in accordance with Section 9VA C20-70 of the Virginia Administrative Code.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 22-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 2019 $ 5,254,356 $ 5,254,356
Delinquent taxes due prior to June 30, 2019 - 5,132,002
Prepaid taxes 320,381 320,381
Total deferred/unavailable revenue $ 5,574,737 $ 10,706,739

Note 23-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 2019, a total of $5,481,064 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, 2019, 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 $864,737 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 2019 and the two preceding fiscal years were as follows:

Balance at Claims and Balance at Beginning of Changes in Claim End of

Fiscal Year Fiscal Year Estimates Payments Fiscal Year

2018-19 $ 1,098,269 $ 5,247,532 $ (5,481,064) $ 864,737
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

Note 24-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, which is now part of the Russell County Public Service Authority.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 22-Deferred/Unavailable Revenue:

Statement of Net Position Balance Sheet Governmental Activities Governmental Funds 2nd half taxes due December 2019 $ 3,254,356 $ 5,754,356 Delinquent taxes due prior to June 30, 2019 : 5,132,002 Prepaid taxes 320,381 320,381 Total deferred/unavailable revenue $ 7

Note 23-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 2019, a total of $5,481,064 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, 2019, 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 $864,737 have been accrued asa liability based primarily on actual cost incurred prior to June 30 but paid after year-end. Interfund premiums are based primarily upon the insured funds’ claims experience and are reported as quasi- external interfund transactions. Changes in the claims liability during fiscal year 2019 and the two preceding fiscal years were as follows:

Balance at Claims and Balance at Beginning of Changes in Claim End of Fiscal Year__Fiscal Year Estimates Payments Fiscal Year

2018-19 § 1,098,269 § 5,247,532 § (5,481,064) $ 864,737 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

Note 24-Moral Oblig

In addition, the Board of Supervisors also provides financing guarantees to the Castlewood Water and Sewage Authority, which is now part of the Russell County Public Service Authority.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 25-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, 2019, the outstanding balance of the loan was $3,001,300.

Future required rent payments are as follows:

Year Ending

June 30, Principal Interest 2020 399,100$ 65,825$
2021 408,700 56,199
2022 418,400 46,514
2023 428,300 36,600
2024 438,400 26,510

2025-2026 908,400 21,487
Totals 3,001,300$ 253,135$

Operating Lease

Note 26-Litigation:

As of June 30, 2019, the County’s Attorney reports matters 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. The company has also appealed its 2017 business personal property tax of $1,192,916 making a similar claim as noted above. As of June 30, 2019, this amount had not been paid but was included in property tax receivables of the County. Both cases are set to be heard by the Circuit Court of Russell County.

The company asserted appeals of their machine and tool tax assessment to the Tax Commissioner for the fiscal years of 2015, 2016, and 2018. The Tax Commissioner ruled that the appeals for the fiscal years of 2015 and 2016 were not timely filed. The Tax Commissioner also remanded the matter back to the Commissioner of Revenue for the fiscal year of 2018. On November 26, 2019, the Commissioner of Revenue received an appeal of the 2019 assessment by the company. There will most likely be litigation as it relates to each of those fiscal years, but as of this date no formal proceedings have been initiated.

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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 25-Operating Lease:

Future required rent payments are as follows:

Year Ending Operating Lease June 30, Principal Interest

2020 3 399,100 “$ 65,825 2021 408,700 56,199 2022 418,400 46,514 2023 428,300 36,600 2024 438,400 26,510

2025-2026 908,400 21,487

Totals 5 007,300 $ 753,135

Note 26-Litigati

As of June 30, 2019, the County’s Attorney reports matters 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. The company has also appealed its 2017 business personal property tax of $1,192,916 making a similar claim as noted above. As. of June 30, 2019, this amount had not been paid but was included in property tax receivables of the County. Both cases are set to be heard by the Circuit Court of Russell 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.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 27-Adoption of Accounting Principles:

The County implemented the financial reporting provisions of Governmental Accounting Standards Board Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements during the fiscal year ended June 30, 2019. This Statement clarifies which liabilities governments should include when disclosing information related to debt. It also requires that additional essential information related to debt be disclosed in notes to financial statements. No restatement was required as a result of this implementation.

Note 28-Restatement of Prior Financial Statements:

Beginning balances have been restated for the current fiscal year as detailed below:

Net Position Business-type

Activities Net Position, July 1, 2018, as previously stated 1,982,514$

Adjustment related to fund receivables 26,517

Net Position, July 1, 2018, as restated 2,009,031$

Note 29-Upcoming Pronouncements:

Statement No. 84, Fiduciary Activities, establishes criteria for identifying fiduciary activities of all state and local governments for accounting and financial reporting purposes and how those activities should be reported. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018.

Statement No. 87, Leases, requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019.

Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, provides guidance for reporting 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. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019.

Statement No. 90, Majority Equity Interests – An Amendment of GASB Statements No, 14 and No. 61, provides guidance for reporting a government’s majority equity interest in a legally separate organization and for reporting financial statement information for certain component units. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 27-Adoption of Accounting Principles:

Note 28-Restatement of Prior Financial Statements:

Beginning balances have been restated for the current fiscal year as detailed below:

Net Position Business-type Activities Net Position, July 1, 2018, as previously stated $1,982,514

Adjustment related to fund receivables 26,517

Net Position, July 1, 2018, as restated $2,009,031

Note 29-Upcoming Pronouncement:

Statement No. 90, Majority Equity Interests - An Amendment of GASB Statements No, 14 and No. 61, provides guidance for reporting a government’s majority equity interest in a legally separate organization and for reporting financial statement information for certain component units. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 29-Upcoming Pronouncements: (Continued)

Statement No. 91, Conduit Debt Obligations, provides a single method of reporting conduit debt obligations by issuers and eliminates diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. The requirements of this Statement are effective for reporting periods beginning after December 15, 2020.

Management is currently evaluating the impact these standards will have on the financial statements when adopted.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2019

Note 29-Upcoming Pronouncements: (Continued)

Management is currently evaluating the impact these standards will have on the financial statements when adopted.

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Required Supplementary Information

Exhibit 11

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES General property taxes 16,054,000$ 16,054,000$ 15,901,393$ (152,607)$
Other local taxes 3,057,100 3,057,100 2,890,062 (167,038)
Permits, privilege fees, and regulatory licenses 36,000 36,000 43,183 7,183
Fines and forfeitures 18,000 18,000 13,545 (4,455)
Revenue from the use of money and property 256,000 256,000 274,536 18,536
Charges for services 334,100 334,100 329,272 (4,828)
Miscellaneous 187,200 187,200 210,687 23,487
Recovered costs 365,284 365,284 1,172,919 807,635
Intergovernmental:

Commonwealth 9,119,685 9,200,140 8,773,771 (426,369)
Federal 3,270,953 3,270,953 3,396,243 125,290

Total revenues 32,698,322$ 32,778,777$ 33,005,611$ 226,834$

EXPENDITURES Current:

General government administration 1,934,006$ 2,109,606$ 2,153,583$ (43,977)$
Judicial administration 2,207,171 2,658,171 2,680,600 (22,429)
Public safety 6,048,010 7,331,510 7,267,404 64,106
Public works 2,629,235 2,732,435 2,691,470 40,965
Health and welfare 8,120,033 8,752,533 7,711,507 1,041,026
Education 8,048,477 8,048,477 7,365,945 682,532
Parks, recreation, and cultural 540,126 551,496 543,499 7,997
Community development 967,144 983,504 959,458 24,046
Nondepartmental 252,000 563,000 421,793 141,207

Capital projects - 288,400 283,529 4,871
Debt service:

Principal retirement 1,392,627 1,392,627 1,517,548 (124,921)
Interest and other fiscal charges 359,493 359,493 549,292 (189,799)

Total expenditures 32,498,322$ 35,771,252$ 34,145,628$ 1,625,624$

Excess (deficiency) of revenues over (under) expenditures 200,000$ (2,992,475)$ (1,140,017)$ 1,852,458$

OTHER FINANCING SOURCES (USES) Transfers out (200,000)$ (200,000)$ (263,453)$ (63,453)$

Total other financing sources (uses) (200,000)$ (200,000)$ (263,453)$ (63,453)$

Net change in fund balances -$ (3,192,475)$ (1,403,470)$ 1,789,005$
Fund balances - beginning - 3,192,475 7,703,145 4,510,670
Fund balances - ending -$ -$ 6,299,675$ 6,299,675$

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, 2019

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County of Russell, Virginia

General Fund ‘Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2019

Exhibit 11

REVENUES General property taxes Other local taxes Permits, privilege fees, and regulatory licenses Fines and forfeitures Revenue from the use of money and property Charges for services Miscellaneous Recovered costs Intergovernmental:

‘Commonwealth

Federal

Total revenues

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

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers out Total other financing sources (uses)

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

Variance with

Budgeted Amounts Final Budget -

Actual Positive

Original Final ‘Amounts (Negative) $ 16,054,000 $ 16,054,000 $ 15,901,393 $ (152,607) 3,057,100 3,057,100 2,890,062 (167,038) 36,000 36,000 43,183 7,183 18,000 18,000 13,545 (4,455) 256,000 256,000 274,536 18,536 334,100 334,100 329,272 (4,828) 187,200 187,200 210,687 23,487 365,284 365,284 4,172,919 807,635 9,119,685 9,200,140 8,773,771 (426,369) 3,270,953 3,270,953 3,396,243 125,290 32,698,322 _$ 32,778,777 _$ 33,005,611 226,834 $1,934,006 $ 2,109,606 $ 2,153,583 $ (43,977) 2,207,171 2,658,171 2,680,600 (22,429) 6,048,010 7,331,510 7,267,404 64,106 2,629,235 2,732,435 2,691,470 40,965 8,120,033 8,752,533 7,711,507 1,041,026 8,048,477 8,048,477 7,365,945 682,532 540,126 551,496 543,499 7,997 967,144 983,504 959,458 24,046 252,000 563,000 1,793 141,207

: 288,400 283,529 4,871 1,392,627 1,392,627 1,517,548 (124,921) 359,493 359,493 549,292 (189,799) 32,498,322 $35,771,252 $ 34,145,628 7,625,624 $200,000 $ (2,992,475) $ (1,140,017) $ 1,852,458 $ (200,000) $ (200,000) $ (263,453) $ (63,453) (200,000) (200,000) (263,453) (63,453)

$ = $ (3,192,475) $ (1,403,470) $1,789,005 : 3,192,475 7,703,145 __4,510,670

—_s =S 6,299,675 _§ 6,299,675

-105-

Exhibit 12

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Other local taxes 150,000$ 150,000$ 360,434$ 210,434$
Revenue from the use of money and property - - 2,205 2,205

Total revenues 150,000$ 150,000$ 362,639$ 212,639$

EXPENDITURES Current:

Public works 150,000$ 206,850$ 202,043$ 4,807$

Excess (deficiency) of revenues over (under) expenditures -$ (56,850)$ 160,596$ 217,446$

Net change in fund balances -$ (56,850)$ 160,596$ 217,446$
Fund balances - beginning - 56,850 253,863 197,013
Fund balances - ending -$ -$ 414,459$ 414,459$

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, 2019

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County of Russell, Special Revenue Fund - Coal Road Fund

rginia

‘Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual

For the Year Ended June 30, 2019

Exhibit 12

REVENUES Other local taxes

Revenue from the use of money and property Total revenues

EXPENDITURES Current: Public works

Excess (dh

iency) 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 $ 360,434 $ 210,434

- 2,205 2,205 3 750,000 750,000_$ 362,639 $712,639 $150,000 206,850 $ 202,043 § 4,807 s : (56,850) $ 160,596 _$ 217,446 5 (56,850) $ 160,596 $217,446 56,850 253,863, 197,013 ~ 414,459 14,459

Exhibit 13

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Recovered costs -$ -$ 52,566$ 52,566$
Intergovernmental:

Federal 2,835,083 2,835,083 436,407 (2,398,676)
Total revenues 2,835,083$ 2,835,083$ 488,973$ (2,346,110)$

EXPENDITURES Current:

Health and welfare 2,835,083$ 2,835,083$ 591,222$ 2,243,861$

Excess (deficiency) of revenues over (under) expenditures -$ -$ (102,249)$ (102,249)$

OTHER FINANCING SOURCES (USES) Transfers in -$ -$ 111,220 111,220$

Total other financing sources (uses) -$ -$ 111,220$ 111,220$

Net change in fund balances -$ -$ 8,971$ 8,971$
Fund balances (deficit) - beginning - - (5,198) (5,198)
Fund balances (deficit) - ending -$ -$ 3,773$ 3,773$

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, 2019

Budgeted Amounts

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County of Russell, Virginia

Special Revenue Fund - Workforce Investment Board Fund

‘Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2019

Exhibit 13

REVENUES. Recovered costs Intergovernmental: Federal Total revenues

EXPENDITURES Current: Health and welfare

Excess (defi

cy) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Transfers in Total other financing sources (uses)

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) $ 7 $ 7 $ 52,566 $ 52,566 2,835,083, 2,835,083 436,407 __(2,398,676) 7,835,083 $2,835,083 488,973 _§ (2,346,110) $2,835,083 § 2,835,083 _$ 591,222 § 2,243,861 $ _$ = S$ (102,249) $ (102,249) $ _$ : 411,220 $111,220 $ _$ =~ $114,220 $111,220 $ $ $ 8,971 § 8,971

- (5,198) (5,198) 773 773

-107-

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 2018 99.2670% 4,411,185$ 6,123,587$ 72.04% 84.04% 2017 99.2986% 4,976,088 4,808,206 103.49% 77.80% 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) 2018 0.22864% 26,888,000$ 18,374,518$ 146.33% 74.81% 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 Measurement Dates of June 30, 2014 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.

