HomeMy WebLinkAbout12/12/2022 - City Council - Agenda -Regular
City Counci l Meeting
AGENDA
Monday, December 12, 2022, 6:30 PM
Work S es s io n 6:00 P.M. C ouncil C hambers C onference R oom, C ity Hall, 114 North Broad S treet, S alem, Virginia 24153
R egular S ession 6:30 P.M. C ouncil C hambers , C ity Hall, 114 North Broad S treet, S alem, Virginia 24153
WORK SE SSI ON
1.C all to Order
2.New Business
A.Discussion I tems
Overview of Annual Comprehensive Financial Report - Brown Edwards - J ohn Aldridge
3.Adjournment
RE GU L AR SE S SI ON
1.C all to Order
2.Pledge of Allegiance
3.Bid Openings, Awards, Recognitions
A.Recognition of Brian Hoffman
Recognition of Brian Hoffman for his constant contributions to the C ity of Salem and his
award-winning coverage of sports at all levels.
4.C onsent Agenda
A.Citizen Comments
C omments from the public, limited to five minutes, on matters not already having a public
hearing component at the same meeting.
B.Minutes
C onsider acceptance of the November 28, 2022, Work Session and Regular Meeting minutes.
5.Old Business
A.Amendment to City Code - Chapter 82
C onsider the adoption of ordinance on second reading to amend C hapter 82, Article I, Section
82-5 (a) Returns 1-3 pertaining to payment of tangible personal property taxes and motor
vehicle license fee; proration of personal property tax generally. (Approved on first reading at
the November 28, 2022, Council meeting).
6.New Business
A.Appropriation of F unds
Hold a public hearing on amending the fiscal year 2022-2023 budget to appropriate American
Rescue Plan Act (A RPA) funding. Audit - Finance Committee
B.Annual Comprehensiv e F inancial Report
Presentation of the Annual Comprehensive Financial Report for the year ended J une 30,
2022. Audit - Finance C ommittee
C .Appropriation of F unds
C onsider request to appropriate funds from the Library of Virginia. Audit - Finance
C ommittee
D.Appropriation of F unds
C onsider request to amend the School Grant Fund and School Cafeteria Fund budgets as
approved by the School Board on November 8, 2022. Audit - Finance Committee
E.Appropriation of F unds
C onsider request to amend the School Grants Fund budget. Audit - Finance C ommittee
F.L ayman - Apperson F ill Site
C onsider setting bond for erosion and sediment control and landscaping for Layman -
Apperson Fill Site. Audit - Finance C ommittee
G.2023 Legislative P ackage
C onsider adoption of Resolution 1442 adopting a Legislative Program for the 2023 session of
the Virginia General Assembly and petitioning the General Assembly to favorably consider the
issues and topics addressed herein.
H.E lectoral P recincts
C onsider the adoption of Resolution 1443 authorizing the City Attorney of Salem to take the
necessary steps to obtain a “C ertificate of No Objection” to a waiver of the requirement for
polling places to be within one mile of the nearest boundary as set forth in VA Code §24.2-310
(A) from the Office of the Attorney General of Virginia such that the C ity may then request a
waiver from the Department of Elections pursuant to VA C ode §24.2-310 (G) to move the
polling places for the West Salem and Beverly Heights precincts to the Salem Civic Center.
I.B oards and Commissions
C onsider appointments to various boards and commissions.
7.Adjournment
Item #4B
Date: 12/12/ 2022
City Council Meeting
MINUTES
Monday, November 28, 2022, 6:30 PM
Work Session 5:30 P.M. Council Chambers Conference Room, City Hall, 114 North Broad Street, Salem, Virginia 24153
Regular Session 6:30 P.M. Council Chambers, City Hall, 114 North Broad Street, Salem, Virginia 24153
WORK SESSION
1. Call to Order
A work session of the Council of the City of Salem, Virginia, was held in the
Council Chambers Conference Room, City Hall, 114 N. Broad Street, Salem,
Virginia, on November 28, 2022, at 5:30 p.m., there being present the following
members of said Council to wit: Renée Ferris Turk, Mayor; James W. Wallace, III,
Vice-Mayor; Council members; Byron Randolph Foley, William D. Jones, and John
Saunders; with Renée Ferris Turk, Mayor, presiding; together with James E.
