AGENDA  HILLSVILLE TOWN COUNCIL HILLSVILLE TOWN HALL  MARCH 25, 2024 & MARCH 26, 2024 BUDGET WORK SESSION  CALL TO ORDER-7:00PM  II. INVOCATION III. PLEDGE OF ALLEGIANCE IV. APPROVAL OF MINUTES A. MARCH 11, 2024 V. CITIZENS TO BE HEARD VI. TOWN MANAGER'S REPORT VII. TOWNATTORNEYS REPORT VIII. POLICE CHIEF'S REPORT IX. REPORTS OF MAYORAND COUNCIL X. UNFINISHED BUSINESS XI. NEWI BUSINESS  A. FY: 2022/2023 AUDIT REPORT: JUAN GARCIA, HICOK, BROWN & COMPANY B. CONSIDERATION OF APPROVAL TO ABATE UTILITY ACCOUNTS LESS THAN $5.00 C. LESLEY CATRON: UPDATE ON HILLSVILLE MOVIE NIGHTS  Recess  XII. RECONVENE ON MARCH 26, 2024, 4:00 P.M., AT TOWN HALL XIII. DENNIS AMOS, HURT AND PROFFITT RATE STUDY XIV. KYLE LAUX, DAVENPORT--FINANCIAL REVIEW  XV. BUDGET WORK SESSION XVI. ADJOURNMENT    March 25, 2024, & March 26, 2024, Budget Work Session Page 10 of3 COMMONWEALTH OF VIRGINIA TOWN OF HILLSVILLE semimonthly meeting.  Hillsville" Town Council met at Town) Hall on Monday, March 25, 2024, at 7:00 P.M. for their regular  COUNCIL: Gregory N.' "Greg" Crowder, Mayor EdTerry, Pine Creek Greg Yonce, Laurel Fork David Young, Pipers Gap Barry. Jessup, Sulphur Springs Town Manager/Treasurer, LeAnna Surratt Assistant to the Town Manager, Valerie Padgett Police Chief, Shannon Goad Town Attorney, Trent Crewe Clerk of Council, Vickie Yonce  LCALLTOORDER-IAN. II. INVOCATION  Mayor Crowder called the meeting to ordera at 7:00 P.M. Vicel Mayor Ed' Terry gave the invocation. II. PLEDGE OF ALLEGIANCE Thel Pledge of Allegiance was recited inu unison. IV. APPROVAL OFI MINUTES A. March 11,2024 March 11,2 2024, as presented. VOTE: Barry Jessup- Aye Greg Yonce-A Aye V.CITIZENS TOJ BE HEARD There were no Citizens Tol Bel Heard. VLTOWNI MANAGER'S: REPORT  Onan motion by Barry. Jessup and as second by Ed Terry, Council: moved to approvet the minutes of  Ed Terry- Aye David Young-A Aye  A copy ofthe Town) Manager's) Report was distributed priort tot the meeting. Mrs. Surratt stated that the Town Office would close at 121 noon onl Friday, March 29, 2024, complimented Tourism Director Lauren Chitwood for sending email updates andy working on available grants, statedt that Ideal Florist was havinga a grand reopening on! Friday, March 29h, at4 4p p.m., and: stated that shel hadi included information: from the Registrar's office inl her Townl Manager's reportt to  Council.  VIL. TOWN. ATTORNEY'S: REPORT Town Attorney Trent Crewel had nothing tor report. VIL. POLICE CHIEF'SI REPORT  A copy oft the Police Chief's report was distributed priort tot the meeting. A copy is attached herewith andr madea aj part oft these minutes. Chief Goad hadi nothing further to report.    March 25, 2024, & March 26, 2024, Budget Work Session IX. REPORTS OFI MAYOR. AND COUNCIL  Page2of3  Councilman Ed' Terry expressed his appreciation for the ongoing efforts and hard work ofa allt town Councilman David Young handed) Police Chief Shannon Goad an envelope which woulde enable him and thet town police officers tol havean meal, buts stated thati itv was not a donation because that was not allowed, and expressed his appreciation for all town employees. Councilman Barry. Jessup expressed his appreciation for all town employees and their hard work. Mayor Crowder expressed his appreciation for thet town employees ands statedt that were all  employees.  doinga a wonderfulj job. X. UNFINISHED BUSINESS There was no unfinished business. XI.I NEWBUSINESS  they  A. FY2022/2023 Audit Report: Juan Garcia, Hicok, Brown & Company. Mr.. Juan Garcia, representing Hicok, Brown & Company, presented thel FY 2022/2023 Audit Report. A copy oft the Auditi is attached herewith andr madea aj part oft these minutes. B. Consideration OfApproval To Abate Utility Accounts Less Than $5.00 Councilman Barry. Jessup madea a motion to approve thel list ofa abatements on utility accounts, as presented, and Councilman Ed Terry seconded the motion. The floor was opened for and Councilman Greg Yonce askedi ifCouncil could make one blanket" motion for abatements discussion, tob be made, and' Town Attorney Trent Crewer recommended thate each abatement should be approvedi individually. The motion was then voted on and passed unanimously.  VOTE: Barry. Jessup- - Aye Greg Yonce-Aye  Ed Terry- - Aye David" Young- Aye  C. Lesley Catron: Update Onl Hillsville Moviel Nights  Mrs. Lesley Catron expressed appreciation on behalf oft thel Hillsvillel Movie Nights Committee to Town Council fort their support, statedt that attending the 2024 movies would once again bei free of charge thankst tot the continued: support ofs several sponsors, statedt that families bring their children who ride their bikes, and described thet themes and activities planned for the movies. Mrs. Surratt expressed her appreciation for Mrs. Catron andt the other volunteers. Ity was also discussedt that having the movies indoors might be cheaper, andI Mayor Crowder statedt that! his building an option and asked Mrs. Catron tos speak withl him later. Mayor Crowder recessed the meeting at 7:17 p.m., ands statedt thati ity would reconvene on March: 26, 2024, at4 4:00 p.m. at Town Hall for thel Budget Work Session. XII. BUDGET WORK SISSION-RECONVINE ONI MONDAY, MARCH27, 2023, 4:001 Hillsville Town Council reconvened on Monday, March 27, 2023, at4 4:001 P.M. at Town) Hall  might be Tuesday, P.M.,  TOWN: HALL  for thel Budget Work Session.    March 25, 2024, &1 March 26, 2024, Budget Work Session PRESENT WERE: Gregory N.' "Greg" Crowder, Mayor  Page3of3  Edi Terry, Pine Creek Greg Yonce, Laurel Fork Barry. Jessup, Sulphur Springs Town) Manager/Treasurer, LeAnna Surratt Assistant tot the Town) Manager, Valerie Padgett Police Chief, Shannon Goad HPD Officel Manager, Michael Henley Town) Engineer, Stevel Bowman Utilities Director, Darrick Mayes Tourism Director, Lauren Chitwood Clerk ofCouncil, Vickie Yonce  Mayor Crowder reconvened the meeting at 4:11 p.m. XIII. DENNIS. AMOS, HURT ANDI PROFFITRATESTUDY  Mr. Dennis. Amos, Hurt and Proffitt, presented a Watera and Sewer Rate Study, and recommended 10%- 10.5% rate increases for the next four years. A copy oft thel Rate Study is attached herewith Mr. Kylel Laux, Davenport, presented a Comprehensive Financial Review and mades several recommendations for financial planning. A copy ofthel Financial Review is attached herewith Copies ofthep proposed FY 2024-25 Budget were distributed priort tot the meeting. A copy ofthe proposed Budget is attached herewith and madea a part oft these minutes. Mrs. Surratt discussed thei increases and decreases and answered questions from Council on various items. Police Chief Shannon Goad, Town! Engineer Stevel Bowman, and Utilities Director Darrick Mayes also answered various questions and contributed additional information. regarding Onamotion by Ed Terry and as second by Barry. Jessup, the meeting was adjourned at 5:55p p.m.  and made ap parto oft theser minutes.  XIV. KVLELAUX.DAVENPORT-FINANCIAL: REVIEW  and made a part oft these minutes. XV. BUDGET WORK SESSION  various departmental matters. XVI. ADJOURNMENT  VOTE: Barry. Jessup- - Aye Greg Yonce- Aye  Ed Terry- Aye David Young- Absent 4  Vickie Wonce, salese    Town Council Meeting March 25, 2024  Law Enforcement Activity Numbers Hillsville Police Department February 1, 2024 to February 29, 2024  Activity  Totals 17 7 8 4 11 39 0 0 2 10 0 5 31 16 18 1059 2 6 292 3 6 128 6 2 1 3 1 7 1 464 63 4 1 2 1 63 2 26 0 0 0 23  Assist Motorists Assist County Assist Fire Department Assist EMS Assist Other Departments Assist HPD Officers Custody Orders Detention Orders Protective Orders Criminal Investigations Domestic Complaints Accident Investigations Follow-Up Investigations Warrants Obtained Warrants Served Business Checks House Checks Welfare Checks Community Engagement Foot Patrols Escorts Service Calls (Other) False Calls/Unfounded DUI- Alcohol Arrests DUI-D Drugs Arrests Drunk in Public Arrests Criminal Arrests Traffic Stop Criminal Arrests - Non-Traffic Field Sobriety Tests Uniform Summons - Speeding Uniform Summons - Reckless Driving Uniform Summons - Safety Belts Uniform Summons Child Safety Seats Uniform Summons Fail to Move Over Uniform Summons Hands Free Violations Uniform Summons Other Traffic Magistrate Summons (Non-Uniform) Warnings Traffic Stop Uniform Summons Unsecured Trash Uniform Summons Littering Warnings Unsecured Trash Vehicles Observed (Carrying Trash)  Month of February 2024; Page 1 of1    Town of Hillsville, Virginia Financial Statements Year Ended. June. 30, 2023  ( (  CERTIRIED PULIC ACCOUNTANIS TRUST.LEGACY. YALUESITALE ADDSUP.    Town Council  Gregory N. Crowder, Mayor Ed1 Terry, Vice Mayor Barry Jessup Greg Yonce David Young Town Manager Retta N.. Jackson Town Attorney Cassell & Crewe  Treasurer LeAnna Surratt  Independent Auditors  HBCCPAS    Table ofContents  Exhibit or Schedule  Page  Financial Section  Independent. Auditor's Report... Governmental. Auditing Standards. Management's. Discussion and Analysis Basic. Financial, Statements Government-vide. Financial Statements Statement ofNet Position. Statement of Activities. Fund Financial Statements Balance Sheet- - Governmental Funds. Statement ofF Revenues, Expenditures and Changes in Fund) Balance- - Governmental Funds. Statement ofNet] Position- - Proprietary Funds. Statement of Revenues, Expenses and Changes in Fund Net Position- - Proprietary Funds.. Statement of Cash) Flows-Proprietary: Funds. Notes to Financial. Statements Required Supplemental. Information  Independent Report on Internal Control Over Financial, Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with  13 14 15 17 19 20 21 22 57 59 60 61 62 63  D  Schedule of Revenues, Expenditures and Changes in Fund] Balance Budget and Actual - Governmental Funds. Schedule of Changes inl Net] Pension) Liability and] Related Ratios. Schedule ofEmployer Pension Contributions. Schedule of] Employer's Share ofNet Groupl Life Insurancel Liability Schedule of Group Lifel Insurancel Employer Contributions.  )  Schedule of Changes in Total Other] Post-Employment Benefit Liability and Related Ratios.....6  Statistical Section Financial Trends Changes in Net Position. Revenues by Function.. Expenses byl Function. Revenue Capacity Property Tax Levies and Collections. Debt Capacity Outstanding Debt by Type. Computation ofLegal Debt Margin... Demographic and Economic. Information Population, Personal Income and Unemployment Rate.. Principal Employers.... Operating. Information Full-time Equivalent Town Government Employees by Function..  64 65 66 67 68 69 70 71 72 73  Assessed Valuation ofTaxable Property and Property Tax Rates.  10 11 12 13 14 15 16  Compliance Section  Independent. Auditor's Report on Compliance, for Each Major Program and on Internal Control  over Compliance Required by the Uniform Guidance.. Schedule of Expenditures of Federal Awards.  74 76    Davidl B. Brown, CPA Juan) J. Garcia, CPA Karen) L.J Jackson, CPA Michael W.1  155 E. Valley Street P.O. Box 821  Abingdon, Virginia 24212-0821 (276) 628-1123 Fax: (276) 676-3000 e-mail: HBCOfirmopa.com  HBC CERTIFIED PUBLIC ACCOUNTANTS TRUST. LEGACY. VALUES. IT ALLA ADDS UP. INDEPENDENT AUDITOR'S REPORT  Pennington, CPA  Tracy S. Garcia, CPA, CGMA, CIA",CVA*  To the Honorable Members oft the Town Council Town ofHillsville, Virginia Report on the Financial Statements  Opinions  We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund oft the Town ofl Hillsville, Virginia, as of and for the year ended. June 30, 2023, and the related notes to the financial statements, which collectively comprise the Town ofl Hillsville, In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each fund of the Town of Hillsville, Virginia, as of June 30, 2023, and the respective changes in financial major position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting 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 oft the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor ofl Public. Accounts oft the Commonwealth of Virginia. Our responsibilities under those standards are further described int the. Auditors' Responsibilities for the Audit of the Financial Statements section ofour report. We are required tol be independent ofthe Town ofHillsville, Virginia, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a As described in Note 1(R) to the financial statements, in 2023, the Town of Hillsville, Virginia adopted new accounting guidance, GASB Statement No. 96, Subscription Based Information Technology Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance ofinternal control relevant tot thej preparationa and fair presentation off financial statements that are free from material misstatement, whether due to fraud or error. Inj preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Town ofHillsville, Virginia's to continue as a going concern for twelve months beyond the financial statement date, including ability  Virginia's basic financial statements as listed in thet table of contents.  principles generally accepted in the United States of America.  Basis for Opinions  basis for our audit opinions. Change in Accounting. Principle  Arrangements. Our opinion is not modified with respect to this matter. Responsibilities QManagement) for the Financial, Statements  currently known information that may raise substantial doubt shortly thereafter.  any  mbers of American Institute ertified Public  Members of Virginia Socicly of Certified. Public Accountants AIIA Accountants Licensed in Virginia  'Members Certified Valuation. ofNational Analysts of "Member of Institute Auditors  Association ofInternal  Accountants  1    Auditor's Responsibilities. for the Auditoft the Financial, Statements  Our objectives aret to obtain reasonable assurance about whether thei financial statements as a whole are: free from material misstatement, whether due to fraud or error, and toi issue an auditors' report that includes our opinions. Reasonable assurance is al high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Govermmental Auditing Standards, and the Specifications for. Audits of Counties, Cities, and Towns will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one: resulting from error, as fraud may involve collusion, intentional omissions, msrepresentations, or the override ofinternal control. Misstatements are considered forgery, material if there is a substantial likelihood that, individually or int the aggregate, they would influence the In performing an audit in accordance with generally accepted auditing standards, Government Auditing Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such] procedures include examining, on at test basis, evidence regarding the amounts and disclosures int the financial Obtain an understanding ofinternal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for thej purpose of expressing an opinion on the effectiveness oft the Town ofHillsville, Virginia's internal control. Accordingly, no such opinion Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the Conclude whether, in our. judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town of Hillsville, Virginia's ability to continue as a going We are required to communicate with those charged with governance: regarding, among other matters, the planned scope and timing ofthe audit, significant audit findings, and certain internal control-related  judgment made by a1 reasonable user based on the financial statements. Standards, and the Specifications) for Audits ofCounties, Cities, and Towns, we:  statements.  -  ise expressed.  financial statements.  concern for ai reasonable period oft time.  matters that we: identified during the audit. Required. Supplementary. Information  Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and schedules related to pension funding as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility ofr management and, although not aj part oft the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit ofthel 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.  2    Supplementary. Information  Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Town ofHillsville, Virginia's basic financial statements. The schedule of expenditures offederal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and. Audit Requirements for Federal. Awards, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures off federal awards is fairly stated, in all material respects, ini relation to thel basic financial statements as a whole. Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors' report thereon. Our opinions on the basic financial statements do not cover the other In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information Ina accordance with Government. Auditing Standards, wel have alsoi issued our report dated. January 22, 2024, on our consideration ofTown ofHillsville, Virginia's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing ofi internal control over financial reporting and compliance and thei results ofthat testing, and not to provide an opinion on the effectiveness ofTown of] Hillsville, Virginia's internal control over financial reporting or on compliance. That report is an: integral part of an audit performed in accordance with Government. Auditing Standards in considering Town ofHillsville, Virginia' 's internal control over financial reporting and compliance.  Other Information  information, and we do not express an opinion or any: form of assurance thereon.  exists, we are: required to describe iti in our report. Other Reporting Required by Government. Auditing Standards  CBC  HBC Certified Public. Accountants Abingdon, Virginia January 22, 2024  3    David B. Brown, CPA Juan) J.Garcia, CPA Karen L.J Jackson, CPA Michael W.  1551 E. Valley Street P.O. Box 821 Abingdon, Virginia 24212-0821 Fax: (276)676-3000 e-mail: HBCOfirmcpa.com  HBC CERTIFIED PUBLIC ACCOUNTANTS TRUST. LEGACY. VALUES. ITA ALL/ ADDS UP.  Pennington, CPA  (276)628-1123  Tracy S. Garcia, CPA, CGMA,CIA",CVA"  INDEPENDENT AUDITOR'SI REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ONCOMPLANCEAND: OTHER MATTERS BASED ONA ANAUDITOF ENANCALSTATEMENTS PERFORMED INACCORDANCE WITH COPERMMENZAUDTING  STANDARDS  Tot the Honorable Members of the Town Council  Town ofHillsville, Virginia  We have audited, in accordance with the auditing standards generally accepted in the United States America and the standards applicable to financial audits contained in Government issued by the Comptroller General of the United States, the financial statements of Auditing the activities, the business-type activities, and each major fund of the Town of Hillsville, for the year ended June 30, 2023, and the related notes to the financial statements, Virginia, which collectively ofand comprise the Town ofHillsville, Virginia's basic financial statements, and have issued our  Standards of governmental as report thereon  dated. January 22, 2024.  Report on Internal Control over Financial Reporting  Inj planning and performing our audit of the financial statements, we considered the Town of Virginia's internal control over financial reporting (internal control) to determine the audit are appropriate in the circumstances for thej purpose ofe expressing our opinions on the: financial procedures that but not for the purpose ofe expressing an opinion on the effectiveness of the Town ofH internal control. Accordingly, we do note express an opinion on the effectiveness of the Hillsville, Town ofHillsville, Virginia's A deficiency in internal control exists when the design or operation ofac control does not allow management ore employees, in the normal course ofperforming theira assigned functions, to prevent, or detect and misstatements on a timely basis. A material weakness is a deficiency, or a combination of internal control, such that there is a reasonable possibility that a material misstatement deficiencies, in financial statements will not be prevented, or detected and corrected on a timely basis. of A the entity's deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe significant material weakness, yet important enough to merit attention by those charged with governance. than a Our consideration of internal control was for the limited purpose described in the first section and was not designed to identify all deficiencies in internal control that paragraph be material this weaknesses or significant deficiencies. Given these limitations, during our audit we did might deficiencies in internal control that we consider to be material weaknesses. However, material not identify weaknesses any  Hillsville, statements,  Virginia's internal control.  