2020-Audit

2020-Audit

Document Date: January 1, 2020 Document: 2020-Audit.pdf

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COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2020

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2020

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS

INTRODUCTORY SECTION

Page List of Elected and Appointed Officials … 1

FINANCIAL SECTION

Independent Auditors’ Report … 2-4

Exhibit Page Basic Financial Statements:

Government-wide Financial Statements: Statement of Net Position … 1 5-6 Statement of Activities … 2 7

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

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

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

Reconciliation of the Statement of Revenues, Expenditures, and Changes

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

Statement of Net Position – Proprietary Funds … 7 12

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

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

Notes to the Financial Statements … 16-102

Required Supplementary Information:

Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual General Fund … 11 103 Special Revenue Fund – Coal Road Fund … 12 104 Special Revenue Fund – Workforce Investment Board Fund … 13 105 Special Revenue Fund – CARES Fund … 14 106 Schedule of Employer’s Proportionate Share of Net Pension Liability … 15 107 Schedule of Changes in Net Pension Liability and Related Ratios – Component Unit School Board (nonprofessional) … 16 108 Schedule of Employer Contributions – Pension Plans … 17 109 Notes to Required Supplementary Information – Pension Plans … 18 110 Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios –
Primary Government … 19 111 Notes to Required Supplementary Information – County OPEB … 20 112

COouNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS

INTRODUCTORY SECTION Page List of Elected and Appointed Officials… 1 FINANCIAL SECTION Independent Auditors’ Report … 24 Exhibit Page Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position . 1 56 Statement of Activities 2 7 Fund Financial 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 4 Statement of Net Position - Proprietary Funds … 7 12 Statement of Revenues, Expenses, and Changes in Net Position -

Proprietary Funds … 8 2B Statement of Cash Flows - Proprietary Funds. 9 14 Statement of Fiduciary Net Position - Fiduciary Funds 1015

Notes to the Financial Statements … 16-102 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund . 11 103 Special Revenue Fund - Coal Road Fund 12 104 Special Revenue Fund - Workforce Investment Board Fund. 13 105 Special Revenue Fund - CARES Fund … 14 106 Schedule of Employer’s Proportionate Share of Net Pension Liability. 15 107 Schedule of Changes in Net Pension Liability and Related Ratios - Component Unit School Board (nonprofessional) . 16 108 Schedule of Employer Contributions - Pension Plans . 17 109 Notes to Required Supplementary Information - Pension Plans 18 110 Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios Primary Government … 190111 Notes to Required Supplementary Information - County OPEB 20 112

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020

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 … 21 113 Notes to Required Supplementary Information - School OPEB … 22 114 Schedule of Employer’s Share of Net OPEB Liability – Group Life Insurance Plan … 23 115 Schedule of Employer Contributions – Group Life Insurance Plan … 24 116 Notes to Required Supplementary Information – Group Life Insurance Plan … 25 117 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios –
Primary Government – Health Insurance Credit Plan … 26 118 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios –
Component Unit School Board (nonprofessional) – Health Insurance Credit Plan … 27 119 Schedule of Employer Contributions – Health Insurance Credit Plan … 28 120 Notes to Required Supplementary Information – Health Insurance Credit Plan … 29 121 Schedule of School Board’s Share of Net OPEB Liability – Teacher Employee Health Insurance Credit Plan … 30 122 Schedule of Employer Contributions – Teacher Employee Health Insurance Credit Plan … 31 123 Notes to Required Supplementary Information – Teacher Employee Health
Insurance Credit Plan … 32 124 Schedule of Employer’s Share of Net LODA OPEB Liability … 33 125 Schedule of Employer Contribution - LODA … 34 126 Notes to Required Supplementary Information - LODA… 35 127

Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities – Agency Funds … 36 128 Discretely Presented Component Unit – School Board:

Balance Sheet – Governmental Funds … 37 129 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds … 38 130 Schedule of Revenues, Expenditures, and Changes in Fund Balances –

Budget and Actual … 39 131

Schedule Page Supporting Schedules:

Schedule of Revenues – Budget and Actual - Governmental Funds … 1 132-136

Schedule of Expenditures – Budget and Actual - Governmental Funds … 2 137-140

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Required Supplementary Information:

Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios -

Component Unit School Board … 2 113 Notes to Required Supplementary Information - School OPEB . Ra 114 Schedule of Employer’s Share of Net OPEB Liability - Group Life Insurance Plan. 23 115 Schedule of Employer Contributions - Group Life Insurance Plan … 24 116 Notes to Required Supplementary Information - Group Life Insurance Plan 2 117 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios -

Primary Government - Health Insurance Credit Plan … 2 118 Schedule of Changes in Employer’s Net OPEB Liability and Related Ratios -

Component Unit School Board (nonprofessional) - Health Insurance Credit Plan … 27 119 Schedule of Employer Contributions - Health Insurance Credit Plan … 28 120 Notes to Required Supplementary Information - Health Insurance Credit Plan 2 121 Schedule of School Board’s Share of Net OPEB Liability - Teacher Employee Health

Insurance Credit Plan. 30 122 Schedule of Employer Contributions - Teacher Employee Health Insurance Credit Plan… 31 123 Notes to Required Supplementary Information - Teacher Employee Health

Insurance Credit Plan. 32124 Schedule of Employer’s Share of Net LODA OPEB Liability 330125 Schedule of Employer Contribution - LODA … 34126 Notes to Required Supplementary Information - LODA… 35127 Other Supplementary Information:

Combined Statement of Changes in Assets and Liabilities - Agency Funds … 36128 Discretely Presented Component Unit - School Board: Balance Sheet - Governmental Funds. 37,129 Statement of Revenues, Expenditures, and Changes in Fund Balances ~ Governmental Funds … 38130 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual . 39131 Schedule Page Supporting Schedules: Schedule of Revenues - Budget and Actual - Governmental Funds… 1132-136 Schedule of Expenditures - Budget and Actual - Governmental Funds 2137-140

COUNTY OF RUSSELL, VIRGINIA

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Other Statistical Information:

Table Page Government-wide Information: Government-Wide Expenses by Function … 1 141 Government-Wide Revenues … 2 142

Fund Information:

General Governmental Expenditures by Function … 3 143 General Governmental Revenues by Source … 4 144 Property Tax Levies and Collections … 5 145

Assessed Value of Taxable Property … 6 146 Property Tax Rates … 7 147 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita … 8 148 Ratio of Annual Debt Service Expenditures for General Bonded Debt to
Total General Governmental Expenditures … 9 149

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 … 150-151

Independent Auditors’ Report on Compliance for Each Major Program and on Internal
Control over Compliance Required by the Uniform Guidance … 152-153

Schedule of Expenditures of Federal Awards … 154-155 Schedule of Findings and Questioned Costs … 156-157 Summary Schedule of Prior Audit Findings … 158

COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS (CONTINUED)

FINANCIAL SECTION (CONTINUED)

Other Statistical Information:

Table Page Government-wide Information: Government-Wide Expenses by Function . 1 141 Government-Wide Revenues … 2 142 Fund Information: General Governmental Expenditures by Function . 3 143 General Governmental Revenues by Source. 4 144 Property Tax Levies and Collections. 5 145 Assessed Value of Taxable Property 6 146 Property Tax Rates … 7 147 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita… 8 148 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures. 9 149 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 150-151 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance … 152-153 Schedule of Expenditures of Federal Awards 154-155 Schedule of Findings and Questioned Costs 156-157 Summary Schedule of Prior Audit Findings 158

INTRODUCTORY SECTION

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS

Rebecca Dye, Chairman Steve Breeding, Vice Chairman Oris Christian David Eaton Lou Wallace Carl Rhea Tim Lovelace

COUNTY SCHOOL BOARD

Cynthia Compton, Chairman Bob Gibson, Vice Chairman Tim Ball Wayne Bostic Linda Garrett
Kip Parsons Alex Zachwieja, Jr.

SOCIAL SERVICES BOARD

Brain Ferguson, Chairman Rebecca Dye, Vice Chairman Andrew Hensley Sharon Owens Donnie Ramey

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

COUNTY OF RUSSELL, VIRGINIA

BOARD OF SUPERVISORS Rebecca Dye, Chairman

Steve Breeding, Vice Chairman Oris Christian David Eaton Lou Wallace Carl Rhea Tim Lovelace

COUNTY SCHOOL BOARD

Cynthia Compton, Chairman

Bob Gibson, Vice Chairman Tim Ball Wayne Bostic Linda Garrett Kip Parsons Alex Zachwieja, Jr.

SOCIAL SERVICES BOARD

Brain Ferguson, Chairman Rebecca Dye, Vice Chairman Andrew Hensley Sharon Owens Donnie Ramey

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, the discretely presented component unit- IDA, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2020, 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 did not audit the financial statements of the Russell County Public Service Authority (PSA), which represents 39% and 9%, respectively, of the assets and revenues of the discretely presented component units. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it related to the amounts included for the PSA is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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.

RoBiNSON, FARMER, Cox AssociAtes, PLLC

Certified Public Accountants

CPAs | ConsuLTants

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

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

Opinions

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit-School Board, the discretely presented component unit-IDA, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of June 30, 2020, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the budgetary comparison information and schedules related to pension and OPEB funding on pages 103-106 and 107-127 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

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

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Russell, Virginia’s basic financial statements. The introductory section, other supplementary information, and other statistical information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.

The other supplementary information and the schedule of 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

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

Opinions

Other Matters Required Supplementary Information

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

-3-

records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the other auditors, the other supplementary information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole.

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

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 16, 2021, on our consideration of the County of Russell, Virginia’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of County of Russell, Virginia’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County of Russell, Virginia’s internal control over financial reporting and compliance.

Blacksburg, Virginia March 16, 2021

Other Reporting Required by Government Auditing Standards

Preluis, Grs, lee dseute

Blacksburg, Virginia March 16, 2021

Basic Financial Statements

Exhibit 1 Page 1 of 2

Governmental Business-type Activities Activities Total

ASSETS Cash and cash equivalents 9,415,581$ -$ 9,415,581$
Receivables (net of allowance for uncollectibles):

Taxes receivable 12,450,249 - 12,450,249
Accounts receivable 645,228 13,776 659,004
Grants receivable - - -
Interest receivable - 96 96
Notes receivable - - -
Lease-purchase receivable - current portion - - -

Due from component unit 688,109 - 688,109
Due from other governmental units 1,882,263 - 1,882,263
Internal balances (19,004) 19,004 -
Inventories - - -
Note receivable - net of current portion - - -
Lease purchase receivable - net of current portion - - -
Prepaid items 387,361 - 387,361
Restricted assets:

Cash and cash equivalents 731,015 49,575 780,590
Investments 607 - 607

Noncurrent assets: Net pension asset - - -

Capital assets (net of accumulated depreciation): Land 663,931 - 663,931
Land improvements - - -
Buildings and improvements 14,450,967 - 14,450,967
Machinery and equipment 1,826,901 4,980 1,831,881
Utility plant in service - 2,337,490 2,337,490
Construction in progress - - -

Total assets 43,123,208$ 2,424,921$ 45,548,129$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 1,691,692$ 1,707$ 1,693,399$
OPEB related items 1,052,744 - 1,052,744

Total deferred outflows of resources 2,744,436$ 1,707$ 2,746,143$

LIABILITIES Accounts payable 1,158,858$ 19,004$ 1,177,862$
Accrued liabilities - - -
Customer deposits - - -
Unearned revenue 1,785,474 - 1,785,474
Accrued interest payable 258,148 1,128 259,276
Due to primary government - - -
Long-term liabilities:

Due within one year 1,939,293 25,060 1,964,353
Due in more than one year 21,646,026 541,653 22,187,679

Total liabilities 26,787,799$ 586,845$ 27,374,644$

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes 5,641,966$ -$ 5,641,966$
Pension related items 364,648 18,808 383,456
OPEB related items 312,351 - 312,351

Total deferred inflows of resources 6,318,965$ 18,808$ 6,337,773$

NET POSITION Net investment in capital assets 7,023,983$ 1,786,345$ 8,810,328$
Restricted:

Coal Road 494,246 - 494,246
Workforce Investment Board 10,904 - 10,904
Asset forfeiture funds 306,460 - 306,460
Energy Lease Project 607 - 607
Debt service and bond covenants - 49,575 49,575

Unrestricted (deficit) 4,924,680 (14,945) 4,909,735
Total net position (deficit) 12,760,880$ 1,820,975$ 14,581,855$

Primary Government

County of Russell, Virginia Statement of Net Position

June 30, 2020

Exhibit 1 Page 1 of 2

County of Russel, Virginia ‘Statement of Net Position

‘June 30, 2020

ASSETS Cash and cash equivalents Receivables (nt of allowance for uncollecibies): “Tanesrecefvable ‘Accounts receivable Grants receivable Interest recewabie Notes receable Lease-purchaserecelvable - current portion Due from component unit Due from other governmental units Internal balances Inventories Note receivable «net of current portion Lease purchase receivable - net of current portion Prepaid items Restricted acets Cash and cash equivalents Investments Noncurrent asets Net pension asset Capital assets net of accumulated depreciation Land Land improvements Bulings and improvements Inachinery and equipment Ustity plant inservice Construction in progress “Total assets

DEFERRED OUTFLOWS OF RESOURCES Pension related items (OPEB related stems

‘otal deferred outflows of resources

aBiUmies Accounts payable Decrued bites Customer deposits Unearned revenue ‘cerued interest payable Due to primary government Long-term labile:

‘ue within one year

Due in more than one year

“Total isiities

‘DEFERRED INFLOWS OF RESOURCES Deferred revenue» property taxes Pension related items (OPEB related items

‘otal deferred inflows of resources

NET POSITION Net irvestment in cap Restricted:

Coal Road

Workforce Investment Board

‘Asst forfeiture funds

Energy Lease Project

Debt service and bend covenants Unrestricted (deficit)

‘otal net position (det)

assets

Primary Government

Governmental Business type ‘Activities Activities Total 5 94t5.s81 § Ss 915,581 1,450,249 12,450,249 (45,228 13,776 "659,008 % 96 688,109 689,109 1,882,263 1,882,263, 119,004) 19,004 387,361 387,361 731,015, 49575 780,590 07 a7 663,931 663,901 14,450,967 14,450,967 41,826,901 4,980 1,831,881 2a 2337490 TS aS S$ 1091692 $1707 $1,683,399, 1050744 40s2,744 PAZERA TOTS 27H 16d S 1158858 5 19,008 51,177,862 1,785,474 1.785.474 258,148 118 259,276, 1,939,293 25,060 1,964,353 21,646,026 sa1.653__22:187,679

Se 7a 75S sa ST IT

5S 5,641,966. 5 5 5,641,966 364,648 13.g08 "383,456 3125351 312351, ©318.965 STROSS 6337.73

S$ 7003,983 $1,786,345 $8,810,328, 494,246 494,246 10,904 10/904 306,460 306,460,

‘07 ‘ar 49,575 49,575

4,924,680, (14945) 4,900,735, aso

Exhibit 1 Page 2 of 2

Industrial Russell County Development Public Service

School Board Authority Authority

ASSETS Cash and cash equivalents 1,070,811$ 254,120$ 136,583$
Receivables (net of allowance for uncollectibles):

Taxes receivable - - -
Accounts receivable 1,445 47,237 806,443
Grants receivable - 51,398 318,457
Interest receivable - 134,724 -
Notes receivable - current portion - 14,086 -
Lease-purchase receivable - current portion - 949,303 -

Due from component unit - - -
Due from other governmental units 1,330,844 15,142 -
Internal balances - - -
Inventories - - 49,186
Note receivable - net of current portion - 65,437 -
Lease purchase receivable - net of current portion - 10,809,575 -
Prepaid items 714,780 - -
Restricted assets:

Cash and cash equivalents - - 280,075
Investments - - -

Noncurrent assets: Net pension asset - - 48,517

Capital assets (net of accumulated depreciation): Land 5,628,295 2,439,875 240,411
Land improvements - 221,078 12,681
Buildings and improvements 10,034,612 9,968,772 267,603
Machinery and equipment 1,497,115 38,179 1,788,356
Utility plant in service - - 26,128,899
Construction in progress - 3,846,352 1,414,969

Total assets 20,277,902$ 28,855,278$ 31,492,180$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 6,942,902$ -$ 180,101$
OPEB related items 4,599,687 - 15,347

Total deferred outflows of resources 11,542,589$ -$ 195,448$

LIABILITIES Accounts payable 225,520$ 68,513$ 432,453$
Accrued liabilities 1,115,280 - 22,411
Customer deposits - - 114,471
Unearned revenue - - -
Accrued interest payable - 86,194 15,921
Due to primary government 488,109 200,000 -
Long-term liabilities:

Due within one year 723,616 1,634,563 893,784
Due in more than one year 52,810,107 19,340,480 11,362,251

Total liabilities 55,362,632$ 21,329,750$ 12,841,291$

DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes -$ -$ -$
Pension related items 3,643,112 - 131,355
OPEB related items 1,375,442 - 12,071

Total deferred inflows of resources 5,018,554$ -$ 143,426$

NET POSITION Net investment in capital assets 17,160,022$ 7,270,543$ 17,737,322$
Restricted:

Coal Road - - -
Workforce Investment Board - - -
Asset forfeiture funds - - -
Energy Lease Project - - -
Debt service and bond covenants - - 514,867

Unrestricted (deficit) (45,720,717) 254,985 450,722
Total net position (deficit) (28,560,695)$ 7,525,528$ 18,702,911$

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

County of Russell, Virginia Statement of Net Position

June 30, 2020

Component Units

exhibit 4

Page 2 of 2 ‘County of Russell, Virginia Statement of Net Postion ‘June 30, 2020 Units industrial Russell County Development Public Service

ASSETS Cash and cash equivalents ReceWvables (net of alowance for uncolletbles: “Taxes recenable ‘Accounts receivable Grants receWable Interest eceWvable Notes receivable - current portion Lease-purchase receivable = current portion ue from component unit Due from other governmental units Internal balances inventories Note receivable «net of current portion Lease purchase receivable net of current portion Prepaid items Restricted arte Cash and cash equivalents Investments Noncurrentasets Net pension asset Capital assets (net of accumulated depreciation and Land improvements Buleings and improvements INachinery and equipment Ustity pant inservice Constraction in progress “Total assets

DEFERRED OUTFLOWS OF RESOURCES Pension related items (OPEB related tem

Total deterred outflows of resources

LuaBiLies Accounts payable Accrued tiaiities Castomer deposits ‘Unearned revenue ‘Acerved interest payable ‘ue to primary government Long-term labile:

‘Due within one year

Due in more than one year

“otal abilities

DEFERRED INFLOWS OF RESOURCES Deferred revenue «property taxes Penson related items (OPEB related tems

‘otal deterred inflows of resources

NET Postion Net investment in capital assets Restricted

Coal Road

Workforce investment Board

Asset forfeiture funds

Energy Lease Project

Debt service and bond covenants Unrestricted (dec)

Total net position (fet)

S 1orosi1 $254,120 § 136,583 1465 4na7 806,443, 51,398 318457

Bane

14/086

= 949,308,

1,330,844 15,0 : 29.186

6.07

~10,309/575,

74780

280,075

43517 5,628,295 2,439,875 20,411 221,078 ‘12681 10.034,612 9,968,772 267,603 1.497.115, 38,179 1,788,356, : 26,128,899 3,846,352 414969

SSS TEST, 1

S 6,942,902 § $180,101 14590,687 157 a cr IC S 25520 § 63518 $82,483 1,115,280 mai : naan : 86,196 15921 49,109 200/000,

T3616 1,634,563, 893,784 52,810,107 19,340,480 11,362,251 $35,362,632 $21,309,750_$_12.841.291

s : s 3,603,112 131,355, 4,375,402 ‘zon Ss.018.354 Tae S i7teoor $ 7,270,568 $17,737,302 514,867

wsmorm —2s49es—_o.7ab

‘The accompanying notes to the financial statements are an integral pat ofthis statement.

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exhibit 2

‘The accompanying notes tothe

Expenses

Program Revenues

Net (Expense) Revenue and

‘changes in Net Postion

Operating Charges for Grants and Services Contributions

“activities

Governmental Business-ype

‘Activities

Exhibit 3

Coal Workforce General Road Investment Board CARES Total

ASSETS Cash and cash equivalents 2,991,319$ -$ 10,904$ 1,773,784 4,776,007$
Receivables (net of allowance for uncollectibles):

Taxes receivable 12,450,249 - - - 12,450,249
Accounts receivable 110,171 7,990 - - 118,161

Due from other funds 524,520 65,105 - 148,849 738,474
Due from component unit 688,109 - - - 688,109
Due from other governmental units 1,882,263 - - - 1,882,263
Prepaid items - - - 387,361 387,361
Restricted assets:

Cash and cash equivalents 306,460 424,555 - - 731,015
Investments 607 - - - 607

Total assets 18,953,698$ 497,650$ 10,904$ 2,309,994$ 21,772,246$

LIABILITIES Accounts payable 604,863$ 3,404$ -$ -$ 608,267$
Unearned revenue - - - 1,785,474 1,785,474 Due to other funds 232,958 - - 524,520 757,478

Total liabilities 837,821$ 3,404$ -$ 2,309,994$ 3,151,219$

DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes 12,455,148$ -$ -$ -$ 12,455,148$

FUND BALANCES Nonspendable:

Prepaid items -$ -$ -$ 387,361$ 387,361$
Restricted:

Coal Road - 494,246 - - 494,246
Workforce Investment Board - - 10,904 - 10,904
Asset forfeiture funds 306,460 - - - 306,460
Energy Lease Project 607 - - - 607

Assigned: Sheriff Funds 43,016 - - - 43,016
Library Donations 47,457 - - - 47,457
Law Library 56,839 - - - 56,839
Commonwealth Attorney 506 - - - 506
Housing 12,124 - - - 12,124
Health and Fitness 8,247 - - - 8,247

Unassigned 5,185,473 - - (387,361) 4,798,112
Total fund balances 5,660,729$ 494,246$ 10,904$ -$ 6,165,879$
Total liabilities, deferred inflows of resources, and fund balances 18,953,698$ 497,650$ 10,904$ 2,309,994$ 21,772,246$

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

County of Russell, Virginia Balance Sheet

Governmental Funds June 30, 2020

exhibit 3 County of Russell, Virginia

Balance sheet ‘Governmental Funds “June 30, 2020) oa Workforce Seneral Road investment Board CARES ‘Total ASSETS ‘Cash and cash equivalents 5 2991319 § s 0.904 1,773,784 § 4,776,007 Receivables (net of allowance for uncollectibies) “Taxes recelvable 12,450,209 12,450,249, Accounts receivable 7,990 : ‘8.161 Due trom other funds 65,105 148,849 738,474 Due from component unit : 38,109 Due from other governmental units 1,882,263 Prepaid items : 387,364 387,361 Restricted assets: ‘Cash and cash equivalents 306,460 424,555 : 731,015, Investments ‘o7 - 607, Total assets ELE UAL O90 S509, S TTT Luasiumies ‘Accounts payable 5 4a S$ 3404S s Ss _ 608,267 UUnearned revenue 705,474 1,785,474 Due to other funds 232,958 524,520 757,478 Total iabiities ‘721 S299 SH DEFERRED INFLOWS OF RESOURCES ‘Unavailable revenue - property taxes S$ 12455,148_§ s s $12,455,148 FUND BALANCES Nonspendable: Prepaid items s s s S 37361 $387,361 Restrict: Coal Road 494,46 494246 Workforce investment Board 10,904 : 10,904 Asset forfeiture funds 306,460 : 306,460 Energy Lease Project ‘or : or Assigned: ‘Sherif Funds 48,016 . 8016 Library Donations 457 457 Law Library 56,839 : 56.839 ‘Commenwealth Attorney 506 : 505, Housing 12,124 : 2124 Health and Fitness 8247 8247 Unassigned 5,185,473, . (987,361) 4,798,112 ‘otal fund balances 3 5.00075 ETS 70,9045 5 6:165.878 Total liaittie, deferred inflows of resources, and fund balances 7, 953,698_3__497,650_5 10,9043 Eso PATI, 2as

“The accompanying notes tothe financial statements are an integral part ofthis statement.

Exhibit 4

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

Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds 6,165,879$

Land 663,931$
Buildings and improvements 14,450,967
Machinery and equipment 1,826,901 16,941,799

Unavailable revenue - property taxes 6,813,182

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

Pension related items 1,691,692$
OPEB related items 1,052,744 2,744,436

4,616,050

Bonds and literary loans (7,845,360)$
Capital leases (5,561,147)
Unamortized premium (148,883)
Accrued interest payable (258,148)
Landfill accrued closure and postclosure liability (298,499)
Net OPEB liabilities (3,205,369)
Compensated absences (613,616)
Net pension liability (5,912,445) (23,843,467)

Pension related items (364,648)$
OPEB related items (312,351) (676,999)

Net position of governmental activities 12,760,880$

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

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

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

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

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

To the Statement of Net Position June 30, 2020

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.

County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2020

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

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

Land Buildings and improvements ‘Machinery and equipment

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

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

Pension related items

‘OPEB related items

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,

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 Capital leases

Unamortized premium

‘Accrued interest payable

Landfill accrued closure and postclosure liability Net OPEB liabilities

‘Compensated absences

Net pension liability

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

Pension related items

‘OPEB related items Net position of governmental activities

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

663,931

14,450,967 1,826,901

1,691,692

1,052,744

(7,845,360) (5,561,147) (148,883) (258,148) (298,499) (3,205,369) (613,616)

(5,912,445)

(364,648)

(312,351)

6,165,879

16,941,799

6,813,182

2,744,436

4,616,050

(23,843,467)

(676,999)

Exhibit 5

Coal Workforce General Road Investment Board CARES Total

REVENUES General property taxes 16,065,093$ -$ -$ -$ 16,065,093$
Other local taxes 2,873,196 161,913 - - 3,035,109
Permits, privilege fees, and regulatory licenses 47,900 - - - 47,900
Fines and forfeitures 6,885 - - - 6,885
Revenue from the use of money and property 174,772 2,776 - - 177,548
Charges for services 312,802 - - - 312,802
Miscellaneous 326,373 - 7,131 - 333,504
Recovered costs 1,151,845 - - - 1,151,845
Intergovernmental:

Commonwealth 8,603,969 - - - 8,603,969
Federal 3,129,887 - - 534,052 3,663,939

Total revenues 32,692,722$ 164,689$ 7,131$ 534,052$ 33,398,594$

EXPENDITURES Current:

General government administration 1,952,540$ -$ -$ -$ 1,952,540$
Judicial administration 2,738,739 - - - 2,738,739
Public safety 7,336,663 - - - 7,336,663
Public works 2,656,913 84,902 - 9,532 2,751,347
Health and welfare 7,169,005 - - - 7,169,005
Education 8,367,888 - - - 8,367,888
Parks, recreation, and cultural 609,539 - - - 609,539
Community development 989,088 - - - 989,088
Nondepartmental 224,547 - - - 224,547

Capital projects 413,535 - - - 413,535
Debt service:

Principal retirement 1,289,006 - - - 1,289,006
Interest and other fiscal charges 455,616 - - - 455,616

Total expenditures 34,203,079$ 84,902$ -$ 9,532$ 34,297,513$

Excess (deficiency) of revenues over (under) expenditures (1,510,357)$ 79,787$ 7,131$ 524,520$ (898,919)$

OTHER FINANCING SOURCES (USES) Transfers out (114,698)$ -$ -$ (524,520)$ (639,218)$
Transfers in 524,520 - - - 524,520
Issuance of capital leases 461,589 - - - 461,589

Total other financing sources (uses) 871,411$ -$ -$ (524,520)$ 346,891$

Net change in fund balances (638,946)$ 79,787$ 7,131$ -$ (552,028)$
Fund balances - beginning 6,299,675 414,459 3,773 - 6,717,907
Fund balances - ending 5,660,729$ 494,246$ 10,904$ -$ 6,165,879$

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, 2020

10 -

Exhibit 5 County of Russell, Virginia ‘Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2020

Coal Workforce General Road Investment Board CARES Total REVENUES General property taxes 3 16,065,093 $ “8 “8 = $16,065,093 Other local taxes 2,873,196 161,913 : ~ 3,035,109 Permits, privilege fees, and regulatory licenses 47,900 : : : 47,900 Fines and forfeitures 6,885 : : : 6,885 Revenue from the use of money and property 1472 2,716 : : 177,548 Charges for services 312,802 : : : 312,802 Miscellaneous 326,373 : 7131 : 333,504 Recovered costs 1,151,845 : : 1,151,845 Intergovernmental: ‘Commonwealth 8,603,969 : : = 8,603,969 Federal 3,129,887 - 534,052 3,663,939 Total revenues 332.07 STS Tist_S 534,052 533,398,594 EXPENDITURES Current: General government administration $1,952,540 $ “8 a = $1,952,540 Judicial administration 2,738,739 : : - 21738,739 Public safety 7,336,663, : : + 7,336,663 Public works 21,656,913, 84,902 : 9,832 2,751,347 Health and welfare : : ~ 7,169,005 Education : : + 8,367,888 Parks, recreation, and cultural : : : 609,539 Community development : : 989,088 Nondepartmental : : : 224,547 Capital projects : : : 413,535 Debt service: Principal retirement : : = 1,289,006 Interest and other fiscal charges - : : 455,616 Total expenditures BOT = FSS 34797 513 Excess (deficiency) of revenues over (under) expenditures $_(1,510,357) $79,787$ 7.131$ 524,520 $ (898,919) (OTHER FINANCING SOURCES (USES) Transfers out S$ (114,698) $ “8 = $ (624,520) $ (639,218) Transfers in 524,520 . . : 524,520 Issuance of capital leases 461,589 : : - 461,589 Total other financing sources (uses) B71AIT i ee] 346,891 Net change in fund balances S (638,946) $79,787 $ 7131 § = $ (852,028) Fund balances - beginning 6,299,675 414,459 3773 = 6,717,907 Fund balances - ending 3,660,729 494,246 70,904 36,165,879

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

10+

Exhibit 6

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

Net change in fund balances - total governmental funds (552,028)$

Capital outlay 917,752$
Reversion of assets back to the School Board (net) (1,160,377)
Depreciation expense (1,298,352) (1,540,977)

The net effect of various miscellaneous transactions involving capital assets (I.e., sales, trade-ins, and donations) is to increase (decrease) net assets. (97,673)

Property taxes 1,681,180

Issuance of long-term obligations: Capital leases (461,589)$

Principal Payments: Bonds, literary loans, and notes 996,545
Capital leases 292,461

Decrease (increase) in estimated liability: Landfill closure and postclosure liability (4,990) 822,427

(Increase) decrease in compensated absences (39,505)$
(Increase) decrease in accrued interest payable (107,295)
Change in OPEB related items (158,057)
Amortization of bond premiums 16,804
Change in pension related items (176,000) (464,053)

1,453,599

Change in net position of governmental activities 1,302,475$

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, 2020

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 deprecation exceeded capital outlays in the current period.

11 -

Exhibit 6 County of Russel, 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, 2020

‘Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds 5 (552,028)

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 deprecation exceeded capital outlays in the current period.