Taliaferro, II, City Manager; Rob Light, Assistant City Manager and Clerk of
Council; Rosemarie B. Jordan, Director of Finance; Chuck Van Allman, Director of
Community Development; Max Dillon, City Planner; Tommy Miller, Director of
Economic Development; Jim Guynn, City Attorney; Crystal Williams, Assistant to
the City Manager; Laura Lea Harris, Deputy Clerk of Council; and the following
business was transacted;
Mayor Turk reported that this date, place, and time had been set in order for the
Council to hold a work session; and
2. New Business
A. Discussion Items
1) Continued discussion on Code Enforcement - signage, tires, storage trailers
2) Discussion of 2023 Legislative Agenda for the General Assembly
3) Economic Development Department Update
WHEREAS, Chuck Van Allman introduced Max Dillon, City Planner, for a
presentation on Code Enforcement. Max presented information on possible changes
to City Code in the areas of signage, tires, and storage containers. Existing and
proposed regulations were shared, and discussion was held on specifics. Council
asked questions and was asked to submit feedback prior to presentation of a final
Item #4B
Date: 12/12/ 2022
draft of ordinance to amend City Code; and
WHEREAS, Rob Light noted that staff would like to get feedback from Council
over the next couple of weeks and have Legislative Agenda to present for approval
by Council at the December 12, 2022, Council meeting. He requested that Council
email any feedback on items they would like to see included. Mayor Turk
requested that an extension of the runway at the Roanoke Regional Airport be
included in this agenda. Discussion was held by Council; and
WHEREAS, Tommy Miller presented an update from the Economic Development
Department. He noted that they have planned eleven stakeholder meetings in the
development of the Strategic Plan. All but two of these have already been held. Mr.
Miller shared some of the feedback from these meetings. It is expected that the
Strategic Plan will be ready during the first quarter of 2023. He shared recent
initiatives, projects, and future initiatives. It is hoped that a committee will be
formed to review the Facade Grant initiative; and
3. Adjournment
WHEREAS, there being no further business, Mayor Turk adjourned the meeting at
6:30 p.m.
REGULAR SESSION
1. Call to Order
A regular meeting of the Council of the City of Salem, Virginia was called to order at 6:31 p.m., there being present the following members to wit: Renée Ferris Turk, Mayor; James W. Wallace, III, Vice-Mayor; Councilmembers: Byron Randolph Foley, William D. Jones, and John Saunders; with Renée Ferris Turk, Mayor, presiding together with James E. Taliaferro, II, City Manager; Rob Light, Assistant City Manager and Clerk of Council; Rosemarie B. Jordan, Director of Finance; Chuck Van Allman, Director of Community Development; Mike Stevens, Director of Communications; and Jim Guynn, City Attorney.
2. Pledge of Allegiance
3. Bid Openings, Awards, Recognitions
There were none this evening.
4. Consent Agenda
A. Citizen Comments
Comments from the public, limited to five minutes, on matters not already
having a public hearing component at the same meeting. The following have
signed up to speak at this meeting:
Item #4B
Date: 12/12/ 2022
1) Eddie Hite - 122 Par Drive - Public Safety Staffing Shortage
Eddie Hite, 122 Par Drive, was the only citizen to appear before Council this
evening. He expressed concern for the public safety staffing shortage. He asked
that compensation for paramedics be raised to at least $25 per hour. He requested
that the City change to a Step system of compensation. He also expressed concern
at the issue of compression as senior staff retires and requested a mid-year
adjustment in the compensation of the Police and Fire Departments to address this.
Mr. Hite asked that a committee be formed to address this issue and that it
include the City Manager, someone from Council, the Fire Chief, and the Police
Chief.
B. Minutes
Consider acceptance of the November 14, 2022, Work Session and Regular
Meeting minutes.
The minutes were accepted as written.
C. Financial Reports
Consider acceptance of the Statement of Revenues and Expenditures for the
four months ending October 31, 2022.
