--- type: document title: 2015-Audit file: ../2015-Audit.pdf tags: - Russell_County - Audit_and_Budget_Information - '2015' docDate: '2015' contentType: application/pdf contentLength: 3172195 sha256sum: 6208bbd41dd2e3ddb8718a3d6f3e682ef36a21709d5aae326932b694699bd79b sha1sum: a4cfe01bf9157a73df513367c924501e46d70964 --- COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 Tim Lovelace Highlight Tim Lovelace Highlight COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2015 INTRODUCTORY SECTION COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS Page List of Elected and Appointed Officials............................................................. 1 FINANCIAL SECTION Independent Auditors· Report 2-4 Exhibit Page Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ........................................................................ . 1 5·6 Statement of Activities ............................................................................ . 2 7 Fund Financial Statements: Balance Sheet - Governmental Funds .......................................................... . 3 8 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................................................................. . 4 9 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds .......................................................................... . 5 10 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............ . 6 11 Statement of Net Position - Proprietary Funds ............................................... . 7 12 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds ............................................................................ . 8 13 Statement of Cash Flows - Proprietary Funds ................................................. . 9 14 Statement of Fiduciary Net Position - Fiduciary Funds ...................................... . 10 15 Notes to the Financial Statements ................................................................ . 16-76 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund ........................................................................................... 11 77 Special Revenue Fund - Coal Road Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 78 Special Revenue Fund - Workforce Investment Board Fund.................................. 13 79 Schedule of OPEB Funding Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 80 Schedule of Employer's Proportionate Share of Net Pension Liability......................... 15 81 Schedule of Components of and Changes in Net Pension Liability and Related Ratios - Component Unit School Board (nonprofessional) . . . .. . . . . . ... . . .. . 16 82 Schedule of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 83 Notes to Required Supplementary Information.................................................... 18 84 COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2015. TABLE OF CONTENTS INTRODUCTORY SECTION Page List of Etected 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 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 2 Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds... 8 2B Statement of Cash Flows - Proprietary Funds . 9 14 Statement of Fiduciary Net Position - Fiduciary Funds . 10 15 Notes to the Financial Statements ... 16-76 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund ... ” 7 Special Revenue Fund - Coal Road Fund 2 7B Special Revenue Fund - Workforce Investment Board Fund. B79 Schedule of OPEB Funding Progress ... 1480 Schedule of Employer's Proportionate Share of Net Pension Liability. 15 Bt Schedule of Components of and Changes in Net Pension Liabitity and Related Ratios - Component Unit School Board (nonprofessional) . 16 82 Schedule of Employer Contributions 7 83 Notes to Required Supplementary Information. 1884 COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS (CONTINUED) FINANCIAL SECTION (CONTINUED) Exhibit Page Other Supplementary Information: Combined Statement of Changes in Assets and Liabilities - Agency Funds ....... ............ 19 85 Discretely Presented Component Unit - School Board: Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 86 Statement of Revenues, Expenditures, and Changes in Fund Balances ·- Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 87 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 88 Schedule Page Supporting Schedules: Schedule of Revenues - Budget and Actual - Governmental Funds ......................... . Schedule of Expenditures - Budget and Actual - Governmental Funds ..................... . Other Statistical Information: Government-wide Information: Government-Wide Expenses by Function ...................................................... . Government·Wide Revenues ..................................................................... . Fund Information: General Governmental Expenditures by Function ............................................ . General Governmental Revenues by Source ................................................... . Property Tax Levies and Collections ............................................................ . Assessed Value of Taxable Property ............................................................ . Property Tax Rates ................................................................................ . Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita ................................................................................. . Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures ................................................. . 1 89-93 2 94-96 1 2 3 4 5 6 7 8 9 97 98 99 100 101 102 103 104 105 COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2015. TABLE OF CONTENTS (CONTINUED) FINANCIAL SECTION (CONTINUED) Page Other Supplementary Information: Combined Statement of Changes in Assets and Liabilities - Agency Funds .. 19 85 Discretely Presented Component Unit - School Board: Balance Sheet . 2 86 Statement of Revenues, Governmental FUNDS ........--ssesseees sescetonseenenseesees un 87 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actuat .. n 8B Schedule Page ‘Supporting Schedules: 89-93 94-96 Schedule of Revenues - Budget and Actual - Governmental Funds . Schedule of Expenditures - Budget and Actual - Governmental Funds . Other Statistical Information: Government-wide Information: Government-Wide Expenses by Function . Government-Wide Revenues .... Table Page 7 98 Fund information: General Governmental Expenditures by Function. 3 9 General Governmental Revenues by Source. 4 100 Property Tax Levies and Collection: 5 101 Assessed Vaiue of Taxable Property 6 102 Property Tax Rates . 7 103 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita... 8 104 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures. 9 105 COMPLIANCE SECTION COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS (CONTINUED) Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................................ . Independent Auditors' Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A-133 ................................ .. Schedule of Expenditures of Federal Awards ..................................................... . Schedule of Findings and Questioned Costs ...................................................... .. 106-107 108-109 110-111 112-114 COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT For THE YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS (CONTINUED) COMPLIANCE SECTION Page Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .. 106-107 independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A-133 ... . 108-109 Schedule of Expenditures of Federal Awards ... 110-111 Schedule of Findings and Questioned Costs... 112-114 INTRODUCTORY SECTION INTRODUCTORY SECTION COUNTY OF RUSSELL, VIRGINIA BOARD OF SUPERVISORS Jon Bowerbank, Chairman Bob Gibson, Vice Chairman Joseph Puckett Rebecca Dye COUNTY SCHOOL BOARD Charlie Collins, Chairman Linda Cross, Vice Chairman Wayne Bostic Tom Griffith SOCIAL SERVICES BOARD Harry Ferguson, Jr., Chairman Roger Brown, Vice Chairman Bill Hale OTHER OFFICIALS Fred A. Arrington Ernest (Shy) Kennedy Danny L. Brown Roger Glovier Carl Jackson Linda Garrett Rebecca Dye Laurel Rasnick Clerk of the Circuit Court. ........................................... Ann S. Mc Reynolds Commonwealth's Attorney .................................................. Brian Patton Commissioner of the Revenue ........................................ Randy N. Williams Treasurer ................................................................ Patrick Thompson Sheriff .............................................................................. Steve Dye Superintendent of Schools .............................................. Dr. Brenda Hess Director of Social Services .............................................. James Anderson County Administrator ........................................................ Lonzo Lester County Attorney ............................................................ Matthew Crum · 1 - COUNTY OF RUSSELL, VIRGINIA BOARD OF SUPERVISORS Jon Bowerbank, Chairman Bob Gibson, Vice Chairman Fred A. Arrington Joseph Puckett Ernest (Shy) Kennedy Rebecca Dye Danny L. Brown COUNTY SCHOOL BOARD Charlie Collins, Chairman Linda Cross, Vice Chairman Roger Gtovier Wayne Bostic Carl Jackson Tom Griffith Linda Garrett SOCIAL SERVICES BOARD Harry Ferguson, Jr., Chairman Roger Brown, Vice Chairman Rebecca Dye Bill Hale Laurel Rasnick OTHER OFFICIALS Clerk of the Circuit Court. Commonwealth's Attorney . Commissioner of the Revenue. Treasurer . Sheriff... Superintendent of Schools . Director of Social Services . County Administrator County Attorney... . Ann S. McReynolds «+» Brian Patton Randy N. Williams . Dr. Brenda Hess . James Anderson Lonzo Lester . Matthew Crum FINANCIAL SECTION FINANCIAL SECTION ROBINSC)N' fAR1\1ER, Cox ASSOCIATES A PROFESSIONAL /Jf\1/71:D LIABILITY COAf PANY Independent Auditors' Report To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia Report on the Financial Statements CER71FIED PUBLIC ACCOUN7~1NTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the County's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Russell County Public Service Authority and The Industrial Development Authority of Russell County. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Russell County Public Service Authority and The Industrial Development Authority of Russell County is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. -2- ROBINSON, FARMER, COX ASSOCIATES A PROFESSIONAL LIMITED LIABILITY COMPANY CERTIFIED PUBLIC ACCOUNTANTS: Independent Auditors’ Report To the Members of the Board of Supervisors County of Russell, Virgi Lebanon, Virginia Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Russell County Public Service Authority and The Industrial Development Authority of Russell County. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Russell County Public Service Authority and The Industrial Development Authority of Russell County is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we pian and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinfon. An audit also includes evaluating the appropriateness of accounting poticies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the 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 units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of June 30, 2015, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note 20 to the financial statements, in 2015, the County adopted new accounting guidance, GASB Statement Nos. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 and 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison information and schedules related to pension and OPEB funding on pages 76-78 and 79-83 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Russell, Virginia's basic financial statements. The other supplementary information and other statistical information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. -3- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions tn 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 units, each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of June 30, 2015, and the respective changes in financiat position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle ‘As described in Note 20 to the financial statements, in 2015, the County adopted new accounting guidance, GASB Statement Nos. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 and 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an ‘amendment of GASB Statement No. 68. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison information and schedules related to pension and OPEB funding on pages 76-78 and 79-83 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 historicat 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 opinfon on the basic financial statements is not affected by this missing information. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Russell, Virginia’s basic financial statements. The other supplementary information and other statistical information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. 3 Other Information (continued) The other supplementary information and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional· procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the report of the other auditors, the other supplementary information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The other statistical information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 31, 2015, on our consideration of the County of Russell, Virginia, Virginia's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County of Russell, Virginia's internal control over financial reporting and compliance. Blacksburg, Virginia December 31, 2015 -4- Other Information (continued) The other supplementary information and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of ‘America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the report of the other auditors, the other supplementary information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The other statistical information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 31, 2015, ‘on our consideration of the County of Russell, Virginia, Virginia’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County of Russell, Virginia’s internal control over financial reporting and compliance, Hatemam, chansr, ly lhsvciates- Blacksburg, Virginia December 31, 2015 Basic Financial Statements Basic Financial Statements Exhibit 1 Page 1 of 2 County of Russell, Virginia Statement of Net Position June 30, 2015 Primary Government Governmental Business~type Activities Activities Total ASSETS Cash and cash equlvalents s 6,653,659 s s 6,653,659 Receivables (net of allowance for uncollectlbles): Taxes receivable 8,235,451 8,235,451 Accounts receivable 619,286 7,582 626,868 Grants receivable Due from component unit 2,699,074 2,699,074 Due from other governmental units 2,096,050 2,096,050 Inventories Prepaid items Restricted assets: Cash and cash equivalents 422,555 49,575 472, 130 Noncurrent assets: Net pension asset Capital assets (net of accumulated depreciation): Land 568,695 568,695 Land rights land improvements Buildings and improvements 13,873, 734 13,873,734 Machinery and equipment 1,545,201 1,545,201 Utility plant in service 2, 992,576 2,992,576 Construction in progress Accumulated Depreciation Total assets s 36,713,705 s 3,049,733 39,763,438 DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date s 791,055 s 5,581 796,636 LIABILJT!ES Accounts payable s 1,692, 939 s 27 ,054 1,719,993 Accrued liabilities 1,805 1,805 Customer deposits Accrued interest payable 172,502 1,527 174,029 Line of credit Due to primary government Long·term liabilities: Due within one year 1,835,753 21,894 1,857,647 Due in more than one year 18,706,855 691,021 19,397,876 Total liabilities s 22,409,854 s 741,496 23, 151 ,350 DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes s 5,276,245 s s 5,276,245 Items related to measurement of net pension liability 1,453,063 10,252 1,463,315 Total deferred inflows of resources $ 6,729,308 $ 10,252 6,739,560 NET POSITION Net investment in capital assets $ 6, 926,011 $ 2,320, 175 9,246,186 Restricted: Coal Road 487,541 487,541 Construction Debt service and bond covenants 49,575 49,575 Other Unrestricted (deficit) 952,046 (66, 184) 885,862 Total net position $ 8,365,598 $ 2,303,566 10,669, 164 The accompanying notes to the financial statements are an integral part of this statement. -5- Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Exhibie Page tof 2 County of Russel, Virginia dune 30, 2005 Primary Government Total “ASSETS Cash and cash equivalents 5 6,053,659 5 5 6,653,659 Receivables (et of allowance for ncollectibes: Taxes receivable 8,235,451 8,235,451 Accounts receivable 19,288 7:58 626,868 ‘Grams receivabie ue from component unit 2,699,074 2,699,074 Due from other governmental units 2096050 7,086,050 Inventaies : Prepaid items Restricted assets Cash and cash equivalents ans 9578 4,330 Noncurrent assets Net person asset Capital assets (net of accumulated depreciation ang 168,695 308,695 Land rights Land improvements Bugings ans improvernents 13,873,734 13.873.734 Wachinery and equipment 1,545,201 4345,201 Ueuty plant inservice 2992578 1,992,578 onstruction In progress Accumulated Depreciation Total assets DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date Accounts payable ‘cerved tabiities Customer deposits Acerved interest payable Line of credit ue to primary government Longer abilities: Due within one year Due in mare than one year Total abilities Deferred revenue - property taxes Items relates to measurement of net pension lability NET POSITION "Net tavestment in capital assets Resticte: Coal Road Construction Debt service and bond covenants ted (efit) TTS ERE N SKIN S$ 79y0ss $5581 796,636 $1,692,939 $7,054 § 1,719,998 1,808 1,805 msn 1507 174,009 1,835,753, 21,894 4,887,647 18,706,855 sorlon1 19,397,876 SMHS 7a, $5,276,245 § 8 5,276,245 4,883,063 40252 1463,315 Sens: 1.2 $ 6,926,011 $2,320,175 $9,246,186 487,541 487,541 49505 49,505 206 Westy 9.83 ‘The accompanying notes tothe financial statements are an integral part of this statement. Exhibit 1 Page 2 of 2 County of Russell, Virginia Statement of Net Position June 30, 2015 Component Units Industrial Russell County Castlewood Development Public Service Water and Sewage School Board Authorit:x: Authorit:X: Authority: ASSETS Cash and cash equivalents s 1,839,676 s 606,465 I 105,798 s 284,013 Receivables (net of allowance for uncollectibles): Taxes receivable Accounts receivable 16,548 28,418 202,780 409,305 Grants receivable 69,830 Due from component unit Due from other governmental units 1,501,315 33,368 19,520 Inventories 27,430 Prepaid items 760,243 Restricted assets: Cash and cash equivalents 109,426 120,182 Noncurrent assets: Net pension asset 65,009 Capita! assets (net of accumulated depreciation): land 5,636,345 2,303,397 106,332 130,080 land rights 13,360 land improvements 394, 784 Buildings and improvements 10,583,275 14,788,750 107,097 204,810 Machinery and equipment 1,632,997 758,649 121, 158 Utility plant in service 20,315,280 12,284,434 Construction in progress 3, 185,364 2,227,390 86,641 Accumulated Depreciation (2,421,086) (5,788,145) Total assets I 21,970,399 19,644,741 17,511,765 I 13,743,333 DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date I 2, 936,268 26,342 I 21,243 LIABILITIES Accounts payable I 94,242 I 542,653 I 226,320 I 92,738 Accrued liabilities 890,850 693 58, 990 25,701 Customer deposits 10,345 59,309 Accrued interest payable 44,363 2,458 42,491 Line of credit 235,242 Due to primary government 2,499,074 200,000 Long-term Liabilities: Due within one year 602,451 478,879 180,385 199,452 Due in more than one year 34,455,558 12,152,168 6,495,048 5,756,071 Total liabilities I 38,542,175 13,418,756 I 6,973,546 I 6,411,004 DEFERRED INFLOWS OF RESOURCES Deferred revenue · property taxes I I I 0 6,030,289 19,395 34,214 Total deferred inflows of resources I 6,030,289 s 19,395 s 34,214 NET POSITION Net investment in capital assets s 17,852,617 s 5,836, 158 s 10,292,521 s 6,881,008 Restricted: Coal Road Construction 1 ,439 Debt service and bond covenants 99,938 120, 182 Other 8,049 Unrestricted (deficit) (37,518,414) 389,827 143,219 318, 168 Total net position s (19,665,797) s 6,225,985 I 10,545,166 $ 7,319,358 -6- Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Exhibit 1 Page 2 of 2 ‘County of Russell, Virginia ‘Statement of Net Postion June 30, 2015 “ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectibtes) Taxes receivable ‘Accounts receivable Grants receivable Due from component unit Due from ether goveramental units Inventories Prepaid items Restricted assets Cash and cash equivalents Noncurrent assets Net pension asset Capital assets (2 of accumulated depreciation} and Land sights Land improvements Bulldogs and improvements Machinery and equipment Unity plant inservice Coastrction in progress Accurlated Depreciation Pension contributions subsequent te measurement date Accounts payable decrves abies Customer deposits Acerved Interest payable Line of creat Due to primary government Long-term Habiites: ‘Due within one year Bue in mare than one year DEFERRED INFLOWS OF RESOURCES. Deferced revecue » proparty taxes ° Total deferred infiows of resources NET POSITION Net ivestment in capital assets Restricted Coal Road Construction Debt service and bond covenants other Unrestricted (de Component Units ‘School Boaré authority Authority S 1,839,676 $606,465 5 105,798 284,013 16,548 28,418 202,780 409,305, 69,820 4,501,315, 33,368, 19,520, s 27.430 760,243, 109,426 120,182 65,009 5,636,345 2,303,387 106,332 130,080, : 33.360 394,784 10,583,275 14,788,750 107,097 204,810 1632,997 758,649 22,158 20,315,280 11,284,434 3,185,364 2,227,380 86,64 (2.425.085) (6,788,145) _ 5 As ae $__23906;268 5 Sean § 21243. S 9a2a 5 542.653 $ 226,20 S 92,738 890,850, on 58,950 25,701 10,345 59,209 46360 2.458 a9 : asa 2,499,074 200,000, 02,481 8879 180,385, 199,452 34455,558_ 12,052,168 6,495,068 5,356,071 a so s s s 5 6,030,289 19,395, 2424 $7 e.030.2a9 = 19,355 Sadie 5 17,852,617 § 5,836,158 $10,297,521 § 6,881,008 1.489 99,938 120,182 8,049 sues : 389,897, 343,219, 318,168, -;.. functions/Programs PRIMARY GOVERNMENT: Governmental activities: General government administration .Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Community development Interest on \ong-term debt Total governmental activities Business·type activities: Service Authority Total primary government COMPONENT UNITS: School Soard Industrial Development Authority Russe([ County Public Service Authority Castlewood Water and Sewer Authority Total component units Expenses 1,772,163 s 1,945,227 6,352,397 3,725,640 8,115,359 7,596,324 514,678 1,023,371 385,445 31,430,604 s Charges for Services 11,782 74,813 253,436 4,451 32, 757 377,239 Program Revenues Operating Grants and Contributions s 308,310 657,911 1,728,384 13,579 6,860,815 79,229 s 9,648,228 County of Russell, Virginia Statement of Activities For the Year Ended June 30, 201 S Capital Grants and Contributions s s Primary Government Governmentat Business-type ~ ~ s n,463.853) s (1,275.534) (4,549,200) (3,458,625) (1,254,544) (7,596,32~) (430,998) (990,614) (385,445) s (21A05,137) S s I Net (Expense) Revenue and Changes In Net Position Component ~ School Board (1,463,853) (1,275,534) (4,549,200) (3.458,625) (1.254,544) (7,596,324) (430,998) (990,614) 1385,445) (21,405,137) Industrial Development Authority Units Russell County Public Service Authority s 430,426 $ 90,873 s s T31,861;-030--s ·"-----468317. ·s-· ···9;·6~l(iia-· s-··-· $ $ {339,548) $ {339,J48) s·(21·:-:ws·;1Th ··s----- ···039,s48)-s--!:f(744.685l 38,564,822 s 442,194 2,748,747 2,402,872 1,189.375 1,459,528 1,464,638 45,175,969 $ 3,096,207 General revenues: General property taxes Other local taxes: Local sales and use taxes Coal road and severence taxes Consumers' utility taxes Motor vehicle licenses Other local taxes s 32,224,354 126,021 s 32,350,375 s Unrestricted revenues from use of money and property Miscellaneous Payments from the County of Russell, Virginia 1,534A56 469,747 1,016,947 3,021,150 Grants and contributions not restricted to specific programs Gain on disposal of capital assets Transfers 15,762,013 1,876,308 1,515.788 530,273 507,262 205,796 257,108 226,621 2,553,497 (222,404) 23,212,262 {5,898,274) s (1,088,270) (743,7501 {5,898,274) s {1,088,270) $ (743,750) s s 15,762,013 1,876,308 1,515.788 530,273 507,262 205,796 257, 108 3,095 725,842 2,354 226,621 245,718 41,572 60,223 6,486,880 560,779 569,839 2,553,497 222,404 s 222,404 s 23,434,666- s 6}"35,693 s 1,328,193 s 632,416 Exhibit 2 Castlewood Water and Sewerage Authority 1,022,057 1.022,057 Total general revenues and transfers Change in net position 1,807,125 s (117,144) s 1,689,981 s 837.419 s 239,923 s (111,334) s f.022:057 Net position - beginning, as restated Net position · ending 6,558,473 8,365,598 2.420,710 s 2,303,566 8,979,183 s 10,669,164 s [20,503,216) 5,986,062 10,656,500 6,297,301 119,665,797) s 6,225,985 s 10,545,166 I 7,319,358 The accompanying notes to the financial statements are an integral part of this statement. Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight county of uss, Virginia or ana ase Ended June 20,2015 Pram Revenue, ‘range he Ftion opening Capita naar Ra Ga chagestor Cham Grand Governmental Bess ype ntpmest Puc Secs Water ond Seeeepe fuctonstremams worse “uti” ceuvaulls cowie “Leg” “Atbaiee” Tot schoattone Suan’ "aug it “prams coven na goarnme sonwioton —«§tTB & s weae s 5 gaan s : Niiently iow han unsee tee.am foie me Smee oan nae fea Meath rd wee ans. esas {iasest0 Wee OSsene Sas 8 Een “a govramantl seer me: LAE TCR EeCRIRE “coMPoNeNT UMTS: ‘Senator S$ msiamn sans. so mmaam 5 Game s 5 5 Bran ‘aoat 1siase (028.270) hans se. “aero oar Noose tusdoe 18907 sm Yexaconeoner nts DEES ae THT SE Genera repr tres 5 sra00 § 5 ts2a00 § s 5 s ‘tre oe te ‘ot rnd a reverence ek 15:88 time unvescted roves om ef money nd eperty 257 a8 357 0 som et at Iiictarsin nest esti ase hare cams Paynes rom he Cony of Ras, vga oasneed stam sent ‘tend corto not en taper Dyers rss. ass Tne coy am.woe Teta gor reverse ener ine § tae Saas Sg “he secmpanying ots tothe nal statements re a ter pr of th sare. Exhibit 3 County of Russell, Virginia Balance Sheet Governmental Funds June 30, 2015 Coal Workforce General Road Investment Board Total ASSETS Cash and cash equivalents $ 3,290,467 $ s s 3,290,467 Receivables (net of allowance for uncollectib!es): Taxes receivable 8,235,451 8,235,451 Accounts receivable 136,076 20,932 157,008 Due from other funds 111,220 65, 105 176,325 Due from component unit 2,699,074 2,699,074 Due from other governmental units 1,766,384 329,666 2,096,050 Restricted assets: Cash and cash equivalents 422,555 422,555 Total assets s 16,238,672 s 508,592 s 329,666 s 17,076,930 LIABILITIES Accounts payable $ 617,839 s 21,051 $ 165,799 s 804,689 Reconciled overdraft 70,296 70,296 Accrued liabilities 1,805 1,805 Due to other funds 65,105 111,220 176,325 Total liabilities $ 684,749 s 21,051 347,315 1,053,115 DEFERRED INFLOWS OF RESOURCES Unavailable revenue · property taxes s 7, 935, 924 $ s $ 7' 935, 924 FUND BALANCES Restricted: Coal Road $ $ 487,541 s s 487,541 Committed: Unassigned: 7,617,999 (17,649) 7,600,350 Total fund balances s 7,617,999 s 487,541 s (17,649) s 8,087,891 Total Liabilities, deferred inflows of resources, and fund balances s 16,238,672 s 508,592 s 329,666 s 17,076,930 The accompanying notes to the financial statements are an integral part of this statement. -8- Tim Lovelace Highlight Tim Lovelace Highlight County of Russell, Virginia Exhibie 3 June 30, 2015, Coal Workforce General Road investment Board Total ASSETS Cash and cash equivalents $3,290,467 5 5 3,290,467 Receivables (net of allowance for uncollectibies) “Taxes receivable 8,235,051 8,235,451 ‘ecounts receivable 136,078 20,932 157,008 Due from other funds rin220 5,105 176,325 Due from component unit 2,699,074 : 2,499,074 Due from other governmental usts 4766,384 329,666 2,096,050, Restricted assets: Cash and cash equivalents 422,555 2,555 Total assets EaTZ 308.5975 SPI BES F7.076,530, asiumies ‘Accounts payable 5 6r7,839 2051 § 165,799 804,689 Reconciled overcratt 70,296 70,296 Accrued liabilities 4,805 1,805 ue to other funds 65.105 111,200 176,325, Total liabilities Sars, Toss 347 315-8705, 115. DEFERRED INFLOWS OF RESOURCES ‘Unavailable revenue - property taxes S__7.935,924 8 $7,935,924 FUND BALANCES Restricted: Coat Road s aera § S$ aersat Committed: Unassigned: 7,617,999 (17.649) 7,600,350, Totat fund balances 57,517,999 TAT (07,668) 58,087. 651 ‘Total liabilities, deferred inflows of resources, end fund balances S76, 08,672 3085928 325,606. $77,076.930, ‘The accompanying notes tothe financial statements are an integral part of this statement County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2015 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 tong-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Unavailable revenue - property taxes Items related to measurement of net pension liability Pension contributions subsequent to the measurement date will be a reduction to the net pension liability in the next fiscal year and, therefore, are not reported in the funds. Internal service tunds are used by management to charge the costs of certain activlties, 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 obligation Compensated absences Net pension liability Net position of governmental activities The accompanying notes to the financial statements are an integral part of this statement. -9- 568,695 13,873,734 1,545,201 2,659,679 (1,453,063) (13,355, 747) (224,844) (232, 903) (172,502) (275, 738) (111,461) (599,590) Exhibit 4 $ 8,087,891 15,987,630 1,206,616 791,055 3,007,516 (5,742,325) (20,715, 110) $ 8,365,598 Tim Lovelace Highlight Tim Lovelace Highlight Exhibit 4 County of Russell, Virginia Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2015 ‘Amounts reported for governmental activities in the statement of net position are different because: Total fund balances per Exhibit 3 - Balance Sheet - Governmental Funds S 8,087,891 Capital assets used in governmental activities are not financial resources and, therefore, are not eported in the funds. Land 568,695 Buildings and improvements 13,873,734 Nachinery and equipment 41,545,201_ 15,987,630 Other iong-term assets are not available to pay for cutrent-period expenditures and, therefore, are deferred in the funds. Unavailable revenue - property taxes 2,659,679 Items related to measurement of net pension liabitity (1,453,063) 1,206,616 Pension contributions subsequent to the measurement date will be a reduction to the net pension Liability inthe next fiscal year and, therefore, are not reported in the funds. 791,055 Internat service tunds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 3,007,516 Long-term tiabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. Bonds and titerary toans (13,355,747) Capital teases (224,844) Unamortized premium (232,903) Accrued interest payable (172,502) Landfill accrued closure and postclosure liability. Net OPEB obligation 511,468) Compensated absences (599,590) Net pension liability (5,742,325) (20,715,110) Net position of governmental activities TS The accompanying notes to the financial statements are an Integral part of this statement. Exhibit 5 County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2015 Coal Workforce General Road Investment Board Total REVENUES General property taxes $ 15,746,635 $ $ $ 15,746,635 Other local taxes 3,877,533 757,894 4,635,427 Permits, privilege fees, and regulatory licenses 40,342 40,342 Fines and forfeitures 2,334 2,334 Revenue from the use of money and property 246,592 2,275 248,867 Charges for services 334,563 334,563 Miscellaneous 226,621 226,621 Recovered costs 710,585 1,893 712,478 Intergovernmental: Commonwealth 7, 798,472 7,798,472 Federal 2,433,534 1,969,719 4,403,253 Total revenues $ 31,417,211 $ 760, 169 $ 1,971,612 $ 34, 148, 992 EXPENDITURES Current: General government administration $ 1,717,342 $ $ $ 1,717,342 Judicial admlnistration 2,011,601 2,011,601 Public safety 6,839,477 6,839,477 Public works 3,116,473 845,842 3,962,315 Health and welfare 6,321,358 2,032,660 8,354,018 Education 5,854,433 5,854,433 Parks, recreation, and cultural 480,741 480,741 Community development 1,046,895 1,046,895 Nondepartmental 112,482 112,482 Debt service: Principal retirement 1,522,447 1,522,447 Interest and other fiscal charges 424, 130 424, 130 Total expenditures $ 29,447,379 $ 845,842 $ 2,032,660 $ 32,325,881 Excess (deficiency) of revenues over (under) expenditures $ 1, 969,832 $ (85,673) $ (61,048) $ 1,823,111 OTHER FINANCING SOURCES (USES) Transfers out $ (446,281) $ $ $ (446,281) Total other financing sources (uses) $ (446,281) $ $ $ (446,281) Net change in fund balances s 1,523,551 $ (85,673) $ (61,048) $ 1,376,830 Fund balances - beginning 6,094,448 573,214 43,399 6,711,061 Fund balances - ending $ 7,617,999 $ 487,541 $ (17,649) $ 8,087,891 The accompanying notes to the financial statements are an integral part of this statement. -10- Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Exhibit 5 County of Russell, Virginia “Governmental Funds For the Year Ended June 30, 2015, Coat Workforce General, Road Investment Board Total REVENUES General property taxes $15,746,635. § 18 9 15,746,635 Other local taxes 3,877,533, 757,894 4,635,427 Permits, privilege fees, and regulatory ticenses 40,342, : : 40,342 Fines and forfeitures 2,334 : - 2,334 Revenue from the use of money and property 246,592 2,075 : 248,867 Charges for services 334,563 : : 334,563, iscellaneous 226,621 - 226,621 Recovered costs 710,585 1,893 712,478 Intergovernmental: ‘Commonwealth 7,798,472 - 7,798,472 Federal 2,433,534 1,969,719 4,403,253 ‘Total revenues: "EXPENDITURES: Current: General government administration $4,717,342. § 5 $1,797,342 Judicial aciministration 2,011,605 : : 2,011,601 Public safety 6,839,477 : - 6,839,477 Public works 3,116,473 845,842 3,962,315 Health and welfare 6,321,358 2,032,660 8,354,018, Education 5,854,433, : 5,854,433, Parks, recreation, and culturat 480,741, : 480,741 Community development 1,046,895 - 1,046,895 Nondepartmental 112,482 112,482 Debt service: Principal retirement 4,522,447 : 1,522,447 Interest and other fiscal charges 424,130 - 224,430 Total expenditures, ms PS 3 Excess (deficiency) of revenues over: (under) expenditures. 