correct,  of  may exist that have not been identified. Report on Compliance and Other Matters  As part of obtaining reasonable assurance about whether the Town of Hillsville, Virginia's statements aref free from materialmisstatement, wej performedi tests ofits compliance with certain financial ofl laws, regulations, contracts, and grant agreements, noncompliance with which could have a provisions direct material effect on the determination of financial statement amounts. However, providing an compliance with thosè provisions was not an objective of our audit, and accordingly, we do not opinion express  and on  embers ofAmerican. Institute Certified Public Accountants  Members of Virginia Societyo of Certified Public Accountants AIIA Accountants Licensedi 4 in Virginia  Members  Certified Valuation ofNational Analysts Association of "Member Auditors ofl Instituteo of Internal    such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are The purpose oft this report is solely to describe the: scope of our testing ofi internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness oft the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government. Auditing Standards in considering the entity's internal control and compliance. Accordingly,  required to be reported under Government. Auditing Standards.  Purpose of this Report  this communication is not suitable for any other purpose.  CBC  HBC Certified! Public. Accountants Abingdon, Virginia January 22, 2024  -  D  5    Town of Hillsville, Virginia Management's Discussion and Analysis  AsofJune3 30, 2023  As management of the Town of Hillsville ("the Town), we offer readers of the Town's encourage readers to read the information presented. here in conjunction with additional year furnished in the Town's financial statements, which follow this narrative.  narrative overview and analysis oft the financial activities oft the Town for the fiscal ended. financial statements this  June 30, 2023. We information that we have  Financial Highlights  The Town ofH Hillsville's net position was $13.61 million att the end oft the current: fiscal Total investment in capital assets, net of related debt was $4.5 million. As of the close of the current fiscal year, the Town's governmental funds reported combined balances of$9.41 million, ani increase of$3.0 million in comparison with the prior Att the end oft the current fiscal year, unassigned fund! balance fort the General Fund year. was $9.3 million.  year.  ending fund  Overview oft thel Financial Statements  This discussion and analysis are intended to serve as an introduction to the Town's basic views oft the Town through the use of government-wide statements and fund: financial  Town's basic financial statements consist of three components: 1) government-wide financial statements. The financial statements, and 3) notes to the: financial statements. The basic financial statements financial statements, 2) fund basic financial statements, this report contains other supplemental information that statements. will In addition to the  present two different enhance the reader's  understanding oft the financial condition ofthe Town.  Basic Financial Statements  The first two statements (Exhibits A and B) in the basic financial statements are the Goyernment-wide Statements. They provide boths short and long-term information about the Town's financial status. The next statements (Exhibits C through G) are Fund Financial Statements. These statements activities of the individual parts of the Town's government. These statements goverment-wide statements. There are two parts to the Fund Financial Statements: provide more detail than the The next section of the basic financial statements is the Notes to Financial Statements. statements explain in detail some of the data contained in those statements. After The notes to financial Supplemental Information is provided to show details about the Town's individual funds. the notes, Required required by the Commonwealth ofVirginia's General Statutes ("the General  Financial focus on the  statements and 2) thep proprietary funds statements.  1) the governmental funds  Budgetary information  ofthes statements.  Statutes") also can be found in this part  Government-wide Financial Statements  The government-wide financial statements are designed to provide the reader with al broad overview oft finances, similar in format to a financial statement ofa private-sector business. The provide short andl long-termi information about the Town's financial status as a whole. government-wide statements The two government-wide statements report the Town's net position and how it has to the Town's total assets and deferred outflows of resources less total liabilities and changed. deferred Net position is equal Measuring net position is one way to gauge the Town's financial condition.  the Town's  inflows oft resources.  6    Town of Hillsville, Virginia Management's Discussion and Analysis  As of. June. 30, 2023  The government-wide statements are divided into two categories: 1) governmental activities and 2) business-type activities. The governmental activities include most of the Town's basic services such as public safety, community development, and general administration. Property taxes and state and federal grant funds finance most of these activities. The business-type activities are those that the Town charges customers to provide. These include the  water and sewer services offered by the Town.  The government-wide financial statements are onl Exhibits. A and) B ofthis report.  Fund) Financial Statements  The fund financial statements provide a more detailed look at the Town's most significant activities. A: fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like all other governmental entities in Virginia, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the General Statutes or the Town's budget ordinance. All of the: funds of the Town can be divided into two categories: governmental funds Governmental Funds - Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements and include the General Fund and the Community Development Block Grant ("CDBG") Fund. Most of the Town's basic services are accounted for in governmental funds. These funds focus on near-term inflows and outflows of spendable resources, and what monies are left at year-end that willl be available for spending in the next year. Governmental funds are reported using an accounting method called modified accrual accounting which provides a short-term spending focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to finance the Town's programs. The relationship between governmental activities (reported in the Statement ofNet] Position andi the Statement of Activities) and governmental The Town adopts an annual budget fori its General Fund as required byt the General Statutes. Thel budget is al legally adopted document that incorporates input from the citizens of the Town, the management of the Town, and the decisions of the Town Council about which services to provide and how to pay for them. It also authorizes the Town to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for the General Fund demonstrates how well the Town complied with the budget ordinance and whether or not the Town succeeded in providing the services as planned when the budget was adopted. The budgetary comparison statement uses the budgetary. basis ofaccounting and is presented using the same: format, language, and classifications as the legal budget document. The statement shows four columns: 1)1 the original budget as adopted by the Town Council; 2) the final budget as amended by the Town Council; 3) the actual resources, charges to appropriations, and ending balances in the General Fund; and 4) the difference or variance between the final budget and the actual resources and charges. To account for the difference between the budgetary basis of accounting and the modified accrual basis, a reconciliation showing the differences in the reported activities is shown at the end of Proprietary Funds - The Town has one, kind of proprietary funds. Enterprise Funds are used to report the same functions presented as business-type activities in the goverment-wide financial statements. The Town uses enterprise funds to account for its water and sewer activity operations. These funds are the same as those functions shown in the business-type activities in the Statement ofNet] Position and the Statement of Activities.  and proprietary funds.  funds is described in ai reconciliation thati is aj part oft thei fund financial statements.  the budgetary statement.  Notes tol Financial Statements 22ofthis report.  The notes to financial statements provide additional information that is essential to a full understanding oft the data provided in the govemment-wide and fund financial statements. The notest to the financial statements begin on page  7    Town of Hillsville, Virginia Management's Discussion and Analysis Required Supplemental Information  AsofJune30,2023  In addition to the basic financial statements and accompanying notes, this report includes certain supplementary information concerning the Town's progress ini funding its obligation to its employees and information about expenditures of federal awards.  required  provide pension benefits to  found beginning onj page: 57 oft this report. Town of Hillsville's Net] Position  Required supplementary information can be  As noted earlier, net position may serve over time as one useful indicator of a government's The Town's net position was $13.6 million as of. June 30, 2023, an increase of $4.0 million financial condition. year-end. Funds from the. American Rescue Plan were recognized ini the current fiscal net position (33%) reflects the Town's investment in capital assets land, uses these capital assets to provide services to outstanding that was issued to acquire those items. The Town spending. Although the Town's investment in its citizens; consequently, these assets are not available for future resources needed to repay that debt must be provided by other sources, since the outstanding assets related debt, the liquidate these liabilities. The Town's: financial position as of. June 30, 2023 and 2022 capital is showni in] cannot Figure 1. be used to  compared to the prior year. A significant portion of  and economic development, less any related debt still  (e.g. buildings, machinery, and equipment)  capital assets is reported net oft the  Assets, Liabilities, and Net Position  Figure 1 Business-type Activities 2023 2022  Governmental Activities 2023 3.480.769  TotalPrimary Government 2023  2022 2.582.040 207.434 1,436,525 344.881 1.781,006 2.652.954 2,048,548 65,391 5.122.501  Current and other assets Capital assets Total assets Total deferred outflows of resources Long-term liabilities Other liabilities Total liabilities Total deferred inflows of resources Net position: Invested inc capital assets, net of related debt Restricted Unrestricted  2022  10,534,518 $ 8,880,926 S 1,474,340 $ 1,187,421 $  9.681.723 10.163.498 12,008,858 $ 10,068,347  14.015.287 11,462.966 11.156.063 11.350.919 13.162.492 12.745.538  25.171.350 22.813.885 337.792 9,709,198 9,736,567 872.127 10.581.325 10.675,098 1.364,616 2.877.126 4,491,128 3,834,887 53,656  230.487 1,515,855 207.704 1.723.559 1.222.664 3,018,111 53,656 8.227.784  107.305 8,193,343 664.423 8,857.766 141.952 1,473,017 790.633 2.263,650  101,655 8,300,042 8.894.092 594,050 224.172 1,786,339 547.971  309.089 938.531  65,391 9.570,750  Total net position 11,299.551 > 7.236,440  2.334.310 13,563.201 9.018.417 5.670.472    Town of Hillsville, Virginia Management's Discussion and Analysis  As of. June 30, 2023  Governmental activities. Governmental activities increased the Town's net position by $4.1 million for the year ended June 30, 2023 which compares to an increase ofs $1.2 million in the prior year. Funds from the American Business-type activities: Business-type activities decreased the Town's net position by $71 thousand for the year ended. June 30, 2023 compared to a $4 thousand increase for the year ended. June 30, 2022, primarily due to grant All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless  Rescue Plan Act of$2.61 million were recognizedi in the current fiscal period. funding in the prior year that did not occur int the current year.  ofthe timing ofr related cash flows. Changes ini net position are: shown inl Figure 2.  Changes in Net Position Figure2 Business-type Activifies 2023  Governmental Activities 2023  Total 2023 2022  2022  2022  Revenue Program revenues: Operating grants and contributions Capital grantsa and contributions General revenues: Propertyt taxes Othert taxes Interesta andi investment, eamings Other Total revenue Expenses General govemment Publics safety Public works Community development Other activities Interesto onl long-term debt Water Sewer Total expenses Increase (decrease) innet position beforet transfers Transfers Increase(decrease) inn net position Netp position, beginning Nety position,e ending  Charges fors services $ 633,214 $ 443,581 $ 1,873,288 $ 1,738,131 $ 2,506,502 $ 2,181,712  2,875,508 395,806 916,017 2,548,660 218,396 27,154 7,614.755 675,553 1,527,084 1,048,602 245,547 40,267 14,591 3.551.644 4,063,111 4,063,111 7,236.440  126,316 224,827 812,999 2,497,416 163,294 93.994 4.362.427 606,586 1,298,710 941,634 180,619 84,430 15,671 3.127,650 1,234,777 1,234,777 6,001,663  2,875,508 401,103 916,017 2,548,660 223,783 53.508 9.525,081 675,553 1,527,084 1,048,602 245,547 40,267 14,591 866,515 1.114.471 5.532,630 3,992,451 3,992,451 9,570.750  126,316 349,579 812,999 2,497,416 146,241 119.650 6.233.913 606,586 1,298,710 941,634 180,619 84,430 15,671 806,476 1,060.594 4.994.720 1,239,193 1,239,193 8,331.557  5,297 5,387 26.354 1.910.326  124,752 (17,053) 25.656 1.871.486  866,515 1.114.471 1,980,986 (70,660) (70,660) 2.334.310  806,476 1.060.594 1.867,070 4,416 4,416 2,329.894  11,299.551 S 7,236.440 S 2.263.650 $ 2.334,310 S 13,563,201 $ 9,570.750  9    Town ofHillsville, Virginia Management's Discussion and Analysis Financial Analysis ofthe Town' 's Funds  As ofJ June 30, 2023  As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related Governmental Funds. The focus of the Town's governmental funds is to provide information on near-term inflows, outflows, and balances ofu usable resources. Such information is useful in assessing the Town's requirements. Specifically, the unreserved fund balance can be a useful measure of a government's net financing The general fund is the chiefo operating fund of the Town. At the end oft the current fiscal the unreserved balance oft the General Fund consisted ofa assigned funds of$98 thousand and unassigned funds year, of$9.3 million. fund At June 30, 2023, the governmental funds of the Town reported a combined fund balance Proprietary Funds. The Town's proprietary funds provide the same type of information found in wides statements but in more detail. Net position ofthe Water and Sewer Fund at the end ofthe fiscal the government-  requirements.  legal  available for spending att the end ofthe fiscal year.  resources  thousand ofwhich were: restricted.  of $9.4 million, $54  to $2.3 million.  year amounted  General Fund Budgetary Highlights  Fines and forfeitures exceeded budget by $249 thousand while hotel and motel taxes and restaurant food Funds in the American Rescue Plan Act were used to cover several general fund expenditures, such  exceeded budget by $101 thousand and $2661 thousand, respectively. expenses are all shown well-under budget in thes general fund.  taxes that these  I0    Town of Hillsville, Virginia Management's Discussion and. Analysis Capital Assets and Long-term Debt  As ofJune 30, 2023  Capital Assets. The Town's investment in capital assets for its governmental and business-type activities as of June 30, 2023, totals $13.2 million (net of accumulated depreciation). These assets include land, land  improvements, buildings and improvements, vehicles, and equipment.  Capital. Assets (net of depreciation) Figure3 Business-type Activities 2023 2022 9,205,580 9,679,575 47,338 78,042 203,015 207,187 181.622 154.526 9,681.723 10,163,498  Governmental Activities 2023 2022 357,793 413,541 778,521 634,411 895,142 597,577 1.349.065 836.263 3.480.762 2,582.040  Total 2023 2022 357,793 413,541 9,984,101 10,313,986 47,338 78,042 1,098,157 804,764 1.530.687 990.789 13,162,492 12,745,538  Land Landi improvements Buildings and improvements Vehicles Equipment Constructioni inF Progress Total  $ 100,248 S 100,248 $ 44,168 $ 44,168 $ 144,416 $ 144,416  Major capital asset transactions include the following additions and disposals:  Changes in Capital Assets Figure 4 Business-type Activities 2022 2023 2022 $ $ 24,275 44,410 14,858 245,321 25,980 716335 27,096 1.030,341 67.934 2,485,442 15,974 57,802 2.559.218  Governmental Activities 2023  Total 2023 2022 24,275 204,751 99,410 494,278 263,437 609.065 832.373 1.308.094 1.219.495 2,526,270 15,974 544,442 69.167 3.155.853  Land Landi improvements Buildings and improvements Vehicles Equipment Constructioni inP Progress Total: additions Land Landi improvements Buildings and improvements Vehicles Equipment Constructioni inF Progress Total disposals  189,893 468,298 581.969 1,240.160 $ 40,828 486,640 69.167 596,635  55,000 18,116 116.038 189.154  30,050 30.050  30,050 30.050  During the year ended. June 30, 2023, the Town removed obsolete assets fromi its capital assets schedules. Primarily all of these assets had been fully depreciated. Additional information on the' Town's capital assets can be found in  note 5 oft thel Basic Financial Statements.  11    Town of Hillsville, Virginia Management's Discussion and Analysis backed by thei full faith and credit oft the Town.  AsofJune3 30,2023  Long-term Debt. As of. June 30, 2023, the Town had total bonded debt outstanding of $8.7 million.  All debt is  Outstanding Debt Figure5  Installment Notes and General Obligation Bonds  Governmental Activities 2023 2022 202,100 246.841 462.658 533.492  Business-type Activitics 2023 2022 $ 8.208,706 8,208.706 8.377.159 8.377,159  2023 Total 2022 260,558 $ 286,651 8.671.364 8.410.806  Installment notes payable $ 260,558 $ 286,651 $ The Town's total debt decreased by $2391 thousand during the year. Town was approximately $23.1 million as of. June 30, 2023. Budget Highlights for thel Fiscal Year Ending. June 30, 2024  General obligation bonds Total  8.624.000 8.910.651  Virginia General Statutes limit the amount of general obligation debt that a unit of government can the total assessed value oft taxable real property located within that government's boundaries. The debt issue to 10% of Additional information regarding the' Town's long-term debt can bei foundi in note 9 and schedules 12 and 13. Governmental Activities: With the completion of the Farmers Market project early in the next having exhausted all funds in the American Rescue Plan Act Fund, both revenues and lower. The Town uses revenues to finance programs currently inj place.  limit for the  are fiscal year and expenses expected to be  Requests forl Information  This report is designed to provide an overview of the Town's finances for those with an interest in Questions conceming any of the information found in this report or requests for additional information this area. directed to the Town Manager, Hillsville, Virginia, P.O. Box 545, Hillsville, Virginia 24343,  should be (276) 728-2128,  vl-dtohlivilk.  