The financial reports were received.
Mayor Turk noted that the trend indicated that there was a slight reduction in sales
tax the last couple of months. Meals tax and lodging tax were up a little from last
year.
5. Old Business
There was no old business this evening.
6. New Business
A. Special Exception Permit
Hold public hearing to consider the request of Jefferson Bennett Development
Group, LLC, contract purchaser, and Layman Candy Co, Inc, property owner,
for the issuance of a Special Exception Permit to allow for personal storage on
the property located at 1630 West Main Street, (Tax Map # 139-4-6) and 1700
blk West Main Street (Tax Map # 139-4-7). (As advertised in the November 10
and 17, 2022, issues of the Salem Times-Register). (Recommended approval
see page 3 of November Planning Commission minutes.)
Mr. Van Allman shared background information on this request and noted that the
Item #4B
Date: 12/12/ 2022
building is the old Layman Candy building, and the purchaser would like to come in
and put personal storage. For any zoning district in the City, this requires a Special
Exception Permit. They are proposing to utilize the existing site and do
improvements to the parking and landscaping. They plan to add a front-loading
zone. This is the only part of the plan that will be a new build on the front. The
structure is partially in the flood plain. They are aware of the requirements that
are needed in order to complete the renovations to this property. He asked
Council to look at Item #6 in the staff report which indicates uses that are
prohibited. Mr., Van Allman indicated that the owner and engineer were present
this evening.
Mayor Turk opened the public hearing.
No one came forward to speak.
Mayor Turk closed the public hearing.
Mayor Turk noted that Council receives a very extensive copy of the minutes from
the Planning Commission that gives them a copy of the background information
including questions that were asked by the Planning Commission and what the
responses were from the people involved.
Randy Foley motioned to approve the request of Jefferson Bennett Development
Group, LLC, applicant, and Layman Candy Co, Inc, owner, for the issuance of a
Special Exception Permit to allow for the personal storage use type (self-storage
facility) on the property located at 1630 West Main Street, (Tax Map # 139-4-6)
and 1700 blk West Main Street (Tax Map # 139-4-7). John Saunders seconded the
motion.
Ayes: Foley, Jones, Saunders, Turk, Wallace
B. Special Exception Permit
Hold public hearing to consider the request of DBMB, LLC, property owner, to
replace the zoning and use permit, with conditions, issued May 1987, to store
scrap metal on the properties located at 1108 Florida St. (T/M# 198-3-2), 1112
Florida St. (T/M# 198-3-3), 1100 blk. Florida St. (T/M# 198-3-6), 1100 blk.
Florida St. (T/M# 198-3-7), and 1100 blk. Indiana St. (T/M# 198-3-11) with a
special exception permit to allow scrap and salvage services. This updated
special exception permit would include the addition of the properties located at
600 9th Street (T/M# 198-3-1), 1116 Florida St. (T/M# 198-3-4), 1120 Florida
St. (T/M# 198-3-5), 1103 Indiana St. (T/M# 198-3-8), 1100 blk Indiana St.
(T/M# 198-3-9), and 1115 Indiana St. (T/M# 198-3-10). (As advertised in the
November 10 and 17, 2022, issues of the Salem Times-Register).
(Recommended approval with conditions, see page 4 of November Planning
Commission minutes.)
Item #4B
Date: 12/12/ 2022
Mr. Van Allman clarified that essentially, they have a permit to do scrap metal
storage on certain lots in that block. Over time, they have accumulated more of the
property and would like to change their operations a little bit. In order to do that,
they need the ordinance to reflect a Special Exception permit for those additional
properties. They are not doing anything new. They are changing how their
operations work, and by doing so, they need this Special Exception permit. It is
zoned as Heavy Manufacturing. They will be coming off of 9th Street. He noted
that the engineer and the owners were present this evening.
Mr. Wallace asked when the pictures of fences had been taken that were included in
the packet. Mr. Van Allman responded that the pictures were taken about three and
a half to four weeks ago. He also asked if Mr. Van Allman deemed the fence to be
in good repair in the pictures. Mr. Van Allman responded that he did not deem the
fence in good repair. Mr. Wallace requested that the definition of "good repair" be
elaborated on. Mr. Van Allman said that this had been discussed and would be
included in the site plan.