51,969,832 § (65,673) $_—61,048) $1,823,111 OTHER FINANCING SOURCES (USES) Transfers out S$ (446,281) § $8 2 $146,281) Total other financing sources (uses) (236,281) (446,287) The accompanying notes to the Financial statements are an integrat part of this statement. County of Russell, Virginia Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended June 30, 2015 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances · total governmental funds Governmental tunds report capital outlays as expenditures. However, m the statement of activities the cost at 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 outlay Reversion of assets back to the School Board (net) Removal of capital asset (net) Depreciation expense Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes Change in deferred inflows of resources related to the measurement of the net pension liability The issuance of tong-term obligations {e.g. bonds, teases) provides current financial resources to governmental funds, while the repayment of the principal of long·term obligations consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when obligations is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term obligations and related items. Issuance of long·term obligations: Landfill closure and postclosure liability Principal Payments: Bonds, literary loans, and notes Capital leases Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds. (Increase) decrease in compensated absences {Increase) decrease in accrued interest payable (Increase) decrease in net OPEB obligation Amortization of bond premiums Change in net pension liability Change Jn deferred outflows of resources related to pension payments subsequent to the measurement date Internal service tunds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The net reveni.;e (expense} of certain internal service funds is reported with governmental activities. Change in net position of governmental act1vities The accompanying notes to the financial statements are an integral part of this statement. -11 - 560,878 (721,700) (106,280) (894, 155) 15,378 (1,453,063) (4,075) 1,240,602 281,845 21,087 21,881 (34,788) 16,804 1,715,784 22,259 Exhibit 6 $ 1,376,830 (1,161,257) (1,437,685) 1,518,372 1,763,027 (252, 162) s 1,807,125 Exhibit 6 County of Russell, Virginia Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended June 30, 2015 Amounts reported for governmental activities inthe statement of activites are different because: Net change in fund balances -tatal governmental funds $1,376,830 Governmental tunds report capita 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 outlay 560,878 Reversion of assets back to the School Board (net) (721,700) Removat of capital asset (net) (106,280) Depreciation expense (894,185) (1,161,257) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 15,378 ‘Change in deferred inflows of resources related to the measurement of the net pension liability (4,453,063) (1,437,685) ‘The issuance of Long-term obligations (e.g. bonds, teases) provides current financial resources to governmental funds, while the repayment of the principal of tong-term abligations 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 isued, 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: Landfill closure and postclosure labitity 4,075) Principal Payments: Bonds, literary loans, and nates 4,240,602 Capital leases e184 1,518,372 ‘Some expenses reported in the statement of activites do not require the use of current financial resources and, therefore are not reportes as expenditures in governmental funds {Increase) decrease in compensated absences {increase} decrease in accrued Interest payable 271381 (increase) decrease in net OPES cbligation 4,788) ‘Amortization af bond premiums 16,808 ‘Change in net pension liability 4,715,784 CChange in deferred outflows of resources related to pension payments subsequent ta the measurement date 22.259 1,763,007 Internat service tunds are used oy management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The net revenue (expense) of certain intemal service funds is reported ‘with governmental activities (27,162) Change in net position of governmental activities wa ‘The accompanying notes tothe financial statements are an integral part ofthis statement. te Exhibit 7 County of Russell, Virginia Statement of Net Position Proprietary Funds June 30, 2015 Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance ASSETS Current assets: Cash and cash equivalents s s 3,433,488 Interest receivable 48 1,260 Accounts receivable, net of allowance for uncollectibles 7,534 461,018 Total current assets s 7,582 s 3,895, 766 Noncurrent assets: Restricted assets: Cash and cash equivalents (in custody of others) s 49,575 s Capital assets: Utility plant in service s 5,240,699 s Less accumulated depreciation (2,248, 123) Total capital assets s 2, 992,576 s Total noncurrent assets s 3,042, 151 s Total assets s 3,049, 733 s 3,895,766 DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date 5,581 s LIABILITIES Current liabilities: Accounts payable s 27,054 s 888,250 Accrued interest payable 1,527 Revenue bonds - current portion 21,894 Total current liabilities s 50,475 s 888,250 Noncurrent liabilities: Revenue bonds - net of current portion $ 650,507 $ Net Pension Liability 40,514 s Total noncurrent liabilities s 691,021 $ Total liabilities s 741,496 s 888,250 DEFERRED INFLOWS OF RESOURCES Items related to measurement of net pension liability s 10,252 $ NET POSITION Net investment in capital assets s 2,320, 175 $ Restricted for debt service and bond covenants 49,575 Unrestricted (66,184) 3,007,516 Total net position $ 2,303,566 $ 3,007,516 The accompanying notes to the financial statements are an integral part of this statement. -12- Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Exhibit 7 County of Russell, Virginia ‘Statement of Net Position ‘Proprietary Funds: June 30, 2015 ASSETS: Current assets: Cash and cash equivalents Interest receivable Accounts receivable, net of allowance for uncollectibles Total current assets Restricted assets: Cash and cash equivalents (in custody of others) Capital assets: Utility plant in service Less accumulated depreciation Total capital assets Total noncurrent assets DEFERRED OUTFLOWS OF RESOURCES Pension contributions subsequent to measurement date 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 Items related to measurement of net pension liability NET POSITION Net investment in capital assets Restricted for debt service and bond covenants Unrestricted Total net position $ 7 $ 3,433,488 4a 1,260 7,534 461,018 7,582 _§ 5.766 $ 49,575 $ : $ 5,240,699 $. (2,248,123) 2,992,576 _§ $ 3,042, 157 ee 5,581_$ $ 27,054 $ 888,250 1,527 : 21,894 30,4755 $ 650,507 $ 40,514_$ s 691,021 _§ 5 741,496 _S $88, 250 $ 10,252_§ $ 2,320,175 § 49,575 - (66,184) 3,007,516 3 7,303,566 5 3,007,516 ‘The accompanying notes to the financial statements are an integral part of this statement. “12+ Exhibit 8 County of Russell, Virginia Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2015 Enterprise Internal Fund Service Fund Dante Self Fund Health Insurance OPERATING REVENUES Charges for services: Sewer revenues $ 90,878 $ Insurance premiums 5,239,673 Total operating revenues $ 90,878 $ 5,239,673 OPERATING EXPENSES Salaries and benefits $ 135,356 $ Professional services 13, 926 Utilities 1,562 Materials and supplies 48,986 Office expenses 58,294 Repairs and maintenance 11,011 Insurance claims and expenses 5,723,953 Depreciation 131,017 Total operating expenses $ 400, 152 $ 5,723,953 Operating income (loss) $ (309,274) $ (484,280) NONOPERATING REVENUES (EXPENSES) Investment income $ $ 8,241 Interest expense (30,274) Total nonoperating revenues (expenses) $ (30,274) $ 8,241 Income before transfers $ (339,548) $ (476,039) Transfers in $ 222,404 223,877 Change in net position $ (117,144) $ (252, 162) Total net position - beginning, as restated 2,420,710 3,259,678 Total net position - ending s 2,303,566 s 3,007,516 The accompanying notes to the financial statements are an integral part of this statement. -13- Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russell, Virgi Exhibit 8 Proprietary Funds For the Year Ended June 30, 2015 ‘Health insurance OPERATING REVENUES Charges for services: ‘Sewer revenues $ 90,878 - Insurance premiums - 5,239,673, ‘Total operating revenues 2 ELE OPERATING EXPENSES Salaries and benefits $ 135,356 $ Professional services 13,926 Utilities 1,562 Materials and supplies Office expenses 58,294 Repairs and maintenance 14,011 : Insurance claims and expenses : 5,723,953 Depreciation 431,017 : Total operating expenses 400,152 $5,723,955 Operating income (loss) 8 (309,274) § (484,280) NONOPERATING REVENUES (EXPENSES) Investment income $ - $ 8,241 Interest expense (30,274) : Total nonoperating revenues (expenses) $ (30,274) $ EPZa Income before transfers g (839,548) $ (476,035) teas ts SB ee ‘The accompanying notes to the financial statements are an integral part of this statement. “13. County of Russell, Virginia Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users Receipts for insurance premiums Payments to suppliers Payments to employees Payments for premiums Net cash provided by (used for) operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on bonds Interest payments Net cash provided by (used for) capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest income Net increase (decrease) in cash and cash equivalents Cash and cash equivalents · beginning Cash and cash equivalents · ending Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation (Increase) decrease in accounts receivable (Increase) decrease in Pension contributions subsequent to measurement date Increase (decrease) in accounts payable Increase (decrease) in items related to measurement of net pension liability Increase (decrease) net pension liability Total adjustments Net cash provided by (used for) operating activities $ $ $ $ $ $ $ $ $ $ $ $ Enterprise Fund Dante Fund 91, 102 (124,693) (137,365) (170,956) 222,404 (21,013) (30,435) (51,448) 49,575 49,575 Exhibit 9 Internal Service Fund Self Health Insurance $ 5, 164,700 (5,607, 955) $ (443,255) $ 223,877 $ $ $ 8,238 $ (211,140) 3,644,628 $ 3,433,488 (309,274) $ (484,280) 131,017 $ 224 (74,973) ( 157) 9,086 115,998 10,252 (12, 104) 138,318 $ 41,025 (170, 956) s (443,255) The accompanying notes to the financial statements are an integral part of this statement. ·14· Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russell, Virginia Exhibit 9 For the Year Ended June 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users Receipts for insurance premiums Payments to suppliers Payments to employees Payments for premiums Net cash provided by (used for) operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES ‘Transfers from other funds CASH FLOWS FROM CAPITAL AND RELATED FINANCING. ACTIVITIES Principal payments on bonds Interest payments Net cash provided by (used for) capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest income Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning Cash and cash equivalents - ending Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (toss) Adjustments to reconcite operating income (loss) to net cash provided by (used for) operating activities: Depreciation (Increase) decrease in accounts receivable (Increase) decrease in Pension contributions subsequent to measurement date Increase (decrease) in accounts payable Increase (decrease) in items related to measurement of net pension liability Increase (decrease) net pension liability Total adjustments Net cash provided by (used for) operating activities $s 91,102 § - : 5,164,700 (124,693) - (137,365) - (5,607,955) (770,956) (443,255) $. 222,404 $ 223,877 $ (21,013) $ - 30,435) : $ (51,448) $ $ 8,238 $ -$ (211,140) 49,575, 3,644,628 $ 49,575 _$ 3,433,488 (309,274) § (484,280) $ 131,017 $ : 224 (74,973) (157) - 9,086 115,998 10,252 (12,404) : $ 138,318 $ F025 S59 755) ‘The accompanying notes to the financial statements are an integral part of this statement. ASSETS Cash and cash equivalents Total assets LIABILITIES County of Russell, Virginia Statement of Fiduciary Net Position Fiduciary Funds June 30, 2015 Amounts held for Social Services clients Amounts held for VASAP Total liabilities s $ s $ The accompanying notes to the financial statements are an integral part of this statement. -1 5- Exhibit 10 Agency Funds 58,432 58,432 57,383 1,049 58,432 Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russell, Virginia June 30, 2015 Exhibit 10 ASSETS Cash and cash equivalents Total assets LIABILITIES Amounts held for Social Services clients Amounts held for VASAP- Total liabilities $ 58,432 5 58,432 $s 57,383 4,049 5 58,432 ‘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, 2015 Note 1-Summary of Significant Accounting Policies: The financial statements of the County conform to generally accepted accounting principles (GAAP) applicable to governmental units promulgated by the Governmental Accounting Standards Board (GASB). The following is a summary of the more significant policies: A. Financial Reporting Entity The County of Russell, Virginia is a municipal corporation governed by an elected six·member Board of Supervisors. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations. Each discretely presented component unit is reported in a separate column in the government·wide financial statements (see note below for description) to emphasize that it is legally separate from the government. Blended component units - None Discretely Presented Component Units - The component unit columns in the financial statements include the financial data of the County's discretely presented component units. They are reported in a separate column to emphasize that they are legally separate from the County. The Russell County School Board operates the elementary and secondary public schools in the County. School Board members are popularly elected. The School Board is fiscally dependent upon the County because the County approves all debt issuances of the School Board and provides significant funding to operate the public schools since the School Board does not have separate taxing powers. The School Board is presented as a governmental fund type. The School Board does not issue separate financial statements. The Industrial Development Authority of Russell County, Virginia (IDA) encourages and provides financing for industrial development in Russell County. The financial statements of the IDA have been included because the County appoints the governing body and has made moral obligation resolutions to finance deficits of any kind or nature that may occur each year subject to annual appropriation. Complete financial statements of the IDA can be obtained in writing at 137 Highland Drive, Lebanon, VA 24266. The Russell County Public Service Authority (PSA) provides water and sewer service to residents of Russell County. The Authority is fiscally dependent on the County because the County appoints the governing body and has financing guarantees involving the Authority. Complete financial statements of the PSA can be obtained in writing at 7341 Swords Creek Road, Swords Creek, VA 24649. The Castlewood Water and Sewage Authority of Russell County provides water and sewer service to residents of Russell County. The Authority is fiscally dependent on the County because the County appoints the governing body and has financing guarantees involving the Authority. Complete financial statements of the Authority can be obtained in writing at P.O. Box 655, Castlewood, VA 24224. -16· CounTY oF RUSSELL, VIRGINIA NOTES TO THE FINANCIAL STATEMENTS June 30, 2015 Note 1-Summary of Significant Accounting Policies: The financial statements of the County conform to generally accepted accounting principles (GAAP) applicable to governmental units promulgated by the Governmental Accounting Standards Board (GASB). The following is a summary of the more significant policies: A. Financial Reporting Entity The County of Russell, Virginia is a municipal corporation governed by an elected six-member Board of Supervisors. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for description) to emphasize that it is legally separate from the government. Blended component units - None Discretely Presented Component Units - The component unit columns in the financial statements include the financial data of the County's discretely presented component units. They are reported in a separate column to emphasize that they are legally separate from the County. The Russell County School Board operates the elementary and secondary public schools in the County. School Board members are popularly elected. The School Board is fiscally dependent upon the County because the County approves all debt issuances of the School Board and provides significant funding to operate the public schools since the School Board does not have separate taxing powers. The School Board is presented as a governmental fund type. The School Board does not issue separate financial statements. The Industrial Development Authority of Russell County, Virginia (IDA) encourages and provides financing for industrial development in Russell County. ‘The financial statements of the IDA have been included because the County appoints the governing body and has made moral obligation resolutions to finance deficits of any kind or nature that may occur each year subject to annual appropriation. Complete financial statements of the IDA can be obtained in writing at 137 Highland Drive, Lebanon, VA 24266. The Russell County Public Service Authority (PSA) provides water and sewer service to residents of Russell County. The Authority is fiscally dependent on the County because the County appoints the governing body and has financing guarantees involving the Authority. Complete financial statements of the PSA can be obtained in writing at 7341 Swords Creek Road, Swords Creek, VA 24649, The Castlewood Water and Sewage Authority of Russell County provides water and sewer service to residents of Russell County. The Authority is fiscally dependent on the County because the County appoints the governing body and has financing guarantees involving the Authority. Complete financial statements of the Authority can be obtained in writing at P.O. Box 655, Castlewood, VA 24224. AG COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 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 $2,832,224 to the Regional Jail and $50,000 to the Community Services Board. The County does not have any ongoing financial responsibility for these Organizations. B. Government-wide and Fund Financial Statements Government-wide financial statements - The reporting model includes financial statements prepared using full accrual accounting for all of the government's activities. This approach includes not just current assets and liabilities but also capital assets and long-term liabilities (such as buildings and general obligation debt). The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. Statement of Net Position - The government-wide Statement of Net Position is designed to display the financial position of the primary government (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, 2015 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 locat 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 $2,832,224 to the Regional Jail and $50,000 to the Community Services Board. The County does not have any ongoing financial responsibility for these Organizations. B. Government-wide and Fund Financial Statements Goyernment-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 (j.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 toa 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. 7 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 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 facus 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 af accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Accordingly, real and personal property taxes are recorded as revenues and receivables when billed, net of allowances for un-collectible amounts. Property taxes not collected within 60 days after year-end are reflected as unavailable revenues. Sales and utility taxes, which are collected by the state or utilities and subsequently remitted to the County, are recognized as revenues and receivables upon collection by the state or utility, which is generally in the month preceding receipt by the County. ·18· COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) B. Government-wide and Fund Financial Statements (Continued) Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds, if any, are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The government-wide Statement of Activities reflects both the gross and net cost per functional category (public safety, public works, health and welfare, etc.) which are otherwise being supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.) The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants, and contributions. The program revenues must be directly associated with the function (public safety, public works, health and welfare, etc.) or a business-type activity. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period, Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Accordingly, real and personal property taxes are recorded as revenues and receivables when billed, net of allowances for un-coltectible 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 utitity, which is generally in the month preceding receipt by the County. 18° COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Licenses, permits, fines and rents are recorded as revenues when received. Intergovernmental revenues, consisting primarily of federal, state and other grants for the purpose of funding specific expenditures, are recognized when earned or at the time of the specific expenditure. Revenues from general·purpose grants are recognized in the period to which the grant applies. All other revenue items are considered to be measurable and available only when the government receives cash. The government reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for and reports all financial resources of the general government, except those required to be accounted for in other funds. The General Fund includes the activities of the Social Services, E-911, Dog Tag, Damage Stamp, Revenue Anticipation Note, Law Library, and Knox Creek Funds. The aforementioned Funds have been merged with the General Fund for financial reporting purposes. The Coal Road and Workforce Investment Board Funds serve as the County's major Special Revenue Funds. The Coal Road Fund accounts for and reports financial resources to be used for improvements to roads used in conjunction with coal mining and other expenses allowable by the Code of Virginia, (1950), as amended. The Workforce Investment Board Fund accounts for and reports financial resources to be used for workforce development benefiting the County. The government reports the following major proprietary funds: The County operates a water treatment system. The activities of the system are accounted for in the Dante fund. Additionally, the government reports the following fund types: 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, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Licenses, permits, fines and rents are recorded as revenues when received. Intergovernmental revenues, consisting primarily of federal, state and other grants for the purpose of funding specific expenditures, are recognized when earned or at the time of the specific expenditure. Revenues from general-purpose grants are recognized in the period to which the grant applies. All other revenue items are considered to be measurable and available only when the government receives cash. The government reports the following major governmental funds: ‘The General Fund is the government's primary operating fund. It accounts for and reports all financial resources of the general government, except those required to be accounted for in other funds. The General Fund includes the activities of the Social Services, E-911, Dog Tag, Damage Stamp, Revenue Anticipation Note, Law Library, and Knox Creek Funds. The aforementioned Funds have been merged with the General Fund for financial reporting purposes. The Coal Road and Workforce Investment Board Funds serve as the County's major Special Revenue Funds. The Coal Road Fund accounts for and reports financial resources to be used for improvements to roads used in conjunction with coal mining and other expenses allowable by the Code of Virginia, (1950), as amended. The Workforce Investment Board Fund accounts for and reports financial resources to be used for workforce development benefiting the County. The government reports the following major proprietary funds: The County operates a water treatment system. The activities of the system are accounted for in the Dante fund. Additionally, the government reports the following fund types: 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 of 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. 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, 2015 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: 1. Cash and Cash Equivalents The government's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Deposits with banks are covered by the Federal Deposit Insurance Corporation (FDIC) and Collateralized in accordance with the Virginia Security for Public Deposits Act (the "Act"). Investments for the government, as well as for its component units, are reported at fair value. The State Treasurer's Local Government Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. 2. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans). 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 nonspendable fund balance 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, 2015 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 Internat 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: 1. Cash and Cash Equivalents The government’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Deposits with banks are covered by the Federal Deposit Insurance Corporation (FDIC) and Collateralized in accordance with the Virginia Security for Public Deposits Act (the “Act”). Investments for the government, as well as for its component units, are reported at fair value. The State Treasurer's Local Government Investment Poot operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the poot shares. 2. Receivables and Payables Activity between funds that are representative of (ending/ borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans). All other outstanding balances between funds are reported as “advances to/from other funds” (j.e., the noncurrent portion of interfund toans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by nonspendable fund balance in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 3. 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. 4. 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 $723,965 at June 30, 2015 and is comprised solely of property taxes. 5. 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. 6. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental column in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset's life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, equipment, and infrastructure of the primary government, as well as the Component Unit - School Board, are depreciated using the straight line method over the following estimated useful lives: Assets Years Bui Win~ ~ Building improvements Structures, lines, and accessories Machinery and equipment -21. 40 20-40 4-30 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 3. 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 The County calculates its allowance for uncollectible accounts using historical collection data and, in certain cases, specific account analysis. The allowance amounted to approximately $723,965 at June 30, 2015 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, ptant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental column in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset’s life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, equipment, and infrastructure of the primary government, as well as the Component Unit - School Board, are depreciated using the straight line method over the following estimated useful lives: Assets Years Buildings 0 Building improvements 40 Structures, lines, and accessories 20-40 Machinery and equipment 4:30 2 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 7. 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. 8. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expenditure/expense) until then. The County only has one item that qualifies for reporting in this category. It is comprised of contributions to the pension plan made during the current year and subsequent to the net pension liability measurement date, which will be recognized as a reduction of the net pension liability next fiscal year. For more detailed information on these items, reference the pension note. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The County has two types of items that qualify for reporting in this category. Under a modified accrual basis of accounting, unavailable revenue representing property taxes receivable is reported in the governmental funds balance sheet. This amount is comprised of uncollected property taxes due prior to June 30th, 2nd half installments levied during the fiscal year but due after June 30th, and amounts prepaid on the 2nd half installments and is deferred and recognized as an inflow of resources in the period that the amount becomes available. Under the accrual basis, 2nd half installments levied during the fiscal year but due after June 30th and amounts prepaid on the 2nd half installments are reported as deferred inflows of resources. In addition, certain items related to the measurement of the net pension liability are reported as deferred inflows of resources. These include differences between expected and actual experience, change in assumptions, and the net difference between projected and actual earnings on pension plan investments. For more detailed information on these items, reference the pension note. The remainder of this page left blank intentionally. -22· COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 7. 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. 8. Deferred Outflows/inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expenditure/expense) until then. The County only has one item that qualifies for reporting in this category. It is comprised of contributions to the pension plan made during the current year and subsequent to the net pension liability measurement date, which will be recognized as a reduction of the net pension liability next fiscal year. For more detailed information on these items, reference the pension note. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so wilt 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 instaltments levied during the fiscal year but due after June 30th, and amounts prepaid on the 2nd half installments and is deferred and recognized as an inflow of resources in the period that the amount becomes available. Under the accruat basis, 2nd half installments levied during the fiscal year but due after June 30th and amounts prepaid on the 2nd half installments are reported as deferred inflows of resources. In addition, certain items related to the measurement of the net pension liability are reported as deferred inflows of resources, These include differences between expected and actual experience, change in assumptions, and the net difference between projected and actual earnings on pension plan investments. For more detailed information on these items, reference the pension note. The remainder of this page left blank intentionally. 22. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 9. Compensated Absences Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. In accordance with the provisions of Governmental Accounting Standards No. 16, Accounting for Compensated Absences, no 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. 10. 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. 11. 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. 12. Fund Equity The County reports fund balance in accordance with GASB Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used: • Nonspendable fund balance· amounts that are not in spendable form (such as inventory and prepaid expenditures) or are required to be maintained intact (corpus of a permanent fund); -23· COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 9. Compensated Absences Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. In accordance with the provisions of Governmental Accounting Standards No. 16, Accounting for Compensated Absences, no 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. Alt vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. 10. Pensions For purposes of measuring the net pension tiability, 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. 11. 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. 12. Fund Equity The County reports fund balance in accordance with GASB Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used: = Nonspendable fund balance - amounts that are not in spendable form (such as inventory and prepaid expenditures) or are required to be maintained intact (corpus of a permanent fund); 2 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 12. Fund Equity (Continued) • Restricted fund balance - amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation; • Committed fund balance - amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint; • Assigned fund balance - amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority; • Unassigned fund balance - amounts that are available for any purpose; positive amounts are only reported in the general fund. The Board of Supervisors is the highest level of decision-making authority and the formal action that is required to establish, modify or rescind a fund balance commitment is a resolution approved by the Board of Supervisors. The resolution must either be approved or rescinded as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period. The Board of Supervisors has authorized the County Administrator as the official authorized to assign fund balance to a specific purpose as approved by the fund balance policy. The County of Russell will maintain an unassigned fund balance in the general fund equal to 16% of the expenditures/operating revenues (two months). The County considers a balance of less than 10% to be a cause for concern, barring unusual of deliberate circumstances. The County considers restricted fund balance to be spent when an expenditure is incurred for purposes for which restricted and unassigned, assigned, or committed fund balances are available, unless prohibited by legal documents or contracts. When an expenditure is incurred for purposes for which committed, assigned or unassigned amounts are available, the County considers committed fund balance to be spent first, then assigned fund balance, and lastly unassigned fund balance. 13. Net Position Net position is the difference between a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources. Net investment in capital assets represents capital assets, less accumulated depreciation, less any outstanding debt related to the acquisition, construction or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are also included in this component of net position. -24- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 12. 13. Fund Equity (Continued) = Restricted fund balance - amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher tevels of government), through constitutional provisions, or by enabling legislation; = Committed fund balance - amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint; % Assigned fund batance - amounts 2 government intends to use for a specific purposes intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority; * Unassigned fund balance - amounts that are available for any purpose; positive amounts are only reported in the general fund. The Board of Supervisors is the highest level of decision-making authority and the formal action that is required to establish, modify or rescind a fund balance commitment is a resolution approved by the Board of Supervisors. The resolution must either be approved or rescinded as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period. The Board of Supervisors has authorized the County Administrator as the official authorized to assign fund balance to a specific purpose as approved by the fund balance policy. The County of Russell will maintain an unassigned fund balance in the general fund equal to 16% of the expenditures /operating revenues (two months). The County considers a balance of less than 10% to be a cause for concern, barring unusual of deliberate circumstances. The County considers restricted fund balance to be spent when an expenditure is incurred for purposes for which restricted and unassigned, assigned, or committed fund balances are available, unless prohibited by legal documents or contracts. When an expenditure is incurred for purposes for which committed, assigned or unassigned amounts are available, the County considers committed fund balance to be spent first, then assigned fund balance, and lastly unassigned fund balance. Net Position Net position is the difference between a) assets and deferred outflows of resources and (b) abilities and deferred inflows of resources. Net investment in capital assets represents capital assets, less accumulated depreciation, less any outstanding debt related to the acquisition, construction or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are also included in this component of net position. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabilities, and net position/fund balance: (Continued) 14. Net Position Flow Assumption Sometimes the County will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted - net position in the government­ wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the County's policy to consider restricted - net position to have been depleted before unrestricted - net position is applied. Note 2-Stewardship, Compliance, and Accountability: A. Budgetary Information The following procedures are used by the County in establishing the budgetary data reflected in the financial statements: 1. 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. 2. Public hearings are conducted to obtain citizen comments. 3. Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution. 4. The Appropriations Resolution places legal restrictions on expenditures at the function level. Only the Board of Supervisors can revise the appropriation for each department or category. The County Administrator is authorized to transfer budgeted amounts within general government departments; however, the School Board is authorized to transfer budgeted amounts within the school system·s categories. 5. 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. 6. All budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP). 7. Appropriations lapse on June 30, for all County units. 8. 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. -25- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1-Summary of Significant Accounting Policies: (Continued) D. Assets, deferred outflows/inflows of resources, liabil ies, and net position/fund balance: (Continued) 14, Net Position Flow Assumption Sometimes the County will fund outlays for a particular purpose from both restricted (e.8., 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: 1. Prior to March 30, the County Administrator submits to the Board of Supervisors a proposed operating and capital budget far the fiscal year commencing the following July 1. The operating and capital budget includes proposed expenditures and the means of financing them. Alt Funds of the County have legally adopted budgets with the exception of the Industrial Development Authority Fund and Agency Funds. Public hearings are conducted to obtain citizen comments. Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution. ‘The Appropriations Resolution places legal restrictions on expenditures at the function level. Only the Board of Supervisors can revise the appropriation for each department or category. The County Administrator is authorized to transfer budgeted amounts within general government departments; however, the School Board is authorized to transfer budgeted amounts within the school system's categories. Format 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 atl County units. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to commit that portion of the applicable appropriations, is not part of the County's accounting system. “25° COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 2-Stewardship, Compliance, and Accountability: (Continued) B. Excess of expenditures over appropriations Numerous departments in the General Fund and the Coal Road Fund, Social Services Fund, CSA Fund, Cannery Fund, Litter Fund, and Law Library Fund had excess expenditures over appropriations in the current year. C. Deficit fund equity At June 30, 2015, there were no funds which had deficit fund equity. Note 3-Deposits and Investments: Deposits: Deposits with banks are covered by the Federal Deposit Insurance Corporations (FDIC) and collateralized in accordance with the Virginia Security for Public Deposits Act (the "Act") Section 2.2- 4400 et. seq. of the Code of Virginia. Under the Act, banks and savings institutions holding public deposits in excess of the amount insured by the FDIC must pledge collateral to the Commonwealth of Virginia Treasury Board. Financial Institutions may choose between two collateralization methodologies and depending upon that choice, will pledge collateral that ranges in the amounts from 50% to 130% of excess deposits. Accordingly, all deposits are considered fully collateralized. Investments: Statutes authorize local governments and other public bodies to invest in obligations of the United States or agencies thereof, obligations of the Commonwealth of Virginia or political subdivisions thereof, obligations of the International Bank for Reconstruction and Development (World Bank), the Asian Development Bank, the African Development Bank, "prime quality" commercial paper and certain corporate notes, banker's acceptances, repurchase agreements, and the State Treasurer's Local Government Investment Pool (LGIP). At June 30, 2015, the County had no investments. The remainder of this page left blank intentiona//y. ·26· COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 2-Stewardship, Compliance, and Accountability: (Continued) B. Excess of expenditures over appropriations Numerous departments in the General Fund and the Coal Road Fund, Social Services Fund, CSA Fund, Cannery Fund, Litter Fund, and Law Library Fund had excess expenditures over appropriations in the current year, C.. Deficit fund equity At June 30, 2015, there were no funds which had deficit fund equity. Note 3-Deposits and investments: Deposits: Deposits with banks are covered by the Federal Deposit Insurance Corporations (FDIC) and collateralized in accordance with the Virginia Security for Public Deposits Act (the “Act”) Section 2.2- 4400 et. seq. of the Code of Virginia. Under the Act, banks and savings institutions holding public deposits in excess of the amount insured by the FDIC must pledge collateral to the Commonwealth of Virginia Treasury Board. Financial Institutions may choose between two collateralization methodologies and depending upon that choice, will pledge collateral that ranges in the amounts from 50% to 130% of excess deposits. Accordingly, all deposits are considered fully collateralized. investments: Statutes authorize local governments and other public bodies to invest in obligations of the United States or agencies thereof, obligations of the Commonwealth of Virginia or political subdivisions thereof, obligations of the International Bank for Reconstruction and Development (World Bank), the Asian Development Bank, the African Development Bank, “prime quality” commercial paper and certain corporate notes, banker's acceptances, repurchase agreements, and the State Treasurer's Local Government investment Pool (LGIP). At June 30, 2015, the County had no investments. The remainder of this page left blank intentionally. “26> COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 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 s 229, 197 s Commonwealth of Virginia: Local sales tax 414,514 State sales tax 723,222 Non-categorical aid 319,534 Categorical aid-shared expenses 203,680 Categorical aid-Virginia Public Assistance funds 145,448 Categorical aid-other 79,317 Categorical aid-Comprehensive Services Act funds 210,471 Federal Government: Categorical aid-Virginia Public Assistance funds 158,002 Categorical aid-Workforce Investment funds 329,666 Categorical aid-Other 6,221 School federal programs 778,093 Total Amount Due from Other Governmental Units $ 2,096,050 s 1, 501, 315 The remainder of this page left blank intentiona//y. -27- COUNTY OF RUSSELL, VIRGINIA NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 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 $29,197 § Commonwealth of Virgini Local sales tax 414,514 : State sales tax : 723,222 Non-categorical aid 319,534 : Categorical aid-shared expenses 203,680 Categorical aid-Virginia Public Assistance funds 145,448 Categorical aid-other 79,317 Categorical aid-Comprehensive Services Act funds 210,471 Federal Government Categorical aid-Virginia Public Assistance funds 158,002 Categorical aid-Workforce Investment funds 329,666 Categorical aid-Other 6,221 School federal programs : 778,093 Total Amount Due from Other Governmental Units $_ 2,096,050 $___ 1,501,315 The remainder of this page left blank intentionally. -U- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE30, 2015 Note 5-lnterfund/Component-Unit Obligations: Fund Primary Government: General Fund Component Unit: School Board IDA Total s s s Due to Primary Due from Primar\ Government/ Government/ Component Unit Component Unit s 2,699,074 2,499,074 s 200,000 2,699,074 s 2,699,074 lnterfund transfers and remaining balances for the year ended June 30, 2015, consisted of the following: Fund Transfers In Transfers Out Primary Government: General Fund s s 446,281 Dante Fund 222,404 Internal Service Fund - Health Insurance 223,877 Total s 446,281 $ 446,281 Primary Government: Due From Due To General Fund $ 111,220 s 65,105 Coal Road Fund 65, 105 Workforce Investment Board Fund 111,220 Total s 176,325 s 176,325 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgeting authorization. The remainder of this page left blank intentionally. -28- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 5-Interfund/Component-Unit Obligations: Due to Primary Due from Primary Government/ _ Government/ Fund Component Unit Component Unit Primary Government: General Fund $___ 2,699,074 Component Unit: School Board S 2,499,074 § IDA 200,000 - Total $___2,699,074 $___ 2,699,074 Interfund transfers and remaining balances for the year ended June 30, 2015, consisted of the following: Fund Transfers In _ Transfers Out Primary Government: General Fund $ - $446,281 Dante Fund 222,404 : Internal Service Fund - Health Insurance 223,877 - Total $446,281 5 446,281 Primary Government: Due From Due To Generat Fund 7 re Coal Road Fund 65,105 : Workforce Investment Board Fund : 411,220 Total 176,325 176,325 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgeting authorization. The remainder of this page left blank intentionally. -28- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 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, 2015: Balance July 1, 2014, as restated General obligation bonds S 8, 142,651 s 1,812,631 4,641,067 Literary loans Revenue bonds Deferred Amounts: Bond premiums Capital leases Landfill closure/ postclosure liability Net OPEB obligation Compensated absences Net pension liability Total 249,707 506,689 271,663 76,673 620,677 7,458, 109 s 23,779,867 s Increases/ Issuances 4,075 39,988 444,421 2,590,801 s Decreases/ Retirements (627,696) s (375, 977) (236, 929) (16,804) (281,845) (5,200) (465,508) ( 4, 306, 585) Balance June 30, 2015 7,514,955 1,436,654 4,404, 138 232, 903 224,844 275,738 111,461 599,590 5,742,325 3,079,285 s (6,316,544) s 20,542,608 Annual requirements to amortize long-term obligations and related interest are as follows: Year Ending June 30, 2016 s 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 2036-2037 Totals S General Obligation Bonds Principal Interest 644,976 s 647, 901 670,770 678,680 702,345 2,625,335 1,424, 948 120,000 7,514,955 s 340,870 s 308,788 277,286 245,292 212,615 635,243 177,869 3,030 2,200, 993 s Literary Loans Principal Interest 375, 977 s 375, 977 282,792 229,246 102,646 70,016 1,436,654 s -29- 32,130 s 23, 167 14,205 8,038 3,453 2, 150 83, 143 s Revenue Bonds Principal 236, 928 s 236, 928 236, 928 236,928 236,928 1, 184,643 1,098,522 797,883 138,450 4,404, 138 s Interest ==== Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Primary Government - Governmental Activities indebtedness The following is a summary of long-term obligation transactions of the County for the year ended June 30, 2015: Balance July 1, 2014, Increases/ Decreases/ Balance as restated Issuances___Retirements__June 30, 2015 General obligation bonds $ 8,142,651 $ - $ (627,696) $7,514,955 Literary loans 1,812,631 - (375,977) 1,436,654 Revenue bonds 4,641,067 - (236,929) 4,404,138 Deferred Amounts: Bond premiums 249,707 . (16,804) 232,903 Capital leases 506,689 - (281,845) 224,844 Landfilt closure/ postclosure liability 271,663 4,075 - 275,738 Net OPEB obligation 76,673 39,988 (5,200) 111,461 Compensated absences 620,677 444,421 (465,508) 599,590 Net pension liability 7,458,109, 2,590,801 (4,306,585) 5,742,325, Total $23,779,867 $ 3,079,285 $ (6,316,544) $20,542,608 Annual requirements to amortize long-term obligations and related interest are as follows: Year Ending _ General Obligation Bonds Literary Loans Revenue Bonds, June 30, Principal Interest Principal _Interest_ Principal _interest 2016 «$644,976 $340,870 § 375,977 $32,130 $ 236,928 S 2017 647,901 308,788 375,977 23,167 236,928 2018 670,770 277,286 282,792 14,205 236,928 2019 678,680 245,292 229,246 8,038 236,928 2020 702,345 212,615 102,646 3,453 236,928 2021-2025 2,625,335 635,243 70,016 2,150 1,184,643, 2026-2030 1,424,948 177,869 : 4,098,522 2031-2035 120,000 3,030 : - 797,883 2036-2037 - : : : 138,450 Totals $7,514,955 $ 2,200,993 $ 1,436,654 $83,143 $4,404,138 $ -29- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6-Long-Term Obligations: (Continued) Primary Government - Governmental Activities Indebtedness (Continued) Details of long-term indebtedness: Final Interest Vate Maturity Installment Rates h~l!~<1 Date Amounts General Obligation Bonds: General obligation bond 5.10%-6.10% 1995 2016 $15,000 a+ $ General obligation bond 5.10%·6.10% 1997 2016 $5,000 a+ General obligation bond 4.10%-5.23% 1999 2019 $25,000 a+ General obligation bond 4.98%-5.10% 2000 2021 $94, 999-115, 952 a+ General obligation bond 2. 35%-5. 10% 2002 2023 $213,799-272,702 a+ General obligation bond 4.60%-5.10% 2006 2027 $147,228-197,458 a+ General obligation bond 4.60%-5.10% 2009 2030 $55,000-110,000 a+ General obligation bond 3.05%-5.05% 2010 2031 $55,000-120,000 a+ Total General Obligation Bonds Revenue Bonds: Revenue bond 0.00% 11128/2001 2033 $15,595 sa $ Revenue bond 0.00% 11/2812001 2033 $27,708 sa Revenue bond 0.00% 11/28/2001 2025 $8,612 sa Revenue bond 0.00% 1111/2002 2033 $13,707 sa Revenue bond 0.00% 3/10/2005 2036 $9,276 sa Revenue bond 0.00% 10/14/2005 2036 $1 ,524 sa Revenue bond 0.00% 10/14/2005 2037 $31,779 sa Revenue bond 0.00% 4/28/2006 2037 $6,925 sa Revenue bond 0.00% 313012007 2037 $3,340 sa Total Revenue Bonds Plus: Unamortized Premium Total General Obligation and Revenue Bonds Amount of Original Issue 325,000 140,000 510,000 1,802,210 4,382, 954 3,205,190 1,485,000 1,620,000 935,690 1 ,678,400 344,477 822,366 556,538 91,439 1,906,717 415,513 197,179 The remainder of this page left blank intentionally. -30- Balance Amount Governmental Due Within Activities Qrie Year s 15,000 $ 15,000 15,000 5,000 125,000 25,000 646,994 100,244 1,986,149 225, 115 2,096,812 154,617 1,230,000 55,000 1 ,400,000 65,000 $ 7,514,955 $ 644,976 $ 530,224 $ 31, 190 969,780 55,416 172,239 17,224 479,713 27,412 380,301 18,551 64,007 J,048 1,366,481 63,557 297,783 13,851 143,610 6,679 $ 4,404, 138 $ 236,928 $ 232,903 $ 16,804 $ 12,151,996 $ 898,708 Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6-Long-Term Obligations: (Continued) Primary Goyernment - Governmental Activities Indebtedness (Continued) Details of long-term indebtedness: Fina “Amount of ‘Balance: Amount Date Maturity Instattment Government ue Within ‘Rates. sued ‘Date “Amounts ‘sue, “Activities One Year General Obtigation Bonds: General obligation bord SAOK6.10R 1995, 2016 515,000a» = «§-—«325,000 $15,000 15,000 General obligation bond S.10%-6.10% 1997 2016, 9,000 a+ 140,000 15,000 5,000 General obligation bond 51085238 1999 2019, 525,000 a 510,000 r2s;000 25,000 Generat obiigation band 4988-5.10% 2000 20r1—$94,999-115,952 a+ 1,802,280 646,994 100,244 General obligation bond 2.35%5.10% 2002 2023 $293,799-272,702ar 4,382,954 1,986,189 225,115 Generat obligation band “4.60%-5.10%8 20062027 3,209,190 2,096,812 154,617 Generat obiigation bond 46085:10% 20092030 55,000110,000a 1,485,000 1,230,000 55,000, ‘General obligation bond 3.05K5,05% 2010, 70M §§5,000-120.000a 1,620,000 1,400,000 65,000 Total General Obtigation Bonds: 5 7isi9s5 5 644976 ‘Revenue Bonds: Revenue bond a8 11/28/2001. 2033 515.5955. $925,690 § Sta $31,190 Revenue bond 0.008 11/28/2001 2033 527,708 sa 1,678,400 969,780 55,416 Revenue bond 0.008 vi/2e/2001— 2025 58,612 52 344,477 172239 17,224 Revenue bond ok ttvav2002 ©2033, $13,707 0 827,366 a9.783 matt Revenue bond 0.00% 3710/2005 2036 99,276 sa 596,538 380,201 18,551 Revenue bond o.o0e 10/14/2003 2036 51.528 sa 91,439 64,007 3088 Revenue bond 0.00% 10/14/2005 2037 S98 1.906.717 1,366,481 63557 Revenue bond 0.00% 4/28/2008 2037 $6,925 8 415,503 297,783 13,851 Revenue bond 0.00% 3/30/2007 2037 53,340 5a 197,179 43,610 — _ sane 9 388 Pls: ‘Unamartized Premium S__232,903 $16,808 ; The remainder of this page left blank intentionally. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6-Long-Term Obligations: (Continued) Primary Government - Governmental Activities Indebtedness (Continued) Details of long-term indebtedness: (Continued) Final Amount of Interest Date Maturity Installment Original Rates Issued Date Amounts Issue Literary loans: Literary loan 3.00% 7 /15/1986 2017 $30,222 a+ $ 960,000 Literary loan 3.00% 7/15/1986 2017 $62,693 a+ 2,000,000 Literary loan 3.00% 2/1 /1988 2018 $18,522 a+ 530,999 Literary loan 3.00% 211 /1988 2018 $12,581 a+ 358, 151 Literary loan 3.00% 211 /1988 2018 $3,005 a+ 84,805 Literary loan 3.00% 2/1/1988 2018 $9, 995 a+ 281,079 Literary loan 3.00% 2/1/1988 2018 $6, 989 a+ 196,873 Literary loan 2.00% 1 /1 /2000 2020 $57, 757 a+ 1,155,140 Literary loan 2.00% 3/15/1999 2019 $55, 700 a+ 1,114,086 Literary \oan 2.00% 3/15/1999 2019 $8,200 a+ 161,449 Literary loan 2.00% 6/15/1999 2019 $21,134a+ 422,680 Literary loan 2.00% 6/1511999 2019 $44,020 a+ 880,411 Literary loan 2.00% 11/15/2000 2021 $24,689 a+ 493,789 Literary loan 3.00% 12/15/2000 2021 $7,700 a+ 154, 118 Literary loan 2.00% 7/1/2003 2023 $12,500 a+ 250,000 Tota! Literary Loans Other Obligations: Capital Leases (Note 7) Landfill Closure and Postclosure Liability Net OPEB Obligation Compensated Absences Net Pension Liability Total Other Obligations Total Long-term Obligations The remainder of this page left blank intentionally. -31- Balance Amount Governmental Due Within Activities One Year $ 60,444 $ 30,222 125,926 62, 963 55,566 18,522 37, 743 12,581 9,015 3,005 29,985 9, 995 20,967 6,989 288, 785 57,757 222,886 55, 700 30,249 8,200 84,536 21, 134 176,091 44,020 148, 143 24,689 46,318 7,700 100,000 12,500 $ 1,436,654 $ 375,977 $ 224,844 $ 111,375 275, 738 111,461 599,590 449,693 5,742,325 $ 6,953,958 $ 561,068 $ 20,542,608 $ 1,835, 753 Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 6-Long-Term Obligations: (Continued) Primary Government - Governmental Activities Indebtedness (Continued) Details of long-term indebtedness: (Continued) Finat Amount of Balance Amount Interest Date Maturity Installment Original Governmental ue Within Rates Issued Date Amounts Issue Activities One Year biterary leans: Literary loan 3.00% 7/95/1986 «BOIT $30,222. a+ § 960,000 $ 60,444 § BORED Literary foan 3.00% 7/15/1986 -2OIT_—_$62,693 ae 2,000,000 125,926 62,963, Literary (oan 3.00% 2/1/1988 2018 «$18,572ar 530,999 55,566 16,522 Gterary loan 3.00% 2/1/1988 «2018 $12,58. ay 358,151 37,743 12,581 Literary loan 3.00% 2/1/1985 2018 4$3,005 a+ 84,805, 9,015 3,005, Literary toan 3.00% 2/1/1988 «2018 $9,995.a+ 281,079 79,985 9,995 Literary toan 3.00% 2/1/1988 20186,989 a+ 196,873 20,967 6,989 Literary toan 2008 1/1/2000 2020 $57,757 a+ 1,195,140, 788,785 57,757 Literary toan 2.008 4/15/1999 2019 «$55,700 a+ 1,174,086 222,886 55,700 Literary foan 2.008 3/15/1999 2019 $8,200 161,449 30,249 8,200 Literary foan 2.008 6/15/1999 2019 $24,343 422,680, 24,536 24134 Literary loan, 2.00% 6/15/1999 «2018 $44,020 880,411 176,091 44,020 Literary loan 2.00% 11/15/2000 2021 $24,689 as 493,789) 148,143 24,689 Literary toan 3.00% 12/15/2000 2021 $7,700a+ = 154,118 46,318 7,700 Literary lean 2.008 7/1/2003 -—-2023—$12,500a+ 250,000, 100,000 12,500 Total Literary Loans $1,436,654 _§ 375,977 ‘Other Obligations: Capital Leases (Note 7) S$ mas $111,375 Lanafill Closure and Postclosure Liability 273,738 Net OPEB Obligation 111,461 - Compensated Absences 599,590 449,693 Net Pension Liability 5,742,325, Total Other Obligations $6,953,958 § 561,068 The remainder of this page teft blank intentionally. te COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 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, 2015: Balance July 1, 2014, Balance as restated Issuances Retirements June 30, 2015 Revenue bonds s 693,414 s s (21,013) s 672,401 Net pension liability 52,618 18,279 (30,383) 40,514 Total s 746,032 s 18,279 s (51,396) s 712,915 Annual requirements to amortize long-term obligations and related interest are as follows: Year Ending Revenue Bonds June 30, Principal Interest 2016 s 21,894 s 29,553 2017 22,814 28,633 2018 23,776 27,671 2019 23,845 26,665 2020 23,960 25,612 2021-2025 137,360 110,505 2026-2030 171,941 75,919 2031-2035 215,235 32,625 2036-2037 31,576 511 Totals s 672,401 s 357,694 Details of long-term indebtedness: Final Amount of Balance Amount Interest Date Maturity Original Business-Type Due Within Rates Issued Date Issue Activities One Year Revenue Bonds: Revenue bond 0.00% 3/24/1999 2019 $ 37,500 $ 6,562 $ 1,875 Revenue bond 4.50% 4/10/1996 2036 900,000 665,839 20,019 Total Revenue Bonds $ 672,401 $ 21,894 Other Obligations: Net pension liability $ 40,514 $ Total Long-term Obligations $ 712,915 $ 21,894 ·32· Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 6-Long-Term Obligations: (Continued) Primary Government - Business-type Activities Indebtedness: The following is a summary of long-term obligatfon transactions of the Enterprise Fund for the year ended June 30, 2015: Balance July 1, 2014, Balance as restated _Issuances__Retirements _June 30, 2015 Revenue bonds S$ 693,414 § - $ (21,013) $ 672,401 Net pension liability 52,618 18,279 (30,383) 40,514 Total $ 746,032_$ 18,279 $. (51,396) $ 712,915 Annual requirements to amortize long-term obligations and related interest are as follows: Year Ending Revenue Bonds June 30, Principal interest 2016 $21,894 $29,553 2017 22,814 28,633 2018 23,776 27,671 2019 23,845 26,665 2020 23,960 25,612 2021-2025 137,360 110,505 2026-2030 171,941 75,919 2031-2035 215,235 32,625 2036-2037 31,576 511 Totals $672,401 _$_357,694 Details of long-term indebtedness: Final Amount of Balance Amount Interest Date Maturity Original Business-Type Due Within Rates Issued Date Issue Activities One Year Revenue Bonds: Revenue bond 0.00% 3/24/1999 2019 $ 3 0S 562 § ‘Revenue bond 450% 4/10/1996 2036 900,000 665,839 Total Revenue Bonds 3 672,401 $21,894 Other Obligations: Net pension tiability $40,514 § Total Long-term Obligations 712,915 _§ 21,894 “32. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 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, 2015: Balance July 1, 2014, Balance as restated Increases Decreases June 30, 2015 Net OPEB obligation s 706,693 s 920,856 s (660,600) s 966,949 Early retirement incentive 70,800 (51,300) 19,500 Compensated absences 758,422 598,330 (568,817) 787,935 Net pension liability 39,393, 146 3,375, 146 (9,484,667) 33,283,625 Total s 40,929,061 s 4,894,332 s (10, 765,384) s 35,058,009 Details of long-term indebtedness: Amount Total Due Within Amount One Year Other Obligations: Early retirement incentive s 19,500 s 11,500 Net OPEB Obligation 966,949 Compensated Absences 787,935 590,951 Net pension liability 33,283,625 Total Other Obligations s 35,058,009 s 602,451 The remainder of this page left blank intentionally . . 33. Tim Lovelace Highlight COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 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, 2015: Balance July 1, 2014, Balance as restated Increases Decreases _June 30, 2015 Net OPEB obligation $706,693 $ 920,856 $ (660,600) $ 966,949 Early retirement incentive 70,800 - (51,300) 19,500 Compensated absences 758,422 598,330 (568,817) 787,935 Net pension liability 39,393,146 3,375,146 _(9,484,667) 33,283,625 Total $_40,929,061 $___4,894,332_$ (10,765,384) $__ 35,058,009 Details of long-term indebtedness: Other Obligations: Early retirement incentive Net OPEB Obligation Compensated absences Net pension liability Total Other Obligations Amount Due Within One Year Totai Amount $ 19,500 $ 966,949 787,935 33,2 11,500 590,951 $602,454 The remainder of this page (eft blank intentionally. 33. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7-Capital Leases: Primary Government The County has entered into lease agreements to finance the acquisition of school buses for the School Board. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of minimum lease payments at the dates of inception. The capital assets acquired through capital leases are as follows: Machinery and equipment Less: Accumulated depreciation Net capital asset s Buses 434, 164 (75, 979) S 358,185 ====== The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2015, were as follows: Year Ending Capital June 30, Leases 2016 s 115,602 2017 115,602 Subtotal s 231,204 Less, amount representing interest (6,360) Present Value of Lease Agreement s 224,844 The remainder of this page left blank intentionally. -34- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7-Capital Leases: Primary Government The County has entered into lease agreements to finance the acquisition of school buses for the School Board. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of minimum lease payments at the dates of inception. The capital assets acquired through capital teases are as follows: Buses Machinery and equipment S 434,164 Less: Accumulated depreciation (75,979) Net capital asset 358,185 The future minimum lease obligations and the net present value of minimum lease payments as of June 30, 2015, were as follows: Year Ending Capital June 30, Leases 2016 $115,602 2017 115,602 Subtotal $ 231,204 Less, amount representing interest (6,360) Present Value of Lease Agreement $__224,844 The remainder of this page teft blank intentionally. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: Plan Description All full-time, salaried permanent employees of the County are automatically covered by the Russell County Retirement Plan upon employment. The Plan includes employees of entities whose financial information is not included in the primary government report, and is therefore a cost-sharing multiple­ employer plan administered by the Virginia Retirement System (the System) along with plans for other employer groups in the Commonwealth of Virginia. All full-time, salaried permanent (nonprofessional) employees of the public school divisions are automatically covered by the Russell County School Board Retirement Plan upon employment. This is an agent multiple-employer plan administered by the System along with plans for other employer groups in the Commonwealth of Virginia. All full-time, salaried permanent (professional) employees of public school divisions are automatically covered by the YRS Teacher Retirement Plan upon employment. This is a cost-sharing multiple employer plan administered by the Virginia Retirement System (the system). Members earn one month of service credit for each month they are employed and for which they and their employer pay contributions to YRS. Members are eligible to purchase prior service, based on specific criteria as defined in the Code of Virginia, as amended. Eligible prior service that may be purchased includes prior public service, active military service, certain periods of leave, and previously refunded service. The System administers three different benefit structures for covered employees - Plan 1, Plan 2, and, Hybrid. Each of these benefit structures has a different eligibility criteria. The specific information for each plan and the eligibility for covered groups within each plan are set out in the table below: - RETIREMENT PLAN PROVISIONS PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN ;------·--- --·--- --- About Plan 1 About Plan 2 About the Hybrid Retirement Plan Plan 1 is a defined Plan 2 is a defined benefit plan. The Hybrid Retirement Plan combines benefit plan. The The retirement benefit is based the features of a defined benefit plan retirement benefit is on a member's age, creditable and a defined contribution plan. Most based on a member's service and average final members hired on or after January 1, age, creditable service compensation at retirement 2014 are in this plan, as well as Plan 1 and average final using a formula. Employees are and Plan 2 members who were eligible compensation at eligible for Plan 2 if their and opted into the plan during a retirement using a membership date is on or after special election window. (see "Eligible formula. Employees are July 1, 2010, or their Members") eligible for Plan 1 if their membership date is before July • The defined benefit is based on a membership date is 1, 2010, and they were not before July 1, 2010, and vested as of January 1, 2013. member's age, creditable service they were vested as of and average final compensation at January 1, 2013. retirement using a formula. ·35- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 8-Pension Plan: Plan Description All full-time, salaried permanent employees of the County are automatically covered by the Russett County Retirement Plan upon employment. The Plan includes employees of entities whose financial information is not included in the primary government report, and is therefore a cost-sharing muttiple- employer plan administered by the Virginia Retirement System (the System) along with ptans for other employer groups in the Commonwealth of Virginia, All full-time, salaried permanent (nonprofessional) employees of the public school divisions are automatically covered by the Russell County School Board Retirement Plan upon employment. This is an agent muitiple-employer plan administered by the System along with plans for other employer groups in the Commonwealth of Virginia. All full-time, salaried permanent (professional) employees of public school divisions are automatically covered by the VRS Teacher Retirement Plan upon employment. This is a cost-sharing multiple employer plan administered by the Virginia Retirement System (the system). Members earn one month of service credit for each month they are employed and for which they and their employer pay contributions to VRS. Members are eligible to purchase prior service, based on specific criteria as defined in the Code of Virginia, as amended. Eligible prior service that may be purchased includes prior public service, active military service, certain periods of leave, and previously refunded service. The System administers three different benefit structures for covered employees - Pian 1, Plan 2, and, Hybrid. Each of these benefit structures has a different eligibility criteria, The specific information for each plan and the eligibility for covered groups within each plan are set out in the table below: RETIREMENT PLAN PROVISIONS PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN About Plan 1 Plan 1 is a defined benefit plan. The retirement benefit is based on a member's age, creditable service and average final compensation at retirement using a formula. Employees are eligible for Plan 1 if their membership date is before July 1, 2010, and they were vested as of January 1, 2013. About Plan 2 Plan 2 is a defined benefit plan. The retirement benefit is based on a member's age, creditable service and average final ‘compensation at retirement using a formula. Employees are eligible for Plan 2 if their membership date is on or after July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of January 1, 2013. About the Hybrid Retirement Plan The Hybrid Retirement Plan combines the features of a defined benefit plan and a defined contribution plan. Most members hired on or after January 1, 2014 are in this plan, as well as Plan 4 and Plan 2 members who were eligible and opted into the plan during a special election window. (see “Eligible Members”) + The defined benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula. -35- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) ~----·---------------~---··-··--------------~ RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 About Plan 1 (Cont.) Eligible Members Employees are in Plan 1 if their membership date is before July 1, 2010, and they were vested as of January 1, 2013. Hybrid Opt-In Election YRS non-hazardous duty covered Plan 1 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014. PLAN 2 About Plan 2 (Cont.) Eligible Members Employees are in Plan 2 if their membership date is on or after July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of January 1, 2013. Hybrid Opt-In Election Eligible Plan 2 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014. ·36· HYBRID RETIREMENT PLAN About the Hybrid Retirement Plan (Cont.) • The benefit from the defined contribution component of the plan depends on the member and employer contributions made to the plan and the investment performance of those contributions. • In addition to the monthly benefit payment payable from the defined benefit plan at retirement, a member may start receiving distributions from the balance in the defined contribution account, reflecting the contributions, investment gains or losses, and any required fees. Eligible Members Employees are in the Hybrid Retirement Plan if their membership date is on or after January 1, 2014. This includes: • Political subdivision employees* • School division employees • Members in Plan 1 or Plan 2 who elected to opt into the plan during the election window held January 1 ·April 30, 2014; the plan's effective date for opt·in members was July 1, 2014. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note Plan Description (Continued) ension Plan: (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2. HYBRID RETIREMENT PLAN About Plan 1 (Cont.) About Plan 2 (Cont.) About the Hybrid Retirement Plan (Cont.) + The benefit from the defined contribution component of the plan depends on the member and employer contributions made to the plan and the investment performance of those contributions. in addition to the monthly benefit payment payable from the defined benefit plan at retirement, a member may start receiving distributions from the balance in the defined contribution account, reflecting the contributions, investment gains or tosses, and any required fees. Eligible Members Employees are in Plan 1 if their membership date is before July 1, 2010, and they were vested as of January 1, 2013. Hybrid Opt-In Election VRS non-hazardous duty covered Plan 1 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014. Eligible Members Employees are in Plan 2 if their membership date is on or after July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of January 1, 2013. Hybrid Opt-in Election Eligible Pian 2 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, 2014. Eligible Members Employees are in the Hybrid Retirement Plan if their membership date is on or after January 1, 2014, This includes: + Political subdivision employees* + School division employees + Members in Plan 1 or Plan 2 who elected to opt into the plan during the election window held January 1-April 30, 2014; the plan’s effective date for opt-in members was July 1, 2014, -36- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 Hybrid Opt-In Election (Cont.) The Hybrid Retirement Plan's effective date for eligible Plan 1 members who opted in was July 1, 2014. If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan. Members who were eligible for an optional retirement plan (ORP) and had prior service under Plan 1 were not eligible to elect the Hybrid Retirement Plan and remain as Plan 1 or ORP. Retirement Contributions Employees contribute 5% of their compensation each month I to their member contribution I account through a pre-tax salary reduction. Some political subdivisions and school divisions elected to phase in the required 5% member contribution but all employees will be paying the full 5% by July 1, 2016. Member contributions are tax-deferred until they are withdrawn as part of a retirement benefit or as a refund. The employer makes a separate actuarially determined contribution to VRS for all covered employees. VRS invests both member and employer contributions to provide funding for the future benefit payment. PLAN 2 Hybrid Opt-In Election (Cont.) The Hybrid Retirement Plan's effective date for eligible Plan 2 members who opted in was July 1, 2014. If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan. Members who were eligible for an optional retirement plan (ORP) and have prior service under Plan 2 were not eligible to elect the Hybrid Retirement Plan and remain as Plan 2 or ORP. Retirement Contributions Employees contribute 5% of their compensation each month to their member contribution account through a pre-tax salary reduction. Some political subdivisions and school divisions elected to phase in the required 5% member contribution but all employees will be paying the full 5% by July 1, 2016. -37- HYBRID RETIREMENT PLAN *Non-Eligible Members Some employees are not eligible to participate in the Hybrid Retirement Plan. They include: • Political subdivision employees who are covered by enhanced benefits for hazardous duty employees. Those employees eligible for an optional retirement plan (ORP) must elect the ORP plan or the Hybrid Retirement Plan. If these members have prior service under Plan 1 or Plan 2, they are not eligible to elect the Hybrid Retirement Plan and must select Plan 1 or Plan 2 (as applicable) or ORP. Retirement Contributions A member's retirement benefit is funded through mandatory and voluntary contributions made by the member and the employer to both the defined benefit and the defined contribution components of the plan. Mandatory contributions are based on a percentage of the employee's creditable compensation and are I required from both the member I and the employer. Additionally, I members may choose to make voluntary contributions to the defined contribution component of the plan, and the employer is required to match those voluntary contributions according to specified percentages. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8:Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Hybrid Opt-in Election (Cont.) ‘The Hybrid Retirement Plan's effective date for eligible Plan 1 members who opted in was July 1, 2014, If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan. Members who were eligible for an optional retirement plan (ORP) and had prior service under Plan 1 were not eligible to elect the Hybrid Retirement Plan and remain as Plan 1 or ORP. Hybrid Opt-In Election (Cont.) The Hybrid Retirement Plan’s effective date for eligible Plan 2 members who opted in was July 1, 2014. If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Pian. Members who were eligible for an optional retirement plan (ORP) and have prior service under Plan 2 were not eligible to elect the Hybrid Retirement Pian and remain as Pian 2 or ORP. *Non-Eligible Members Some employees are not eligible to participate in the Hybrid Retirement Plan. They inciude: + Political subdivision ‘employees who are covered by enhanced benefits for hazardous duty employees. Those employees eligible for an optional retirement plan (ORP) must elect the ORP plan or the Hybrid Retirement Plan. if these members have prior service under Plan 1 or Plan 2, they are not eligible to elect the Hybrid Retirement Plan and must select Pian 1 or Plan 2 (as applicable) or ORP, Retirement Contributions Employees contribute 5% of their compensation each month to their member contribution account through a pre-tax salary reduction. Some political subdivisions and school divisions elected to phase in the required 5% member contribution but alt employees will be paying the full 58 by July 1, 2016. Member contributions are tax-deferred until they are withdrawn as part of a retirement benefit or as a refund. The employer makes a separate actuarially determined contribution to VRS for atl covered employees. VRS invests. both member and employer contributions to provide funding for the future benefit payment. Retirement Contributions Employees contribute 5% of their ‘compensation each month to their member contribution account through a pre-tax salary reduction. Some political subdivisions and school divisions elected to phase in the required 5% member contribution but all employees will be paying the full 5% by July 1, 2016, Retirement Contributions A member's retirement benefit fs funded through mandatory and voluntary contributions made by the member and the employer to both the defined benefit and the defined contribution components. of the plan. Mandatory contributions are based on a percentage of the employee’s creditabie compensation and are required from both the member and the employer. Additionally, members may choose to make voluntary contributions to the defined contribution component of the plan, and the employer is required to match those voluntary contributions according to specified percentages. “37 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) 1---~~~~~~~~~~ ~~~~~~~~-~~~~~~~~_, PLAN 1 Creditable Service Creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member's total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit. PLAN 2 Creditable Service Same as Plan 1. -38- HYBRID RETIREMENT PLAN Creditable Service Defined Benefit Component: Under the defined benefit component of the plan, creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member's total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit. Defined Contributions Component: Under the defined contribution component, creditable service is used to determine vesting for the employer contribution portion of the plan. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Creditable Service Creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member’s totat creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit. Creditable Service Same as Plan 1. Creditable Service Defined Benefit Componen Under the defined benefit component of the pian, creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member's total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit. Defined Contributions component: Under the defined contribution component, creditable service is used to determine vesting for the employer contribution portion of the plan. 38+ COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Vesting Vesting Vesting Vesting is the minimum length Same as Plan 1. Defined Benefit Component: of service a member needs to Defined benefit vesting is the qualify for a future retirement minimum length of service a benefit. Members become member needs to qualify for a vested when they have at least future retirement benefit. five years (60 months) of Members are vested under the creditable service. Vesting defined benefit component of means members are eligible to the Hybrid Retirement Plan qualify for retirement if they when they reach five years (60 meet the age and service months) of creditable service. requirements for their plan. Plan 1 or Plan 2 members with Members also must be vested to at least five years (60 months) receive a full refund of their of creditable service who opted member contribution account into the Hybrid Retirement Plan balance if they leave remain vested in the defined employment and request a benefit component. refund. Defined Contributions Members are always 100% Component: vested in the contributions that Defined contribution vesting they make. refers to the minimum length of service a member needs to be eligible to withdraw the i employer contributions from the 1 defined contribution component of the plan. Members are always 100% vested in the contributions that they make. ---· -· -39- COUNTY OF RUSSELL, VIRGINIA NOTES 70 FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Vesting Vesting is the minimum length of service a member needs to qualify for a future retirement benefit. Members become vested when they have at least five years (60 months) of creditable service. Vesting means members are eligible to qualify for retirement if they meet the age and service requirements for thefr plan. Members also must be vested to receive a full refund of their member contribution account balance if they leave employment and request a refund. Members are always 100% vested in the contributions that, they make. Vesting Same as Plan 1. Vesting Defined Benefit Component: Defined benefit vesting is the minimum length of service a member needs to qualify for a future retirement benefit. Members are vested under the defined benefit component of the Hybrid Retirement Plan when they reach five years (60 months) of creditable service. Plan 1 or Plan 2 members with at least five years (60 months) of creditable service who opted into the Hybrid Retirement Plan remain vested in the defined benefit component. Defined Contributions component: Defined contribution vesting refers to the minimum length of service a member needs to be eligible to withdraw the employer contributions from the defined contribution component of the plan. ‘Members are always 100% vested in the contributions that they make. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 Vesting (Cont.) Calculating the Benefit The Basic Benefit is calculated based on a formula using the member's average final compensation, a retirement multiplier and total service credit at retirement. It is one of the benefit payout options available to a member at retirement. PLAN 2 Vesting (Cont.) Calculating the Benefit See definition under Plan 1. -40- HYBRID RETIREMENT PLAN Vesting (Cont.) Defined Contributions Component: (Cont.) Upon retirement or leaving covered employment, a member is eligible to withdraw a percentage of employer contributions to the defined contribution component of the plan, based on service. • After two years, a member is 50% vested and may withdraw 50% of employer contributions. • After three years, a member is 75% vested and may withdraw 75% of employer contributions. • After four or more years, a member is 100% vested and may withdraw 100% of employer contributions. Distribution is not required by law until age 70Y,. Calculating the Benefit Defined Benefit Component: See definition under Plan 1 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Vesting (Cont.) Vesting (Cont.) Vesting (Cont.) Defined Contributions Component: (Cont.) Upon retirement or leaving covered employment, a member is eligible to withdraw a percentage of employer contributions to the defined contribution component of the plan, based on service. + After two years, a member is 50% vested and may withdraw 50% of employer contributions. + After three years, a member is 75% vested and may withdraw 75% of employer contributions. + After four or more years, a member is 100% vested and may withdraw 100% of employer contributions. Distribution is not required by law until age 7074. Calculating the Benefit The Basic Benefit is calculated based on a formula using the member's average final compensation, a retirement multiplier and total service credit at retirement. It is one of the benefit payout options available to a member at retirement. Calculating the Benefit See definition under Plan 1. Calculating the Benefit Defined Benefit Component See definition under Plan 1 -40- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) -----i I PLAN 1 I PLAN 2 HYBRID RETIREMENT PLAN l Calculating the Benefit (Cont.) Calculating the Benefit Calculating the Benefit (Cont.) An early retirement reduction (Cont.) Defined Contribution ComQonent: factor is applied to the Basic The benefit is based on Benefit if the member retires contributions made by the member with a reduced retirement and any matching contributions benefit or selects a benefit made by the employer, plus net payout option other than the investment earnings on those Basic Benefit. contributions. Average Final Compensation Average Final Compensation Average Final Compensation A member's average final A member's average final Same as Plan 2. It is used in the compensation is the average of compensation is the average retirement formula for the defined the 36 consecutive months of of their 60 consecutive benefit component of the plan. highest compensation as a months of highest covered employee. compensation as a covered employee. -- Service Retirement Multiplier Service Retirement Service Retirement Multiplier VRS: The retirement multiplier Multiplier Defined Benefit ComQonent: is a factor used in the formula VRS: Same as Plan 1 for I VRS: The retirement multiplier for to determine a final retirement service earned, purchased or the defined benefit component is benefit. The retirement granted prior to January 1, 1.00%. multiplier for non-hazardous 2013. For non-hazardous duty duty members is 1. 70%. members the retirement For members who opted into the multiplier is 1.65% for Hybrid Retirement Plan from Plan Sheriffs and regional jail creditable service earned, 1 or Plan 2, the applicable superintendents: The purchased or granted on or multipliers for those plans will be retirement multiplier for after January 1, 2013. used to calculate the retirement sheriffs and regional jail benefit for service credited in superintendents is 1.85%. Sheriffs and regional jail those plans. superintendents: Same as Political subdivision hazardous Plan 1. Sheriffs and regional jail duty employees: The superintendents: Not applicable. retirement multiplier of eligible Political subdivision political subdivision hazardous hazardous duty employees: Political subdivision hazardous duty employees other than Same as Plan 1 . duty employees: Not applicable. sheriffs and regional jail superintendents is 1. 70% or Defined Contribution ComQonent: 1.85% as elected by the Not applicable. employer. - -41- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Calculating the Benefit (Cont. ) An early retirement reduction factor is applied to the Basic Benefit if the member retires with a reduced retirement benefit or selects a benefit payout option other than the Basic Benefit. Calculating the Benefit (Cont.) Calculating the Benefit (Cont.) Defined Contribution Component: ‘The benefit is based on contributions made by the member and any matching contributions made by the employer, plus net investment earnings on those contributions. Average Final Compensation ‘A member's average final ‘compensation is the average of the 36 consecutive months of highest compensation as a covered employee. Average Final Compensation A member's average final compensation is the average of their 60 consecutive months of highest compensation as a covered employee. Average Final Compensation Same as Plan 2. It is used in the retirement formula for the defined benefit component of the plan. Service Retirement Multiplier VRS: The retirement multiplier is a factor used in the formula to determine a final retirement benefit. The retirement multiplier for non-hazardous duty members is 1.70%. Sheriffs and regional jail superintendents: The retirement multiplier for sheriffs and regional jail superintendents is 1.85%. Political subdivision hazardous duty employees: The retirement multiplier of eligible political subdivision hazardous duty employees other than sheriffs and regional jail superintendents is 1.70% or 1.85% as elected by the employer. Service Retirement Multiplier VRS: Same as Plan 1 for service earned, purchased or | granted prior to January 1, 2013, For non-hazardous duty members the retirement multiplier is 1.65% for creditable service earned, purchased or granted on or after January 1, 2013. Sheriffs and regional jail superintendents: Same as Plan 1. Political subdivision hazardous duty employees: Same as Plan 1. Service Retirement Multiplier Defined Benefit Component: VRS: The retirement multiplier for the defined benefit component is 1.00%. For members who opted into the Hybrid Retirement Plan from Plan 1 or Plan 2, the applicable multipliers for those plans will be used to calculate the retirement benefit for service credited in those plans. Sheriffs and regional jail superintendents: Not applicable. Political subdivision hazardous duty employees: Not applicable. Defined Contribution Component: Not applicable. “At. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Normal Retirement Age Normal Retirement Age Normal Retirement Age YRS: Age 65. YRS: Normal Social Security Defined Benefit Com12onent: Political subdivisions retirement age. YRS: Same as Plan 2. hazardous duty employees: Political subdivisions Political subdivisions hazardous Age 60. hazardous duty employees: duty employees: Not applicable. Same as Plan 1. Defined Contribution Com12onent: Members are eligible to receive distributions upon leaving employment, subject to restrictions. Earliest Unreduced Retirement Earliest Unreduced Earliest Unreduced Retirement Eligibility Retirement Eligibility Eligibility YRS: Age 65 with at least five YRS: Normal Social Security Defined Benefit Com12onent: years (60 months) of creditable retirement age with at least YRS: Normal Social Security service or at age 50 with at five years (60 months) of retirement age and have at least least 30 years of creditable creditable service or when five years (60 months) of service. their age and service equal creditable service or when their 90. age and service equal 90. Political subdivisions hazardous duty employees: Political subdivisions Political subdivisions hazardous Age 60 with at least five years hazardous duty employees: duty employees: Not applicable. of creditable service or age 50 Same as Plan 1 . with at least 25 years of Defined Contribution Com12onent: creditable service. Members are eligible to receive distributions upon leaving employment, subject to restrictions. Earliest Reduced Retirement Earliest Reduced Earliest Reduced Retirement Eligibility Retirement Eligibility Eligibility YRS: Age 55 with at least five YRS: Age 60 with at least five Defined Benefit Com12onent: years (60 months) of creditable years (60 months) of YRS: Members may retire with a service or age 50 with at least creditable service. reduced benefit as early as age 60 10 years of creditable service. with at least five years (60 months) of creditable service. -~ -42- ' ' I ' COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN | Normal Retirement Age VRS: Age 65. Political subdivisions hazardous duty employees: Age 60. Normal Retirement Age VRS: Normal Social Security retirement age. Political subdivisions hazardous duty employees: Same as Plan 1. Normal Retirement Age Defined Benefit Component: VRS: Same as Plan 2. Political subdivisions hazardous duty employees: Not applicable. Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions. Earliest Unreduced Retirement Eligibility VRS: Age 65 with at least five years (60 months) of creditable service or at age 50 with at least 30 years of creditable service. Political subdivisions hazardous duty employees: Age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service. Earliest Unreduced Retirement Eligibility VRS: Normal Social Security retirement age with at least five years (60 months) of | creditable service or when | their age and service equat 190. | Political subdivisions | hazardous duty employees: ‘Same as Pian 1. Earliest Unreduced Retirement Eligibility Defined Benefit Component: VRS: Normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90. Political subdivisions hazardous duty employees: Not applicable. Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions. Earliest Reduced Retirement Eligibitity VRS: Age 55 with at least five years (60 months) of creditable service or age 50 with at least 40 years of creditable service. | Earliest Reduced | Retirement Eligibility | VRS: Age 60 with at least five | years (60 months) of | creditable service. Earliest Reduced Retirement Eligibility Defined Benefit Component: VRS: Members may retire with a reduced benefit as early as age 60 with at least five years (60 months) of creditable service. | “AQ. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) - ·-----~~--·---·---~-- RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN ~- Earliest Reduced Retirement Earliest Reduced Retirement Earliest Reduced Retirement Eligibility (Cont.) Eligibility (Cont.) Eligibility (Cont.) Political subdivisions Political subdivisions Political subdivisions hazardous duty employees: 50 hazardous duty employees: hazardous duty employees: with at least five years of Same as Plan 1 . Not applicable. creditable service_ Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions. ·---·--- Cost-of-Living Adjustment Cost-of-Living Adjustment Cost-of-Living Adjustment (COLA) in Retirement (COLA) in Retirement (COLA) in Retirement The Cost-of-Living Adjustment The Cost-of-Living Adjustment Defined Benefit Component: (COLA) matches the first 3% (COLA) matches the first 2% Same as Plan 2. increase in the Consumer Price increase in the CPl-U and half of Index for all Urban Consumers any additional increase (up to Defined Contribution (CPl-U) and half of any 2%), for a maximum COLA of 3%. Component: additional increase (up to 4%) Not applicable. up to a maximum COLA of 5%. Eligibility: Same as Plan 1 Eligibility: Eligibility: Same as Plan 1 and Plan 2. For members who retire with an unreduced benefit or with a reduced benefit with at least 20 years of creditable service, the COLA will go into effect on July 1 after one full calendar year from the retirement date. For members who retire with a reduced benefit and who have less than 20 years of creditable service, the COLA will go into effect on July 1 after one calendar year following the unreduced retirement eligibility date. -43- ' ' I I COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Earliest Reduced Retirement Eligibility (Cont.) Political subdivisions hazardous duty employees: 50 with at least five years of creditable service. Earliest Reduced Retirement Eligibility (Cont.) Political subdivisions hazardous duty employees: Same as Plan 1. Earliest Reduced Retirement Eligibility (Cont.) Political subdivisions hazardous duty employees: Not applicable. Defined Contribution Members are eligible to receive distributions upon leaving employment, subject to restrictions. Cost-of-Living Adjustment (COLA) in Retirement The Cost-of-Living Adjustment (COLA) matches the first 3% increase in the Consumer Price Index for all Urban Consumers (CPI-U) and haif of any additional increase (up to 4%) up to a maximum COLA of 5%. Eligibility: For members who retire with an unreduced benefit or with a reduced benefit with at least 20 years of creditable service, the COLA will go into effect on July 1 after one full calendar year from the retirement date. For members who retire with a reduced benefit and who have less than 20 years of creditable service, the COLA will go into effect on July 1 after one calendar year following the unreduced retirement eligibility date. Cost-of-Living Adjustment (COLA) in Retirement ‘The Cost-of-Living Adjustment (COLA) matches the first 2% increase in the CPI-U and half of any additional increase (up to 2%), for a maximum COLA of 3%. Eligibility: Same as Plan 1 Cost-of-Living Adjustment {COLA) in Retirement Defined Benefit Component: Same as Plan 2. Defined Contribution Component: Not applicable. Eligibility: Same as Plan 1 and Plan 2. 43. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 Cost-of-Living Adjustment (COLA) in Retirement (Cont.) Exceptions to COLA Effective Dates: The COLA is effective July 1 following one full calendar year (January 1 to December 31) under any of the following circumstances: • The member is within five years of qualifying for an unreduced retirement benefit as of January 1, 2013 . • The member retires on disability. • The member retires directly from short-term or long-term disability under the Virginia Sickness and Disability Program (VSDP). • The member is involuntarily separated from employment for causes other than job performance or misconduct and is eligible to retire under the Workforce Transition Act or the Transitional Benefits Program . • The member dies in service and the member's survivor or beneficiary is eligible for a monthly death-in-service benefit. The COLA will go into effect on July 1 following one full calendar year (January 1 to December 31) from the date the monthly benefit begins. PLAN 2 Cost-of-Living Adjustment (COLA) in Retirement (Cont.) Exceptions to COLA Effective Dates: Same as Plan 1 -44- HYBRID RETIREMENT PLAN Cost-of-Living Adjustment (COLA) in Retirement (Cont.) Exceptions to COLA Effective Dates: Same as Plan 1 and Plan 2. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 1 PLAN 2 HYBRID RETIREMENT PLAN Cost-of-Living Adjustment (COLA) in Retirement (Cont.) Exceptions to COLA Effective Cost-of-Living Adjustment (COLA) in Retirement (Cont.) Exceptions to COLA Effective Cost-of-Living Adjustment (COLA) in Retirement (Cont.) Exceptions to COLA Effective Dates: The COLA is effective July 1 following one full calendar year (January 1 to December 31) under any of the foltowing circumstances: +The member is within five years of quatifying for an unreduced retirement benefit as of January 1, 2013. +The member retires disability. + The member retires directly from short-term or long-term disabitity under the Virginia Sickness and Disability Program (VSDP). + The member is involuntarily separated from employment for causes other than job performance or misconduct and is eligible to retire under the Workforce Transition Act or the Transitional Benefits Program. + The member dies in service and the member's survivor or beneficiary is eligible for a monthly death-in-service benefit. The COLA witl go into effect on July 1 following one full calendar year (January 1 to December 31) from the date the monthly benefit begins. on Dates: ‘Same as Plan 1 Dates: Same as Plan 1 and Plan 2. “Ag. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) RETIREMENT PLAN PROVISIONS (CONTINUED) -··-------· PLAN 1 Disability Coverage Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1. 7% on all service, regardless of when it was earned, purchased or granted. VSDP members are subject to a one-year waiting period before becoming eligible for non-work­ related disability benefits. Purchase of Prior Service Members may be eligible to purchase service from previous public employment, active duty military service, an eligible period of leave or VRS refunded service as creditable service in their plan. Prior creditable service counts toward vesting, eligibility for retirement and the health insurance credit. Only active members are eligible to purchase prior service. When buying service, members must purchase their most recent period of service first. Members also may be eligible to purchase periods of leave without pay. PLAN 2 Disability Coverage Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1.65% on all service, regardless of when it was earned, purchased or granted. VSDP members are subject to a one-year waiting period before becoming eligible for non-work related disability benefits. Purchase of Prior Service Same as Plan 1 . -45· HYBRID RETIREMENT PLAN Disability Coverage Employees of political subdivisions and School divisions (including Plan 1 and Plan 2 opt-ins) participate in the Virginia Local Disability Program (VLDP) unless their local governing body provides an employer·paid comparable program for its members. Hybrid members (including Plan 1 and Plan 2 opt-ins) covered under VLDP are subject to a one-year waiting period before becoming eligible for non-work-related disability benefits. Purchase of Prior Service Defined Benefit Component: Same as Plan 1, with the following exceptions: •Hybrid Retirement Plan members are ineligible for ported service. •The cost for purchasing refunded service is the higher of 4% of creditable compensation or average final compensation. •Plan members have one year from their date of hire or return from leave to purchase all but refunded prior service at approximate normal cost. After that one-year period, the rate for most categories of service will change to actuarial cost. Defined Contribution Component: Not applicable. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) PLAN 1 RETIREMENT PLAN PROVISIONS (CONTINUED) PLAN 2 | Disability Coverage Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1.7% on all service, regardless of when it was earned, purchased or granted. \VSDP members are subject to a one-year waiting period before becoming eligible for non-work- related disability benefits. Disability Coverage ‘Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiptier is 1.65% on alt service, regardless of when it was earned, purchased or granted. VSDP members are subject to a one-year waiting period before becoming eligible for non-work related disability benefits. HYBRID RETIREMENT PLAN Disability Coverage Employees of political subdivisions and School divisions (including Plan 1 and Plan 2 opt-ins) participate in the Virginia Local Disabitity Program (VLDP) unless their local governing body provides an employer-paid comparable program for its members. Hybrid members (including Plan 1 and Plan 2 opt-ins) covered under VLDP are subject to a one-year waiting period before becoming eligible for non-work-related disability benefits. Purchase of Prior Service Members may be eligible to purchase service from previous public employment, active duty military service, an eligible period of leave or VRS refunded service as creditable service in their plan. Prior creditable service counts toward vesting, eligibility for retirement and the health insurance credit. Only active members are eligible to purchase prior service. When buying service, members must purchase their most recent period of service first. Members also may be eligible to purchase periods of leave without pay. Purchase of Prior Service Same as Plan 1. Purchase of Prior Service Defined Benefit Component: Same as Plan 1, with the following exceptions: sHybrid Retirement Plan members are ineligible for ported service. sThe cost for purchasing refunded service is the higher of 4% of creditable compensation or average final compensation. *Plan members have one year from their date of hire or return from leave to purchase all but refunded prior service at approximate normal cost. After that one-year period, the rate for most categories of service will change to actuarial cost. Defined Contribution Component: Not applicable. | -45- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. A copy of the most recent report may be obtained from the VRS website at http:I/www.vareiire.org/ Pdf I Publications/2014-annual·report.pdf or by writing to the System's Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218·2500. Contributions The contribution requirement for active employees is governed by §51.1-145 of the Code of Virginia, as amended, but may be impacted as a result of funding options provided to political subdivisions by the Virginia General Assembly. Employees are required to contribute 5.00% of their compensation toward their retirement. Prior to July 1, 2012, all or part of the 5.00% member contribution may have been assumed by the employer. Beginning July 1, 2012, new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5.00% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee­ paid member contribution. The County's contractually required contribution rate for the year ended June 30, 2015 was 14.84% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2013. 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 $796,636 and $774,220 for the years ended June 30, 2015 and June 30, 2014, respectively. Net Pension Liability At June 30, 2015, the County reported a liability of $5,782,839 for its proportionate share of the net pension liability. The County's net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2013, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2014. 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, 2014 and 2013 was used as a basis for allocation to determine the County's proportionate share of the net pension liability. At June 30, 2014 and 2013, the County's proportion was 99.1179%. The remainder of this page is left blank intentionally. -46- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Plan Description (Continued) The System issues a publicly available comprehensive annuat financial report that includes financial statements and required supplementary information for VRS. A copy of the most recent report may be obtained from the VRS website at http://www.varetire.ore/Pat /Publications/2014-annual-report pdf or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500. Contributions The contribution requirement for active employees is governed by §51.1-145 of the Code of Virginia, as amended, but may be impacted as a result of funding options provided to political subdivisions by the Virginia General Assembly. Employees are required to contribute 5.00% of their compensation toward their retirement. Prior to July 1, 2012, all or part of the 5.00% member contribution may have been assumed by the employer. Beginning July 1, 2012, new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5.00% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee- paid member contribution. ‘The County’s contractually required contribution rate for the year ended June 30, 2015 was 14.84% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2013. 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 ability. Contributions to the pension plan from the County were $796,636 and $774,220 for the years ended June 30, 2015 and June 30, 2014, respectively. Net Pension Liability ‘At June 30, 2015, the County reported a liability of $5,782,839 for its proportionate share of the net pension liability. The County’s net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension tiabitity was determined by an actuarial valuation performed as of June 30, 2013, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2014. In order to allocate the net pension liability to ali 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, 2014 and 2013 was sed as a basis for allocation to determine the County’s proportionate share of the net pension liabitity. ‘At June 30, 2014 and 2013, the County’s proportion was 99.1179%. The remainder of this page is left blank intentionally. Ab COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Actuarial Assumptions - General Employees The total pension liability for General Employees in Russell County's Retirement Plan and the Russell County Public Schools Retirement Plan was based on an actuarial valuation as of June 30, 2013, 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, 2014. Inflation Salary increases, including inflation Investment rate of return 2.5% 3.5% - 5.35% 7.0%, net of pension plan investment expense, including inflation• •Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long·term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities. Mortality rates: 14% of deaths are assumed to be service related Largest 10 - Non-LEOS: Pre· Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 4 years and females set back 2 years Post-Retirement: RP· 2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement All Others (Non 10 Largest) - Non-LEOS: Pre-Retirement: RP·2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 4 years and females set back 2 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year -47· COUNTY OF RUSSELL, VIRGINIA, NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 8-Pension Plan: (Continued) Actuarial Assumptions - General Employees The total pension liability for General Employees in Russell County's Retirement Plan and the Russell County Public Schools Retirement Plan was based on an actuarial valuation as of June 30, 2013, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolied forward to the measurement date of June 30, 2014. Inflation 2.5% Salary increases, inciuding infiation 3.5% - 5.35% Investment rate of return 7.0%, net of pension plan investment expense, including inflation* * Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities. Mortality rates: 14% of deaths are assumed to be service related Largest 10 - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with mates set forward 4 years and females set back 2 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement Ail Others (Non 10 Largest) - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with mates set forward 4 years and females set back 2 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year -4T- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Actuarial Assumptions - General Employees (Continued) Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows: Largest 10 - Non-LEOS: Update mortality table Decrease in rates of service retirement Decrease in rates of disability retirement Reduce rates of salary increase by 0.25% per year All Others (Non 10 Largest) - Non-LEOS: - Update mortality table - Decrease in rates of service retirement - Decrease in rates of disability retirement - Reduce rates of salary increase by 0.25% per year Actuarial Assumptions - Public Safety Employees The total pension liability for Public Safety employees in Russell County's Retirement Plan was based on an actuarial valuation as of June 30, 2013, 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, 2014. Inflation Salary increases, including inflation Investment rate of return 2.5% 3.5% - 4.75% 7.0%, net of pension plan investment expense, including inflation* • Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7 .0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities. ·48- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Actuarial Assumptions - General Employees (Continued) Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with mates set back 3 years and no provision for future mortality improvement ‘The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows: Largest 10 - Non-LEOS: - Update mortality table - Decrease in rates of service retirement - Decrease in rates of disability retirement + Reduce rates of salary increase by 0.25% per year All Others (Non 10 Largest) - Non-LEOS: - Update mortality table - Decrease in rates of service retirement - Decrease in rates of disability retirement - Reduce rates of salary increase by 0.25% per year Actuarial Assumptions - Public Safety Employees The total pension liability for Public Safety employees in Russell County’s Retirement Plan was based on an actuarial valuation as of June 30, 2013, 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, 2014. Inflation 2.5% Salary increases, including inflation 3.5% - 4.75% Investment rate of return 7.0%, net of pension plan investment expense, including inflation* * Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities. -48- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Actuarial Assumptions - Public Safety Employees (Continued) Mortality rates: 60% of deaths are assumed to be service related Largest 10 - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 2 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement All Others (Non 10 Largest) - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 2 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows: Largest 10 - LEOS: Update mortality table - Decrease in male rates of disability All Others (Non 1 O Largest) - LEOS: - Update mortality table - Adjustments to rates of service retirement for females - Increase in rates of withdrawal - Decrease in male and female rates of disability -49- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Actuarial Assumptions - Public Safety Employees (Continued) Mortality rates: 60% of deaths are assumed to be service related Largest 10 - Non-LEQS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 2 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year Post-Disablement: RP-2000 Disability Life Mortatity Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement All Others (Non 10 Largest) - Non-LEOS: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with mates set back 2 years and females set back 2 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set forward 1 year Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows: Largest 10 - LEOS: + Update mortality table ~ Decrease in male rates of disability All Others (Non 10 Largest) - LEOS: - Update mortality table - Adjustments to rates of service retirement for females - Increase in rates of withdrawal - Decrease in male and female rates of disability -49- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Long-Term Expected Rate of Return The long-term expected rate of return on pension System investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension System investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the following table: Weighted Arithmetic Average Long-Term Long-Term Target Expected Expected Asset Class (Strategy) Allocation Rate of Return Rate of Return U.S. Equity 19.50% 6.46% 1.26% Developed Non U.S. Equity 16.50% 6.28% 1.04% Emerging Market Equity 6.00% 10.00% 0.60% Fixed Income 15.00% 0.09% 0.01% Emerging Debt 3.00% 3.51% 0.11% Rate Sensitive Credit 4.50% 3.51% 0.16% Non Rate Sensitive Credit 4.50% 5.00% 0.23% Convertibles 3.00% 4.81% 0.14% Public Real Estate 2.25% 6.12% 0.14% Private Real Estate 12.75% 7.10% 0.91% Private Equity 12.00% 10.41% 1.25% Cash 1.00% -1. 50% -0.02% Total 100.00% 5.83% Inflation 2.50% 'Expected arithmetic nominal return 8.33% • Using stochastic projection results provides an expected range of real rates of return over various time horizons. Looking at one year results produces an expected real return of 8.33% but also has a high standard deviation, which means there is high volatility. Over larger time horizons the volatility declines significantly and provides a median return of 7.44%, including expected inflation of 2.50%. The remainder of this page is left blank intentionally. -50- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015, Note 8-Pension Pian: (Continued) Long-Term Expected Rate of Return The long-term expected rate of return on pension System investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension System investment expense and inflation) are developed for each major asset class, These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the following table: Weighted Arithmetic Average Long-Term Long-Term Target Expected Expected Asset Class (Strategy) Allocation _Rate of Return _Rate of Return U.S. Equity 19.50% 6.46% 1.26% Developed Non U.S. Equity 16.50% 6.28% 1.04% Emerging Market Equity 6.00% 10.00% 0.60% Fixed Income 15.00% 0.09% 0.01% Emerging Debt 3.00% 3.51% 0.11% Rate Sensitive Credit 4.50% 3.51% 0.168 Non Rate Sensitive Credit 4.50% 5.00% 0.23% Convertibles 3.00% 4.81% 0.14% Public Real Estate 2.25% 6.12% 0.14% Private Real Estate 12.75% 7.10% 0.91% Private Equity 12.00% 10.41% 1.25% Cash 1.50% 02% Total 5.83% Inflation 2.50% 8.33% * Using stochastic projection results provides an expected range of real rates of return over various time horizons. Looking at one year results produces an expected real return of 8.33% but also has a high standard deviation, which means there is high volatility. Over larger time horizons the volatitity declines “Expected arithmetic nominal return significantly and provides a median return of 7.44%, including expected inflation of 2.50%. The remainder of this page is left blank intentionally. -50- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Discount Rate The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that System member contributions will be made per the YRS 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 YRS Board of Trustees and the member rate. Through the fiscal year ending June 30, 2018, the rate contributed by the employer for the Russell County Retirement Plan, Russell County School Board Retirement Plan, and the YRS Teacher Retirement Plan will be subject to the portion of the YRS Board­ certified rates that are funded by the Virginia General Assembly. From July 1, 2018 on, participating employers are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore the long-term expected rate of return was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the County's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents County's proportionate share of the net pension liability using the discount rate of 7 .00%, as well as what the County's proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate: County's proportionate share of the County Retirement Plan Net Pension Liability s (6.00%) 9,599,012 s Rate (7.00%) 5, 782,838 s The remainder of this page is left blank intentionally. -51- (8.00%) 2,618,256 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Discount Rate The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that System member contributions will be made per the VRS Statutes and the employer contributions will be made in accordance with the VRS funding policy at rates equal to the difference between actuarially determined contribution rates adopted by the VRS Board of Trustees and the member rate. Through the fiscal year ending June 30, 2018, the rate contributed by the employer for the Russell County Retirement Plan, Russell County School Board Retirement Plan, and the VRS Teacher Retirement Plan will be subject to the portion of the VRS Board- certified rates that are funded by the Virginia General Assembly. From July 1, 2018 on, participating employers are assumed to contribute 100% of the actuariatly 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 liabitity. Sensitivity of the County’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents County’s proportionate share of the net pension liability using the discount rate of 7.00%, as well as what the County's proportionate share of the net pension Liability woutd be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate: Rate (6.00%) (7.00%) (8.00%) County's proportionate share of the County Retirement Plan Net Pension Liability $ 9,599,012 $ 5,782,838 $ 2,618,256 The remainder of this page is left blank intentionally. “St COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2015, the County recognized pension expense of $509,647. At June 30, 2015, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Primary Government Deferred Deferred Outflows of Inflows of Resources Resources Net difference between projected and actual earnings on pension plan investments $ $ 1,463,315 Employer contributions subsequent to the measurement date 796,636 Total $ 796,636 $ 1,463,315 $796,636 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 year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended June 30 2016 2017 2018 2019 Thereafter s Primary Government (365,829) (365,829) (365,829) (365,828) The remainder of this page is left blank intentionally. -52· COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 8:Pension Plan: (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2015, the County recognized pension expense of $509,647. At June 30, 2015, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Primary Government. “Deferred Deferred Outflows of Inflows of Resources _ Resources Net difference between projected and actual earnings on pension plan investments $ - $1,463,315 Employer contributions subsequent to the measurement date 796,636 Total $__796,636_$__ 1,463,315 $796,636 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 year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Primary Year ended June 30 Government 2016 8 (365,829) 2017 (365,829) 2018 (365,829) 2019 (365,828) Thereafter : The remainder of this page is left blank intentionally. “52+ COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (nonprofessional) Plan Description Additional information related to the plan description, plan contribution requirements, actuarial assumptions, long-term expected rate of return, and discount rate is included in the first section of this note. Employees Covered by Benefit Terms As of the June 30, 2013 actuarial valuation, the following employees were covered by the benefit terms of the pension plan: Inactive members or their beneficiaries currently receiving benefits Inactive members: Vested inactive members Non-vested inactive members Inactive members active elsewhere in VRS Total inactive members Active members Total covered employees Contributions Component Unit School Board Nonprofessional 137 7 14 10 31 130 298 The Component Unit School Board's contractually required contribution rate for nonprofessional employees for the year ended June 30, 2015 was 17.55% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2013. 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 $427,268 and $423,435 for the years ended June 30, 2015 and June 30, 2014, respectively. -53- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit Schoo! Board (nonprofessional) Plan Description Additional information related to the plan description, plan contribution requirements, actuarial assumptions, long-term expected rate of return, and discount rate is included in the first section of this note. Employees Covered by Benefit Terms As of the June 30, 2013 actuarial valuation, the following employees were covered by the benefit terms of the pension plan: Component Unit School Board Nonprofessional_ Inactive members or their beneficiaries currently receiving benefits 137 Inactive members: Vested inactive members 7 Non-vested inactive members 14 Inactive members active elsewhere in VRS 10 Total inactive members 31 Active members 130 Total covered employees 298 Contributions The Component Unit School Board’s contractually required contribution rate for nonprofessional ‘employees for the year ended June 30, 2015 was 17.55% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2013. 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 $427,268 and $423,435 for the years ended June 30, 2015 and June 30, 2014, respectively. 53 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (nonprofessional) (Continued) Net Pension Liability The Component Unit School Board's (nonprofessional) net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2013, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2014. Changes in Net Pension Liability Balances at June 30, 2013 Changes for the year: Service cost Interest Differences between expected and actual experience Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expenses Other changes Net changes Balances at June 30, 2014 Component Unit-School Board (nonprofessional) Increase (Decrease) Total Plan Net Pension Liability (a) Fiduciary Net Position (b) Pension Liability (a) - (b) s 16,485,081 s ----'--'--- 10,635,935 s 5,849, 146 ----'--'--- s 263, 958 s 1,116,022 (1,083,833) 423,435 130,388 1,629,758 (1,083,833) (9, 166) 86 1,090,668 s~~~-2_96~,_14_7_S~~--'~-'--- 11, 726,603 s 16,781,228 s ~~~==~~ ~~~====~ s s s 263, 958 1, 116,022 (423,435) (130,388) (1,629,758) 9, 166 (86) (794,521) 5,054,625 The remainder of this page is Left blank intentionally. -54- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (nonprofessional) (Continued) Net Pension Liability The Component Unit Schoot Board’s (nonprofessional) net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2013, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2014. Changes in Net Pension Liability Component Unit-School Board (nonprofessional) Increase (Decrease) Total Plan Net Pension Fiduciary Pension Liabitity Net Position Liability (a) b) (a) (0) Balances at June 30, 2013 $ 16,485,081_ $ 10,635,935 $ 5,849,146 Changes for the year: Service cost $ 263,958 § - 263,958 Interest 1,116,022 - 1,116,022 Differences between expected and actual experience : : : Contributions - employer : 423,435 (423,435) Contributions - employee : 130,388 (130,388) Net investment income : 1,629,758 (1,629,758) Benefit payments, including refunds of employee contributions (1,083,833) (1,083,833) : Administrative expenses : (9,166) 9,166 Other changes : 86 (86) Net changes $ 26147 $ 7,090,668. $ (794,521) Balances at June 30, 2014 $ 16,781,228 § 11,726,603 $ 5,054,625, The remainder of this page is left blank intentionally. 5 4- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (nonprofessional) (Continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Component Unit School Board (nonprofessional) using the discount rate of 7.00%, as well as what the Component Unit School Board's (nonprofessional) net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate: Component Unit School Board (nonprofessional) Net Pension Liability (Asset) (6.00%) 6,902,490 Rate (7.00%) (8.00%) 5,054,625 3,493,014 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2015, the Component Unit School Board (nonprofessional) recognized pension expense of $352,203. At June 30, 2015, the Component Unit School Board (nonprofessional) reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net difference between projected and actual earnings on pension plan investments Employer contributions subsequent to the measurement date Total s s Component Unit School Board (nonprofessional) Deferred Deferred Outflows of Inflows of Resources Resources s 723,289 427,268 427,268 s 723,289 The remainder of this page is left blank intentionally. -55· COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (nonprofessional) (Continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Component Unit School Board (nonprofessional) using the discount rate of 7.00%, as well as what the Component Unit School Board’s (nonprofessional) net pension liability would be if it were calculated using a discount rate that is one percentage point tower (6.00%) or one percentage point higher (8.00%) than the current rate: Rate (6.00%) (7.00%) 6.00%) Component Unit Schoot Board (nonprofessional) Net Pension Liability (Asset) 6,902,490 5,054,625 3,493,014 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2015, the Component Unit School Board (nonprofessional) recognized pension expense of $352,203. At June 30, 2015, the Component Unit Schoo! Board (nonprofessional) reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Component Unit School Board (nonprofessional) Deferred Deferred Outflows of Inflows of Resources _ Resources Net difference between projected and actual ‘earnings on pension plan investments $ > $723,289 Employer contributions subsequent to the measurement date 427,268 Total $___427,268 $___723,289 The remainder of this page is left blank intentionally. “55. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (nonprofessional) (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) $427,268 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 year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended June 30 2016 2017 2018 2019 Thereafter Component Unit School Board (professional) Plan Description s Component Unit School Board (nonprofessional) (180,822) (180,822) (180,822) (180,823) Additional information related to the plan description, plan contribution requirements, long-term expected rate of return, and discount rate is included in the first section of this note. Contributions Each School Division's contractually required contribution rate for the year ended June 30, 2015 was 14. 50% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2013. The actuarial rate for the Teacher Retirement Plan was 18.20%. 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. Based on the provisions of §51.1-145 of the Code of Virginia, as amended the contributions were funded at 79.69% of the actuarial rate for the year ended June 30, 2015. Contributions to the pension plan from the School Board were $2,509,000 and $1, 991,484 forthe years ended June 30, 2015 and June 30, 2014, respectively. -56- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (nonprofessional) (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) $427,268 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 year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Component Unit School Board Year ended June 30 (nonprofessional) 2016 $ (180,822) 2017 (180,822) 2018 (180,822) 2019 (180,823) Thereafter : Component Unit Schoo! Board (professional Plan Description Additional information related to the plan description, plan contribution requirements, long-term expected rate of return, and discount rate is included in the first section of this note. Contributions Each School Division's contractually required contribution rate for the year ended June 30, 2015 was 14.50% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2013. The actuarial rate for the Teacher Retirement Plan was 18.20%. 