Capital outlay S 917,752 Reversion of assets back to the School Board (net) (1,160,377) Depreciation expense (1,298,352), (1,540,977) ‘The net effect of various miscellaneous transactions involving capital assets (Le., sales, trade-ins, and donations) is to increase (decrease) net assets. (97,673)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 1,681,180

‘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 tssued, whereas these ‘amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term obligations and related items,

Issuance of long-term obligations:

Capital leases S (461,589) Principal Payments:

Bonds, literary loans, and notes 996,545

Capital leases 292,461 Decrease (increase) in estimated liability:

Landfill closure and postclosure lability (4,990) 822,427

‘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 (9,505) (Increase) decrease in accrued interest payable (107,295) Change in OPEB related items (158,057) Amortization of bond premiums 16,804 CChange in pension related items (176,000) (464,053)

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 1,453,599 Change in net position of governmental activities sas

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

“Me

Exhibit 7

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

ASSETS Current assets:

Cash and cash equivalents -$ 4,639,574$
Interest receivable 96 -
Accounts receivable, net of allowance for uncollectibles 13,776 527,067 Due from other funds 19,004 -

Total current assets 32,876$ 5,166,641$

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 (2,906,377) -
Total capital assets 2,342,470$ -$
Total noncurrent assets 2,392,045$ -$
Total assets 2,424,921$ 5,166,641$

DEFERRED OUTFLOWS OF RESOURCES Pension related items 1,707$ -$

LIABILITIES Current liabilities:

Accounts payable 19,004$ 550,591$
Accrued interest payable 1,128 -
Revenue bonds - current portion 25,060 -

Total current liabilities 45,192$ 550,591$

Noncurrent liabilities: Revenue bonds - net of current portion 531,065$ -$
Net pension liability 10,588 -

Total noncurrent liabilities 541,653$ -$
Total liabilities 586,845$ 550,591$

DEFERRED INFLOWS OF RESOURCES Pension related items 18,808$ -$

NET POSITION Net investment in capital assets 1,786,345$ -$
Restricted for debt service and bond covenants 49,575 -
Unrestricted (14,945) 4,616,050

Total net position 1,820,975$ 4,616,050$

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, 2020

12 -

County of Russell, Virginia Statement of Net Position Proprietary Funds June 30, 2020

Exhibit 7

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

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

DEFERRED OUTFLOWS OF RESOURCES Pension related items

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

Noncurrent liabilities: Revenue bonds - net of current portion Net pension liability

Total noncurrent liabilities Total liabilities

DEFERRED INFLOWS OF RESOURCES Pension related items

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

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

$8 4,639,574

96 : 13,776 527,067 19,004 : 32,876 $ 5, 166,641 49,575$ : 5,240,699 $ - 8,148 : (2,906,377) : 2,342,470 5 2,392,045_$ zi 2,424,921 $ 5,166,641 1,707$ - 19,004 $ 550,591 1,128 : 25,060 : 45,192 550,591 531,065 $ . 10,588 : 541,653 5 586,845 550,591 18,808 $ - 1,786,345 $ - 49,575 : (14,945) 4,616,050 7,820,975 4,616,050,

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

“12+

Exhibit 8

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

OPERATING REVENUES Charges for services:

Sewer revenues 151,795$ -$
Insurance premiums - 7,221,605

Total operating revenues 151,795$ 7,221,605$

OPERATING EXPENSES Pension expense (6,102)$ -$
Professional services 30,644 -
Materials and supplies 127,563 -
Office expenses 17,270 -
Insurance claims and expenses 542 5,775,046 Depreciation 133,732 -

Total operating expenses 303,649$ 5,775,046$

Operating income (loss) (151,854)$ 1,446,559$

NONOPERATING REVENUES (EXPENSES) Investment income -$ 7,040$
Contribution to Castlewood PSA (38,491) -
Interest expense (25,364) -

Total nonoperating revenues (expenses) (63,855)$ 7,040$
Income (loss) before transfers (215,709)$ 1,453,599$

Transfers in 114,698$ -$
Change in net position (101,011)$ 1,453,599$

Total net position - beginning 1,921,986 3,162,451 Total net position - ending 1,820,975$ 4,616,050$

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, 2020

13 -

County of Russell, Virginia

Exhibit 8

Statement of Revenues, Expenses, and Changes in Net Position

Proprietary Funds

For the Year Ended June 30, 2020

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance OPERATING REVENUES Charges for services: Sewer revenues $ 151,795 $ : Insurance premiums - 7,221,605 Total operating revenues 151,795_5 7,221,605 OPERATING EXPENSES Pension expense $ (6,102) $ Professional services 30,644 Materials and supplies 127,563 Office expenses 17,270 : Insurance claims and expenses 542 5,775,046 Depreciation 133,732 - Total operating expenses 303,649_5, 5,775,046 Operating income (loss) $ (151,854) $ 1,446,559 NONOPERATING REVENUES (EXPENSES) Investment income $ - $ 7,040 Contribution to Castlewood PSA (38,491) - Interest expense (25,364) : Total nonoperating revenues (expenses) 3 (63,855) 5 7,040 Income (loss) before transfers (215,709) 7,453,599 Transfers in $ 114,698_$ - Change in net position (101,011) $ 7,453,599 Total net position - beginning 1,921,986 3,162,451 Total net position - ending 1,820,975 _$ 4,616,050

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

-1B-

Exhibit 9

Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users 133,852$ -$
Receipts for insurance premiums - 7,265,578
Payments to suppliers (160,462) -
Payments for premiums - (6,089,192)

Net cash provided by (used for) operating activities (26,610)$ 1,176,386$

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 114,698$ -$

Net cash provided by (used) for noncapital financing activities 114,698$ -$

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds (23,957)$ -$
Contribution to Castlewood PSA (38,491) -
Interest payments (25,640) -

Net cash provided by (used for) capital and related financing activities (88,088)$ -$

CASH FLOWS FROM INVESTING ACTIVITIES Interest income -$ 7,040$

Net increase (decrease) in cash and cash equivalents -$ 1,183,426$

Cash and cash equivalents - beginning (including restricted of $49,575) 49,575 3,456,148
Cash and cash equivalents - ending (including restricted of $49,575) 49,575$ 4,639,574$

Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) (151,854)$ 1,446,559$
Adjustments to reconcile operating income (loss) to net cash

provided by (used for) operating activities: Depreciation 133,732$ -$
(Increase) decrease in accounts receivable (2,338) 43,973
(Increase) decrease in interest receivable (48) -
(Increase) decrease in deferred outflows of resources 30 -
(Increase) decrease in due from other funds (15,557) -
Increase (decrease) in accounts payable 15,557 (314,146)
Increase (decrease) in deferred inflows of resources (7,700) -
Increase (decrease) in net pension liability 1,568 -
Total adjustments 125,244$ (270,173)$

Net cash provided by (used for) operating activities (26,610)$ 1,176,386$

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, 2020

14 -

Exhibit 9 County of Russell, Virginia Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2020

Enterprise internal Fund Service Fund Dante Self Fund Health Insurance CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 133,852 $ - Receipts for insurance premiums : 7,265,578 Payments to suppliers (160,462) Payments for premiums : (6,089,192) Net cash provided by (used for) operating activities Bee) $1,176,386 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES ‘Transfers from other funds $ 114,698 $ Net cash provided by (used) for noncapital financing activities $ 114,698_$ : CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES. Principal payments on bonds $ (23,957) $ Contribution to Castlewood PSA (38,491) Interest payments (25,640) : Net cash provided by (used for) capital and related financing activities $ (88,088) $ CASH FLOWS FROM INVESTING ACTIVITIES Interest income $ ~$ 7,040 Net increase (decrease) in cash and cash equivalents $ -$ 1,183,426 Cash and cash equivalents - beginning (including restricted of $49,575) 49,575 3,456,148

Cash and cash equivalents - ending (including restricted of $49,575)

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

Operating income (loss) $ (151,854) $ 1,446,559 Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation $ 133,732 $ (Increase) decrease in accounts receivable (2,338) 43,973, (Increase) decrease in interest receivable (48) : (Increase) decrease in deferred outflows of resources 30 (Increase) decrease in due from other funds (15,557) Increase (decrease) in accounts payable 15,557 (314,146) Increase (decrease) in deferred inflows of resources (7,700) Increase (decrease) in net pension liability 1,568 Total adjustments $ 725,244 § (270,173) Net cash provided by (used for) operating activities 06,610) $3,176,386

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

14+

Exhibit 10

Agency Funds

ASSETS Cash and cash equivalents 78,580$

Total assets 78,580$

LIABILITIES Amounts held for Social Services clients 64,608$
Amounts held for VASAP 13,972

Total liabilities 78,580$

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, 2020

15 -

Exhibit 10 County of Russell, Virginia Statement of Fiduciary Net Position Fiduciary Funds June 30, 2020

Agency Funds

ASSETS

Cash and cash equivalents $ 78,580 Total assets 3 _78,580

LIABILITIES

Amounts held for Social Services clients $ 64,608

Amounts held for VASAP 13,972 Total liabilities 3__78,580_

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, 2020

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.

16 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

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.

16 =

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 $2,522,083 to the Regional Jail and $39,996 to the Community Services Board. The County does not have any ongoing financial responsibility for these Organizations.

B. Government-wide and Fund Financial Statements

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

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

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

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

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

17 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Financial Reporting Entity (Continued)

Government-wide and Fund Financial Statements

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

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

17+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 when they have been earned and 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 principal and interest expenditures on general long-term debt, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

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

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

18 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Government-wide and Fund Financial Statements (Continued)

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

Sales and utility taxes, which are collected by the state or utilities and subsequently remitted to the

County, are recognized as revenues and receivables upon collection by the state or utility, which is generally in the month preceding receipt by the County.

18 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 CARES Fund accounts for and reports financial resources that are restricted, committed, or assigned to expenditures for Coronavirus Relief 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:

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, 2020

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 CARES Fund accounts for and reports financial resources that are restricted, committed, or assigned to expenditures for Coronavirus Relief 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, 2020

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, amounts in demand deposits, as well as short-term investments with original maturities of three months or less from the date of acquisition. For purposes of the statement of cash flows, the government’s proprietary funds consider their demand deposits and all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Investments

Investments with a maturity of less than one year when purchased, non-negotiable certificates of deposit, other nonparticipating investments, and external investment pools are stated at cost or amortized cost. Investments with a maturity greater than one year when purchased are stated at fair value. Fair value is the price that would be received to sell an investment in an orderly transaction at year end.

Receivables and Payables

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

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

Advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

20 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

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

Proprietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the County’s Internal Service Funds are charges to departments for health insurance. Operating expenses for Internal Service Funds include the cost of services and administrative expenses. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

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

Cash and Cash Equivalents

Investments

Receivables and Payables

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

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

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

-20-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 $600,449 at June 30, 2020 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 2020.

21 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 2020.

“U1.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 Land improvements 40 Buildings and improvements 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, 2020

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 live:

Assets Years Land improvements 40 Buildings and improvements 40 Machinery and equipment 430 Utility plant in service 40

Prepaid Items

Deferred Outflows/Inflows of Resources

-2-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 net 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.

23 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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)

“Be

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 that can be spent only for the specific purposes stipulated by external resource providers such as grantors or enabling federal, state, or local legislation. Restrictions may be changed or lifted only with the consent of the resource providers;

 Committed fund balance – amounts that can be used only for the specific purposes determined by the adoption of an ordinance committing fund balance for a specified purpose by the Board of Supervisors prior to the end of the fiscal year. Once adopted, the limitation imposed by the ordinance remains in place until the resources have been spent for the specified purpose or the Board adopts another ordinance to remove or revise the limitation;

 Assigned fund balance – amounts a government intends to use for a specific purpose but do not meet the criteria to be classified as committed; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. Unlike commitments, assignments general only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment;

 Unassigned fund balance – amounts that are available for any purpose; positive amounts are only reported in the general fund. Additionally, any deficit fund balance within the other governmental fund types is reported as unassigned.

24 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 that can be spent only for the specific purposes stipulated by external resource providers such as grantors or enabling federal, state, or local legislation. Restrictions may be changed or lifted only with the consent of the resource providers;

= Committed fund balance - amounts that can be used only for the specific purposes determined by the adoption of an ordinance committing fund balance for a specified purpose by the Board of Supervisors prior to the end of the fiscal year. Once adopted, the limitation imposed by the ordinance remains in place until the resources have been spent for the specified purpose or the Board adopts another ordinance to remove or revise the limitation;

= Assigned fund balance - amounts a government intends to use for a specific purpose but do not meet the criteria to be classified as committed; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. Unlike commitments, assignments general only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment;

= Unassigned fund balance - amounts that are available for any purpose; positive amounts are only reported in the general fund. Additionally, any deficit fund balance within the ‘other governmental fund types is reported as unassigned.

-24-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

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

(Continued)

Fund Balance (Continued)

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

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

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

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

Net Position

For government-wide reporting as well as in proprietary funds, the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources is called net position. Net position is comprised of three components: net investment in capital assets, restricted, and unrestricted.

 Net investment in capital assets consists of capital assets, net of accumulated

depreciation and reduced by outstanding balances of bonds, notes, and other debt that are attributable 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 included in this component of net position.

 Restricted net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Assets are reported as restricted when constraints are placed on asset use either by external parties or by law through constitutional provision or enabling legislation.

25 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

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

14,

Fund Balance (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.

Net Position

= Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by outstanding balances of bonds, notes, and other debt that are attributable 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 included in this component of net position.

= Restricted net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Assets are reported as restricted when constraints are placed on asset use either by external parties or by law through constitutional provision or enabling legislation.

-25-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

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

(Continued)

Net Position (Continued)

 Unrestricted net position is the net amount of the assets, deferred outflows of resources,

liabilities, and deferred inflows of resources that does not meet the definition of the two preceding categories.

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

Note 2-Stewardship, Compliance, and Accountability:

A. Budgetary Information

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

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

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

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

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

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

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

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

(GAAP).

Appropriations lapse on June 30, for all County units.

26 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

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

Net Position (Continued)

= Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that does not meet the definition of the two preceding categories.

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:

Budgetary Information

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

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

Public hearings are conducted to obtain citizen comments. Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution. The Appropriations Resolution places legal restrictions on expenditures at the departmental level. Only the Board of Supervisors can revise the appropriation for each department or category. The County Administrator is authorized to transfer budgeted amounts within general government departments; however, the School Board is authorized to transfer budgeted amounts within the school system’s categories.

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

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

Appropriations lapse on June 30, for all County units.

26+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

A. Budgetary Information (Continued)

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

C. Deficit fund balance

At June 30, 2020, there were no funds with deficit fund balance.

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 that has received at least two of the following ratings: P-1 by Moody’s Investors Service, Inc.; A-1 by Standard and Poor’s; or F1 by Fitch Ratings, Inc. (Section 2.2-4502), banker’s acceptances, repurchase agreements, and the State Treasurer’s Local Government Investment Pool (LGIP). As of and for the year ending June 30, 2020, the County did not have any investments.

27 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Budgetary Information (Continued)

_Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to commit that portion of the applicable appropriations, is not part of the County’s accounting system.

Excess of expenditures over appropriations

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

Deficit fund balance

At June 30, 2020, there were no funds with deficit fund balance.

Note 3-Deposits and Investments:

Deposits:

Investments:

“27+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 $ 527,967 $ -
Commonwealth of Virginia:

Local sales tax 328,048 -
State sales tax - 550,377
Non-categorical aid 172,570 -
Categorical aid-shared expenses 225,107 -
Categorical aid-Virginia Public Assistance funds 172,035 -
Categorical aid-other 26,120 -
Categorical aid-Comprehensive Services Act funds 196,620 -

Federal Government: Categorical aid-Virginia Public Assistance funds 233,796 -
School federal programs - 780,467

Total Amount Due from Other Governmental Units $ 1,882,263 $ 1,330,844

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary Government/ Government/

Component Unit Component Unit

Primary Government: General Fund $ - $ 688,109

Component Unit: School Board $ 488,109 $ -
IDA 200,000 -

Total $ 688,109 $ 688,109

Fund

28 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 $527,967 $ Commonwealth of Virginia: Local sales tax 328,048 : State sales tax : 550,377 Non-categorical aid 172,570 : Categorical aid-shared expenses 225,107 Categorical aid-Virginia Public Assistance funds 172,035 Categorical aid-other 26,120 Categorical aid-Comprehensive Services Act funds 196,620 Federal Government: Categorical aid- Virginia Public Assistance funds 233,796 : School federal programs : 780,467 Total Amount Due from Other Governmental Units $_ 1,882,263 $ 1,330,844

Note 5-Interfund/Component-Unit Obligations:

Due to Primary Due from Primary

Government/ Government/ Fund Component Unit _Component Unit Primary Government: General Fund $ _$ 688,109 Component Unit: School Board $ 488,109 $ IDA 200,000 Total S 688,109 $ 688,109

28+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Interfund transfers and remaining balances for the year ended June 30, 2020, consisted of the following:

Transfers In Transfers Out

Primary Government:

General Fund 524,520$ 114,698$

CARES Fund - 524,520
Dante Fund 114,698 -
Internal Service Fund - Health Insurance - -
Total 639,218$ 639,218$

Primary Government: Due From Due To General Fund 524,520$ 232,958$
Coal Road Fund 65,105 -
Dante Fund 19,004 -
CARES Fund 148,849 524,520
Total 757,478$ 757,478$

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.

The remainder of this page left blank intentionally.

29 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Interfund transfers and remaining balances for the year ended June 30, 2020, consisted of the following:

Fund Transfers In Transfers Out

Primary Government:

General Fund $ 524,520 S$ 114,698 CARES Fund : 524,520 Dante Fund 114,698 - Internal Service Fund - Health Insurance : : Total Primary Government: Due From Due To General Fund $524,520 § 232,958 Coal Road Fund 65,105 : Dante Fund 19,004 : CARES Fund 148,849 524,520 Total

The remainder of this page left blank intentionally.

-29-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020:

Balance Increases/ Decreases/ Balance July 1, 2019 Issuances Retirements June 30, 2020

Direct borrowings and placements General obligation bonds $ 5,172,915 $ - $ (662,712) $ 4,510,203
Literary loans 172,662 - (102,646) 70,016
Revenue bonds 3,496,328 - (231,187) 3,265,141
Deferred Amounts:

Bond premiums 165,687 - (16,804) 148,883
Total direct borrowings

and placements $ 9,007,592 $ - $ (1,013,349) $ 7,994,243

Other long-term obligations Capital leases $ 5,392,019 $ 461,589 $ (292,461) $ 5,561,147
Landfill closure/

postclosure liability 293,509 4,990 - 298,499
Net OPEB liabilities 2,475,567 1,464,431 (734,629) 3,205,369
Compensated absences 574,111 470,088 (430,583) 613,616
Net pension liability 4,402,165 4,279,202 (2,768,922) 5,912,445

Total other long-term obligations $ 13,137,371 $ 6,680,300 $ (4,226,595) $ 15,591,076

Total $ 22,144,963 $ 6,680,300 $ (5,239,944) $ 23,585,319

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

Year Ending June 30, Principal Interest Principal Interest Principal Interest

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 391,583 111,564 - - 231,187 -
2025 408,095 92,214 - - 231,187 -

2026-2030 1,538,007 197,212 - - 1,155,935 -
2031-2035 144,745 10,864 - - 814,841 -
2036-2039 21,778 1,866 - - 138,430 -

Totals $ 4,510,203 $ 913,970 $ 70,016 $ 2,150 $ 3,265,141 $ -

Direct Borrowings and Placements General Obligation Bonds Literary Loans Revenue Bonds

30 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2020:

Balance Increases/ Decreases/ Balance July 1, 2019 Issuances Retirements__June 30, 2020 Direct borrowings and placements General obligation bonds $ 5,172,915 $ + $ (662,712) $ 4,510,203 Literary loans 172,662 : (102, 646) 70,016 Revenue bonds 3,496,328 : (231,187) 3,265,141 Deferred Amounts: Bond premiums 165,687 : (16,804) 148,883 Total direct borrowings and placements $ 9,007,592. $ = $__ (4,013,349) $___ 7,994,243 Other long-term obligations Capital leases $5,392,019 $ 461,589 $ (292,461) $5,561,147 Landfill closure/ postclosure liability 293,509 4,990 : 298,499 Net OPEB liabilities 2,475,567 1,464,431 (734,629) 3,205,369 Compensated absences 574,111 470,088 (430,583) 613,616 Net pension liability 4,402,165 4,279,202 (2,768,922) 5,912,445 Total other long-term obligations $__ 13,137,371 $ 6,680,300 $ (4,226,595) $__ 15,591,076 Total S___22,144,963_$6,680,300$_ (5,239,944) $___ 23,585,319

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

Direct Borrowings and Placements Year Ending __General Obligation Bonds Literary Loans Revenue Bonds June 30, Principal Interest Principal Interest Principal Interest

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 391,583 111,564 : : 231,187 : 2025 408,095 92,214 : : 231,187 : 2026-2030 1,538,007 197,212 : : 1,155,935 : 2031-2035 144,745 10,864 : : 814,841 : 2036-2039 21,78 1,866 : : 138,430 :

Totals $4,510,203 $913,970 $ 70,016 $_2,150 $ 3,265,141 $ :

-30-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Direct Borrowings and Placements

General Obligation Bonds:

General obligation bond 5.75% 1988 2028 $13,063-41,261 a+ 672,000$ 257,835$ 29,246$

General obligation bond 4.50% 1999 2039 $2,518-6,183 a+ 119,530 82,083 2,881

General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210 115,954 115,954

General obligation bond 2.35%-5.10% 2002 2023 $213,799-272,702 a+ 4,382,954 796,238 258,347

General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 a+ 3,205,190 1,288,093 171,736

General obligation bond 4.60%-5.10% 2009 2030 $55,000-110,000 a+ 1,485,000 915,000 75,000

General obligation bond 3.05%-5.05% 2010 2031 $55,000-120,000 a+ 1,620,000 1,055,000 75,000

Total General Obligation Bonds 4,510,203$ 728,164$

Revenue Bonds:

Revenue bond 0.00% 11/28/2001 2033 $15,595 sa 935,690$ 374,276$ 31,190$

Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 692,434 55,416

Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 132,050 11,483

Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 342,652 27,412

Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 287,545 18,551

Revenue bond 0.00% 10/14/2005 2036 $1,524 sa 91,439 48,768 3,048

Revenue bond 0.00% 10/14/2005 2037 $31,779 sa 1,906,717 1,048,694 63,557

Revenue bond 0.00% 4/28/2006 2037 $6,925 sa 415,513 228,532 13,851

Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 110,190 6,679

Total Revenue Bonds 3,265,141$ 231,187$

Plus:

Unamortized Premium 148,883$ 16,804$

Total General Obligation and Revenue Bonds 7,924,227$ 976,155$

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

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

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31 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 6-Long-Term Obligations: (Continued)

Primary Government - Governmental Activities Indebtedness (Continued)

Details of long-term indebtedness:

Final Amount of Balance Interest Date —=Maturity—_—nstallment Original Governmental Rates Issued Date Amounts Issue Activities Direct Borrowings and Placements General Obigation Bonds: General obligation bond 5.75% 1988 2028 $13,063-41,261 a+ § 672,000 $257,835 General obligation bond 4.50% 1999 2039 —§2,518-6,183 ar 119,530 82,083, General obligation bond 4.98%-5.10% 2000 2021 $94,999-115,952 a+ 1,802,210 115,954 General obligation bond 2.35%-5.10% 2002 2023. §213,799-272,702 ar 4,387,954 796,238 General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 a» 3,205,190 1,288,093 General obtgation bond 4.60%-5.10% 2008 2030 $85,000-110,000a+ 1,485,000 915,000 General obligation bond 3.05%-5.05% 2010 2031 $85,000-120,000 a+ 1,620,000 _1,055,000 “Total General Obigation Bonds $4,510,203 Revenue Bonds: Revenue bond 0.00% 11/28/2001 2033 515,595sa$—«935,690 $374,276 Revenue bond 0.00% 11/28/2001 2033 $27,708 sa 1,678,400 692,434 Revenue bond 0.00% 11/28/2001 2025 $8,612 sa 344,477 132,050 Revenue bond 0.00% 11/1/2002 2033 $13,707 sa 822,366 342,652 Revenue bond 0.00% 3/10/2005 2036 $9,276 sa 556,538 287,545 Revenue bond 0.00% 10/14/2005 2036 51,524 sa 91,439 48,768 Revenue bond 0.00% 10/14/2005 2037 $31,779 sa 1,906,717 1,048,694 Revenue bond 0.00% 4/28/2008 2037 $6,925 sa 415,513 228,532 Revenue bond 0.00% 3/30/2007 2037 $3,340 sa 197,179 110,190 Total Revenue Bonds $3,265,141 Pus: UUnamortized Premium $148,983

Total General Obligation and Revenue Bonds

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

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-31-

Amount ue Within One Year

$29,246 2,881 115,954 258,347 171,736 75,000 75,000

S$ 7a,164

531,190 55,416 11,483 27,412 18,551

3,048 387 13,851

6,679

$231,187

S 16,804

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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% 11/15/2000 2021 $24,689 a+ 493,789$ 24,698$ 24,698$
Literary loan 3.00% 12/15/2000 2021 $7,700 a+ 154,118 7,818 7,818
Literary loan 2.00% 7/1/2003 2023 $12,500 a+ 250,000 37,500 12,500

Total Literary Loans 70,016$ 45,016$

Other Long-term Obligations: Capital Leases (Note 7) 5,561,147$ 457,910$
Landfill Closure and Postclosure Liability 298,499 -
Net OPEB Liabilities 3,205,369 -
Compensated Absences 613,616 460,212
Net Pension Liability 5,912,445 -

Total Other Long-term Obligations 15,591,076$ 918,122$

Total Long-term Obligations 23,585,319$ 1,939,293$

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

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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32 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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% 11/15/2000 2021 $24,689.a+ $ 493,789 $ 24,698 $24,698 Literary toan 3.00% 12/15/2000 2021 $7,700 a+ 154,118 7,818 7,818 Literary loan 2.00% 7/1/2003 2023 $12,500a+ 250,000 37,500 12,500 Total Literary Loans $70,016 $ 45,016 Other Long-term Obligations: Capital Leases (Note 7) $ 5,561,147 $457,910 Landfill Closure and Postclosure Liability 298,499 : Net OPEB Liabilities 3,205,369 : Compensated Absences 613,616 460,212 Net Pension Liability 5,912,445 : Total Other Long-term Obligations $15,591,076 $918,122

Total Long-term Obligations

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

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, 2020

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, 2020:

Balance Balance July 1, 2019 Issuances Retirements June 30, 2020

Direct borrowings and placements Revenue bonds $ 580,082 $ - $ (23,957) $ 556,125

Total direct borrowings and placements $ 580,082 $ - $ (23,957) $ 556,125

Net pension liability 9,020 7,664 (6,096) 10,588

Total $ 589,102 $ 7,664 $ (30,053) $ 566,713

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

Year Ending June 30, Principal Interest

2021 25,060$ 24,512$
2022 26,212 23,360
2023 27,416 22,156
2024 28,675 20,897
2025 29,993 19,579

2026-2030 171,941 75,919
2031-2035 215,235 32,625

2036 31,593 512

Totals 556,125$ 219,560$

Direct Borrowings and Placements Revenue Bonds

Details of long-term indebtedness:

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

Direct Borrowings and Placements Revenue Bonds: Revenue bond 4.50% 4/10/1996 2036 900,000$ 556,125$ 25,060$

Other Obligations: Net pension liability 10,588$ -$

Total Long-term Obligations 566,713$ 25,060$

33 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2020:

Balance Balance July 1, 2019 _Issuances__Retirements__June 30, 2020

Direct borrowings and placements

Revenue bonds $580,082$ - $_ (23,957) $ 556,125 Total direct borrowings and placements $580,082 $ - $ (23,957) $ 556,125 Net pension liability 9,020 7,664 (6,096) 10,588 Total $_589,102$ 7,664 $ (30,053) $ 566,713

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

Year Ending Revenue Bonds

June 30, Principal interest 2021 $ 25,060 $ 24,512 2022 26,212 23,360 2023 27,416 22,156 2024 28,675 20,897 2025 29,993 19,579

2026-2030 171,941 75,919

2031-2035 215,235 32,625 2036 31,593 512 Totals S$ 556,125. _$ 219,560

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

Direct Borrowings and Placements

Revenue Bonds:

Revenue bond 4.50% 4/10/1996 2036 $900,000 _$ 556,125 $25,060

Other Obligations:

Net pension liability $10,588 §

Total Long-term Obligations $566,713 $25,060

-33-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020:

Balance Balance July 1, 2019 Increases Decreases June 30, 2020

Net OPEB liabilities $ 13,058,331 $ 5,962,805 $ (2,335,985) $ 16,685,151
Compensated absences 730,807 782,119 (548,105) 964,821
Net pension liability 32,556,828 11,490,955 (8,164,032) 35,883,751

Total $ 46,345,966 $ 18,235,879 $ (11,048,122) $ 53,533,723

Details of long-term indebtedness:

Amount Total Due Within

Amount One Year Other Obligations:

Net OPEB Liabilities 16,685,151$ -$
Compensated Absences 964,821 723,616
Net Pension Liability 35,883,751 -

Total Other Obligations 53,533,723$ 723,616$

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34 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2020:

Balance Balance July 1, 2019 Increases Decreases June 30, 2020 Net OPEB liabilities $ 13,058,331 $ 5,962,805 $ (2,335,985) $ 16,685,151 Compensated absences 730,807 782,119 (548,105) 964,821 Net pension liability 32,556,828 11,490,955 (8,164,032) 35,883,751 Total $__ 46,345,966 $18,235,879 $ (11,048,122) $53,533,723 Details of long-term indebtedness: Amount Total Due Within Amount __One Year

$ 16,685,151 $

Compensated Absences 964,821 723,616 Net Pension Liability 35,883,751 : Total Other Obligations $ 53,533,723 _$ 723,616

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 7-Capital Leases:

Primary Government

The County has entered into lease agreements 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 Leases

Machinery and equipment $ 5,411,473 $ 983,400
Less: Accumulated depreciation (541,147) (154,159)

Net capital asset $ 4,870,326 $ 829,241

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2020, were as follows:

Year Ending Capital June 30, Leases

2021 $ 699,834
2022 592,241
2023 595,954
2024 439,482
2025 443,043

2026-2030 2,140,323
2031-2035 2,127,907
2036-2037 851,409

Subtotal $ 7,890,193

Less, amount representing interest (2,329,046)

Present Value of Lease Agreement $ 5,561,147

35 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 7-Capital Leases:

Primary Government

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

Energy Savings School Equipment Bus Leases Machinery and equipment S$ 5,411,473. $ 983,400 Less: Accumulated depreciation (541,147) (154,159) Net capital asset S___ 4,870,326 $ 829,241

The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2020, were as follows:

Year Ending Capital June 30, Leases 2021 $699,834 2022 592,241 2023 595,954 2024 439,482 2025 443,043 2026-2030 2,140,323 2031-2035 2,127,907 2036-2037 851,409 Subtotal $7,890,193 Less, amount representing interest (2,329,046)

Present Value of Lease Agreement $__5,561,147

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 service credit or age 50 with at least 30 years of service credit. Non-hazardous duty employees may retire with a reduced benefit as early as age 55 with at least 5 years of service credit or age 50 with at least 10 years of service credit. 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 service credit or age 50 with at least 25 years of service credit. Hazardous duty employees may retire with a reduced benefit as early as age 50 with at least 5 years of service credit.

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 service credit or when the sum of their age plus service credit equals 90. Non-hazardous duty employees may retire with a reduced benefit as early as age 60 with at least 5 years of service credit. Hazardous duty employees are eligible for an unreduced benefit beginning at age 60 with at least 5 years of service credit or age 50 with at least 25 years of service credit. Hazardous duty employees may retire with a reduced benefit as early as age 50 with at least 5 years of service credit.

36 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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.

36°

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 service credit, or when the sum of their age plus service credit equals 90. Employees may retire with a reduced benefit as early as age 60 with at least 5 years of service credit. 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 service credit. Under Plan 1, average final compensation is the average of the employee’s 36 consecutive months of highest compensation and the multiplier is 1.70% for non-hazardous duty employees, 1.85% for sheriffs and regional jail superintendents, and 1.70% 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 1.70% 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 service credit 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 service credit 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.

37 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 service credit, or when the sum of their age plus service credit equals 90. Employees may retire with a reduced benefit as early as age 60 with at least 5 years of service credit. 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.

37+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 8-Pension Plans: (Continued)

Contributions (Continued)

The County’s contractually required contribution rate for the year ended June 30, 2020 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 $719,102 and $681,397 for the years ended June 30, 2020 and June 30, 2019, respectively.

Net Pension Liability

At June 30, 2020, the County reported a liability of $5,923,033 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2018, and rolled forward to the measurement date of June 30, 2019. 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, 2019 and 2018 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 99.0170% and 99.2670%, 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, 2018, 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, 2019.

Inflation 2.50%

Salary increases, including inflation 3.50% – 5.35%

Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% to simplify preparation of pension liabilities.

38 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Net Pension Liability

At June 30, 2020, the County reported a liability of $5,923,033 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2018, and rolled forward to the measurement date of June 30, 2019. 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, 2019 and 2018 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 99.0170% and 99.2670%, respectively.

Actuarial Assumptions - General Employees

Inflation 2.50% Salary increases, including inflation 3.50% - 5.35% Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% to simplify preparation of pension liabilities.

-38-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 8-Pension Plans: (Continued)

Actuarial Assumptions – General Employees (Continued)

Mortality 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.

The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period from July 1, 2012 through June 30, 2016, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as a result of the experience study and VRS Board action are as follows:

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 14.00% to 15.00% Discount Rate Decreased rate from 7.00% to 6.75%

39 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

All Others (Non-10 Largest) - Non-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 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 14,00% to 15.00%

Discount Rate Decreased rate from 7.00% to 6.75%

39+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2018, 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, 2019.

Inflation 2.50%

Salary increases, including inflation 3.50% – 4.75%

Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% to simplify preparation of pension liabilities.

Mortality rates:

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.

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

40 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note

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

Inflation 2.50% Salary increases, including inflation 3.50% - 4.75% Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% to simplify preparation of pension liabilities.

Mortality rates:

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.