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County of Russel, Virginia Schedule of Employer’s Proportionate Share of the Net Pension Liability For the Measurement Dates of June 30, 2014 through June 30, 2018

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 rcentage of Total Date Liability (NPL) Share of the NPL Payroll eye) Pension Liability o @ @) “) 6) © Primary Government - County Retirement Plan 2018 99.2670% $ 411 185 § 6,123,587 7.08% 84.04% 2017 99.2986% 4,976,088 4,808,206 103.49% 77.80% 2016 98.6202% 6,835,305 5,467,426 125.02% 77.80% 2015 99.1179% 5,970,089 5,368,165 121% 80.39% 2014 99.1179% 5,782,839 5,440,419 106.29% 80.53% Component Unit School Board (professional) 2018 0.22864% $ 26,888,000 $ 18,374,518, 146.33% 74.81% 2017 0.22900% 28,167,000 17,982,879 156.63% NI 2016 o.23491% 32,921,000 a7914579 18.77% 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%

Schedule is intended to show information for 10 years.

included as they become available

-108-

Information prior to the 2014 valuation is not available, However, additional years will be

Exhibit 15

2018 2017 2016 2015 2014 Total pension liability Service cost $ 222,182 $ 241,584 $ 228,855 $ 261,697 $ 263,958
Interest 1,189,675 1,149,952 1,151,059 1,132,997 1,116,022
Differences between expected and actual experience 21,651 340,261 (240,897) 20,402 -
Changes in assumptions - 32,003 - - -
Benefit payments, including refunds of employee contributions (1,206,028) (1,186,620) (1,123,037) (1,191,112) (1,083,833)
Net change in total pension liability $ 227,480 $ 577,180 $ 15,980 $ 223,984 $ 296,147
Total pension liability - beginning 17,598,372 17,021,192 17,005,212 16,781,228 16,485,081
Total pension liability - ending (a) $ 17,825,852 $ 17,598,372 $ 17,021,192 $ 17,005,212 $ 16,781,228

Plan fiduciary net position Contributions - employer $ 443,319 $ 450,897 $ 460,715 $ 425,544 $ 423,435
Contributions - employee 125,060 127,268 128,274 120,010 130,388
Net investment income 860,829 1,325,272 187,821 515,108 1,629,758
Benefit payments, including refunds of employee contributions (1,206,028) (1,186,620) (1,123,037) (1,191,112) (1,083,833)
Administrative expense (7,790) (8,059) (7,361) (7,577) (9,166)
Other (755) (1,167) (82) (108) 86
Net change in plan fiduciary net position $ 214,635 $ 707,591 $ (353,670) $ (138,135) $ 1,090,668
Plan fiduciary net position - beginning 11,942,389 11,234,798 11,588,468 11,726,603 10,635,935
Plan fiduciary net position - ending (b) $ 12,157,024 $ 11,942,389 $ 11,234,798 $ 11,588,468 $ 11,726,603

School Division’s net pension liability - ending (a) - (b) $ 5,668,828 $ 5,655,983 $ 5,786,394 $ 5,416,744 $ 5,054,625

Plan fiduciary net position as a percentage of the total pension liability 68.20% 67.86% 66.00% 68.15% 69.88%

Covered payroll $ 2,610,768 $ 2,147,811 $ 2,648,956 $ 2,434,577 $ 2,612,301

School Division’s net pension liability as a percentage of covered payroll 217.13% 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 Measurement Dates of June 30, 2014 through June 30, 2018

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County of Russ, Vigna

Component Unit Schoo Board anpreesional)

For the Messurement Oats of June 30,2014 tough June 30,2018

ean 15

‘Tota pension Habit Diferences between expected and actual experince Changes in assungtions

Bona payment nlsng refunds of employee contributions Not change n total persion abity

‘otal persion Habity begining

‘Tota person Habit ending (e)

Pan fiduciary net poston Controtins - payee

‘Senet payment, nung refunds of employee contributions dminisratve expense

ener

Plan fiduciary net position = begining

Pian fir net postion = ending)

‘Schoo Divisions net pension Habity- ending (a) 8)

Pian fiduciary net position as a percentage ofthe otal person abiy

Covered payrott

‘Schoo Divison’ net pension Habity as a percentage of covered payrll,

2018 207 2016 2015 2014 mie § aunsee § nss § meer 263.958 “n68t "340,261 eas, 20,402 _

32,003

11,206,008) ote 20) 1.23037, sus 1.083.835) D780 § S700 13.980" § ca 26.147

TERA $17 598372 $9 $7 5 SCLIRT 40309 § oer s sons § ass 23,05

(1,206,028) 48,186,620), 11.23.037) sana) 19,083,833) 17.790) (6.09) 360) osm 18.166)

5 167) io (308) ry Taos § Tarsst s———asseroy § 8,5) To

TZ.157,024_ § 11,942,389. 5S. 5115968 1726.60 Suinare $5559 S$ 578630 § —S.at6 Se54.05 aa e768 oom e198 ory 2ero7ee $ ara S856 § 204577 2.62.01

Scndule fe ftended to show ntrmaton fr 19 yrs. Infomation prior tothe 2014 valuain isnt avalabe. However, atonal years wil be Included as they Become

-109-

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 2019 $ 681,397 $ 681,397 $ - $ 6,020,423 11.32% 2018 760,630 760,630 - 6,123,587 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) 2019 $ 447,435 $ 447,435 $ - $ 2,601,655 17.20% 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%

Component Unit School Board (professional) 2019 $ 2,854,000 $ 2,854,000 $ - $ 18,519,029 15.41% 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%

County of Russell, Virginia Schedule of Employer Contributions - Pension Plans

For the Years Ended June 30, 2010 through June 30, 2019

Contributions are from County/School Board 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.

-110-

Exhibit 16 County of Russell, Virginia Schedule of Employer Contributions - Pension Plans For the Years Ended June 30, 2010 through June 30, 2019

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) () @) (4) (5) Primary Government 2019 681,397 $ 681,397 $ - $6,020,423 11.32% 2018 760,630 760,630 : 6,123,587 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)

447,435 $ 447,435 $ = $2,601,655 17.20% 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% Component Unit School Board (professional) 2019 $ ~—2,854,000 $ 2,854,000 $ - $18,519,029 15.41% 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%

Contributions are from County/School Board records.

-110-

Exhibit 17

Largest 10 – Non-Hazardous Duty:

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

Largest 10 – Hazardous Duty:

All Others (Non 10 Largest) – Hazardous Duty:

Component Unit School Board - Professional Employees

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

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

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

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)

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

Salary Scale

Line of Duty Disability

Retirement Rates

Withdrawal Rates

Disability Rates

Withdrawal Rates

Disability Rates

Salary Scale

Line of Duty Disability

Disability Rates

Salary Scale

Line of Duty Disability

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

Retirement Rates Withdrawal Rates

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

Retirement Rates

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

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, 2019

-111-

Exhibit 17 County of Russel, Virginia

Notes to Required Supplementary Information - Pension Plans

For:

the Year Ended June 30, 2019

‘Changes of benefit terms - There have been no actuarially

‘Changes of assumptions - The following changes in act

material changes to the System benefit provisions since the prior actuarial valuation.

arial 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

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

Largest 10 - Hazardous Duty Mortality Rates (pre-retirement, post-retirement heathy, 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 heathy, 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 heathy, and disabled)

Retirement Rates ‘Withdrawal 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 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

Lowered rates at older ages ‘Adjusted rates to better fit experience Increased rates

No change Increased rate from 60H to 70%

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

Increased age $0 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

111

Exhibit 18

2019 2018 Total OPEB liability Service cost $ 15,523 $ 16,038
Interest 14,342 13,000
Changes in assumptions 11,569 (11,427)
Benefit payments (17,342) (18,508)
Net change in total OPEB liability $ 24,092 $ (897)
Total OPEB liability - beginning 363,657 364,554
Total OPEB liability - ending $ 387,749 $ 363,657

Covered payroll $ 6,190,566 $ 6,190,566

County’s total OPEB liability (asset) as a percentage of covered payroll 6.26% 5.87%

County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios

Primary Government For the Measurement Dates of June 30, 2018 through June 30, 2019

Schedule is intended to show information for 10 years. Additional years will be included as they become available.

-112-

Exhibit 18 County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios Primary Government For the Measurement Dates of June 30, 2018 through June 30, 2019

2019 2018 Total OPEB liability Service cost $ 15,523 $ 16,038 Interest 14,342 13,000 Changes in assumptions 11,569 (11,427) Benefit payments (17,342) (18,508) Net change in total OPEB liability $ 24,092 $ (697) Total OPEB liability - beginning 363,657 364,554 Total OPEB liability - ending $ 387,749_ 363,657 Covered payroll $ 6,190,566 $ 6,190,566 County’s total OPEB liability (asset) as a percentage of

covered payroll 6.26% 5.87%

‘Schedule is intended to show information for 10 years. Additional years will be included as they become available.

112+

Exhibit 19

Valuation Date: 7/1/2017 Measurement Date: 6/30/2019

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:

County of Russell, Virginia Notes to Required Supplementary Information - County OPEB

For the Year Ended June 30, 2019

Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2018 and gradually declines to 4.20% by the year 2095.

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

3.50% as of June 30, 2019

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% 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.

-113-

Exhibit 19 County of Russell, Virginia Notes to Required Supplementary Information - County OPEB For the Year Ended June 30, 2019

Valuation Date: 7/4/2017 ‘Measurement Date: 6/30/2019

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:

Actuarial Cost Method Entry age normal, level percentage of pay Discount Rate 3.87% as of June 30, 2018; 3.50% as of June 30, 2019 Inflation 2.50% Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2018 and gradually declines to 4.20% by the year 2095. 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.

‘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.

-113-

Exhibit 20

2019 2018 Total OPEB liability Service cost $ 226,831 $ 235,586
Interest 297,553 275,959
Changes in assumptions 201,429 (205,110)
Benefit payments (496,549) (490,936)
Net change in total OPEB liability $ 229,264 $ (184,501)
Total OPEB liability - beginning 7,707,795 7,892,296
Total OPEB liability - ending $ 7,937,059 $ 7,707,795

Covered payroll $ 20,503,347 $ 20,503,347

School Board’s total OPEB liability (asset) as a percentage of covered payroll 38.71% 37.59%

County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios

Component Unit School Board For the Measurement Dates of June 30, 2018 through June 30, 2019

Schedule is intended to show information for 10 years. Additional years will be included as they become available.

-114-

Exhibit 20 County of Russell, Virginia ‘Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios Component Unit School Board For the Measurement Dates of June 30, 2018 through June 30, 2019

2019 2018 Total OPEB liability Service cost $ 226,831 $ 235,586 Interest 297,553 275,959 Changes in assumptions 201,429 (205,110) Benefit payments (496,549) (490,936) Net change in total OPEB liability $ 229,264 S (184,501) Total OPEB liability - beginning 7,107,795 7,892,296 Total OPEB liability - ending s 7,937,059_ $ 7,707,795 Covered payroll $ 20,503,347 § 20,503,347 ‘School Board’s total OPEB liability (asset) as a percentage of

covered payroll 38.71% 37.59%

Schedule is intended to show information for 10 years. Additional years will be included as they become available.

-114-

Exhibit 21

Valuation Date: 7/1/2017 Measurement Date: 6/30/2019

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:

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

2018 and gradually declines to 4.20% by the year 2095. 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.

Discount Rate 3.87% as of June 30, 2018;
3.50% as of June 30, 2019

County of Russell, Virginia Notes to Required Supplementary Information - School OPEB

For the Year Ended June 30, 2019

Actuarial Cost Method Entry age normal, level percentage of pay

-115-

Exhibit 21 County of Russell, Virginia Notes to Required Supplementary Information - School OPEB For the Year Ended June 30, 2019

Valuation Date: 7/4/2017 ‘Measurement Date: 6/30/2019

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:

‘Actuarial Cost Method Entry age normal, level percentage of pay Discount Rate 3.87% as of June 30, 2018; 3.50% as of June 30, 2019 Inflation 2.50% Healthcare Trend Rate The healthcare trend rate assumption starts at 6.00% in 2018 and gradually declines to 4.20% by the year 2095, 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.

“115+

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 0.0325% $ 494,000 $ 6,184,666 7.99% 51.22% 0.0309% 465,000 5,704,306 8.15% 48.86%

Component Unit School Board (nonprofessional) 0.0138% $ 210,000 $ 2,629,348 7.99% 51.22% 0.0144% 216,000 2,654,927 8.14% 48.86%

Component Unit School Board (professional) 0.0966% $ 1,468,000 $ 18,376,099 7.99% 51.22% 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 Measurement Dates of June 30, 2017 through June 30, 2018

2017

Date (1)

2017 2018

2018

2018 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.