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. Based on the provisions of 851.1-145 of the Code of Virginia, as amended the contributions were funded at 79.69% of the actuarial rate for the year ended June 30, 2015. Contributions to the pension plan from the School Board were $2,509,000 and $1,991,484 for the years ended June 30, 2015 and June 30, 2014, respectively. -56- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (professional) (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the school division reported a liability of $28,229,000 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2014 and the total pension liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. The school division's proportion of the Net Pension Liability was based on the school division's actuarially determined employer contributions to the pension plan for the year ended June 30, 2014 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2014, the school division's proportion was 0.23360% as compared to 0.24350% at June 30, 2013. For the year ended June 30, 2015, the school division recognized pension expense of $1, 986,000. Since there was a change in proportionate share between June 30, 2013 and June 30, 2014, 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, 2015, the school division reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources Change in assumptions Net difference between projected and actual earnings on pension plan investments Employer contributions subsequent to the measurement date Total s s Deferred Outflows of Resources 2,509,000 s Deferred Inflows of Resources 1,117,000 4, 190,000 2,509,000 s 5,307,000 ========= The remainder of this page is left blank intentionally. -57- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (professional) (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred inflows of Resources Related to Pensions ‘At June 30, 2015, the school division reported a liability of $28,229,000 for its proportionate share of the Net Pension Liability. The Net Pension Liability was measured as of June 30, 2014 and the total pension liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. The school division's proportion of the Net Pension Liability was based on the school division’s actuarially determined employer contributions to the pension plan for the year ended June 30, 2014 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2014, the school division’s proportion was 0.23360% as compared to 0.24350% at June 30, 2013. For the year ended June 30, 2015, the school division recognized pension expense of $1,986,000. Since there was a change in proportionate share between June 30, 2013 and June 30, 2014, 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, 2015, 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 ‘Change in assumptions $ oy 1,117,000 Net difference between projected and actual earnings on pension plan investments : 4,190,000 Employer contributions subsequent to the measurement date 2,509,000 : Total $ 2,509,000_$ 5,307,000 The remainder of this page is left blank intentionally. “57 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (professional) (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions $2,509,000 reported as deferred outflows of resources related to pensions resulting from the school division's contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Actuarial Assumptions Year ended June 30 2016 2017 2018 2019 Thereafter s (1,294,000) (1,294,000) (1,294,000) (1,294,000) (131,000) The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of June 30, 2013, 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, 2014. Inflation Salary increases, including inflation Investment rate of return 2.5% 3.5%" 5.95% 7. 0%, net of pension plan investment expense, including inflation* *Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7 .0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long·term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities. The remainder of this page is left blank intentionaUy. ·58- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (professional) (Continued Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions $2,509,000 reported as deferred outflows of resources related to pensions resulting from the school Givision’s contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as. follows: Year ended June 30 2016 $ (4,294,000) 2017 (1,294,000) 2018 (1,294,000) 2019 (1,294,000) Thereafter (131,000) Actuarial Assumptions The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation as of June 30, 2013, 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, 2014. Inflation 2.5% Salary increases, including inflation 3.5% - 5.95% Investment rate of return 7.0%, net of pension plan investment expense, including inflation* * Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities. The remainder of this page is left blank intentionally. “58° COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (professional) (Continued) Mortality rates: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 3 years and females set back 5 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 3 years Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 1 year and no provision for future mortality improvement The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows: · Update mortality table · Adjustments to the rates of service retirement · Decrease in rates of withdrawals for 3 through 9 years of service - Decrease in rates of disability · Reduce rates of salary increase by 0.25% per year Sensitivity of the School Division's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the school division's proportionate share of the net pension liability using the discount rate of 7 .00%, as well as what the school division's proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate: School division's proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability (6.00%) 41,453,000 -59- Rate (7.00%) (8.00%) 28,229,000 17,343,000 COUNTY OF RUSSELL, VIRGINIA NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8:Pension Plan: (Continued) Component Unit School Board (professional) (Continued) Mortality rates: Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set back 3 years and females set back 5 years Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with males set back 2 years and females set back 3 years Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 1 year and no provision for future mortality improvement The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows: - Update mortality table - Adjustments to the rates of service retirement + Decrease in rates of withdrawals for 3 through 9 years of service - Decrease in rates of disability ~ Reduce rates of salary increase by 0.25% per year Sensitivity of the School Division’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the school division's proportionate share of the net pension liability using the discount rate of 7.00%, as well as what the school division’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate: Rate (6.00%) (7.00%) (6.00%) School division's proportionate share of the VRS Teacher Employee Retirement Plan Net Pension Liability 41,453,000 28,229,000 17,343,000 -59- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (professional) (Continued) Pension Plan Fiduciary Net Position Detailed information about the VRS Teacher Retirement Plan's Fiduciary Net Position is available in the separately issued VRS 2014 Comprehensive Annual Financial Report (CAFR). A copy of the 2014 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf /Publications/2014·annual­ report.pdf, or by writing to the System's Chief Financial Officer at P .0. Box 2500, Richmond, VA, 23218- 2500. Note 9-Capital Assets: Capital asset activity for the year ended June 30, 2015 was as follows: Primary Government: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets, not being depreciated: Land $ 568,695 $ - $ $ 568,695 Capital assets, being depreciated: Buildings and improvements $ 26,814,300 $ 102,316 $ (2,035,501) $ 24,881,115 Machinery and equipment 4,114,985 458,562 (295,845) 4,277,702 Total capital assets being depreciated $ 30,929,285 $ 560,878 $ (2,331,346) $ 29,158,817 Accumulated depreciation: Buildings and improvements $ (11,726,337) $ (594,845) $ 1,313,801 $ (11,007,381) Machinery and equipment (2,622,756) (299,310) 189,565 (2,732,501) Total accumulated depreciation $ (14,349,093) $ (894, 155) $ 1,503,366 $ (13,739,882) Total capital assets being depreciated, net $ 16,580, 192 $ (333,277) $ (827,980) $ 15,418,935 Governmental activities capital assets, net $ 17, 148,887 $ (333,277) $ (827,980) $ 15,987,630 The remainder of this page left blank intentionally. -60- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8-Pension Plan: (Continued) Component Unit School Board (professional) (Continued) Pension Plan Fiduciary Net Position Detailed information about the VRS Teacher Retirement Plan’s Fiduciary Net Position is available in the separately issued VRS 2014 Comprehensive Annual Financial Report (CAFR). A copy of the 2014 VRS CAFR may be downloaded from the VRS website at htt www .varetire.org/Pdf /Publications/2014-annual- feport.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218- 2500. Note 9-Capital Assets: Capital asset activity for the year ended June 30, 2015 was as follows: Primary Government: Governmental Activities: Capital assets, not being depreciated: tand Capital assets, being depreciated: Buildings and improvements Machinery and equipment Total capital assets being depreciated Accumulated depreciation: Buildings and improvements Machinery and equipment Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net The remainder of this page left blank intentionally. $ $ Beginning Ending Balance increases Decreases Balance 568,695 $ 18 $568,695 26,814,300 § 102,316 $ (2,035,501) $24,881,115 4,194,985 458,562 (295,845) 4,277,702 30,909,785 § 560,878 $__(2,337,346) $~ 29,758,817 (14,726,337) § (594,845) $1,313,801 § (11,007,381) (2,622,756) (299,310) 189,565 (2,732,501) (14,349,083) $1894, 755) $_1,503,386_ $_ (13,739,882) 16,580,192_ $ (333,277) $__ (827,980) $_15,418,935 17,148,887_$_(333,277) $__ (827,980) $_ 15,987,630 -60- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9-Capital Assets: (Continued) Primary Government: (Continued) Business-type Activities Capital assets, being depreciated: Utility plant Accumulated depreciation: Utility plant Total capital assets being depreciated, net Business-type activities capital assets, net Beginning Balance s 5,240,699 s s (2, 117, 106) s s 3,123,593 s s 3,123,593 s Ending Increases Decreases Balance s - s 5,240,699 (131,017) s s (2,248,123) (131,017) s s 2,992,576 (131,017) s s 2,992,576 Depreciation expense was charged to functions/ programs of the primary government as follows: Governmental activities: General government administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Total depreciation expense-governmental activities Business-type activities: Sewer Authority $ 15,458 176,204 44,731 10,987 608,553 38,222 $ 894, 155 ======= $ ==13=1=, 0=1=7= The remainder of this page left blank intentionally. -61 - COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9-Capital Assets: (Continued) Primary Government: (Continued) Beginning Ending Balance Increases Decreases Balance Business-type Activities Capital assets, being depreciated: Utility plant $___5,240,699_§ _$ = $_ 5,240,699 ‘Accumulated depreciation: Utility plant $_@,117,106) §_(131,017) $ = $_ (2,248,123) Total capital assets being depreciated, net $__3,123,593 $___—(131,017) S. $_ 2,992,576 Business-type activities capital assets, net $3,123,593 $ (134,017) $ $_ 2,992,576 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government administration $ 15,458 Public safety 176,204 Public works 44,731 Health and welfare 10,987 Education’ 608,553 Parks, recreation, and cultural 38,222 Total depreciation expense-governmental activities S__ 894,155 Business-type activities: Sewer Authority $__ 131,017 The remainder of this page left blank intentionally. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9-Capital Assets: (Continued) Capital asset activity for the School Board for the year ended June 30, 2015 was as follows: Discretely Presented Component Unit - School Board: Beginning Balance Increases Decreases Capital assets, not being depreciated: Land $ 5,636,345 $ $ $ Capital assets, being depreciated: Buildings and improvements $ 22,294,656 $ 2, 177,298 $ $ Machinery and equipment 6, 735,850 536, 749 (620,054) Total capital assets being depreciated $ 29,030,506 $ 2,714,047 $ (620,054) $ Accumulated depreciation: Buildings and improvements $ (11, 915, 932) $ (1, 972,747) $ $ Machinery and equipment (5,299,360) (340,242) 620,054 Total accumulated depreciation $ (17,215,292) $ (2,312, 989) $ 620,054 $ Total capital assets being depreciated, net $ 11,815,214 $ 401,058 $ $ Governmental activities capital assets, net $ 17,451,559 $ 401,058 $ $ Note 10-Risk Management: Ending Balance 5,636,345 24,471, 954 6,652,545 31, 124,499 (13,888,679) (5,019,548) (18,908,227) 12,216,272 17,852,617 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. The remainder of this page left blank intentionally. -62- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 9-Capital Assets: (Continued) Capital asset activity for the School Board for the year ended June 30, 2015 was as follows: Discretety Presented Component Unit - School Board: Beginning Ending Balance Increases Decreases Balance Capital assets, not being depreciated: Land S___ 5,636,345 § _5 S____ 5,636,345 Capital assets, being depreciated: Buildings and improvements $22,294,656 § 2,177,298 $ = $24,471,954 Machinery and equipment 6,735,850 536,749 (620,054) 6,652,545 Total capital assets being depreciated $030,506" ST $6.) ST Accumulated depreciation: Buildings and improvernents $ (11,915,932) $ (1,972,747) $ = S (13,888,679) Machinery and equipment (5,299,360) (340,242) 620,054 (5,019,548) Total accumulated depreciation S717,215,292) $12,312,989), $670,054 $118,908, 27) Total capital assets being depreciated, net $11,815,214 $401,058 $ 2 812,216,272 Governmental activities capital assets, net §_17,451,559 $401,058 = $__17,852,617 Note 10-Risk Management: ‘The County and its Component Unit - School Board are exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The County and the related Component Unit - School Board participate with other localities in a public entity risk pool for their coverage of general liability, property, crime and auto insurance with the Virginia Association of Counties Risk Pool. Each member of this risk pool jointly and severally agrees to assume, pay and discharge any liability. The County and the School Board pay the Risk Pool contributions and assessments based upon classification and rates into a designated cash reserve fund out of which expenses of the pool, claims and awards are to be paid. In the event of a loss, deficit, or depletion of all available excess insurance, the pool may assess all members in the proportion to which the premium of each bears to the total premiums of all members in the year in which such deficit occurs. The County and its Component Unit - Schoot 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. The remainder of this page left blank intentionally. -62- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11-Contingent Liabilities: Federal programs in which the County and its component units participate were audited in accordance with the provisions of U.S. Office of Management.and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Pursuant to the provisions of this circular all major programs and certain other programs were tested for compliance with applicable grant requirements. While matters of noncompliance were disclosed by the audit, the Federal Government may subject grant programs to additional compliance tests, which may result in disallowed expenditures. In the opinion of management, any future disallowances of current grant program expenditures, if any, would be immaterial. Note 12-Surety Bonds: Fidelity & Deposit Company of Maryland-Surety: Ann McReynolds, Clerk of the Circuit Court Patrick Thompson, Treasurer Randy N. Williams, Commissioner of the Revenue Steve Dye, Sheriff All constitutional officers· employees: blanket bond Hartford Company - Surety: Tammy Caldwell - Clerk of the School Board All school employees: blanket bond USF&G Insurance Co. - Surety: All Social Services employees-blanket bond Note 13-Landfill Closure and Postclosure Care Cost: $ $ $ 1,010,000 400,000 3,000 30,000 50,000 10,000 10,000 100,000 State and federal laws and regulations require the County to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site after closure. $275,738 is the total estimated closure and postclosure care liability at June 30, 2015. 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 2015. 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. The remainder of this page left blank intentiona//y. -63- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11-Contingent Liabilities: Federal programs in which the County and its component units participate were audited in accordance with the provisions of U.S. Office of Management-and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Pursuant to the provisions of this circular all major programs and certain other programs were tested for compliance with applicable grant requirements. While matters of noncomptiance were disclosed by the audit, the Federal Government may subject grant programs to additional compliance tests, which may result in disallowed expenditures. In the opinion of management, any future disallowances of current grant program expenditures, if any, would be immaterial. Note 12-Surety Bonds: Fidelity & Deposit Company of Maryland-Surety: ‘Ann NcReynotds, Clerk of the Circuit Court $1,010,000 Patrick Thompson, Treasurer 400,000 Randy N. Williams, Commissioner of the Revenue 3,000 Steve Dye, Sheriff 30,000 All constitutional officers’ employees: blanket bond 50,000 Hartford Company - Surety: Tarimy 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 13-Landfill Closure and Postclosure Care Cost: State and federal laws and regulations require the County to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site after closure. $275,738 is the total estimated closure and postclosure care liability at June 30, 2015. 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 2015. Actual costs for closure and postclosure monitoring may change due to inflation, deflation, changes in technology or changes in regulations. The County uses the Cornmonwealth 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. The remainder of this page left blank intentionally. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 14-Deferred/Unavailable Revenue: Governmental funds report deferred/unavailable revenue in connection with receivables for revenues not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred! unavailable revenue reported in the governmental funds were as follows: 2nd half taxes due December 2015 Delinquent taxes due prior to June 30, 2015 Prepaid taxes Total deferred/unavailable revenue for governmental funds Note 15-Self Health Insurance: $ Gov't-wide Statements Governmental Activities 5,136,011 $ Balance Sheet Governmental Funds 5, 136,011 2,659,679 140,234 140,234 $ 5,276,245 $ 7,935,924 ~~~~~--'~-'-~ ~~~~-'-~'----~ 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 2015, a total of $5, 723, 953 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, 2015, 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 $888,250 have been accrued as a liability based primarily on actual cost incurred prior to June 30 but paid after year-end. lnterfund premiums are based primarily upon the insured funds' claims experience and are reported as quasi­ external interfund transactions. Changes in the claims liability during fiscal year 2015 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 2014-15 $ 772,252 $ 5,839,951 s (5,723,953) $ 888,250 The remainder of this page left blank intentionally. -64- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 14-Deferred/Unavailable Revenue: Governmental funds report deferred/unavailable revenue in connection with receivables for revenues not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred/ unavailable revenue reported in the governmental funds were as follows: Gov't-wide Statements Balance Sheet Governmental Activities Governmental Funds 2nd half taxes due December 2015 $ 5,136,011 § 5,136,011 Delinquent taxes due prior to June 30, 2015 : 2,659,679 Prepaid taxes 140,234 140,234 Total deferred/unavailable revenue for governmentat funds § 5,276,245 § 7,935,924 Note 15-Self Health Insurance: The County of Russell, Virginia established a limited risk management program for health insurance. Premiums are paid into the health ptan fund from the County and School Board and are available to pay claims, and administrative costs of the program. During the fiscal year 2015, a total of $5,723,953 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, 2015, 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 $888,250 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 2015 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 2014-15 $772,252 $___ 5,839,951 $___ (5,723,953) $ 888,250 The remainder of this page left blank intentionally. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 5 Note 16-0ther Postemployment Benefits-Health Insurance: A. Plan Description The County of Russell and Russell County's Component Unit - School Board administer a single-employer healthcare plan ("the Plan"). The Plan provides for participation by eligible retirees and their dependents in the health insurance programs available to County and School Board employees. The Plan will provide retiring employees the option to continue health insurance offered by the County and School Board. Any County or School Board eligible retiree may receive this benefit until he/she has reached sixty five years of age. To be eligible for this benefit a retiree must meet the following criteria: attained age 50 and 15 years of service and not eligible for Medicare and the last 10 years must be with the County or School Board prior to retirement. The benefits, employee contributions and the employer contributions are governed by the Board of Supervisors and the School Board and can be amended through the Board of Supervisors and the School Board action respectively. The Plan does not issue a publicly available financial report. B. Funding Policy The County and School Board currently pay for the post-retirement health care benefits on a pay-as-you­ go basis. The County and School Board currently have 757 employees that are eligible, respectively, for the program. In addition, 100 percent of premiums are the responsibility of the retiree. Health benefits include Medical, Dental, and Vision coverage for retirees and eligible spouses/dependents. Retirees are eligible to choose one of the following medical options through the County and School Board. The rates are as follows: County: Medical & Rx Retiree Spouse Ret./Family PPO $ 421 $ 421 $ 1, 180 Medicare 135 135 N/A Schools Board: Medical & Rx Retiree Spouse Ret./Family PPO $ 505 $ 505 $ 1,416 Medicare 135 135 N/A The remainder of this page left blank intentionally. -65- COUNTY OF RUSSELL, VIRGINIA NOTES 70 FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 16-Other Postemployment Benefits-Health Insurance: A, Plan Description The County of Russell and Russell County’s Component Unit - School Board administer a single-employer healthcare plan (“the Plan"). The Pian provides for participation by eligible retirees and their dependents in the health insurance programs available to County and School Board employees. The Plan will provide retiring employees the option to continue health insurance offered by the County and School Board. Any County or School Board eligible retiree may receive this benefit until he/she has reached sixty five years of age. To be eligible for this benefit a retiree must meet the following criteria: attained age 50 and 15 years of service and not eligible for Medicare and the last 10 years must be with the County or School Board prior to retirement. The benefits, employee contributions and the employer contributions are governed by the Board of Supervisors and the School Board and can be amended through the Board of Supervisors and the School Board action respectively. The Plan does not issue a publicly available financial report. B. Funding Policy ‘The County and School Board currently pay for the post-retirement health care benefits on a pay-as-you- g0 basis. The County and School Board currently have 757 employees that are eligible, respectively, for the program, In addition, 100 percent of premiums are the responsibility of the retiree, Health benefits include Medical, Dental, and Vision coverage for retirees and eligible spouses/dependents. Retirees are eligible to choose one of the following medical options through the County and School Board. The rates are as follows: County: Medical & Rx Retiree Spouse __Ret./Family, PPO aS aS Ta Medicare 135 135 NIA Schools Board: Medical & Rx Retires Spouse __Ret./Family PPO $ 505 S80 SSC« ATG Medicare 135 135 NIA The remainder of this page left blank intentionally. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 16-0ther Postemployment Benefits-Health Insurance: (Continued) C. Annual OPEB Cost and Net OPEB Obligation The County's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the County's annual OPEB cost for the fiscal year 2015, the amount actually contributed to the plan, and changes in the County's net OPEB obligation during fiscal year 2015. Annual required contribution s 41,000 Interest on net OPEB obligation 3,067 Adjustment to annual required contribution (4,079) Annual OPEB cost (expense) 39,988 Contributions made (5,200) Increase (decrease) in net OPEB obligation 34,788 Net OPEB obligation - beginning of year 76,673 Net OPEB obligation - end of year s 111,461 The County's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years were as follows: Percentage of Fiscal Annual Annual OPEB Cost Net OPEB Year Ended OPEB Cost Contributed Obligation 6/30/2013 s 35,812 2.51% s 41,521 6/3012014 37,852 7.13% 76,673 6/30/2015 39,988 13.00% 111,461 The remainder of this page is left blank intentionally. -66- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 16-Other Postemployment Benefits-Health Insurance: (Continued) C. Annual OPEB Cost and Net OPEB Obligation The County’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ‘ongoing basis, is projected to cover normat cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the County’s annual OPEB cost for the fiscal year 2015, the amount actually contributed to the plan, and changes in the County’s net OPEB obligation during fiscal year 2015. Annual required contribution $41,000 Interest on net OPEB obligation 3,067 Adjustment to annual required contribution (4,079) ‘Annual OPEB cost (expense) 39,988 Contributions made (5,200) Increase (decrease) in net OPEB obligation 34,788 Net OPEB obligation - beginning of year 76,673 Net OPEB obligation - end of year $141,461 The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years were as follows: Percentage of Fiscal Annual Annual OPEB Cost Net OPEB Year Ended _OPEB Cost Contributed _Obligation 6/30/2013 $35,812 251%S 41,521 6/30/2014 37,852 7.13% 76,673 6/30/2015, 39,988 13.008 111,461 The remainder of this page is left blank intentionally. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 16-0ther Postemployment Benefits-Health Insurance: (Continued) C. Annual OPEB Cost and Net OPEB Obligation (Continued) The School Board's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the School Board's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the School Board's net OPEB obligation: Annual required contribution $ 934,400 Interest on net OPEB obligation 24,734 Adjustment to annual required contribution (38,278) Annual OPEB cost (expense) 920,856 Contributions made (660,600) Increase (decrease) in net OPEB obligation 260,256 Net OPEB obligation - beginning of year 706,693 Net OPEB obligation - end of year $ 966,949 The School Board's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years were as follows: Percentage of Fiscal Annual Annual OPEB Cost Net OPEB Year Ended OPEB Cost Contributed Obligation 6/3012013 $ 885,708 56.79% $ 427,536 6/30/2014 910,457 69.34% 706,693 6/3012015 920,856 71.74% 966,949 D. Funded Status and Funding Progress The funded status of the Plan for the County as of July 1, 2012, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets I AAL) Covered payroll (active plan members) UAAL as a percentage of covered payroll -67- $ $ $ $ 198,600 198,600 0.00% 5,576,300 3.56% COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 16-Other Postemployment Benefits-Health insurance: (Continued) C. Annual OPEB Cost and Net OPEB Obtigation (Continued) The School Board’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Schoo! Board's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the School Board’s net OPEB obligation: ‘Annual required contribution S$ 934,400 Interest on net OPEB obligation 24,734 Adjustment to annual required contribution (38,278) Annual OPEB cost (expense) 920,856 Contributions made (660,600) Increase (decrease) in net OPEB obligation 260,256 Net OPEB obligation - beginning of year 706,693 Net OPEB obligation - end of year $966,949 ‘The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years were as follows: Percentage of Fiscal Annual Annual OPEB Cost Net OPEB Year Ended _ OPEB Cost Contributed Obligation 6/30/2013 § 885,708 56.79% $ 427,536 6/30/2014 910,457 69.34% 706,693 6/30/2015 920,856 174% 966,949 D. Funded Status and Funding Progress The funded status of the Plan for the County as of July 1, 2012, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AL) $ 198,600 Actuarial value of plan assets $ - Unfunded actuarial accrued liabitity (UAL) $ 198,600 Funded ratio (actuarial value of plan assets / AL) 0.00% Covered payroll (active plan members) $5,576,300 UAAL as a percentage of covered payroll 3.56% “67° COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 16-0ther Postemployment Benefits-Health Insurance: (Continued) D. Funded Status and Funding Progress (Continued) The funded status of the Plan for the School Board as of July 1, 2014, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets I AAL) Covered payroll (active plan members) UAAL as a percentage of covered payroll $ $ $ $ 9,357,000 9,357,000 0.00% 18, 961, 700 49.35% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far in the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multiyear trend information, as it becomes available, about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Primary Government As of July 1, 2012, the most recent actuarial valuation date, the projected unit of credit actuarial cost method was used. Under this method, future benefits are projected and the present value of such benefits is allocated from date of hire to date of eligibility the actuarial assumptions included: investment rate of return at 4.00 percent and a health care trend rate of 7.50 percent graded to 4.80 percent over 72 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2012 was 20 years. -68- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 16-Other Postemployment Benefits-Health insurance: (Continued) D. Funded Status and Funding Progress (Continued) The funded status of the Plan for the School Board as of July 1, 2014, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AL) $ 9,357,000 Actuarial value of plan assets $ . Unfunded actuarial accrued liability (UAAL) $ 9,357,000 Funded ratio (actuarial value of plan assets / AAL) 0.00% Covered payrolt (active plan members) 5 18,961,700 UAAL as a percentage of covered payroll 49.35% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far in the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multiyear trend information, as it becomes available, about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatitity in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Primary Government As of July 1, 2012, the most recent actuarial valuation date, the projected unit of credit actuarial cost method was used. Under this method, future benefits are projected and the present value of such benefits is allocated from date of hire to date of eligibility the actuarial assumptions included: investment rate of return at 4.00 percent and a health care trend rate of 7.50 percent graded to 4.80 percent over 72 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2012 was 20 years. -68- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 16-0ther Postemployment Benefits-Health Insurance: (Continued) E. Actuarial Methods and Assumptions (Continued) Discretely Presented Component Unit - School Board: As of July 1, 2014, the most recent actuarial valuation date, the projected unit of credit actuarial cost method was used. Under this method, future benefits are projected and the present value of such benefits is allocated from date of hire to date of eligibility the actuarial assumptions included: investment rate of return at 3.50 percent and a health care trend rate of 5.60 percent graded to 4.50 percent over 80 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at July 1, 2014 was 20 years. Note 17-0ther Postemployment Benefits-YRS Health Insurance Credit: A. Plan Description The County and School Board participate in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is an agent and cost sharing, multiple·employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dollar amount of the health insurance credit for each year of creditable service. The credit amount and eligibility differs for state, school division, political subdivision, local officer, local social services department and general registrar retirees. An employee of the County or School Board, who retires under VRS with at least 15 years of total creditable service under the System and is enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $1 .50 per year of creditable service up to a maximum monthly credit of $45. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automatically receive the maximum monthly health insurance credit of $45. Benefit provisions and eligibility requirements are established by Title 51.1, Chapter 14 of the Code of Virginia. The YRS actuarially determines the amount necessary to fund all credits provided, reflects the cost of such credits in the applicable employer contribution rate pursuant to §51.1-145, and prescribes such terms and conditions as are necessary to carry out the provisions of the health insurance credit program. VRS issues separate financial statements as previously discussed in Note 8. B. Funding Policy Primary Government: As a participating local political subdivision, the County is required to contribute the entire amount necessary to fund participation in the program using the actuarial basis specified by the Code of Virginia and the VRS Board of Trustees. The County's contribution rate for the fiscal year ended 2015 was 0.30% of annual covered payroll. Discretely Presented Component Unit - School Board (Non·Professional Employees): As a participating local political subdivision, the Covington School Board is required to contribute the entire amount necessary to fund participation in the program using the actuarial basis specified by the Code of Virginia and the YRS Board of Trustees. The School Board's contribution rate for the fiscal year ended 2015 was 0. 95% of annual covered payroll. -69- COUNTY OF RUSSELL, VIRGINIA NOTES 70 FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 16-Other Postemployment Benefits-Health Insurance: (Continued) E, Actuarial Methods and Assumptions (Continued) Discretely Presented Component Unit - Schoot Board: As of July 1, 2014, the most recent actuarial valuation date, the projected unit of credit actuarial cost method was used. Under this method, future benefits are projected and the present value of such benefits is allocated from date of hire to date of eligibility the actuarial assumptions included: investment rate of return at 3.50 percent and a health care trend rate of 5.60 percent graded to 4.50 percent over 80 years. The UAAL is being amortized as a level percentage over the remaining amortization period, which at Juty 1, 2014 was 20 years. Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: A, Plan Description ‘The County and School Board participate in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is an agent and cost sharing, muitiple-employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dollar amount of the health insurance credit for each year of creditable service. The credit amount and eligibility differs for state, school division, political subdivision, local officer, local social services department and general registrar retirees. An employee of the County or School Board, who retires under VRS with at least 15 years of total creditable service under the System and is enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $1.50 per year of creditable service up to a maximum monthly credit of $45. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automatically receive the maximum monthly health insurance credit of $45. Benefit provisions and eligibility requirements are established by Title 51.1, Chapter 14 of the Code of Virginia. The VRS actuarially determines the amount necessary to fund all credits provided, reflects the cost of such credits in the applicable employer contribution rate pursuant to §51.1-145, and prescribes such terms and conditions as are necessary to carry out the provisions of the health insurance credit program. VRS issues separate financial statements as previously discussed in Note 8. B. Funding Policy Primary Government: As a participating local political subdivision, the County is required to contribute the entire amount necessary to fund participation in the program using the actuarial basis specified by the Code of Virginia and the VRS Board of Trustees. The County’s contribution rate for the fiscal year ended 2015 ‘was 0.30% of annual covered payroll. Discretely Presented Component Unit - School Board (Non-Professionat Employees): ‘As a participating local political subdivision, the Covington School Board is required to contribute the entire amount necessary to fund participation in the program using the actuarial basis specified by the Code of Virginia and the VRS Board of Trustees. The School Board’s contribution rate for the fiscal year ended 2015 was 0.95% of annual covered payroll. COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 201 5 Note 17-0ther Postemployment Benefits-YRS Health Insurance Credit: (Continued) C. Annual OPEB Cost and Net OPEB Obligation Primary Government: The annual cost of OPEB under Governmental Accounting Standards Board (GASB) 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, is based on the annual required contribution (ARC). The County is required to contribute the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. For 2015, the County's contribution of $3,321 was equal to the ARC and OPEB cost. The County's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years are shown below: Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending Cost (ARC) Contributed Obligation Primary Government: County 6/30/2013 s 1, 764 100.00% s 6/30/2014 778 100.00% 6/30/2015 3,321 100.00% Discretely Presented Component Unit - School Board (Non-Professional Employees): The annual cost of OPEB under Governmental Accounting Standards Board (GASB) 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, is based on the annual required contribution (ARC). The School Board is required to contribute the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. For 2015, the School Board's contribution of $23, 128 was equal to the ARC and OPEB cost. The School Board's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years are shown below: Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending Cost (ARC) Contributed Obligation Discretely Presented Component Unit School Board 6/30/2013 s 15,780 100.00% s 6/3012014 13,320 100.00% 6/30/2015 23, 128 100.00% ·70- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (Continued) C. Annual OPEB Cost and Net OPEB Obligation Primary Government: The annual cost of OPEB under Governmental Accounting Standards Board (GASB) 45, Accounting and Financial Reporting by Employers for Postemptoyment Benefits Other than Pensions, is based on the annual required contribution (ARC). The County is required to contribute the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. For 2015, the County’s contribution of $3,321 was equal to the ARC and OPEB cost. The County's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years are shown below: Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending Cost (ARC) Contributed —_ Obligation Primary Government: County 6/30/2013 $ 1,764 100.00% $ - 6/30/2014 778 10.00% - 6/30/2015 3,321 10.00% : Discretely Presented Component Unit - School Board (Non-Professional Employees): The annual cost of OPEB under Governmental Accounting Standards Board (GASB) 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, is based on the annual required contribution (ARC). The School Board is required to contribute the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. For 2015, the School Board’s contribution of $23,128 was equal to the ARC and OPEB cost. The School Board's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years are shown below: Fiscal Annual Percentage Net Year OPEB of ARC OPEB Ending __Cost (ARC) Contributed _Obligation Discretely Presented Component Unit School Board 6/30/2013 § 15,780 100.00% $ 6/30/2014 13,320 100.00% 6/30/2015, 23,128 100.0% -70- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 17-0ther Postemployment Benefits-YRS Health Insurance Credit: (Continued) D. Funded Status and Funding Progress Primary Government: The funded status of the plan as of June 30, 2014, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets/ AAL) Covered payroll (active plan members) UAAL as a percentage of covered payroll $ $ $ $ 123,274 84,614 38,660 68.64% 1, 182,479 3.27% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future and reflect a long-term perspective. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements presents multi·year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations. Discretely Presented Component Unit - School Board (Non-Professional Employees): The funded status of the plan as of June 30, 2014, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets/ AAL) Covered payroll (active plan members) UAAL as a percentage of covered payroll $ $ $ $ 382,648 (15,285) 397,933 -3. 99% 2,639,711 15.07% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future and reflect a long-term perspective. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. -71- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2015 Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (Continued) D. Funded Status and Funding Progress Primary Government The funded status of the plan as of June 30, 2014, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AL) $123,274 Actuarial value of plan assets $ 84,614 Unfunded actuarial accrued tfability (UAL) 8 38,660 Funded ratio (actuarial value of plan assets/AAL) 68.64% Covered payroll (active plan members) $1,182,479 UAAL as a percentage of covered payroll 3.27% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future and reflect a long-term perspective. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annuat required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabitity for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations. Discretely Presented Component Unit - School Board (Non-Professional Employees): The funded status of the plan as of June 30, 2014, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AL) S$ 382,648 Actuarial value of plan assets 5 (15,285) Unfunded actuarial accrued liability (UAL) $397,933 Funded ratio (actuarial value of plan assets/AAL) "3.99% Covered payroll (active plan members) $2,639,711 UAAL as a percentage of covered payroll 15.07% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future and reflect a long-term perspective. Examples include assumptions about future employment, mortality, and the healthcare cost trend, Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. TN COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 17-0ther Postemployment Benefits-YRS Health Insurance Credit: (Continued) D. Funded Status and Funding Progress (Continued) Discretely Presented Component Unit - School Board (Non-Professional Emolovees): (Continued) The schedule of funding progress, presented as required supplementary information following the notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations. E. Actuarial Methods and Assumptions Primary Government: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used included techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long·term perspective of the calculations. The entry age normal cost method was used to determine the plan's funding liabilities and costs. The actuarial assumptions included a 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAAL is being amortized as a level percentage of payrolls on an open basis. The remaining open amortization period at June 30, 2014 was 20-29 years. Discretely Presented Component Unit - School Board (Non-Professional Employees): Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used included techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long·term perspective of the calculations. The entry age normal cost method was used to determine the plan's funding liabilities and costs. The actuarial assumptions included a 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2014 was 20-29 years. F. Professional Employees - Discretely Presented Component Unit School Board Plan Description The School Board participates in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is a cost sharing, multiple-employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dollar amount of the health insurance credit for each year of creditable service. -72· COUNTY OF RUSSELL, VIRGINIA, NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (Continued) D. Funded Status and Funding Progress (Continued) Discretely Presented Component Unit - School Board (Non-Professional Employees): (Continued) The schedule of funding progress, presented as required supplementary information following the notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of tegal or contractual funding limitations. E, Actuarial Methods and Assumptions Primary Government: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as. understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used included techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The entry age normal cost method was used to determine the plan's funding liabilities and costs. The actuarial assumptions included a 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAAL is being amortized as a level percentage of payrolls on an open basis. The remaining open amortization period at June 30, 2014 was 20-29 years. Discretely Presented Component Unit - School Board (Non-Professional Employees): Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and pian members to that point. The actuarial methods and assumptions used included techniques that are designed to reduce short-term volatility in actuarial accrued tiabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations, The entry age normal cost method was used to determine the plan’s funding liabilities and costs. The actuarial assumptions included a 7.00% investment rate of return, compounded annually, including an inflation component of 2.50%, and a payroll growth rate of 3.00%. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining open amortization period at June 30, 2014 was 20-29 years. F. Professional Employees - Discretely Presented Component Unit School Board Plan Description The School Board participates in the Health Insurance Credit Program, a plan designed to assist retirees with the cost of health insurance coverage. This program is a cost sharing, multipte-employer defined benefit plan administered by the Virginia Retirement System (VRS). The Virginia General Assembly establishes the dollar amount of the health insurance credit for each year of creditable service. 2 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 17-0ther Postemployment Benefits-YRS Health Insurance Credit: (Continued) F. Professional Employees - Discretely Presented Component Unit School Board (Continued) Funding Policy A teacher, who retires under VRS with at least 15 years of total creditable service under the System and is enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $4 per year of creditable service. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automatically receive a monthly health insurance credit of $4 multiplied by the smaller of (i) twice the amount of their creditable service or (ii) the amount of creditable service they would have completed at age 60 if they had remained in service to that age. The School Board is required to contribute, at an actuarially determined rate, the entire amount necessary to fund participation in the program. The School Board's contribution to VRS was $184,055, $189,624, and $193,975 for the fiscal years ended 2015, 2014, and 2013, respectively. The School Board's contributions represented 1.06%, 1 .11 %, and 1 .11 %, of covered payroll for the fiscal years ended 2015, 2014, and 2013, respectively. Note 18-Moral Obligation: The County has signed a support agreement that backs certain debt obligations of the Russell County Public Service Authority (a component unit of the County). In the agreement, the Board of Supervisors has a moral obligation to fund the Russell County Public Service Authority in amounts sufficient to cover debt service issued during fiscal year 2014 in the amount of $700,843. To date, the County of Russell, Virginia has provided funds sufficient to cover such debt service. During fiscal year 2015, the County paid $199, 127 in debt service for the Russell County Public Service Authority. Note 19-0perating 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, 2015, the outstanding balance of the loan was $4,507,700. Future required rent payments are as follows: Year Ending Operating Lease June 30, Principal Interest 2016 $ 363,300 $ 101,621 2017 372, 100 92,744 2018 381,000 83,925 2019 390,000 74,898 2020 399,100 65,825 2021-2025 2, 142,700 181,885 2026 459,500 5,425 Totals $ 4,507,700 $ 606,323 -73- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015, Note 17-Other Postemployment Benefits-VRS Health Insurance Credit: (Continued) F. Professionat Employees - Discretely Presented Component Unit School Board (Continued) Funding Policy A teacher, who retires under VRS with at least 15 years of total creditable service under the System and is enrolled in a health insurance plan, is eligible to receive a monthly health insurance credit of $4 per year of creditable service. However, such credit shall not exceed the health insurance premium for the retiree. Disabled retirees automatically receive a monthly health insurance credit of $4 multiplied by the smaller of (i) twice the amount of their creditable service or (ii) the amount of creditable service they would have completed at age 60 if they had remained in service to that age. The School Board is required to contribute, at an actuarially determined rate, the entire amount necessary to fund participation in the program. The School Board’s contribution to VRS was $184,055, $189,624, and $193,975 for the fiscal years ended 2015, 2014, and 2013, respectively. The School Board’s contributions represented 1.06%, 1.11%, and 1.11%, of covered payroll for the fiscal years ended 2015, 2014, and 2013, respectively. Note 18-Moral Obligation: The County has signed a support agreement that backs certain debt obligations of the Russell County Public Service Authority (a component unit of the County). In the agreement, the Board of Supervisors has a moral obligation to fund the Russell County Public Service Authority in amounts sufficient to cover debt service issued during fiscal year 2014 in the amount of $700,843. To date, the County of Russell, Virginia has provided funds sufficient to cover such debt service. During fiscal year 2015, the County paid $199,127 in debt service for the Russell County Public Service Authority. Note 19-Operating Lease: The County has signed a lease agreement with The Industrial Development Authority of Russell County to pay rent equivalent to the required debt service as it relates to the Russell County Government Center. To date, the County of Russell, Virginia has provided funds sufficient to cover such debt service. As of June 30, 2015, the outstanding balance of the loan was $4,507,700. Future required rent payments are as follows: Year Ending Operating Lease June 30, Principal Interest 2016 5 363,300 § 101,627 2017 372,100 92,744 2018 381,000 83,925 2019 390,000 74,898 2020 399,100 65,825 2021-2025 2,142,700 181,885 2026 459,500 5,425 Totals 34,507,700 ~S_608,323, “13 COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 20-Adoption of Accounting Principle: Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date- an amendment of GASB Statement No. 68: The County implemented the financial reporting provisions of the above Statements for the fiscal year ended June 30, 2015. These Statements establish standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures related to pensions. Note disclosure and required supplementary information requirements about pensions are also addressed. The requirements of these Statements will improve financial reporting by improving accounting and financial reporting by state and local governments for pensions. The implementation of these Statements resulted in the following restatement of net position: July 1 2014, as previously stated Net pension liability Deferred outflows July 1 2014, as restated Note 21 - Upcoming Pronouncements: Primary Government Net Position Governmental Activities $ 13,247,786 (7,458, 109) 768,796 $ 6,558,473 Business-type Activities 2,467,904 (52,618) 5,424 s 2,420,710 Component Unit Net Position School Board s 16,472,495 (39,393, 146) 2,417,435 $ (20,503,216) Statement No. 72, Fair Value Measurement and Application, amends the definitions of fair value used throughout GASB literature to be consistent with the definition and principles provided in FASB Accounting Standards Codification Topic 820, Fair Value Measurement. This Statement provides guidance for determining a fair value measurement for financial reporting purposes and for applying fair value to certain investments and disclosures related to all fair value measurements. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015. No formal study or estimate of the impact of this standard has been performed. The remainder of this page is left blank intentionally. -74- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 20-Adoption of Accounting Principle: Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68: The County implemented the financial reporting provisions of the above Statements for the fiscal year ended June 30, 2015. These Statements establish standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense expenditures related to pensions. Note disclosure and required supplementary information requirements about pensions are also addressed. The requirements of these Statements will improve financial reporting by improving accounting and financial reporting by state and local governments for pensions. The implementation of these Statements resulted in the following restatement of net position: Component Primary Government Unit Net Position Net Position Governmental Business-type Schoot Activities. Activities Board July 1 2014, as previously stated “573,247,786 7,467,904 16,472,495 Net pension liability (7,458,109) (52,618) (39,393,146) Deferred outflows 768,796 5,424 2,417,435 July 1 2014, as restated 6,558,473 7,400,710 (20,503,276) Note 21 - Upcoming Pronouncement: Statement No. 72, Fair Value Measurement and Application, amends the definitions of fair value sed throughout GASB literature to be consistent with the definition and principles provided in FASB Accounting Standards Codification Topic 820, Fair Value Measurement. This Statement provides guidance for determining a fair value measurement for financial reporting purposes and for applying fair value to certain investments and disclosures related to all fair value measurements. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015. No formal study or estimate of the impact of this standard has been performed. The remainder of this page is left blank intentionally. Th COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 21- Upcoming Pronouncements: (Continued) Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That are Not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68 and amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement 68 for pension plans and pensions that are within their respective scopes. The requirements of this Statement that address accounting and financial reporting by employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68 are effective for financial statements for fiscal years beginning after June 15, 2016, and the requirements of this Statement that address financial reporting for assets accumulated for purposes of providing those pensions are effective for fiscal years beginning after June 15, 2015. The requirements of this Statement for pension plans that are within the scope of Statement 67 or for pensions that are within the scope of Statement 68 are effective for fiscal years beginning after June 15, 2015. No formal study or estimate of the impact of this standard has been performed. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, improves the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement 43, and Statement No. 50, Pension Disclosures. This Statement is effective for financial statements for fiscal years beginning after June 15, 2016. No formal study or estimate of the impact of this standard has been performed. Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension, improves accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. This Statement is effective for fiscal years beginning after June 15, 2017. No formal study or estimate of the impact of this standard has been performed. Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, objective is to identify-in the context of the current governmental financial reporting environment-the hierarchy of generally accepted accounting principles (GAAP). This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015, and should be applied retroactively. No formal study or estimate of the impact of this standard has been performed . . 75. COUNTY OF RUSSELL, VIRGINIA NOTES To FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 21— Upcoming Pronouncements: (Continued) Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That are Not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. in addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68 and amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement 68 for pension plans and pensions that are within their respective scopes. The requirements of this Statement that, address accounting and financial reporting by employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68 are effective for financial statements for fiscal years beginning after June 15, 2016, and the requirements of this Statement that address financial reporting for assets accumulated for purposes of providing those pensions are effective for fiscal years beginning after June 15, 2015. The requirements of this Statement for pension plans that are within the scope of Statement 67 or for pensions that are within the scope of, Statement 68 are effective for fiscal years beginning after June 15, 2015. No formal study or estimate of the impact of this standard has been performed. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, improves the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement, replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple Employer Plans, It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit, Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement 43, and Statement No. 50, Pension Disclosures. This Statement is effective for financial statements for fiscal years beginning after June 15, 2016. No formal study or estimate of the impact of this standard has. been performed. Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension, improves accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. This Statement is effective for fiscal years beginning after June 15, 2017. No formal study or estimate of the impact of this standard has been performed. Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, objective is to identify—in the context of the current governmental financial reporting environment—the hierarchy of generally accepted accounting principles (GAAP). This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015, and should be applied retroactively. No formal study or estimate of the impact of this standard has been performed. 15: COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 21- Upcoming Pronouncements: (Continued) Statement No. 77, Tax Abatement Disclosures, will increase the disclosure of tax abatement agreements to disclose information about the agreements. The requirements of this Statement improve financial reporting by giving users of financial statements essential information that is not consistently or comprehensively reported to the public at present. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2015. No formal study or estimate of the impact of this standard has been performed. Note 22-Litigation: As of June 30, 2015, there were no matters of litigation involving the County which would materially affect the County's financial position should court decisions on pending matters not be favorable. -76- COUNTY OF RUSSELL, VIRGINIA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 21— Upcoming Pronouncements: (Continued) Statement No. 77, Tax Abatement Disclosures, will increase the disclosure of tax abatement agreements to disclose information about the agreements. The requirements of this Statement improve financial reporting by giving users of financial statements essential information that is not consistently or comprehensively reported to the public at present. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2015. No formal study or estimate of the impact of this standard has been performed. Note 22-Litigatio As of June 30, 2015, there were no matters of litigation involving the County which would materially affect the County’s financial position should court decisions on pending matters not be favorable. 76 Required Supplementary Information Required Supplementary Information Exhibit 11 County of Russell, Virginia General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances~ Budget and Actual For the Year Ended June 30, 2015 Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) REVENUES General property taxes $ 15,867,387 $ 15,867,387 $ 15, 746,635 $ (120,752) Other local taxes 3,747,517 3,747,517 3,877,533 130,016 Permits, privilege fees, and regulatory licenses 50,600 50,600 40,342 (10,258) Fines and forfeitures 27,000 27,000 2,334 (24,666) Revenue from the use of money and property 335,000 335,000 246,592 (88,408) Charges for services 293,300 293,300 334,563 41,263 Miscellaneous 216,600 216,600 226,621 10,021 Recovered costs 398,500 545,253 710,585 165,332 Intergovernmental: Commonwealth 8,008,760 8,041,335 7,798,472 (242,863) Federal 2,577,166 2,577,166 2,433,534 (143,632) Total revenues $ 31,521,830 $ 31, 701, 158 $ 31,417,211 $ (283,947) EXPENDITURES Current: General government administration $ 1,689,988 $ 1,697,188 $ 1,717,342 $ (20,154) Judicial administration 2,035,763 2,046,691 2,011,601 35,090 Public safety 6,323,356 6,502,684 6,839,477 (336,793) Public works 3,479, 798 3,483,998 3,116,473 367, 525 Health and welfare 6,448,531 6,448,531 6,321,358 127, 173 Education 7,712,756 7,712,756 5,854,433 1,858,323 Parks, recreation, and cultural 492,368 492,368 480,741 11,627 Community development 705,401 705,401 1,046,895 (341,494) Nondepartmental 475,847 453,519 112,482 341,037 Debt service: Principal retirement 1,527,257 1,527,257 1, 522,447 4,810 Interest and other fiscal charges 430, 765 430, 765 424, 130 6,635 Total expenditures $ 31,321,830 $ 31,501, 158 $ 29,447,379 $ 2,053, 779 Excess {deficiency) of revenues over (under) expenditures $ 200,000 $ 200,000 $ 1,969,832 $ 1,769,832 OTHER FINANCING SOURCES (USES) Transfers out $ (200,000) $ (200,000) $ (446,281 I $ (246,281 I Total other financing sources (uses) $ (200,000) $ (200,000) $ (446,281) $ (246,281 I Net change in fund balances $ $ $ 1,523,551 $ 1,523,551 Fund balances - beginning 6,094,448 6,094,448 Fund balances - ending $ $ $ 7,617, 999 $ 7,617,999 -77- Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russ ell, Virginia For the Year Ended June 30, 2015 Exhibit 11 General property taxes Other local taxes Permits, privilege fees, and regulatory licenses Fines and forfeitures Revenue from the use of money and property Charges for services, ‘Miscellaneous Recovered costs Intergovernmentat: Commonveaith Federal Current: General government administration Judiciat administration ‘Public safety. Public works Health and welfare Education Parks, recreation, and cultural Community development Nondepartmental Debt service: Principal retirement Interest and other fiscal charges Budgeted Amounts Original os 5,867,387 3,747,517 50,600 27,000 335,000 293,300 216,600 398,500 8,008,760 2,577,166 1,689,988 2,035,763, 6,323,356 3,479,798 6,488,531 7,112,756 492,368 705,401 475,847 1,527,257 430,765, Ei 15,867,387 § 3,747,517 50,600 27,000 335,000 293,300 216,600 545,253 8,041,335 2,577,166 1,697,188 § 2,046,691 6,502,684 3,483,998 6,448,531 7,712,756 492,368 705,401 453,519 4,527,257 430,765 Variance with Final Budget - Actual Positive Amounts Negative! 