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

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 8-Pension Plans: (Continued)

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

Mortality rates: (Continued)

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 60.00% to 45.00% Discount Rate Decreased rate from 7.00% to 6.75%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2020

Note 8-Pension Plans: (Continued)

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

Mortality rates: (Continued)

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

[Adjusted rates to better fit experience at each year age

‘Withdrawal Rates land 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 60.00% to 45.00%

Discount Rate

Decreased rate from 7.00% to 6.75%

The remainder of this page is left blank intentionally.

“Me

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 34.00% 5.61% 1.91% Fixed Income 15.00% 0.88% 0.13% Credit Strategies 14.00% 5.13% 0.72% Real Assets 14.00% 5.27% 0.74% Private Equity 14.00% 8.77% 1.23% MAPS - Multi-Asset Public Strategies 6.00% 3.52% 0.21% PIP - Private Investment Partnership 3.00% 6.29% 0.19%

Total 100.00% 5.13%

Inflation 2.50% Expected arithmetic nominal return* 7.63%

The above allocation provides a one-year return of 7.63%. 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 7.11%, including expected inflation of 2.50%. The VRS Board elected a long-term rate of 6.75% which is roughly at the 40th percentile of expected long-term results of the VRS fund asset allocation.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 34.00% 5.61% 1.91% Fixed Income 15.00% 0.88% 0.13% Credit Strategies 14.00% 5.13% 0.72% Real Assets 14.00% 5.27% 0.74% Private Equity 14.00% 8.77% 1.23% MAPS - Multi-Asset Public Strategies 6.00% 3.52% 0.21% PIP - Private Investment Partnership 3.00% 6.29% 0.19% Total 100.0% 5.13% Inflation 2.50%

Expected arithmetic nominal return” 7.63%

The above allocation provides a one-year return of 7.63%. 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 7.11%, including expected inflation of 2.50%. The VRS Board elected a long-term rate of 6.75% which is roughly at the 40% percentile of expected long-term results of the VRS fund asset allocation.

The remainder of this page is left blank intentionally.

-42-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 8-Pension Plans: (Continued)

Discount Rate

The discount rate used to measure the total pension liability was 6.75%. 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, 2019 the alternate rate was the employer contribution rate used in FY 2012 or 100% of the actuarially determined employer contribution rate from the June 30, 2017 actuarial valuations, whichever was greater. Through the fiscal year ended June 30, 2019, 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, 2019 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 6.75%, 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 (5.75%) or one percentage point higher (7.75%) than the current rate:

1% Decrease Current Discount 1% Increase (5.75%) (6.75%) (7.75%)

County’s proportionate share of the County Retirement Plan Net Pension Liability $ 10,278,533 $ 5,923,033 $ 2,449,671

Rate

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43 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 (5.75%) (6.75%) (7.75%) County’s proportionate share of the County Retirement Plan Net Pension Liability $10,278,533 $ 5,923,033 $ 2,449,671

The remainder of this page is left blank intentionally.

-4B-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020, the County recognized pension expense of $888,996. At June 30, 2020, 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 $ 322,896 $ 131,327

Net difference between projected and actual earnings on pension plan investments - 235,335

Change in proportionate share 19,425 16,794
Change in assumptions 631,976 -

Employer contributions subsequent to the measurement date 719,102 -

Total $ 1,693,399 $ 383,456

Primary Government

$719,102 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, 2021. 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

2021 $ 375,566
2022 204,975
2023 (7,424)
2024 17,724

Thereafter -

Pension Plan Data

Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/pdf/publications/2019-annual-report-pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA 23218-2500.

44 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 $322,896 $ 131,327 Net difference between projected and actual

earnings on pension plan investments : 235,335 Change in proportionate share 19,425 16,794 Change in assumptions 631,976 : Employer contributions subsequent to the

measurement date 719,102 :

Total $__ 1,693,399 $ 383,456

Primary

Year ended June 30 Government 2024 $ 375,566 2022 204,975 2023 (7,424)

2024 17,724 Thereafter :

Pension Plan Data Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued

VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be

downloaded from the VRS website at http: //www.varetire.org/pdf/publications/2019-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, 2020

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, 2018 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 144

Inactive members: Vested inactive members 10

Non-vested inactive members 15

Long-term disability (LTD) 1

Inactive members active elsewhere in VRS 14

Total inactive members 40

Active members 110

Total covered employees 294

Contributions

The Component Unit School Board’s contractually required contribution rate for nonprofessional employees for the year ended June 30, 2020 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 $457,296 and $447,435 for the years ended June 30, 2020 and June 30, 2019, respectively.

45 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 8-Pension Plans: (Continued)

Component Unit School Board (Nonprofessional)

Employees Covered by Benefit Terms

As of the June 30, 2018 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 144

Inactive members:

Vested inactive members 10 Non-vested inactive members 5 Long-term disability (LTD) 1 Inactive members active elsewhere in VRS 14 Total inactive members 40 Active members 110 Total covered employees 294

Contributions

This rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the pension plan from the Component Unit School Board’s nonprofessional employees were $457,296 and $447,435 for the years ended June 30, 2020 and June 30, 2019, respectively.

45+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2019. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2018 rolled forward to the measurement date of June 30, 2019.

Changes in Net Pension Liability

Total Plan Net Pension Fiduciary Pension Liability Net Position Liability

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

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

Changes for the year: Service cost $ 215,965 $ - $ 215,965
Interest 1,200,584 - 1,200,584
Changes of assumptions 447,422 - 447,422
Differences between expected

and actual experience 376,115 - 376,115
Contributions - employer - 447,436 (447,436)
Contributions - employee - 123,611 (123,611)
Net investment income - 772,746 (772,746)
Benefit payments, including refunds

of employee contributions (1,349,305) (1,349,305) -
Administrative expenses - (8,244) 8,244
Other changes - (485) 485

Net changes $ 890,781 $ (14,241) $ 905,022

Balances at June 30, 2019 $ 18,716,633 $ 12,142,783 $ 6,573,850

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

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2018 $ 17,825,852_$ 12,157,024 § 5,668,828 Changes for the year: Service cost s 215,965 $ - $ 215,965 Interest 1,200,584 : 41,200,584 Changes of assumptions 447,422. : 447,422 Differences between expected and actual experience 376,115, : 376,115 Contributions - employer : 447,436 (447,436) Contributions - employee : 123,611 (123,611) Net investment income : 772,746 (772,746) Benefit payments, including refunds of employee contributions (1,349,305) (1,349,305) - Administrative expenses - (8,244) 8,244 Other changes : (485) 485 Net changes $ 890,781 $ (14,241) $ 905,022 Balances at June 30, 2019 $ 18,716,633. $ 12,142,783. $ 6,573,850

46+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 6.75%, 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 (5.75%) or one percentage point higher (7.75%) than the current rate:

1% Decrease Current Discount 1% Increase (5.75%) (6.75%) (7.75%)

Component Unit School Board (Nonprofessional) Net Pension Liability 8,572,605$ 6,573,850$ 4,962,316$

Rate

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

For the year ended June 30, 2020, the Component Unit School Board (Nonprofessional) recognized pension expense of $975,181. At June 30, 2020, 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 $ 242,441 $ -

Change in assumptions 280,473 -

Net difference between projected and actual earnings on pension plan investments - 91,224

Employer contributions subsequent to the measurement date 457,296 -

Total $ 980,210 $ 91,224

Board (Nonprofessional)

Component Unit School

47 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 (6.75%) (6.75%) (7.75%) Component Unit School Board (Nonprofessional) Net Pension Liability $ 8,572,605 $ 6,573,850 $4,962,316

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 S$ 242,441 $ :

Change in assumptions 280,473 :

Net difference between projected and actual

earnings on pension plan investments : 91,224

Employer contributions subsequent to the measurement date 457,296 :

Total $___ 980,210. $ 91,224

-47-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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)

$457,296 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, 2021. 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)

2021 $ 323,394
2022 97,510
2023 645
2024 10,141

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, 2020 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 $3,005,168 and $2,854,000 for the years ended June 30, 2020 and June 30, 2019, respectively.

48 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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)

2021 $ 323,394

2022 97,510

2023 645

2024 10,141 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, 2020 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 $3,005,168 and $2,854,000 for the years ended June 30, 2020 and June 30, 2019, respectively.

48 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020, the school division reported a liability of $29,309,901 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2019 and the total pension liability used to calculate the Net Pension Liability was determined by an actuarial valuation performed as of June 30, 2018, and rolled forward to the measurement date of June 30, 2019. 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, 2019 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2019, the school division’s proportion was 0.22271% as compared to 0.22864% at June 30, 2018.

For the year ended June 30, 2020, the school division recognized pension expense of $2,718,616. 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, 2020, the school division reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources

Differences between expected and actual experience $ - $ 1,876,836

Net difference between projected and actual earnings on pension plan investments - 643,576

Change of assumptions 2,902,367 -

Changes in proportion and differences between employer contributions and proportionate share of contributions 55,157 1,031,476

Employer contributions subsequent to the measurement date 3,005,168 -

Total $ 5,962,692 $ 3,551,888

Component Unit School Board (Professional)

49 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2020, the school division reported a liability of $29,309,901 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2019 and the total pension liability used to calculate the Net Pension Liability was determined by an actuarial valuation performed as of June 30, 2018, and rolled forward to the measurement date of June 30, 2019. 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, 2019 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2019, the school division’s proportion was 0.22271% as compared to 0.22864% at June 30, 2018.

At June 30, 2020, the school division reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Component Unit School Board (Professional) Deferred Outflows Deferred Inflows

of Resources of Resources

Differences between expected and actual experience $ - $ 1,876,836 Net difference between projected and actual

earnings on pension plan investments : 643,576 Change of assumptions 2,902,367 Changes in proportion and differences between

employer contributions and proportionate

share of contributions 55,157 1,031,476 Employer contributions subsequent to the

measurement date 3,005,168

Total $ 5,962,692_$ 3,551,888

49+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 (Continued)

$3,005,168 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, 2021. 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

2021 $ (263,383)
2022 (854,537)
2023 12,884
2024 338,640

Thereafter 172,032

Actuarial Assumptions

The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of June 30, 2018, 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, 2019.

Inflation 2.50%

Salary increases, including inflation 3.50% – 5.95%

Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% to simplify preparation of pension liabilities.

50 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 (Continued)

Year ended June 30

2021 $ (263,383) 2022 (854,537) 2023 12,884 2024 338,640 Thereafter 172,032

Actuarial Assumptions

The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of, June 30, 2018, 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, 2019.

Inflation 2.50% Salary increases, including inflation 3.50% - 5.95% Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% to simplify preparation of pension liabilities.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 Discount Rate Decreased rate from 7.00% to 6.75%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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-2014 retirement healthy, and disabled) 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 age Withdrawal Rates and service through 9 years of service Disability Rates [Adjusted rates to better match experience Salary Scale No change Discount Rate Decreased rate from 7.00% to 6.75%

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2019, NPL amounts for the VRS Teacher Employee Retirement Plan is as follows (amounts expressed in thousands):

Teacher Employee Retirement Plan

Total Pension Liability $ 49,683,336
Plan Fiduciary Net Position 36,522,769
Employers’ Net Pension Liability (Asset) $ 13,160,567

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 73.51%

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 6.75%, 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 (5.75%) or one percentage point higher (7.75%) than the current rate:

1% Decrease Current Discount 1% Increase (5.75%) (6.75%) (7.75%)

School division’s proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability 44,124,135$ 29,309,901$ 17,061,274$

Rate

52 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 8-Pension Plans: (Continued)

Component Unit School Board (Professional) (Continued)

Net Pension Liability

Teacher Employee Retirement Plan

Total Pension Liability $ 49,683,336 Plan Fiduciary Net Position 36,522,769 Employers’ Net Pension Liability (Asset) $ 13,160,567

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability B51%

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

Rate 1% Decrease Current Discount 1% Increase (5.75%) (6.75%) (7.75%) School division’s proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability $ 44,124,135 § 29,309,901 $ 17,061,274

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/pdf/publications/2019-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

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, 2020 (measurement date), the following employees were covered by the benefit terms:

Active Employees 145
Retirees and Spouses 1

Total 146

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, 2020 was $7,461.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/pdf /publications/2019-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, 2020 (measurement date), the following employees were covered by the benefit terms:

Active Employees 145 Retirees and Spouses 1 Total 146

Contributions

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020. The total OPEB liability was determined by an actuarial valuation as of July 1, 2019.

Actuarial Assumptions

The total OPEB liability in the July 1, 2019 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Healthcare Trend Rate The healthcare trend rate assumption starts at 34.20% in 2020 and gradually declines to 4.00% by the year 2074.

Actuarial Cost Method Entry age normal, level percentage of pay Discount Rate 3.50% as of June 30, 2019; 2.21% as of June 30, 2020

Inflation 2.50%

Mortality Rates The pre-retirement mortality rates were calculated using RP- 2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with Scale BB to 2020; males set back 1 year, 85% of rates; females setback 1 year. 25% of deaths are assumed to be service-related. The post- retirement mortality rates were calculated using RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase compounded from ages 70 to 85. The post-disablement mortality rates were calculated using RP-2014 Disabled Mortality Rates projected with Scale BB to 2020; males 115% of rates; females 130% of rates.

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

Retirement Age The average age at retirement is 62.

The demographic assumptions used to determine the Total OPEB Liability as of June 30, 2020 were based on the results of an actuarial experience study for the Virginia Retirement System coving the period from July 1, 2012 to June 30, 2016. The demographic assumptions recommended as a result of this study were adopted by the VRS Board of Trustees on April 26, 2017.

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, 2020

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, 2020. The total OPEB liability was determined by an actuarial valuation as of July 1, 2019.

Actuarial Assumptions

[Actuarial Cost Method Entry age normal, level percentage of pay Discount Rate 3.50% as of June 30, 2019; 2.21% as of June 30, 2020 Inflation 2.50%

Healthcare Trend Rate The healthcare trend rate assumption starts at 34.20% in|

2020 and gradually declines to 4.00% by the year 2074.

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 pre-retirement mortality rates were calculated using RP 2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with Scale BB to 2020; males set back 1 year, 85% of rates; females setback 1 year. 25% of deaths are assumed to be service-related. The post- retirement mortality rates were calculated using RP-2014| Employee Rates to age 49, Healthy Annuitant Rates at ages| 50 and older projected with Scale BB to 2020; males set| forward 1 year; females set back 1 year with 1.5% increase compounded from ages 70 to 85. The post-disablement mortality rates were calculated using RP-2014 Disabled Mortality Rates projected with Scale BB to 2020; males 115% of rates; females 130% of rates.

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, 2020

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

Changes in Total OPEB Liability

Primary Government Total OPEB Liability

Balances at June 30, 2019 $ 387,749

Changes during Year: Service Cost $ 14,265
Interest on Total OPEB Liability 13,941
Effect of Economic/Demographic Gains or Losses (88,594)
Effect of Assumptions Changes or Inputs 434,635
Benefit Payments (7,461)
Net Changes $ 366,786
Balances at June 30, 2020 $ 754,535

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 (1.21%) or one percentage point higher (3.21%) than the current discount rate:

1% Decrease Current Discount 1% Increase (1.21%) Rate (2.21%) (3.21%)

$ 826,730 $ 754,535 $ 687,885

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 (33.20% decreasing to an ultimate rate of 3.00%) or one percentage point higher (35.20% decreasing to an ultimate rate of 5.00%) than the current healthcare cost trend rates:

Healthcare Cost 1% Decrease Trend 1% Increase

(33.20% decreasing (34.20% decreasing (35.20% decreasing to 3.00%) to 4.00%) to 5.00%)

$ 657,001 $ 754,535 $ 869,693

Rates

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Changes in Total OPEB Liability

Primary Government Total OPEB Liability

Balances at June 30, 2019 $ 387,749 Changes during Year:

Service Cost. $ 14,265 Interest on Total OPEB Liability 13,941

Effect of Economic/Demographic Gains or Losses (88,594) Effect of Assumptions Changes or Inputs 434,635

Benefit Payments (7,461) Net Changes $ 366,786

Balances at June 30, 2020 $

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

Rate 1% Decrease Current Discount 1% Increase (1.21%) Rate (2.21%) (3.21%) $ 826,730 $ 754,535 $ 687,885,

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

Rates Healthcare Cost 1% Decrease Trend 1% Increase (33.20% decreasing (34.20% decreasing (35.20% decreasing to 3.00%) to 4.00%) to 5.00%) $ 657,001 $ 754,535 $ 869,693

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020, the County recognized OPEB expense in the amount of $81,788. At June 30, 2020, the County reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources

Differences between expected and actual experience $ - $ 74,964

Changes in assumptions 375,131 6,153
Total $ 375,131 $ 81,117

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

2021 $ 53,582
2022 53,582
2023 53,582
2024 53,412
2025 53,237

Thereafter 26,619

Additional disclosures on changes in total 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

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.

56 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 Resources of Resources Differences between expected and actual experience $ - $ 74,964 Changes in assumptions 375,131 6,153 Total $ 375,131 $ 81,117

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

2021 $53,582 2022 53,582 2023 53,582 2024 53,412 2025 53,237 Thereafter 26,619

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, 2020

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

Plan Membership

At June 30, 2020 (measurement date), the following employees were covered by the benefit terms:

Active employees 565
Retirees and Spouses 51

Total 616

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, 2020 was $457,831.

Total OPEB Liability

The School Board’s total OPEB liability was measured as of June 30, 2020. The total OPEB liability was determined by an actuarial valuation as of July 1, 2019.

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57 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note _10-Component_Unit School Board Other Postemployment_Benefits-Health_Insurance: (Continued)

Plan Membership

At June 30, 2020 (measurement date), the following employees were covered by the benefit terms:

Active employees 565 Retirees and Spouses 51 Total 616

Contributions

The School Board does not pre-fund benefits; therefore, no assets are accumulated ina 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, 2020 was $457,831. Total OPEB Liability

The School Board’s total OPEB liability was measured as of June 30, 2020. The total OPEB liability was determined by an actuarial valuation as of July 1, 2019.

The remainder of this page is left blank intentionally.

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Actuarial Assumptions

Inflation 2.50% Healthcare Trend Rate The healthcare trend rate assumption starts at 34.20% for

pre-medicare and 0.00% for post-medicare in 2020 and gradually declines to 4.00% by the year 2074.

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 3.50% as of June 30, 2019; 2.21% as of June 30, 2020 Actuarial Cost Method Entry age normal, level percentage of pay

Retirement Age The average age at retirement is 62.

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, 2020

Note _10-Component_Unit School Board Other Postemployment_Benefits-Health_Insurance: (Continued)

Actuarial Assumptions

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

Discount Rate 3.50% as of June 30, 2019; 2.21% as of June 30, 2020 Inflation 2.50%

Healthcare Trend Rate The healthcare trend rate assumption starts at 34.20% for|

pre-medicare and 0.00% for post-medicare in 2020 and| gradually declines to 4.00% by the year 2074,

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

Retirement Age ‘The average age at retirement is 62.

[Mortality Rates The pre-retirement mortality rates were calculated using RP}

2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with Scale BB to 2020; males set back 1 year, 85% of rates; females setback 1 year. 25% of deaths are assumed to be service-related. The post- retirement mortality rates were calculated using RP-2014| Employee Rates to age 49, Healthy Annuitant Rates at ages| 50 and older projected with Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase compounded from ages 70 to 85. The post-disablement| mortality rates were calculated using RP-2014 Disabled Mortality Rates projected with Scale BB to 2020; males 115% lof rates; females 130% of rates.

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, 2020

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, 2019 $ 7,937,059

Changes during Year: Service Cost $ 229,725
Interest on Total OPEB Liability 277,894
Effect of Economic/Demographic Gains or Losses (1,076,097)
Effect of Assumptions Changes or Inputs 4,554,327
Benefit Payments (457,831)
Net Changes $ 3,528,018
Balances at June 30, 2020 $ 11,465,077

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 (1.21%) or one percentage point higher (3.21%) than the current discount rate:

1% Decrease Current Discount 1% Increase (1.21%) Rate (2.21%) (3.21%)

$ 12,268,934 $ 11,465,077 $ 10,681,667

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 (33.20% decreasing to an ultimate rate of 3.00%) or one percentage point higher (35.20% decreasing to an ultimate rate of 5.00%) than the current healthcare cost trend rates:

Healthcare Cost 1% Decrease Trend 1% Increase

(33.20% decreasing (34.20% decreasing (35.20% decreasing to 3.00%) to 4.00%) to 5.00%)

$ 10,172,500 $ 11,465,077 $ 12,989,589

Rates

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2019 $ 059 Changes during Year:

Service Cost $ 229,725 Interest on Total OPEB Liability 277,894 Effect of Economic/Demographic Gains or Losses (1,076,097) Effect of Assumptions Changes or Inputs 4,554,327 Benefit Payments (457,831) Net Changes $ 3,528,018 Balances at June 30, 2020 $ 11,465,077

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

Rate 1% Decrease Current Discount 1% Increase (1.21%) Rate (2.21%) (3.21%)

$ 12,268,934 § 11,465,077 $ 10,681,667

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

Rates Healthcare Cost 1% Decrease Trend 1% Increase (33.20% decreasing (34.20% decreasing (35.20% decreasing to 3.00%) to 4.00%) to 5.00%) s 10,172,500 $ 11,465,077 $ 12,989,589

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020, the School Board recognized OPEB expense in the amount of $1,102,461. At June 30, 2020, 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 Resources of Resources

Differences between expected and actual experience $ - $ 893,708

Changes in assumptions 3,904,844 102,555

Total $ 3,904,844 $ 996,263

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

2021 $ 594,842
2022 594,842
2023 594,842
2024 593,480
2025 530,575

Thereafter -

Additional disclosures on changes in School Board’s total 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, 2020

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, 2020, the School Board recognized OPEB expense in the amount of

$1,102,461. At June 30, 2020, 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 Resources of Resources Differences between expected and actual experience $ - $s 893,708 Changes in assumptions 3,904,844 102,555 Total $ 3,904,844 $ 996,263

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 2021 s 594,842 2022 594,842 2023 594,842 2024 593,480 2025 530,575 Thereafter -

Additional disclosures on changes in School Board’s total 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, 2020

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

Plan Description

The Group Life Insurance (GLI) Plan 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 Plan 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 Plan. 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 plan, it is not included as part of the GLI Plan OPEB.

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

Eligible Employees

The GLI Plan was established July 1, 1960, for state employees, teachers, and employees of political subdivisions that elect the plan. 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 Plan 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 plan 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 service credit, the minimum benefit payable was set at $8,000 by statute in 2015. This will be increased annually based on the VRS Plan 2 cost-of-living adjustment calculation. The minimum benefit adjusted for the COLA was $8,463 as of June 30, 2020.

61 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Plan Description

The Group Life Insurance (GLI) Plan 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 Plan 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

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Contributions

The contribution requirements for the GLI Plan 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 Plan 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, 2020 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 Plan from the County were $33,061 and $31,276 for the years ended June 30, 2020 and June 30, 2019, respectively.

Contributions to the GLI Plan from the Component Unit School Board (Nonprofessional) were $13,912 and $13,543 for the years ended June 30, 2020 and June 30, 2019, respectively.

Contributions to the GLI Plan from the Component Unit School Board (Professional) were $101,949 and $96,000 for the years ended June 30, 2020 and June 30, 2019, respectively.

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

At June 30, 2020, the County reported a liability of $500,384 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2020, the Component Unit School Board (Nonprofessional) reported a liability of $216,264 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2020, the Component Unit School Board (Professional) reported a liability of $1,537,278 for its proportionate share of the Net GLI OPEB Liability.

The Net GLI OPEB Liability was measured as of June 30, 2019 and the total GLI OPEB liability used to calculate the Net GLI OPEB Liability was determined by an actuarial valuation performed as of June 30, 2018, and rolled forward to the measurement date of June 30, 2019. 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 Plan for the year ended June 30, 2019 relative to the total of the actuarially determined employer contributions for all participating employers.

At June 30, 2019, the County’s proportion was 0.03075% as compared to 0.03252% at June 30, 2018.

At June 30, 2019, the Component Unit School Board (Nonprofessional) proportion was 0.01329% as compared to 0.01383% at June 30, 2018.

At June 30, 2019, the Component Unit School Board (Professional) proportion was 0.09447% as compared to 0.09664% at June 30, 2018.

62 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Contributions

The contribution requirements for the GLI Plan 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 Plan 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, 2020 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 Plan from the County were $33,061 and $31,276 for the years ended June 30, 2020 and June 30, 2019, respectively.

Contributions to the GLI Plan from the Component Unit School Board (Nonprofessional) were $13,912 and $13,543 for the years ended June 30, 2020 and June 30, 2019, respectively.

Contributions to the GLI Plan from the Component Unit School Board (Professional) were $101,949 and $96,000 for the years ended June 30, 2020 and June 30, 2019, respectively.

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

At June 30, 2020, the County reported a liability of $500,384 for its proportionate share of the Net GLI OPEB Liability.

‘At June 30, 2020, the Component Unit School Board (Nonprofessional) reported a liability of $216,264 for its proportionate share of the Net GLI OPEB Liability.

At June 30, 2020, the Component Unit School Board (Professional) reported a liability of $1,537,278 for its proportionate share of the Net GL! OPEB Liability.

The Net GLI OPEB Liability was measured as of June 30, 2019 and the total GL! OPEB liability used to calculate the Net GLI OPEB Liability was determined by an actuarial valuation performed as of June 30, 2018, and rolled forward to the measurement date of June 30, 2019. 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 Plan for the year ended June 30, 2019 relative to the total of the actuarially determined employer contributions for all participating employers.

At June 30, 2019, the County’s proportion was 0.03075% as compared to 0.03252% at June 30, 2018.

At June 30, 2019, the Component Unit School Board (Nonprofessional) proportion was 0.01329% as compared to 0.01383% at June 30, 2018.

At June 30, 2019, the Component Unit School Board (Professional) proportion was 0.09447% as compared to 0.09664% at June 30, 2018.

62+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

GLI OPEB Liabilities, GLI OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the GLI Plan OPEB (Continued)

For the year ended June 30, 2020, the County recognized GLI OPEB expense of $11,431. 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, 2020, the Component Unit School Board (Nonprofessional) recognized GLI OPEB expense of $1,269. 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, 2020, the Component Unit School Board (Professional) recognized GLI OPEB expense of $21,794. 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, 2020, 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 Resources of Resources of Resources of Resources of Resources of Resources

Differences between expected and actual experience $ 33,279 $ 6,491 $ 14,383 $ 2,806 $ 102,238 $ 19,939

Changes in proportion 18,725 23,615 - 16,818 - 60,583
Changes in assumptions 31,591 15,089 13,654 6,521 97,055 46,356
Net difference between projected and actual

earnings on OPEB plan investments - 10,278 - 4,442 - 31,577
Employer contributions subsequent to the

measurement date 33,061 - 13,912 - 101,949 -
Total $ 116,656 $ 55,473 $ 41,949 $ 30,587 $ 301,242 $ 158,455

Primary Government (Nonprofessional) Component Unit School Board Component Unit School Board

(Professional)

$33,061, $13,912, and $101,949 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, 2021. 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)

2021 $ 1,638 $ (2,963) $ (8,292)
2022 1,638 (2,963) (8,291)
2023 5,991 (1,082) 5,083
2024 9,964 1,130 20,254
2025 7,491 2,533 25,069

Thereafter 1,400 795 7,015

63 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

GLI OPEB Liabilities, GLI OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the GLI Plan OPEB (Continued)

For the year ended June 30, 2020, the County recognized GLI OPEB expense of $11,431. 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, 2020, the Component Unit School Board (Professional) recognized GLI OPEB expense of $21,794. 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, 2020, the employer reported deferred outflows of resources and deferred inflows of resources related to the GLI OPEB from the following sources:

Component unt School Board Component unit Shoot Board Primary Governmant ‘longotessonal) (Profersana Deferred Outs Deterediniow —DeferredOutlows Orerredifions —DeforredOutlows, Defered lowe (tfowurcer”_ofRorowcer”ofRerourcr of Rexourer fRerourcer of Resourcer

‘aod ato enperence s bam § oan naan § 2,806 1m208 $ vow ‘sening an OPEB pan nvement 1027 aaa x37 ployer contre stosuen tothe Tot s Tess Sas. KOR Sr, Sos as

$33,061, $13,912, and $101,949 reported as deferred outflows of resources related to the GLI OPEB resulting from the County’s, Component Unit School Board (Nonprofessional), and Component Unit School Board (Professional), respectively, contributions subsequent to the measurement date will be recognized as a reduction of the Net GL! OPEB Liability in the fiscal year ending June 30, 2021. 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) 2021 $ 1,638 § (2,963) $ (8,292) 2022 1,638 (2,963) (8,291) 2023 5,991 (1,082) 5,083 2024 9,964 1,130 20,254 2025 7,491 2,533 25,069 Thereafter 1,400 795 7,015

-63-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Actuarial Assumptions

The total GLI OPEB liability was based on an actuarial valuation as of June 30, 2018, 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, 2019. The assumptions include several employer groups as noted below. Salary increases and mortality rates included herein are for relevant employer groups. Information for other groups can be referenced in the VRS CAFR.

Inflation 2.50%

Salary increases, including inflation: Teachers 3.50%-5.95% Locality - General employees 3.50%-5.35% Locality - Hazardous Duty employees 3.50%-4.75%

Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% 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.

64 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Actuarial Assumptions

The total GL! OPEB liability was based on an actuarial valuation as of June 30, 2018, 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, 2019. The assumptions include several employer groups as noted below. Salary increases and mortality rates included herein are for relevant employer groups. Information for other groups can be referenced in the VRS CAFR.

Inflation 2.50% Salary increases, including inflation:

Teachers 3.50%-5.95%

Locality - General employees 3.50%-5.35%

Locality - Hazardous Duty employees 3.50%-4.75% Investment rate of return 6.75%, 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 6.75%. However, since the difference was minimal, and a more conservative 6.75% 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 6.75% 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.

64+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 11―Group Life Insurance (GLI) Plan (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

Discount Rate Decreased rate from 7.00% to 6.75%

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.

65 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 11—Group Life Insurance (GLI) Plan (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

Discount Rate Decreased rate from 7.00% to 6.75%

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

65+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 11―Group Life Insurance (GLI) Plan (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 14.00% to 15.00% Discount Rate Decreased rate from 7.00% to 6.75%

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:

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.

66 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 11—Group Life Insurance (GLI) Plan (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-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 at each age and service year

Withdrawal Rates

Disability Rates Lowered disability rates Salary Scale No change

Line of Duty Disability Increased rate from 14,00% to 15.00% Discount Rate Decreased rate from 7.00% to 6.75%

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: 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.

= 66°

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 11―Group Life Insurance (GLI) Plan (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 60.00% to 45.00% Discount Rate Decreased rate from 7.00% to 6.75%

NET GLI OPEB Liability

The net OPEB liability (NOL) for the GLI Plan represents the plan’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, 2019, NOL amounts for the GLI Plan is as follows (amounts expressed in thousands):

GLI OPEB Plan

Total GLI OPEB Liability $ 3,390,238
Plan Fiduciary Net Position 1,762,972
GLI Net OPEB Liability (Asset) $ 1,627,266

Plan Fiduciary Net Position as a Percentage of the Total GLI OPEB Liability 52.00%

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.

67 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Actuarial Assumptions (Continued) Mortality Rates - Non-Largest Ten Locality Employers - Hazardous Duty Employees (Continued)

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

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

[Adjusted termination rates to better fit experience at each

Withdrawal Rates age and service year

Disability Rates [Adjusted rates to better match experience Salary Scale No change Line of Duty Disability Decreased rate from 60.00% to 45.00% Discount Rate Decreased rate from 7.00% to 6.75%

NET GLI OPEB Liability

The net OPEB liability (NOL) for the GLI Plan represents the plan’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, 2019, NOL amounts for the GLI Plan is as follows (amounts expressed in thousands):

GLI OPEB Plan Total GLI OPEB Liability $ 3,390,238 Plan Fiduciary Net Position 1,762,972 GLI Net OPEB Liability (Asset) $ 1,627,266 Plan Fiduciary Net Position as a Percentage of the Total GL! OPEB Liability 52.00%

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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 11―Group Life Insurance (GLI) Plan (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*

Total 100.00% 5.13%

Inflation 2.50% Expected arithmetic nominal return* 7.63%

*The above allocation provides a one-year return of 7.63%. 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 7.11%, including expected inflation of 2.50%. The VRS Board elected a long-term rate of 6.75% which is roughly at the 40th percentile of expected long-term results of the VRS fund asset allocation.