-116-

Exhibit 22 County of Russell, Virginia ‘Schedule of Employer’s Share of Net OPES Liability Group Life Insurance Program For the Measurement Dates of June 30, 2017 through June 30, 2018

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. _ 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 mn @ 3) 4) 6) (6) Primary Government. 2018 0.0325% § 494,000 $ 6,184,666 7.99% 51.22% 2017 0.0309% 465,000 5,704,306 8.15% 48.86% Component Unit School Board (nonprofessional) 2018 0.0138% § 210,000 $ 2,629,348 7.99% 51.22% 2017 0.014% 216,000 2,654,927, 8.14% 48.86% Component Unit School Board (professional) 2018 0.096% § 1,468,000 $18,376,099 7.99% 51.22% 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,

“116+

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 2019 $ 31,276 $ 31,276 $ - $ 6,028,822 0.52% 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%

Component Unit School Board (nonprofessional) 2019 $ 13,543 $ 13,543 $ - $ 2,604,399 0.52% 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%

Component Unit School Board (professional) 2019 $ 96,000 $ 96,000 $ - $ 18,519,029 0.52% 2018 95,556 95,556 - 18,376,099 0.52% 2017 93,780 93,780 - 18,034,586 0.52% 2016 86,114 86,114 - 17,940,378 0.48% 2015 83,384 83,384 - 17,371,656 0.48% 2014 82,222 82,222 - 17,129,577 0.48%

2013 83,953 83,953 - 14,490,261 0.58% 2012 51,461 51,461 - 18,378,975 0.28% 2011 49,914 49,914 - 17,826,341 0.28% 2010 36,866 36,866 - 19,131,926 0.19%

County of Russell, Virginia Schedule of Employer Contributions

Group Life Insurance Program For the Years Ended June 30, 2010 through June 30, 2019

-117-

County of Russell, Virginia

Schedule of Employer Contributions

Group Life Insurance Program For the Years Ended June 30, 2010 through June 30, 2019

Exhil

bit 23

Contributions in

Relation to Contributions. Contractually Contractually Contribution Employer’s, asa%of Required Required Deficiency Covered Covered Contribution Contribution (Excess) Payroll Payroll Date ay Q) @) 4) 6) Primary Government 2019S 31,276 $ 31,276 $ 6,028,822 0.52%, 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% ‘Component Unit School Board (nonprofessional) 219° S 13,543 $ 13,543 $ 2,604,399 0.52% 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% Component Unit School Board (professional) 2019S 96,000 $ 96,000 $ 18,519,029 0.52%, 2018 95,556 95,556 18,376,099 0.52% 2017 93,780 93,780 18,034,586 0.52% 2016 86,114 86,114 17,940,378 0.48%, 2015 83,384 83,384 17,371,656 0.48% 2014 82,222 82,222 17,129,577 0.48% 2013 83,953 83,953 14,490,261 0.58% 2012 51,461 51,461 18,378,975 0.28% 2011 49,914 49,914 17,826,341 0.28% 2010 36,866 36,866 19,131,926 0.19%

117-

Exhibit 24

Teachers

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

No change Decreased rate from 60% to 45%

Lowered disability rates No change Increased rate from 14% to 20%

Increased disability rates No change

Lowered retirement rates at older ages

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

Lowered disability rates No change Increased rate from 14% to 15%

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Salary Scale

Disability Rates Adjusted rates to better match experience Salary Scale Line of Duty Disability

County of Russell, Virginia Notes to Required Supplementary Information

Group Life Insurance Program For the Year Ended June 30, 2019

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

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

Withdrawal Rates Adjusted termination rates to better fit experience at each age and service year

Disability Rates Salary Scale Line of Duty Disability

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

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

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

-118-

Exhibit 24

County of Russell, Virginia Notes to Required Supplementary information Group Life Insurance Program For the Year Ended June 30, 2019

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the

prior actuarial valuation.

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:

Teachers 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 t0 2020

Lowered rates at older ages and changed final retirement from 701075

‘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 t0 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 t0 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%

-118-

Exhibit 25

2018 2017 Total HIC OPEB Liability Service cost $ 1,884 $ 1,785
Interest 7,367 7,343
Changes in assumptions - (1,681)
Differences between expected and actual experience (4,641) -
Benefit payments (9,286) (4,926)
Net change in total HIC OPEB liability $ (4,676) $ 2,521
Total HIC OPEB Liability - beginning 109,885 107,364
Total HIC OPEB Liability - ending (a) $ 105,209 $ 109,885

Plan fiduciary net position Contributions - employer $ 4,374 $ 3,731
Net investment income 6,182 9,214
Benefit payments (9,286) (4,926)
Administrative expense (141) (148)
Other (472) 472
Net change in plan fiduciary net position $ 657 $ 8,343
Plan fiduciary net position - beginning 88,734 80,391
Plan fiduciary net position - ending (b) $ 89,391 $ 88,734

Employer’s net HIC OPEB liability - ending (a) - (b) $ 15,818 $ 21,151

Plan fiduciary net position as a percentage of the total HIC OPEB liability 84.97% 80.75%

Covered payroll $ 1,562,251 $ 1,332,239

Employer’s net HIC OPEB liability as a percentage of covered payroll 1.01% 1.59%

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.

County of Russell, Virginia Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios

Health Insurance Credit (HIC) Program For the Measurement Dates of June 30, 2017 through June 30, 2018

Primary Government

-119-

Exhibit 25 County of Russell, Virginia ‘Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios, Primary Government Health Insurance Credit (HIC) Program For the Measurement Dates of June 30, 2017 through June 30, 2018

2018 2017 Total HIC OPEB Liability

Service cost $ 1,884 $ 1,785 Interest 7,367 7,343 Changes in assumptions : (1,681) Differences between expected and actual experience (4,641) - Benefit payments (9,286) (4,926) Net change in total HIC OPEB liability $ (4,676) $ 2,521 Total HIC OPEB Liability - beginning 109,885 107,364

Total HIC OPEB Liability - ending (a) $ (05,209

Plan fiduciary net position

Contributions - employer $ 4374 § 3,731 Net investment income 6,182 9,214

Benefit payments (9,286) (4,926) Administrative expense (141) (148) Other (472) 47

Net change in plan fiduciary net position s 657 $ 3343

Plan fiduciary net position - beginning 88,734 80,391

Plan fiduciary net position - ending (b) $ 89,391 S 88,734

Employer’s net HIC OPEB liability - ending (a) - (b) s 15,818 $ 21,151

Plan fiduciary net position as a percentage of the total

HIC OPEB liability 84.97% 80.75% Covered payroll 8 4,562,251 $ 1,332,239

Employer’s net HIC OPEB liability as a percentage of covered payroll 1.01% 1.59%

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.

-119-

Exhibit 26

2018 2017 Total HIC OPEB Liability Service cost $ 9,113 $ 12,000
Interest 18,227 17,000
Changes in assumptions - (42,000)
Differences between expected and actual experience (1,089) -
Benefit payments (33,696) (34,000)
Benefit payments (5,145) -
Net change in total HIC OPEB liability $ (12,590) $ (47,000)
Total HIC OPEB Liability - beginning 534,000 581,000
Total HIC OPEB Liability - ending (a) $ 521,410 $ 534,000

Plan fiduciary net position Contributions - employer $ 31,329 $ 32,000
Benefit payments (33,696) (34,000)
Other (495) -
Net change in plan fiduciary net position $ (2,862) $ (2,000)
Plan fiduciary net position - beginning (35,000) (33,000)
Plan fiduciary net position - ending (b) $ (37,862) $ (35,000)

Employer’s net HIC OPEB liability - ending (a) - (b) $ 559,272 $ 569,000

Plan fiduciary net position as a percentage of the total HIC OPEB liability -7.26% -6.55%

Covered payroll $ 2,610,768 $ 2,645,183

Employer’s net HIC OPEB liability as a percentage of covered payroll 21.42% 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.

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 (HIC) Program

For the Measurement Dates of June 30, 2017 through June 30, 2018

-120-

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 (HIC) Program For the Measurement Dates of June 30, 2017 through June 30, 2018

Exhibit 26

2018 Total HIC OPEB Liability Service cost $ 9,113 Interest 18,227 Changes in assumptions Differences between expected and actual experience (1,089) Benefit payments (33,696) Benefit payments (5,145) Net change in total HIC OPEB liability $ (12,590) Total HIC OPEB Liability - beginning 534,000 Total HIC OPEB Liability - ending (a) s 521,410 Plan fiduciary net position Contributions - employer $ 31,329 Benefit payments (33,696) Other (495) Net change in plan fiduciary net position $ (@,862) Plan fiduciary net position - beginning (35,000) Plan fiduciary net position - ending (b) $ (37,862) Employer’s net HIC OPEB liability - ending (a) - (b) $ 589,272 Plan fiduciary net position as a percentage of the total

HIC OPEB liability 7.26% Covered payroll s 2,610,768 Employer’s net HIC OPEB liability as a percentage of

covered payroll 21.42%

2017

12,000 17,000 (42,000) (34,000) (47,000)

581,000 534,000

32,000 (34,000)

12,000) (33,000) (35,000)

569,000

6.55%

2,645,183

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.

-120-

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 2019 $ 2,763 $ 2,763 $ - $ 1,327,521 0.21% 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%

Component Unit School Board (nonprofessional) 2019 $ 32,001 $ 32,001 $ - $ 2,601,655 1.23% 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 (HIC) Program For the Years Ended June 30, 2010 through June 30, 2019

-121-

County of Russell, Virginia Schedule of Employer Contributions Health Insurance Credit (HIC) Program

For the Years Ended June 30, 2010 through June 30, 2019

Exhi

bit 27

Contributions in

Relation to Contributions

Contractually Contractually Contribution Employer’s asa% of

Required Required Deficiency Covered Covered

Contribution Contribution (Excess) Payroll Payroll

Date ay @ @) ay 6) Primary Government 2019 $ 2,763 $ 2,763 $ - 1,327,521 0.21% 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% Component Unit School Board (nonprofessional)

2019 $ 32,001 $ 32,001 $ - 2,601,655, 1.23% 2018 34,329 31,329 : 2,610,768 1.20% 2017 34,742 34,742 : 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%

121-

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

Increased rate from 14% to 15%

Increased disability rates No change Increased rate from 60% to 70%

Adjusted rates to better match experience

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%

County of Russell, Virginia Notes to Required Supplementary Information

Health Insurance Credit (HIC) Program For the Year Ended June 30, 2019

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

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

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

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

-122-

Exhibit 28 County of Russell, Virginia Notes to Required Supplementary Information Health Insurance Credit (HIC) Program For the Year Ended June 30, 2019

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:

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 t075

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 70075

‘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%

-122-

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)

0.02715% $ 2,884,000 $ 18,370,145 15.70% 8.08% 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 Employee Health Insurance Credit (HIC) Program For the Measurement Dates of June 30, 2017 through 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 2018

-123-

County of Russell, Virginia Schedule of School Board’s Share of Net OPEB Liability ‘Teacher Employee Health Insurance Credit (HIC) Program For the Measurement Dates of June 30, 2017 through 2018

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

Date Liability (Asset) _Liability (Asset) Payroll ayia HIC OPEB Liability

a) 2 @) (4) 3) (6)

2018 0.02715% § 2,884,000 $ 18,370,145, 15.70% 8.08%

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.

-123-

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) 2019 $ 222,000 $ 222,000 $ - $ 18,519,029 1.20% 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%

County of Russell, Virginia Schedule of Employer Contributions

Teacher Employee Health Insurance Credit (HIC) Program For the Years Ended June 30, 2010 through June 30, 2019

-124-

County of Russell, Virginia Schedule of Employer Contributions

Teacher Employee Health Insurance Credit (HIC) Program For the Years Ended June 30, 2010 through June 30, 2019

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 (2) @) (4) ©)

2019 222,000 $ 222,000 $ 78,519,029 7.20% 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%

“124-

Exhibit 31

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 Employee Health Insurance Credit (HIC) Program

For the Year Ended June 30, 2019

Adjusted rates to better match experience No change

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

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

-125-

Exhibit 31 County of Russell, Virginia Notes to Required Supplementary Information Teacher Employee Health Insurance Credit (HIC) Program For the Year Ended June 30, 2019

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

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:

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

retirement 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

-125-

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)

0.50337% $ 1,578,000 N/A N/A 0.60% 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 (LODA) Program For the Measurement Dates of June 30, 2017 through 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.

2018

-126-

County of Russell, Virginia Schedule of Employer’s Share of Net LODA OPEB Liability Line of Duty Act (LODA) Program For the Measurement Dates of June 30, 2017 through June 30, 2018

Exhibit 32

Employer’s Proportionate Share

Employer’s of the Net LODA OPEB Employer’s Proportionate Liability (Asset) Plan Fiduciary Proportion of the Share ofthe 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 * aya) LODA OPEB Liability,

a) Q Q) oy 6) ©)

2018 0.50337% § 1,578,000 NIA NA 0.60%

2017 0.50108% 1,317,000 NIA NA 1.30%,

“The contributions for the Line of Duty Act Program are based on the number of participants in the Program using @ per capita-based contribution versus a payroll-based contribution. Therefore, covered-employee payroll is the relevant measurement, which fs 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.

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.

-126-

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)

$ 72,164 $ 72,164 $ - N/A N/A 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 (LODA) Program For the Years Ended June 30, 2016 through June 30, 2019

Date

2018

2016 2017

2019

-127-

County of Russell, Virginia

Schedule of Employer Contributions Line of Duty Act (LODA) Program.

For the Years Ended June 30, 2016 through June 30, 2019

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 a (2) @) (4) (5) 2019 72,164 $ 72,164 $ N/A N/A 2018 53,616 53,616 : N/A N/A 2017 54,041 54,041 N/A N/A 2016 47,993 47,993 : N/A N/A

“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 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.

relevant measurement, which is the total payroll of employees in the OPEB plan.

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.

-127-

Exhibit 34

Employees in the Largest Ten Locality Employers with Public Safety Employees

Employees in the Non-Largest Ten Locality Employers with Public Safety Employees

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

Notes to Required Supplementary Information Line of Duty Act (LODA) Program

For the Year Ended June 30, 2019

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

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%

Disability Rates Salary Scale Line of Duty Disability

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.