15,746,635 (120,752) 3,877,533 130,016 40,342 (10,258) 2,334 (24,666) 246,592 (88,408) 334,563 41,263 226,621 10,021 710,585 165,332, 7,798,472 (242,863) 2,433,534 (143,632) 1,717,342 $ (20,154) 2,011,601 35,090, 6,839,477 (336,793) 3,116,473 367,525 6,321,358 127,173 5,854,433 1,858,323 480,741 11,627 1,046,895 (41,494) 112,482 341,037 1,522,447 4,810 424,130 6,635 County of Russell, Virginia Special Revenue Fund ·Coat Road Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2015 REVENUES Other local taxes Revenue from the use of money and property Total revenues EXPENDITURES Current: Public works Excess (deficiency) of revenues over (under) expendi:ures Net change in fund balances Fund balances - beginning Fund balances - ending s s s s s s -78- Budgeted Amounts Original Final 900,000 s 900,000 900,000 s 900,000 900,000 s 900,000 s s s Actual Amounts s 757,894 2,275 s 760, 169 s 845,842 s (85,673) s (85,673) 573,214 s 487,541 Exhibit 12 Variance with Final Budget - Positive {Negative} s (142, 106) 2,275 s (139,831) s 54,158 s (85,673) s (85,673) 573,214 s 487,541 Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Exhibit 12 County of Russell, Virginia For the Year Ended June 30, 2015 Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts Negative Other local taxes $ 900,000 $ 900,000 $ 787,894 $ (142,106) Revenue from the use of money and property - 2275 2,275 Total revenues 300,000 300,000 760,163 5 (039,834) EXPENDITURES: Current Public works $900,000 $ 900,000 $845,842 $54,158 Excess (deficiency) of revenues over (under) expenditures: S$ _$ $ Net change in fund balances 5 +8 S (85,673) $ (85,673) Fund balances - beginning Fund balances - ending . 573,214 573,214 a NE TA 7 z 487,541 18: 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, 2015 REVENUES Recovered costs I ntergovern mental: Federal Total revenues EXPENDITURES Current: Health and welfare Excess (deficiency) of revenues over (under) expenditures Net change in fund balances Fund balances - beginning Fund balances - ending $ $ $ $ $ $ -79- Budgeted Amounts Actual Original Final Amounts $ $ 1,893 2,746,846 2, 746,846 1,969,719 2,746,846 $ 2,746,846 $ 1, 971,612 2, 746,846 $ 2, 746,846 $ 2,032,660 $ $ (61,048) $ $ (61,048) 43,399 $ $ (17,649) Exhibit 13 Variance with Final Budget - Positive (Negative) $ 1,893 (777, 127) $ (775,234) $ 714,186 $ (61,048) $ (61,048) 43,399 $ (17,649) Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russelt, Virginia Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2015 Exhibit 13 REVENUES Recovered costs Intergovernmental: Federal Total revenues EXPENDITURES. Current: Health and welfare Excess (deficiency) of revenues over (under) expenditures Net change in fund balances Fund balances - beginning Fund balances - ending. Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts Negative) $ -$ s 1893 51,893 2,746,846 2,746,846 1,969,719. mz 32,746,846 32,746,846 $1,971,012 $775,234) $2,746,846 § 2,746,846 § 2,032,660 $ 714,186 $ A S$ (61,048) $161,048) 5 5 S (61,048) $ (61,048) 43,399 43,309 T7645) -79- Exhibit 14 County of Russell, Virginia Schedule of OPEB Funding Progress For the Year Ended June 30, 2015 Primary Government County Other Postemployment Benefits-Health Insurance: Actuarial Actuarial Actuarlal Unfunded UAAL as a Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered % of Covered as of Assets Liability (AAL) (3) - (2) (2)/(3) Payroll Payroll (4)/(6) (1) (2) (3) (4) (5) (6) (7) July 1, 2012 s s 198,600 s 198,600 0.00% s 5,576,300 3.56% July 1, 2010 464, 748 464, 748 0.00% 5,581,443 8.33% July 1, 2008 546,570 546,570 0.00% 4, 198,697 13.02% County Other Postemployment Benefits· VRS Health Insurance Credit: Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered % of Covered as of Assets Liability (AAL) (3) - (2) (2)/(3) Payroll Payroll (4)/(6) (1) (2) (3) (4) (5) (6) (7) June 30, 2014 s 84,614 s 123,274 s 38,660 68.64% s 1,182,479 3.27% June 30, 2013 81,083 118,770 37,687 68.27% 1,110,563 3.39% June 30, 2012 78,231 101,849 23,618 76.81% 1, 769,420 1.33% Discretely Presented Component Unit: School Board Other Postemp\oyment Benefits-Health Insurance: Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Vatue of Accrued AAL (UAAL) Funded Ratio Covered % of Covered as of Assets Liability (AAL) (3) - (2) (2)/(3) Payroll Payroll (4)/(6) (1) (2) (3) (4) (5) (6) (7) July 1, 2014 $ s 9,357,000 s 9,357,000 0.00% s 18,961,700 49.35% July 1, 2012 8,991,400 8, 991,400 0.00% 21,181,100 42-45% July 1, 2010 3,030, 967 3,030, 967 0.00% 20,559,274 14.74% School Board Other Postemptoyment Benefits·VRS Health Insurance Credit: Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Value of Accrued AAL (UAAL) Funded Ratio Covered % of Covered as of(") Assets Liability (AAL) (3) - (2) (2)/ (3) Payroll Payroll (4)/(6) (1) (2) (3) (4) (5) (6) (7) June 30, 2014 s (15,285) s 382,648 s 397, 933 -3.99% $ 2,639,711 15.07% June 30, 2013 379 376, 778 376,399 0.10% 2,666,329 14.12% June 30, 2012 161,463 161,463 0.00% 2,689,457 6.00% (*) - June 30, 2012 was the initial valuation as the School Board recently joined this plan. -80- County of Russell, Virginia ‘Schedule of OPEB Funding Progress For the Year Ended June 30, 2015 Exhibit 14 Primary Government County Other Pastemployment Benefits-Health Insurance: Actuarial Actuarial Actuarial Unfunded UAAL as a Valuation Value of ‘Accrued AAL (UAL) Funded Ratio Covered & of Covered as of Assets Liability (AAL) @)-@) ve Payroll Payroll (44/(6) w a Gy @ Gy @ a) July 1, 2012 § 3 198,600 § 198,600 0.00% $5,576,300 3.568 ‘uly 1, 2010 464,748 464,728 00% 5,581,443 8.338 “uly 1, 2008 546,570 546,570 0.00% 4,198,697 13.02% County Other Postemployment Benefits-VRS Health insurance Credit: Actuarial Actuarial Actuarial Unfunded UAAL asa Valuation Value of Accrued AAL(UAAL) Funded Ratio Covered % of Covered as of Assets Liability (AAL) (3)-Q) Qi) Payrott Payratt (4)/(6) v7 a GF co G) 16) Ty June 30,2014 § 84614 $123,274 $38,660 68.64% 5 1,182,479 3.27% ‘June 30, 2013 81,083, 118,770 37,687 68.27% 1,110,563 3.398 June 30, 2012 78,231 101,849 23,618 76.81% 1,769,420 1.338 Discretely Presented Component Unit: ‘Schaot Board Other Postemployment Benefits-Health Insurance: Actuariai Actuarial Actuarial Unfunded UAAL asa Valuation Value of Accrued AAL(UAAL} Funded Ratio Covered % of Covered as of Assets Liability (AAL) QQ) (2) Payroll Payrott (4)/(6) o @ Gy a @) @ ay July 4,204 $9,357,000 § 9,357,000 0.00% 518,963,700 49.39% duly 1, 2012 8,991,400 8,991,400 0.00% 21,181, 100 42.45% duly 1, 2010 3,030,967 3,030,967 0.00% 20,559,274 14.74%, Schoot Board Other Postemplayment Benefits-VRS Health Insurance Credit Actuarial Actuariat Actuarial Unfunded UAAL asa Valuation Value of Accrued AAL(UAAL) Funded Ratio Covered % of Covered as.of (*) Assets Liability (MAL) @-@ (ove) Payrott Payroll (4)/(6) w @ 8 co ‘Gy co) O June 30,201 (15,285) $382,648 § 397,933 3.998 S$ 2,639,711 15.07% June 30, 2013 379 376,778 376,399 10% 2,666,329 14.12% June 30, 2012 461,463 161,463, 0.00% 2,689,457 6.00% () + June 30, 2012 was the initial valuation as the School Board recently joined this plan. -80- County of Russell, Virginia Schedule of Employer's Proportionate Share of the Net Pension Liability June 30, 2015 Proportionate Share of the NPL Proportion of as a Percentage of the Net Pension Proportionate Covered Covered Payroll Date liability (NPL) Share of the NPL Employee Payroll (3)/(4) (1) (2) (3) (4) (5) Primary Government - County Retirement Plan 2014 99.1179% $ 5,782,839 s 5,440,419 106.29% Component Unit School Board (professional) 2014 0.23360% 28,229,000 $ 17,083,236 165.24% Exhibit 15 Pension Plan's Fiduciary Net Position as a Percentage of Total Pension liability (6) 80.53% 70.88% Schedule is intended to show information for 10 years. Since 2015 is the first year for this presentation, no other data is available. However, •The amounts presented have a measurement date of the previous fiscal year end. -81- County of Russel, Virginia Schedule of Employer's Proportionate Share of the Net Pension Liability June 30, 2015 exhibit 15 Proportionate Pension Plan's Share of the NPL_—Fiductary Net Proportion of asaPercentage of Position as a the Net Pension Proportionate Covered Covered Payroll Percentage of Total Date Liability (NPL) Share of the NPL Employee Payrolt eye) Pension Liability o Q By wo 6) �� Primary Government - County Retirement Pian 2014 9.179% § 5,702.89. § 5,440,499 06.29% 50.53% Component Unit Schoot Board (professional) 2014 0.23360% § 28,229,000 § 17,083,236 165.2% 70.88% Schedule is intended to show information for 10 years. Since 2015 is the first year for ths presentation, no other data is available. However, "The amounts presented have a measurement date ofthe previous fiscal year end. Exhibit 16 County of Russell, Virginia Schedule of Components of and Changes in Net Pension Liability and Related Ratios Component Unit School Board (nonprofessional) Total pension liability Service cost Interest Changes of benefit terms For the Year Ended June 30, 2015 Differences between expected and actual experience Changes in assumptions Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) School Division's net pension liability - ending (a) - (b) Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll School Division's net pension liability as a percentage of covered-employee payroll $ s 2014 263,958 1,116,022 (1,083,833) 296, 147 16,485,081 $ ===1=6=,7=81=='=22=8= $ $ 423,435 130,388 1,629,758 (1,083,833) (9,166) 86 1,090,668 10,635, 935 $ 11,726,603 ========= $ 5,054,625 69.88% $ 2,612,301 193.49% Schedule is intended to show information for 10 years. Since 2015 is the first year for this presentation, no other data is available. However, additional years will be included as they become available. -82- County of Russell, Virginia Exhibit 16 Schedule of Components of and Changes in Net Pension Liability and Related Ratios Component Unit School Board (nonprofessional) For the Year Ended June 30, 2015 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments, including refunds of emptoyee contributions Net change in total pension tiability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) School Division's net pension liability - ending (a) - (b) Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll School Division’s net pension liability as a percentage of covered-employee payroll 2014 $ 263,958 1,116,022 (1,083,833) 5 296,147 16,485,081 $ 16,781,228 $ 423,435 130,388 1,629,758 (4,083,833) (9,166) 86 $ 7,090, 668 10,635,935 $ 11,726,603 $ 5,054,625 69.88% $ 2,612,301 193.49% Schedule is intended to show information for 10 years. Since 2015 is the first year for this presentation, no other data is available. However, additional years will be included as they become available. -82- County of Russell, Virginia Schedule of Employer Contributions For the Year Ended June 30, 2015 Contractually Required Contribution Date (1) Primary Government 2015 $ 796,636 $ Contributions in Relation to Contractually Required Contribution (2) 796,636 Component Unit School Board (nonprofessional) $ 2015 $ 427,268 $ 427,268 $ Component Unit School Board (professional) 2015 $ 2,509,000 $ 2,509,000 $ Contribution Deficiency (Excess) (3) $ $ $ Exhibit 17 Contributions Employer's as a% of Covered Covered Employee Employee Payroll Payroll (4) (5) 5,368, 165 14.61% 2,434,577 17. 55% 17,363,701 14.45% Schedule is intended to show information for 10 years. Since 2015 is the first year for this presentation, no other data is available. However, additional years will be included as they become available. ·83· Exhibit 17 County of Russell, Virginia Schedule of Employer Contributions For the Year Ended June 30, 2015 Contributions in Contributions Relation to Employer's asa%of Contractually Contractually Contribution Covered Covered Required Required Deficiency Employee Employee Contribution Contribution (Excess) Payroll Payroll Date (4) (2) (3) (4) () Primary Government 2015S 796,636 $ 796,636 § + $5,368,165 14.61% Component Unit School Board (nonprofessional) 2015S 427,168 $ 427,208 § - $2,434,577 17.55% Component Unit School Board (professional) 2015 § ~——-2,509,000 $ 2,509,000 $ - $17,363,701 14.45% ‘Schedule is intended to show information for 10 years. Since 2015 is the first year for this presentation, no other data is available. However, additional years will be included as they become available. -83- County of Russell, Virginia Notes to Required Supplementary Information For the Year Ended June 30, 2015 Exhibit 18 Changes of benefit terms - There have been no significant changes to the System benefit provisions since the prior actuarial valuation. A hybrid plan with changes to the defined benefit plan structure and a new defined contribution component were adopted in 2012. The hybrid plan applies to most new employees hired on or after January 1, 2014 and not covered by enhanced hazardous duty benefits. The liabilities presented do not reflect the hybrid plan since it covers new members joining the System after the valuation date of June 30, 2013 and the impact on the liabilities as of the measurement date of June 30, 2014 are minimal. Changes of assumptions - The following changes in actuarial assumptions were made effective June 30, 2013 based on the most recent experience study of the System for the four-year period ending June 30, 2012: Largest 10 - Non-LEOS: - Update mortality table · Decrease in rates of service retirement - Decrease in rates of disability retirement - Reduce rates of salary increase by 0.25% per year Largest 10 - LEOS: - Update mortality table - Decrease in male rates of disability All Others (Non 10 Largest) - Non-LEOS: - Update mortality table · Decrease in rates of service retirement - Decrease in rates of disability retirement · Reduce rates of salary increase by 0.25% per year All Others (Non 10 Largest) - LEOS: - Update mortality table - Adjustments to rates of service retirement for females - Increase in rates of withdrawal - Decrease in male and female rates of disability Component Unit School Board - Professional Employees - Update mortality table - Adjustments to the rates of service retirement - Decrease in rates withdrawals for 3 through 9 years of service - Decrease in rates of disability retirement - Reduce rates of salary increase by 0.25% per year -84· Exhibit 18 County of Russell, Virginia Notes to Required Supplementary Information For the Year Ended June 30, 2015, Changes of benefit terms - There have been no significant changes to the System benefit provisions since the prior actuarial valuation. A hybrid plan with changes to the defined benefit plan structure and a new defined contribution component were adopted in 2012. The hybrid plan applies to most new employees hired on or after January 1, 2014 and not covered by enhanced hazardous duty benefits, The liabilities presented do not reflect the hybrid plan since it covers new members joining the System after the vatuation date of June 30, 2013 and the impact on the tiabitities as of the measurement date of June 30, 2014 are minimal. Changes of assumptions - The following changes in actuarial assumptions were made effective June 30, 2013, based on the most recent experience study of the System for the four-year period ending June 30, 2012 Largest 10 - Non-LEOS: - Update mortality table Decrease in rates of service retirement - Decrease in rates of disability retirement = Reduce rates of salary increase by 0.25% per year Largest 10 - LEOS: - Update mortality table ~ Decrease in male rates of disability All Others (Non 10 Largest) - Non-LEOS: - Update mortality table - Decrease in rates of service retirement - Decrease in rates of disability retirement - Reduce rates of salary increase by 0.25% per year Alt Others (Non 10 Largest) - LEOS: = Update mortality table - Adjustments to rates of service retirement for females = Increase in rates of withdrawal « Decrease in male and female rates of disability Component Unit School Board - Professional Employees - Update mortality table - Adjustments to the rates of service retirement - Decrease in rates withdrawals for 3 through 9 years of service - Decrease in rates of disability retirement ~ Reduce rates of salary increase by 0.25% per year “84. Other Supplementary Information 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. 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. County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2015 Balance Beginning of Year Additions Deletions Assets Current Assets Cash and cash equivalents Special Welfare Fund s 68, 932 s 98,891 s (110,440) VASAP Fund 16, 189 216,897 (232,037) Total Assets $ 85, 121 s 315,788 $ (342,477) Liabilities Amounts held for social services clients s 68, 932 s 98,891 s (110,440) Amounts held for VASAP 16, 189 216,897 (232,037) Total Liabilities s 85, 121 $ 315,788 s (342,477) -85- Exhibit 19 Balance End of Year s 57,383 1,049 $ 58,432 s 57,383 1,049 $ 58,432 Exhibit 19 County of Russell, Virginia Combined Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2015 Balance Balance Beginning End of Year Additions. Deletions -—of Year. Assets Current Assets Cash and cash equivalents Special Welfare Fund $ 68,932 $ 98,891 $ (110,440) $ 57,383 VASAP Fund 16,189. 216,897 (232,037) 1,049 Total Assets 85,727 315,768 (342,477) 38,432 Liabilities Amounts held for social services clients. $ 68,932 $ 98,891 $ (110,440) $57,383 Amounts held for VASAP 16,189. 216,897 (232,037) 4,049 Total Liabilities 85,721 315,788 (842,477) 38,432 DISCRETELY PRESENTED COMPONENT UNIT - SCHOOL BOARD MAJOR GOVERNMENTAL FUNDS School Operating Fund - The School Operating Fund accounts for and reports the operations of the County's school system. Financing is provided by the State and Federal governments as well as contributions from the General Fund. DISCRETELY PRESENTED COMPONENT UNIT - SCHOOL BOARD MAJOR GOVERNMENTAL FUNDS. School Operating Fund - The School Operating Fund accounts for and reports the operations of the County's school system. Financing is provided by the State and Federal governments as well as contributions from the General Fund. ASSETS Cash and cash equivalents County of Russell, Virginia Balance Sheet Discretely Presented Component Unit ~ School Board June 30, 2015 Receivables (net of allowance for uncollectibles): Accounts receivable Due from other governmental units Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Salaries payable Due to primary government Total liabilities Fund balances: Nonspendable: Prepaid items Committed: Textbook purchases Regional Adult Education Unassigned: Total fund balances Total liabilities and fund balances Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Total fund balances per above Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Land Buildings and i1nprovements Machinery and equipment Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Items related to measurement of net pension liability Pension contributions subsequent to the measurement date will be a reduction to the net pension liability in the next fiscal year and, therefore, are not reported in the funds. Long-term liabilities, including early retirement incentives, are not due and payable in the current period and, therefore, are not reported in the funds. Compensated absences Early retirement incentive Net OPEB obligation Net pension liability Net position of governmental activities -86- 5,636,345 10,583,275 1,632,997 (787, 935) (19,500) (966, 949) (33,283,625) Exhibit 20 School Operating Fund $ 1,839,676 $ $ $ $ 16,548 1,501,315 760,243 4, 117,782 94,242 890,850 2,499,074 3,484, 166 760,243 345, 940 287,676 (760,243) 633,616 4, 117,782 633,616 17,852,617 (6,030,289) 2, 936,268 (35,058,009) $ (19,665,797) Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russell, Virginia Balance Sheet. Discretely Presented Component Unit - School Board June 30, 2015 Exhibit 20 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectibles) Accounts receivable Due from other governmental units Prepaid items Total assets LIABILITIES AND FUND BALANCES. Liabilities: Accounts payable Salaries payable Due to primary government Total liabilities Fund batances: Nonspendable: Prepaid items Committed: Textbook purchases Regional Adult Education Unassigned: Total fund batances Total liabilities and fund balances Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Total fund balances per above Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Lang 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. Items related to measurement of net pension liability Pension contributions subsequent to the measurement date will be a reduction to the net pension Labitity in the next fiscat year and, therefore, are not reported in the funds. Long-term liabilities, including early retirement Incentives, are not due and payable in the current period and, therefore, are not reported in the funcs. Compensated absences Early retirement incentive Net OPEB obligation Net pension tiabiity “86: 5,636,345 10,583,275 41,632,997, (787,935) (19,500) (966,949) (33,283,625) Schoo! Operating Fund 5 1,839,676 16,548 1,301,315, 760,243 ae 94,242 890,850 2,499,074 4, 165, $760,243 345,940, 287,676 (760,243) 633,616 Sana 5 633,616 17,852,617 (6,030,289) 2,936,268 (35,058,009) County of Russell, Virginia Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds - Discretely Presented Component Unit - School Boarc For the Year Ended June 30, 2015 REVENUES Revenue from the use of money and property Charges for services Miscellaneous Recovered costs Intergovernmental: Local government Commonwealth Federal Total revenues EXPENDITURES Current: Education Excess (deficiency) of revenues over {under) expenditures Net change in fund balances Fund balances - beginning Fund balances - ending Amounts reported for governmental activities in the statement of activities (Exhibit 2) are different because· Net change in fund balances - total governmental funds - per above Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation ln the current period. Capital outlays Reversion of assets back to the School Board {net) Depreciation expense Revenues in the statement of activities that do not proviCe current financial resources are not reported as revenues in the funds. Change in deferred inflows of resources related to the measurement of the net pension liabilit} Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds. (Increase} decrease in compensated absences (Increase) decrease in early retirement incentive (Increase) decrease in net OPEB obligation Change in net pension liability Change in deferred outflows of resources related to pension payments subsequent to the measurement date Change in net position of governmental activities -87- 678,546 721, 700 (999, 188) (29,513) 51 ,300 (260,256) 6, 109,521 Exhibit 21 School Operating .E!mQ $ 3,095 442, 194 24S,718 627,694 5, 765, 180 27,931,541 4,292,813 $ 39,308,235 $ 39,231,470 $ $ $ $ 76, 765 76,765 556,851 633,616 76,765 401,058 (6,030,289) 518,833 6,389,885 $ 837,419 County of Russell, Virginia ‘Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds -Discretely Presented Component Unit - Schoot Boare For the Year Ended June 30, 2015 Exhibit 21 REVENUES Revenue from the use of money and property Charges far services Miscellaneous Recovered costs ‘ntergovernmentat Locat government Commonweatth Federal Total revenves EXPENDITURES Current: Education Excess (deficiency) of revenves over (under) expenditures Net change in fund balances Fund balances - beginning Fund balances - ending Amounts reported for governmental activities in the statement of activities (Exhibit 2} are different because Net change in fund batances - total governmental funds » per above 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 reparted as depreciation expense, This Is the amount by wich capital outlays exceeded depreciation in the current period, Capital outiays Reversion af assets back to the School Board (net) Depreciation expense Revenues in the statement of activities that do nat provice current financial resources are not reported as revenues ‘nthe funds. CChange in deferred inflows of resources related to the measurement af the net pension lability Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds. (increase) decrease in compensated absences (increase) decrease in eariy retirement incentive (increase) decrease in net OPEB obligation Change in net pension lability Change in deferred outflows of resources related to pension payments subsequent to the measurement date Change in net position of governmental activities -87- 678,546 721,700 (999,188) (29,513) 51,300 (260,256) 6,109,521 518,833 Schoo! Operating Fund S 3,095 42,594 245,718 627,694 5,765,180 27,931,544 4,292,813 $39,308. 235 $39,231,470 76.765 $76,765 556,851 Eee $16,765 401,058 (6,020,289), 6,389,885 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, 2015 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 Budgeted Amounts Original Final Actual 1,500 $ 1,500 $ 3,095 721,813 721,813 442, 194 170,000 164, 558 245,718 533, 500 533,500 627,694 7,623,503 7,623,503 5,765, 180 26,998,851 27,710, 165 27,931,541 4,499,020 5,082,784 4,292,813 40,548, 187 $ 41,837,823 $ 39,308,235 40,548, 187 $ 41,837,823 $ 39,231,470 $ $ 76,765 $ $ 76,765 556,851 $ $ 633,616 -88- Exhibit 22 Variance with Final Budget Positive (Negative) $ 1,595 (279,619) 81,160 94, 194 (1,858,323) 221,376 (789,971) $ (2,529,588) $ 2,606,353 $ 76,765 $ 76, 765 556,851 $ 633,616 Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russell, Virginia Discretely Presented Component Unit - School Board For the Year Ended June 30, 2015 Exhibit 22 REVENUES Revenue from the use of money and property Charges for services ‘Miscellaneous Recovered costs Intergovernmental Local government ‘Commonwealth Federal Total revenues EXPENDITURES Current: Education Excess (deficiency) of revenues over (under) ‘expenditures Net change in fund balances Fund balances - beginning Fund balances - ending ‘School Operating Fund Variance with Final Budget Budgeted Amounts Positive ‘Original nal Actus Negative! $ 4,500 $ 4,500 § 3,095 $ 1,595 721,813 724,813 442,194 (279,619) 170,000 164,558 245,718 81,460 533,500 533,500 627,694 94,194 7,623,503 7,623,503 5,765,180 (1,858,323) 26,998,851 27,710,165 27,931,541 221,376 4,499,020 5,082,784 4,292,813, (789,971) 0,548,187 $41,837,823 $39,308,235 $ (2,529,588) $40,548,187 $41,837,823 § 39,231,470 $2,606,353 $ $ $76,765 $76,765 $ “38 S 76,765 $ 76,765 : 556,851 556,851 -88- Supporting Schedules Supporting Schedules County of Russell, Virginia Schedule 1 Schedule of Revenues - Budget and Actual Page 1 of 5 Governmental Funds For the Year Ended June 30, 2015 Variance with Final Budget Original Final Positive Fund. Major and Minor Revenue Source Budget Budget Actual {Negative) General Fund: Revenue from local sources: General property taxes: Real Property Tax s 8,400,000 s 8,400,000 s 7,876,874 s {523,126) Real and Personal PSC Tax 1,386,387 1,386,387 1,537,854 151,467 Personal Property Tax 2, 791 ,000 2,791,000 3,523,969 732,969 Mobile Home Tax 112,000 112,000 115,011 3,011 Machinery and Tools Tax 1,800,000 1,800,000 1, 191,281 (608,719) Merchants Capital 30,000 30,000 34, 996 4,996 Mineral Tax 940,000 940,000 993,732 53, 732 Penalties 120,000 120,000 148,441 28,441 Interest 288,000 288,000 324,477 36,477 Total general property taxes $ 15,867,387 15,867,387 15,746,635 $ (120,752) Other local taxes: Local Sales and Use Tax $ 1,893,517 $ 1,893,517 $ 1,876,308 $ (17,209) Consumers' Utility Tax 550,000 550,000 530,273 (19,727) Consumption Taxes 70,000 70,000 85, 941 15,941 Franchise License Tax 3,230 3,230 Coal Severance Tax 700,000 700,000 757,894 57,894 Bank Stock Tax 10,915 10,915 Grantee tax 94,000 94,000 86,598 (7,402) Motor Vehicle Licenses 410,000 410,000 507 ,262 97,262 Taxes on Recordation and Wills 30,000 30,000 19, 112 {10,888) Total other local taxes 3,747,517 3,747,517 3,877,533 130,016 Permits, privilege fees, and regulatory licenses: Animal licenses s 2,300 2,300 2,264 $ (36) Building permits 45,000 45,000 34,851 {10,149) Other permits and other licenses 3,300 3,300 3,227 (73) Total permits, privilege fees, and regulatory licenses $ 50,600 s 50,600 $ 40,342 $ (10,258) Fines and forfeitures: Court fines and forfeitures $ 27,000 $ 27,000 $ 2,334 s (24,666) Revenue from use of money and property: Revenue from use of money $ 20,000 $ 20,000 $ 27,986 $ 7,986 Revenue from use of property 315,000 315,000 218,606 (96,394) Total revenue from use of money and property $ 335,000 $ 335,000 $ 246,592 $ (88,408) Charges for services: Charges for sanitation and waste removal $ 185,000 $ 185,000 $ 244, 198 $ 59,198 Charges for courthouse security 51,000 51,000 29,603 (21,397) Charges for cannery operations 30,000 30,000 29,530 (470) Charges for commonwealth attorney 5,600 5,600 5,978 378 Charges for courthouse maintenance 10,000 10,000 9,238 (762) Charges for jail and inmate fees 4,000 4,000 4,655 655 Charges for district court 2,646 2,646 Charges for library 2,200 2,200 4,451 2,251 Other charges for services 5,500 5,500 4,264 (1,236) Total charges for services 293,300 293,300 334,563 41 ,263 Miscellaneous: Other miscellaneous revenue $ 206,600 206,600 180,278 (26,322) Sale of property/surplus 10,000 10,000 46,343 36,343 Tota( miscellaneous $ 216,600 $ 216,600 226,621 s 10,021 -89- Tim Lovelace Highlight Tim Lovelace Highlight Tim Lovelace Highlight County of Russell, Virgina Schedule 4 Schedule of Revenues - Budget and Actual Page 1 of 5 Governmental Funds: _fo the Vane Ended tune 30,2058 Variance with Final Budget Original Final Postive und, Major ang Minor Revenue Source Budget Busget Actual ——_iNegativey “General Funds Reverue from local sources ‘General property tates: Real Property Tax 8,400,000 $ 6,400,000 § 7,876,874 § (523,128) eat and Persanat PSC Tax 1,386,387” 1)386,387 1.537.854, 151,467 Personal Property Tax 2i7e1jo00 2,791,000 3,823,969, 732969 ‘Mobile Home Tax 132,000 112,000 nns,011 Som Dachinery and Tools Tax 1,800,000 3,800,000 3,191,281 (608,759) Merchants Capita 30,000 30,000 34.995 4956 mineral Tax 940,000 940,000 993,732 33,732 Penalties 120,000 120,000 148,441 2844 Inverest 788,000 283,000, maar) 36.477 Total general property taxes STE AGT 38) ST 867.387 5 TS, S_S TRO.) (ther Local taxes: Local Sales and Use Tax S 1,893,507 $1,893,557 § 1,876,308 § (17,209) Consumers Utity Tax 580,000 580,000 530,273, 03,727) Consumption Taxes 70,000 70,000 35,944 15.941 Franchise License Tax 3,230 3,230 Coal Severance Tax 700,000 700,000 157,8594 57.894 Bank Stock Tax 10,915 10915 Grantee tax 94,000, 4,000 36,598 7.402) Motor Vehicle Licenses 410,000 490,000 507,262 97.262 ‘Taxes on Recordation and Wills 30,000 30,000 19.112 (20,888) “otal other tocal taxes Spars) $—37a0.s7 6387 533 Permits, privilege fees, and regtatory lenses: ‘Animal licenses S 2300 $ 2,300 § ate eo Buliding permits 45,000, 45,000 3east 10,129) (Other permits and other licenses 3,300 3,300 3,227 i Total permits, prviege Fees, and regulatory icenses $3,600" 3o.500 Bie 70.758) Fines and forfelures Court fines and forfeitures $27,000 § 77,000 § 2334 $a. 666) Revenue from use of maney and property Revenue from wse of money S 20000 $ 20,000 $ a.m $7,986 Revenue from use of property 315,000, 315,000 218,605, (96,394), “otal revenve from tse of money and property $35,000 S355, 000 576,592 S88 08) Charges for services: {Charges for saitation and waste removal S 185000 $ 485,000 5 244,198 $89,198 {Charges for courthouse security 51,000 53,000 28,603 21397) Charges for cannery operations 30,000 30,000 29,530, (a0), Charges for commonwealth attorney 5,600 5,600 5.978 a8 Charges for courthouse maintenance 10,000 10,000 9.238 (782) (Charges for jail and inmate fees 4000 4,000 4.655 655 (Charges for cletrit court, . 2,646 2,666 Charges for inary 2,200 2,200 ass 225% (Other charges fr services 5.500 5500 4.264 2361 Total charges for services $793, 300“§ HH G0 Sab Saas scellanecus: ‘Other miscellaneous revenue $206,600 § 206,600 twa,z78 $5,322) Sale of property/sepics 10,000, 10,000, 46,343 36,383 “Total miscellaneous 5 716,600 56,600 S421 _S 10,021 -89- County of Russell, Virginia Schedule 1 Schedule of Revenues • Budget and Actual Page 2 of 5 Governmental Funds For the Year Ended June 30, 2015 Variance with Final Budget Original Final Positive Fund, Major and Minor Revenue Source Budget Budget Actual X ASSOCIATES '1 PROFESSIONAL LIMITED LIABILITY COlvf PANY CERTIFIED PCB!JC ACCOL'/\tTANTS Independent Auditors' Report on Compliance For Each Major Program and on Internal Control over Compliance Required by OMB Circular A-133 To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia Report on Compliance for Each Major Federal Program We have audited the County of Russell, Virginia's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County of Russell, Virginia's major federal programs for the year ended June 30, 2015. County of Russell, Virginia's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about 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, 2015. -108- ROBINSON, FARMER, COX ASSOCIATES 4 PROFESSIONAL LIMITED LIABILITY COMPANY CERTIFIED PUBLIC ACCOUNTANTS Independent Auditors’ Report on Compliance For Each Major Program and on Internal Control over Compliance Required by OMB Circular A-133 To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia Report on Compliance for Each Major Federal Program We have audited the County of Russell, Virginia’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County of Russell, Virginia’s major federal programs for the year ended June 30, 2015. County of Russell, Virginia’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on comptiance 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about 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 alt 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, 2015. -108- 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 OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A·133. Accordingly, this report is not suitable for any other purpose. if~111t, ~' (tkca'c