68 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 11—Group Life Insurance (GLI) Plan (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 34.00% 5.61% 1.91% Fixed Income 15.00% 0.88% 0.13% Credit Strategies 14.00% 5.13% 0.72% Real Assets 14.00% 5.27% 0.74% Private Equity 14.00% 8.77% 1.23% MAPS - Multi-Asset Public Strategies 6.00% 3.52% 0.21% PIP - Private Investment Partnership 3.00% 6.29% 0.19% Total 10.00% 5.13%

Inflation Expected arithmetic nominal return*

“The above allocation provides a one-year return of 7.63%. 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 7.11%, including expected inflation of 2.50%. The VRS Board elected a long-term rate of 6.75% which is roughly at the 40" percentile of expected long-term results of the VRS fund asset allocation.

= 68 =

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Discount Rate

The discount rate used to measure the total GLI OPEB liability was 6.75%. 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, 2019, the rate contributed by the entity for the GLI OPEB will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly, which was 100% of the actuarially determined contribution rate. From July 1, 2019 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.

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 6.75%, 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 (5.75%) or one percentage point higher (7.75%) than the current rate:

1% Decrease Current Discount 1% Increase (5.75%) (6.75%) (7.75%)

Proportionate share of the Group Life Insurance Plan Net OPEB Liability:

County 657,366$ 500,384$ 373,076$

Component Unit School Board (Nonprofessional) 284,111$ 216,264$ 161,242$

Component Unit School Board (Professional) 2,019,558$ 1,537,278$ 1,146,163$

Rate

Group Life Insurance Program Fiduciary Net Position

Detailed information about the Group Life Insurance Plan’s Fiduciary Net Position is available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/pdf/publications/2019-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

69 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Discount Rate

The discount rate used to measure the total GLI OPEB liability was 6.75%. 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, 2019, the rate contributed by the entity for the GL! OPEB will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly, which was 100% of the actuarially determined contribution rate. From July 1, 2019 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.

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 (5.75%) (6.75%) (7.75%)

Proportionate

share of the Group Life

Insurance Plan

Net OPEB Liability: County $ 657,366 $ 500,384 $ 373,076 Component Unit School Board

(Nonprofessional) $ 284,111 $ 216,264 § 161,242 Component Unit School Board

(Professional) $ 2,019,558 $ 1,537,278 $$ 1,146, 163

Group Life Insurance Program Fiduciary Net Position

Detailed information about the Group Life Insurance Plan’s Fiduciary Net Position is available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http: //www.varetire.org/pdf /publications/2019-annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500.

69 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Plan Description

The Political Subdivision Health Insurance Credit (HIC) Plan 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 Plan 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 Plan OPEB, including eligibility, coverage and benefits is described below:

Eligible Employees

The Political Subdivision Retiree HIC Plan 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 Plan 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 Plan 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.

70 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Plan Description

The Political Subdivision Health Insurance Credit (HIC) Plan 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 Plan 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 Plan OPEB, including eli benefits is described below:

bility, coverage and

Eligible Employees

Benefit Amounts

HIC Plan 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.

70+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Employees Covered by Benefit Terms

As of the June 30, 2018 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 18 66

Active members 41 110

Total covered employees 59 176

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, 2020 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, 2020 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 Plan were $2,700 and $2,763 for the years ended June 30, 2020 and June 30, 2019, respectively. Contributions from the Component Unit School Board (nonprofessional) to the Health Insurance Credit Plan were $32,853 and $32,001 for the years ended June 30, 2020 and June 30, 2019, respectively.

71 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Employees Covered by Benefit Terms

As of the June 30, 2018 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 18 66 Active members 4 110 Total covered employees 59 176 Contributions

The contribution requirements for active employees is governed by 851.1-1402(E) of the Code of Virginia, as amended, but may be impacted as a result of funding options provided to political subdivisions by the Virginia General Assembly. The County’s contractually required employer contribution rate for the year ended June 30, 2020 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, 2020 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 Plan were $2,700 and $2,763 for the years ended June 30, 2020 and June 30, 2019, respectively. Contributions from the Component Unit School Board (nonprofessional) to the Health Insurance Credit Plan were $32,853 and $32,001 for the years ended June 30, 2020 and June 30, 2019, respectively.

“Ne

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 12―Health Insurance Credit (HIC) Plan (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, 2019. The total HIC OPEB liability was determined by an actuarial valuation performed as of June 30, 2018, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2019.

Actuarial Assumptions

The total HIC OPEB liability was based on an actuarial valuation as of June 30, 2018, 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, 2019.

Inflation 2.50%

Salary increases, including inflation: Locality - General employees 3.50%-5.35% Locality - Hazardous Duty employees 3.50%-4.75%

Investment rate of return 6.75%, net of investment expenses, including inflation*

72 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 12—Health Insurance Credit (HIC) Plan (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, 2019. The total HIC OPEB liability was determined by an actuarial valuation performed as of June 30, 2018, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2019.

Actuarial Assumptions The total HIC OPEB liability was based on an actuarial valuation as of June 30, 2018, 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, 2019.

Inflation 2.50% Salary increases, including inflation: Locality - General employees 3.50%-5.35%

Locality - Hazardous Duty employees 3.50%-4,75%

Investment rate of return 6.75%, net of investment expenses, including inflation*

-T-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 12―Health Insurance Credit (HIC) Plan (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 14.00% to 15.00% Discount Rate Decreased rate from 7.00% to 6.75%

73 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 12—Health Insurance Credit (HIC) Plan (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-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 at each age and service year

Withdrawal Rates

Disability Rates Lowered disability rates Salary Scale No change

Line of Duty Disability Increased rate from 14.00% to 15.00% Discount Rate Decreased rate from 7.00% to 6.75%

“TB.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 12―Health Insurance Credit (HIC) Plan (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 60.00% to 45.00% Discount Rate Decreased rate from 7.00% to 6.75%

74 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 12—Health Insurance Credit (HIC) Plan (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

[Adjusted termination rates to better fit experience

‘Withdrawal Rates 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 60.00% to 45.00% Discount Rate Decreased rate from 7.00% to 6.75%

~The

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 12―Health Insurance Credit (HIC) Plan (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*

Total 100.00% 5.13%

Inflation 2.50% Expected arithmetic nominal return* 7.63%

75 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 12—Health Insurance Credit (HIC) Plan (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 34.00% 5.61% 1.91% Fixed Income 15.00% 0.88% 0.13% Credit Strategies 14.00% 5.13% 0.72% Real Assets 14.00% 5.27% 0.74% Private Equity 14.00% 8.77% 1.23% MAPS - Multi-Asset Public Strategies 6.00% 3.52% 0.21% PIP - Private Investment Partnership 3.00% 6.29% 0.19% Total 10.00% 5.13% Inflation 2.50% Expected arithmetic nominal return* 7.63%

-75-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Discount Rate

The discount rate used to measure the total HIC OPEB liability was 6.75%. 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, 2019, the rate contributed by the entity for the HIC OPEB will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly, which was 100% of the actuarially determined contribution rate. From July 1, 2019 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.

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, 2018 $ 105,209 $ 89,391 $ 15,818

Changes for the year: Service cost $ 1,956 $ - $ 1,956
Interest 7,056 - 7,056
Differences between expected

and actual experience 2,390 - 2,390
Assumption changes 2,217 - 2,217
Contributions - employer - 2,788 (2,788)
Net investment income - 5,480 (5,480)
Benefit payments (8,828) (8,828) -
Administrative expenses - (117) 117
Other changes - (7) 7

Net changes $ 4,791 $ (684) $ 5,475

Balances at June 30, 2019 $ 110,000 $ 88,707 $ 21,293

Increase (Decrease)

76 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Discount Rate

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, 2018 $ 105,209 $ 89,391 $ 15,818 Changes for the year: Service cost $ 1,956 $ - S$ 1,956 Interest 7,056 : 7,056 Differences between expected and actual experience 2,390 - 2,390 Assumption changes 2,217 : 2,217 Contributions - employer - 2,788 (2,788) Net investment income : 5,480 (5,480) Benefit payments (8,828) (8,828) - Administrative expenses - (117) 17 Other changes : @ 7 Net changes $ 47 $ (684) $ 5,475 Balances at June 30, 2019 $ 110,000_$ 88,707 _$ 21,293

76+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 12―Health Insurance Credit (HIC) Plan (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, 2018 $ 521,410 $ (37,862) $ 559,272

Changes for the year: Service cost $ 8,086 $ - $ 8,086
Interest 19,598 - 19,598
Differences between expected

and actual experience 507 - 507
Assumption changes 20,714 - 20,714
Contributions - employer - 32,001 (32,001)
Benefit payments (35,194) (35,194) -

Net changes $ 13,711 $ (3,193) $ 16,904

Balances at June 30, 2019 $ 535,121 $ (41,055) $ 576,176

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 Plan net HIC OPEB liability using the discount rate of 6.75%, 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 (5.75%) or one percentage point higher (7.75%) than the current rate:

1% Decrease Current Discount 1% Increase (5.75%) (6.75%) (7.75%)

County’s Net HIC OPEB Liability $ 31,020 $ 21,293 $ 12,886

Component Unit School Board’s (Nonprofessional) Net HIC OPEB Liability $ 635,844 $ 576,176 $ 525,581

Rate

77 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

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

Increase (Decrease)

Total Plan Net HIC OPEB Fiduciary HIC OPEB Liability Net Position Liability (Asset) (a) (b) (a)- (b) Balances at June 30, 2018 $ 521,410 $ (37,862) $ 559,272 Changes for the year: Service cost $ 8,086 $ - $ 8,086 Interest 19,598 : 19,598 Differences between expected and actual experience 507 : 507 Assumption changes 20,714 : 20,714 Contributions - employer : 32,001 (32,001) Benefit payments (35,194) (35,194) : Net changes $ 1B,711_ $ (3,193) $ 16,904 Balances at June 30, 2019 $ 535,121 $ (41,055) $ 576,176

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

rate that is one percentage point lower (5.75%) or one percentage point higher (7.75%) than the current rate:

Rate 1% Decrease Current Discount 1% Increase (6.75%) (6.75%) (7.75%)

County’s

Net HIC OPEB Liability $ 31,020 $ 21,293 $ 12,886 Component Unit School

Board’s (Nonprofessional)

Net HIC OPEB Liability $ 635,844. $ 576,176 $ 525,581

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

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

For the year ended June 30, 2020, the County and Component Unit School Board (Nonprofessional) recognized Health Insurance Credit Plan OPEB expense of $2,162 and $23,641, respectively. At June 30, 2020, 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 Plan 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 $ 1,918 $ 2,873 $ 393 $ 619

Net difference between projected and actual earnings on HIC OPEB plan investments - 1,097 - 4,715

Change in assumptions 1,779 736 16,049 17,150

Employer contributions subsequent to the measurement date 2,700 - 32,853 -

Total $ 6,397 $ 4,706 $ 49,295 $ 22,484

Primary Government (Nonprofessional) Component Unit School Board

$2,700 and $32,853 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, 2021. 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)

2021 $ (933) $ (6,805)
2022 (935) (4,354)
2023 - 3,566
2024 802 1,551
2025 57 -

Thereafter - -

78 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

HIC Plan OPEB Expense, and Deferred Outflows of Resources and Deferred inflows of Resources Related to HIC Plan OPEB

‘Component Unit School Board

Primary Government (Nonprofessional) Deferred Outflows Deferredinflows Deferred Outflows Deferred Inflows of Resources of Resources of Resources of Resources Differences between expected ‘and actual experience s 1,918 $ 2873 $ 393 S 619 Net difference between projected and actual ‘earnings on HIC OPEB plan investments 1,07 : 45 Change in assumptions 4779 n6 16,00 17,150 Employer contributions subsequent to the: measurement date 2,700 32,853 Total 5 6397 §, 4706_. 9.295 §, 22,484

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) 2021 $ (933) $ (6,805) 2022 (935) (4,354) 2023 : 3,566 2024 802 1,551 2025 7 - Thereafter : -

78+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Health Insurance Credit Program Plan Data

Information about the VRS Political Subdivision Health Insurance Credit Plan is available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/pdf/publications/2019-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) Plan (OPEB Plan):

Plan Description

The Virginia Retirement System (VRS) Teacher Employee Health Insurance Credit (HIC) Plan 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 Plan. 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 Plan OPEB, including eligibility, coverage, and benefits is described below:

Eligible Employees

The Teacher Employee Retiree HIC Plan 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 Plan 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.

79 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Health Insurance Credit Program Plan Data

Information about the VRS Political Subdivision Health Insurance Credit Plan is available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http: / /www.varetire.org/pdf /publications/2019-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) Plan (OPEB Plan):

Plan Description

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

Eligible Employees

Benefit Amounts

-79-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

HIC Plan 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, 2020 was 1.20% of covered employee compensation for employees in the VRS Teacher Employee HIC Plan. 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 $234,902 and $222,000 for the years ended June 30, 2020 and June 30, 2019, respectively.

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

At June 30, 2020, the school division reported a liability of $2,890,356 for its proportionate share of the VRS Teacher Employee HIC Net OPEB Liability. The Net VRS Teacher Employee HIC OPEB Liability was measured as of June 30, 2019 and the total VRS Teacher Employee HIC OPEB liability used to calculate the Net VRS Teacher Employee HIC OPEB Liability was determined by an actuarial valuation performed as of June 30, 2018 and rolled forward to the measurement date of June 30, 2019. The school division’s proportion of the Net VRS Teacher Employee HIC OPEB Liability was based on the school division’s actuarially determined employer contributions to the VRS Teacher Employee HIC OPEB plan for the year ended June 30, 2019 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2019, the school division’s proportion of the VRS Teacher Employee HIC was 0.22079% as compared to 0.27150% at June 30, 2018.

For the year ended June 30, 2020, the school division recognized VRS Teacher Employee HIC OPEB expense of $214,106. Since there was a change in proportionate share between measurement dates, a portion of the VRS Teacher Employee HIC Net OPEB expense was related to deferred amounts from changes in proportion.

80 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

HIC Plan Notes

Contributions

The contribution requirements for active employees is governed by 851.1-1401(E) of the Code of Virginia, as amended, but may be impacted as a result of funding provided to school divisions by the Virginia General Assembly. Each school division’s contractually required employer contribution rate for the year ended June 30, 2020 was 1.20% of covered employee compensation for employees in the VRS Teacher Employee HIC Plan. 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 $234,902 and $222,000 for the years ended June 30, 2020 and June 30, 2019, respectively.

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

-80-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

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

At June 30, 2020, the school division reported deferred outflows of resources and deferred inflows of resources related to the VRS Teacher Employee HIC Plan OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources

Differences between expected and actual experience $ - $ 16,372

Net difference between projected and actual earnings on Teacher HIC OPEB plan investments 183 -

Change in assumptions 67,272 20,084

Change in proportion - 131,197

Employer contributions subsequent to the measurement date 234,902 -

Total $ 302,357 $ 167,653

$234,902 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, 2021. 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

2021 $ (21,035)
2022 (21,038)
2023 (19,771)
2024 (20,195)
2025 (14,440)

Thereafter (3,719)

81 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

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

‘At June 30, 2020, the school division reported deferred outflows of resources and deferred inflows of resources related to the VRS Teacher Employee HIC Plan OPEB from the following sources:

Deferred Outflows Deferred Inflows

of Resources of Resources

Differences between expected and actual experience $ “S$ 16,372 Net difference between projected and actual

earnings on Teacher HIC OPEB plan investments 183 Change in assumptions 67,272 20,084 Change in proportion : 131,197 Employer contributions subsequent to the

measurement date 234,902

Total $ 302,357_$ 167,653

Year Ended June 30

2021 $ (21,035) 2022 (21,038) 2023 (19,771) 2024 (20,195) 2025 (14,440) Thereafter (3,719)

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Actuarial Assumptions

The total Teacher Employee HIC OPEB liability for the VRS Teacher Employee HIC Plan was based on an actuarial valuation as of June 30, 2018, 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, 2019.

Inflation 2.50%

Salary increases, including inflation 3.50%-5.95%

Investment rate of return 6.75%, 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.

82 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Actuarial Assumptions

Inflation 2.50% Salary increases, including inflation __3.50%-5.95% Investment rate of return 6.75%, 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.

82+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 13―Teacher Employee Health Insurance Credit (HIC) Plan (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 Discount Rate Decreased rate from 7.00% to 6.75%

Net Teacher Employee HIC OPEB Liability

The net OPEB liability (NOL) for the Teacher Employee HIC Plan represents the plan’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net position. As of June 30, 2019, NOL amounts for the VRS Teacher Employee HIC Plan is as follows (amounts expressed in thousands):

Teacher Employee HIC

OPEB Plan

Total Teacher Employee HIC OPEB Liability $ 1,438,114
Plan Fiduciary Net Position 129,016
Teacher Employee Net HIC OPEB Liability (Asset) $ 1,309,098

Plan Fiduciary Net Position as a Percentage of the Total Teacher Employee HIC OPEB Liability 8.97%

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.

83 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Discount Rate Decreased rate from 7.00% to 6.75%

Net Teacher Employee HIC OPEB Liability

Teacher Employee HIC

OPEB Plan Total Teacher Employee HIC OPEB Liability $ 1,438,114 Plan Fiduciary Net Position 129,016 Teacher Employee Net HIC OPEB Liability (Asset) $ 1,309,098

Plan Fiduciary Net Position as a Percentage

of the Total Teacher Employee HIC OPEB Liability 8.97%

83+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 13―Teacher Employee Health Insurance Credit (HIC) Plan (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*

Total 100.00% 5.13%

Inflation 2.50% Expected arithmetic nominal return* 7.63%

84 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Long-Term Expected Rate of Return

Weighted

Arithmetic Average

Long-term Long-term

Target Expected Expected Asset Class (Strategy) Allocation __Rateof Return __Rate of Return* Public Equity 34.00% 5.61% 1.91% Fixed Income 15.00% 0.88% 0.13% Credit Strategies 14.00% 5.13% 0.72% Real Assets 14.00% 5.27% 0.74% Private Equity 14.00% 8.77% 1.23% MAPS - Multi-Asset Public Strategies 6.00% 3.52% 0.21% PIP - Private Investment Partnership 00% 6.29% 19% Total 3% Inflation 2.50% Expected arithmetic nominal return* 7.63%

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

Discount Rate

The discount rate used to measure the total Teacher Employee HIC OPEB was 6.75%. 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, 2019, the rate contributed by each school division for the VRS Teacher Employee HIC Plan 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, 2019 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.

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 Plan net HIC OPEB liability using the discount rate of 6.75%, 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 (5.75%) or one percentage point higher (7.75%) than the current rate:

1% Decrease Current Discount 1% Increase (5.75%) (6.75%) (7.75%)

School division’s proportionate share of the VRS Teacher Employee HIC OPEB Plan Net HIC OPEB Liability $ 3,234,799 $ 2,890,356 $ 2,597,751

Rate

Teacher Employee HIC OPEB Fiduciary Net Position

Detailed information about the VRS Teacher Employee HIC Plan’s Fiduciary Net Position is available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/pdf/publications/2019- annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

85 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Discount Rate

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 (6.75%) (6.75%) (7.75%) School division’s proportionate share of the VRS Teacher Employee HIC OPEB Plan Net HIC OPEB Liability $ 3,234,799 $ 2,890,356 $ 2,597,751

Teacher Employee HIC OPEB Fiduciary Net Position

Detailed information about the VRS Teacher Employee HIC Plan’s Fiduciary Net Position is available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http: //www.varetire.org/pdf /publications/2019- annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

85+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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. This is a cost-sharing multiple-employer plan administered by the Virginia Retirement System (the System). 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:

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.

86 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Plan Description

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

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

= 86+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

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, 2020 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 $68,106 and $72,164 for the years ended June 30, 2020 and June 30, 2019, 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, 2020, the entity reported a liability of $1,929,157 for its proportionate share of the Net LODA OPEB Liability. The Net LODA OPEB Liability was measured as of June 30, 2019 and the total LODA OPEB liability used to calculate the Net LODA OPEB Liability was determined by an actuarial valuation as of June 30, 2018, and rolled forward to the measurement date of June 30, 2019. 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, 2019 relative to the total of the actuarially determined pay-as-you-go employer contributions for all participating employers. At June 30, 2019, the entity’s proportion was 0.53769% as compared to 0.50337% at June 30, 2018.

For the year ended June 30, 2020, the entity recognized LODA OPEB expense of $174,367. 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.

87 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Contributions

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

For the year ended June 30, 2020, the entity recognized LODA OPEB expense of $174,367. 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.

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020, 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 $ 280,401 $ -

Net difference between projected and actual earnings on LODA OPEB program investments - 3,819

Change in assumptions 90,518 167,236

Change in proportion 115,535 -

Employer contributions subsequent to the measurement date 68,106 -

Total $ 554,560 $ 171,055

$68,106 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, 2021. 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

2021 $ 39,647
2022 39,654
2023 40,244
2024 40,874
2025 41,059

Thereafter 113,921

88 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2020, the entity reported deferred outflows of resources and deferred inflows of resources

related to the LODA OPEB from the following sources:

Deferred Outflows of Resources

Differences between expected and actual experience $ 280,401 $

Net difference between projected and actual earnings on LODA OPEB program investments -

Change in assumptions 90,518 Change in proportion 115,535,

Employer contributions subsequent to the measurement date 68,106

Total $s. 554,560_$

Deferred Inflows of Resources

3,819

167,236

$68, 106 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, 2021. 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

2021 $ 39,647 2022 39,654 2023 40,244 2024 40,874 2025 41,059 Thereafter 113,921

= 88 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2018, 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, 2019. The assumptions include several employer groups as noted below. Salary increases and mortality rates included herein are for relevant employer groups. Information for other groups can be referenced in the VRS CAFR.

Inflation 2.50%

Salary increases, including inflation: Locality employees N/A

Medical cost trend rates assumption: Under age 65 7.25%-4.75% Ages 65 and older 5.50%-4.75%

Year of ultimate trend rate Post-65 Fiscal year ended 2023 Pre-65 Fiscal year ended 2028

Investment rate of return 3.50%, 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 3.50%. However, since the difference was minimal, a more conservative 3.50% investment return assumption has been used. Since LODA is funded on a current-disbursement basis, the assumed annual rate of return of 3.50% was used since it approximates the risk-free rate of return.

89 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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, 2018, 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, 2019. The assumptions include several employer groups as noted below. Salary increases and mortality rates included herein are for relevant employer groups. Information for other groups can be referenced in the VRS CAFR.

Inflation

Salary increases, including inflation:

Locality employees

Medical cost trend rates assumption:

Under age 65 ‘Ages 65 and older

Year of ultimate trend rate Post-65 Pre-65

Investment rate of return

2.50%

NIA

7.25%-4,75% 5,50%-4.75%

Fiscal year ended 2023 Fiscal year ended 2028

3.50%, 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 3.50%. However, since the difference was minimal, a more conservative 3.50% investment return assumption has been used. Since LODA is funded on a current-disbursement basis, the assumed annual rate of return of 3.50% was used since it approximates the risk-free rate of return.

89+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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.

The actuarial assumptions used in the June 30, 2018 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- 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 60.00% to 45.00%

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 lage and service year

Disability Rates [Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 60.00% to 45.00%

-90-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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

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, 2019, NOL amounts for the LODA Program is as follows (amounts expressed in thousands):

LODA Program

Total LODA OPEB Liability $ 361,626
Plan Fiduciary Net Position 2,839
LODA Net OPEB Liability (Asset) $ 358,787

Plan Fiduciary Net Position as a Percentage of the Total LODA OPEB Liability 0.79%

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 3.50% for this valuation. Since LODA is funded on a current-disbursement basis, it is not able to use the VRS Pooled Investments 6.75% assumption. Instead, the assumed annual rate of return of 3.50% 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, 2019.

Discount Rate

The discount rate used to measure the total LODA OPEB liability was 3.50%. 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, 2019, the rate contributed by participating employers to the LODA OPEB Program will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly.

91 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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

Net LODA OPEB Liability

LODA Program Total LODA OPEB Liability $ 361,626 Plan Fiduciary Net Position 39 LODA Net OPEB Liability (Asset) $ 358,787 Plan Fiduciary Net Position as a Percentage

of the Total LODA OPEB Liability 0.79%

Long-Term Expected Rate of Return

Discount Rate

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 Discount Rate

The following presents the covered employer’s proportionate share of the net LODA OPEB liability using the discount rate of 3.50%, 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 (2.50%) or one percentage point higher (4.50%) than the current rate:

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

County’s proportionate share of the LODA Net OPEB Liability $ 2,237,960 $ 1,929,157 $ 1,684,914

Discount Rate

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 4.75%, 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 3.75%) or one percentage point higher (8.75% decreasing to 5.75%) than the current rate:

1% Decrease Current 1% Increase (6.75% decreasing (7.75% decreasing (8.75% decreasing

to 3.75%) to 4.75%) to 5.75%) County’s proportionate

share of the LODA Net OPEB Liability $ 1,631,083 $ 1,929,157 $ 2,305,059

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 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/pdf/publications/2019-annual-report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

92 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 Discount Rate

Discount Rate

1% Decrease Current 1% Increase (2.50%) (3.50%) (4.50%) County’s proportionate share of the LODA Net OPEB Liability $ 2,237,960 $ 1,929,157 $ 1,684,914

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 3.75%) to 4.75%) to 5.75%) County’s proportionate share of the LODA Net OPEB Liability $ 1,631,083 $ 1,929,157 $ 2,305,059

LODA OPEB Fiduciary Net Position

Detailed information about the LODA Program Fiduciary Net Position is available in the separately issued VRS 2019 Comprehensive Annual Financial Report (CAFR). A copy of the 2019 VRS CAFR may be downloaded from the VRS website at http: / /www.varetire.org/ pdf /publications/2019-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, 2020

Note 15-Aggregate Pension Information:

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

VRS Pension Plans: Primary Government $ 1,693,399 $ 383,456 $ 5,923,033 $ 888,996 $ - $ - $ - $ -
School Board Nonprofessional - - - - 980,210 91,224 6,573,850 975,181
School Board Professional - - - - 5,962,692 3,551,888 29,309,901 2,718,616 Totals $ 1,693,399 $ 383,456 $ 5,923,033 $ 888,996 $ 6,942,902 $ 3,643,112 $ 35,883,751 $ 3,693,797

Primary Government Component Unit School Board

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) $ 375,131 $ 81,117 $ 754,535 $ 81,788 $ - $ - $ - $ -

School Stand-Alone Plan (Note 10) - - - - 3,904,844 996,263 11,465,077 1,102,461

VRS OPEB Plans:

Group Life Insurance Plan (Note 11):

County 116,656 55,473 500,384 11,431 - - - -

School Board Nonprofessional - - - - 41,949 30,587 216,264 1,269

School Board Professional - - - - 301,242 158,455 1,537,278 21,794

County Health Insurance Credit Plan (Note 12) 6,397 4,706 21,293 2,162 - - - -

Nonprofessional Health Insurance Credit Plan (Note 12) 49,295 22,484 576,176 23,641

Teacher Health Insurance Credit Plan (Note 13) - - - - 302,357 167,653 2,890,356 214,106

Line of Duty Act (LODA) Program (Note 14) 554,560 171,055 1,929,157 174,367 - - - -
Totals $ 1,052,744 $ 312,351 $ 3,205,369 $ 269,748 $ 4,599,687 $ 1,375,442 $ 16,685,151 $ 1,363,271

Primary Government Component Unit School Board

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2020

Note 15: ite Pension Information: Primary Government Component Unit School Board Deferred Deferred NetPension Pension Deferred Deferred ‘Net Pension Pension Outfiows Inflows __Liabilty Expense _Outflows__Inflows __Liability __Expense VRS Pension Plans: Primary Government 5 1693,399 $33,456 $5,973,033 $ BBB.I96 S - 8 - 8 so. School Board Nonprofessional : . 990,210 91224 6,573,850 975,181 School Board Professional 5,962,652 _ 3.551.888 29,309,901 2,718 616

Totals Sees,

EGE $ EHO $ BEI $6,902,900 $3648.12 $35. BBS. TSI S_3,693,797

Note 16-Aggregate OPEB Informatior

County Stand-Alone Pan (ote 9) Scoot Stand-Alone Pan (ote 10) RS OFE8 Pans ‘Group Life insane Plan Not 1) County Schoo Board Nonpofessonal Shoo Board Profession county Heath insane Crest Pan (Note 2) Nongrofesiona Health Isurance Crest an (Note 2) “Teacher Healt surance eat lan Nate 13) Line of Duty Act 00) Program (ce 14)

Primary Government Component Unit Schl Board Cuttiows inflows isbity__Expense__Outflows__Inflows__inbiity_ Expense Sass Sua § 754535 § a7 s s s Sooke 996283 11465077 4,102,461 116656 554 son.aes 1 419 357 T6808 a 54560 171.055 1929,187 174367 STs Tae $3 § 3205368 $7 SASH MAT § Ta § TGS STL

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COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 17-Capital Assets:

Capital asset activity for the year ended June 30, 2020 was as follows:

Primary Government:

Beginning Ending Balance Increases Decreases Balance

Governmental Activities: Capital assets, not being depreciated:

Land $ 643,695 $ 20,236 $ - $ 663,931
Total capital assets not being depreciated $ 643,695 $ 20,236 $ - $ 663,931

Capital assets, being depreciated: Buildings and improvements $ 26,961,596 $ 154,985 $ (2,578,626) $ 24,537,955
Machinery and equipment 5,431,854 742,531 (178,138) 5,996,247

Total capital assets being depreciated $ 32,393,450 $ 897,516 $ (2,756,764) $ 30,534,202

Accumulated depreciation: Buildings and improvements $ (10,718,246) $ (786,991) $ 1,418,249 $ (10,086,988) Machinery and equipment (3,738,450) (511,361) 80,465 (4,169,346)

Total accumulated depreciation $ (14,456,696) $ (1,298,352) $ 1,498,714 $ (14,256,334)

Total capital assets being depreciated, net $ 17,936,754 $ (400,836) $ (1,258,050) $ 16,277,868

Governmental activities capital assets, net $ 18,580,449 $ (380,600) $ (1,258,050) $ 16,941,799

During the fiscal year, the County transferred four buildings to the Component Unit - School Board with an original cost of $2,578,626 and accumulated depreciation of $1,418,249 (net book value of $1,160,377).

94 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 17-Capital Asse Capital asset activity for the year ended June 30, 2020 was as follows:

Primary Government:

Beginning Ending Balance Increases Decreases Balance

Governmental Activities:

Capital assets, not being depreciated:

Land S$ 643,695 $ 20,236 $ _ $663,931 Total capital assets not being depreciated $ 643,695 $ 20,236 $ = $663,931 Capital assets, being depreciated:

Buildings and improvements S$ 26,961,596 $ 154,985 $ (2,578,626) $ 24,537,955,

Machinery and equipment 5,431,854 742,531 (178,138) 5,996,247

Total capital assets being depreciated $32,393,450 $897,516 $

(2,756,764) §_ 30,534,202

‘Accumulated depreciation:

1,418,249 $ (10,086,988) 80,465 (4,169,346)

Buildings and improvements $ (10,718,246) $ (786,991) $ Machinery and equipment (3,738,450) (511,361) Total accumulated depreciation $_ (14,456,696) $__ (1,298,352) $

1,498,714 $ (14,256,334)

Total capital assets being depreciated, net $__ 17,936,754 $ (400,836) $

(1,258,050) $_ 16,277,868

Governmental activities capital assets, net $18,580,449 $ (380,600) $

(1,258,050) $_ 16,941,799

During the fiscal year, the County transferred four buildings to the Component Unit - School Board with an original cost of $2,578,626 and accumulated depreciation of $1,418,249 (net book value of

$1,160,377).