12    Town ofHillsville, Virginia Statement ofl Net Position June 30, 2023  Exhibit A Total  Governmental Business-type Primary  Activities  Activities Government  Assets Cash and cash equivalents Investments Receivables (net ofallowances for uncollectibles): Taxes, including penalties Accounts Accrued charges fors services Loans Note receivable Due from other funds Due from other governmental units Capital assets, net Total assets Deferred Outflows of Resources Liabilities Accounts payable Deposits Due to other funds Accrued bond interest Bonds andi notes payable due within one year Bonds and notes payable due ini more than one. year Compensated absences Net! pension liability Other post-employment benefits obligation Total liabilities Deferred Inflows ofl Resources Net] Position Invested in capital assets, net ofrelated debt Restricted Unrestricted  9,014,240 $ 953,120 $ 9,967,360  174,564 967,576 267,165 59,656 51,317 3.480.769 14.015.287 230.487 144,165 3,525 2,080 404,724 57,934. 147,457 598,235 365,439 1.723,559 1.222,664 3,018,111 53,656 8.227.784 11,299,551 $ 2,263,650  286,454 149,407 85,359  461,018 967,576 416,572 85,359 59,656 51,317 13.162.492 25.171.350 337.792 168,444 118,883 59,656 93,821 431,323 8,240,041 204,451 779,143 485.563 10.581.325 1.364.616 4,491,128 53,656 9,018.417 13,563,201  9.681.723 11.156.063 107.305 24,279 115,358 59,656 91,741 373,389 .7,835,317 56,994 180,908 120.124 8.857.766 141.952 1,473,017 790.633  Total net position  Thed accompanying notes toj fnancial statements are ani integral part ofthiss statement.  13    11    Town of Hllsville, Virginia  ExhibitC Page1  Balance Sheet Governmental, Funds June. 30, 2023  General Fund  Recovery Fund  CDBG Fund  Total 9,014,240 174,564 967,576 267,165 2,820,648 51.317 13.295.510 144,165 3,525 2.760.992 2.908.682 956.099  Assets Cash and cash equivalents Investments Receivables (net ofa allowances for uncollectibles): Taxes, including penalties Accounts Due from other funds Due from other governmental units Total assets Liabilities Accounts payable Deposits Duet to other funds Total liabilities Deferred Inflows ofl Resources Deferred revenue Fund Balances Nonspendable Restricted: Community development Committed Assigned: Capital projects Unassigned Total fund balances  $ 6,199,592 $ 2,760,832 $ 174,564 967,576 267,165 2,820,648 51.317 10.480.862 144,165 3,525 147,690 956.099  53,816 $  2.760.832  53.816  2.760.832 2.760.832  160 160  53,656  53,656 98,233 9.278.840 9,430.729  98,233 9.278,840 9,377.073 $  53,656  Thed accompanying notes to financial: statements are ani integral! part ofthiss statement.  15    Town ofHillsville, Virginia  Exhibit C Page2 Total $ 9,430,729  Balance! Sheet Governmental) Funds June 30, 2023  Total fund balances perl Balance Sheet for Governmental Funds Amounts reported for governmental activities in the Statement of Net Position (Exhibit. A) are different because: Capital assets in government activities are not financial resources and therefore are not reported as fund assets. The Statement of Net] Position, however, includes these assets, net of accumulated depreciation/amortization. Capital assets, net Some receivables are not available toj pay for current period expenditures andt therefore are deferred in the: fund financial statements. Property taxes Pension expense Other post-employment benefit plans  3,480,769 38,353 (231,933) (72,985) 230,487  Pension contributions and other post-employment benefits subsequent to ther measurement date ofthe net liability are considered tol be deferred Some liabilities, including general governmental bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. Alll liabilities are included  outflows ofresources  int the Statement ofNet Position. Accrued bondi interest Bonds and notes payable Compensated: absences Net pension liability  (2,080) (462,658) (147,457) (598,235) (365,439) 11,299.551  Other post-employment benefits obligation Net position of governmental activities  Thea accompanying notes toj financials statements are ani integral part ofthiss statement.  16    Town ofHillsville, Virginia Governmental Funds For the Year Ended.J June. 30, 2023  Exhibit D Page1 Total Governmental Activities 900,503 2,547,550 1,110 633,214 218,396 27,154 3,156,638 114.676 7,599,241 635,380 1,786,412 985,775 256,968 14,772 795,236 70,834 14.763 4.560.140 3.039,101  Statement of] Revenues, Expenditures and Changes in Fund Balance  General Fund $ 900,503 $ 2,547,550 1,110 633,214 218,313 27,154 395,806 114.676 4,838.326 94,464 551,891 166,926 121,676 766,936 70,834 14.763 1,787.490 3,050,836  Recovery Fund  CDBG Fund $  Revenues: General property taxes Other local taxes Permits, privilege fees andi regulatory licenses Fines and forfeitures Payment in lieu oft taxes Revenue from use ofmoney andj property Charges fors services Gain on: sale of capital assets Miscellaneous Intergovermental: Federal State Total revenues Expenditures: Current: General goverment administration Public safety Public works Community development Non-departmental Capital projects Annexation expenses Debt service: Principal retirement Interest and finance charges Total expenditures Other financing sources and uses: Proceeds from debt Operating transfers in Operating transfers out Total other financing sources and uses Excess (loss) of revenues and others sources over expenditures and other uses Fund balance, beginning Fund balance, ending  83  2,760,832 2.760.832 540,916 1,234,521 818,849 123,474 14,772 28,300  83  11,818  2.760.832  11,818 (11.735)  Excess (loss) ofrevenues over expenditures  3,050,836 6.326.237 9.377,073  (11,735) 65.391 $ 53,656 $ 6.391.628 9,430,729  3,039,101  The accompanying notes toj fnancials statements are ani integralp parto ofthis statement.  17    Town of Hillsville, Virginia Governmental For the Year Ended.June. 30, 2023  Exhibit D Page2 Total Governmental Activities 3,039,101  Statement of] Revenues, Expenditures and Changes in) Fund Balance  Funds  Net change in fund balances -1 total governmental: funds  Amounts reported forg governmental activities in the Statement of Activities (Exhibit B)  are different because:  Governmental funds report the cost of equipment and facilities acquired as current expenditures while the governmental Statement of Activities reports depreciation expense to allocate those  expenditures over thel life ofthe assets. Capital assets additions Depreciation expense  1,170,993 (272,264)  Difference between accumulated depreciation ando cost of disposed assets Debt proceeds provide current financial resources to governmental funds, but debt issues increase long-t term liabilities in the Statement ofNet] Position. Principal repayments are expenditures in governmental funds, but reduce long - term liabilities in the Statement ofNet) Position.  New debt issued Principal payments Interest accrued General property taxes Pension Other postretirement benefit plans Change inj post-employment benefits Change in compensated absences Change inj pension plan benefits  70,834 172 15,515 158,870 17,306 (16,468) (25,054) (95.894) 4,063,111  Certain revenues in the government-wide statement ofactivities do not provide current financial resources and are not reported as revenue: in the fund financial statements.  Some expenses reported in the Statement of Activities do not require the use of current financial resources. and therefore are noti reported as expenditures! in governmental funds.  Change in net position of governmental activities  The accompanying notes toj fmnancialsiatemeuts are ani integral! part ofthis statement.  18    Town ofHillsville, Virginia Statement ofl Net Position Proprietary Funds June. 30, 2023 Assets Currenta assets: Casha and equivalents Investments Accounts receivable (neto ofa allowance for uncollectibles) Due from other funds Accrued charges fors services Total currenta assets Capital assets Buildings Land Machinery ande equipment Construction: inp progress Total capital assets Lessa accumulated depreciation Netc capital assets Total assets Deferred Outflows ofResources Liabilities Liabilities: Currentl liabilities (payable from current assets): Accounts payable Deposits Duet toc other funds Accrued bond interest Current portion ofbonds Long-term liabilities: Bonds (net ofc current portion) Compensated: absences Netp pension liability Other post-employment' benefits obligation Totall long-term liabilities Total liabilities Deferred Inflows ofResources Net] Position Net Position: Invested inc capital: assets, net ofrelated debt Unrestricted Total netp position  Exhibit E  Water Fund $ 582,932 $ 143,227 74,210 42.942 843.311 6,582,076 31,468 161,341 15.870 6,790,755 (1.834.231) 4.956.524 5.799.835 52.682 12,019 57,679 29,828 3,807 121,176 224.509 4,228,335 28,622 93,621 60.045 4.410.623 4,635,132 69.693 607,013 1.147.692 540.679  Sewer Fund 370,188 $ 143,227 75,197 631,029 42.417 10,437,115 12,700 327,536 165.752 10,943,103 (6.217.904) 4.725.199 5.356.228 54.623 12,260 57,679 29,828 87,934 252.213 439.914 3,606,982 28,372 60.079 87,287 3.782.720 4.222,634 72.259 866,004 1.115,958 249.954  Total 953,120 286,454 149,407 85.359 1,474.340 17,019,191 44,168 488,877 181.622 17,733,858 (8.052.135) 9.681.723 11,156.063 107.305 24,279 115,358 59,656 91,741 373.389 664.423 7,835,317 56,994 180,908 120.124 8,193.343 8.857.766 141.952 1,473,017 790,633 2.263.650  Totalo current liabilities (payable from current assets)  The accompanying notes toj financial statements are an integralp part ofthis statement.  19    Town of] Hillsville, Virginia Proprietary: Funds For the) Year EndedJune. 30, 2023 Operating revenues: Charges fors services Miscellaneous Total operatingrevenues Operating expenses: Personnel services Fringel benefits Contractual: services Paymenti inl lieu oftaxes Depreciation: anda amortization Other Totald operatinge expenses Operatingi income Nonoperating revenues (expenses): Connection: fees Interest Other nonoperating revenues Interesta and fiscal charges Total nonoperating revenues (expenses) Loss beforec contributions andt transfers Capital grants and contributions Operatingt transfers in Operatingt transfers out Changes inn net position Net position, beginning Net position, ending  Exhibit F  Statement of] Revenues, Expenses and Changes in Fund Net Position  Water Fund $  Sewer Fund 15,355 1,093.551 349,114. 113,447 5,069 344,346 212.555 1.024.531 69,020 1,658 2,661 10,166 (89.940) (75.455) (6,435) 5,297 (95) (1,233) 1.117.191 1115.958  Total 1,857,498 1.873.288 15.790 657,567 220,069 22,675 549,709 384.898 1,834.918 38.370 2,783 5,387 (146.068) 23,571 (114.327) (75,957) 5,297 (70,660) 2.334.310 2.263.650  779,302 $ 1,078,196 $ 435 779.737 308,453 106,622 17,606 205,363 172.343 810.387 (30,650) 1,125 2,726 13,405 (56.128) (38.872) (69,522) 95 (69,427) 1.217.119 1.147.692  The accompanying notes toj financial statements are ani integral! partofthis statement.  20    Town ofHillsville, Virginia Statement of Cash) Flows Proprietary Funds For the Fear EndedJune. 30, 2023 Cash flows from operating activities: Cashr received from customers Cash payments tos suppliers forg goods ands services Cashy payments to employces fors services Paymenti inl lieu oftaxes Net cash (used! by)p provided byo operating activities Cash flows from noncapital financing activities: Operating transfers from (to)o other funds Netc cash provided (used) by noncapital financinga activities Cash flows from capitala and relatedi financinga activities: Acquisition, construction: and disposal ofcapital: assets  ExhibitG  Water Fund $ 801,391 $ (188,660) (430,330) 182.401 95 95 (24,528) (112,793) (190.825) (53.504) (2,566) 2.726 160 (8,169) 591.101 582.932 (30.650) $ 205,363 4,046 1,289 14,530 (15,255) 3.078 213.051 182.401  Sewer Fund Total 1,110,234 $ 1,911,625 (220,737) (409,397) (471,788) (902,118) 417.709 600.110 (95) (95) 5,297 (43,406) (55,660) (121.925) (28.156) (2,566) 2.661 95 295,784 370.188 74.404 69.020 $ 344,346 1,782 (3,113) 11,824 (9,227) 3.077 348,689 417,709  Capitalg grants Issuance ofbonds Principal paid on! bonds Interest paido onb bonds Cash flows fromi investinga activities: Cashp payments top purchase investments Interest ont temporaryi investments Net cash provided! byi investing: activities Neto decreasei inc casha and cash equivalents Casha and cashe equivalents at beginning ofyear Cash and cashe equivalents ate end ofyear Reconciliation ofc operating loss tor neto cash provided byoperating: activities: Operatingi income  5,297 (67,934) (168,453) (81.660) (312,750) (5,132) 5.387 255 287,615 665.505 953.120 38.370 549,709 5,828 (1,824) 26,354 (24,482) 6.155 561,740 600,110  Neto cashj provided! by (used by) capital andi relatedf financing: activities  Adjustments tor reconcile operatingl loss tor net cash provided by operating activities: Depreciation: anda amortization Receivables: anda accrued charges fors services Accounts payable: ando deferredr revenue Connection fees and other income Othera accrued expenses Deposits Totala adjustments Net cash provided byo operatinga activities  Thed accompanying notes tof fnancials statements are an integral part ofthiss statement.  21    Town ofHillsville, Virginia Notes tol Financial Statements AsofJune 30, 2023 1.  Summary of Significant. Accounting Policies  The basic financial statements oft the Town ofHillsville, Virginia (the "Town") have been prepared in accordance  accounting principles generally accepted in the United States applicable to  with  Governmental Accounting Standards Board ("GASB"). The following is a summary oft the more significant policies: A. The Financial Reporting Entity  governments established by the  For financial reporting purposes, in conformity with statements of GASB, the Town includes all account groups, agencies, boards, commissions and authorities that are controlled by or Council. Control by or dependence on the Town was determined on the basis of budget dependent adoption, the authority, outstanding debt secured by revenues or general obligations oft the finance any deficits that may occur, or receipt of significant subsidies from Town, the Town. obligation The ofthe Town Town to component units as defined by GAAP. The Town also has no related organizations or GASB Statement No. 34 requires the financial statements be accompanied by a narrative introduction analytical overview of the government's financial activities in the form of management's discussion and and  on funds, taxing has no jointly governed  organizations. analysis"(MD&A).  B.  Government-wide and Fund Financial Statements  The goverment-wide financial statements (ie., the statement of net position and the statement of report information on all of the nonfiduciary activities of the primary government. For the activities) effect ofi interfiund activity has been removed from these statements. Governmental activities, which most part, the are supported by taxes and intergovermmental revenues, are reported separately from which rely to as significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function segment are offset by program revenues. Direct expenses are those that are function ors segment. Program revenues include 1) charges to customers or clearly applicants who with as specific directly benefit from goods, services, or privileges provided by a given function or contributions that are restricted to meeting the operational or capital requirements segment ofa and 2) grants and segment. Taxes and other items not properly included among program revenues are particular reported function instead or Separate financial statements are provided for governmental funds and proprietary funds. governmental funds and major individual enterprise funds are reported as separate columns Major Measurement Focus. Basis of Accounting, and] Financial Statement Presentation  normally  business-type activities,  identifiable  or  purchase, use,or  generalrevenues. financial statements.  as individual in the fund  The govemment-wide financial statements are reported using thee economic resources. measurement) the accrual basis ofaccounting, as are the proprietary fund financial statements. Revenues are recorded focus and earned and expenses are recorded when al liability is incurred, regardless oft thet timing ofi related cash flows. when 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 havel been met.  22    Town ofHillsville, Virginia Notes to) Financial Statements As ofJune 30, 2023 1.  Summary of Significant Accounting) Policies, continued  Measurement Focus. Basis ofA Accounting, and Financial Statement Presentation, continued  Governmental fund financial statements are reported using the current fnancial resources measurement, focus and the modified accrual basis ofaccounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered tol be available when they are collectible within the current period or soon enough thereafter toj pay liabilities oft the current period. Fort this purpose, the Town 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 relatedt to compensated absences and claims andj judgments, are recorded Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Accordingly, real and personal property taxes are recorded as revenues and receivables when billed, net of allowances: for uncollectible amounts. Property taxes not collected within! 90 days after year-end are reflected as deferred revenues. Sales and utility taxes, which are collected by the state or utilities and subsequently remitted to the Town, are recognized as1 revenues andi reçeivables upon collection by thes state or utility, which Licenses, permits, fines and rents are recorded as revenues when received. Intergovermmental revenues, consisting primarily of federal, state and other grants for the purpose of funding specific expenditures, are recognized when earned or at thet 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 tol be measurable  only when payment is due.  is generally int ther month preceding receipt byt the Town.  and: available only when cashi is received! by the' Town. The Town reports the following major govemmental funds:  The general, find is the Town's primary operating fund. It accounts for all financial resources of the The special revenue. fund accounts for the proceeds ofs specific revenue sources that are legally restricted to expenditures for specific purposes. Special revenue funds consist of the CDBG Fund that has been established to account for revenues received and expenditures made under the Community Development  general government, except those required tol be accounted fori in another fund.  Block Grant.  The Town reports the: following major proprietary: funds:  Enterprise Funds account for operations that are financed and operated in a manner similar to private business enterprises. Thei intent oft the' Town: ist that the cost of providing services tot the general public be financed or recovered through user charges. Enterprise Funds consist ofthe Water and Sewer Funds. Private-sector standards of accounting and financial reporting issued prior tol December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject tot this same limitation. The Town has electedi not toi follow subsequent  private-sector guidance.  23    Town of Hillsville, Virginia Notes to Financial Statements AsofJune 30, 2023 1.  Summary of Significant Accounting! Policies, continued  Measurement Focus. Basis ofA Accounting.and) Financial Statement resentation.comtinued  As a general rule, the effect of interfund activity has been eliminated from the goverment-wide financial statements. Exceptions to this general rule are other charges between the Town's water and sewer function and various other functions of the Town. Elimination of these charges would distort the direct costs and Amounts reported as program revenes include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating granfs and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program 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 aj proprietary fund's principal ongoing operations. Thej principal operating revenues oft the enterprise fund are charges to customers for sales and services. The Town also recognizes as operating revenuei the portion fees intended to recover the cost of connecting new customers to the system. Operating expenses oftap for enterprise funds include the cost of sales and services, administrative expense, and depreciation on assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues capital and When both restricted and unrestricted: resources are available for use, itis the Town's policy to use: restricted  program revenues: reported for the various functions concerned.  