Adjusted termination rates to better fit experience at each age and service year

Retirement Rates Lowered retirement rates at older ages

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

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

Withdrawal Rates

-128-

Exhibit 34 County of Russell, Virginia Notes to Required Supplementary Information Line of Duty Act (LODA) Program For the Year Ended June 30, 2019,

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:

Employees in the Largest Ten Locality Employers with Public Safety Employees Mortality Rates (pre-tetirement, post: Updated to a more current mortality table - RP-2014 projected to 2020

retirement 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%

Employees in the Non-Largest Ten Locality Employers with Public Safety Employees Mortality Rates (pre-retirement, post: Updated to a more current mortality table - RP-2014 projected to 2020 retirement 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%

-128-

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 61,336$ 134,172$ (137,878)$ 57,630$
VASAP Fund 11,302 185,925 (186,620) 10,607
Total Assets 72,638$ 320,097$ (324,498)$ 68,237$

Liabilities Amounts held for Social Services clients 61,336$ 134,172$ (137,878)$ 57,630$
Amounts held for VASAP 11,302 185,925 (186,620) 10,607
Total Liabilities 72,638$ 320,097$ (324,498)$ 68,237$

County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities

Agency Funds For the Year Ended June 30, 2019

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County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities

‘Agency Funds

For the Year Ended June 30, 2019

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 ofYear Additions Deletions of Year $ 61,336 $ 134,172 $ (137,878) $ 57,630 11,302 185,925 (186,620) 10,607 $72,638 —$ 320,097 (324,498) 68,237 $ 61,336 $ 134,172 $ (137,878) $ 57,630 11,302 185,925 (186,620) 10,607 3_72,638_ —$ 320,097 (324,498) 68,237

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DISCRETELY PRESENTED COMPONENT UNIT – SCHOOL BOARD

MAJOR GOVERNMENTAL FUNDS

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

DISCRETELY PRESENTED COMPONENT UNIT - SCHOOL BOARD

MAJOR GOVERNMENTAL FUNDS:

Exhibit 36

School Operating

Fund

ASSETS Cash and cash equivalents 1,024,325$
Receivables (net of allowance for uncollectibles):

Accounts receivable 2,824 Due from other governmental units 1,549,699
Prepaid items 326,948

Total assets 2,903,796$

LIABILITIES Accounts payable 288,978$
Accrued liabilities 1,067,372 Due to primary government 961,535

Total liabilities 2,317,885$

FUND BALANCES Nonspendable:

Prepaid items 326,948$
Committed:

Textbook purchases 29,950
Regional Adult Education 255,798
School food 300,163

Unassigned (326,948)
Total fund balances 585,911$
Total liabilities and fund balances 2,903,796$

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

Total fund balances per above 585,911$

Land 5,636,345$
Buildings and improvements 9,682,614
Machinery and equipment 1,601,982 16,920,941

Pension related items 3,853,016$
OPEB related items 607,477 4,460,493

Compensated absences (730,807)$
Net OPEB liabilities (13,058,331)
Net pension liability (32,556,828) (46,345,966)

Pension related items (3,648,168)$
OPEB related items (488,046) (4,136,214)

Net position of governmental activities (28,514,835)$

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, 2019

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.

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Exhibit 36 County of Russell, Virginia Balance Sheet Governmental Funds - Discretely Presented Component Unit - School Boarc June 30, 2019

Schoo! operating Fund ASSETS Cash and cash equivalents $1,024,325 Receivables (net of allowance for uncollectibles)

‘Accounts receivable 2,824 Due from other governmental units 1,549,699 Prepaid items 326,948

Total assets 303, LIABILITIES ‘Accounts payable $288,978 ‘Accrued lablities 1,067,372 Due to primary government 961/535 Total liabilities Te FUND BALANCES Nonspendable:

Prepaid items $326,948 Committed:

Textbook purchases 29,950

Regional Adult Education 255,798

School food 300,163 Unassigned (226,948)

Total fund balances 8a

Total liabilities and fund balances

‘Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because Total fund balances per above $585,911

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

Land S$ 5,636,345 Buildings and improvements 9,682,614 Machinery and equipment 41,601,982 16,920,941

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

Pension related items S$ 3,853,016 OPEB related items 607,477 4,460,493

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

Compensated absences (730,807) Net OPEB liabilities (13,058,331) Net pension liability (32,556,828) (46,345,966)

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

Pension related items S (3,648,168) OPEB related items (488,046) (4,136,214)

Net position of governmental activities

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Exhibit 37

School Operating

Fund REVENUES Revenue from the use of money and property 5,107$
Charges for services 390,754
Miscellaneous 235,994
Recovered costs 1,015,231
Intergovernmental:

Local government 7,288,776
Commonwealth 28,826,415
Federal 5,472,962

Total revenues 43,235,239$

EXPENDITURES Current:

Education 43,147,528$

Excess (deficiency) of revenues over (under) expenditures 87,711$

Net change in fund balances 87,711$
Fund balances - beginning 498,200
Fund balances - ending 585,911$

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 87,711$

Capital outlays 754,967$
Reversion of assets back to the School Board (net) 1,180,308
Depreciation expense (2,010,654) (75,379)

(Increase) decrease in compensated absences (5,391)$
Change in OPEB related items 93,990
Change in pension related items 1,582,004 1,670,603

Change in net position of governmental activities 1,682,935$

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, 2019

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.

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Exhibit 37 County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balance: Governmental Funds - Discretely Presented Component Unit - School Boarc For the Year Ended June 30, 2019

Schoo! Operating Fund

REVENUES Revenue from the use of money and property $5107 Charges for services 390,754 Miscellaneous 235,994 Recovered costs 4,015,231 Intergovernmental:

Local government 7,288,776

Commonwealth 28,826,415

Federal 5,472,962

Total revenues $5,255,259

EXPENDITURES Current:

Education $43,147,528 Excess (deficiency) of revenues over (under)

expenditures sr7t Net change in fund balances san Fund balances - beginning 498,200

Fund balances - ending

Amounts reported for governmental activities in the statement of activities (Exhibit 2) are different because Net change in fund balances - total governmental funds - per above Sem

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

Capital outlays $754,967 Reversion of assets back to the School Board (net} 1,180,308 Depreciation expense (2,010,654) (75,379)

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 (5,391)

Change in OPEB related items 93,990

Change in pension related items 41,582,004 1,670,603, Change in net position of governmental activities STS

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Exhibit 38

Variance with Final Budget

Positive Original Final Actual (Negative)

REVENUES Revenue from the use of money and property 6,000$ 6,000$ 5,107$ (893)$
Charges for services 559,554 559,554 390,754 (168,800)
Miscellaneous 165,000 165,000 235,994 70,994
Recovered costs 571,914 571,914 1,015,231 443,317
Intergovernmental:

Local government 7,956,528 7,956,528 7,288,776 (667,752)
Commonwealth 28,323,975 28,323,975 28,826,415 502,440
Federal 6,068,621 6,068,621 5,472,962 (595,659)

Total revenues 43,651,592$ 43,651,592$ 43,235,239$ (416,353)$

EXPENDITURES Current:

Education 43,651,592$ 43,651,592$ 43,147,528$ 504,064$

Excess (deficiency) of revenues over (under) expenditures -$ -$ 87,711$ 87,711$

Net change in fund balances -$ -$ 87,711$ 87,711$
Fund balances - beginning - - 498,200 498,200
Fund balances - ending -$ -$ 585,911$ 585,911$

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, 2019

School Operating Fund

Budgeted Amounts

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County of Russell, Virginia Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Discretely Presented Component Unit - School Board

For the Year Ended June 30, 2019

Exhibit 38

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

Positive

Actual (Negative) s 6,000 $ 6,000 5,107 § (893) 559,554 559,554 390,754 (168,800) 165,000 165,000 235,994 70,994 571,914 571,914 1,015,231 443,317 7,956,528 7,956,528 7,288,776 (667,752) 28,323,975 28,323,975 28,826,415 502,440 6,068,621 6,068,621 5,472,962 (595,659) 343,651,592 5 43,651,592 _$ 43,235,239 _$ (416,353) S 43,651,592 $ 43,651,592$ 43,147,528 $ 504,064 $ $ : 87,711$ 87,711 $ -$ : 87,711 § 87,711 : : 498,200 498,200

= = 585,911 585,911

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Supporting Schedules

Schedule 1 Page 1 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

General Fund: Revenue from local sources:

General property taxes: Real Property Tax 8,000,000$ 8,000,000$ 7,907,128$ (92,872)$
Real and Personal PSC Tax 1,900,000 1,900,000 1,971,983 71,983 Personal Property Tax 3,543,000 3,543,000 3,731,384 188,384 Mobile Home Tax 114,000 114,000 111,621 (2,379)
Machinery and Tools Tax 950,000 950,000 839,002 (110,998) Merchants Capital 36,000 36,000 42,432 6,432 Mineral Tax 1,050,000 1,050,000 900,904 (149,096) Penalties 146,000 146,000 130,844 (15,156) Interest 315,000 315,000 266,095 (48,905)

Total general property taxes 16,054,000$ 16,054,000$ 15,901,393$ (152,607)$

Other local taxes: Local Sales and Use Tax 2,057,100$ 2,057,100$ 1,794,619$ (262,481)$
Consumers’ Utility Tax 550,000 550,000 532,700 (17,300)
Consumption Taxes 75,000 75,000 76,061 1,061
Coal Severance Tax 250,000 250,000 360,435 110,435
Bank Stock Tax 11,000 11,000 16,838 5,838
Grantee tax 87,000 87,000 75,451 (11,549)
Motor Vehicle Licenses - - 9,684 9,684
Taxes on Recordation and Wills 27,000 27,000 24,274 (2,726)

Total other local taxes 3,057,100$ 3,057,100$ 2,890,062$ (167,038)$

Permits, privilege fees, and regulatory licenses: Animal licenses 1,800$ 1,800$ 1,732$ (68)$
Building permits 31,000 31,000 39,002 8,002 Other permits and other licenses 3,200 3,200 2,449 (751)

Total permits, privilege fees, and regulatory licenses 36,000$ 36,000$ 43,183$ 7,183$

Fines and forfeitures: Court fines and forfeitures 18,000$ 18,000$ 13,545$ (4,455)$

Revenue from use of money and property: Revenue from use of money 256,000$ 256,000$ 87,394$ (168,606)$
Revenue from use of property - - 187,142 187,142

Total revenue from use of money and property 256,000$ 256,000$ 274,536$ 18,536$

Charges for services: Charges for sanitation and waste removal 195,000$ 195,000$ 188,985$ (6,015)$
Charges for courthouse security 45,000 45,000 37,435 (7,565)
Charges for cannery operations 65,000 65,000 44,966 (20,034)
Charges for commonwealth attorney 7,500 7,500 12,087 4,587
Charges for courthouse maintenance 8,500 8,500 10,415 1,915
Charges for jail and inmate fees 4,500 4,500 20,131 15,631
Charges for district court - - 5,196 5,196
Charges for library 5,200 5,200 5,908 708
Other charges for services 3,400 3,400 4,149 749

Total charges for services 334,100$ 334,100$ 329,272$ (4,828)$

Miscellaneous: Other miscellaneous revenue 187,200$ 187,200$ 72,890$ (114,310)$

Sale of property/surplus - - 130,692 130,692

Valley Heights revenue - - 7,105 7,105

Total miscellaneous 187,200$ 187,200$ 210,687$ 23,487$

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2019

Fund, Major and Minor Revenue Source

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County of Russell, Vieginia Schedule 1 Schedule of Revenues » Budget and Actual Page 1 of 5 Governmental Funds For the Year Ended June 30, 2019

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget tual (Negative) General Fund: Revenue from local sources: General property taxes Real Property Tax S 8,000,000 $ 8,000,000 $ 7,907,128 $ (92,872) Real and Personal PSC Tax 1,900,000 1,900,000 1,971,983, 71,983 Personal Property Tax 3,543,000 3,543,000 3,731,384 188,384 ‘Mobile Home Tax 114,000 114,000 ‘11,621 (2,379) ‘machinery and Toots Tax 980,000, 980,000, 839,002 (110,998), ‘Merchants Capital 36,000 36,000 42.432 6432 Mineral Tax 1,050,000 1,050,000 900,904 (149,096), Penalties 146,000 146,000 130,844 (15,156) Interest 315,000 315,000. 266,095. (48,905) Total general property taxes $16,054,000 $16,054,000_$ 15,901,393 $ (152,607) Other local taxes: Local Sales and Use Tax S 2,057,100 $ 2,057,100 $ 1,794,619 $ (262,481) Consumers Utility Tax 550,000 350,000 532,700 (17,300) Consumption Taxes 75,000 75,000 76,061 4061 Coal Severance Tax 280,000 250,000 360,435 110,435 Bank Stock Tax 11,000 11,000 16,838 5,838 Grantee tax 87,000 87,000 75,451 (115549) ‘Motor Vehicle Licenses : : 9,684 9,684 Taxes on Recordation and Wills 27,000 27,000 24274 2,726) Total other local taxes $3,057, 100_$ 3,057, 100_$ —7,890,062_$ (167,038) Permits, privilege fees, and regulatory licenses “nial icenses S480 $ 1,800 $1472 § (63) Biting permits 31,000 31,000 39,002 8,002 Other permits and other licenses 3,200 3,200 2.449 51) “Total permits, privilege fees, and regulatory licenses 536,000 § 36,000 § 43,163 § 7.183 Fines and forfeitures: Court fines and forfeitures S 18,000 $ 18,00 $ 13,545 $4,455) Revenue from use of money and property: Revenue from use of money S 256,000 $ 256,000 $ 87,394 $§ (168,606) Revenue from use of property - - 187,142 187,142 Total revenue from use of money and property S_756,000_$—~756,000-§ 774,536 18.536 Charges for services: Charges for sanitation and waste removal S 195,000 $ 195,000 $188,985 § (6,015) Charges for courthouse security 45,000 45,000 37,435 7,565) Charges for cannery operations 65,000 65,000 44,966 (20,034) Charges for commonwealth attorney 7,500 7,300 12,087 4587 Charges for courthouse maintenance 85300 31300 10,415 41,915 Charges for jail and inmate fees 4500, 4300 20,131 15,631 Charges for district court 5,196 51196 Charges for library 5,200 5,200 5.908 “708 Other charges for services 3,400 3,400 4149 749 “Total charges for services 5 334,100 § 334,100 § 379.277 $14,828) iscellaneous: Other miscellaneous revenue S 187,200 $ 187,200 $ 72,890 $ (114,310) Sale of property/surplus 130,692 130,692 Valley Heights revenue 7.105, 7.105 ‘Total miscellaneous S__167,200§ 187,200 § 710,687 -§ 23.487