-94-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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 $ 5,248,847 $ - $ - $ 5,248,847

Accumulated depreciation: Utility plant $ (2,772,192) $ (131,017) $ - $ (2,903,209) Machinery and equipment (453) (2,715) - (3,168)

Total accumulated depreciation $ (2,772,645) $ (133,732) $ - $ (2,906,377)

Total capital assets being depreciated, net $ 2,476,202 $ (133,732) $ - $ 2,342,470

Business-type activities capital assets, net $ 2,476,202 $ (133,732) $ - $ 2,342,470

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

Governmental activities: General government administration $ 26,780
Judicial administration 11,983
Public safety 255,129
Public works 140,642
Health and welfare 31,672
Education 796,762
Parks, recreation, and cultural 31,152
Community development 4,232

Total depreciation expense-governmental activities $ 1,298,352

Business-type activities: Sewer Authority $ 133,732

95 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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 $5,248,847 $ $ = $ 5,248,847 Accumulated depreciation: Utility plant. $ (2,772,192) $ (131,017) $ - $ (2,903,209) Machinery and equipment (453) (2,715) : (3,168) Total accumulated depreciation $(@,772,645) $_ (133,732) $ ~ $_ (2,906,377) Total capital assets being depreciated, net $2,476,202 $ (133,732) $ = $2,342,470 Business-type activities capital assets, net $_ 2,476,202 $___ (133,732) $ = $_ 2,342,470

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

Governmental activities:

General government administration $ 26,780 Judicial administration 11,983 Public safety 255,129 Public works 140,642 Health and welfare 31,672 Education 796,762 Parks, recreation, and cultural 31,152 Community development 4,232

Total depreciation expense-governmental activities $__ 1,298,352

Business-type activities:

Sewer Authority $___ 133,732

-95-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 17-Capital Assets: (Continued)

Capital asset activity for the School Board for the year ended June 30, 2020 was as follows:

Discretely Presented Component Unit – School Board:

Beginning Ending Balance Increases Decreases Balance

Capital assets, not being depreciated: Land $ 5,636,345 $ - $ (8,050) $ 5,628,295

Capital assets, being depreciated: Buildings and improvements $ 29,226,792 $ 2,620,597 $ (305,146) $ 31,542,243
Machinery and equipment 7,900,497 308,868 (58,784) 8,150,581

Total capital assets being depreciated $ 37,127,289 $ 2,929,465 $ (363,930) $ 39,692,824

Accumulated depreciation: Buildings and improvements $ (19,544,178) $ (2,221,349) $ 257,896 $ (21,507,631)
Machinery and equipment (6,298,515) (413,735) 58,784 (6,653,466)

Total accumulated depreciation $ (25,842,693) $ (2,635,084) $ 316,680 $ (28,161,097)

Total capital assets being depreciated, net $ 11,284,596 $ 294,381 $ (47,250) $ 11,531,727

Governmental activities capital assets, net $ 16,920,941 $ 294,381 $ (55,300) $ 17,160,022

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.

96 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 17-Capital Assets: (Continued) Capital asset activity for the School Board for the year ended June 30, 2020 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 $ (8,050) $___ 5,628,295 Capital assets, being depreciated:

Buildings and improvements S$ 29,226,792 $ 2,620,597 $ (305,146) $31,542,243

‘Machinery and equipment 7,900,497 308,868 (58,784) 8,150,581 Total capital assets being depreciated S___37,127,289 $_ 2,929,465 $___(363,930) $___39,692,824 Accumulated depreciation:

Buildings and improvements S$ (19,544,178) $ (2,221,349) $257,896 $ (21,507,631)

‘Machinery and equipment (6,298,515) (413,735) 58,784 (6,653,466) Total accumulated depreciation $_ (25,842,693) $_ (2,635,084) $___ 316,680 $ (28,161,097) Total capital assets being depreciated, net $11,284,596 $294,381 $ (47,250) $___ 11,531,727 Governmental activities capital assets, net $16,920,941 $294,381 $ (55,300) $___ 17,160,022

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.

96+

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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, 2020 is $298,499. 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 2020. 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.

97 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

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.

-97-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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.

Government-wide Statement of Net Position Balance Sheet Governmental Activities Governmental Funds

2nd half taxes due December 2020 $ 5,414,757 $ 5,414,757
Delinquent taxes due prior to June 30, 2020 - 6,813,182
Prepaid taxes 227,209 227,209
Total deferred/unavailable revenue $ 5,641,966 $ 12,455,148

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 2020, a total of $5,775,046 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, 2020, 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 $550,591 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 2020 and the two preceding fiscal years were as follows:

Current Year Balance at Claims and Balance at

Beginning of Changes in Claim End of Fiscal Year Fiscal Year Estimates Payments Fiscal Year

2019-20 $ 864,737 $ 5,460,900 $ (5,775,046) $ 550,591
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

98 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 22-Deferred/Unavailable Revenue:

Government-wide

Statement of Net Position Balance Sheet

Governmental Activities _ Governmental Funds

2nd half taxes due December 2020 s 5,414,757 $ 5,414,757 Delinquent taxes due prior to June 30, 2020 : 6,813,182 Prepaid taxes 227,209 227,209 Total deferred/unavailable revenue $ 5,641,966 $ 12,455,148

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 2020, a total of $5,775,046 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, 2020, 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 $550,591 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 2020 and the two preceding fiscal years were as follows:

Current Year

Balance at Claims and Balance at Beginning of Changes in Claim End of Fiscal Year_ _ Fiscal Year Estimates Payments Fiscal Year 2019-20 § 864,737 § 5,460,900 $ (5,775,046) $ 550,591 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

98 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

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.

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, 2020, the outstanding balance of the loan was $2,602,200.

Future required rent payments are as follows:

Year Ending

June 30, Principal Interest 2021 408,700$ 62,259$
2022 418,400 51,521
2023 428,300 40,529
2024 438,400 29,278
2025 448,900 17,759
2026 459,500 5,965

Totals 2,602,200$ 207,311$

Operating Lease

Note 26-Litigation:

As of June 30, 2020, 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, 2020, 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.

99 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 24-Moral Obligation:

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.

Note 25-Operating Lease:

Future required rent payments are as follows:

Year Ending Operating Lease June 30, Principal Interest 2021 S$ 408,700 § 62,259 2022 418,400 51,521 2023 428,300 40,529 2024 438,400 29,278 2025 448,900 17,759 2026 459,500 5,965 Totals 602,200 207,311

Note 26-Litigatior

As of June 30, 2020, 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, 2020, 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.

-99-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 26-Litigation: (Continued)

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.

Note 27 – Subsequent Events:

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency stemming from a new strain of coronavirus that was spreading globally (the “COVID-19 outbreak”). On March 11, 2020, the WHO classified the COVID-19 outbreak as a pandemic, triggering volatility in financial markets and a significant negative impact on the global economy. The COVID-19 pandemic has developed rapidly in 2020 and remains a quickly evolving situation. As a result of the spread of COVID-19, economic uncertainties have arisen which are likely to negatively impact economic activity. County of Russell, Virginia is not able to estimate the effects of the COVID-19 pandemic for fiscal year 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed by the federal government to alleviate some of the effects of the sharp economic downturn due to the COVID-19 pandemic. Among the CARES Act key provisions was $339.8 billion designated for programs for state and local government, which included $150 billion in direct aid for state and local governments from the federal Coronavirus Relief Fund (CRF), pursuant to the federal CARES Act, to address spending shortages related to the COVID-19 pandemic.

The Commonwealth of Virginia received approximately $3.1 billion from the CRF, of which $1.3 billion was allocated for localities with fewer than 500,000 people. Localities with populations greater than 500,000 could apply to receive funds directly. All other CRF funds were distributed to the states to determine the allocations to localities.

On May 12, 2020, the first round of the allocations to local governments was authorized by the Commonwealth. On June 1, 2020, each locality received its share of the first half, or fifty (50) percent, of the locally based allocations. Unspent funds at June 30 from the initial allocation are reported as unearned revenue. Like the first round, the second round of allocations was based on population and was for the same total amount distributed in the first round. County of Russell, Virginia, received the second round of CRF funds in the amount of $2,319,526 on August 13, 2020.

The federal guidance for the CARES Act states that the CRF funds can be used only for the direct costs associated with the response to the COVID-19 pandemic and cannot be used to address revenue shortfalls. CRF funds are considered one-time funds and should not be used for ongoing services or base operations. As a condition of receiving CRF funds, any funds unexpended as of December 30, 2021 will be returned to the federal government.

Note 28-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, 2019.

100 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 26-Litigation: (Continued)

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.

Note 27 - Subsequent Events:

‘On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency stemming from a new strain of coronavirus that was spreading globally (the “COVID-19 outbreak”). On March 11, 2020, the WHO classified the COVID-19 outbreak as a pandemic, triggering volatility in financial markets and a significant negative impact on the global economy. The COVID-19 pandemic has developed rapidly in 2020 and remains a quickly evolving situation. As a result of the spread of COVID-19, ‘economic uncertainties have arisen which are likely to negatively impact economic activity. County of Russell, Virginia is not able to estimate the effects of the COVID-19 pandemic for fiscal year 2021.

Note 28-Upcoming Pronouncement:

= 100 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 28-Upcoming Pronouncements: (Continued)

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 June 15, 2021.

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, 2020.

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, 2019.

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, 2021.

Statement No. 92, Omnibus 2020, addresses practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics such as leases, assets related to pension and postemployment benefits, and reference to nonrecurring fair value measurements of assets or liabilities in authoritative literature. The effective dates differ by topic, ranging from January 2020 to periods beginning after June 15, 2021.

Statement No. 93, Replacement of Interbank Offered Rates, establishes accounting and financial reporting requirements related to the replacement of Interbank Offered Rates (IBORs) in hedging derivative instruments and leases. It also identifies appropriate benchmark interest rates for hedging derivative instruments. The requirements of this Statement, except for removal of London Interbank Offered Rate (LIBOR) as an appropriate benchmark interest rate and the requirements related to lease modifications, are effective for reporting periods beginning after June 15, 2020. The removal of LIBOR as an appropriate benchmark interest rate is effective for reporting periods ending after December 31, 2021. All requirements related to lease modifications in this Statement are effective for reporting periods beginning after June 15, 2021.

Statement No. 94, Public-Private and Public-Public Partnerships and Availability of Payment Arrangements, addresses issues related to public-private and public-public partnership arrangements. This Statement also provides guidance for accounting and financial reporting for availability payment arrangements. The requirements of this Statement are effective for reporting periods beginning after June 15, 2022.

101 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 28-Upcoming Pronouncements: (Continued)

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, 2019.

Statement No. 93, Replacement of interbank Offered Rates, establishes accounting and financial reporting requirements related to the replacement of Interbank Offered Rates (IBORs) in hedging derivative instruments and leases. It also identifies appropriate benchmark interest rates for hedging derivative instruments. The requirements of this Statement, except for removal of London Interbank Offered Rate (LIBOR) as an appropriate benchmark interest rate and the requirements related to lease modifications, are effective for reporting periods beginning after June 15, 2020. The removal of LIBOR as an appropriate benchmark interest rate is effective for reporting periods ending after December 31, 2021. All requirements related to lease modifications in this Statement are effective for reporting periods beginning after June 15, 2021.

=101-

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020

Note 28-Upcoming Pronouncements: (Continued)

Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs), (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. The requirements of this Statement are effective for reporting periods beginning after June 15, 2022.

Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code (IRC) Section 457 Deferred Compensation Plans – an Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement. No 32, (1) increases consistency and comparability related to reporting of fiduciary component units in certain circumstances; (2) mitigates costs associated with the reporting of certain plans as fiduciary component units in fiduciary fund financial statements; and (3) enhances the relevance, consistency, and comparability of the accounting and financial reporting for Section 457 plans that meet the definition of a pension plan and for benefits provided through those plans. The effective dates differ based on the requirements of the Statement, ranging from June 2020 to reporting periods beginning after June 15, 2021.

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

102 -

COUNTY OF RUSSELL, VIRGINIA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020

Note 28-Upcoming Pronouncements: (Continued)

Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code (IRC) Section 457 Deferred Compensation Plans - an Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement. No 32, (1) increases consistency and comparability related to reporting of fiduciary component units in certain circumstances; (2) mitigates costs associated with the reporting of certain plans as fiduciary component units in fiduciary fund financial statements; and (3) enhances the relevance, consistency, and comparability of the accounting and financial reporting for Section 457 plans that meet the definition of a pension plan and for benefits provided through those plans. The effective dates differ based on the requirements of the Statement, ranging from June 2020 to reporting periods beginning after June 15, 2021.

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

= 102 -

Required Supplementary Information

Exhibit 11

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES General property taxes 16,169,000$ 16,169,000$ 16,065,093$ (103,907)$
Other local taxes 3,018,433 3,018,433 2,873,196 (145,237)
Permits, privilege fees, and regulatory licenses 35,700 35,700 47,900 12,200
Fines and forfeitures 18,000 18,000 6,885 (11,115)
Revenue from the use of money and property 244,300 244,300 174,772 (69,528)
Charges for services 329,100 329,100 312,802 (16,298)
Miscellaneous 143,550 143,550 326,373 182,823
Recovered costs 427,780 427,780 1,151,845 724,065
Intergovernmental:

Commonwealth 9,377,720 9,464,483 8,603,969 (860,514)
Federal 3,242,780 3,242,780 3,129,887 (112,893)

Total revenues 33,006,363$ 33,093,126$ 32,692,722$ (400,404)$

EXPENDITURES Current:

General government administration 1,898,214$ 2,047,854$ 1,952,540$ 95,314$
Judicial administration 2,311,747 2,679,197 2,738,739 (59,542)
Public safety 6,068,471 7,451,327 7,336,663 114,664
Public works 2,678,364 2,841,364 2,656,913 184,451
Health and welfare 7,460,073 7,460,873 7,169,005 291,868
Education 7,804,655 8,003,155 8,367,888 (364,733)
Parks, recreation, and cultural 574,049 587,549 609,539 (21,990)
Community development 919,415 926,951 989,088 (62,137)
Nondepartmental 302,300 463,660 224,547 239,113

Capital projects 323,416 379,416 413,535 (34,119)
Debt service:

Principal retirement 1,291,906 1,291,906 1,289,006 2,900
Interest and other fiscal charges 455,616 455,616 455,616 -

Total expenditures 32,088,226$ 34,588,868$ 34,203,079$ 385,789$

Excess (deficiency) of revenues over (under) expenditures 918,137$ (1,495,742)$ (1,510,357)$ (14,615)$

OTHER FINANCING SOURCES (USES) Transfers in (788,137)$ (788,137)$ 524,520$ 1,312,657$
Transfers out (130,000) (183,400) (114,698) 68,702
Issuance of capital leases - - 461,589 461,589

Total other financing sources (uses) (918,137)$ (971,537)$ 871,411$ 1,842,948$

Net change in fund balances -$ (2,467,279)$ (638,946)$ 1,828,333$
Fund balances - beginning - 2,467,279 6,299,675 3,832,396
Fund balances - ending -$ -$ 5,660,729$ 5,660,729$

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, 2020

103 -

County of Russell, Virginia General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2020

Variance with

Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) REVENUES General property taxes $ 16,169,000 $ 16,169,000 $ 16,065,093 $ (103,907) Other local taxes 3,018,433 3,018,433 2,873,196 (145,237) Permits, privilege fees, and regulatory licenses 35,700 35,700 47,900 12,200 Fines and forfeitures 18,000 18,000 6,885 (11,115) Revenue from the use of money and property 244,300 244,300 174,72 (69,528) Charges for services 329,100 329,100 312,802 (16,298) Miscellaneous 143,550 143,550 326,373 182,823 Recovered costs 427,780 427,780 4,151,845 724,065 Intergovernmental: Commonwealth 9,377,720 9,464,483 8,603,969 (860,514) Federal 3,242,780___3,242,780 3,129,887 (112,893) Total revenues 33,006,363 $ 33,093,126 $32,692,722 (400,404) EXPENDITURES Current: General government administration S$ 1,898,214 $ 2,047,854 $ 1,952,540 $ 95,314 Judicial administration 2,311,747 2,679,197 2,738,739 (59,542) Public safety 6,068,471 7,451,327 7,336,663 114,664 Public works 2,678,364 2,841,364 2,656,913 184,451 Health and welfare 7,460,073 7,460,873 7,169,005 291,868 Education 7,804,655 8,003,155 8,367,888 (364,733) Parks, recreation, and cultural 574,049 587,549 609,539 (21,990) Community development 919,415 926,951 989,088 (62,137) Nondepartmental 302,300 463,660 224,547 239,113 Capital projects 323,416 379,416 413,535 4,119) Debt service: Principal retirement 1,291,906 1,291,906 1,289,006 2,900 Interest and other fiscal charges 455,616 455,616 455,616 - Total expenditures 37,088,226 5 34,588,868 $34,203,079 385, 789 Excess (deficiency) of revenues over (under) expenditures $ 918,137$ (1,495,742) $ (1,510,357) § (14,645) OTHER FINANCING SOURCES (USES) Transfers in $ (788,137) $ (788,137) $524,520 § 1,312,657 Transfers out (130,000) (183,400) (114,698) 68,702 Issuance of capital leases - - 461,589 461,589 Total other financing sources (uses) (18,137) $_O71.537) S B71, ATT TiBAL, 948 Net change in fund balances $ = $ (2,467,279) $ (638,946) $1,828,333 Fund balances - beginning : 2,467,279 6,299,675 3,832,396 Fund balances - ending = = 5,660,729 5,660,729

103 -

Exhibit 12

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Other local taxes 150,000$ 150,000$ 161,913$ 11,913$
Revenue from the use of money and property - - 2,776 2,776

Total revenues 150,000$ 150,000$ 164,689$ 14,689$

EXPENDITURES Current:

Public works 150,000$ 150,000$ 84,902$ 65,098$

Excess (deficiency) of revenues over (under) expenditures -$ -$ 79,787$ 79,787$

Net change in fund balances -$ -$ 79,787$ 79,787$
Fund balances - beginning - - 414,459 414,459
Fund balances - ending -$ -$ 494,246$ 494,246$

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, 2020

104 -

County of Russell, Virginia Special Revenue Fund - Coal Road Fund

ind Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2020

Schedule of Revenues, Expenditures,

Exhibit 12

REVENUES

Other local taxes

Revenue from the use of money and property Total revenues

EXPENDITURES. Current: Public works

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

Fund balances - beginning Fund balances - ending.

Variance with

Budgeted Amounts. Final Budget - Actual Positive

Original Final Amounts Negative)

$ 150,000 $ 150,000 $ 161,913. $ 11,913

2,776 2,776

5 150,000_$750,000$_164,689 514,689

$150,000 _$ 150,000$ 84,902$ 65,098

$ s S 79,787 $79,787.

$ $ $79,787 $79,787

: 414,459 414,459

94,246 294,246

= 104 -

Exhibit 13

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Miscellaneous -$ -$ 7,131$ 7,131$

Total revenues -$ -$ 7,131$ 7,131$

Excess (deficiency) of revenues over (under) expenditures -$ -$ 7,131$ 7,131$

Net change in fund balances -$ -$ 7,131$ 7,131$
Fund balances - beginning - - 3,773 3,773
Fund balances - ending -$ -$ 10,904$ 10,904$

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, 2020

Budgeted Amounts

105 -

Exhibit 13 County of Russell, Virginia Special Revenue Fund - Workforce Investment Board Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2020

Variance with Budgeted Amounts Final Budget - Actual Positive

Original Final ‘Amounts (Negative)

REVENUES Miscellaneous $ -$ _$ 7.131 $ 7,131 Total revenues = = 7131S EAE Excess (deficiency) of revenues over (under) expenditures $ _$ _$ 7.131 $ 7,131 Net change in fund balances $ -$ $ 7131 7,131 Fund balances - beginning : : 3,773 3,773 Fund balances - ending = 70,904 70,904

+105 -

Exhibit 14

Variance with Final Budget -

Actual Positive Original Final Amounts (Negative)

REVENUES Intergovernmental:

Federal -$ 2,319,526$ 534,052$ (1,785,474)$
Total revenues -$ 2,319,526$ 534,052$ (1,785,474)$

EXPENDITURES Current:

Public works -$ 2,319,526$ 9,532$ 2,309,994$
Total expenditures -$ 2,319,526$ 9,532$ 2,309,994$

Excess (deficiency) of revenues over (under) expenditures -$ -$ 524,520$ 524,520$

OTHER FINANCING SOURCES (USES) Transfers out -$ -$ (524,520)$ (524,520)$

Total other financing sources (uses) -$ -$ (524,520)$ (524,520)$

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

County of Russell, Virginia Special Revenue Fund - CARES Fund

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2020

Budgeted Amounts

106 -

County of Russell, Virginia Special Revenue Fund - CARES Fund

ind Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2020

Schedule of Revenues, Expenditures,

Exhibit 14

REVENUES Intergovernmental: Federal Total revenues

EXPENDITURES. Current: Public works

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) $ = $2,319,526 $ 534,052 § (1,785,474) = 2,319,526 $ 534,052 5 (1,785,474) $ = $2,319,526 $ 9,532$ 2,309,994 $ = $2,319,526 $ 9,532$ 2,309,994 $ _$ S 524,520 $ 524,520 $ $ = $ (524,520) $ (524,520) $ ~$ ~$ (524,520) $ (524,520) $ “3s s s

= 106 -

Exhibit 15

Proportionate Pension Plan’s Share of the NPL Fiduciary Net

Proportion of as a Percentage of Position as a the Net Pension Proportionate Covered Covered Payroll Percentage of Total

Date Liability (NPL) Share of the NPL Payroll (3)/(4) Pension Liability (1) (2) (3) (4) (5) (6)

Primary Government - County Retirement Plan 2019 99.0170% 5,923,033$ 6,020,423$ 98.38% 86.16% 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) 2019 0.22271% 29,309,901$ 18,519,029$ 158.27% 73.51% 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, 2019

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.

Pension Plans

107 -

County of Russell, Virginia Schedule of Employer’s Proportionate Share of the Net Pension Liability Pension Plans

For the Measurement Dates of June 30, 2014 through June 30, 2019

Exhibit 15

Proportionate Pension Plan’s Share of the NPL Fiduciary Net Proportion of as a Percentage of Position as a the Net Pension Proportionate Covered Covered Payroll Percentage of Total

Date Liability (NPL) Share of the NPL. Payroll aya) Pension Liability

a @ oy @ 6) © Primary Government - County Retirement Plan

2019 99.0170% § 5,923,033 $ 6,020,423 98.38% 86.16%

2018 99.2670% 441,185 6,123,587 7.04% 84,04%

2017 99.2986% 4,976,088 4,208,206 103.49% 77.80%

2016 98.6202% 6,835,305 5,467 426 25.02% 77.80%

2015, 99.1179% 5,970,089 5,368,165 11.21% 80.39%

2014 99.1179% 5,782,829 5,440,419 106.29% 80.53% ‘Component Unit School Board (professional)

2019 o.22271% § 29,309,901 § 18,519,009 158.27% 7.51%

2018 o.22864% 26,888,000 19,374,518 146.3% aat%

2017 0.22908% 28,167,000 17,982,879 156.63% TR

2016 o.2s401% 32,921,000 a7914s79 183.7% 68.28%

2015, 0.233376 29,373,000 17,363,701 169.168 70.68%

2014 0.23360% 28,229,000 17,083,236 165.244 70.88%

Schedule is intended to show information for 10 years. Information prior to the 2014 valuation s not available. However, additional years will be

Included as they become available.

+107

Exhibit 16

2019 2018 2017 2016 2015 2014 Total pension liability Service cost $ 215,965 $ 222,182 $ 241,584 $ 228,855 $ 261,697 $ 263,958
Interest 1,200,584 1,189,675 1,149,952 1,151,059 1,132,997 1,116,022
Differences between expected and actual experience 376,115 21,651 340,261 (240,897) 20,402 -
Changes of assumptions 447,422 - 32,003 - - -
Benefit payments (1,349,305) (1,206,028) (1,186,620) (1,123,037) (1,191,112) (1,083,833)
Net change in total pension liability $ 890,781 $ 227,480 $ 577,180 $ 15,980 $ 223,984 $ 296,147
Total pension liability - beginning 17,825,852 17,598,372 17,021,192 17,005,212 16,781,228 16,485,081
Total pension liability - ending (a) $ 18,716,633 $ 17,825,852 $ 17,598,372 $ 17,021,192 $ 17,005,212 $ 16,781,228

Plan fiduciary net position Contributions - employer $ 447,436 $ 443,319 $ 450,897 $ 460,715 $ 425,544 $ 423,435
Contributions - employee 123,611 125,060 127,268 128,274 120,010 130,388
Net investment income 772,746 860,829 1,325,272 187,821 515,108 1,629,758
Benefit payments (1,349,305) (1,206,028) (1,186,620) (1,123,037) (1,191,112) (1,083,833)
Administrator charges (8,244) (7,790) (8,059) (7,361) (7,577) (9,166)
Other (485) (755) (1,167) (82) (108) 86
Net change in plan fiduciary net position $ (14,241) $ 214,635 $ 707,591 $ (353,670) $ (138,135) $ 1,090,668
Plan fiduciary net position - beginning 12,157,024 11,942,389 11,234,798 11,588,468 11,726,603 10,635,935
Plan fiduciary net position - ending (b) $ 12,142,783 $ 12,157,024 $ 11,942,389 $ 11,234,798 $ 11,588,468 $ 11,726,603

School Division’s net pension liability - ending (a) - (b) $ 6,573,850 $ 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 64.88% 68.20% 67.86% 66.00% 68.15% 69.88%

Covered payroll $ 2,601,655 $ 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 252.68% 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, 2019 Pension Plans

108 -

Coury of Rel, Vege

\Conponen Un Scoot our (noprtenona)

‘otal pension tabitty Net change in otal pension abity

‘Total person abit begining

“Total person tabity “ening

Soar ages

Net charge in lan dry net poston Pian haut net poston bering Pan tauctry net poston ening)

School Dison’ net pes abe - ending a)

‘enon abity

School Don’s net pansion aby a percentage of

5 nisges § maim § paste S$ aaass anor S958 Sis 0261 ‘asoaon 0 5 ozs §———araeo- srt Tsya0" § ase § sng. won 700102 005202 Peron 5 ress s oessr soma: some, sas 5 wees 4029 oar wor § ass Sas 1136305) (1,206,008), (95186620) a23.037) agian 9083833) it 35, 16, ‘s, ira te 5 Tae § Wass §——_Tor sets Gazaroy sess) sa $s oiager s erie ssn: sacs, sme sizes 5 bsraso S Sanane § 5485965 5 S7tksee 5 ataT $5545 5 naonass $neoyes §—zrant Snags 5 aT 561230

= 108 -

Exhibit 17

Contributions in Relation to Contributions

Contractually Contractually Contribution Employer’s as a % of Required Required Deficiency Covered Covered

Contribution Contribution (Excess) Payroll Payroll Date (1) (2) (3) (4) (5)

Primary Government 2020 $ 719,102 $ 719,102 $ - $ 6,303,680 11.41% 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) 2020 $ 457,296 $ 457,296 $ - $ 2,670,960 17.12% 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%

Component Unit School Board (professional) 2020 $ 3,005,168 $ 3,005,168 $ - $ 19,575,194 15.35% 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%

County of Russell, Virginia Schedule of Employer Contributions

For the Years Ended June 30, 2011 through June 30, 2020

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.

Pension Plans

109 -

Exhibit 17 County of Russell, Virginia Schedule of Employer Contributions Pension Plans For the Years Ended June 30, 2011 through June 30, 2020

Contributions in

Relation to Contributions Contractually Contractually Contribution Employer’s asa% of Required Required Deficiency Covered Covered Contribution Contribution (Excess) Payroll Payroll Date (ty (a) @) (4) () Primary Government 2020 $ 719,102 $ 719,102 $ - $6,303,680 11.41% 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)

2020S 457,296 $ 457,296 $ - S$ 2,670,960 17.12% 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% Component Unit School Board (professional) 2020S 3,005,168 $ 3,005,168 $ = $19,575,194 15.35% 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%

= 109 -

Exhibit 18

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

All Others (Non 10 Largest) – Hazardous Duty:

Component Unit School Board - Professional Employees

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

Retirement Rates

Line of Duty Disability

Lowered rates
No change

Decreased rate from 7.00% to 6.75%

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

Withdrawal Rates

Disability Rates Salary Scale

Discount Rate Line of Duty Disability

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 actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period from July 1, 2012 through June 30, 2016, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as a result of the experience study and VRS Board action are as follows:

County of Russell, Virginia Notes to Required Supplementary Information

For the Year Ended June 30, 2020 Pension Plans

Salary Scale

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

Increased age 50 rates, and lowered rates at older ages Adjusted rates to better fit experience at each year age and service through 9 years of service

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

Retirement Rates

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

No change Decreased rate from 7.00% to 6.75%Discount Rate

Increased rate from 14.00% to 15.00%

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

Discount Rate

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

Adjusted rates to better fit experience
No change

Decreased rate from 7.00% to 6.75%

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

Decreased rate from 60.00% to 45.00%

Retirement Rates Withdrawal Rates

110 -

Exhibit 18 County of Russell, Virginia

Notes to Required Supplementary Information

Pension Plans

For the Year Ended June 30, 2020

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 actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study {or the period from July 1, 2012 through June 30, 2016, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as a result ofthe experience study and VRS Board action are as follows:

all others

(Won 10 Largest) - Non-Hazardous Duty:

[Mortality Rates (pre-retirement, post-retirement lneatthy, 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

[Cowered rates

salary Scale

[No change

Line of Duty Disability

increased rate from 14,008 to 15.00%

Discount Rate

[Decreased rate from 7.00% to 6.75%

all others

(Non 10 Largest) - Hazardous Duty:

[Mortality Rates (pre-retirement, post-retirement lneatthy, and disabled)

[Updated to a more current mortality table - RP-20T4 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 lof service

Disability Rates

[Adjusted rates to better fit experience.

salary Scale

INo change

Line of Duty Disability

[Decreased rate from 60.00% to 45.00%

Discount Rate

[Decreased rate from 7.00% to 6.75%

Component Unit School Board - Professional Employees

[Mortality Rates (pre-retirement, post-retirement Ineathy, and disabled)

[Updated to a more current mortality table - RP-2074 projected to 2020,

Retirement Rates

[Cowered rates at older ages and changed final retirement from 70 to 75

withdrawal Rates

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

Disability Rates

[Adjusted rates to better match experience

Salary Scale

INo change

Discount Rate

[Decreased rate from 7.00% to 6.75%

-110-

Exhibit 19

2020 2019 2018 Total OPEB liability Service cost $ 14,265 $ 15,523 $ 16,038
Interest 13,941 14,342 13,000
Changes in assumptions 434,635 11,569 (11,427)
Effect of economic/demographic gains or losses (88,594) - -
Benefit payments (7,461) (17,342) (18,508)
Net change in total OPEB liability $ 366,786 $ 24,092 $ (897)
Total OPEB liability - beginning 387,749 363,657 364,554
Total OPEB liability - ending $ 754,535 $ 387,749 $ 363,657

Covered payroll $ 6,096,747 $ 6,190,566 $ 6,190,566

County’s total OPEB liability (asset) as a percentage of covered payroll 12.38% 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, 2020

Schedule is intended to show information for 10 years. Additional years will be included as they become available.

111 -

County of Russel, Virginia

‘Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios

Exhibit 19

Total OPEB liability Service cost

Interest

Changes in assumptions

Effect of economic/ demographic gains or losses Benefit payments

[Net change in total OPEB liability

Total OPEB liability - beginning

Total OPEB liability - ending

Covered payroll

County’s total OPEB lability (asset) asa percentage of

Primary Government For the Measurement Dates of June 30, 2018 through June 30, 2020 2020 2019 2018 s 14,265 15523 $ 16,038 13,941 14342 43,000 24,635 11,569 (11,427) (28,594) 7.461) (07,342) (18,508) 5 366,786 § 24,02 § 97) 387,749 363.657, 364,554 s TSA 535 § 387.749 § 363,657 5 6,096,747 § 6,190,566. § 6,190,566 12.38% 6.26% 5.87%

covered payroll,

Schedule is intended to show information for 10 years

Additonal years wil be included as they become available.

11+

Exhibit 20

Valuation Date: 7/1/2019 Measurement Date: 6/30/2020

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

Methods and assumptions used to determine OPEB liability:

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

Retirement Age The average age at retirement is 62.

County of Russell, Virginia Notes to Required Supplementary Information - County OPEB

For the Year Ended June 30, 2020

Healthcare Trend Rate The healthcare trend rate assumption starts at 34.20% in 2020 and gradually declines to 4.00% by the year 2074.

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

2.21% as of June 30, 2020 Inflation 2.50%

112 -

County of Russell, Virginia Notes to Required Supplementary Information - County OPEB For the Year Ended June 30, 2020

Exhibit 20

Valuation Date: ‘Measurement Date:

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

7/1/2019 6/30/2020

Methods and assumptions used to determine OPEB liability:

Actuarial Cost Method Discount Rate

Inflation Healthcare Trend Rate

Salary Increase Rates

Retirement Age Mortality Rates

Entry age normal, level percentage of pay

3.50% as of June 30, 2019; 2.21% as of June 30, 2020 2.50%

‘The healthcare trend rate assumption starts at 34.20% in 2020 and gradually declines to 4.00% by the year 2074.

The salary increase rate starts at 5.35% salary increase for 1 year of service and gradually declines to 3.50% salary

increase for 20 or more years of service.

‘The average age at retirement is 62.

The pre-retirement mortality rates were calculated using RP. 2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with Scale BB to 2020; males set back 1 year, 85% of rates; females setback 1 year. 25% of deaths are assumed to be service-related. The post- retirement mortality rates were calculated using RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase compounded from ages 70 to 85. The post-disablement mortality rates were calculated using RP-2014 Disabled Mortality Rates projected with Scale BB to 2020; males 115%

of rates; females 130% of rates.