Mayor Turk opened the public hearing.
Barney Horrell, 3553 Carvins Cove Road, stated that he was the engineer for this
project and that the owners were present as well. He commented that the minutes
were very good from the Planning Commission meeting and that they were satisfied
with the revised conditions. He noted that the owner was currently in the process of
making fence revisions. Mr. Horrell stated that the nature of the operation is not
changing. What is changing is the location of the scale that they weigh in and out
of. The scale is being moved from along the alley to the opposite side rear. This
moves most of the traffic to the Southwest corner, furthest away from the Valleydale
property. Basically, they are just rearranging how things are on the site. The fences
are currently being revised to allow for the new traffic pattern. This traffic pattern
is reflected on the site plan included in the agenda packet.
Mayor Turk closed the public hearing.
Mr. Foley questioned whether it was required that the conditions be verbalized.
Mr. Taliaferro noted that the Staff Report to Planning Commission included five
recommendations for conditions. Planning Commission recommended four of those
and omitted the landscaping requirement from the recommendation. They changed
the requirement on the fencing from "like-new" to "good repair". Otherwise, they
recommended adopting everything that was included in the Staff report.
Mr. Saunders asked if what the City is doing on Indiana with Valleydale as far as
Streetscape would be affected.
Mr. Taliaferro responded that everything being talked about with Valleydale is
Item #4B
Date: 12/12/ 2022
within the right-of-way as opposed to being on their property.
Mr. Taliaferro clarified that as the Planning Commission recommendation had the
four amended recommendations included in it, that Council could move to approve
based on the Planning Commission recommendation.
Randy Foley motioned to approve request of DBMB, LLC, property owner, for a
Special Exception Permit including the amended conditions recommended by the
Planning Commission.
William Jones seconded the motion.
Ayes: Foley, Jones, Saunders, Turk, Wallace
C. Sale of Public Land
Hold a public hearing to consider the sale of an approximate .046-acre tract
located adjacent to the Interstate I-81 frontage, Salem, Virginia, being a portion
of Tax Map # 91-1-2.1. (As advertised in the November 17, 2022, issue of
the Salem Times-Register).
Mayor Turk noted that due to widening of I-81, there is a certain property on the
backside of Salem High School that the City will request an easement for.
Mr. Light clarified that VDOT is acquiring rights-of-way all along the area to the
west of the track at Salem High School, adjacent to the Interstate. The City's parcel
is a very small stormwater facility parcel. City engineers have reviewed this and
there is no impact to the City's stormwater facilities. The action that Council is
being requested to take to authorize the City Manager to finalize and execute the
documents required for this sale. He noted that the City needs an easement for an
electric line that runs through. Easements are now in existence to the east and west
of that and the City desires for that to remain continuous through that area.
Mayor Turk opened the public hearing.
No citizens came forward to speak.
Mayor Turk closed the public hearing.
The dollar amount was clarified at the request of Mr. Jones. Mr. Light stated that
the purchase price is $7,205, which includes the land and fencing and $280 for a
temporary construction easement. The total consideration is $7,485.
William Jones motioned to authorize the City Manager to finalize and execute
documents required for the sale of the sale of an approximate .046-acre tract located
adjacent to the Interstate I-81 frontage, Salem, Virginia, being a portion of Tax Map
Item #4B
Date: 12/12/ 2022
# 91-1-2.1and a temporary construction easement in forms acceptable to the City
Attorney. Randy Foley seconded the motion.
Ayes: Foley, Jones, Saunders, Turk, Wallace
D. Amendment to City Code - Chapter 82
Consider the adoption of ordinance on first reading to amend Chapter 82,
Article I, Section 82-5 (a) Returns 1-3 pertaining to payment of tangible
personal property taxes and motor vehicle license fee; proration of personal
property tax generally.