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Schedule 1 Page 2 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2019

Fund, Major and Minor Revenue Source

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

Recovered costs: Social services 246,000$ 246,000$ 56,069$ (189,931)$
Health department 15,000 15,000 40,500 25,500
School resource officer 58,284 58,284 207,975 149,691
Insurance recoveries - - 36,443 36,443
Industrial development 18,000 18,000 27,807 9,807
Other Recovered Costs 28,000 28,000 804,125 776,125

Total recovered costs 365,284$ 365,284$ 1,172,919$ 807,635$

Total revenue from local sources 20,307,684$ 20,307,684$ 20,835,597$ 527,913$

Intergovernmental: Revenue from the Commonwealth:

Noncategorical aid: Motor vehicles carriers’ tax 135,250$ 135,250$ 135,819$ 569$
Mobile home titling tax 78,000 78,000 89,476 11,476
Motor vehicle rental tax 2,000 2,000 3,277 1,277
Communications tax 848,000 848,000 730,302 (117,698)
State recordation tax 21,000 21,000 26,478 5,478
Personal property tax relief act funds 1,437,003 1,437,003 1,437,003 -

Total noncategorical aid 2,521,253$ 2,521,253$ 2,422,355$ (98,898)$

Categorical aid: Shared expenses:

Commonwealth’s attorney 438,404$ 438,404$ 408,466$ (29,938)$
Sheriff 1,620,000 1,620,000 1,461,284 (158,716)
Commissioner of revenue 203,778 203,778 160,950 (42,828)
Treasurer 112,000 112,000 113,726 1,726
Registrar/electoral board 43,000 43,000 42,436 (564)
Clerk of the Circuit Court 293,000 293,000 336,497 43,497
Total Shared Expenses 2,710,182$ 2,710,182$ 2,523,359$ (186,823)$

Other categorical aid: Victim witness grant 64,000$ 64,000$ 24,405$ (39,595)$
GIS 3,700 3,700 2,890 (810)

JAG grants - - 840 840
E911 state funds 45,000 45,000 91,354 46,354
Asset forfeiture funds - - 26,557 26,557
EMS grants - - 30,084 30,084
Fire Program Funds 2,000 82,455 82,455 -
Library grants 91,000 91,000 98,393 7,393
Litter control grants 15,000 15,000 11,460 (3,540)
Public assistance 2,389,956 2,389,956 2,293,423 (96,533)
Comprehensive services act 1,250,094 1,250,094 1,031,534 (218,560)
School resource officer grants - - 84,929 84,929

Workforce investment 27,500 27,500 - (27,500)

Health department - - 44,933 44,933

Other state funds - - 4,800 4,800
Total other categorical aid 3,888,250$ 3,968,705$ 3,828,057$ (140,648)$

Total categorical aid 6,598,432$ 6,678,887$ 6,351,416$ (327,471)$

Total revenue from the Commonwealth 9,119,685$ 9,200,140$ 8,773,771$ (426,369)$

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County of Russell, Virginia Schedule 1 Schedule of Revenues » Budget and Actual Page 2 of 5 Governmental Funds For the Year Ended June 30, 2019 Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget tual (Negative) General Fund: (Continued) Revenue from local sources: (Continued) Recovered costs: Social services S 246,000 $ 246,000 56,069 § (189,931) Health department 15,000 15,000 40,500 25,500 School resource officer 58,284 58,284 207,975 149,691 Insurance recoveries : : 36,483, 36,483 Industrial development 18,000 18,000 27,807 9,807 Other Recovered Costs 28,000. 28,000. 804,125, 776,125 Total recovered costs 5 365,284 5 365,284 SF 7172.919 $807,635, Total revenue from local sources $20,307,684 $20,307,684 $20,835,597 $527,913, Intergovernmentat: Revenue from the Commonwealth: Noncategorical ai: ‘Motor vehicles carriers tax S 135,250 $135,250 135,819 $ 569 ‘Mobile home titling tax 78,000 78,000 89,476 11,476 ‘Motor vehicle rental tax 2,000, 2,000, 3.277 4,27 Communications tax ‘848,000 848,000 730,302 (117,698) State recordation tax 21,000 21,000 26,478 5,478 Personal property tax relief act funds 41,437,003 1,437,003 1,437,003, - Total noncategorical aid SZ521,253 $752,253 $7,422,355 08,89) Categorical até: Shared expenses: Commonwealth attorney S 438,404 $438,404 408,466 S$ (29,938) Sheriff 1,620,000 1,620,000 1,461,284 (158,716) Commissioner of revenue 203,778 203,78 160,950 (47,828) Treasurer ‘12/000 ‘12/000 mane 1.726 Registrar/etectoral board 3,000 43,000 42,436 (564) Clerk of the Circuit Court 293,000 293,000 336,497 43,497 Total Shared Expenses SZ 710,182 $7,710,182 $7,523,359 (186,823) Other categorical aid: Victim witness grant S 64,000 $ 64,000 24.405 $ (39,595) ais 3,700 3.700 2,890 (10) JAG grants B40 40 F911 state funds 45,000 45,000 91,354 46,356 ‘Asset forfeiture funds 26557 26,557 EMS grants 30,084 30,084 Fire Program Funds 2,000, 82,455, 22,455 Library grants 91,000 91,000 98,393 7,393 Litter contrat grants 15,000 15,000 11,460 8,540) Public assistance 2,389,956 2,389,956 2,293,423 (96,533) Comprehensive services act 41250,094 1,250,094 1,031,534, (218,560) School resource officer grants 84,929 34,929 Workforce investment 27,500 27,500 (27,500) Health department 4.933 44,933 Other state funds 4,800 4,800 ‘Total other categorical aid $3,888, 250__$ 3,968,705 $3,828,057 _§ (140,648) ‘Total categorical aid S 6,598,482 $6,678,857 $ 6,351,416 $ (327.471) “Total revenue from the Commonwealth $9,119,685 $9,200,140 $ 8,773,771 $ (426,369)

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Schedule 1 Page 3 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2019

Fund, Major and Minor Revenue Source

General Fund: (Continued) Intergovernmental: (Continued) Revenue from the federal government:

Categorical aid: Forfeited Assets -$ -$ 260,547$ 260,547$

Emergency management grants 89,000 89,000 9,944 (79,056)

Law enforcement grants - - 46,615 46,615
Violence against women - - 24,881 24,881

Victim witness grant - - 32,235 32,235

USDA Rural Development grant - - 50,000 50,000
DMV ground transportation safety grant 18,500 18,500 908 (17,592)
Comprehensive services act 136,309 136,309 136,309 -
Public assistance 3,027,144 3,027,144 2,834,804 (192,340)

Total categorical aid 3,270,953$ 3,270,953$ 3,396,243$ 125,290$

Total revenue from the federal government 3,270,953$ 3,270,953$ 3,396,243$ 125,290$

Total General Fund 32,698,322$ 32,778,777$ 33,005,611$ 226,834$

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

Other local taxes: Coal road taxes 150,000$ 150,000$ 360,434$ 210,434$

Revenue from use of money and property: Revenue from the use of money -$ -$ 2,205$ 2,205$

Total revenue from local sources 150,000$ 150,000$ 362,639$ 212,639$

Total Coal Road Fund 150,000$ 150,000$ 362,639$ 212,639$

Workforce Investment Board Fund:

Revenue from local sources:

Recovered costs:

Other recovered costs -$ -$ 52,566$ 52,566$

Intergovernmental: Revenue from the federal government:

Categorical aid: Workforce Investment 2,835,083$ 2,835,083$ 436,407$ (2,398,676)$

Total revenue from the federal government 2,835,083$ 2,835,083$ 436,407$ (2,398,676)$

Total Workforce Investment Board Fund 2,835,083$ 2,835,083$ 488,973$ (2,346,110)$

Total Primary Government 35,683,405$ 35,763,860$ 33,857,223$ (1,906,637)$

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County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 3 of 5 Governmental Funds For the Year Ended June 30, 2019 Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget tual (Negative) General Fund: (Continued) Intergovernmental: (Continued) Revenue from the federal government: Categorical aid: Forfeited Assets 260,547 $§ 260,547 Emergency management grants 89,000 89,000 9,944 (79,056) Law enforcement grants 46,515 46,615 Viotence against women 24,881 24,881 Victim witness grant 32,235 2.235 USDA Rural Development grant 50,000 50,000 DNV ground transportation safety grant 18,500 18,500 908 (17,592) Comprehensive services act 136,309, 136,309 136,309 Public assistance 3or7,14a__3,027,144 2,834,804 192,340) Total categorical ald 3,770,953 $ 3,770,953 $3,396,278 $175,290, Total revenue from the federal government 3,270,953 $3,270,953 $ 3,396,249 $125,290 “Total General Fund 32,698,322§32,778,777$ 33,005,611 $726,834 Special Revenue Funds: Coal Road Fund: Revenue from local sources: (Other local taxes: Coal road taxes 150,000 150,000 360.484 $210,404 Revenue from use of money and property: Revenue from the use of money 2205 $2,205 Total revenue from local sources 150,000 150,000 362,639 $212,638 “Total Coal Road Fund 150,000. 150,000 362.639_$§ 212.639 Workforce Investment Board Fun Revenue from local sources: Recovered costs: Other recovered costs 52,566 $52,566, Intergovernmentat: Revenue from the federal government: Categorical aid: Workforce Investment 2,835,083 $ 2,835,083, 426,407 $ (2,398,676) ‘Total revenue from the federal government 2,835,083_§ 2,835,083, 436.407 $ (2,398,676) ‘Total Workforce Investment Board Fund 2,835,083 $2,835,083 488,973 § (2,346,110) ‘otal Primary Government 35,683,405 $35,763,860 _$ 33,857,223 $ (1,906,637)

135+

Schedule 1 Page 4 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2019

Fund, Major and Minor Revenue Source

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 -$ -$ 107$ 107$
Revenue from the use of property 6,000 6,000 5,000 (1,000)

Total revenue from use of money and property 6,000$ 6,000$ 5,107$ (893)$

Charges for services: Cafeteria sales 400,000$ 400,000$ 357,866$ (42,134)$
Tuition payments 5,000 5,000 - (5,000)
Drivers Ed fees 14,000 14,000 10,920 (3,080)
Other charges for services - - 168 168
Regional Adult Education 138,554 138,554 21,095 (117,459)
GED Testing fees 2,000 2,000 705 (1,295)

Total charges for services 559,554$ 559,554$ 390,754$ (168,800)$

Miscellaneous: Other miscellaneous 165,000$ 165,000$ 235,994$ 70,994$

Recovered costs: Insurance recoveries -$ -$ 42,015$ 42,015$
Extra duties revenue 23,000 23,000 15,109 (7,891)
Dual Enrollment 300,000 300,000 454,732 154,732
Sale of Equipment and Supplies 10,000 10,000 4,516 (5,484)
Reimburse Health Services 187,414 187,414 254,287 66,873
Other recovered costs 51,500 51,500 244,572 193,072

Total recovered costs 571,914$ 571,914$ 1,015,231$ 443,317$

Total revenue from local sources 1,302,468$ 1,302,468$ 1,647,086$ 344,618$

Intergovernmental: Revenues from local governments:

Contribution from County of Russell, Virginia 7,956,528$ 7,956,528$ 7,288,776$ (667,752)$

Revenue from the Commonwealth: Categorical aid:

Share of state sales tax 4,202,407$ Basic Aid 12,930,951 Remedial summer education 254,054 Regular foster care 23,660 Gifted and talented 134,288 Remedial education 518,353 Special education 1,826,320 Textbook payment 270,430 Career and Technical Education 67,262 Alternative education 924,464 Algebra readiness 67,524 Mentor teacher program 2,689 Social security fringe benefits 835,273 Group life 56,401 Retirement fringe benefits 1,845,120 Early reading intervention 87,259 Adult Education 31,197 Homebound education 27,005 Vocation education 502,490 At risk payments 610,603 Primary class size 730,755 Technology 362,000 Jobs for Virginia Graduates 25,000 Industry Certification Costs 4,341 At risk four-year olds 592,567 School Food 27,818 4,202,407$ 4,243,805$ 41,398$
12,930,951 13,079,012 148,061
254,054 260,356 6,302
23,660 6,612 (17,048)
134,288 135,731 1,443
518,353 523,920 5,567
1,826,320 1,845,935 19,615
270,430 273,334 2,904
67,262 25,008 (42,254)
924,464 924,464 -
67,524 70,547 3,023
2,689 2,064 (625)
835,273 844,244 8,971
56,401 57,007 606
1,845,120 1,864,938 19,818
87,259 87,259 -
31,197 45,605 14,408
27,005 25,716 (1,289)
502,490 555,850 53,360
610,603 684,501 73,898
730,755 718,324 (12,431)
362,000 334,858 (27,142)
25,000 25,000 -
4,341 4,229 (112)
592,567 558,567 (34,000)
27,818 27,299 (519)

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County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 4 of 5 Governmental Funds For the Year Ended June 30, 2019