revenues. Likewise, general revenues include all taxes.  expenses.  resources: first, then unrestricted resources as they are needed. Slewartshp.Complance and Accountability  D.  The following procedures are used by the Town in establishing the budgetary data reflected in the financial Prior tol March 30, the Town Manager submits to the Town Council ap proposed operating and budget for the fiscal year commencing the following July 1. The operating and capital capital  statements: 1. 2. 3. 4.  includes proposed expenditures andi the means of financing them. Public hearings are conducted to obtain citizen comments.  budget  Priort toJ June 30, thel budget is legally enacted through passage ofa an Appropriations Resolution. The Appropriations Resolution places legal restrictions on expenditures at the department level or category level. The appropriation for each department or category can be revised only by the Town Council. The Town Manager is authorized to transfer budgeted amounts within general government Formal budgetary integration is employed as a management control device during the for the Alll budgets are adopted and maintained on a basis consistent with GAAP. The original budget and budget revisions during the fiscal year are authorized at the departmental level by Town council.  departments. General Fund.  5. 6. 7.  year  Appropriations lapse on. June 301 for all Town units.  24    Town of Hillsville, Virginia Notes to) Financial Statements Aso ofJune 30, 2023 1.  Summary of Significant Accounting! Policies, continued  E.  Cash and Cash Equivalents  For the purposes of the Statement of Cash Flows, cash and cash equivalents are defined as short-term highly  liquidi investments that are readily convertible tol known amounts of cash.  F.  Receivable and Payables  Certain activities between the funds are representative of lending or borrowing arrangements outstanding at the end of the fiscal year. Such outstanding activity is referred to as "due to/from other funds" for the current portion and "advances to/from other funds" for the non-current portion. All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide  financial statements as" "internal balances".  G.  Investments  Certificates of deposits and short-term repurchase agreements are reported in the accompanying financial statements as cash and cash equivalents. Investments in Alliance U.S. Government Bond Fund. and Local  Govemment! Investment Pool are reported at market values.  H.  Capital Assets  Capital assets, which include property, buildings, equipment, and infrastructure assets (e.g. roads, bridges, sidewalks, and similar items), are reported in the applicable govemmental or business-type activities columns in the goverment-wide: financial statements. Capital assets are defined by the Town as assets with an initial, individual cost of $1,000, and an estimated useful life in excess of one year. Such assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded ate estimated fair market value The cost of normal maintenance and repairs that does not add to the value of the asset or materially extend Depreciation for property, plant ande equipment is computed over the following usefull lives using the straight-  att the date ofdonation. lives is not capitalized. liner method.  Buildings, improvements and landi improvements  10-40 years Syears 5-10 years  Vehicles Equipment Property Taxes  I.  Property is assessed ati its value on. January 1. Property taxes attach as an enforceable lien onj property as of January 1. Taxes arej payable! December 5th. The Town bills and collects its own property taxes.  J.  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. Amounts of vested or accumulated vacation leave that are not expected to bel liquidated with expendable available resources are reported in the general long-term debt account group. No expenditure is reported: for these amounts. In: accordance witht the provisions of Government, Accounting Standards No. 16,Accounting for Compensated. Absences, no liability is recorded for non-vesting accumulating rights to receive benefits. The Town accrues salary-related costs associated with the payment ofc compensated: absences.  25    Town ofl Hillsville, Virginia Notes tol Financial Statements AsofJune 30, 2023 1.  SummaryorSigpuifieant, Accounting Policies, continued  K.  Long-Term Obligation  In the government-wide financial statements and proprietary fund types in the fund financial long-term debt and other long-term obligations are reported as liabilities in the applicable statements, activities, business-type activities, or proprietary fund type statement of net position. Bond governmental discounts, as well as issuance costs, are deferred and amortized over the life of the premiums and issuance costs are reported as deferred charges and amortized over applicable the life oft ther premiums related or bond. discounts. Bond as bond issuance costs, during the current period. The face amount of debt premiums issued is discounts, as well  effective interest method. Bonds payable are reported net of the Int the fund financial statements, governmental fund types recognize bond financing sources. Premiums received on debt issuances are reported as other costs, whether or not withheld from the actual' debt proceeds  bonds using the  and reported as other financing uses. Issuance  expenditures. Net Position  received, are reported as debt service  L.  Net position is the difference between assets and deferred outflows of resources and liabilities inflows of resources. Net position is classified as net investment in capital assets, restricted and deferred Net investment in capital assets consists of the historical cost of capital assets less accumulated or unrestricted. and less any debt that remains outstanding that was used to finance those assets resources less deferred inflows of resources related to those assets. Restricted net plus deferred outflows of that are restricted by the Town's creditors (for example, through debt legislation (through restrictions on shared revenues), by grantors (both covenants), federal and by the state enabling contributors. Unrestricted net position consists ofall other net] position reportedi int this state), and by other  depreciation  position consists of assets category.  M. Net] Position Flow Assumption  Sometimes the Town will fund outlays for aj particular purpose from both restricted and grant proceeds) and unrestricted resources. In order to calculate the amounts to (e.g. restricted bond position and unrestrictedi net position in the financial statements, a: flow order in which the resources are considered to be applied. Iti is the Town's assumptioni must bei made about the position tol have been depleted before unrestricted net position is  report as restricted net policy to consider restricted net  applied.  N.  Fund Balances  Governmental fund equity is classified as fund balance. Fund balance is further classified as restricted, committed, assigned, or unassigned. Nonspendable fund balance cannot be form. Restricted fund balance has limitations imposed by creditors, legislation or constitutional provisions. Committed fund balancei is a limitation grantors, or contributors or by enabling through approval of resolutions. Assigned fund balances is a limitation Council. Unassigned fund balance in the General Fund is the net resourcesi imposed in by a designee of the Town classified in one of the above four categories. Negative represents excess expenditures incurred over the amounts restricted, committed, or Proprietary fund equity is classified the same asi int the government-wide statements. assigned When both restricted and unrestricted fund balances are available for use, it is the  nonspendable, spent because ofi its imposed by the Town Council excess of what can bej properly governmental to those funds purposes. Town policy to use  unassigned fund balance in other  restricted fund balance first, then unrestricted fund balance. reduced first, followed by assigned amounts, andt then  Furthermore, committed fund balances are classifications canl be used.  purposes: for which amounts in any ofthose unrestricted unassigned fund balance amounts when expenditures are incurred for  26    Town ofHillsville, Virginia Notes to Financial Statements AsofJune. 30, 2023 1.  Summary of Significant Accounting) Policies, continued 0. Deferred Outflows/Inflows ofResources  In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows ofr resources. This separate: financial statement element, deferred outflows ofresources, represents a consumption of net position that applies to a future period(s) and so will notl be recognized as an outflow of In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows ofresources. This separate financial statement element, deferred inflows ofr resources, represents an acquisition of net position that applies to a future period(s) and sO will not be recognized as an inflow of The components oft the deferred outflows of resources and deferred inflows of resources at. June 30, 2023 are  resources (expense) until then.  resources (revenue) until that time.  asf follows:  Governmental Business-Type Activities $ 181,814 $ 7,214 41.459 230,487 $ 917,746 $ 231,933 6,209 66.776  Total  Activities Government 84,644 $ 266,458 3,359 19.302 107,305 $ 107,974 2,890 31.088  Deferred outflows of resources: Pension activities Group life insurance Other] post-employment benefits Total deferred outflows ofresources Deferred: inflows ofresources: General property taxes Pension activities Groupl life insurance Other post-employment benefits Total deferred inflows ofresources Pensions  10,573 60.761 337.792 917,746 339,907 9,099 97.864  1,222,664 $ 141,952 $ 1,364,616  P.  The Virginia Retirement System ("VRS") Political Subdivision Retirement Plan is a multi-employer agent plan. Forp purposes of measuring the net pension. liability, deferred outflows ofresources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Town's Retirement Plan and the additions to/deductions from the Plan's fiduciary net position have been determined on the same basis as they were reported by the VRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the The VRS Group Life ("GLI") Insurance Program is a multiple employer, cost-sharing plan. It provides coverage to state employees, teachers, and employees of participating political subdivisions. The Group Life Insurance Program was established pursuant to $51.1-500 et seq. of the Code ofl Virginia, as amended, and which provides the authority under which benefit terms are established or may be amended. The Group Life Insurance Program is a defined benefit plan that provides al basic group lifei insurance benefit for employees of participating employers. For purposes of measuring the net Group Life Insurance Program Other Post- Employment Benefit ("OPEB") liability, deferred outflows of resources and deferred inflows of resources related to the Group Life Insurance Program OPEB, and Group Life Insurance Progranl OPEB expense, information about the fiduciary net position of the VRS Group Life Insurance Program OPEB and the additions to/deductions from the VRS Group Life Insurance Program OPEB's fiduciary net position have been detemmined on the same basis as they were reported by the VRS. In addition, benefit payments are recognized when due and payablei in accordance with the benefit terms. Investments are reported at fair value.  benefit terms. Investments are reported at fair value.  Group Life Insurance  27    Town ofHillsville, Virginia Notes tol Financial Statements As ofJune. 30, 2023 1.  Summary of Significant Accounting) Policies, continued Recently Adopted Accounting Standards  R.  GASB Statement No. 91, "Conduit Debt Obligations," was issued May 2019, ande establishes for conduit debt obligations byi issuers. The adoption of this statement did not have a material accounting requirements GASB Statement No. 96, "Subscription Based Information Technology Arrangements," was issued in 2020 provide guidance on the accounting and financial reporting for subscription-based information (SBITAs) for government endi users. The statement was effective. July 1,2023 and didi not] have technology a material arrangements GASB Statement! No. 99, "Omnibus 2022," wasi issued April 2022. The primary objectives oft this statement: are to enhance comparability in accounting andi financial reporting andt toi improve the consistency ofa authoritative literature practice issues that have been identified during implementation and application of certain GASB Statements. by addressing provisions oft this statement became effective upon issuance. The adoption oft this statement did not! havea a material Certain  financial statements.  impact on the Town's May to impact on the  Town's: financial statements.  on the' Town's financial statements.  impact  The following pronouncementsl have been issued, buta arer note effective as ofJ June 30, 2023: GASB Statement No. 100, "Accounting Changes and Error Corrections - an amendment of GASB was issued June 2022 top provide consistent application ofa accounting changes ande error corrections Statement No. 62," and financial reporting requirements. The statement willl bee effective: fort the fiscal years ending. June andi 30,2 2024. related accounting GASB Statement No. 101, "Compensated Absences," was issued June 2022 to align recognition and measurement guidance for allt types ofc compensated absences undera a unified model. The statement will be effective for the fiscal  ending. June 30, 2025. Use ofEstimates from those estimates. Subsequent Events  years  S.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ  T.  Subsequent to. June 30, 2023, town council approved al USDA bondi issuance in the amount of$3.3 million. These financial statements have not been updated for subsequent events occurring after January  which ist the date thei financial statements were: available tol bei issued.  22, 2024,  28    Town ofHillsville, Virginia Notes tol Financial Statements AsofJ June 30, 2023 2.  Deposits and Investments  Deposits: At year-end the carrying value oft the Town's deposits with banks and savings institutions was $10,311,248 and the bank balance was $9,967,360. All of the bank balance was covered by Federal depository insurance or collateral held under the provisions ofthe Virginia Security for Public Deposits Act. Under the Act, banks holding public deposits in excess oft the amounts insured by FDICI Bank Insurancel Fundi must pledge collateral int the amount of50% ofe excess deposits to a collateral pool in the name of the State Treasury board. Savings and loani institutions are required to collateralize 100% of deposits in excess of) FDIC Savings Association Insurance Fund limits. The State Treasury board is responsible for monitoring compliance with the collateralization and reporting requirements fort the Act and for notifying local governments of compliance by banks ands savings and loans. Investments: Statutes authorize the Town toi investi in obligations oft 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, commercial paper rated A-1 by Standard and Poor's Corporation or P-1 by Moody's Commercial Paper Record, banker's acceptances, repurchase agreements and the State! Treasurer'sLocal Government Investment. Pool (LGIP).  Fair Ouality Ratings AAAm $ 321.244 321,244  Fair Value 139,774 321.244  Unrated $ 139,774 $  Alliance U.S. Government. Bond Fund Investment! in Local Government Investment! Pool (LGIP) Total  139,774 $ 461.018  Concentration of Credit Risk: The Town's investments in the Alliance Bond Fund and the LGIP represented 30.3% The Town ofHillsville calculates its allowance for uncollectible accounts using historical collection data and, in certain  and 69.7%, respectively, of the portfolio at. June 30, 2023. Allowance for Uncollectible. Accounts  3.  cases, specific account analysis. The allowance at. June 30, 2023: is composed oft thei following:  Generall Fund, Allowance for Uncollectible Taxes Water and Sewer Funds, Allowance for Uncollectible Accounts  $  30,797 31.584 62.381  4.  Duet from Other Governmental Units Carroll County, Virginia Court fines and forfeitures  Amounts due from other governmental units at) June 30, 2023 are summarized as follows:  $  51,317  29    Town ofHillsville, Virginia Notes to) Financial Statements As ofJune. 30, 2023 5. Capital Assets Governmental, Activities Land (noto depreciated) Landi improvements Buildings and improvements Equipment Construction inj progress Total Less accumulated depreciation Govemment activities capital assets, net  As summary of changes in capital assets follows:  Balance Julv1,2022 $ 100,248 $ 826,975 1,215,480 2,698,341 836.263 5,677,307 (3.095.267) 2,582,040 $ Balance Julv1,2022 S 31,468 $ 8,067,249 83,137 106,674 8,288,528 (3.151.169) 5.137,359 $ 12,700 $ 11,422,526 88,478 258,384 154.526 11,936,614 (6.910.475) 5.026.139 $  Balance Disposals June 30.2023 $ 100,248 (40,828) 826,975 1,364,545 (486,640) (69.167) 2,679,999 (596,635) 1.349.065 527.468 6,320,832 (2.840.063) (69.167) $ 3.480.769 Balance Disposals June 30, 2023 31,468 (1,491,131) 6,582,076 (15,974) 67,163 (15,196) 94,178 15.870 (1,522,301) 6,790,755 (1.834.231) 4.956,524 12,700 10,437,115 88,478 239,058 165.752 10,943,103 (6.217.904) 4,725.199  Additions 189,893 468,298 581.969 1,240,160 (272.264) 976.896 $ Additions 5,958 2,700 15.870 24,528 (205.363) (180,835) $ 1.522,301  Busmnes-opeAcivitle Water Fund: Land (not depreciated) Buildings and improvements Vehicles Equipment Construction inp progress Total Less accumulated depreciation Water Fundo capital assets, net Sewer) Fund: Land (not depreciated) Buildings andi improvements Vehicles Equipment Construction inp progress Total Less accumulated depreciation Sewer Fund capital assets, net Govermmental, Activities General government Public safety Public works Community development Business-type. Activities Water Sewer  8,900 23,280 11.226 43,406 (344.346) (300,940)  (994,311) (42,606) (1,036,917) 1.036.917  Depreciation expense was charged toi functions/programs as follows:  $  48,895 69,403 96,401 57.565 272,264 205,363 344.346 549,709  $  30    Town ofHillsville, Virginia Notes tol Financial Statements AsofJune 30, 2023 6. Benefits VRS Retirement Plan A. Plan Description  All full-time, salaried permanente employees of the Town are automatically covered by a' VRS Retirement Plan upon employment. This plan is administered by the Virginia Retirement System (the System) along with plans for other employer groups in the Commonwealth of Virginia. 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 toj purchase prior service, based on specific criteria as definedi ini the Code afVirginia, as amended. Eligible prior service that may be purchased includes prior public service, active military service, The System administers three different benefit structures for covered employees - Plan 1, Plan 2, and Hybrid. Each oft these benefit structures has different eligibility criteria. Thes specific information for each] plan andt the  certain periods ofleave, and previously refundeds service.  eligibility for covered groups within each plan are set outi int thet table below:  HYBRID RETIREMENT! PLAN Thel Hybrid) Retirement Plan combines the features ofad defined benefit plan and: a defined contribution; plan. The defined benefiti is based on a member's age, service credit and average final compensation at retirement using: ai formula. The benefit from the defined contribution component of the plan depends ont the member and employer contributions madet tot the plan and the investment performance oft those contributions. Ina addition tot the monthly benefit payment payable from the defined benefit plan ati retirement, a member may start receiving distributions from thel balance int the defined contribution account, reflecting the contributions, investment gains or losses, and any required fees.  PLAN1  PLAN2 About the) Plan  Plan lisa defined benefit plan. The Same as plan 1.  retirement benefit is based ona member's age, service credit and average final compensation at retirement using a formula.  31    Town ofHillsville, Virginia Notes tol Financial! Statements Aso ofJune 30, 2023 6.  