“112+

Exhibit 21

2020 2019 2018 Total OPEB liability Service cost $ 229,725 $ 226,831 $ 235,586
Interest 277,894 297,553 275,959
Changes in assumptions 4,554,327 201,429 (205,110)
Effect of economic/demographic gains or losses (1,076,097) - -
Benefit payments (457,831) (496,549) (490,936)
Net change in total OPEB liability $ 3,528,018 $ 229,264 $ (184,501)
Total OPEB liability - beginning 7,937,059 7,707,795 7,892,296
Total OPEB liability - ending $ 11,465,077 $ 7,937,059 $ 7,707,795

Covered payroll $ 21,427,078 $ 20,503,347 $ 20,503,347

School Board’s total OPEB liability (asset) as a percentage of covered payroll 53.51% 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, 2020

Schedule is intended to show information for 10 years. Additional years will be included as they become available.

113 -

County of Russell, Virginia Schedule of Changes in Total OPEB Liability (Asset) and Related Ratios ‘Component Unit School Board For the Messurement Dates of June 30, 2018 through June 30, 2020

Exhibit 21

2020 2019 2018 Total OPEB lability Service cost s ms § 226,831 235,586 Interest 277,394 297553 275,959 Changes in assumptions 4554,307 201,429 (205,110) Effect of economic/demographic gains or losses (1,076,097 Benefit payments (457,831), 496.549) (490,936) Net change in total OPE lability s 3.528.018 § 9.264 (134,50) Total OPEB lability - beginning 7,937,058, 7,707,795, 7,892,296 Total OPES lability - ending s 7145,077_ $ 7.337 059 7707 795 Covered payroll s 21,827,078 $ 20,503,347 20,503,347 School Boar’s total OPEB liability (asset) asa percentage of

‘covered payroll 53.5% sart% a7.59%

Schedule is intended to show information for 10 yeas. Adeitional years will be included as they become avaiable

113+

Exhibit 22

Valuation Date: 7/1/2019 Measurement Date: 6/30/2020

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

Methods and assumptions used to determine OPEB liability:

Discount Rate 3.50% as of June 30, 2019;
2.21% as of June 30, 2020

County of Russell, Virginia Notes to Required Supplementary Information - School OPEB

For the Year Ended June 30, 2020

Actuarial Cost Method Entry age normal, level percentage of pay

Retirement Age The average age at retirement is 62. Mortality Rates The pre-retirement mortality rates were calculated using RP-

2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with Scale BB to 2020; males set back 1 year, 85% of rates; females setback 1 year. 25% of deaths are assumed to be service-related. The post- retirement mortality rates were calculated using RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase compounded from ages 70 to 85. The post-disablement mortality rates were calculated using RP-2014 Disabled Mortality Rates projected with Scale BB to 2020; males 115% of rates; females 130% of rates.

Inflation 2.50% Healthcare Trend Rate The healthcare trend rate assumption starts at 34.20% in

2020 and gradually declines to 4.00% by the year 2074.

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.

114 -

County of Russell, Virginia Notes to Required Supplementary Information - School OPEB For the Year Ended June 30, 2020

Exhibit 22

Valuation Date: ‘Measurement Date:

No assets are accumulated in a trust that meets the criteria in GASB 75 to pay related benefits.

7/1/2019 6/30/2020

Methods and assumptions used to determine OPEB liability:

Actuarial Cost Method Discount Rate

Inflation Healthcare Trend Rate

Salary Increase Rates

Retirement Age Mortality Rates

Entry age normal, level percentage of pay

3.50% as of June 30, 2019; 2.21% as of June 30, 2020 2.50%

The healthcare trend rate assumption starts at 34.20% in 2020 and gradually declines to 4.00% by the year 2074.

‘The salary increase rate starts at 5.35% salary increase for 1 year of service and gradually declines to 3.50% salary

increase for 20 or more years of service.

‘The average age at retirement is 62.

‘The pre-retirement mortality rates were calculated using RP 2014 Employee Rates to age 80, Healthy Annuitant Rates at ages 81 and older projected with Scale BB to 2020; males set back 1 year, 85% of rates; females setback 1 year. 25% of deaths are assumed to be service-related. The post- retirement mortality rates were calculated using RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase ‘compounded from ages 70 to 85. The post-disablement mortality rates were calculated using RP-2014 Disabled Mortality Rates projected with Scale BB to 2020; males 115%

of rates; females 130% of rates.

-114-

Exhibit 23

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 0.0308% $ 500,384 $ 6,028,822 8.30% 52.00% 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) 0.0133% $ 216,264 $ 2,604,399 8.30% 52.00% 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) 0.0945% $ 1,537,278 $ 18,519,029 8.30% 52.00% 0.0966% 1,468,000 18,376,099 7.99% 51.22% 0.0978% 1,471,000 18,034,586 8.16% 48.86%

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.

2019

County of Russell, Virginia Schedule of Employer’s Share of Net OPEB Liability

Group Life Insurance (GLI) Plan For the Measurement Dates of June 30, 2017 through June 30, 2019

2017

Date (1)

2017 2018

2018

2019

115 -

Exhibit 23

County of Russell, Virginia ‘Schedule of Employer’s Share of Net OPEB Liability Group Life Insurance (GL) Plan For the Measurement Dates of June 30, 2017 through June 30, 2019

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 Date Liability (Asset) Liability (Asset) Payroll ayy GLI OPEB Liability a) 2 @) oy (5) (6) Primary Government 2019 0.0308% § 500,384 § 6,028,822 8.30% 52.00% 2018 0.0325% 494,000 6,184,666 7.99% 51.22% 2017 0.0309% 465,000 5,704,306 3.15% 48.86% ‘Component Unit School Board (nonprofessional) 2019 0.01338 § 216,264 $2,604,399 8.30% 52.00% 2018 0.0138% 210,000 2,629,348 7.99% 51.22% 2017 o.0144% 216,000 2,654,927 8.14% 48.86% Component Unit School Board (professional) 2019 0.0945% § 41,537,278 $18,519,029 8.30% 52.00% 2018 0.0966% 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.

-115-

Exhibit 24

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 2020 $ 33,061 $ 33,061 $ - $ 6,357,959 0.52% 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%

Component Unit School Board (nonprofessional) 2020 $ 13,912 $ 13,912 $ - $ 2,675,341 0.52% 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%

Component Unit School Board (professional) 2020 $ 101,949 $ 101,949 $ - $ 19,605,574 0.52% 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%

County of Russell, Virginia Schedule of Employer Contributions

Group Life Insurance (GLI) Plan For the Years Ended June 30, 2011 through June 30, 2020

116 -

County of Russell, Virginia

Schedule of Employer Contributions Group Life insurance (GLI) Plan

For the Years Ended June 30, 2011 through June 30, 2020

Exhit

bit 24

Contributions in

Relation to Contributions Contractually _Contractually Contribution Employer’s asa % of Required Required Deficiency Covered Covered Contribution Contribution (Excess) Payroll Payroll Date oy @) @) (4) () Primary Government 20200 $ 33,061 $ 33,061 6,357,959 0.52% 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 26,087 5,428,571 0.48% 2014 26,130 26,130 5,443,723 0.48% 2013, 26,774 26,774 5,877,961 0.48% 2012 15,361 15,361 5,486,088 0.28% 2011 15,435 15,435 5,512,595 0.28% ‘Component Unit School Board (nonprofessional) 2020 $ 13,912 $ 13,912 2,675,341 0.52% 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 247115 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% ‘Component Unit School Board (professional) 2020 $ 101,949 § 101,949 19,605,574 0.52% 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%

-116-

Exhibit 25

Teachers

Non-Largest Ten Locality Employers - General Employees

Non-Largest Ten Locality Employers - Hazardous Duty Employees

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

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

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

Retirement Rates Lowered 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

Disability Rates

Discount Rate

Adjusted rates to better match experience

Decreased rate from 7.00% to 6.75% Salary Scale No change

County of Russell, Virginia Notes to Required Supplementary Information

Group Life Insurance (GLI) Plan For the Year Ended June 30, 2020

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

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

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

Withdrawal Rates

Lowered disability rates No change Increased rate from 14.00% to 15.00%

Disability Rates Adjusted rates to better match experience

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

Discount Rate Decreased rate from 7.00% to 6.75%

No change Decreased rate from 60.00% to 45.00%

Salary Scale Line of Duty Disability

117 -

Exhibit 25 County of Russell, Virginia Notes to Required Supplementary Information Group Life Insurance (GLI) Plan For the Year Ended June 30, 2020

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 actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period from July 1, 2012 through June 30, 2016, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as a result of the experience study and VRS Board action are as follows:

Teachers Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected healthy, and disabled) to 2020 Retirement Rates Lowered rates at older ages and changed final retirement from 70 to 75

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

Disability Rates ‘Adjusted rates to better match experience

Salary Scale No change

Discount Rate Decreased rate from 7.00% to 6.75%

Non-Largest Ten Locality Employers - General Employees

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

healthy, and disabled) 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 14.00% to 15.00%

Discount Rate Decreased rate from 7.00% to 6.75%

Non-Largest Ten Locality Employers - Hazardous Duty Employees

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

healthy, and disabled) 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 60.00% to 45.00%

Discount Rate Decreased rate from 7.00% to 6.75%

17-

Exhibit 26

2019 2018 2017 Total HIC OPEB Liability Service cost $ 1,956 $ 1,884 $ 1,785
Interest 7,056 7,367 7,343
Changes of assumptions 2,217 - (1,681)
Differences between expected and actual experience 2,390 (4,641) -
Benefit payments (8,828) (9,286) (4,926)
Net change in total HIC OPEB liability $ 4,791 $ (4,676) $ 2,521
Total HIC OPEB Liability - beginning 105,209 109,885 107,364
Total HIC OPEB Liability - ending (a) $ 110,000 $ 105,209 $ 109,885

Plan fiduciary net position Contributions - employer $ 2,788 $ 4,374 $ 3,731
Net investment income 5,480 6,182 9,214
Benefit payments (8,828) (9,286) (4,926)
Administrator charges (117) (141) (148)
Other (7) (472) 472
Net change in plan fiduciary net position $ (684) $ 657 $ 8,343
Plan fiduciary net position - beginning 89,391 88,734 80,391
Plan fiduciary net position - ending (b) $ 88,707 $ 89,391 $ 88,734

Employer’s net HIC OPEB liability - ending (a) - (b) $ 21,293 $ 15,818 $ 21,151

Plan fiduciary net position as a percentage of the total HIC OPEB liability 80.64% 84.97% 80.75%

Covered payroll $ 1,327,521 $ 1,562,251 $ 1,332,239

Employer’s net HIC OPEB liability as a percentage of covered payroll 1.60% 1.01% 1.59%

County of Russell, Virginia Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios

Health Insurance Credit (HIC) Plan For the Measurement Dates of June 30, 2017 through June 30, 2019

Primary Government

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.

118 -

County of Russel, Virginia

‘Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios

Primary Government Health Insurance Credit (HIC) Plan For the Measurement Dates of June 30, 2017 through June 30, 2019

Exhibit 26

2019 2018 2017 Total HIC OPEB Liability Service cost s 1,956 $ 1,884 1,785 Interest 71056 7367 7343 Changes of assumptions 27 - (1,681) Differences between expected and actual experience 2,390 (4,64) : Benefit payments (g.828) (9,286) (4.926) Net change in total HIC OPEB liability 5 471 § (4,676) 7,521 Total HIC OPEB Liability - beginning 105,209 109,885 107,364 Total HIC OPEB Liability - ending (a) 5 710,000_ $ 105,209 709,885, Plan fiduciary net position Contributions - employer s 2,788 $ 4374 3m Net investment income 5,480 6.182 9,214 Benefit payments (6,828) (9,286) (4.926) [Administrator charges 7) (141) (148) Other a) (a7) 472 Net change in plan fiduciary net position 5 ea) $ 67 538 Plan fiduciary net position - beginning 89,391, 88,734 20,391, Plan fiduciary net position - ending (b) 5 38,707_ $ 89,391 36,734 Employer’s net HIC OPEB lability - ending (a) -(b) 5 21,293 § 15,818 21,151 Plan fiductary net position as a percentage of the total

HIC OPEB liability 80.64% 84.97% 80.75% Covered payroll 5 1,327,521 § 1,562,251 1,332,239 Employer’s net HIC OPEB lability as a percentage of

covered payroll 1.60% 1.01% 1.59%

Schedule is intended to show information for 10 years. Information prior to the 2017 valuation js not available. However, additional years will be

‘included a5 they become avaiable.

-118-

Exhibit 27

2019 2018 2017 Total HIC OPEB Liability Service cost $ 8,086 $ 9,113 $ 12,000
Interest 19,598 18,227 17,000
Changes of assumptions 20,714 - (42,000)
Differences between expected and actual experience 507 (1,089) -
Benefit payments (35,194) (33,696) (34,000)
Other - (5,145) -
Net change in total HIC OPEB liability $ 13,711 $ (12,590) $ (47,000)
Total HIC OPEB Liability - beginning 521,410 534,000 581,000
Total HIC OPEB Liability - ending (a) $ 535,121 $ 521,410 $ 534,000

Plan fiduciary net position Contributions - employer $ 32,001 $ 31,329 $ 32,000
Benefit payments (35,194) (33,696) (34,000)
Other - (495) -
Net change in plan fiduciary net position $ (3,193) $ (2,862) $ (2,000)
Plan fiduciary net position - beginning (37,862) (35,000) (33,000)
Plan fiduciary net position - ending (b) $ (41,055) $ (37,862) $ (35,000)

Employer’s net HIC OPEB liability - ending (a) - (b) $ 576,176 $ 559,272 $ 569,000

Plan fiduciary net position as a percentage of the total HIC OPEB liability -7.67% -7.26% -6.55%

Covered payroll $ 2,601,655 $ 2,610,768 $ 2,645,183

Employer’s net HIC OPEB liability as a percentage of covered payroll 22.15% 21.42% 21.51%

County of Russell, Virginia Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios

Component Unit School Board (nonprofessional) Health Insurance Credit (HIC) Plan

For the Measurement Dates of June 30, 2017 through June 30, 2019

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.

119 -

County of Russel, Virginia

‘Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios

‘Component Unit School Board (nonprofessional) Health Insurance Credit (HIC) Plan

For the Measurement Dates of June 30, 2017 through June 30, 2019

Exhibit 27

2019 2018 2017 Total HIC OPEB Liability Service cost s 8,086 9113 § 12,000 Interest 19,598 18.207 17,000 Changes of assumptions 20,714 - (42,000) Differences between expected and actual experience 507 (1,089) : Benefit payments (25,194) (3,696) (34,000) Other 6.145) Net change in total HIC OPEB lability s a 112,580) § (7,000) Total HIC OPEB Liability - beginning 521,410 534,000, 581,000 Total HIC OPEB Liability - ending (a) s 335,121 521.410. $ 534,000. Plan fiduciary net position Contributions - employer 5 32,001 31,329 § 32,000 Benefit payments 85,194) (3,696) (34,000) other : (495) : Net change in plan fiduciary net position 5 By 7,862) $ 7,000) Plan fiduciary net position - beginning (97,862) (35,000) (33,000). Plan fiduciary net position - ending (b) s (41,055) (7,862) § (35,000) Employer’s net HIC OPEB lability - ending (a) -(b) s 576,176 599,272 § 569,000, Plan fiductary net position as a percentage of the total

HIC OPEB liability 7.67% 7.26% 4.55% Covered payroll s 2,601,655 2,610,768 § 2,645,183 Employer’s net HIC OPEB lability as a percentage of

covered payroll 2.15% 1A 2.51%

Schedule is intended to show information for 10 years. Information prior to the 2017 valuation isnot available. However, additional years will be

‘included as they become available.

-119-

Exhibit 28

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 2020 $ 2,700 $ 2,700 $ - $ 1,285,580 0.21% 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%

Component Unit School Board (nonprofessional) 2020 $ 32,853 $ 32,853 $ - $ 2,670,960 1.23% 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) Plan

For the Years Ended June 30, 2011 through June 30, 2020

Schedule is intended to show information for 10 years. Information prior to the 2013 valuation is not available. However, additional years will be included as they become available.

120 -

County of Russell, Virginia Schedule of Employer Contributions Health Insurance Credit (HIC) Plan

For the Years Ended June 30, 2011 through June 30, 2020

Exhibit 28

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) (6) Primary Government 2020 $ 2,700 $ 2,700 $ : 1,285,580 0.21% 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 737 757 : 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% Component Unit School Board (nonprofessional) 2020 $ 32,853 $ 32,853 $ : 2,670,960 1.23% 2019 32,001 32,001 : 2,601,655 1.23% 2018 31,329 31,329 : 2,610,768 1.20% 2017 31,742 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%

Schedule is intended to show information for 10 years. However, additional years will be included as they become available.

= 120-

Information prior to the 2013 valuation is not available.

Exhibit 29

Non-Largest Ten Locality Employers - General Employees

Non-Largest Ten Locality Employers - Hazardous Duty Employees

Changes of assumptions – The actuarial assumptions used in the June 30, 2018, valuation were based on the results of an actuarial experience study for the period from July 1, 2012 though June 30, 2016, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as a result of the experience study and VRS Board action are as follows:

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

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

County of Russell, Virginia Notes to Required Supplementary Information

Health Insurance Credit (HIC) Plan For the Year Ended June 30, 2020

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

Increased age 50 rates and lowered rates at older ages

Discount Rate

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

Lowered disability rates No change

Disability Rates Salary Scale Line of Duty Disability Increased rate from 14.00% to 15.00%

Discount Rate Decreased rate from 7.00% to 6.75%

Decreased rate from 7.00% to 6.75%

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 60.00% to 45.00%

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

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

Retirement Rates

121 -

Exhibit 29 County of Russell, Virginia

Notes to Required Supplementary Information Health Insurance Credit (HIC) Plan. For the Year Ended June 30, 2020

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 actuarial assumptions used in the June 30, 2018, valuation were based on the results of an actuarial

experience study for the period from July 1, 2012 though June 30, 2016, except the change in the discount rate, which was based on ‘VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as a result of the experience study and VRS Board

action are as follows:

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

‘Withdrawal Rates

Disability Rates Salary Scale

Line of Duty Disability Discount Rate

Lowered retirement rates at older ages and extended final retirement age from 70 t075

‘Adjusted termination rates to better fit experience at each age and service year

Lowered disability rates No change

Increased rate from 14.00% to 15.00% Decreased rate from 7.00% to 6.75%

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 Withdrawal Rates

Disability Rates Salary Scale

Line of Duty Disability Discount Rate

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 60.00% to 45.00% Decreased rate from 7.00% to 6.75%

2121-

Exhibit 30

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)

0.22079% $ 2,890,356 $ 18,519,029 15.61% 8.97% 0.22715% 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) Plan

For the Measurement Dates of June 30, 2017 through June 30, 2019

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 2019

122 -

For the Measurement Dates of June 30, 2017 through June 30, 2019

County of Russell, Virginia

‘Schedule of School Board’s Share of Net OPEB Liability

Teacher Employee Health Insurance Credit (HIC) Plan

Exhibit 30

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 ey) HIC OPEB Liability () 2) eo) ) 6) ©) 2019 0.22079% $ 2,890,356 $ 18,519,029 15.61% 8.97% 2018 0.22715% 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.

-122-

Exhibit 31

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) 2020 $ 234,902 $ 234,902 $ - $ 19,575,194 1.20% 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%

County of Russell, Virginia Schedule of Employer Contributions

Teacher Employee Health Insurance Credit (HIC) Plan For the Years Ended June 30, 2011 through June 30, 2020

123 -

County of Russell, Virginia Schedule of Employer Contributions

Teacher Employee Health Insurance Credit (HIC) Plan For the Years Ended June 30, 2011 through June 30, 2020

Exhibit 31

Contributions in

Relation to Contributions Contractually _Contractually Contribution Employer’s asa % of Required Required Deficiency Covered Covered Contribution Contribution (Excess) Payroll Payroll Date ay (2) @) (4) (5) 2020 234,902 234,902 $ 19,575,194 1.20% 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%

123 -

Exhibit 32 County of Russell, Virginia

Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

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

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

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

Disability Rates

Discount Rate

Notes to Required Supplementary Information Teacher Employee Health Insurance Credit (HIC) Plan

For the Year Ended June 30, 2020

Adjusted rates to better match experience

Decreased rate from 7.00% to 6.75%

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

Salary Scale No change

124 -

Exhibit 32 County of Russell, Virginia Notes to Required Supplementary Information Teacher Employee Health Insurance Credit (HIC) Plan For the Year Ended June 30, 2020

Changes of benefit terms - There have been no actuarially material changes to the System benefit provisions since the prior actuarial valuation.

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

healthy, and disabled) to 2020

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

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

Disability Rates ‘Adjusted rates to better match experience

Salary Scale No change

Discount Rate Decreased rate from 7.00% to 6.75%

-124-

Exhibit 33

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)

0.53769% $ 1,929,157 N/A N/A 0.79% 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, 2019

*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 2017 is the first year for this presentation, only three years of data is available. However, additional years will be included as they become available.

2018 2019

125 -

Exhibit 33 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, 2019

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 LODAOPEB Net LODAOPEB Employee —Covered-Employee Payroll Percentage of Total

Date Liability (Asset) Liability (Asset) Payroll * aay LODA OPEB Liability ow 2 fo) 4) (5) ©

2019 0.53769% § 1,929,157 NA NA 0.79% 2018 0.50337% 1,578,000 N/A N/A 0.60% 2017 0.50108% 1,317,000 N/A NIA 1.30%

“The contributions for the Line of Duty Act Program are based on the number of participants in the Program using a per capita-based contribution versus a payroll-based contribution. Therefore, covered-employee payroll Is the relevant measurement, which is the total payroll of the employees in the OPEB plan. However, when volunteers and part-time employees make up a significant percentage of the ‘employer’s members in the plan, the employer may determine that covered-employee payroll is misleading and, therefore, not applicable for disclosure,

Schedule is intended to show information for 10 years. Since 2017 fs the first year for this presentation, only three years of data is available. However, additional years will be included as they become available.

+125 -

Exhibit 34

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)

$ 68,106 $ 68,106 $ - N/A N/A 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, 2020

Date

2018

2016 2017

2019 2020

126 -

Exhibit 34 County of Russell, Virginia Schedule of Employer Contributions Line of Duty Act (LODA) Program For the Years Ended June 30, 2016 through June 30, 2020

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) 2020 § 68,106 $ 68,106 § N/A N/A 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 : NIA 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 relevant measurement, which is the total payroll of employees in the OPEB plan. However, when volunteers and part-time employees make up a significant percentage of the employer’s members in the plan, the employer may determine that covered-employee payroll is misleading and, therefore, not applicable for disclosure.

Schedule is intended to show information for 10 years. Information prior to the 2016 valuation is not available.

However, additional years will be included as they become available.

+126 -

Exhibit 35

Employees in the Non-Largest Ten Locality Employers with Public Safety Employees

Decreased rate from 60.00% to 45.00%Line of Duty Disability

Notes to Required Supplementary Information Line of Duty Act (LODA) Program

For the Year Ended June 30, 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 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

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.

Changes of assumptions – The actuarial assumptions used in the June 30, 2018 valuation were based on 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:

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Exhibit 35 County of Russel, Virginia Notes to Required Supplementary Information Line of Duty Act (LODA) Program For the Year Ended June 30, 2020

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 actuarial assumptions used in the June 30, 2018 valuation were based on 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:

Employees in the Non-Largest Ten Locality Employers with Public Safety Employees ‘Mortality Rates (pre-retirement, post-retirement Updated to a more current mortality table - RP-2014 projected to 2020 healthy, and disabled)

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

Withdrawal Rates ‘Adjusted termination rates to better fit experience at each age and service year Disability Rates| Adjusted rates to better match experience

Salary Scale No change

Line of Duty Disability Decreased rate from 60.00% to 45.00%

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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 36

Balance Balance Beginning End of Year Additions Deletions of Year

Assets Cash and cash equivalents Special Welfare Fund 57,630$ 54,635$ (47,657)$ 64,608$
VASAP Fund 10,607 187,101 (183,736) 13,972
Total Assets 68,237$ 241,736$ (231,393)$ 78,580$

Liabilities Amounts held for Social Services clients 57,630$ 54,635$ (47,657)$ 64,608$
Amounts held for VASAP 10,607 187,101 (183,736) 13,972
Total Liabilities 68,237$ 241,736$ (231,393)$ 78,580$

County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities

Agency Funds For the Year Ended June 30, 2020

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County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities

Agency Funds

For the Year Ended June 30, 2020

Exhibit 36

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 $ 57,630 $ 54,635 $ (47,657) $ 64,608 10,607 187,101 (183,736) 13,972 $68,237 “$241,736 (237,393) 78,580 $ 57,630 $ 54,635 $ (47,657) $ 64,608 10,607 187,101 (183,736) 13,972 $68,237 “$241,736 (237,393) 78,580

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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 37

School Operating

Fund

ASSETS Cash and cash equivalents 1,070,811$
Receivables (net of allowance for uncollectibles):

Accounts receivable 1,445 Due from other governmental units 1,330,844
Prepaid items 714,780

Total assets 3,117,880$

LIABILITIES Accounts payable 225,520$
Accrued liabilities 1,115,280 Due to primary government 488,109

Total liabilities 1,828,909$

FUND BALANCES Nonspendable:

Prepaid items 714,780$
Committed:

Textbook purchases 44,920
Regional Adult Education 252,111
School food 277,160

Total fund balances 1,288,971$
Total liabilities and fund balances 3,117,880$

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

Total fund balances per above 1,288,971$

Land 5,628,295$
Buildings and improvements 10,034,612
Machinery and equipment 1,497,115 17,160,022

Pension related items 6,942,902$
OPEB related items 4,599,687 11,542,589

Compensated absences (964,821)$
Net OPEB liabilities (16,685,151)
Net pension liability (35,883,751) (53,533,723)

Pension related items (3,643,112)$
OPEB related items (1,375,442) (5,018,554)

Net position of governmental activities (28,560,695)$

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, 2020

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

Long-term liabilities 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 pay for current period expenditures and, therefore, are not reported in the funds.

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Exhibit 37 County of Russell, Virginia Balance Sheet Governmental Funds - Discretely Presented Component Unit - School Board June 30, 2020

School Operating Fund ASSETS Cash and cash equivalents $1,070,811 Receivables (net of allowance for uncollectibles)

Accounts receivable 1,445 Due from other governmental units 4,330,846 Prepaid items 714,780

Total assets ee RILALON LIABILITIES Accounts payable $ 225,520 ‘Accrued lablities 1,115,280 Due to primary government 488,109 Total liabilities 828,909 FUND BALANCES Nonspendable:

Prepaid items: $ 714,780 Committed:

Textbook purchases 44,920

Regional Adult Education 252,111

School food 277/160,

Total fund balances SRK Total liabilities and fund balances SE RITALOM

Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Total fund balances per above $1,288,971

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

Land $5,628,295 Buildings and improvements, 10,034,612 ‘Machinery and equipment 1,497,115 17,160,022

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

Pension related items $6,942,902 OPEB related items 4,599,687 11,542,589

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

Compensated absences S$ (964,821) Net OPEB liabilities (16,685,151) Net pension liability (35,883,751) (53,533,723)

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

Pension related items $ (3,643,112) OPEB related items (1,375,442) 6,018,554)

Net position of governmental activities

129 -

Exhibit 38

School Operating

Fund REVENUES Revenue from the use of money and property 5,035$
Charges for services 385,747
Miscellaneous 186,840
Recovered costs 896,982
Intergovernmental:

Local government 7,440,909
Commonwealth 29,745,780
Federal 5,778,660

Total revenues 44,439,953$

EXPENDITURES Current:

Education 43,736,893$

Excess (deficiency) of revenues over (under) expenditures 703,060$

Net change in fund balances 703,060$
Fund balances - beginning 585,911
Fund balances - ending 1,288,971$

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 703,060$

Capital outlays 912,428$
Reversion of assets back to the School Board (net) 2,813,799
Depreciation expense (3,431,846) 294,381

The net effect of various miscellaneous transactions involving capital assets (I.e., sales, trade-ins, and donations) is to increase net assets. (55,300)
Disposal of capital assets (net)

(Increase) decrease in compensated absences (234,014)$
Change in OPEB related items (522,006)
Change in pension related items (231,981) (988,001)

Change in net position of governmental activities (45,860)$

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, 2020

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 38 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, 2020

School Operating Fund REVENUES Revenue from the use of money and property 5 5,035, Charges for services 385,747 Miscellaneous 186,840, Recovered costs 896,982 Intergovernmental: Local government 7,440,909 Commonwealth 29,745,780 Federal 5,778,660 Total revenues 344,439,953 EXPENDITURES Current: Education $43,736,893 Excess (deficiency) of revenues over (under) expenditures 703,060 Net change in fund balances 5 703,060 Fund balances - beginning 585,911 Fund balances - ending S288. 71_ ‘Amounts reported for governmental activities in the statement of activities (Exhibit 2) are different because Net change in fund balances - total governmental funds - per above 5 703,060 Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. Capital outlays S 912,428 Reversion of assets back to the School Board (net) 2,813,799 Depreciation expense (3,431,846) 294,381 The net effect of various miscellaneous transactions involving capital assets (le., sales, trade-ins, anc donations) is to increase net assets. (55,300) Disposal of capital assets (net) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds, (Increase) decrease in compensated absences, S$ (234,014) CChange in OPEB related items (622,006) Change in pension related items (231,981 (988,001)

Change in net position of governmental activities

130 -

Exhibit 39

Variance with Final Budget

Positive Original Final Actual (Negative)

REVENUES Revenue from the use of money and property 6,000$ 6,000$ 5,035$ (965)$
Charges for services 559,554 559,554 385,747 (173,807)
Miscellaneous 165,000 165,000 186,840 21,840
Recovered costs 571,914 571,914 896,982 325,068
Intergovernmental:

Local government 7,729,877 7,729,877 7,440,909 (288,968)
Commonwealth 29,317,909 29,317,909 29,745,780 427,871
Federal 5,813,300 5,813,300 5,778,660 (34,640)

Total revenues 44,163,554$ 44,163,554$ 44,439,953$ 276,399$

EXPENDITURES Current:

Education 44,163,554$ 44,163,554$ 43,736,893$ 426,661$

Excess (deficiency) of revenues over (under) expenditures -$ -$ 703,060$ 703,060$

Net change in fund balances -$ -$ 703,060$ 703,060$
Fund balances - beginning - - 585,911 585,911
Fund balances - ending -$ -$ 1,288,971$ 1,288,971$

Budgeted Amounts

County of Russell, Virginia Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual

Discretely Presented Component Unit - School Board For the Year Ended June 30, 2020

School Operating Fund

131 -

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, 2020

Exhibit 39

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) $ 6,000 6,000 5,035 § (965) 559,554 559,554 385,747 (173,807) 165,000 165,000 186,840 21,840 571,914 571,914 896,982 325,068 7,729,877 7,729,877 7,440,909 (288,968) 29,317,909 29,317,909 29,745,780 427,871 5,813,300 5,813,300 5,778,660 (34,640) 344,163,554 _§ 44,163,554 § 44,439,953 5 276,399 $44,163,554 $ 44,163,554 $ 43,736,893 $ 426,661 $ _ 3 : 703,060$§ 703,060 $ aay : 703,060 § 703,060 : : 585,911 585,911

= 7,288,971 7,288,971

2131+

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 8,170,000$ 8,170,000$ 7,912,904$ (257,096)$
Real and Personal PSC Tax 1,900,000 1,900,000 2,094,724 194,724 Personal Property Tax 3,610,000 3,610,000 3,652,563 42,563 Mobile Home Tax 115,000 115,000 87,719 (27,281)
Machinery and Tools Tax 950,000 950,000 957,392 7,392 Merchants Capital 42,000 42,000 45,631 3,631 Mineral Tax 936,000 936,000 944,779 8,779 Penalties 143,000 143,000 116,822 (26,178) Interest 303,000 303,000 252,559 (50,441)

Total general property taxes 16,169,000$ 16,169,000$ 16,065,093$ (103,907)$

Other local taxes: Local Sales and Use Tax 2,029,356$ 2,029,356$ 1,931,777$ (97,579)$
Consumers’ Utility Tax 535,000 535,000 526,756 (8,244)
Consumption Taxes 75,000 75,000 72,500 (2,500)
Coal Severance Tax 250,000 250,000 161,913 (88,087)
Bank Stock Tax 14,000 14,000 24,374 10,374
Grantee tax 87,000 87,000 108,074 21,074
Motor Vehicle Licenses - - 4,019 4,019
Taxes on Recordation and Wills 28,077 28,077 43,783 15,706