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget tual (Negative) 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 s a a 107 $ 107 Revenue from the use of property 6,000 6,000, 5,000 (4,000) Total revenue from use of money and property 36,000 $6,000 § 5,107 -$ (683) Charges for services: Cafeteria sales S 400,000 $ 400,000 $357,866 $ (42,134) Tuition payments 5,000, 5,000 : (6,000) Drivers Ed fees 14,000 14,000 10,920 £2,080) Other charges for services : : 168 168 Regional Adult Education| 138,554 138,554 21,095 (117,459) GED Testing fees 2,000, 2,000, 705, (1,295) Total charges for services $359,554 $559,554 380,754 (168,600) ‘Miscellaneous: Other miscellaneous S 165,000 $165,000 $ 235,994 $70,994 Recovered costs: Insurance recoveries s a + $2015 $ 42,015 Extra duties revenue 23,000 23,000 15,109 7.891) Dual Enrollment 300,000 300,000 486732 147M Sale of Equipment and Supplies 10,000 10,000 4516 (6484) Reimburse Health Services, 187,414 187,414 254,287 66,873 Other recovered costs 51,500 51,500 244,572 193,072 Total recovered costs S54 S594 TOTTI Total revenue from local sources S 1,302,468 $1,302,468 $1,647,086 $144,618 Intergovernmentat: Revenues from local governments: Contribution from County of Russell, Virginia $7,956,528 $ 7,956,528 $ 7,288,776 $ (667,752) Revenue from the Commonwealth: Categorical aid: Share of state sales tax S 4,202,407 $ 4,202,407 $§ 4,243,805 $41,398 Basic Aid 17)930,951 12,930,951 13,079,012 148,061 Remedial summer education 254,054 254,054 260,356 6,302 Regular foster care 23,660 23,660 6612 (17,048) Gifted and talented 134288, 134.288 135,731 41,443 Remedial education 518,353, 518,353, 523,920 5,567 Special education 1,826,320 1,826,320 1,845,935, 19,615, Textbook payment 270,830 270,830 273,334 2,904 Career and Technical Education 67,262 67,262 25,008 (42,254) Alternative education 924,464 924,464 924,464 : ‘Algebra readiness one 67,504 70,547 3,023 ‘Mentor teacher program 2,689 2,689 2,064 (625) Social security fringe benefits 835,273 835,273 844.244 3971 Group ite 56,401 56,401 57,007 606 Retirement fringe benefits 1,845,120 1,845,120 1,864,938, 19,818 Early reading intervention 87,259 87,259 87,259 : ‘Adult Education 31197 31197 45,605 14,408 Homebound edvcation 27,005, 271005, 25,716 (1,289) Vocation education 502,490 021490 555,850 53,360 At risk payments 610,603 610,603 684,501 73,898 Primary class size 730,755, 730,755, 718,324 (12,431) Technology 362,000 362,000 334,858 (27,142) Jobs for Virginia Graduates, 25,000 25,000 25,000 : industry Certification Costs 4341 4241 4229 «1 ‘Av risk four-year olds 592,567 392,567 588,567 (34,000) School Food 27.818 27818 27.299 19)

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Schedule 1 Page 5 of 5

Variance with Final Budget

Original Final Positive Budget Budget Actual (Negative)

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2019

Fund, Major and Minor Revenue Source

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

Noncategorical aid: (Continued) English as a second language 7,232$ 7,232$ 7,748$ 516$
Project graduation 7,309 7,309 7,309 -
GED prep programs 77,239 77,239 77,962 723
Lottery payments 902,632 902,632 988,525 85,893
Tobacco Commission 30,000 30,000 47,905 17,905
Adult literacy 82,515 82,515 82,515 -
Special education-foster care - - 12,207 12,207
Other state funds 256,817 256,817 378,059 121,242

Total categorical aid 28,323,975$ 28,323,975$ 28,826,415$ 502,440$

Total revenue from the Commonwealth 28,323,975$ 28,323,975$ 28,826,415$ 502,440$

Revenue from the federal government: Categorical aid:

Basic Adult Education 261,451$ 261,451$ 281,271$ 19,820$
Title I 1,271,153 1,271,153 1,284,286 13,133
Special Education 1,152,259 1,152,259 1,013,139 (139,120)
Title VI-B, preschool 35,432 35,432 32,035 (3,397)
Vocational education 83,592 83,592 735 (82,857)
School Food Program 1,320,000 1,320,000 1,728,790 408,790
Improving teacher quality 222,735 222,735 199,540 (23,195)
Title IV part A - - 21,140 21,140
21st century grant 1,432,757 1,432,757 826,745 (606,012)
Rural and low income schools 65,242 65,242 79,070 13,828
Other federal funds 224,000 224,000 6,211 (217,789)

Total categorical aid 6,068,621$ 6,068,621$ 5,472,962$ (595,659)$

Total revenue from the federal government 6,068,621$ 6,068,621$ 5,472,962$ (595,659)$

Total Discretely Presented Component Unit - School Board 43,651,592$ 43,651,592$ 43,235,239$ (416,353)$

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County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 5 of 5 Governmental Funds For the Year Ended June 30, 2019

Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget tual (Negative) Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Intergovernmeatal: (Continued) Revenue from the Commonwealth: (Continued) Noncategorical aid: (Continued) English asa second language S722 $722 $7,748 § 516 Project graduation 7.309 7.309 7,308 : GED prep programs 7239 m9 T7962 na Lottery payments 902,632 902,632 988,525 85,893 Tobacco Commision 30,000 30,000 47,905 17,905 ‘Adult \eracy 22,515 22,515 82,515 : Spectal education-foster care : : 12207 12,207 Other state funds 256,817 256,817 378,059 121,202 Total categorical ald S_76,323,975_$ 78,323,975 _$ 76,826,415 $502,440, Total revenue from the Commonwealth $28,323,975 $28,323,975 $28,826,415 $502,440 Revenue from the federal government: Categorical até: Basic Adult Education S$ 214s1 $261,451 $ 281271 $19,820 Tile | 4,271,153 4,271,153 1,284,286 3133 Special Education 1152259 1,152,259 1,013,139 (139,120) Title VIB, preschool 35,432 35,432 32,035 397) Vocational education 83,592 83,592 735 22,857) School Food Program 1,320,000 1,320,000 1,728,790 408,790 Improving teacher quality 222,735 222,735 199,540 (23,195) Title IV part A : : 21,140 21,140 2ist century grant 1,432,757 1,432,757 826,745 (606,012) Rural and tow income schools 65,202 05.202 79,070 13,828 Other federal funds 224,000, 224,000 621 (217,789) Total categorical ald 36,068,671 $6,068,671 $5,472,962$ (595,659) Total revenue from the federal government $6,068,621 $ 6,068,621 $ 5,472,962 $ (595,659) “Total Discretely Presented Component Unit - School Boare $43,651,592 _$43,651,592$43,735,239$ (416,353)

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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 203,652$ 288,652$ 284,753$ 3,899$

General and financial administration: County administrator 329,914$ 357,914$ 382,194$ (24,280)$
Independent auditor 68,250 86,250 85,850 400
Commissioner of the revenue 309,271 309,771 318,306 (8,535)
Real estate assessor 282,658 282,658 283,093 (435)
Treasurer 427,060 442,060 465,733 (23,673)

Auto decals - - 1,230 (1,230)

Procurement 124,506 143,506 139,771 3,735 Total general and financial administration 1,541,659$ 1,622,159$ 1,676,177$ (54,018)$

Board of elections: Electoral Board 73,675$ 73,775$ 50,587$ 23,188$
General Registrar 115,020 125,020 142,066 (17,046)

Total board of elections 188,695$ 198,795$ 192,653$ 6,142$

Total general government administration 1,934,006$ 2,109,606$ 2,153,583$ (43,977)$

Judicial administration: Courts:

Circuit Court 124,909$ 140,909$ 143,151$ (2,242)$
General District Court 21,088 21,088 16,219 4,869
Special Magistrates 8,400 8,400 8,365 35
Clerk’s Office 415,059 482,059 490,258 (8,199)
Sheriff Courts 934,214 1,072,214 1,095,723 (23,509)
Victim and Witness Assistance 60,559 60,559 59,555 1,004
Law Library - - 397 (397)

Total courts 1,564,229$ 1,785,229$ 1,813,668$ (28,439)$

Commonwealth’s attorney: Commonwealth’s Attorney 642,942$ 872,942$ 866,932$ 6,010$

Total judicial administration 2,207,171$ 2,658,171$ 2,680,600$ (22,429)$

Public safety: Law enforcement and traffic control:

Sheriff 2,066,648$ 2,733,648$ 2,721,180$ 12,468$
Dare program 3,000 3,000 2,957 43

Total law enforcement and traffic control 2,069,648$ 2,736,648$ 2,724,137$ 12,511$

Fire and rescue services: Volunteer Fire Departments 203,200$ 289,700$ 289,555$ 145$
Ambulance Rescue Squad 190,875 190,875 188,910 1,965

Total fire and rescue services 394,075$ 480,575$ 478,465$ 2,110$

Correction and detention: Operation of Jail 2,488,745$ 2,985,745$ 2,985,743$ 2$
Probation Office 208,261 209,761 209,753 8

Total correction and detention 2,697,006$ 3,195,506$ 3,195,496$ 10$

Inspections: Building inspector 116,091$ 116,091$ 114,174$ 1,917$

Other protection: Forestry Service 11,804$ 12,304$ 12,239$ 65$
Enhanced 911 573,130 573,130 508,487 64,643
Medical Examiner 400 400 340 60

County of Russell, Virginia Schedule of Expenditures - Budget and Actual

Governmental Funds For the Year Ended June 30, 2019

Fund, Function, Activity and Element

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County of Russell, Vieginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 1 of 4 Governmental Funds For the Year Ended June 30, 2019

Variance with

Final Budget Original Final Positive Fund, Function, Activity and Elemé Budget Budget Actual Negative General Fund: General government administration: Legislative: Board of supervisors S 203652 $ 28.652 $784,753 $3,899 General and financial administration: County administrator S 329,914 $357,914 $382,194 $ (24,280) Independent auditor 68,250 86,250 85,850 “400 Commissioner of the revenue 309,271 309,771 318,306 (6,535) Real estate assessor 282,658 282,658 283,093 (235) Treasurer 227,060 442,060 465,733 23,673) ‘Auto decals : : 41,230 (1,230) Procurement 124,506 143,506 139,71 3.735 Total general and financial administration 3 T541,659 81,622,159 $1,676,177 $4078) Board of elections Electoral Board S$ 16 $73,775 $50,587 § 23,188 General Registrar 115,020 125,020 142,066, (17,046) Total board of elections S108, 655 $198,795 $19,653 Sa Total general government administration $1,934,006 $ 2,109,606 $ 2,153,583 $ (43,97) Judlclal administration: Courts: ‘lreutt Court S 124,909 $ 140,909 $143,151 $242) General District Court, 21088 21,088 16.219 4,869 Special Magistrates 8,400 8,400 8,365 35 Clerks Office 415,059 482,059 490258 (6.199) Sheriff Courts 934.214 1,072,214 1,095,723, (23509) Victim and Witness Assistance 60,559 60,558 59,555, +1004 Law Library : : 397 (397) Total courts STS 9 S175 9S 7,81 668 SB.) Commonwealths attorney: Commonwealths Attorney S92 $ amon $ 6692 § 6,010 Total judicial administration $2,207,171 $ 2,658,171 $ 2,680,600 § 2.429) Public safety Law enforcement and traffc contrat: Sheriff S$ 2,066,608 $2,733,688 $2,721,180 $12,468 Dare program 3,000 3,000 21957 mn Total law enforcement and traffic contro! 32,069,648 $2,736,648 $274,197 SSH Fite and rescue services: ‘olunteer Fire Departments S 203,200 $ 289,700 $289,555. § 45 “Ambulance Rescue Squad 190,875. 490,875. 188,910, 41,965 Total fire and rescue services S_394,075 $480,575 $478,465 S 2.110 Correction and detention: Operation of Jail S$ 2,488,745 $ 2,985,745 $2,985,743 § 2 Probation Office 208,261 209,761 209,753 A ‘Total correction and detention S697, 006 $3,195,506 $3,195,496 0 Inspections: Building inspector S 116.091 $ 11601 $474 § 1,917 Other protection: Forestry Service S 14,804 $ 12,304 $12,238 § 6 Enhanced 911 573,130 573,130 508 487 64,683 Medical Examiner "400 "400 340 o

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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, 2019

Fund, Function, Activity and Element

General Fund: (Continued) Public safety: (Continued)

Other protection: (Continued) Emergency Services 147,625$ 147,625$ 117,276$ 30,349$
Animal Control 38,231 69,231 116,790 (47,559)

Total other protection 771,190$ 802,690$ 755,132$ 47,558$

Total public safety 6,048,010$ 7,331,510$ 7,267,404$ 64,106$

Public works: Sanitation and waste removal:

Landfill 1,704,465$ 1,807,465$ 1,716,128$ 91,337$
Litter Coordinator - - 75,856 (75,856)

Total sanitation and waste removal 1,704,465$ 1,807,465$ 1,791,984$ 15,481$

Maintenance of general buildings and grounds: General properties 924,770$ 924,970$ 899,486$ 25,484$

Total public works 2,629,235$ 2,732,435$ 2,691,470$ 40,965$

Health and welfare: Health:

Health Department 340,000$ 340,000$ 380,500$ (40,500)$

Mental health and mental retardation: Cumberland Mountain Community Services Board 40,000$ 40,000$ 39,996$ 4$

Welfare: Social services 5,942,100$ 6,354,100$ 5,607,190$ 746,910$
Comprehensive Services Act 1,714,458 1,934,158 1,599,510 334,648
Appalachian Agency for Senior Citizens 83,475 83,475 82,711 764
Other health and welfare - 800 1,600 (800)

Total welfare 7,740,033$ 8,372,533$ 7,291,011$ 1,081,522$

Total health and welfare 8,120,033$ 8,752,533$ 7,711,507$ 1,041,026$

Education: Other instructional costs:

Contributions to County School Board 7,956,528$ 7,956,528$ 7,288,776$ 667,752$
SVCC Contribution 91,949 91,949 77,169 14,780

Total education 8,048,477$ 8,048,477$ 7,365,945$ 682,532$

Parks, recreation, and cultural: Parks and recreation:

Recreation Park 154,837$ 155,687$ 141,646$ 14,041$
Health and fitness 63,970 67,570 69,054 (1,484)

Total parks and recreation 218,807$ 223,257$ 210,700$ 12,557$

Library: Public Library 321,319$ 328,239$ 332,799$ (4,560)$

Total parks, recreation, and cultural 540,126$ 551,496$ 543,499$ 7,997$

Community development: Planning and community development:

Planning Commission 18,000$ 18,000$ 16,275$ 1,725$
Community Development 36,050 36,050 33,075 2,975
Industrial Development 510,500 510,500 480,823 29,677
PSA Contributions 222,985 222,985 244,853 (21,868)
Cumberland Plateau 35,000 35,000 35,000 -
Regional Housing - 550 550 -
Highway Safety Commission 4,200 4,200 3,500 700
Canneries 30,000 45,800 45,330 470

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County of Russell, Virginia Schedule of Expenditures - Budget and Actual Governmental Funds For the Year Ended June 30, 2019

Schedule 2 Page 2 of 4

Variance with

Final Budget Original Final Positive Fund, Function, Activity and Elemé Budget Budget Actual Negative General Fund: (Continued) Public safety: (Continued) Other protection: (Continued) Emergency Services S 147625 $ 147625 $117,278 $30,349 ‘Animal Controt 38,231 69,231 116,790, (47’359) Total other protection S77 190_$—802,690$—755,132_S 47.558 ‘Total public safety $6,048,010 $ 7,331,510 $ 7,267,404 $64,106 Public works: Sanitation and waste removal: Landfit S 1,704,465 $ 1,807,465 $ 1,716,128 § 91,337 Litter Coordinator : : 75,856 (75,856) Total sanitation and waste removal STORMS $1,807 MSS 1791,984 S154 Maintenance of general buildings and grounds: General properties $924,770 $ 924970 $ 999,486 § 25,484 ‘otal public works $2,629,235 $ 2,732,435 $2,691,470 § 40,965 Health and wettare: Health: Health Department $340,000 $ 340,000 $ 380,500 $ (40,500) ‘Mental health and mental retardation ‘Cumberland Mountain Community Services Boaré S 40,000 $ 40,000 $ 39,99 _§ 4 Weltare: Social services S$ 5,942,100 $ 6,354,100 $ 5,607,190 § 746,910 Comprehensive Services Act 1714458 1,934,158 1,599,510 334,648 ‘Appalachian Agency for Senior Citizens 83,475 83,475 2.711 764 (Other health and welfare : ‘300 4,600 (00) Total welfare STAG OSS BIASES _S—7TH,ON $1,081,522 Total health and welfare S 8,120,033 $ 8,752,533 $7,711,507 $ 1,041,026 Education: (Other instructional costs: Contributions to County School Board S 7,956,528 $ 7,956,528 $ 7,288,776 § 667,752 ‘SVCC Contribution 91,949 91,949 77,169, 14,780 Total education 38048, a77 $6,048,477 $7,365,945 5 082,532 Parks, recreation, and cultural: Parks and recreation: Recreation Park S 154,837 $155,687 $141,646 $14,041 Health and fitness 63,970 67,570 69,054 (1.484) Total parks and recreation 3 218.807 $203,257 $210,700 § 12,557 brary Public Library S 321,319 $328,239 $332,799 § (4,560) Total parks, recreation, and cultural S 540,126 $ 551496 $ 583.499 $7,997 Community development: Planning and community development: Planning Commission $18,000 $ 18,000 $16,275 § 1,75, Community Development 36,050 36,050 33,075, 2,975 Industrial Development 510,500 510,500 480,823 29,677 PSA Contributions 222,985 222,985 244,853 (21,868) Cumberland Plateau 35,000 35,000, 35,000, ~ Regional Housing : 550 550 : Highway Safety Commission 4200 4200 3,500 700 Canneries 30,000 45,800 45,330 470

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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, 2019

Fund, Function, Activity and Element

General Fund: (Continued) Community development: (Continued)

Planning and community development: (Continued) Tourism 6,000 6,000 4,408 1,592

Total planning and community development 862,735$ 879,085$ 863,814$ 15,271$

Environmental management: Soil and Water Conservation 33,233$ 33,243$ 33,236$ 7$

Cooperative extension program: VPI Extension 71,176$ 71,176$ 62,408$ 8,768$

Total community development 967,144$ 983,504$ 959,458$ 24,046$

Nondepartmental: Nondepartmental 252,000$ 563,000$ 421,793$ 141,207$

Capital projects: Other capital projects -$ 288,400$ 283,529$ 4,871$

Total capital projects -$ 288,400$ 283,529$ 4,871$

Debt service: Principal payments 1,392,627$ 1,392,627$ 1,517,548$ (124,921)$
Interest Expense 359,493 359,493 549,292 (189,799)

Total debt service 1,752,120$ 1,752,120$ 2,066,840$ (314,720)$

Total General Fund 32,498,322$ 35,771,252$ 34,145,628$ 1,625,624$

Special Revenue Funds: Coal Road Fund: Public Works:

Maintenance of highways, streets, bridges and sidewalks: Maintenance of highways, streets, bridges and sidewalks 125,000$ 125,000$ -$ 125,000$
Virginia coalfield 25,000 81,850 202,043 (120,193)

Total Public Works 150,000$ 206,850$ 202,043$ 4,807$

Total Coal Road Fund 150,000$ 206,850$ 202,043$ 4,807$

Workforce Investment Board Fund: Health and Welfare:

Welfare: Workforce Investment 2,835,083$ 2,835,083$ 591,222$ 2,243,861$

Total Primary Government 35,483,405$ 38,813,185$ 34,938,893$ 3,874,292$

Discretely Presented Component Unit - School Board: School Operating Fund: Education:

Administration of schools: Administration and health services 1,934,012$ 1,934,012$ 1,893,998$ 40,014$

Instruction costs: Instructional costs 31,788,663$ 31,788,663$ 31,716,365$ 72,298$
Technology 872,175 872,175 779,333 92,842

Total instruction costs 32,660,838$ 32,660,838$ 32,495,698$ 165,140$

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County of Russell, Virginia

Schedule of Expenditures - Budget and Actual Governmental Funds

For the Year Ended June 30, 2019

Schedule 2 Page 3 of 4

Fund, Function, Activity and Elemé

Community development: (Continued Planning and community development: (Continued, Tourism Total planning and community development

Environmental management: Soll and Water Conservation

Cooperative extension program: ‘VP Extension

Total community development

Nondepartmental: Nondepartmental

Capital projects: Other capital projects Total capital projects

Debt service: Principal payments Interest Expense

Total debt service

Total General Fund

‘Special Revenue Funds: Coal Road Fun: Publle Works: Maintenance of highways, streets, bridges and sidewalks: Maintenance of highways, streets, bridges and sidewalks Virginia coalfield “Total Public Works

Total Coal Road Fund

Workforce Investment Board Fur Health and Welfare: Welfare: Workforce Investment

Total Primary Government

Discretely Presented Component Unit - School Board: ‘School Operating Fund: Eeucation: ‘Administration of choos: ‘Administration and health services

Instruction costs: Instructional costs Technology

Total instruction costs

-140-

Variance with

Final Budget Original Final Positive Budget Budget Actual Negative

6,000, 6,000, 4,408 4,592

SW, 735 $879,085 wage S157

SB $28 33236 $ 7

S mim $1176 2.408 $8,768

S 967,144 $ 983,504 959,458 $24,096

$252,000 $ 563,000 421,793 § 141,207

$ $288,400 283,599 § 4.871

3 ‘S286, 400 7635798 4.871

S 1,392,627 $1,392,627 $ 1,517,548 $ (124,921)

359,493, 359,493 549,292 (189,799)

31,752,120 $1,752,120 7,066,880_$ (14.720)

$32,498,322$ 35,771,252$ 34,145,628$ 1,625,624

$125,000 $ 125,000 $125,000

25,000 81,850 202,083 (120,193)

S_150,000 $206,850 700,083 S 4.807

S$ 150,000_$ 206,850 202,083 § 4,807

S__ 2,835,083_$ _ 2,835,083 591,222 § 2,243,861

$35,483,405 _$ 38,813,185$ 34,938,893§ _ 3,874,292

S$ 1,934012 $ 1,934012 $1,893,998 § 40,014

S$ 31,788,663 $ 31,788,663 $ 31,716,365 § 72,298

872,175. 872,175 779,333 92,842

37,660,838 $37,660,838 $37,495,098 $165,140

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, 2019

Fund, Function, Activity and Element

Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Education: (Continued)

Operating costs: Pupil transportation 2,887,406$ 2,887,406$ 2,479,120$ 408,286$
Operation and maintenance of school plant 4,507,671 4,507,671 4,275,896 231,775
Food service and non-instructional 1,661,665 1,661,665 2,002,816 (341,151)

Total operating costs 9,056,742$ 9,056,742$ 8,757,832$ 298,910$

Total education 43,651,592$ 43,651,592$ 43,147,528$ 504,064$

Total School Operating Fund 43,651,592$ 43,651,592$ 43,147,528$ 504,064$

Total Discretely Presented Component Unit - School Board 43,651,592$ 43,651,592$ 43,147,528$ 504,064$

-141-

County of Russell, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 4 of 4 Governmental Funds For the Year Ended June 30, 2019

Variance with

Final Budget Original Final Positive Fund, Function, Activity and Elemé Budget Budget Actual Negative Discretely Presented Component Unit - School Board: (Continued) ‘School Operating Fund: (Continued) Education: (Continued) Operating costs: Pupil transportation S 2,887,406 $ 2,887,406 $ 2,479,120 § 408,286 ‘Operation and maintenance of schoot plant 407,671 4,507,671 4,275,896 23,775 Food service and non-instructional 1,661,665 1,661,665 2,002,816, (941,151) ‘Total operating costs 39,056,742 $9,056,782 $ 6.757.832 298,910 Total education $43,651,592 $43,651,592 $43,147,528 § 504,064 ‘Tota School Operating Fund S_43,651,592_$ 43,651,592$ 43,147,528 § 504,064 Total Discretely Presented Component Unit - School Boaré S_43,651,592$ 43,651,592$ 43,147,528 _§ 504,064

141-

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-145-

County of Russell, Virginia General Governmental Revenues by Source (1) Last Ten Fiscal Years

Table 4

Revenue from the

General Other Fines Use of Charges

Fiscal Property Local ‘and Money and for Recovered Year Taxes Taxes (3) Licenses __Forfeitures___Property Services Miscellaneous ___ Costs.

Total

2018-19 $15,901,393 $3,250,496 $43,183 $13,545 § 68,668

32,009

30,258

40,342

281,848 § 720,008 $446,681 S$ 259,642 710,045 534,953 186,397 684,981 342,528 237 676,644 126,624 251,962 716,757 472339 3521852 307,398 39,878 352,993 65,238, 394,657 73514 416,883 74.279 293,467

46,905,798 46,735,222 46,597,608 44,977,461 44,426,079

43,856,378

$69,803,686 69,637,717 70,226,034

65,967,723

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-146-

146-

County of Russell, Virginia Property Tax Levies and Collections Last Ten Fiscal Years

Table 5

Fiscal Year

Total Tax Levy (1)

Current Tax

Collections (1)

Percent Delinquent

of Levy Tax

Collected

Collections (1)

Total Tax Collections

Percent of Total Tax Collections to Tax Levy

Percent of Delinquent Taxes to

Outstanding

Delinquent Taxes (1)

Tax Levy

2018-19 $ 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10

18,755,991 17,975,777 18,121,006 17,361,249 17,704,326 17,616,878 16,328,495, 14,681,089 14,682,949 14,169,807

15,878,451 16,002,677 16,441,108 14,744,908 15,716,165, 16,022,072 14,812,738 13,185,991 13,329,182 13,038,906

(1) Exclusive of penalties and interest.

84.66% $ 89.02% 90.73% 84.93% 88.77% 90.95% 90.72% 89.82% 90.78% 92.02%

1,063,006 1,377,820 1,946,062 1,312,236 994,555 895,532 953,671 723,190 1,330,697 886,480

16,941,457 17,380,497 18,387,170 16,057,144 16,710,720 16,917,604 15,766,409 13,909,181 14,659,879 13,925,386

90.33% $ 96.69% 101.47% 92.49% 94.39% 96.03% 96.56% 94.74% 99.84% 98.28%

6,126,347 4,476,207 3,734,590 4,096,565, 3,823,404 3,914,585 4,786,523 4,693,121 3,847,456 3,624,318

32.66% 24.90% 20.61% 23.60% 21.60% 22.22% 29.31% 31.97% 26.20% 25.58%

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-147-

147-

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

2018-19 $ 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10

1,425,907,354 $ 1,437,419, 342, 1,424,285,595, 1,435,763,539 1,426,948,990 1,420,301,334 1,323,141,655, 4,214,673,535 4,197,720,260 4,181,352,276

340,126,676 $ 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

54,399,602 $ 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

(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.