Benefits, continued VRS Retirement, Plan, continued A. Plan] Description, continued  PLANI  PLAN2 Eligible Members  HYBRID RETIREMENTPLAN  Employees are inj Plan 1i iftheir Employees arè in] Plan 2i ift their Employees arei ini the membership datei is before July 1, membership datei is on or after July Retirement Plani Hybrid 2010, and they were vested as of 1,2010, or their membership date membership iftheir  January 1, 2013, and they haver not is before. July 1,2 2010, and they  date is on or after January Political 1, 2014. subdivision Thisi includes: Members inl Plan 1 or employees* Plan 2 who elected to opti intot thep the election window held. plan during April 30, 2014; the plan'se January effective 1- date for opt-in members was. July1 1, 2014 Members employees are not eligiblet to participate int the. Hybrid Retirement Plan. Theyi include:  Political subdivision employees who are covered by enhanced employees Those employees eligible fora an optional retirement plan (ORP) must elect the ORP plan or the members have service Plan 1 orl Plan prior eligible to electt thel Hybrid  taken a refund. Hybrid Opt-In Election  were not vested as ofJanuary 1, 2013. Hybrid Opt-In Election  VRS non-hazardous duty covered Eligible Plan 2 members were Plan 1 members were allowed to allowed to make ani irrevocable make ani irrevocable decision to opt decision to opti into the Hybrid into the) Hybrid: Retirement Plan Retirement Plan during aspecial during a special election window election window held. January 1 *Non-Eligiblel Some held. January 1 through. April 30, through. April 30,2 2014.  2014.  Thel Hybrid Retirement Plan's effective date for eligible Plan 1 members who 2014. Ifeligible deferred members returned to work during the election eligible to opti into thel Hybrid Retirement! Plan. Members who  Thel Hybrid) Retirement Plan's effective date fore eligible Plan 2 Ifeligible deferred members returned to work during the Retirement Plan.  in opted was. July1, 2014.  members who opted in was July 1, benefits for hazardous duty  election window, they were also Hybrid Retirement Plan. Ifthese Members who were eligible for an Retirement Plan andi must  window, they were also eligible to opti intot the Hybrid  under 2, they are not select (as applicable) or  were eligible for an optional retirement plan (ORP) and Plan lor Plan 2  optional retirement plan (ORP) and have prior service under Plan 2 had prior service under Plan 1 were werei not eligiblet to elect the Retirement: Plan andi remain asl Plan as Plan 20 or ORP.  ORP.  not eligible to elect thel Hybrid 1orORP.  Hybrid) Retirement Plan and remain  32    Town of Hillsville, Virginia Notes tol Financial Statements As ofJune. 30, 2023 6. Benefits, continued VRS Retirement. Plan, continued A. Planl Description. continued  HYBRID RETIREMENT PLAN Ar member'sretirement benefit is funded through mandatory and voluntary contributions madel by the member and the employer to both the defined benefit and the defined contribution components of the plan. Mandatory contributions are based on a percentage of the employee's creditable compensation and are required from both the member and the employer.. Additionally, members may choose tor make voluntary contributions tot the defined contribution component ofthe plan, and the employer ist required toI match those voluntary contributions according to specified percentages. Defined Benefit Component: Under the defined benefit component ofthe plan, service crediti includes active service. Members earn service credit for eachi month they are employed inac covered position. It also may include credit for priors service the member has purchased or additional creditable service the member was granted. A member'st total service crediti is one ofthe factors used to determine theire eligibility for retirement and to calculate their retirement benefit. Ita also may count toward eligibility for thel health insurance crediti ini retirement, ifthe employer offers thel healthi insurance Defined Contribution Component: Under the defined contribution component, service crediti is usedt to determine vesting fort the employer contribution portion ofthe plan.  PLAN1  PLAN2 Retirement Contributions  Employees contribute 5% oft their Same as Plan 1. compensation each month tot their member contribution account through aj pre-tax salary reduction. Member contributions are tax- deferred until they are withdrawn as part ofar retirement benefit or as arefund. The employer makes a separate actuarially determined contribution to VRS for all covered employees. VRS invests both member and employer contributions toj provide funding for the future benefit payment.  Service Credit Same asl Plan 1.  Service crediti includes active service. Members earn service credit for eachi month they are employed in a covered position. It also may include credit for prior servicet the member has purchased oradditional service credit the member was granted. A member's total service crediti is one ofthe factors used to determine their eligibility for retirement and to calculatet theirretirement benefit.] It also may count toward eligibility for thel health insurance crediti in retirement, ifthe employer offers the health insurance credit.  credit.  33    Town ofHillsville, Virginia Notes tol Financial Statements AsofJune 30, 2023 6. Benefits, continued VRS Retirement. Plan, continued A. Plan Description. continued PLAN1  PLAN2 Vesting  HYBRID RETIREMENTPLAN Defined Benefit Component: Defined benefit vesting ist minimum ofs the member length service a needs to qualify fora future retirement benefit. Members are vested under the defined component ofthel benefit Retirement Plan when Hybrid reach five years they (60 months) ofs service credit. Plan 1 orl Plan 2 members with at least fivey years (60 months) ofservice credit who opted intot the Hybrid Retirement Plan remain vestedi in the defined benefit component. Defined Contribution Component: Defined contribution vesting refers tot the minimum length ofs servicea member needs to be eligible to withdraw the employer contributions from the defined contribution component ofthe plan. Members are always 100% vested int the contributions that they make. Upon retirement or leaving covered employment, ai member is eligible to withdraw ap percentage of employer contributions toi the defined contribution component of the plan, based on service. * After two years, a member is 50% vested andi may withdraw 50% ofe employer contributions. After three years, a member is 75% vested and may withdraw 75% ofe employer contributions. After four or more years, a member is 100% vested and may withdraw 100% of employer contributions. Distributions are not required, except as governed by law.  Vesting is the minimum length of Same as. Plan 1. service ai member needs to qualify for ai future retirement benefit. Members become vested when they have: atl least fivey years (601 months) ofservice credit. members are eligible to qualify for retirement ifthey meet the age and service requirements fort their plan. Members also must be vested to receive ai fullr refund oftheir member contribution account balance ifthey leave employment and request ai refund. Members are always 100% vested in the contributions that they make.  Vesting means  34    Town ofHillsville, Virginia Notes tol Financial Statements Aso ofJune 30, 2023 6. Benefits, continued VRS Retirement. Plan, continued A. Plan] Description, continued  HYBRID RETIREMENT PLAN Defined] Benefit Component: See definition under] Plan 1 Defined Contribution Component: Thel benefiti is based on contributions made by the member and any matching contributions made by the employer, plus net investment earnings on those contributions.  PLAN1  PLAN2 Calculating thel Benefit See definition under) Plan 1.  The basic benefiti is determined using the average: final compensation, service credit and plan multiplier. An early retirement reduction is applied to this amount ifthe member isi retiring with a reduced benefit. In cases where thei member has elected an optional form of retirement payment, an option factor specific tot the option chosen isthen applied. Am member'sa average: final compensation as a covered employee. factor usedi in the: formula to determine a final retirement  Average Final Compensation Ar member's average final highest compensation as a covered Service Retirement Multiplier to. January 1, 2013. For non-  Same asl Plan 2.1 Itis usedi int the retirement formula fort the defined benefit component ofthe plan.  compensation is the average oft the compensation ist the average of 36 consecutive months ofhighest their 60 consecutive months of  employee.  VRS: The retirement: multiplier isa VRS: Same asl Plan1 for service Defined Benefit Component:  earned, purchased or granted prior VRS: Ther retirement multiplier for service credit earned, purchased or For members who opted into the granted on or after. January 1, 2013. Hybrid Retirement Plan from Plan  the defined benefit component is  benefit. Thei retirement multiplier hazardous duty members the for non-hazardous duty members is retirement multiplier is 1.65%1 for  1.00%.  1.70%.  lorl Plan 2, the: applicable multipliers for those plans willl be used to calculate the retirement benefit for service credited in those plans. Sheriffs and regional jail  Sheriffs and regional jail superintendents: Thei retirement multiplier for sheriffs and regional jail superintendents is 1.85%. employees: The retirement multiplier ofe eligible political subdivision hazardous duty employees other than sheriffs and regional jail superintendents is 1.70% or 1.85% as elected by the employer.  Sheriffs and regional jail  superintendents: Same as Plan 1. superintendents: Not: applicable.  Political subdivision hazardous duty Politicalsubdivision hazardous duty Political subdivision hazardous duty  employees: Same asl Plan 1.  employees: Not applicable. Defined Contribution Component: Nota applicable.  35    Town ofHillsville, Virginia Notes tol Financial Statements AsofJune. 30, 2023 6.  Benefits, continued VRS Retirement Plan, continued Plan) Description, continued  A.  PLAN1  PLAN2 Normal Retiremént Age VRS: Normal Social Security retirement age. Political subdivisions hazardous  HYBRID RETIREMENTI PLAN Defined Benefit Component: VRS: Same as) Plan 2. Political subdivisions hazardous Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subjectto restrictions. Defined Benefit Component: retirement age and have at] least five years (601 months) ofs service credit or when their age plus service credit equals 90.  VRS: Age 65.  Politicals subdivisions hazardous duty employees: Age 60.  duty employees: Same as Plan 1. duty employees: Not applicable.  Earliest Unreduced) Retirement Eligibility credit or when their age plus service credit equals 90.  VRS: Age 65 with atl least five VRS: Normal Social Security credit or at age: 50 with atl least 30 years (601 months) ofs service  years (60 months) ofservice years ofs service credit. Political subdivisions hazardous least five years ofs service credit or age 50 with at least 25 years of service credit.  retirement age with at least five VRS: Normal Social Security  Political subdivisions hazardous Politicals subdivisions hazardous  duty employees: Age 60 with at duty employees: Same as Plan 1. duty employees: Not  applicable.  Defined Contribution Component: Members are eligible tor receive distributions upon leaving employment, subjectto restrictions. VRS: Age 60 with atl least five years (601 months) ofservice credit.  Earliest Reduced Retirement Eligibility years (601 months) ofservice  VRS: Age 55 with at least five VRS: Age 60 with at least five Defined Benefit Component:  years (60 months) ofservice credit or age 50 with atl least 10 credit. years ofs service credit. Political subdivisions hazardous least five years ofs service credit.  Political subdivisions hazardous Political subdivisions hazardous  duty employees: Age 50 with at duty employees: Same as) Plan 1. duty employees: Not  applicable.  Defined Contribution Component: Members are eligible to1 receive distributions upon leaving employment, subjectt to restrictions.  36    Town of Hiilisvillle, Virginia Notes tol Financial Statements As of June. 30, 2023 6.  Benefits, continued VRS Retirement. Plan, continued A. Plan] Deseription.continued  HYBRID RETIREMENTPLAN Same as Plan 2. Component: Not applicable. Eligibility: Same asl Plan 1 and Plan 2.  PLAN1  PLAN2  Cost-of-Living. Adjustment (COLA)in] Retirement (COLA) matches the first 2% increase ini the CPI-U and halfof  The Cost-of-Living. Adjustment The Cost-of-Living Adjustment Defined Benefit Component:  (COLA) matches the first 3% increase in the Consumer) Price Index for all Urban Consumers increase (up to 4%) upi toa maximum COLA of 5%. Eligibility: For members who retire with an Same as Plan 1. unreduced benefit or with a reduced benefit with atl least 20 years of service credit, the COLA will goi into effect on. July 1a after one full calendar year from the retirement date. For members who retire witha a reduced benefit and whol have less than 20; years ofservice credit, the COLA will goi into effect on. Julyl after one calendar year following the unreduced retirement eligibility Exceptions to COLAI Effective The COLA is effective July 1 following one full calendar year (January 1 tol December 31) under any oft the following circumstances: Thei member is within five years ofqualifying for an unreduced retirement benefit as ofJ January 1,2013. The member: retires on disability. The member retires directly from short-term orl long-term disability. The member isi involuntarily separated from employment for causes other thanj job performance orr misconduct andi is eligiblet to retire under the Workforce Transition Act or the Transitional Benefits Program.  any additional increase (upt to 2%), Defined Contribution  (CPI-U) and! halfo of any additional forar maximum COLA of3%.  Eligibility:  date. Dates:  Exceptions to COLA] Effective Dates: Same as Plan 1.  Exceptions to COLAI Effective] Dates: Same asl Plan 1 and] Plan 2.  37    Town ofHillsville, Virginia Notes to Financial Statements AsofJune 30, 2023 6.  Benefits, continued VRS. Retirement Plan, continued A. Plan) Description, continued  PLAN1  PLAN2  HYBRID RETIREMENT PLAN  Cost-of-Living Adjustment (COLA) in) Retirement, continued  The member dies in service and the member's survivor or beneficiary is eligible fora monthly death-in-service benefit. - The COLA will goi into effect on July 1f following onei full calendar year (January I to December: 31) from the datet the monthly benefit  begins.  Disability Coverage and retire on disability, the  Members who are eligible to be Members who are eligible tol be  considered for disability retirement considered for disability retirement Employees of political subdivisions retirement multiplier is 1.70%0 on retirement multiplier is 1.65% on ins) Local participate int the Virginia alls service, regardless ofwheni it all service, regardless of when it unless Disability their local Program (VLDP) was earned, purchased or granted. was earned, purchased or granted. provides ane employer-paid governing body  and retire on disability, the  (including Plan 1a and] Plan 2 opt-  comparable program fori its members. Hybridi members (including Plan 1 and] Plan 2 opt-ins) covered under VLDP are subject toa one-year waiting period before becoming eligible for non-work-related disability benefits. Defined Benefit Component: Same as Plan 1 witht the: following exception: Hybrid Retirement Plan members are ineligible for ported service. Defined Contribution Component: Not applicable.  Purchase of Prior Service Same as) Plan 1.  Members may be eligiblet to purchase service from previous public employment, active duty military service, an eligible period ofleave or VRS refunded service as service credit in their plan. Prior service credit counts toward vesting, eligibility for retirement andt thel health insurance credit. Only active members are eligible to purchase prior service. Members also may bee eligible toj purchase periods of leave without pay.  38    Town ofHillsville, Virginia Notes to Financial Statements AsofJune3 30,2023 6. Benefits, continued VRS Retirement, Plan, continued  B.  Employees Covered by Benefit Terms  As of the. June 30, 2021 actuarial valuation, the following employees were covered by the benefit terms of  the pension plan:  Number of Employees 39 9 5 22 36 42 117  Inactive members ort their beneficiaries currently receiving benefits  Inactive members: Vested Non-vested Active elsewhere in the VRS Totali inactive members Active members Total covered employees Contributions  C.  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% oft their compensation toward their The Town's contractually required contribution rate for the year. ended June 30, 2023 was 13.61% of covered employee compensation. This rate was based on an actuarially determined rate from an actuarial 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 Town were $266,458 and $236,065 fort the years ended. June 30,  retirement.  valuation as of. June 30, 2021.  2023 and 2022, respectively. D. Net] Pension) Liability  The net pension liability (NPL) is calculated separately for each employer and represents that particular employer's total pension liability determined in accordance with GASB Statement No. 68, less that employer's fiduciary net position. The Town's NPL was measured as of] June 30, 2022. The total pension liability used to calculate the NPL was determined by an actuarial valuation performed as of June 30, 2021,  rolled forward toi the measurement date ofJune 30, 2022.  39    Town ofHillsville, Virginia Notes to) Financial Statements AsofJune. 30, 2023 6.  Benefits, continued VRS. Retirement, Plan, continued Actuarial, Assumptions General Employees  The total pension liability for General Employees in the Town's Retirement Plan was based on an actuarial valuation as of June 30, 2021, using the Entry Age Normal actuarial cost method and the assumptions, applied to all periods included in the measurement and rolled forward to the measurement following  date of] June 30, 2022. Inflation Investment rate ofretur Mortality rates: Pre-Retirement: Post-Retirement: Post-Disablement  2.50% inflation  Salary increases, includingi inflation 3.50%-5.35%  6.75%, neto of! pension plan investment expense, including  Non-Hazardous Duty: 15% of deaths are assumed to be servicerelated males; 105% ofrates for females set forward 2 years. forr males; 105% ofrates for females set forward 3 years. back: 3 years; 90% ofrates for females set back 3: years. ofrates for males and females set forward 2 years.  Pub-2010 Amount Weighted Safety Employee Rates projected generationally; 95% of rates for Pub-2010. Amount Weighted Safety Healthy Retiree Rates projected generationally; 110% ofrates RP-2010 Amount Weighted Disabled Rates projected generationally; 95% of rates for males set Pub-2010. Amount Weighted Safety Contingent Annuitant Rates projected generationaly;1109 Rates projected generationally with Modified MP-2020 Improvement Scale that is 75% oft thel MP-  Beneficiaries and Survivors: Mortality Improvement: 2020 rates.    Town ofHillsville, Virginia Notes to) Financial Statements AsofJune 30,2023 6.  Benefits, continued VRS Retirement Plan, continued E. Actuarial Assumptions. continued  The actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study fort the period from. July 1,2 2016 through June 30, 2020, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as ai result oft thee experience study and' VRS Board action are as follows: Mortality Rates (Pre-retirement, post- Updated tol Pub-2010 public sector mortality tables. For  Non-Hazardous Duty: retirement healthy, and disabled) Retirement! Rates Withdrawal Rates Disability Rates Salary Scale Line ofDuty) Disability Discount Rate  future mortality improvements, replaced load witha a modified Mortality Improvement Scale] MP-2020 Adjusted rates tol better fit experience for Plan 1;s set separate rates based on experience for) Plan 2/Hybrid; changed final retirement age Adjusted: rates tol better fit experience ate each year age and service through 9 years ofservice No change No change No change No change  U  Public Safety. Employees with Hazardous Duty Benefits  The total pension liability for Public Safety Employees with Hazardous Duty Benefits in the Town's Retirement Plan was based on an actuarial valuation as of June 30, 2021, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement  andi rolled forward to the measurement date of. June 30, 2022. Salary increases, including inflation 3.50%-4.75%  Inflation Investment: rate ofretum  2.50% inflation  6.75%, net of! pension plani investment expense, including  Mortality rates:  Hazardous Duty: 45% of deaths are assumed to be: service related  Pre-Retirement: Post-Retirement: forward 3 years. Post-Disablement set! back 3) years.  