Mr. Light noted that this item had been requested by the Commissioner of Revenue
and that it was a housekeeping item. He explained that many years ago a return was
required to be submitted for personal property items. The State Code changed to
reflect that boats were eligible to not go through that process. The City followed
suit procedurally and went that direction and this is a housekeeping measure to have
the City Code reflect what State Code says. There is no change in how citizens are
taxed.
Randy Foley motioned to adopt on first reading an ordinance to amend Chapter 82,
Article I, Section 82-5 (a) Returns 1-3 pertaining to payment of tangible personal
property taxes and motor vehicle license fee; proration of personal property tax
generally. John Saunders seconded the motion.
Ayes: Foley, Jones, Saunders, Turk, Wallace
E. Appropriation of Funds
Consider request to amend the School Capital Projects Fund budget as
approved by the School Board on October 11, 2022.
Ms. Jordan noted that this action is done as a formality to approve what
Superintendent Hicks presented at the Work Session on November 14, 2022.
John Saunders motioned to approve the School Board’s appropriation change of
$3,859,859 to the School Capital Projects Fund as presented by the Dr. Hicks at the
Work Session held on November 14, 2022. This motion is also to approve of the
six-year CIP document submitted by the School Board. William Jones seconded the
motion.
Ayes: Foley, Jones, Saunders, Turk, Wallace
F. Public Comment Rules
Consideration adoption of Resolution 1441 incorporating changes by Council to
Item #4B
Date: 12/12/ 2022
the City's current adopted public comment procedures at Council meetings.
Mayor Turk noted that two items were being updated. The deadline for signing up
to speak will be noon on Friday as opposed to noon on Wednesday. The second
item notes that a speaker may not speak on the same topic at two consecutive
meetings rather than months as previously stated.
John Saunders motioned to adopt Resolution 1441 incorporating changes to the
City's current adopted public comment procedures at Salem City Council meetings.
Randy Foley seconded the motion.
Ayes: Foley, Jones, Saunders, Turk, Wallace
G. Abstract of Votes
Receive the Abstract of Votes cast at the General Election held on November 8,
2022.
Mayor Turk stated that no vote was required, and that Council accepted the
Abstract of Votes. She congratulated Mr. Foley and Mr. Holliday.
H. Boards and Commissions
Consider appointments to various boards and commissions.
Randy Foley motioned to reappoint Rev. C. Todd Hester for a three-year term
ending December 31, 2025, and endorse reappointing Patrick Kenney as an at-large
member for a three-year term ending December 31, 2025, to the Blue Ridge
Behavioral Healthcare Board and to reappoint William D. Jones, James E.
Taliaferro, II, and April M. Staton as Members and Byron R. Foley, Rosemarie
Jordan, and Steve Garber as Alternates for a one-year terms ending December 31,
2023 to the Western Virginia Regional Jail Authority. John Saunders seconded the
motion.
Ayes: Foley, Jones, Saunders, Turk, Wallace
7. Adjournment
Mayor Turk noted that the NCAA Soccer Tournament will be held here in Salem,
starting with a banquet on Wednesday. All of the games will be taking place at
Roanoke College. She encouraged citizens to come and take place in these events.
The meeting was adjourned at 6:58 p.m.
Item # 5A
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Consider the adoption of ordinance on second reading to amend
Chapter 82, Article I, Section 82-5 (a) Returns 1-3 pertaining to
payment of tangible personal property taxes and motor vehicle license
fee; proration of personal property tax generally. (Approved on first
reading at the November 28, 2022, meeting).
SUBMITTED BY: Kristie Chittum, The Commissioner of the Revenue
SUMMARY OF INFORMATION:
This ordinance is a housekeeping item to reflect the City’s long-standing adopted
methodology based on the State Code’s inclusion of boats with other tangible personal
property related to filing requirements. There is no change or impact to citizens.
FISCAL IMPACT:
None
STAFF RECOMMENDATION:
Staff recommends adoption of this ordinance.
AN ORDINANCE TO AMEND, REVISE AND REORDAIN CHAPTER 82, ARTICLE I, SECTION 82-5 (a) RETURNS
1-3 PERTAINING TO PAYMENT OF TANGIBLE PERSONAL PROPERTY TAXES AND MOTOR VEHICLE LICENSE
FEE; PRORATION OF PERSONAL PROPERTY TAX GENERALLY.