5,701,488 $ 21,270,790 $ 251,848,360 $

5,992,268 5,716,770 5,876,008 6,084,205 6,061,014 5,631,601 5,340,902 5,136,529 5,402,115

20,380,636 20,726,176 21,377,908 21,500,580 21,820,581 23,486,868 23,401,571 23,320,148 22,864,821

288,824,827 265,575,303 243,897,231 240,244,298 315,700,293 230,027,520 269,503,982 326,871,285, 253,750,196

2,099,254,270 2,130,856, 787 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

Table 7

Fiscal Real Personal Machinery Merchant’s Mobile Year Estate (2) Property & Tools Capital Homes

2018-19 $ 0.63 $ 1.95 $ 1.65 $ 0.65 $ 0.63
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

(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

-148-

County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Table 7

Fiscal Real Personal Machinery Merchant’s Mobile Year Estate (2) Property & Tools Capital Homes 2018-19 0.63 $ 1.95 $ 1.65 0.65 0.63 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

(1) Per $100 of assessed value. (2) 2nd half due December/1st half due June of fiscal year.

148-

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

2018-19 28,897 2,099,254$ 4,975,292$ 4,975,292$ 0.24% 172$
2017-18 28,897 2,130,857 5,953,218 5,953,218 0.28% 206
2016-17 28,897 2,100,993 6,906,780 6,906,780 0.33% 239
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

(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

-149-

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 2018-19 28,897 $ 2,099,254 $ 4,975,292 § 4,975,292 0.24% $ 172 2017-18 28,897 2,130,857 5,953,218 5,953,218 0.28% 206 2016-17 28,897 2,100,993 6,906,780 6,906,780 0.33% 29 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 4,871,111 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

(1) Bureau of the Census.

(2) Real property assessed at 100% of the fair market value.

(G) 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.

-149-

Table 9

Ratio of Total Debt Service

Total General to General Fiscal Debt Governmental Governmental Year Service Expenditures Expenditures

2018-19 2,066,840$ 70,514,116$ 2.93% 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%

(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

-150-

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 2018-19 $ 2,066,840 $ 70,514,116 2.93% 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%

(1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board.

-150-

COMPLIANCE SECTION

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards

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 unit–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, 2019, 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 December 31, 2019.

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 [2019-001].

-151-

RoBINSON, FARMER, Cox Associates, PLLC

Certified Public Accountants

CPAs | Consuttants

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 unit-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, 2019, 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 December 31, 2019.

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.

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 [2019-001].

151°

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 December 31, 2019

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Compliance and Other Matters

County of Russell, Virginia’s Response to Findings

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.

Polis, Somes, ba Casysitee

Blacksburg, Virginia December 31, 2019

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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, 2019. County of Russell, Virginia’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s 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, 2019.

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RoBINSON, FARMER, Cox Associates, PLLC

Certified Public Accountants

CPAs | ConsutTants

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.

Auditor’s 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.

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, 2019.

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Other Matters

The results of our auditing procedures disclosed an instance of noncompliance which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying schedule of findings and questioned costs as item 2019-002. Our opinion on each major federal program is not modified with respect to these matters.

County of Russell, Virginia’s response to the noncompliance finding 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 compliance and, accordingly, we express no opinion on the response.

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 and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify a certain deficiency in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as item 2019-002, that we consider to be a material weakness.

County of Russell, Virginia’s response to the internal control over compliance finding 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 compliance and, accordingly, we express no opinion on the response.

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Other Matters

Report on Internal Control over Compliance

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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 December 31, 2019

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Probar, Gane’, bo Cssevit

Blacksburg, Virginia December 31, 2019

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Page 1 of 2

Pass-through Federal Entity

Federal Grantor/State Pass - Through Grantor/ CFDA Identifying Federal Expenditures to Program Cluster or Title Number Number Expenditures Subrecipients

Department of Health and Human Services: Pass Through Payments: Department of Social Services: Promoting Safe and Stable Families 93.556 0950117, 0950118 22,829$ -$
TANF Cluster

  Temporary Assistance for Needy Families 93.558 0400118, 0400119 346,047             -                        
  Refugee and Entrant Assistance - State Administered Programs 93.566 0500118, 0500119 247                    -                        
  Low-Income Home Energy Assistance 93.568 0600418, 0600419 57,135               -                        
  CCDF Cluster

  Child Care Mandatory and Matching Funds of the 93.596 0760118, 0760119 62,635               -                        
      Child Care and Development Fund

  Chafee Education and Training Vouchers 93.599 9160118 885                    -                        
  Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900118 426                    -                        
  Foster Care - Title IV-E 93.658 1100118, 1100119 585,463             -                        
  Adoption Assistance 93.659 1120118, 1120119 623,735             -                        
  Social Services Block Grant 93.667 1000118, 1000119 400,048             -                        
  Chafee Foster Care Independence Program 93.674 9150118 7,156                 -                        
  Children's Health Insurance Program 93.767 0540118, 0540119 9,730                 -                        
  Medicaid Cluster

  Medical Assistance Program 93.778 1200118, 1200119 454,727             -

Total Department of Health and Human Services 2,571,063$ -$

Department of Agriculture: Pass Through Payments: Child Nutrition Cluster: Department of Agriculture: Food Distribution-Schools (Note 3) 10.555 Not available 104,981$

    Department of Education:
      National School Lunch Program 10.555 40254 938,269      1,043,250$   
      School Breakfast Program 10.553 40253 350,913        
      Summer Food Service Program for Children 10.559 60302, 60303 68,639          

Total Child Nutrition Cluster 1,462,802$         -                        

    Department of Education:
      Child and Adult Care Food Program 10.558 70027, 70028 265,988             
      Child Nutrition Discretionary Grants Limited Availability 10.579 86804 6,211                 -                        

Department of Social Services:
  SNAP Cluster
      State Administrative Matching Grants for the Supplemental 10.561 0010118, 0010119
          Nutrition Assistance Program 0040118, 0040119 400,050             -                        

Water and Waste Disposal Systems for Rural Communities 10.760 Not available 50,000               -

Total Department of Agriculture 2,185,051$ -$

Department of Justice: Direct Payments: Equitable Sharing Program 16.922 Not applicable 193,516$ -$
To Units of Local Government

Pass Through Payments: Department of Criminal Justice Services: Violence Against Women Formula Grants 16.588 Not available 24,881$ -$
Edward Byrne Memorial Justice Assistance Grant Program 16.738 Not available 46,615 -
Crime Victim Assistance 16.575 Not available 32,235 -

Total Department of Justice 297,247$ -$

Department of Transportation: Pass Through Payments: Department of Motor Vehicles: Alcohol Open Container Requirements 20.607 Not available 908$ -$

Department of Education: Pass Through Payments: Department of Education: Adult Education - Basic Grants to States 84.002 42801, 61111 281,271$ -$
Title I: Grants to Local Educational Agencies 84.010 42901 1,284,286 -
Special Education Cluster:

  Special Education - Grants to States 84.027 43071 1,013,139$   -                        
  Special Education - Preschool Grants 84.173 62521 32,035          -                        

  Total Special Education Cluster 1,045,174           
  Career and Technical Education:  Basic Grants to States 84.048 61095, 86650 735                    -                        
  Twenty-First Century Community Learning Centers 84.287 60565 826,745             -                        
  Rural Education 84.358 43481 79,070               -                        
  Supporting Effective Instruction State Grants 
        (formerly Improving Teacher Quality State Grants) 84.367 61480 199,540             -

Student Support and Academic Enrichment Program 84.424 60281 21,140 -

Total Department of Education 3,737,961$ -$

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2019

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Page 2 of 2

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2019

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, 1-17-02 111,271$ 67,980$
WIOA Youth Activities 17.259 LWA 1-16-02, 1-17-02 145,697 81,005
WIOA Dislocated Worker Formula Grants 17.278 LWA 1-16-02, 1-17-02 100,550 18,311
Workforce Investment Act Cluster Total 357,518$ 167,296$

      WIOA National Dislocated Worker Grants/WIA National Emergency Grants 17.277 Not available 28,873               -                        
      H-1B Job Training Grants 17.268 Not available 38,031               -

Total Department of Labor 424,422$ 167,296$

Appalachian Regional Commission: Pass Through Payments: Virginia Community College System: Appalachian Area Development 23.002 Not available 11,985$ -$

Department of Homeland Security: Pass Through Payments: Department of Emergency Management: Emergency Management Performance Grants 97.042 Not available 7,500$ -
Homeland Security Grant Program 97.067 Not available 2,444 -

Total Department of Homeland Security 9,944$ -

Total Expenditures of Federal Awards 9,238,581$         167,296$

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 3,396,243$
Less: Equitable sharing program difference (67,031)
Workforce Investment Board Fund 436,407

Total primary government 3,765,619$         

Component Unit School Board:
  School Operating Fund 5,472,962$

Total expenditures of federal awards per the basic financial statements 9,238,581$

(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, 2019, 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, 2019. 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.

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Page 1 of 3

Section I - Summary of Auditors’ Results

Financial Statements

Type of auditors’ report issued: Unmodified: governmental activities; business-type activities; each major fund; discretely presented component unit-School Board; and aggregate remaining fund information

Disclaimer: discretely presented component units- IDA and Russell County PSA

Internal control over financial reporting: Material weakness(es) identified? Yes

Significant deficiency(ies) identified? No

Noncompliance material to financial statements noted? No

Federal Awards

Internal control over major programs: Material weakness(es) identified? Yes

Significant deficiency(ies) identified? No

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)? Yes

Identification of major programs:

CFDA # Name of Federal Program or Cluster

10.553/10.555/10.559 Child Nutrition Cluster 84.010 Title I Grants to Local Educational Agencies

84.027/84.173 Special Education Cluster

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, 2019

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Page 1 of 3

County of Russell, Virginia

Schedule of Findings and Questioned Costs For The Year Ended June 30, 2019

Section | - Summary of Auditors’ Results

inancial Statements

‘Type of auditors’ report issued: Unmodified: governmental activities; business-type activities; each major fund; discretely presented component unit-School Board; and aggregate remaining fund information

Disclaimer: discretely presented component units- IDA and Russell County PSA

Internal control over financial reporting:

Material weakness(es) identified? Yes Significant deficiency(ies) identified? No Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weakness(es) identified? Yes Significant deficiency(ies) identified? No ‘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)? Yes

Identification of major programs:

CFDA # Name of Federal Program or Cluster 10.553/10.555/10.559 Child Nutrition Cluster 84.010 Title | Grants to Local Educational Agencies 84.027/84.173 Special Education Cluster Dollar threshold used to distinguish between Type A and Type B programs: $750,000 ‘Auditee qualified as low-risk auditee? No

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Page 2 of 3

Section II - Financial Statement Findings

2019-001

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP).

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.

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 2019 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

The County Administrator will review the auditors’ proposed audit adjustments for 2019 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.

County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) For The Year Ended June 30, 2019

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County of Russell, Virginia

Page 2 of 3

Schedule of Findings and Questioned Costs (Continued)

For The Year Ended June 30, 2019

Section Il - Financial Statement Findings

2019-001

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

Identification of a material adjustment to the financial statements that was not detected by the entitys internal controls indicates that a material weakness exists.

‘The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP).

‘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 2019 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

The County Administrator will review the auditors’ proposed audit adjustments. for 2019 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.

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Page 3 of 3

Section III - Federal Award Findings and Questioned Costs

2019-002

Program Titles:

CFDA Numbers:

Pass-through Entities:

Compliance Requirement:

Finding Type:

Criteria:

Condition:

Context:

Effect:

Cause:

Recommendation:

Views of Responsible Officials and Planned

Corrective Action:

Section IV - Status of Prior Audit Findings and Questioned Costs

Amounts per free and reduced lunch applications are keyed into a system that determines whether individual’s qualify for assistance based on income levels and family size information provided.

Free and reduced lunch applications should be entered in the system exactly as the amounts are shown on the application.

Management should establish a system to review amounts keyed in the system to ensure that totals agree to underlying applications.

Applications were not appropriately keyed in the system. This resulted in two applications being denied when they should have been reduced. Also, one application was not marked as to whether it was free, reduced, or denied.

Schedule of Findings and Questioned Costs (Continued) For The Year Ended June 30, 2019

County of Russell, Virginia

Finding 2018-001 was repeated in the current year as 2019-001.

The School Board does not have sufficient controls in place for review of free and reduced applications.

Management acknowledges that there were errors in the input of information on the applications and is working to establish a process to ensure that this is corrected going forward.

A review of 25 free and reduced lunch applications resulted in 3 individuals being inappropriately classified as denied/reduced/free in the system due to a clerical error in entering the amounts in the system.

Child Nutrition Cluster

10.553/10.555/10.559

Departments of Agriculture and Education

Eligibility

Noncompliance and Material Weakness

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Page 3 of 3

County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) For The Year Ended June 30, 2019

Section Ill - Federal Award Findings and Questioned Costs

2019-002 Program Titles: Child Nutrition Cluster CFDA Numbers: 10.553/10.555/ 10.559 Pass-through Entities: Departments of Agriculture and Education Compliance Requirement: Eligibility Finding Type: Noncompliance and Material Weakness Criteria: Free and reduced lunch applications should be entered in the system exactly

as the amounts are shown on the application.

Condition: A review of 25 free and reduced lunch applications resulted in 3 individuals being inappropriately classified as denied/reduced/free in the system due to a clerical error in entering the amounts in the system.

Context: ‘Amounts per free and reduced lunch applications are keyed into a system that determines whether individual’s qualify for assistance based on income levels and family size information provided.

Effect: Applications were not appropriately keyed in the system. This resulted in two applications being denied when they should have been reduced. Also, one application was not marked as to whether it was free, reduced, or denied.

Cause: The School Board does not have sufficient controls in place for review of free and reduced applications.

Recommendation: ‘Management should establish a system to review amounts keyed in the system to ensure that totals agree to underlying applications.

Views of Responsible ‘Management acknowledges that there were errors in the input of information Officials and Planned on the applications and is working to establish a process to ensure that this is Corrective Action: corrected going forward.

Section IV - Status of Prior Audit Findings and Questioned Costs

Finding 2018-001 was repeated in the current year as 2019-001.

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