Pub-2010 Amount Weighted Safety Employee Rates projected generationally with a Modified MP-2020 Improvement Scale; 95% ofrates for males; 105%1 rates for females set forward 2 years. Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected generationally with a Modified MP-2020 Improvement Scale; 110% of rates for males; 105% of rates for females set Pub-2010 Amount Weighted General Disabled Rates projected generationally with a Modified MP-2020 Improvement Scale; 95% of rates for males set back 3 years; 90% of rates for females  41    Town of] Hillsville, Virginia Notes to) Financial Statements AsofJune 30, 2023 6. Benefits, continued VRS Retirement Plan, continued E. Actuarial Assumptions. continued  Beneficiaries and Survivors: Mortality Improvement: 2020 rates.  Pub-2010. Amount Weighted Safety Contingent Annuitant Rates projected generationally witha Modified] MP-2020 Improvement Scale; 110% ofrates fori males and females set forward 2j years a Rates projected generationally with Modified MP-2020 Improvement Scale that is 75% ofthel MP- The actuarial assumptions used in the. June 30, 2021 valuation were based on the results of an actuarial experience study for the period from. July 1, 2016 through June 30, 2020, except the change in the discount rate, which was based on' VRS Board action effective. July 1, 2019. Changes to the actuarial aresult oft the experience study and VRS Board action are as follows:  assumptions as  Hazardous Duty:  Mortality Rates (Pre-retirement, post- Updated tol Pub-2010 public sector mortality tables.  retirement healthy, and disabled) Retirement Rates. Withdrawal Rates Disability Rates Salary Scale Line ofl Duty Disability Discount Rate  Increased disability life expectancy. For future mortality improvements, replaced load with ar modified] Mortality Adjusted rates tol better fit experience and changed final Decreased rates and changed: from rates based on age and service to rates! based ons service only tol better fit experience andt tol be more consistent with) Locals Largest  Improvement Scalel MP-2020 retirement age from 651 to70 10 Hazardous Duty No change No change No change No change  42    Town ofHillsville, Virginia Notes tol Financial Statements As ofJune. 30, 2023 6. Benefits, continued VRS Retirement. Plan, continued . Long-Term Expected Rate ofRetum  The long-term expected rate of return on pension System investments was determined using al log-normal distribution analysis inj which best-estimate ranges of expected: future reali rates ofreturn (expected returns, net of pension System investment expense and inflation) are developed for eachi major asset class. These ranges are combined toj produce thel long-term expected rate ofr 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 ofr return for each major asset class are summarized in the following  table:  Weighted Average Expected 1.94% 0.31% 0.67% 0.63% 1.36% 0.22% 0.20% 5.33% 2.50% 7.83%  Arithmetic  Long-Term Long-Term Long-Term Target Asset Expected Allocation Rate ofReturn RateofRetrn* 34.00% 15.00% 14.00% 14.00% 14.00% 6.00% 3.00% 100.00% Inflation  Asset Class (Strategy) Public Equity Fixed] Income Credit Strategies Real Assets Privatel Equity Total  5.71% 2.04% 4.78% 4.47% 9.73% 3.73% 6.55%  MAPS-Muli-Asset: Public Strategies PIP-Private! Investment. Partnership  Expected arithmetic nominal return**  The above allocation provides a one-year expected return of7.83% However, one-year returns do not take into account the volatility present in each oft the asset classes. In setting the long-term expected return for the system, stochastic projections are employed tor model future returns under variouse economic conditions The results provide ai range ofreturns over various time periods thatt ultimately providea ar median return of6 6.72%, including expectedi inflation of2.50%. ** On October 10, 2019, the VRS Board elected a long-term rate of 6.75% which is roughly at the 40th percentile of expected long-term results oft the VRS fund asset allocation at that time, providing a median return of7.11%, including  -  expectedi inflation of2.50%.  G. Discount Rate  The discount rate used to measure the total pension liability was 6.75%. Thej projection of cash flows used to determine the discount rate assumed that System member contributions willl be made per the VRS Statutes and the employer contributions willl be made in accordance with the VRS funding policy at rates equal to the difference between actuarially determined contribution rates adopted by the VRS Board of Trustees and the member rate. Consistent with the phased-in funding provided by the General. Assembly for state and teacher employer contributions; political subdivisions were also provided with an opportunity to use an alternate employer contribution rate. For they yeare ended. June 30, 2022, the alternate rate was the employer contribution rate used in FY 2012 or 100% of the actuarially determined employer contribution rate from the June 30, 2021, actuarial valuations, whichever was greater. From. July 1,2022 on, participating employers are assumed to continue to contribute 100% oft 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 allj periods ofprojected benefit payments to determine thet total pension liability.  43    Town ofHillsville, Virginia Notes tol Financial Statements As ofJ June 30, 2023 6.  Benefits, continued VRS Retirement. Plan, continued H. Changes inl Net Pension Liability  Increase (Decrease) Plan Fiduciary Net] Position (b) 8.015.884  Total Pension Liability (a) 8.645.716 208,140 583,616 (358,505)  Net Pension Liability (a)-(b) 629.832 208,140 583,616 (358,505) (220,228) (77,163) 8,644 4,990 (183) 149.311  Balances at. June 30, 2021 Changes fort the year: Service cost Interest Changes of assumptions Differences between expected and actual experience Contributions - employer Contributions- - employee Neti investment income Benefit] payments, including refunds ofe employee contributions Administrative expense Other changes Net changes Balances at. June 30, 2022  220,228 77,163 (8,644) (415,380) (4,990) 183 (131.440) 7,884,444 $ 779,143  (415,380) 17.871 8,663,587  Sensitivityofthe) Net] Pension Liability to Changes in the Discount Rate  The following presents the net! pension liability ofthe Town using the discount rate of6.75%, as well as what the Town's net pension liability would be ifi it were calculated using a discount rate that is one percentage  point lower (5.75%) or onel percentage point higher (7.75%) than the current rate:  1% Decrease 1,938.829  Current Discount 779.143  1% Increase (162,402)  (5.75%) Rate(6.75%) (7.75%)  Net Pension Liability  J. Pension Expense and) Deferred Outflows of] Resources and Deferred Inflows ofResources Related to Pensions For the year ended. June 30, 2023, the Town recognized pension expense of$162,240. At. June 30, 2023, the Town reported deferred outflows of resources and deferred inflows ofi resources related to pensions from the  following sources:  Deferred Outflows ofResources ofResources  Deferred Inflows $ 231,592 (120,266) 228,581 339.907  Differences between expected and actual experience Net difference between projected and actual earnings on plan investments Employer contributions subsequent to the Measurement) Date*  Changes ofassumptions Total  266.458 266,458 $  44    Town ofHillsville, Virginia Notes to) Financial Statements AsofJune 30, 2023 6. Benefits, continued VRS Retirement. Plan, continued continued  Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. $266,458 reported as deferred outflows of resources related to pensions resulting from the Town's contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows ofresources related toj pensions will be recognized in pension expense in future reporting  periods as follows: 2024 2025 2026 2027 2028 Thereafter  $  (83,024) (196,480) (169,520) 109,117  K. Pension Plan] Data  Information about the VRS Political Subdivision Retirement Plan is also available in the separately issued VRS 2022. Annual Report. A copy of the 2022 VRS Annual Report may be downloaded from the VRS website at wwwyaretireore/ndpublisations707--amual-reportpdr or by writing to the System's Chief  Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.  VRS Group Life Insurance Plan A. Plan Description  All full-time, salaried permanent employees oft the Town are automatically covered by the VRS Group Life Insurance Program upon employment. This plan is administered by the Virginia Retirement System (the System), along with pensions and other OPEB plans, for public employer groups in the Commonwealth of In addition to the Basic Group Life Insurance benefit, members are also eligible to elect additional coverage for themselves as well as a spouse or dependent children through the Optional Group Life Insurance Program. For members who elect the optional group life insurance coverage, the insurer bills employers directly for the premiums. Employers deduct these premiums from members' paychecks and pay the premiums to the insurer. Since this is a separate and fully insured program, iti is not included as The specific information for Group Life Insurance Program OPEB, including eligibility, coverage and  Virginia.  part ofthe Group) Lifel Insurancel Program OPEB. benefits is set outi in the tablel below:  45    Town ofHillsville, Virginia Notes tol Financial Statements AsofJune 30,2023 6. Benefits, continued  VRS Group Life Insurance Plan, continued A. Plan Description.c continued  GROUP LIFE INSURANCE PROGRAM PLAN PROVISIONS  Eligible Employees  The Group Life Insurancel Program was established July 1, 1960, fors state employees, teachers and Basic group lifei insurance coverage is automatic upon employment. Coverage ends for leave their position before retirement eligibility or who take ai refund oft their accumulated. employees who  employees ofpolitical subdivisions thate elect thep program. member contributions and accrued interest.  retirement  Benefit Amounts  Thel benefits payable under the Groupl Life Insurancel Program have several - Natural-Death Benefit - Ther natural death benefiti is equal tot the employee's components. covered rounded to the next highest thousand and then doubled. Accidental Death Benefit - The accidental death benefit is doublet the natural death benefit. Other Benefit Provisions - In addition to the basic natural and accidental death benefits, provides additional benefits provided under specific circumstances. Thesei include: the program  compensation  OA Accidental dismemberment benefit oS Safety belt benefit ol Repatriation benefit oFelonious assault benefit oAccelerated death benefit option Reduction in Benefit Amounts 25% ofi its original value.  Thel benefit amounts provided to members covered under the Group Life Insurancel separation. Thel benefit amount reduces by an additional 25% on eachs Minimum Benefit. Amount and Cost-of-Living. Adjustment (COLA) For covered members with at least 30 years ofs service credit, therei is ar minimum benefit Group Life Insurance Program. The minimum benefit was set at increased annually based on the VRS Plan 2 cost-of-living  areduction factor. The benefit amount reduces by 25% on. January 11 following one Program calendar ares subject to  year of  subsequent January I until it reaches  statute $8,000 by  payable under the in 2015.This willl be  adjusted for the COLA was $8,984 as of June 30, 2023. adjustment calculation. The minimum benefit  B.  Contributions  The contribution requirements fort the Group Life Insurancel Program are governed Insurance Program was 1.34% of covered employee compensation. This and an employer component using a 60/40 split. The the employer component was 0.54%  508 of the Code of Virginia, as amended, but may be impacted as a result of funding by $51.1-506 and $51.1- agencies and school divisions by the Virginia General Assembly. The total rate provided to state employee contribution, however the employer must pay all oft the employer contribution. Each part of the contractually required employer contribution rate for the year ended June 30, 2023 was 0.54% employer's of covered employee compensation. This rate was based on an actuarially determined rate from an as of. June 30, 2021. The actuarially determined rate, when combined with expected to finance the costs ofbenefits payable during the year, with an additional employee contributions, was unfunded accrued liability. Contribution to the Group Life Insurance Program from the amount Town to finance any and $9,052 for they years ended. June 30, 2023 and. June 30, 2022, respectively.  for the Group Life was allocated into an employee  employee component was 0.80%(1.34%: x 60%) and  (1.34% x 40%). Employers may elect to pay all or  actuarial valuation was $10,573  46    Town ofHillsville, Virginia Notes tol Financial Statements AsofJune 30, 2023 6. Benefits, continued  VRS Group. Life Insurance. Plan, continued Contributions. continued oft the 2022 Appropriation Act.  B.  In. June 2022, the Commonwealth made as special contribution ofa approximately $30.41 million tot the Group Life Insurance plan. This special payment was authorized by a) Budget Amendment: included in Chapterl GLI OPEB Liabilities. GLI OPEB Expense, and Deferred Outflows ofResources and] Deferred Inflows of At June 30, 2023, the Town reported a liability of$92,8361 for its proportionate share of thel Net GLIOPEB liability. The Net GLI OPEB liability was measured as of June 30, 2022 and the total GLI OPEB liability used to calculate the Net GLI OPEB liability was determined by an actuarial valuation performed as of June 30, 2021, and rolled forward to the measurement date ofJ June 30, 2022. The Town's proportion ofthe Net GLI OPEB liability was based on the Town's actuarially determined employer contributions to the Group Life Insurance Program for the year ended June 30, 2022, relative to the total of the actuarially determined employer contributions for all participating employers. The Town's proportion was 0.01%: for For the year ended. June 30, 2023, the Town recognized GLI OPEB expense of $2,658. Since there was a change inj proportionate share between measurement dates, aj portion of the GLI OPEB expense was related At June 30, 2023, the Town reported deferred outflows of resources and deferred inflows of resources  C.  Resources Related to Group) Life Insurance Program OPEB  both. June 30, 2023 and 2022.  to deferred amounts form changes inj proportion. related to the GLI OPEB from the: following sources:  Deferred Outflows ofResources of] Resources  Deferred Inflows $ 5,801 (3,627) 5,580 1,345 9,099  Investment experience Changes ofa assumptions Changei inj proportion Total  Differences between expected and actual experience Employer contributions subsequent tot thel Measurement, Date*  10.573 10,573  *$10,573 reported as deferred outflows of resources related to the GLI OPEB resulting from the Town's contributions subsequent to the measurement date will be recognized as a reduction of the Net GLI OPEB Other amounts reported as deferred outflows ofr resources and deferredi inflows of resources related tot the GLI OPEB willl be recognized in the GLI OPEB expense in future reporting periods as follows:  liability int the Fiscal Year ending June 30, 2024.  2024 2025 2026 2027 2028 Thereafter  $  (1,934) (1,890) (4,604) 696 (1,367)  47    Town ofHillsville, Virginia Notes to Financial Statements AsofJune. 30, 2023 6.  Benefits, continued VRS Group Life Insurance Plan, continued D. Actuarial Assumptions  The total GLI OPEB liability was based on an actuarial valuation as of. June 30, measurement andi rolled forward to the measurement date of June 30, 2022.  Normal actuarial cost method and the following assumptions, applied to all 2021, using included the Entry Age  periods  in the  Inflation Salary increases, including inflation General employees Hazardous Duty employees Investment rate ofreturn Mortality rates: General Employees: Pre-Retirement: Post-Retirement: Post-Disablement  2.50% 3.50%-5.35% 3.50%-4.75%  6.75%, net ofinvestment expense, including inflation  Pub-2010. Amount Weighted Safety Employee Rates projected generationally; males set forward2 Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected generationally; 95% of for males set forward 2y years; 95% ofrates for females set forward 1 year. Pub-2010 Amount Weighted General Disabled Rates projected generationally; 110% of rates for males set forward. 3 years; 110% of rates for females set forward 2 years. Pub-2010. Amount Weighted Safety Contingent. Annuitant Rates projected generationally. Rates projected generationally with Modified. MP-2020 Improvement Scalei that is 75% oft thel The actuarial assumptions used in the June 30, 2021, valuation were based on the results of an actuarial experience study for thej period from. July 1,2 2016 through June 30, 2020, except the rate, which was based on VRS Board action effective. July 1, 2019. Changes to the actuarial change aresult ofthee experience study and VRS Board action are as follows:  years; 105% ofr rates for females set forward 3: years.  rates  Beneficiaries and Survivors: Mortality Improvement: 20201 rates.  MP- in the discount assumptions as  General Employees: retirement healthy, and disabled) Retirement Rates Withdrawal Rates Disability Rates Salary Scale Line ofDuty Disability Discount Rate  Mortality Rates (Pre-retirement, post- Updated to Pub-2010 publics sector mortality tables. For  future mortality improvements, replaced load with a modified Mortality) Improvement Scale MP-2020 Adjustedi rates tol better fit experience for Plan 1;set separate rates based on experience for Plan 2/Hybrid; changed final retirement age from 751 to 80 for all Adjusted rates tol better fit experience at each age and service decrement through 9 years ofs service  No change No change No change No change 48    Town ofHilsville, Virginia Notes tol Financial Statements AsofJune 30, 2023 6. Benefits, continued  VRS Group. Lifel Insurance. Plan, continued D. Actuarial Assumptions. continued Mortality rates: Hazardous Duty: Pre-Retirement: Post-Retirement: Post-Disablement:  Pub-2010 Amount Weighted Safety Employee Rates projected generationally; 95% of rates for Pub-2010. Amount Weighted! Safety. Healthy Retiree Rates projected generationally; 110% ofrates Pub-2010 Amount Weighted General Disabled Rates projected generationally; 95% of rates for Pub-2010. Amount Weighted Safety Contingent. Annuitant Rates projected generationally; 110% Rates projected generationally with) Modified: MP-2020 Improvement Scale thati is 75% ofthel MP- The actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study for the period from July 1, 2016 through June 30, 2020, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as al result ofthe experience study and VRS Board action are as follows: Mortality Rates (Pre-retirement, post- Updated tol Pub-2010 public sector mortality tables.  males; 105% ofrates for females set forward 2 years. fori males; 105% ofrates for females set forward: 3: years.  males set back 3 years; 90% ofrates for females set back 3 years. ofrates for males and females set forward2 2. years.  Beneficiaries and Survivors: Mortality Improvement: 20201 rates.  