Total other local taxes 3,018,433$ 3,018,433$ 2,873,196$ (145,237)$

Permits, privilege fees, and regulatory licenses: Animal licenses 1,500$ 1,500$ 1,095$ (405)$
Building permits 31,000 31,000 38,953 7,953 Other permits and other licenses 3,200 3,200 7,852 4,652

Total permits, privilege fees, and regulatory licenses 35,700$ 35,700$ 47,900$ 12,200$

Fines and forfeitures: Court fines and forfeitures 18,000$ 18,000$ 6,885$ (11,115)$

Revenue from use of money and property: Revenue from use of money 35,000$ 35,000$ 52,872$ 17,872$
Revenue from use of property 209,300 209,300 121,900 (87,400)

Total revenue from use of money and property 244,300$ 244,300$ 174,772$ (69,528)$

Charges for services: Charges for sanitation and waste removal 195,000$ 195,000$ 198,705$ 3,705$
Charges for courthouse security 45,000 45,000 35,150 (9,850)
Charges for cannery operations 60,000 60,000 25,942 (34,058)
Charges for commonwealth attorney 7,500 7,500 10,455 2,955
Charges for courthouse maintenance 8,500 8,500 9,118 618
Charges for jail and inmate fees 4,500 4,500 18,636 14,136
Charges for district court - - 4,751 4,751
Charges for library 5,200 5,200 5,880 680
Other charges for services 3,400 3,400 4,165 765

Total charges for services 329,100$ 329,100$ 312,802$ (16,298)$

Miscellaneous: Other miscellaneous revenue 143,550$ 143,550$ 100,094$ (43,456)$

Sale of property/surplus - - 217,489 217,489

Valley Heights revenue - - 8,790 8,790

Total miscellaneous 143,550$ 143,550$ 326,373$ 182,823$

Recovered costs: Social services 246,000$ 246,000$ 55,116$ (190,884)$
Health department 15,000 15,000 40,500 25,500
School resource officer 120,780 120,780 215,808 95,028
Insurance recoveries - - 70,370 70,370

County of Russell, Virginia Schedule of Revenues - Budget and Actual

Governmental Funds For the Year Ended June 30, 2020

Fund, Major and Minor Revenue Source

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County of Russell, Virginia Schedule 1 Schedule of Revenues » Budget and Actual Page 1 of 5 Governmental Funds For the Year Ended June 30, 2020 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 8,170,000 $ 8,170,000 $ 7,912,904 $ (287,096) Real and Personal PSC Tax 1/900,000 1,900,000 2,084,724, 194,724 Personal Property Tax 3,610,000 3,610,000 3,652,563 42,563 ‘Mobile Home Tax 115,000 115,000 87.719 (27,281) ‘machinery and Toots Tax 980,000, 950,000, 957,392 7;392 ‘Merchants Capital 42,000 2,000 45,631 3631 Mineral Tax 936,000, 936,000, 94,779 879 Penalties 143,000 143,000 116,822 (26,178) Interest 303,000 303,000. 252,559 (60,441) Total general property taxes $16,169,000 $16,169,000 $16,065,093 $ (103,907) (Other local taxes: Local Sales and Use Tax S 2,029,356 $ 2,029,356 $ 1,931,777 $ (97,579) Consumers Utility Tax 535,000 535,000 526,756 (6,244) Consumption Taxes 75,000 75,000 7,500 (2,500) Coal Severance Tax 250,000, 250,000 161,913, (@8,087) Bank Stock Tax 14,000 14,000 24,374 10,374 Grantee tax 87,000 87,000 108,074 21,074 ‘Motor Vehicle Licenses : : 4019, 4019 Taxes on Recordation and Wills 28,077, 28,077 43,783, 15,706, Total other local taxes 53018, 83 53,018.48 7.873.196 (145.237) Permits, privilege fees, and regulatory icenses “Animal licenses S150 $ 1,500 1,095 $ (405) Biting permits 31,000 31,000 38953, 7,953 Other permits and other licenses 3,200 3,200 7.852 4652 “Total permits, privilege fees, and regulatory licenses S__35,700_§ 35,700 47,900_§ 12,200. Fines and forfeitures: Court fines and forfeitures $18,000 $ 18,000 6885 $111,115) Revenue from use of money and property: Revenue from use of money S 35,00 $ 35,000 3262 $ 17,82 Revenue from use of property 208/300 209/300 121,900 (87,400) Total revenue from use of money and property S244, 300 $244,300 174,772 (68,528) Charges for services: Charges for sanitation and waste removal S 195,000 $ 195,000 198,705 $ 3,705 Charges for courthouse security 45,000 45,000 35,150 (9,850) Charges for cannery operations 60,000 60,000 25,942 (34,058) Charges for commonwealth attorney 7,500 7,300 10,455, 2.955, Charges for courthouse maintenance 85300 31300 9.118 618 Charges for jail and inmate fees 4500, 4300 18,636 14,136 Charges for district court 4751 4751 Charges for library 5,200 5,200 5,880 ‘680 Other charges for services 3,400 3,400 4,165, 765 “Total charges for services $379,100 § 379.00 312,802 (16,298) iscellaneous: Other miscellaneous revenue S 143,550 $143,550 100,094 § (43,456) Sale of property/surplus 217,489 217,489 Valley Heights revenue 8.790 8.790 ‘Total miscellaneous 313,550 § 143,550 326,373 $162,823 Recovered costs: Social services S 246,000 $ 246,000 55,116 $ (190,884) Health department 15,000 15,000 49,500 25,500 School resource officer 120,780 120,780 215,808 95,028 Insurance recoveries 70,370 70,370

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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, 2020

Fund, Major and Minor Revenue Source

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

Recovered costs: (Continued) Industrial development 18,000$ 18,000$ 68,802$ 50,802$
Other Recovered Costs 28,000 28,000 701,249 673,249

Total recovered costs 427,780$ 427,780$ 1,151,845$ 724,065$

Total revenue from local sources 20,385,863$ 20,385,863$ 20,958,866$ 573,003$

Intergovernmental: Revenue from the Commonwealth:

Noncategorical aid: Motor vehicles carriers’ tax 135,250$ 135,250$ 136,133$ 883$
Mobile home titling tax 78,000 78,000 94,941 16,941
Motor vehicle rental tax 2,000 2,000 3,066 1,066
Communications tax 848,000 848,000 713,647 (134,353)
State recordation tax 25,750 25,750 19,052 (6,698)
Personal property tax relief act funds 1,437,003 1,437,003 1,437,003 -

Total noncategorical aid 2,526,003$ 2,526,003$ 2,403,842$ (122,161)$

Categorical aid: Shared expenses:

Commonwealth’s attorney 389,147$ 389,147$ 379,209$ (9,938)$
Sheriff 1,618,320 1,618,320 1,505,136 (113,184)
Commissioner of revenue 169,378 169,378 163,343 (6,035)
Treasurer 117,891 117,891 117,243 (648)
Registrar/electoral board 44,764 44,764 65,063 20,299
Clerk of the Circuit Court 353,896 353,896 352,653 (1,243)
Total Shared Expenses 2,693,396$ 2,693,396$ 2,582,647$ (110,749)$

Other categorical aid: Victim witness grant 64,000$ 64,000$ 25,641$ (38,359)$
GIS 3,700 3,700 2,880 (820)
E911 state funds 46,000 46,000 95,521 49,521

Law enforcement grants - - 45,054 45,054
Asset forfeiture funds - - 1,091 1,091
Fire Program Funds 2,000 88,763 86,763 (2,000)
Library grants 98,000 98,000 88,010 (9,990)
Litter control grants 12,800 12,800 10,377 (2,423)
Public assistance 2,244,930 2,244,930 2,177,234 (67,696)
Comprehensive services act 1,584,391 1,584,391 955,377 (629,014)
School resource officer grants 75,000 75,000 104,873 29,873

Workforce investment 27,500 27,500 (1) (27,501)

Health department - - 22,660 22,660

Other state funds - - 2,000 2,000
Total other categorical aid 4,158,321$ 4,245,084$ 3,617,480$ (627,604)$

Total categorical aid 6,851,717$ 6,938,480$ 6,200,127$ (738,353)$

Total revenue from the Commonwealth 9,377,720$ 9,464,483$ 8,603,969$ (860,514)$

Revenue from the federal government: Categorical aid:

Forfeited Assets -$ -$ 160$ 160$

Emergency management grants 94,039 94,039 4,776 (89,263)

Homeland security grants - - 40,508 40,508

Law enforcement grants 3,000 3,000 2,367 (633)
Violence against women 24,882 24,882 24,887 5

Victim witness grant - - 77,477 77,477
DMV ground transportation safety grant 18,500 18,500 - (18,500)

133 -

County of Russell, Virginia Schedule 1 Schedule of Revenues » Budget and Actual Page 2 of 5 Governmental Funds For the Year Ended June 30, 2020 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: (Continued) Industrial development 18,000 18,000 68,802 $50,802 Other Recovered Costs 28,000. 28,000. 701,249 673,249 Total recovered costs B78, BT T80_S 1,151,845 $724,065 Total revenue from local sources 20,385,863 § 20,385,863 $ 20,958,866 $ 573,003 Intergovernmentat: Revenue from the Commonwealth: Noncategorical ai: ‘Motor vehicles carriers tax 135,250 135,250 136,133 $ 83 ‘Mobile home titling tax 78,000 78,000 94,941 16,94 ‘Motor vehicle rental tax 2,000, 2,000, 3066 1066 Communications tax 848,000, 848,000 73,647 (134,353) State recordation tax 25,750 25,750 19,052 (6,698) Personal property tax relief act funds 1,437,003 1,437,003 1,437,003, : Total noncategorical aid 2,526,003 $2,526,003 $2,403,882 $ (2,101) Categorical até: Shared expenses: Commonwealth attorney 389,147 389,147 379,209 $ (9,938) Sheriff 1,618,320 1,618,320 1,505,136 (113,184) Commissioner of revenue 169,378, 169,378 163,343, (6,035) Treasurer n7a% 7% 117,283 (648) Registrar/etectoral board 44,764 44,764 65,063, 20,299 Clerk of the Circuit Court 353,896 353,896 352,653, (1,243) Total Shared Expenses Zeg3.396 $7,693,396 $7,580,647 $110,748) Other categorical aid: Victim witness grant 64,000 64,000 25,641 § (38,359) ais 3,700 3,700 2,880 (620) 91 state funds 46,000 46,000 95,521 49,521 Law enforcement grants 45,054 45,054 ‘Asset forfeiture funds 1,091 1,091 Fire Program Funds 2,000, 88,763, 86,763 (2,000) Library grants 98,000 98,000 88,010 (9,990) Litter contrat grants 12,800 12,800 10,37 (2,423) Public assistance 2,244,930 2,244,930 2,477,234 (67,656) Comprehensive services act 11584,391 1,584,391 955,377 (629,014) School resource officer grants 75,000 75,000 104,873 29,873 ‘Workforce investment 27,500 27,500 w (27,501) Health department 22,660 22,660 Other state funds 2,000. 2,000 Total other categorical aid EIGER S 4 TAS ORAS 3,617 480$ (27, 604) Total categorical ald 6851717 $6,938,480 $ 6,200,127 $ (738,353) Total revenue from the Commonwealth 9377.0 $9,464,483 $8,603,969 $ (860,514) Revenue from the federal government: Categorical aid: Forfeited Assets s 160 Emergency management grants 94,039 94,039 (@9,263) Homeland security grants 40,508 Law enforcement grants 3,000 3,000 (633) Viotence against women 24,882 24,882 5 Victim witness grant maT DNV ground transportation safety grant 18,500 18,500 (18,500)

133 -

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, 2020

Fund, Major and Minor Revenue Source

General Fund: (Continued)

Intergovernmental: (Continued)

Revenue from the federal government: (Continued)

Categorical aid: (Continued) Comprehensive services act 136,309$ 136,309$ 165,544$ 29,235$
Public assistance 2,966,050 2,966,050 2,814,168 (151,882)

Total categorical aid 3,242,780$ 3,242,780$ 3,129,887$ (112,893)$

Total revenue from the federal government 3,242,780$ 3,242,780$ 3,129,887$ (112,893)$

Total General Fund 33,006,363$ 33,093,126$ 32,692,722$ (400,404)$

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

Other local taxes: Coal road taxes 150,000$ 150,000$ 161,913$ 11,913$

Revenue from use of money and property: Revenue from the use of money -$ -$ 2,776$ 2,776$

Total revenue from local sources 150,000$ 150,000$ 164,689$ 14,689$

Total Coal Road Fund 150,000$ 150,000$ 164,689$ 14,689$

CARES Fund: Revenue from the federal government:

Categorical aid: CARES Act COVID-19 Grant -$ 2,319,526$ 534,052$ (1,785,474)$

Total categorical aid -$ 2,319,526$ 534,052$ (1,785,474)$

Total revenue from the federal government -$ 2,319,526$ 534,052$ (1,785,474)$

Total CARES Fund -$ 2,319,526$ 534,052$ (1,785,474)$

Workforce Investment Board Fund:

Revenue from local sources:

Miscellaneous:

Other miscellaneous -$ -$ 7,131$ 7,131$

Total miscellaneous -$ -$ 7,131$ 7,131$

Total Workforce Investment Board Fund -$ -$ 7,131$ 7,131$

Total Primary Government 33,156,363$ 35,562,652$ 33,398,594$ (2,164,058)$

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 -$ -$ 35$ 35$
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$ 5,035$ (965)$

Charges for services: Cafeteria sales 400,000$ 400,000$ 256,474$ (143,526)$
Tuition payments 5,000 5,000 - (5,000)
Drivers Ed fees 14,000 14,000 12,010 (1,990)
Other charges for services - - 19,585 19,585
Regional Adult Education 138,554 138,554 97,377 (41,177)

134 -

County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 3 of 5 Governmental Funds For the Year Ended June 30, 2020 Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget ‘Actual (Negative) General Fund: (Continued) Intergovernmental: (Continued) Revenue from the federal government: (Continued) Categorical aid: (Continued) Comprehensive services act S$ _ 136,309 136,309 165,544 $29,235 Public assistance 2,966,080 2,966,050___2,814,168 (151,882) Total categorical ald 3.242, 780_S—3,242,780$ 3,129,887 $ (112,893) Total revenue from the federal government S 3,242,780 $3,242,780 $ 3,129,887 $ (112,893) “Total General Fund $38,006,363 $ 33,093,126 $32,692,722$ (400,404) Special Revenue Funds: Coal Road Fund: Revenue from local sources: (Other local taxes: Coal road taxes S 150,000 150,000 161913 $14,913 Revenue from use of money and property: Revenue from the use of money s 276 $2716 Total revenue from local sources S 150,000 150,000 164.689 $14,689 “Total Coal Road Fund $150,000 150,000 164,689 $14,689 CARES Fund: Revenue from the federal government: Categorical a CCARES Act COVID-19 Grant s 2,319,526 534,052 $ (1,785,474) Total categorical ald s 2,319,526 534,052 $ (1,785,474) Total revenue from the federal government s 2,319,526 534,052 $ (1,785,474) “Total CARES Fund A 2,319,526 534,052$ (1,785,474) Workforce Investment Board Fund: Revenue from local sources: Miscellaneous: Other miscellaneous s 7a 7.34 ‘Total miscellaneous 5 7A $ 7.134 ‘Total Workforce Investment Board Fund s 2a $7.38 ‘Total Primary Government $33,156,363 $35,562,652 _$ 33,398,594 _$ (2,164,058) 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 35 8 35 Revenue from the use of property 6,000, 6,000 5,000 4,000) “Total revenue from use of money and property 5 6,000 6,000, 5.035 (965) Charges for services Cafeteria sales 5 400,000 400,000 256,474 $§ (143,526) “Tuition payments 5,000, 5,000, (6,000) Drivers Ed fees 14,000 14,000 12,010 (1,990) Other charges for services 19,585, 19,585 Regional Adult Education 138,554 138,554 97,377 cant)

134-

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, 2020

Fund, Major and Minor Revenue Source

Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Revenue from local sources: (Continued)

Charges for services: (Continued) GED Testing fees 2,000$ 2,000$ 301$ (1,699)$

Total charges for services 559,554$ 559,554$ 385,747$ (173,807)$

Miscellaneous: Other miscellaneous 165,000$ 165,000$ 186,840$ 21,840$

Recovered costs: Insurance recoveries -$ -$ 12,542$ 12,542$
Extra duties revenue 23,000 23,000 16,808 (6,192)
Dual Enrollment 300,000 300,000 443,101 143,101
Sale of Equipment and Supplies 10,000 10,000 2,201 (7,799)
Reimburse Health Services 187,414 187,414 221,651 34,237
Other recovered costs 51,500 51,500 200,679 149,179

Total recovered costs 571,914$ 571,914$ 896,982$ 325,068$

Total revenue from local sources 1,302,468$ 1,302,468$ 1,474,604$ 172,136$

Intergovernmental: Revenues from local governments:

Contribution from County of Russell, Virginia 7,729,877$ 7,729,877$ 7,440,909$ (288,968)$

Revenue from the Commonwealth: Categorical aid:

Share of state sales tax 4,331,766$ Basic Aid 12,760,075 Remedial summer education 272,566 Regular foster care 28,603 Gifted and talented 130,737 Remedial education 514,944 Special education 1,816,980 Textbook payment 268,651 Career and Technical Education 85,547 Alternative education 993,302 Algebra readiness 67,829 Mentor teacher program 2,064 Social security fringe Group life 56,030 Retirement fringe benefits 1,838,324 Supplemental support - Early reading intervention 84,693 Adult Education 31,197 Homebound education 25,845 Vocation education 498,892 Advanced placement incentive 816,797 At risk payments 740,692 Primary class size 700,738 Technology 362,000 Jobs for Virginia Graduates 25,000 Industry Certification Costs 4,341 At risk four-year olds 568,281 School Food 29,565 English as a second language 7,748 Project graduation 7,760 GED prep programs 78,232 Lottery payments 974,218 Tobacco Commission 30,000 Adult literacy 82,515 Special education-foster care - 4,331,766$ 4,432,089$ 100,323$
12,760,075 12,896,659 136,584
272,566 257,205 (15,361)
28,603 16,227 (12,376)
130,737 132,367 1,630
514,944 521,365 6,421
1,816,980 1,839,636 22,656
268,651 272,001 3,350
85,547 31,542 (54,005)
993,302 993,302 -
67,829 68,704 875
2,064 2,528 464
benefits 832,449 832,449 842,829 10,380
56,030 56,729 699
1,838,324 1,861,247 22,923
- 811,674 811,674
84,693 102,658 17,965
31,197 31,197 -
25,845 31,228 5,383
498,892 558,541 59,649
816,797 - (816,797)
740,692 749,753 9,061
700,738 707,740 7,002
362,000 528,150 166,150
25,000 25,000 -
4,341 4,740 399
568,281 519,710 (48,571)
29,565 31,516 1,951
7,748 17,528 9,780
7,760 7,760 -
78,232 78,025 (207)
974,218 988,730 14,512
30,000 55,952 25,952
82,515 82,515 -
- 22,428 22,428

135 -

County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 4 of 5 Governmental Funds For the Year Ended June 30, 2020

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) Revenue from local sources: (Continued) Charges for services: (Continued) GED Testing fees S__2,00 $2,000 $ 301 $11,699) Total charges for services S $59,554 §559,554§ 305,747 _§ (173,807) Miscellaneous: Other miscellaneous S 165,000 $ 165,000 $186,840 $21,840 Recovered costs: Insurance recoveries s -$ + $1252 $ 12,582 Extra duties revenue 23,000 23,000 16,808 (6,192) Dual Enroliment 300,000 300,000 443,101 143,101 Sale of Equipment and Supplies 10,000 10,000 2,201 7,798) Reimburse Health Services, 187,414 187,414 221,651 34.237 Other recovered costs 51,500 51,500 200,679 149,179 Total recovered costs 3 571.914 $571,914 896,982 375,068 Total revenue from local sources S 1,302,468 $1,302,468 $1,474,608 $172,136 Intergovernmentat: Revenues from local governments: Contribution from County of Russell, Virginia $7,729,877 $7,729,877 $7,440,909 $ (288,968) Revenue from the Commonwealth: Categorical aid: Share of state sales tax S 433,766 $4,331,766 $ 4,432,089 § 100,323 Basic Aid 12,760,075 12,760,075 12,896,659 136,584 Remedial summer education 272566 272566 257,205 (15,361) Regular foster care 28,603, 28,603, 16.227, (12,376) Gifted and talented 130,737 130,737 132,367 1,630 Remedial education 514,944 514.944 521,365 eat Special education 1,816,980 1,816,980 1,839,636, 2656 Textbook payment 268,651, 268,651 272,001 3,350 Career and Technical Education 85,547 85,547 31542 (64,005) Alternative education 993,302 993/302 993,302 : ‘Algebra readiness 67,829 67829 68,704 875 ‘Mentor teacher program 2,064 2,064 2,528 464 Social security fringe benefits 832,449 2.449 842,829 10,380, Group tite 56,030 56,030 56,729 699 Retirement fringe benefits 1,838,324 1,838,324 1,861,247 2.923 Supplemental support : : 811,674 811,674 Early reading intervention 84,693, 84,693, 102,658 17,965, ‘Adult Education 31,197 31,197 31,197 : Homebound education 25,845, 25,845, 3128 5,383 Vocation education 498,892 498,892 558,541 59,649 ‘Advanced placement incentive 816,797 816,797 : (816,797) ‘At risk payments 740,692 740,692 749,753 9,061 Primary class size 700,738 700,738 707,740 7,002 Technology 362,000 362,000 528,150 166,150 Jobs for Virginia Graduates, 25,000 25,000 25,000 - industry Certification Costs 4341 441 4740 399 ‘Av isk four-year olds 568,281 568,281 519,710 43,571) School Food 29,565 29,565 31,516 4,951 English asa second language 7,748 7748 17,528 9,780 Project graduation 7760 7760 7,760 : GED prep programs 78232 7822 78,005 207) Lottery payments 974,218 974.218 988,730 14512 Tobacco Commission 30,000 30,000 55,952 25,982 ‘Adult Ueracy 22,515 22,515 22.515 : Spectal education-foster care : : nae 2.08

+135 -

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, 2020

Fund, Major and Minor Revenue Source

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

Categorical aid: (Continued) Other state funds 249,528$ 249,528$ 166,505$ (83,023)$

Total categorical aid 29,317,909$ 29,317,909$ 29,745,780$ 427,871$

Total revenue from the Commonwealth 29,317,909$ 29,317,909$ 29,745,780$ 427,871$

Revenue from the federal government: Categorical aid:

Basic Adult Education 276,389$ 276,389$ 228,054$ (48,335)$
Title I 1,238,667 1,238,667 1,189,325 (49,342)
Special Education 1,146,994 1,146,994 951,517 (195,477)
Title VI-B, preschool 36,161 36,161 661 (35,500)
Vocational education 82,051 82,051 82,051 -
School Food Program 1,355,000 1,355,000 2,052,122 697,122
Improving teacher quality 169,306 169,306 171,136 1,830
Title IV part A 87,534 87,534 17,333 (70,201)
21st century grant 1,124,232 1,124,232 936,865 (187,367)
Rural and low income schools 72,966 72,966 90,117 17,151
Other federal funds 224,000 224,000 59,479 (164,521)

Total categorical aid 5,813,300$ 5,813,300$ 5,778,660$ (34,640)$

Total revenue from the federal government 5,813,300$ 5,813,300$ 5,778,660$ (34,640)$

Total Discretely Presented Component Unit - School Board 44,163,554$ 44,163,554$ 44,439,953$ 276,399$

136 -

County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 5 of 5 Governmental Funds For the Year Ended June 30, 2020

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) Categorical aid: (Continued) (Other state funds S 249,508 $249,528 $ 166,505$ (83,023) Total categorical ald S79,317,909_$ 79,317,909 $ 79,745,780§ 427,871 Total revenue from the Commonwealth $29,317,909 $29,317,909 $ 29,745,780 $427,871 Revenue from the federal government: Categorical aid: Basic Adult Education S 276,389 $276,389 $228,054 § (48,335) Title | 1,238,667 1,238,667 1,189,325, (49,342) Special Education 1,146,994 1,146,994 951,517 (195,477) Title VIB, preschool 36,161 36,161 ot (35,500) Vocational education 82,051 82,051 82,051 : School Food Program 1,355,000 1,355,000 2,052,122, 697,122 Improving teacher quality 169,306 169,306 171,136 1,830 Tile IV part A 87,534 87,534 173333 (70,201) 2ist century grant 1yr24232 1,124,232 936,865 (187,367) Rural and tow income schools 72,966 72,966 90,117 17,151 Other federal funds 224,000 224,000 59,479 (64.521) Total categorical ald $5,813,300 $ —5,813,300_$ 5,778,660 $ (4,640) Total revenue from the federal government $5,813,300 $ 5,813,300 $ 5,778,660 $ (24,640) “Total Discretely Presented Component Unit - School Boare S_ 44,163,554 $44,163,554 _$ 44,439,953$ 276,399

136 -

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 237,800$ 277,800$ 237,865$ 39,935$

General and financial administration: County administrator 350,823$ 386,382$ 368,107$ 18,275$
Independent auditor 68,250 80,253 84,253 (4,000)
Commissioner of the revenue 336,052 336,052 334,440 1,612
Real estate assessor 102,721 129,274 130,925 (1,651)
Treasurer 439,950 439,950 427,604 12,346

Auto decals - - 1,192 (1,192)

Procurement 162,562 162,562 139,183 23,379 Total general and financial administration 1,460,358$ 1,534,473$ 1,485,704$ 48,769$

Board of elections: Electoral Board 73,675$ 73,675$ 79,998$ (6,323)$
General Registrar 126,381 161,906 148,973 12,933

Total board of elections 200,056$ 235,581$ 228,971$ 6,610$

Total general government administration 1,898,214$ 2,047,854$ 1,952,540$ 95,314$

Judicial administration: Courts:

Circuit Court 127,596$ 127,596$ 104,394$ 23,202$
General District Court 17,483 17,483 15,906 1,577
Special Magistrates 4,500 9,800 9,107 693
Clerk’s Office 444,364 525,014 531,926 (6,912)
Sheriff Courts 979,835 1,117,835 1,163,483 (45,648)
Victim and Witness Assistance 61,293 61,293 64,785 (3,492)
Law Library - - 662 (662)

Total courts 1,635,071$ 1,859,021$ 1,890,263$ (31,242)$

Commonwealth’s attorney: Commonwealth’s Attorney 676,676$ 820,176$ 848,476$ (28,300)$

Total judicial administration 2,311,747$ 2,679,197$ 2,738,739$ (59,542)$

Public safety: Law enforcement and traffic control:

Sheriff 2,073,102$ 2,787,102$ 2,803,168$ (16,066)$
Dare program 3,000 3,000 2,986 14

Total law enforcement and traffic control 2,076,102$ 2,790,102$ 2,806,154$ (16,052)$

Fire and rescue services: Volunteer Fire Departments 203,200$ 380,101$ 293,863$ 86,238$
Ambulance Rescue Squad 189,875 190,875 189,954 921

Total fire and rescue services 393,075$ 570,976$ 483,817$ 87,159$

Correction and detention: Operation of Jail 2,488,745$ 2,523,745$ 2,522,083$ 1,662$
Probation Office 208,261 215,761 215,711 50

Total correction and detention 2,697,006$ 2,739,506$ 2,737,794$ 1,712$

Inspections: Building inspector 120,729$ 120,729$ 118,232$ 2,497$

Other protection: Forestry Service 11,804$ 12,239$ 12,239$ -$
Enhanced 911 587,810 587,810 549,317 38,493
Medical Examiner 400 340,420 340,440 (20)
Emergency Services 112,251 140,251 153,001 (12,750)

County of Russell, Virginia Schedule of Expenditures - Budget and Actual

Governmental Funds For the Year Ended June 30, 2020

Fund, Function, Activity and Element

137 -

County of Russell, Virginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 1 of 4 Governmental Funds For the Year Ended June 30, 2020 Variance with Final Budget origina Final Positive Fund, Function, Activity and Element Budget sudeet tual (Negative) General Fund: {General government administration: LegKstaive: Board of supervisors $237.00 § 27800 § 237.865 § 39.835, Genera an financial administration: County administrator $323 § —3a.3e2 $368,107 § 18,275 Independent auditor 68,250 20.253 84.253 (4,000) Commision ofthe revenue 336052 336052 aaa 4,612 Real estate assessor 42,721 29.28 130,925 (1651) Treasurer 439,950 439.950 427,604 12346 Auto decals : - 4192 (0.1%) Procurement 156.52 139,183 239 Total general and financial administration 570,585,544 S75 70ST Board of elections: Electoral Board snes 1675 79,958 $6,323) General Registrar 126,381 1615906 148,973 12/933 “ota board of elections $200,056 —235;581 2B9 S610 Tota general government administration S1ose214 $2,047,854 § 1,952,540 § 95,314 ud administration: Couns: Cheut Court S$ 1275% § 2759 $ toga § 23,200 General Disvict Court 17.483 17.483 15,506 1377 Special Magistrates 4500 9,800 9,107 693 Clerks Ofte 44664 525.014 54,928 6912) Sheriff Courts 97935 1117.833 1,168,483 45,648), Viet and Witness Assistance 61,293 61293 4.785 6,492) Law Library 5 : ‘62 (662) Tota courts 5S EX 7 OS TE Commonwealths attorney: {Commonweaths Attorney $676,676 § 0.176 § 848.475§ 28,300) Tota judicial administration $231,747 §2679,197 $279 § 69,582) Public safety: Law enforcement and traffe conte: Sherif S$ 2073,102 $2,787,102 § 2,803,168 § (6,066) Dare program 3,000 3,000 21986 14 Tota law enforcement and trafic control Ze, 02S 7,790,102 $2.0, 154 F052) Fire and rescue services: Volunteer Fire Departmen, $203,200 § 380,101 2386 § 86.238 Ambulance Rescue Squad 439.875 190,875 189.954 oz Total fre and rescue services, $393,075 -$ 570.97 _$ 483 817 _§ TT Correction and detention: ‘Operation of Ja S$ 208745 § 252375 § 252208 § 1,662 Probation Office 20826, 215.761 25.711 50 Tota correction and detention SLT. 006 SZ 739,506 SDT 794 FAT Inspections Busing inspector $_nom $ mone s e2 § 2487 Other protection Forestry Service S180 12239 12.239 § : Enhanced 911 sa7si0 587810 549.317 38.493 Medial Examiner 400 4020 0,440 20, Emergency Services 12351 140.251 433,001 (2,750)

137-

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, 2020

Fund, Function, Activity and Element

General Fund: (Continued) Public safety: (Continued)

Other protection: (Continued) Animal Control 69,294$ 149,294$ 135,669$ 13,625$

Total other protection 781,559$ 1,230,014$ 1,190,666$ 39,348$

Total public safety 6,068,471$ 7,451,327$ 7,336,663$ 114,664$

Public works: Sanitation and waste removal:

Landfill 1,741,079$ 1,904,079$ 1,811,080$ 92,999$
Refuse collection - - 2,601 (2,601)
Litter Coordinator - - 4,190 (4,190)

Total sanitation and waste removal 1,741,079$ 1,904,079$ 1,817,871$ 86,208$

Maintenance of general buildings and grounds: General properties 937,285$ 937,285$ 839,042$ 98,243$

Total public works 2,678,364$ 2,841,364$ 2,656,913$ 184,451$

Health and welfare: Health:

Health Department 340,000$ 340,000$ 40,500$ 299,500$

Mental health and mental retardation: Cumberland Mountain Community Services Board 40,000$ 40,000$ 39,996$ 4$

Welfare: Social services 5,210,980$ 5,210,980$ 5,460,710$ (249,730)$
Comprehensive Services Act 1,785,618 1,785,618 1,547,485 238,133
Appalachian Agency for Senior Citizens 83,475 83,475 80,314 3,161
Other health and welfare - 800 - 800

Total welfare 7,080,073$ 7,080,873$ 7,088,509$ (7,636)$

Total health and welfare 7,460,073$ 7,460,873$ 7,169,005$ 291,868$

Education: Other instructional costs:

Contributions to County School Board 7,637,706$ 7,637,706$ 7,440,909$ 196,797$
Capital Outlay - - 561,589 (561,589)
SVCC Contribution 166,949 365,449 365,390 59

Total education 7,804,655$ 8,003,155$ 8,367,888$ (364,733)$

Parks, recreation, and cultural: Parks and recreation:

Recreation Park 163,001$ 163,001$ 121,083$ 41,918$
Fairground project - - 92,257 (92,257)
Health and fitness 72,861 72,861 47,574 25,287

Total parks and recreation 235,862$ 235,862$ 260,914$ (25,052)$

Library: Public Library 338,187$ 351,687$ 348,625$ 3,062$

Total parks, recreation, and cultural 574,049$ 587,549$ 609,539$ (21,990)$

Community development: Planning and community development:

Planning Commission 18,000$ 18,000$ 15,250$ 2,750$
Community Development 26,550 26,550 17,000 9,550
Industrial Development 510,500 510,514 478,824 31,690
PSA Contributions 222,989 222,989 321,540 (98,551)
Cumberland Plateau 35,000 35,000 35,000 -
Regional Housing 1,800 1,800 - 1,800

138 -

County of Russel, Vieginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 2 of 4 Governmental Funds For the Year Ended June 30, 2020 Variance with Final Budget Original Final Positive Budget Budget tual Negative ‘General Fund: (Continued) Public safety: (Continued) (Other protection: (Continued) ‘Animal Control. S 69.294 $149,204 $135,669 $13,625, Total other protection 3 7a1,559$1.20,014 $1,190,666 § 39.348 ‘otal public safety S 6,068,471 $7,451,327 $7,336,663 $114,664 Public works: Sanitation and waste removal: Landfit $1,741,079 $ 1,904,079 $ 1,811,080 § 92,999 Refuse collection : : 2601 (2.601) Litter Coordinator : : 4190 (4.190) Total sanitation and waste removal 317A O79 $1,504 079 $—T.817,871_S 86,708 Maintenance of general buildings and grounds General properties S$ 937.285 $ 937.285 § 839,02 § 98,243 Total public works $2,678,364 $2,841,364 $ 2,656,913 § 184451 Health and welfare: Health: Health Department $340,000 $ 340,000 $ 40,500 $§ 299,500 Mental health and mental retardation: Cumberland Mountain Community Services Board $40,000 $ 40,000 $ 39,99 $ 4 Welfare: Social services S $210,980 $ 5,210,980 $ 5,460,710 $ (248,730) Comprehensive Services ket 1,785,618 1,785,618 1,547,485 238,133 ‘Appalachian Agency for Senior Citizens 83,475, 83,475 80,314 3,161 (Other health and welfare : ‘300 : 800 Total welfare 37,080,073 $7, 080,873$ 7,088 5097S 17.636) Total health and welfare $7,460,073 $7,460,873 $7,169,005 $291,868 Education: (Other instructional costs ‘Contributions to County School Board S 7,637,706 $ 7,637,706 $ 7,440,909 § 196,797 Capital Outlay : : 561,589 (561,589) SSVCC Contribution 166,949 365,449 365,390 59 Total education 37,804,655 $6,003,155 $6,367,808 S$ G6ATI) Parks, recreation, ané cultura: Parks and recreation: Recreation Park S 163,001 $ 163,001 $121,088 $41,918 Fairground project : : 92,257 92,257) Health and fitness 72,861 72,861 47/574 25,287 ‘Total parks and recreation S_735,862 $735,862 $260,914 $25,052) brary: Public Library S 338,187 $351,687 $348,625 $3,062 ‘otal parks, recreation, and cultural S 574.009 $587,549 $ 609,539 $21,990) Community development: Planning and community development: Planning Commission S 18,000 $ 18,000 $ 15,250 § 2,750 Community Development 26,550 26,550 17,000, 9,550 Industrial Development 510,500 510,514 478,824 31,680, SA Contributions 222,989 222,989 321,540 (8,551) Cumberland Plateau 35,000 135,000 35,000, Regional Housing 1,800 1,800 : 1,800

138 -

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, 2020

Fund, Function, Activity and Element

General Fund: (Continued) Community development: (Continued)

Planning and community development: (Continued) Highway Safety Commission 4,200$ 4,200$ 3,400$ 800$
Canneries 25,000 25,000 44,950 (19,950)
Tourism 6,000 6,022 6,022 -

Total planning and community development 850,039$ 850,075$ 921,986$ (71,911)$

Environmental management: Soil and Water Conservation -$ 7,500$ 6,875$ 625$

Cooperative extension program: VPI Extension 69,376$ 69,376$ 60,227$ 9,149$

Total community development 919,415$ 926,951$ 989,088$ (62,137)$

Nondepartmental: Nondepartmental 302,300$ 463,660$ 224,547$ 239,113$

Capital projects: Other capital projects 323,416$ 379,416$ 413,535$ (34,119)$

Total capital projects 323,416$ 379,416$ 413,535$ (34,119)$

Debt service: Principal payments 1,291,906$ 1,291,906$ 1,289,006$ 2,900$
Interest Expense 455,616 455,616 455,616 -

Total debt service 1,747,522$ 1,747,522$ 1,744,622$ 2,900$

Total General Fund 32,088,226$ 34,588,868$ 34,203,079$ 385,789$

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 25,000 84,902 (59,902)

Total public works 150,000$ 150,000$ 84,902$ 65,098$

Total Coal Road Fund 150,000$ 150,000$ 84,902$ 65,098$

CARES Fund: Public works:

Maintenance of general buildings and grounds: General properties -$ 2,319,526$ 9,532$ 2,309,994$

Total public works -$ 2,319,526$ 9,532$ 2,309,994$

Total CARES Fund -$ 2,319,526$ 9,532$ 2,309,994$

Total Primary Government 32,238,226$ 34,738,868$ 34,297,513$ 450,887$

Discretely Presented Component Unit - School Board: School Operating Fund: Education:

Administration of schools: Administration and health services 2,314,829$ 2,314,829$ 2,072,416$ 242,413$

Instruction costs: Instructional costs 30,872,788$ 30,872,788$ 30,419,305$ 453,483$
Technology 1,529,032 1,529,032 1,556,486 (27,454)

Total instruction costs 32,401,820$ 32,401,820$ 31,975,791$ 426,029$

139 -

County of Russel, Vieginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 3 of 4 Governmental Funds For the Year Ended June 30, 2020 Variance with Final Budget Original Final Positive Budget Budget tual Negative Community development: (Continued) Planning and community devetopment: (Continued) Highway Safety Commission $4200 $ 4,200 3,400 $ 800 Canneries 25,000 25,000 44,950 (19,950) Tourism 6,000, 6,022, 6,022 : ‘otal planning and community development. 350,039 $850,075 321,986 S ITA, Environmental management: Soil and Water Conservation s s_7,500 675 $ 2s Cooperative extension program: YP Extension S 69.376 $69,376 eon $9149 ‘otal community development S 919,415 $926,951 989,008 § (62.137) Nondepartmental: Nondepartmental S 302,300 $ 463,660 24sa7 $239,113 Capital projects: Other capital projects S$ 33,416 $ 379.416 413,535 $4,119) Total capital projects S336 $37.16 415,535 $4119) Debt service: Principal payments S 1,291,906 $ 1,291,906 $ 1,289,008 § 2,900 Interest Expense “455,616, 455,616, 455,616 Total debt service S747 Sa2$ 1747 SS T7679 Totat General Fund $32,088,226 $34,588,868 _$ 34,203,079 $ 385,789 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 $125,000 Virginia coalfield 25,000. (59,902) Total public works S__¥50,000—$ 5 6,098 Total Coal Road Fund S___150,000$ $65,098 ‘CARES Fund: Public works: Maintenance of general buildings and grounds: General properties $ $2,319,526 9,532 $ 2,309,994 “Total public works 3 32,319,526 9.532 $2,109,994 Total CARES Fund $ $2,319,526 9,532§ _ 2,309,994 ‘Total Primary Government $32,238,226 $34,738,868 $34,297,513 ___ 450,887 Discretely Presented Component Unit - School Board: ‘School Operating Fund: Education: ‘Administration of schools: ‘Administration and health services S$ 2314.899 $ 2314829 $2072.46 § 242,413, Instruction cost: Instructional costs $30,872,788 $ 30,872,788 $ 30,419,305 $453,483 Technology 4,529,032 1/529,032___1/556,486 (27,454) Total instruction costs 332,401,820 32,401,620$ 31,975,791 426,009.

= 139 -

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, 2020

Fund, Function, Activity and Element

Discretely Presented Component Unit - School Board: (Continued) School Operating Fund: (Continued) Education: (Continued)

Operating costs: Pupil transportation 2,585,969$ 2,585,969$ 2,590,440$ (4,471)$
Operation and maintenance of school plant 5,074,871 5,074,871 4,832,326 242,545
Food service and non-instructional 1,786,065 1,786,065 2,265,920 (479,855)

Total operating costs 9,446,905$ 9,446,905$ 9,688,686$ (241,781)$

Total education 44,163,554$ 44,163,554$ 43,736,893$ 426,661$

Total School Operating Fund 44,163,554$ 44,163,554$ 43,736,893$ 426,661$

Total Discretely Presented Component Unit - School Board 44,163,554$ 44,163,554$ 43,736,893$ 426,661$

140 -

County of Russel, Vieginia Schedule 2 Schedule of Expenditures - Budget and Actual Page 4 of 4 Governmental Funds For the Year Ended June 30, 2020 Variance with Final Budget Original Final Positive Fund, Function, Activity and Element Budget Budget tual Negative Education: Continued) Operating costs:

Pupil transportation 2,585,969 $2,585,969 $2,590,440 § 4,471) ‘Operation and maintenance of school plant so7ae7t 5,074,871 4,832,326 242,545

Food service and non-instructonal 41,786,065 1,786,065 2,266,920, (479,855)

Total operating costs 9,446,905 $9,446,905 $9,688,686 S (241,781)

Total education 44,163,554 $44,163,554 $43,736,803 § 426,661,

Total School Operating Fund 4,163,554 $44,163,554 $43,736,893 _§ 426,661

Total Discretely Presented Component Unit - School Board 44,163,554 $44,163,554 $43,736,893 _§ 426,661

= 140 -

Other Statistical Information

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141 -

Table 1 County of Russell, Virginia Government-Wide Expenses by Function Last Ten Fiscal Years

Parks, Interest Recreation, Community on Long- Sewer

Public Public Education and Cultural Development _Term Debt__Authority Total

Safet Works

5 8,533,863 $ 650,254 § 924,518 $ $46,107 $ 367,504 $ 32,885,300 548,374 935,883 487,606 351,058

499,803 388,981 515,428 454,634, 342,729 441,642, 385,445

457,095 498,401 522,300 756,064

2,085,083 2,099,001

(1) 2010-2011 is the first year the Workforce Investment Board is included. BQ) 2018-2019 the Workforce Investment Board became it’s own entity, Southwest Virginia Workforce Development Board.

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142 -

Table 2 County of Russell, Virginia Government-Wide Revenues Last Ten Fiscal Years

PROGRAM REVENUES GENERAL REVENUES.

Grants and Operating Capital Unrestricted Contributions Charges Grants. Grants General Other Revenue from Not Restricted Fiscal for and and Property Local use of Money to Specific Year Services Contributions Contributions Taxes Taxes _and Property Miscellaneous Programs Total

2019-20 $ 519,382 $ 9,864,066 $ = $ 17,746,273 § 3,035,109 $ 184,588 $ 333,504 $ 2,403,842 $ 34,086,764 2018-19 497,780 10,134,066 50,000 17,541,471 3,250,496 282,315 210,687 2,422,355 34,389,170 2017-18 546,610 11,391,778 : 17,446,217 3,390,189 254,538 233,890 2,340,315 35,603,537 2016-17 414,700 11,862,113 : 17,065,361 3,297,225 185,677 91,300 2,493,045 35,409,421 2015-16 430,589 10,616,989. 61,200 15,198,122 3,781,925 223,008 180,343 2,501,627 32,993,803 2014-15 468,117 9,648,228 : 15,762,013 4,635,427 257,108 226,621 2,553,497 33,551,011 2013-14 445,727 8,991,231 320,311 15,749,617 4,873,857 359,952 86,115 2,562,116 33,388,926 2012-13 398,711 9,822,073 : 14,686,993 5,079,612 45,865 60,479 2,580,839 32,674,572 2011-12 488,408 9,677,480 761,738 13,142,777 6,881,302 77,226 138,135 2,445,435 33,612,501 2010-11 337,064 10,635,876 : 13,683,476 6,340,919 89,819 177,669 2,638,202 33,903,025

-142-

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144 -

Table 4 County of Russell, Virginia General Governmental Revenues by Source (1) Last Ten Fiscal Years

Revenue from the

Fines Use of Charges

Regulatory and Money and

Licenses: Forfeitures Property

General Fiscal Property Year Taxes

Recovered Inter Miscellaneous Costs governmental (2)__Total

2019-20 § 2018-19 2017-18 2016-17 2015-16 2014-15, 2013-14

S 182,583 $ 281,848,

$ $20,344 § 2,048,827 $47,792,348 $70,397,638 446,681 46,905,798 69,803,686 534,953 46,735,222 69,637,717 342,528 46,597,608 70,226,034 426,624 44,977,461 66,809,242 472,339 44,426,079 67,690,154 307,398 352,993 394,657 416,883,

251,962 352,852 39,878 65,238 B54

13,548,896

Includes General and Special Revenue funds of the Primary Government and its Di -udes contribution from Primary Government to Discretely Presented Componer

‘etely Presented Component Unit - School Board. Excludes Capital Projects. Unit - School Board.

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145 -

2145 -

County of Russell, Virginia Property Tax Levies and Collections Last Ten Fiscal Years

Table 5

Fiscal Year

Total Tax Levy (1)

Current Tax

Collections (1)

Percent of Levy

Delinquent Tax

Collected Collections (1)

Total Tax Collections

Percent of Total Tax Collections to Tax Levy

Percent of

Outstanding Delinquent Delinquent Taxes to Taxes (1) Tax Levy

2019-20 $ 2018-19 2017-18 2016-17 2015-16 2014-15, 2013-14 2012-13 2011-12 2010-11

18,740,791 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

15,990,742 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

(1) Exclusive of penalties and interest.

85.33% $ 84.66% 89.02% 90.73% 84.93% 88.77% 90.95% 90.72% 89.82% 90.78%

1,141,973 1,063,006 1,377,820 1,946,062 1,312,236 994,555 895,532 953,671 723,190 1,330,697

17,132,715, 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

91.42% 90.33% 96.69% 101.47% 92.49% 94.39% 96.03% 96.56% 94.74% 99.84%

7,729,993 41.25% 6,126,347 32.66% 4,476,207 24,90% 3,734,590 20.61% 4,096,565 23.60% 3,823,404 21.60% 3,914,585 22.22% 4,786,523 29.31% 4,693,121 31.97% 3,847,456 26.20%

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146 -

+146 -

County of Russell, Virginia Assessed Value of Taxable Property Last Ten Fiscal Years

Table 6

Fiscal Year

Real Estate (1)

Personal Property

Machinery and Tools

Merchant’s

Capital

Mobile Homes

Public. Service (2)

Total

2019-20 $ 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11

1,441,294,836 $ 1,425,907,354 1,437,419, 342 1,424,285,595, 1,435,763,539 1,426,948,990 1,420,301,334 4,323,141,655, 1,214,673,535 4,197,720,260

355,435,332 §$ 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

59,906,364 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

(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.

7,482,353 $ 5,701,488 5,992,268 5,716,770 5,876,008 6,084,205 6,061,014 5,631,601 5,340,902 5,136,529

15,473,918 $ 324,047,377 $

21,270,790 20,380,636 20,726,176 21,377,908 21,500,580 21,820,581 23,486,868 23,401,571 23,320,148

251,848,360 288,824,827 265,575,303 243,897,231 240,244,298 315,700,293 230,027,520 269,503,982 326,871,285

2,203,640, 180 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

Table 7

Fiscal Real Personal Machinery Merchant’s Mobile Year Estate (2) Property & Tools Capital Homes

2019-20 $ 0.63 $ 1.95 $ 1.65 $ 0.65 $ 0.63
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

(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

147 -

Table 7 County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years

Fiscal Real Personal Machinery Merchant’s Mobile Year Estate (2) Property & Tools Capital Homes 2019-20 $ 0.63 $ 1.95 $ 1.65 § 0.65 $ 0.63 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

(1) Per $100 of assessed value. (2) 2nd half due December/1st half due June of fiscal year.

+147 -

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

2019-20 28,897 2,203,640$ 4,580,219$ 4,580,219$ 0.21% 159$
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

(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

148 -

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 2019-20 28,897 $ 2,203,640 § 4,580,219 $ 4,580,219 0.21% $ 159 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 1,871,111 14,066,729 14,066,729 0.75% 487

(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.

= 148 -

Table 9

Ratio of Total Debt Service

Total General to General Fiscal Debt Governmental Governmental Year Service Expenditures Expenditures

2019-20 1,744,622$ 70,179,962$ 2.49% 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%

(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

149 -

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 2019-20 $ 1,744,622 $ 70,179,962 2.49% 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 4,747,724 67,289,189 2.60% 2014-15 1,946,577 65,792,171 2.96% 2013-14 1,810,023 64,636,204 2.80% 2012-13 2,869,820 68,943,068 4.16% 2011-12 2,526,021 71,017,651 3.56% 2010-11 2,537,376 67,593,280 3.75%

(1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board.

= 149-

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, the discretely presented component unit-IDA, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the County of Russell, Virginia’s basic financial statements and have issued our report thereon dated March 16, 2021. Our report includes a reference to other auditors who audited the financial statements of Russell County PSA, as described in our report on the County of Russell, Virginia’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the County of Russell, Virginia’s internal control over financial reporting (internal control) as a basis for designing 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. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item 2020-01, that we consider to be material weaknesses.

150 -

Rosinson, FARMER, Cox AssociATes, PLLC

Certified Public Accountants

CPAs | ConsutTaNnTs

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, the discretely presented component unit-IDA, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the County of Russell, Virginia’s basic financial statements and have issued our report thereon dated March 16, 2021. Our report includes a reference to other auditors who audited the financial statements of Russell County PSA, as described in our report on the County of Russell, Virginia’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors.

Internal Control over Financial Reporting

150 -

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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

County of Russell, Virginia’s Response to Findings

County of Russell, Virginia’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. County of Russell, Virginia’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Blacksburg, Virginia March 16, 2021

151 -

Compliance and Other Matters

County of Russell, Virginia’s Response to Findings

auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Pelore, Fret, la Ostet

Blacksburg, Virginia March 16, 2021

= 151-

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, 2020. 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, 2020.

152 -

RoBINSON, FarmerR, 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, 2020.

+152 -

Report on Internal Control over Compliance

Management of the County of Russell, Virginia is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the County of Russell, Virginia’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Blacksburg, Virginia March 16, 2021

153 -

Report on Internal Control over Compliance

Alivia, cn le Osseo t&

Blacksburg, Virginia March 16, 2021

+153 -

Page 1 of 2

Pass-through Federal Entity

Federal Grantor/State Pass - Through Grantor/ CFDA Identifying Federal Program Cluster or Title Number Number Expenditures

Department of Health and Human Services: Pass Through Payments: Department of Social Services: Promoting Safe and Stable Families Program 93.556 0950118, 0950119 30,204$

Temporary Assistance for Needy Families 93.558 0400119, 0400120 328,943
Refugee and Entrant Assistance - State/Replacement Designee Administered Programs 93.566 0500120 481
Low-Income Home Energy Assistance 93.568 0600419, 0600420 63,507
CCDF Cluster

  Child Care Mandatory and Matching Funds of the 93.596 0760119, 0760120 62,695              
      Child Care and Development Fund

  Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900118, 0900119 856                   
  Foster Care - Title IV-E 93.658 1100119, 1100120 488,301             
  Adoption Assistance 93.659 1120119, 1120120 654,289             
  Social Services Block Grant 93.667 1000119, 1000120 443,469             
  John H. Chafee Foster Care Program for Successful Transition to Adulthood 93.674 9150118, 9150119 7,383                
  Children's Health Insurance Program 93.767 0540119, 0540120 7,453                
  Medicaid Cluster

  Medical Assistance Program 93.778 1200119, 1200120 456,303

Total Department of Health and Human Services 2,543,884$

Department of Agriculture: Pass Through Payments: Department of Agriculture and Consumer Services:

State Administrative Expenses for Child Nutrition 10.560 86507 160$                 

Child Nutrition Cluster:
    Department of Agriculture:
      Food Distribution-Schools (Note 3) 10.555 Not available 119,074$     

    Department of Education:
      COVID-19 National School Lunch Program 10.555 40264 352,826       
      National School Lunch Program 10.555 40254 655,430       1,127,330$   

      COVID-19 School Breakfast Program 10.553 40263 206,420$     
      School Breakfast Program 10.553 40253 226,721       433,141       

      Summer Food Service Program for Children 10.559 60302, 60303 260,761       

Total Child Nutrition Cluster 1,821,232          

    Department of Education:
      COVID-19 Child and Adult Care Food Program 10.558 70035 19,297$       
      Child and Adult Care Food Program 10.558 70027, 70028 211,593       230,890             

      Child Nutrition Discretionary Grants Limited Availability 10.579 86804 59,479              

Department of Social Services:
  SNAP Cluster
      State Administrative Matching Grants for the Supplemental 0010119, 0010120
          Nutrition Assistance Program 10.561 0040119, 0040120 435,828

Total Department of Agriculture 2,547,589$

Department of Treasury: Pass Through Payments: Department of Accounts:

COVID-19 - Coronavirus Relief Fund 21.019 SLT0022 534,052$

Department of Justice: Pass Through Payments: Department of Criminal Justice Services: Violence Against Women Formula Grants 16.588 Not available 24,887$
Edward Byrne Memorial Justice Assistance Grant Program 16.738 Not available 2,367
Crime Victim Assistance 16.575 Not available 77,477

Total Department of Justice 104,731$

Department of Education: Pass Through Payments: Department of Education: Adult Education - Basic Grants to States 84.002 42801, 61111 228,054$
Title I: Grants to Local Educational Agencies 84.010 42901 1,189,325
Special Education Cluster:

  Special Education - Grants to States 84.027 43071 951,517$      
  Special Education - Preschool Grants 84.173 62521 661              

  Total Special Education Cluster 952,178             
  Career and Technical Education:  Basic Grants to States 84.048 61095 82,051              
  Twenty-First Century Community Learning Centers 84.287 60565 936,865             
  Rural Education 84.358 43481 90,117              
  Supporting Effective Instruction State Grants 
        (formerly Improving Teacher Quality State Grants) 84.367 61480 171,136

Student Support and Academic Enrichment Program 84.424 60281 17,333

Total Department of Education 3,667,059$

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2020

154 -

county of Rural, Virsa Senedule of Expondtres of Federal Avards

For the ear nde ne 90, 3020 Feder “oo Fedral Gantotte Pass Trough Grantor! eon venting roy Custer or Te omer number ss Thrush Pome Soper of al Serv: rooting Sand Se aries Progra ss oso18, onsen sr030¢ Tenprny sees frend Pa Ss Gunny, or eae Ties Enos tee tlResacenet rire Minted Progam sah OED ie fawesesteNe rene mess eons om a301 ‘pt cece ese fons, sao Sea "otal Deparment o Hes and umn Sees epee of ait Ps Troup Payrets: Separate Consume Sees State hte Egos ar aan 10510 esa? sw Deparinent of agree: Toad Btn Shot ate} oss ec aminble $1907 Deparment eatin 9 pat eo Lach roan 10388 ose asain Raton See inch oso 10588 ‘ase 300 $ sn300 cowo-19 Sco Brekat Progam 038 ams; '$ ms.n0 Summer Fd Sere Fron fr Cran 0559 com, 0 10761 Co hd od dl Care ond Progam oss roms $s sa07 Cin ant Cae Foe Po 3s ot 78 Bre 050 Carton Deretonay Gat Lime aby 10579 sone san Deparment of Sci Servis Slt Arta Hatchig Grants orth upleetal coror9, o1029 won stance Pegs tose: spay coun ose Total Department Agctire 23 st0 eprtment of Trsny Ps Thrush Paes Beparer of esas: Go = Corona Ree ard now seroma Pass Throw Payments Seprer of Cul ae Sere “tec gn Women Formas ats ue ale s Eder tener snc Gat Rogan crate Total Deprinent of sie Depron fave ss Thrush Paes Departmen of eatin Tt eteaton ane Gansta son 2am 6104 Ss mmase fie Gamo a evento asces wo00 “aor 18 Spec aventon Cer Spec avenean Grant States won ‘oon Ss ssusi7 Sfecl aveatan Mecho Gans pa co ‘et rota specl econ ane 52.78 CSreerana Tete Cacao: ae Gans to tater woe aos 2.51 ‘ert Contry Corman asa Caters tee oss shoes Roni aieaton pe oat son Soporeng eve taco Sate Grane “lormery orang Teacher Qty sate Gras) wae 0 mn sevsne apart hese scent oa tae feast fa xa Deparment of Exton 53607059

154-

Page 2 of 2

County of Russell, Virginia Schedule of Expenditures of Federal Awards

For the Year Ended June 30, 2020

Pass-through Federal Entity

Federal Grantor/State Pass - Through Grantor/ CFDA Identifying Federal Program Cluster or Title Number Number Expenditures

Department of Homeland Security: Pass Through Payments: Department of Emergency Management: Emergency Management Performance Grants 97.042 Not available 4,776$
Homeland Security Grant Program 97.067 Not available 40,508

Total Department of Homeland Security 45,284$

Total Expenditures of Federal Awards 9,442,599$

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 – Subrecipients

The County did not have any subrecipients for the year ended June 30, 2020.

Note 5 – Relationship to the Financial Statements Federal expenditures, revenues and capital contributions are reported in the County’s basic financial statements as follows:

Intergovernmental federal revenues per the basic financial statements: Primary government: General Fund 3,129,887$
CARES Fund 534,052

Total primary government 3,663,939$        

Component Unit School Board:
  School Operating Fund 5,778,660$

Total expenditures of federal awards per the basic financial statements 9,442,599$

(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, 2020. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of County of Russell, Virginia, it is not intended to and does not present the financial position, changes in net position, or cash flows of County of Russell, Virginia.

(3) The County did not elect the 10% de minimis indirect cost rate because they only request direct costs for reimbursement.

(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, 2020, Russell County, Virginia had food commodities totaling $119,074 in inventory.

155 -

County of Ruse, Virginia Senedle of Expenditures of Federal Awards

For the ear Ende June 30, 2020 Pasethough Federal ‘ne Fos ete shag eater! cron eros ss Thraush Pye epartment of EnersenyHanasement {Eneraony anagem Perfomance rats 00 Not avaiable s 4m Norland Scant Grant roam sr Net vase wae Total Deparenent of Homeland Seay sme Total expenses of Fert Avars 59.00.59

Notes to Sched of Expentures of Feral ards Note Bas of Presentation

‘The accompanying sched of expenditures of eral awards the Schedule Ince the feceral award actvty of County of Ruel, Vigil unde programs of the federal goverment forthe year ended June 30, 2020. The information In ths Schedue Is presented In acorénce with de requrements of Tile? US. Code of Federal Requatins Part 200, Ue ‘ainsi Requirement, Cost Princes, ard Aude Reqarerment or Federal fares (UNorm Guan). Because the Scheu presents oy a selected potn ofthe operations of County of Psa, Vpn, ene mended to nd oes ot presen the franca poston, changes net pston, o cash lms of County of Rs, Vr

Note 2 Summary of Sian counting Pots (1) Expenditures reported on th Schule ae reported on the accra basis of accountng. Such expenditures are recognized flowing the cast princes contained In Unem ‘usdance, wheren cern ees of egendtures are nat alonable rae ited 3510 Feimausenent

(2) Pass tvou ety senting ruber are resend where avalaie 13) Te County a lect the 10s de mumsnet cast oe because ey ely eqs Sect css or Feimbusenant.

Nonmonetaryautance eprted in the che tthe fai mare vale ofthe conmodtie received ane dibursed. At une 30, 2020, Rsl County, Wein ha fod commodties, {otating $118,074 verry. ‘The County ert have any sori fr he yar ended ne 3,220

Note Relationship tothe Francia Statomens cera expense, evens a apa ontrulons ae reported nthe Couns bakin statement allows:

Intrgoreramental feral revenues er the tas ancl statements: Primary goverenent ‘neat and Cafes rind

‘

Toa primar goverment

‘amponant unt cho! Boar Son Operating Fone ss.7s.s00 Total expentues of fecal award pe he bse rani statement ere

+155 -

Page 1 of 2

Section I - Summary of Auditors’ Results

Financial Statements

Type of auditors’ report issued: Unmodified

Internal control over financial reporting: Material weakness(es) identified? Yes

Significant deficiency(ies) identified? None reported

Noncompliance material to financial statements noted? No

Federal Awards

Internal control over major programs: Material weakness(es) identified? No

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)? No

Identification of major programs:

CFDA # Name of Federal Program or Cluster

10.553/10.555/10.559 Child Nutrition Cluster 93.659 Adoption Assistance 21.019 Coronavirus Relief Fund 84.287 Twenty-First Century Community Learning Centers

Dollar threshold used to distinguish between Type A and Type B programs: $750,000

Auditee qualified as low-risk auditee? No

County of Russell, Virginia

Schedule of Findings and Questioned Costs For The Year Ended June 30, 2020

156 -

Page 1 of 2

County of Russell, Virginia

‘Schedule of Findings and Questioned Costs For The Year Ended June 30, 2020

Section | - Summary of Auditors’ Results Financial Statements Type of auditors’ report issued: Unmodified

Internal control over financial reporting:

Material weakness(es) identified? Yes Significant deficiency(ies) identified? None reported Noncompliance material to financial statements noted? No Federal Awards

Internal control over major programs:

Material weakness(es) identified? No Significant deficiency(ies) identified? No Type of auditors’ report issued on compliance for major program: Unmodified ‘Any audit findings disclosed that are required to be reported in accordance with 2 CFR Section 200.516(a)? No Identification of major programs: CFDA # Name of Federal Program or Cluster 10.553/10.555/ 10.559 Child Nutrition Cluster 93.659 Adoption Assistance 21.019 Coronavirus Relief Fund 84,287 Twenty-First Century Community Learning Centers Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee? No

156 =

Page 2 of 2

Section II - Financial Statement Findings

2020-001

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

Recommendation:

Management’s Response:

Section III - Federal Award Findings and Questioned Costs

None

County of Russell, Virginia

Schedule of Findings and Questioned Costs (Continued) For The Year Ended June 30, 2020

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 material misstatement of the County’s financial statements will not be prevented or detected and corrected 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 2020 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 2020 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.

157 -

County of Russell, Virginia

Page 2 of 2

‘Schedule of Findings and Questioned Costs (Continued)

For The Year Ended June 30, 2020

Section Il - Financial Statement Findings

2020-001

Criteria:

Condition:

Cause of Condition:

Effect of Condition:

‘Management’s Response:

Identification of a material adjustment to the financial statements that was not detected by the entity’s internal controls indicates that a material weakness exists.

The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP).

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 2020 and develop a plan to ensure the trial balances and related schedules are accurately presented for audit.

Section Ill - Federal Award Findings and Questioned Costs

None

+157 -

Section I - Summary of Auditors’ Results

2019-001

Condition:

Recommendation:

Current Status:

2019-002

Condition:

Recommendation:

Current Status:

County of Russell, Virginia

Summary Schedule of Prior Audit Findings For The Year Ended June 30, 2020

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.

Management should establish a system to review amounts keyed in the system to ensure that totals agree to underlying applications.

Finding 2019-002 was resolved in fiscal year 2020.

The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP).

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.

Finding 2019-001 was repeated in the current year as 2020-001.

158 -

County of Russell, Virginia

‘Summary Schedule of Prior Audit Findings For The Year Ended June 30, 2020

Section | - Summary of Auditors’ Results

2019-001 Condition: The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GAAP). Recommendation: 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. Current Status: Finding 2019-001 was repeated in the current year as 2020-001. 2019-002 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. Recommendation: ‘Management should establish a system to review amounts keyed in the system to ensure that totals agree to underlying applications. Current Status: Finding 2019-002 was resolved in fiscal year 2020.

+158 -

Dividers
Notes - County of Russell
Dividers
Notes - County of Russell
Auditor's Opinion
Financial Statements - Footed
Exh1
Exh2
Exh3
Exh4
Exh5
Exh6
Exh7
Exh8
Exh9
Exh10

Notes - County of Russell
Financial Statements - Footed
Exh11
Exh12
Exh13
Exh14

Russell RSI Schedules
Pension 1
Pension 2
Pension 3
Pension Notes
OPEB-County-Standalone1
OPEB-County-Standalone2
OPEB-Schools-Standalone1
OPEB-Schools-Standalone2
GLI 1
GLI 2
GLI Notes
HIC1
HIC2
HIC3
HIC Notes
Teacher HIC1
Teacher HIC2
Teacher HIC Notes
LODA1
LODA2
LODA Notes

Financial Statements - Footed
Exh36
Exh37
Exh38
Exh39

Sch 1
Sch 2
Financial Statements - Footed
Table1
Table2
Table3
Table4
Table5
Table6
Table7
Table8
Table9

CCT Yellow Book
Opinion Uniform Guidance
SEFA
SFQC
SSPAF

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