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF SALEM, VIRGINIA, THAT SECTIONS 82-5 (a) RETURNS
1-3, ARTICLE I, CHAPTER 82, of The Code of the City of Salem, Virginia, be amended, revised and
reordained to read as follows:
CHAPTER 82
ARTICLE I. – IN GENERAL
Sec. 82-5. Payment of tangible personal property taxes and motor vehicle license fees; proration of
personal property tax generally.
(a) Returns.
(1) Returns for tangible personal property (except tangible personal property on motor vehicles,
boats and trailers), tangible personal property (including motor vehicles, boats and trailers)
employed in a trade or business and machinery and tools taxes shall be filed with the
commissioner of the revenue on or before February 15 of the year for which the tax is to be
assessed. Any person who shall fail to file such a return on or before February 15 of the year
for which the tax is to be assessed shall, in addition to the tax to be paid, be assessed a
penalty of ten percent of the tax assessable on such return or $10.00, whichever is greater;
provided, however, that the penalty shall in no case exceed the amount to the tax due.
(2) Provided there has been no change in status or situs of any motor vehicles, boats or trailers
and that a personal property tax return on any such motor vehicles, boats or trailers has
previously been filed with the commissioner, no returns of tangible personal property on
motor vehicles, boats or trailers with a situs within the city on January 1 need be filed with
the commissioner of the revenue.
(3) Returns of tangible personal property on motor vehicles, boats and trailers shall be filed
within 30 days of the occurrence of any of the following events, for the year for which the tax
is to be assessed:
a. A change in the name or address of the person or persons owning tangible personal
property;
b. A change in situs of the taxable personal property;
c. A change in which a person acquires one or more motor vehicles, boats and trailers for
which no personal property tax return has been filed; or
d. Any other change affecting the assessment or levy of the personal property tax on
motor vehicles, boats and trailers for which a tax return has been filed previously.
Any person who shall fail to file such return within 30 days of the occurrence of any of the changes
described in a., b., c., or d. shall, in addition to the tax to be paid, be assessed a penalty of ten percent of
the tax assessable on such return or $10.00, whichever is greater; provided, however, that the penalty
shall in no case exceed the amount of the tax due.
All ordinances, or parts of ordinances, in conflict with the provisions of this ordinance be and the
same are hereby repealed.
This ordinance shall be in full force and effect ten (10) days after its final passage.
Upon a call for an aye and a nay vote, the same stood as follows:
John Saunders –
William D. Jones –
Byron Randolph Foley –
James W. Wallace, III –
Reneé F. Turk –
Passed:
Effective:
Mayor
ATTEST:
H. Robert Light
Clerk of Council
City of Salem, Virginia
Item #6A
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Hold a public hearing on amending the fiscal year 2022-2023
budget to appropriate American Rescue Plan Act (ARPA)
funding.
SUBMITTED BY: Rosemarie B. Jordan, Director of Finance
SUMMARY OF INFORMATION:
This time has been set aside for a public hearing on amending the budget for fiscal year
2022-2023 to appropriate ARPA Funding. A public hearing and the proposed budget
amendment were advertised in the Roanoke Times on November 28 and December 5,
2022.
The City was awarded ARPA funding in the amount of $31,164,631. A portion of these
funds was appropriated in the General Fund as part of the fiscal year 2023 adopted
budget. An additional $9,666,491 needs to be appropriated in the General Fund to spend
in fiscal year 2023 for general government services. Utilizing these funds for general
government services is an eligible use of funds per guidance issued by the United States
Department of the Treasury and will free up local funds for other uses.
The fiscal year 2023 adopted budget for Water and Sewer funds needs to be adjusted to
reflect the correct funding source for the North Salem Water Improvement project, the
Roanoke River Upper Sewer Rehab project and the Wiley Court Sewer Improvem ent
project. Local funding of $2,485,753 needs to be appropriated in the Capital Projects Fund
for various projects per Attachment A.