retirement healthy, and disabled) Retirement Rates Withdrawal Rates Disability Rates Salary Scale Line ofI Duty Disability Discount Rate  Increased disability life expectancy. For future mortality improvements, replaced load with aj modifiedl Mortality Adjusted rates tol better fit experience and changed final Decreased rates and changed rates based on age and service to rates based on service only to better fit experience andt to bei more consistent with) Local Top 10  Improvement Scalel MP-2020 retirement age from 651 to70 Hazardous Duty No change No change No change No change  49    Town ofHillsville, Virginia Notes tol Financial Statements AsofJune 30, 2023 6.  Benefits, continued VRS Group Life Insurance. Plan, continued E. Net GLIOPEB] Liability  The net OPEB liability (NOL): for the Group Life Insurance Program represents the program's total OPEB liability determined in accordance with GASB Statement No. 74,1 lesst the associated fiduciary net position. As oft the measurement date of. June 30, 2022, NOL amounts for the Group Lifel Insurance Program is asi follows  (amounts expressedi int thousands): Total GLI OPEBLiability Plan Fiduciary Net] Position  Group Life Insurance OPEB Program $ 3,672,085 (2.467,989) 1,204,096 67.21%  Net GLI OPEB Liability (Asset)  Plan Fiduciary Net] Position as al Percentage ofTotal GLI OPEB Liability  The total GLI OPEB liability is calculated by the System's actuary, and each plan's fiduciary net position is reported in the System's financial statements. The net GLIOPEB liability is disclosed in accordance with the requirements of GASB Statement No. 74 in the System's notes to the financial statements and required  supplementary information. F. Long-Term Expected Rate ofRetum  The long-term expected rate of retum on the System's investments was determined using a log-normal distribution analysis in which best-estimate ranges ofe expected future real rates ofreturn (expected returns, net ofthe System's investment expense andi inflation) are developed for each major asset class. These combined to produce the long-term expected rate of return by weighting the expected future real ranges 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 ofreturn for each major asset class are summarized in the  are following Weighted Average Expected 1.94% 0.31% 0.67% 0.63% 1.36% 0.22% 0.20% 5.33% 2.50% 7.83%  table:  Arithmetic  Long-Term Long-Term Long-Term Target Asset Expected Allocation Rate ofReturn RateofReturn. 34.00% 15.00% 14.00% 14.00% 14.00% 6.00% 3.00% 100.00% Inflation  Asset Class (Strategy) Public Equity Fixed Income Credit Strategies Real Assets Private Equity Total  5.00% 2.04% 4.78% 4.47% 9.73% 3.73% 6.55%  MAPS -Multi-Asset! Public Strategies PIP. -Private Investment Partnership  Expected arithmetic nominal retumn**  The above allocation provides a one-year return of7.83%. However, one-year returs do not take into account the volatility present ine each ofthea asset classes. In setting thel long-term expected return fort the system, stochastic are employed to model future retums under various economic conditions The results provide a of returns projections over various time periods that ultimately provide a median retum of6.72%, including expectedi inflation of2.50%. range **On October 10, 2019, the VRS Board elected a long-term rate of 6.75% which is roughly at the 40th percentile of expected long-term results oft the VRS fund asset allocation at that time, providing a median return of7.11%, including  expected inflation of2.50%.  50    Town ofHillsville, Virginia Notes to) Financial Statements As ofJune. 30, 2023 6.  Benefits, continued G. Discount Rate  VRS Group Life Insurance. Plan, continued  The discount rate used to measure the total GLI OPEB liability was 6.75%. The projection of cash flows used to determine the discount rate assumed 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. Through the fiscal year ending June 30, 2022, the rate contributed by the employer for the Town's GLI OPEB will be subject to the portion oft the VRS Board-certified rates that are funded by the Virginia General Assembly which was 100% of the actuarially determined contribution rate. From July 1, 2022 on, employers are assumed to continue to contribute. 100% oft the actuarially determined contribution rates. Based on those assumptions, the GLI OPEB's fiduciary net position was projected to be available to make all projected future benefit payments. of eligible employees. Therefore, the long-term expected. rate of return was applied to all periods of projected benefit payments to determine the total GLI  OPEB liability.  H. Sensitivity of the Proportionate Share oft thel Net GLI OPEB Liability to Changes int thel Discount] Rate  The following presents the Town's proportionate share oft the net GLI OPEB liability using the discount rate of6 6.75%, as well as what the Town's proportionate share of the net GLI OPEB liability would be ifit were calculated using a discount rate that is one percentage point lower (5.75%) or one percentage point higher  (7.75%) than the current rate:  1% Decrease (5.75%) 135,087 $  Current Discount Rate(6.75%) (7.75%) 92,836 $  1% Increase  Town's! proportionate share ofthe Groupl Lifel Insurance Program Net OPEB liability Group Life Insurance Program Fiduciary/ Net] Position  58,691  Detailed information about the Group Life Insurance Program's Fiduciary Net Position is available in the separately issued VRS 2022 Annual Comprehensive Financial Report (Annual Report). A copy oft the 2022 VRS Annual Report may be downloaded from the VRS website at wwwaretireorendfpubications2022- annual-report.pdf or by writing to the System's Chief Financial Officer at P.O. Box 2500, Richmond, VA,  23218-2500.  51    Town ofHillsville, Virginia Notes to Financial Statements As ofJune. 30, 2023 Benefits, continued Otherl Pos-Employment Benefits A. Plan] Description  The Town provides post-employment benefits for retirees thati meet certain criteria. Thesel benefits include medical, dental, and vision coverage. Participants must meet one oft the following criteria tol be health benefits upon retirement: @) attain age 50 with at least 10 years of service with the eligible for In addition, employees must meet one oft the following requirements to be eligible for retirement  attain age: 55 with atl least 5y years ofservice with the Town.  Town, or (ii) through  Virginia Retirement System.  General Employees Plan 1: Members vested as ofJanuary 1, 2013:  Attain age: 50 witha atl least 10 years ofs service with VRS forar reduced pension benefit, or Attain age 55 with atl least 5 years ofservice with VRS fora a reduced pension benefit, or Attain age 65 with atl least 5 years ofservice with VRS for an unreduced pension benefit, or Attain age 50 with atl least 30; years ofservice with VRS for an unreduced pension benefit. General Employees Plan. 2 and Hybrid. Plan: Members not vested as of January 1, 2013 and hired on or gfer July 1, 2010 (Plan 2) and members hired on or qfer. Jamuary. 1, 2014 or members member Attain age 60 with atl least 5: years ofservice with VRS fora ar reduced pension benefit, or Attain 90j points (age plus service) with VRS for an unreduced pension benefit, or Attain Social Security Normal Retirement Age with at least 5: years of service with VRS Public Sqfety. Employees: Members hired prior to. January 1, 2014 (Plan 1) and members hired on or Attain age 50 with at least 5 years ofservice with VRS for a reduced pension benefit, or Attain age 60 with atl least 5 years ofservice with VRS for an unreduced pension benefit, or Attain age: 55 with atl least 25; years ofs service with VRS for an unreduced pension benefit. Retirees may elect to cover a spouse and dependents. Health benefits are offered for the lifetime retiree. If the retiree predeceases the spouse, the spouse may continue their coverage until the earlier of the of death, remarriage, or the obtainment of! health coverage not offered by the Town. Ifther retiree predeceases his or her dependents, then the dependents may continue medical coverage until the earlier attainment of age 26, marriage, ability to be self-supportive, obtaining health coverage not offered of death, the Town, or loss ofe eligibility ofs surviving spouse if covered under surviving spouse. The retiree and spouse pay 100% oft the premium cost for both retiree and spouse/dependent OPEBLiabilities. OPEB Expense, and Deferred Outflows of Resources and] Deferred Inflows Resources At. June 30, 2023, the Town reported al liability of$392,727 fori its OPEB liability. The OPEB determined by an actuarial valuation as of the valuation date, calculated based on the discount liability was actuarial assumptions below, and was then projected forward to the measurement date. Any rate and changes during this period! havel been reflected as prescribed by GASB 74 and 75.  election (Hybrid Plan):  by  unreduced pension benefit.  for an  gfer. January 1, 2014 (Plan 2). (No hybrid plan)  by  B. Contributions  Town has no contribution requirement.  coverage. The of  Related to OPEB  significant  52    Town ofHillsville, Virginia Notes tol Financial Statements As ofJune. 30, 2023 6.  Benefits, continued  Other Posi-Employment Benefits, continued Related to OPEB. continued  C.  OPEB Liabilities. OPEB Expense. and Deferred Outflows of Resources and Deferred Inflows ofResources  For they year ended. June 30, 2023, the Town recognized OPEB expense of $35,676.  At June 30, 2023, the Town reported deferred outflows of resources and deferred inflows of resources  related to the OPEB: from thei following sources: Differences between expected and actual experience  Deferred Outflows ofResources ofR Resources (66,800) $ (31,064) (97.864) $  Deferred Inflows 21,293 39,468 60.761  Changes in: assumptions Total  Amounts currently reported as deferred outflows of resources and deferred inflows of resources related to  OPEB will be recognizedi in OPEB expense in future reportingperiods: as follows:  2024 2025 2026 2027 2028 Thereafter  $  (361) 483 (5,878) (16,906) (16,910) 2,469  D. Actuarial Methods and Assumptions  The demographic assumptions used to determine the OPEB liability as of] June: 30, 2023 werel based ont ther results of an actuarial experience study fort the Virginia Retirement System covering thej period from July 1, 2016 to. June 30, 2020. The demographic assumptions recommended as aresult oft this study were adopted by the VRS Board of Trustees on April 20, 2021. Significant methods and assumptions were as  follows: Valuation date Measurement date Actuarial cost method Inflation Healthcare trend rates Salary increases, including inflation General employees Hazardous Duty employees  7/1/2022 6/30/2023 Entry ager normal 2.50% 5.90%1 to3.90% over: 50 years 3.50%-5.35% 3.50%-4.75%  53    Town ofHillsville, Virginia Notes tol Financial Statements As ofJune. 30, 2023 6.  Benefits, continued  Other Post-Employment Benefits, continued E. Changes in OPEBLiability  Increase or (Decrease) 368,004 23,504 13,379 16,509 (1,315) (27,354) 24.723 392.727  Balance at. June 30, 2022 Changes for thes year: . Service cost Interest Effecto ofp plan changes Effect ofe economic/lemographic gains or losses Effect ofa assumptions changes ori inputs Benefit payments Net changes Balance at] June: 30,2023  F. Discount Rate  The discount rate usedt to measure thet total OPEB liability was 3.65%. The discount ratei is based on the Bond  Buyer 20-Year Bond GOI Index as ofther measurement date.  G. Sénsitivity ofthe OPEB Liability to Changes in thel Discount and] Healthcare Trend] Rates  The following presents the Town's OPEB liability calculated using the discount rate of3.65%, as well as the OPEB liability would be ifit were calculated using a discount rate that is one percentage  lower what point 1% Increase  (2.65%) or onej percentage pointl higher (4.65%) than the current rate:  1% Decrease  Current Discount  (2.65%) Rate(3.65%) (4.65%) 423,283 $ 392,727 $ 364,497  OPEBI liability  The following presents the Town's OPEB liability calculated using the current healthcare trend rates as as what the OPEB liability would be ifi it were calculated using the healthcare trend rates that are well one  percentage point lower or one percentage point higher than the current rates:  1% Decreasei in  1% Increasei in  Current  Trend Rate Trend Rate Trend] Rate 351,752 $ 392,727 $ 440,561  OPEBI liability Compensated Absences  7.  Each Town employee earns vacation leave based on years ofs service up to 20 days per after 15: ands sick leave at the rate ofone day per month. Nol benefits or pay are received: fori unused year sick Accumulated vacation is paidi upon termination. The Town has outstanding accrued vacation leave upont termination. Governmental Activities and $56,994i in Business-type. Activities at] June 30, 2023.  years of service pay totaling $147,457in  54    Town ofHillsville, Virginia Notes to) Financial Statements Aso ofJune 30, 2023 8.  Lease Obligations (Capital and Operating) there were no capital leases outstanding. Long-Term Debt  The' Town periodically leases various types of equipment under capital and operating agreements. At June 30, 2023,  9.  The followingi is as summary of long-term debt transactions oft the Town for the year ended. June 30, 2023:  Amounts payable: at $ 286,651 $ 246.841 533,492 8 8,377,159 $ 8,377,159  Amounts payable at Due within  July1,2022 Increases Decreases June 30, 2023 one year  Governmental. Activities Notes from direct borrowings and direct placements General obligation bonds Business-type. Activities General obligation bonds Revenue bonds  - $ (26,093) $ 260,558 $ 26,859 (44.741) (70.834) $ 462,658 $ (168,453) $ 8,208,706 $ 373,389 (168,453) 8,208.706  202,100  31.075 57,934 373,389  The Town's outstanding notes from direct borrowings and direct placements related to governmental activities contain ap provision that in an event of default, outstanding amounts become immediately due if the Town is unable to make At June 30, 2023, the Town had one direct borrowing note that was secured by a fire truck. The Town has no  payment.  outstanding lines ofo credit.  Contractual maturities forl long-term debt are as follows:  Governmental. Activities Notes Payable and Bonds Principal 57,934 $ 59,664 61,458 62,461 54,309 166,832  Business-type. Activities Bonds Principal Interest 381,121 138,425 388,444 131,102 395,943 123,603 403,490 116,056 2,318,562 424,317 1,543,288 233,378 523,071 161,163 496,156 124,896 535,428 85,624 577,722 43,330 272,092 4,818  Year ending June 30, 2024 2025 2026 2027 2028 2029-2033 2034-2038 2039-2043 2044-2048 2049-2053 2054-2058 2059-2063 Total  Interest 10,911 9,116 7,270 5,527 9,091  12,640 $ 373,389 $ 146,157  462,658  54,555 $ 8,208.706  1,732,869  10. Accrued Charges for Services  The Town has adopted a bi-monthly billing cycle for most of its water and sewer customers. As a result, most customersh have received services for as many as one and one-halfn months for which they! had not been billed. These revenues are subject to accrual, and the asseti represents an estimate ofsuch charges based on subsequent bi-monthly billings. This amount isi includedi inj proprietary fund operating revenues. At. June 30, 2023, Water and Sewer Fund  accrued charges for services are: $42,942. and $42,417, respectively.  55    Town ofHillsville, Virginia Notes to) Financial Statements AsofJune 30, 2023 11. Deferred Revenue  Deferred revenue represents a measurable inflow of resources that will be available in a future Deferred revenue totaling $956,099 at. June 30, 2023 is comprised ofthe following:  reporting period. expenditures  Deferred Property Tax Revenue totaled $949,003. Prepaid Property Taxes  Deferred revenue representing uncollected tax billings not available for funding of current Property taxes dues subsequent to the current tax levy but paidi in advance byt taxpayers totaled $7,096.  12. Commitments and Contingencies  Amounts received or receivable from grantor agencies are subject to audit and adjustment principally the federal government. Any disallowed claims, including amounts already liability ofthe applicable funds. The amount, ifany, ofe expenditures which be disallowed collected, may constitute a determined at thist time although the government expects such amount, ifany, may tol bei immaterial. by the grantor cannot be At. June 30, 2023, the Town was involved in various litigation arising out oft the normal course of in the opinion ofmanagement, there were noi matters oflitigation involving the Town which would operations, howèver, Town's financial position should any court decision or pending matter notb bei favorablet tot the Town. materially affect the  by grantor agencies,  13. Surety Bond Information  Fidelity and Deposit Company ofMaryland:  Treasurer  $ $  100,000 100,000  All Town employees blanket bond  14. Risk ofLoss  The Town is subject to risk ofl loss from the following events: Theft of, damage to, or destruction of assets Job-related employee illness ori injuries  -Torts  Business interruption Errors or omissions Acts ofGod  The risk of these losses is managed by the purchase of commercial insurance. There have been no reductions in coverage over the past year and settlements have not exceeded insurance coverage in significant  three years.  any of the past  56    Town of Hillsville, Virginia Governmental, Funds Fort the Year Ended. June 30, 2023  Schedule1 Page1 Variance Favorable (Unfavorable)  Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual  Budget Original Final S 808,603 $ 811,634 $ 2,045,500 2,045,500 1,000 1,000 248,450 383,784 108,300 108,300 16.832 16.832 3.228,685 3.367,050  Actual  General Fund Revenues Revenue froml local sources: General propertyt taxes Other local taxes Permits, privilegef fees, and regulatory licenses Fines andf forfeitures Paymenti inl lieud oftaxes Revenuei from usec ofn money and property Charges fors services Gaino ons sale ofcapital assets Miscellancous Total revenue from! local sources Revenue from thel Federal Govemment: Byme. Justice. Assistance grant Body-wom Camera Policy and! Implementation. Program Downtown Planning Grant Community facilities grant Local law enforcement; grants Highway safetys grants Localg govermento challenge grant Total revenue from thel Federal Govemment Revenue from the Commonwealth: Noncategorical: aid Community development Farmers Market Freshl Match Fire prevention Litter control Other Totalr revenue from the Commonwealth Total revenues Expenditures Current: General govemmental administration Publics safety Public works Community development Non-departmental Capital projects Annexation expenses Debts service: Principalr retirement Interest ando other fiscal charges Total expenditures Excess revenues over expenditures Otherf financings sources: and uses Proceeds from debt Operatingt transfersi in Operatingt transfèrs out Carryover balances Total other financing sources and uses Netchangesi inf fund! balances Fund balance, beginning Fund balance, ending  900,503 $ 2,547,550 1,110 633,214 218,313 27.154 4.327.844 18,595 10,504 8,250 334,720 2,552 19,435 1.750 395.806 81,833 14,334 1,133 15,000 2,376 114.676 4.838.326 94,464 551,891 166,926 121,676 766,936 70,834 14.763 1.787.490 3,050.836  502,050 88,869 110 249,430 110,013 10.322 960.794 18,595 10,504 8,250 334,720 2,552 11,435 386.056 16,833 14,334 1,133 6,000 580 38.880 1,385.730 576,493 822,306 874,823 51,782 12,500 251,390 10,916 2,600.146 (64) 3,985,876 315,835 (1.250.875) (935,040) 3.050.836  8,000 1.750 9.750 65,000 9,000 1,796 75.796 3.314.231 670,957 1,230,029 1,038,351 173,458 12,500 1,018,693 81,750 14.699 4.240.437 (926.206) (315,835) 1.242.041 926.206  8,000 1.750 9.750 65,000 9,000 1,796 75.796 3.452.596 670,957 1,374,197 1,041,749 173,458 12,500 1,018,326 81,750 14.699 4387.636 (935.040) (315,835) 1.250,875 935.040  3,050,836 6.326.237 9.377.073  57    Town ofHillsville, Virginia Governmental. Funds For the) Year Ended. June30, 2023  Schedule1 Page2 Variance Favorable (Unfavorable)  Schedule of Revenues, Expenditures and Changes inl Fund Balance- Budget and Actual  Budget Original Final  Actual  ARP Revenue Revenues from thel Federal Govemment American Recovery) Fund Expenditures Current: General governmental: administration Publics safety Publicy works Community development Non-departmental Capital projects Total expenditures Net changesi inf fundl balances Fundi balance, beginning Fund balance, ending CDBG Revenue Revenues froml local sources Revenue from use ofmoneya and property Expenditures Community development Neto changesi inf fund! balances Fundb balance, beginning Fund! balance, ending  2.760.832 $ 2.760.832 540,916 1,234,521 818,849 123,474 14,772 28.300 2.760.832  (540,916) (1,234,521) (818,849) (123,474) (14,772) (28.300) (2.760.832)  83 $ 11.818 (11.735) 65.391 53.656  83 (11.818) (11,735)  -  58      a    2 ERE June. 30, 2023  Town ofHillsville, Virginia Schedule of Employer Pension Contributions  Schedule3 Contributions as%of Covered Employce Payroll (5) 13.49% 11.00% 12.65 10.41 10.70 11.27 11.48 13.91 12.06  Contributionsi in Relation to Required Contribution (2) 180,076 151,824 157,469 177,871 190,620 233,118 236,065  Employer's Covered Employee Payroll (4) 1,423,882 1,458,625 1,471,417 1,578,765 1,660,676 1,676,163 1,957,810  Recommended Contractually Contractually  Contribution Deficiency (Excess) (1)-(2) 4,550 $ 1,305,996 28,052 $ 1,381,354 (12,200) 1,623 18,660 11,107 29,752 (10,691) 30,393  Contribution Rate (nformatinnOnh) 13.84% 13.03% 11.79 10.52 11.97 11.97 13.27 13.27 13.61  Required Contribution (1) 167,876 153,447 176,129 188,978 220,372 222,427 266,458  Fiscal Year 2014 2015 2017 2018 2019 2020 2021 2022 2023  $ 180,750 S 176,200 $ $ 179,990 $ 151,938 $  Datai isr not readily available foryearsp priort tot thea adoption ofSGAST No. 68. Notes tol Required Supplementary. Information- -Pension  Date ofactuarial valuation. For the) Year EndedJune. 30, 2023 valuation. follows:  Changes ofbenefit terms- - There have been no actuarially material changes to the System benefit provisions since thej prior actuarial Changes of assumptions = The: actuarial assumptions used in the. June 30, 2021, valuation were based on results of an actuarial experience study for the period from July 1, 2016, through June 30, 2020, except the change in the discount rate, which was based on VRS Board action effective as of] July 1,2019. Changes to the actuarial assumptions as a result oft the experience study and VRS Board action are as  Non-Hazardous Dutyl Employees: Mortality Rates (Pre-retirement, post- retirement! healthy, and disabled) Retirement Rates Withdrawal: Rates Disability Rates Salary Scale Line ofl Duty) Disability Discount Rate Hazardous Duty Employees: Mortality Rates (Pre-retirement, post- retirement healthy, ando disabled) Retirement Rates Withdrawal Rates Disability) Rates Salary Scale Line ofDuty Disability Discount Rate  Updated tol Pub-2010 public sector mortality tables. Forf future mortality improvements, replaced] loady with ar modified Mortality Improvement Scalel MP-2020 Adjusted rates tob better fite experience forl Plan 1; sets separate rates based on experience for Plan 2/Hybrid; changed final retirement: age Adjusted rates tob better fite experience ate eachy year age and service through 9 years ofservice No change No change No change Nochange  Updated to) Pub-2010 public sector mortality tables. Increased disability life expectancy.. For future mortality improvements, replaced loady with a modified! Mortality Improvement: Scalel MP- Adjusted rates tol better fite experience ando changed final Decreased rates and changed from rates based on age ands service tor rates based ons service only to better fit experience andt tol be more consistent with Locals Top 101 Hazardous Duty  2020  retirement age from 651 to70 No change No change No change No change 60    o    Town ofHilisville, Virginia Schedule of Group) Lifel Insurance) Employer Contributions  Schedule5 Contributions asa%of Covered Employee Payroll (5) 0.52% 0.52 0.52 0.54 0.54 0.54  Last Sir Years'  Contribufions in Relation to Required Contribution (2) 7,779 $ 7,746 8,281 8,921 9,052 10,573  Employer's Covered Employee Payroll (4) $ 1,496,002 1,489,508 1,592,488 1,652,151 1,676,163 1,957,810  Recommended Contractually Contractually  Contribution Deficiency (Excess) (1)-(2)  Contribution Rate (lnformfiorOnh) 0.52% 0.52 0.52 0.54 0.54 0.54  Required Contribution (1) $ 7,779 $ 7,746 8,281 8,922 9,052 10,573  Fiscal Year? 2018 2019 2020 2021 2022 2023  Datai is notr readily available fory years priort tot the: adoption ofSGASI No. 75. Notes tol Required Supplementary. Information- - Group) Lifel Insurance  Date ofa actuarial valuation. For the) Year Ended.) June. 30, 2023 valuation.  Changes ofbenefit terms- = There have been no actuarially material changes tot the System benefit provisions since thej prior actuarial Changes of assumptions- - The actuarial assumptions usedi in the. June 30, 2021, valuation were based onr results ofan actuarial experience study for the period from. July 1,2016, through. June 30, 2020, except the change in discount rate, which was based on VRS Board action effective as ofJuly 1,2019. Changes tot the actuarial assumptions asar resulto oft the experience study and' VRSI Board action are as follows:  General Employees: Mortality Rates (Pre-retirement, post- retirement healthy, and disabled) Retirement Rates Withdrawal. Rates Disability Rates Salary Scale Line ofDutyl Disability Discount Rate Hazardous Duty Employees: Mortality Rates (Pre-retirement, post- retirement! healthy, and disabled) Retirement Rates Withdrawal Rates Disability Rates Salary Scale Line ofDuty Disability Discount Rate  Updated tol Pub-2010 public sector mortality tables. For future mortality improvements, replaced load with amodified. Mortality Improvement Scale MP-2020 Adjusted rates tob better fite experience for Plan 1;s set separate rates based on experience for Plan 2/Hybrid; changed final retirement age from 75t to 80 fora all Adjusted rates tol better fite experience ate each age ands service through 9 years ofservice No change No change No change No change  Updated tol Pub-20101 public sector mortality tables. For future mortality improvements, replaced load with al modified Mortality Adjusted rates tol better fite experience and changed. final Decreased: rates and changed rates based on age ands servicet to rates based ons service only tol better fite experience and tol ber more consistent with] Locals Top 101 Hazardous Duty  Improvement Scalel MP-2020 retirement age from 651 to 70 No change No change No change No change 62    6    de    L I  8  L    Town ofHilisville, Virginia  Schedule9  Expenses by) Function Last Ten Fiscal) Fears Governmental. Activities Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Business-type. Activities Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022. 2023  General Government 407,310 449,575 476,609 508,331 540,815 593,300 744,392 606,586 675,553  Public Safety 1,032,841 1,142,534 1,225,899 1,358,018 1,318,334 1,323,849 1,493,234 1,298,710 1,527,084  Public Works 677,929 730,797 743,716 783,175 760,240 887,506 1,000,734 941,634 1,048,602  Community Long-term Interest on Development 119,061 143,829 240,931 168,817 147,493 177,084 148,758 180,619 245,547  Debt 22,713 21,524 19,538 20,120 22,594 14,881 29,476 15,671 14,591  Other 37,884 10,685 41,274 9,295 69,130 17,913 15,897 40,267 84,430  Total 2,297,738 2,498,944 2,747,967 2,847,756 2,858,606 3,014,533 3,432,491 3,127,650 3,551,644 Total 1,510,241 1,548,971 1,594,880 1,621,643 1,661,778 1,782,799 1,943,984 1,867,070 1,980,986  $ 414,681 $ 1,082,316 $ 721,765 $ 114,859 $  25,218 $ 56,178 $ 2,415,017  Water $ 539,405 591,332 609,854 627,324 634,337 711,898 809,505 806,476 866,515  Sewer 970,836 957,639 985,026 994,319 1,027,441 1,070,901 1,134,479 1,060,594 1,114,471  577,820 $ 990,420 $ 1,568,240  66    EEEEEEEEE  AAARRARRAS  EEEEEEEEEE  EEEEEEEEEE  - -  AAAARARRAR    Town of Hillsville, Virginia Property Tax Levies: and Collections Last Ten Fiscal) Years  Schedule11  Collected Within thel Fiscal Year oftheLevy Percent of Amount! Levy 95.88% $ 676,455 94.91 691,647 96.90 718,504 98.05 707,826 98.13 694,350 97.54 724,816 96.34 764,988 97.30 784,655 97.25 839,902 95.88  Taxes Levied for the Fiscal Year $ 705,784 $ 676,677 712,737 713,803 732,819 721,288 711,878 752,364 786,236 806,868 875,998  Collections in Subsequent Years 29,070 36,076 21,792 13,039 12,001 14,873 23,482 14,277 10,262  Tofal Collections Date Amount! $ 705,747 712,531 713,439 731,543 719,827 709,223 748,298 779,265 794,917 839,902  tol Percent of Levy 99.99% 99.97 99.95 99.83 99.80 99.63 99.46 99.11 98.52 95.88  Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023  Exclusive ofp penalties and interest.  68    Town ofHillsville, Virginia Outstanding! Debt by Type Last Ten Fiscal Years Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023  Schedule 12  General Bonded Debt Installment Notes 567,848 483,046 424,694 383,421 360,260 336,453 311,924 286,651 202,100 Business-type Activities Sewer Bonds 5,528,919 5,144,807 5,030,528 4,875,373 4,889,553 4,611,021 4,342,424 3,914,855 3,859,195  Percentage ofActual Property Value 0.33% 0.29 0.25 0.26 0.25 0.24 0.22 0.19 0.19 0.16 Total Primary Government 7,641,187 7,863,172 7,837,620 7,579,060 7,507,834 8,833,706 9,412,958 8,910,651 8,671,364  General Obligation Bonds 140,017 131,422 209,943 233,575 237,812 204,328 168,989 246,841 260,558 Water Bonds 1,404,403 2,103,897 2,172,455 2,086,691 2,020,209 3,681,904 4,589,621 4,462,304 4,349,511  Total 707,865 614,468 634,637 616,996 598,072 540,781 480,913 533,492 462,658 Total 6,933,322 7,248,704 7,202,983 7,962,064 6,909,762 8,292,925 8,932,045 8,377,159 8,208,706  148,278 $ 649,747 $ 798,025  1,267,883 $ 5,455,190 $ 6,723,073 $ 7,521,098  69    €  00    Town ofHillsville, Virginia Population, Personall Income and Unemployment. Rate  Schedule: 14  LatestAvailable. Information Year 2007 2010 2011 2013 2015 2017 2020  Household Per Capita Median Income' $ 27,148 $ 34,240 30,922 30,293 30,584 31,862 35,156  Personal Unemployment Income' 16,663 17,942 18,070 20,891 21,645 20,146 20,430  Population 2,849 2,622 2,709 2,714 2,680 2,654 2,762  Rate 6.6% 10.9% 8.4% 6.4% 4.9% 4.7% 9.5%  Unemployment rate: andi incomei isf for Carroll County, Virginia whichi includest the Town ofHillsville, Virginia. The unemployment) rate: andi incomef fort the  TownofHillsville, Virginia was notr readily available.  -  71    Town ofHillsville, Virginia  Schedule] 15  Principal Employers Current Year Rank 1 2 3 4 5 6 7 8 9 10  Employer  Carroll County School Board County of Carroll Mohawk Esvl Incorporated Virginia Produce COLLC Lowes' Home Centers, Inc Vanguardl Furniture Company Barker. Microfàrads Unicon Inc. Turman Sawmill Aeriall Machine and Tool Corporation  Large employers aref for Carroll County, Virginia whichi includes the Town ofHillsville, Virginia. Large employers for the Town  notr readily available.  ofHillsville, Virginia were  72    Town of Hillsville, Virginia Full-time Equivalent Government Employees by Function  Schedule 16  Last Ten) Vears  Full-time] Equivalent] Employees: as ofJune30,  2023  2022  2021  2020  2019  2018  2017  2016  2015  2014  Community development Farmers' market Generalg govemment Management Finance Building Police Officers Civilians Refused collection Otherp public works Water Wastewater  15 1 4 7.5 5.5 5.5  14 1 5 7 5.5 5.5  14 1 5 7 5.5 5.5  16 1 4 7 5.5 5.5  18 1 6 5.5 5.5  14.5 1 4 6 5 5  14.5 I 4 5 4.5 4.5  13 4 5 4.5 4.5  ' 4 7 5.5 5.5  '5 4 6 5.5 5.5  L  73    David B. Brown, CPA JuanJ J. Garcia, CPA Karen L.] Jackson, CPA Michael W. Pennington, CPA Tracy S. Garcia, CPA, CGMA, CIA",CVA*  1551 E. Street Valley P.O. Box 821 HBCOfirmepa.com  Abingdon, Virginia 24212-0821 (276)628-1123 Fax: (276)676-3000 e-mail:  HBC CERTIFIED PUBLIC ACCOUNTANTS TRUST. LEGACY. VALUES. ITALLA ADDSUP.  NDEPENDENTAIDITORS REPORTON COMPLIANCE FOR EACH MAJORI PROGRAM AND ON INTERNAL CONTROLOVER COMPLIANCE REQUIRED BY THE UNIFORM  GUIDANCE  To the Honorable Members oft the Town Council Report on Compliance for Each Major Federal Program Opinion on Each. Major. Federal. Program We have audited the Town of Hillsville, Virginia's compliance with the  Town ofHillsville, Virginia  ofc compliance  identified as subject to audit in the OMB Compliance Supplement that types could have a direct requirements and material effect on each oft the Town of Hillsville, Virginia's major federal programs for the year ended June 2023. the Town ofHillsville, Virginia's major federal programs are identified ini the summary ofa auditor's 30, In our opinion, the Town of Hillsville, Virginia complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each types  results section oft the accompanying schedule off findings and questioned costs.  of ofits major  federal programs for the year ended. June 30, 2023. Basis for Opinion on. Each. Major. Federal. Program  We conducted our audit of compliance in accordance with auditing standards generally United States of America; the standards applicable to financial audits contained in Government accepted in the Standards, issued by the Comptroller General of the United States; and the audit requirements Auditing 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Audit Requirements for Federal. Awards (Uniform Guidance). Our responsibilities under those Principles, standards and and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of We are required to be independent of the Town of Hillsville, Virginia and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion that the on compliance for each major federal program. Our audit does not provide a legal determination of the Town ofHillsville, Virginia's compliance with the compliance requirements referred to above. Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance ofe effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the Town of Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion  ofTitle  Compliance section of our report.  Responsibilities ofManagement) for Compliance  Hillsville, Virginia's federal programs. Auditor's. Responsibilities, for the Audit of Compliance  embers ofAmerican. Institute Certified Public Accountants  Members of Virginia Societyof Certified Public Accountants AllAccountants Licensedi 74 in Virginia  Members  Certified Valuation ofNational Analysts Association of "Member Auditors of Institute ofl Internal    on1 the Town of] Hillsville, Virginia's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government, Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user oft the report on compliance about the Town ofHillsville, Virginia's compliance with the Inj performing an audit in accordance with generally accepted auditing standards, Government Auditing Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Town of] Hillsville, Virginia's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary Obtain an understanding of the Town of Hillsville, Virginia's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Town of Hillsville, Virginia'si internal control over compliance.. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing oft the audit and any significant deficiencies and material weaknesses in internal A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, ini the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement ofa a federal program on a timely basis. A material weakness in internal control over compliancei is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with at type of compliance requirement ofai federal program will not bej prevented, or detected and corrected, on at timely basis. A. significant deficiency in internal control over compliance is a deficiency, or a combination ofd deficiencies, in internal control over compliance with at type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yeti important enoughtor merit attention byt those charged with governance. Ouro consideration ofinternal control over compliance was: fort thel limited purpose describedi int the Auditor's Responsibilities for the Audit of Compliance: section above and wasi not designed toi identify all deficiencies ini internal control over compliance that might be material weaknesses or significant deficiencies ini internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider tol be material weaknesses, as defined above. However, material weaknesses or significant deficiencies ini internal control over compliance may exist that were not Our audit was: not designed for thej purpose ofexpressing an opinion on1 the effectiveness ofinternal control  requirements of each major federal program as a whole. Standards, and the Uniform Guidance, we:  int the circumstances.  - C :  control over compliance that we: identified during the audit. Report on Internal Control over Compliance  identified.  over compliance. Accordingly, no such opinion is expressed.  75    Thej purpose ofthis report oni internal control over compliance iss solely to describe the: scope ofo our testing ofinternal control over compliance and the results oft that testing based ont the requirements oft the Uniform  Guidance. Accordingly, this report is not suitable for any other purpose.  CHBC  HBC Certified Public. Accountants Abingdon, Virginia January 22, 2024  76    Town of] Hillisville, Virginia Fort the Year EndedJune. 30, 2023  Notest to) Required Supplementaryl Information- - Schedule ofl Expenditures of Federal. Awards  Federal Granting Agency/ Pass Through Agency/ Grant Program  Federal Assistance Listing Number 21.027 16.738 20,600 20.600 20.600 20,600 45.025 14.228 10.351  Passed- Through to Subrecipient n/a n/a n/a n/a n/a n/a n/a nla n/a  Federal Expenditures  Department ofTreasury: Pass-throughy payments: Virginial DeparimentofAcounts: COVID-19Coronavins: Statez andI Local Fiscal Recovery Funds* Department of] Justice: Pass-throughy payments: Department of Criminal. Justice Services Edwardi Byme! Memorial. Justice Assistance Grant) Program Department ofTransportation: Pass-throughy payments: Department of Molor Vchicles Highway Safely Grant- Alcohol Highway Safety Grant- - Occupant Protection Highway Safety Grant- Speed Highway Safety Grant-Traffic: Services National Endowment fort the Arts: Pass-through payments: Virginia Commission fort the Arts Local Govemment Challenge Grant Department ofHousing and Urban Development: Pass-through payments: Virginia Department ofHousing and Community Development Community Development Block Grant Department of Agriculture: Pass-through! payments: United States Department ofA Agriculture Rurall Business Development Grant Total Expenditures ofFederal Awards Denotes amajory program.  $  2,760,832 2,552 1,257 1,186 1,186 16,213 1,750 8,250 334,720 3,127,946  77    Town of Hillsville, Virginia For the) Vear EndedJune3 30, 2023  Notes tol Required Supplementaryl Information- - Schedule ofExpenditures ofFederal Awards  Summary of Significant. Accounting Policies  The accompanying Schedule of Expenditures ofl Federal Awards includes the federal award activity oft the Town ofH Hillsville, Virginia, under programs ofthe federal government for the year ended. June 30, 2023. Thei information ini the schedulei is presentedi in accordance with the requirements of Title 2U.S. Code ofl Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements FORI Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion oft the operations of the Town ofHillsville, Virginia, iti ist not intended to: and does not present The accompanying Schedule of Expenditures ofl Federal Awards is presented using the modified accrual basis ofa accounting,  thet financial position, changes in net position, or cash flows ofthe Town ofHillsville, Virginia.  Basis of Accounting  whichi is described in Note 1 to the Town's basic financial statements. Pass-through entity identifying numbers are presented where available.  Pass-through Entity Identifying Numbers  Indirect Cost Rate reimbursement. Loans and) Loan Guarantees Subrecipients  The Town didi not elect to use the 10 percent dei minimis indirect cost rate because they only request direct costs for The Town did notl have any loans or loan guarantees which are subject to reporting requirements for the current year.  The Town did not have any subrecipients during the fiscal year. Relationship to thel Financial Statements Govermment. Activities: General government Public safety Community development Total  Federal expenditures, revenues: and capital contributions are reported ini the Town's basic financial statements as follows:  $ 2,760,832 22,394 344.720 3,127,946  78    9    E    i  S 8R 2    o  II NN