FISCAL IMPACT:
Federal funding of $9,666,491 will be used to cover general government services in the
General Fund, freeing up local funds for other uses.
STAFF RECOMMENDATION:
Staff recommends appropriating ARPA Act funding of $9,666,491 in the General Fund and
making other budget adjustments as detailed in Attachment B.
ARPA Funding Allocation Plan Adjustments Attachment A
Council 12/12/22
Related
Current Adjusted
Budget Adjustments Budget
Special Revenue Fund
Expenditures
15‐012‐9100‐59448 Transfer to Water & Sewer Capital Fund 13,575,000 (6,200,000) N Salem to Excess Local ‐
(375,000) Wiley Court to Excess Local
(7,000,000)
15‐012‐9100‐59470 Transfer to General Fund 16,283,509 6,200,000 N Salem to Excess Local 31,160,631
375,000 Wiley Court to Excess Local
209,575 Increase Excess Local Reserve
7,000,000 Rke River Sewer System Rehab Excess Local
1,092,547
15‐012‐9110‐59500 Contingency 1,302,122 (1,302,122) Increase Excess Local Reserve ‐
15‐053‐8170‐59601 Tourism Initiative 4,000 4,000
31,164,631 31,164,631
General Fund
Revenues
10‐012‐0100‐49975 Transfer From Special Revenue Fund 16,283,509 9,666,491 25,950,000
Expenditures
10‐012‐9100‐59410 Transfer To Capital Projects 16,283,509 209,575 16,493,084
10‐012‐9100‐59448 Transfer to Water & Sewer Capital Fund ‐ 9,456,916 9,456,916
Water & Sewer Capital Fund
Revenues
50‐051‐0300‐49975 Transfer From Special Revenue Fund 6,200,000 (6,200,000) N Salem to Excess Local ‐
50‐052‐0300‐49975 Transfer From Special Revenue Fund 7,375,000 (7,375,000) Wiley Court to Excess Local ‐
50‐051‐0300‐49900 Transfer From General Fund ‐ 2,081,916 N Salem to Excess Local 2,081,916
50‐052‐0300‐49900 Transfer From General Fund ‐ 375,000 Wiley Court to Excess Local 375,000
50‐052‐0300‐49900 Transfer From General Fund ‐ 7,000,000 Rke River Sewer System Rehab Excess Local 7,000,000
50‐051‐0301‐58022 N Salem Water Impr 6,200,000 (4,118,084) Reduce proj budget until addl local available 2,081,916
Capital Projects Fund
Revenues
20‐012‐0200‐49905 Transfer From General Fund ‐ Capital Projects 12,584,331 2,485,753 New Appropriation 15,070,084
Expenditures
20‐070‐0205‐54729 Moyer Sports Complex Renovation 12,584,331 12,584,331
20‐032‐0205‐54310 Fire Station #2 Renovations 432,000 New Appropriation 432,000
20‐032‐0205‐54311 Fire Station #2 Storage Building 515,000 New Appropriation 515,000
20‐018‐0205‐54731 Library Flooring Replacement 190,000 New Appropriation 190,000
20‐018‐0205‐54732 Library Co‐working Space 155,000 New Appropriation 155,000
20‐070‐0205‐54733 Civic Center East/West Fields Restrooms 220,000 New Appropriation 220,000
20‐018‐0205‐54734 Longwood Park Restroom Replacement #2 180,000 New Appropriation 180,000
20‐018‐0205‐54418 Jury Room Expansion 400,000 New Appropriation 400,000
20‐012‐0205‐54110 Excess Local Funding Reserve 393,753 New Appropriation 393,753
15,070,084
Attachment B
Budget Transfers
Special Revenue Fund
15‐012‐9100‐59448 Transfer to Water & Sewer Capital Fund (13,575,000)
15‐012‐9100‐59470 Transfer to General Fund 14,877,122
15‐012‐9110‐59500 Contingency (1,302,122)
Water/Sewer Capital Fund
50‐051‐0300‐49975 Transfer From Special Revenue Fund (13,575,000)
50‐051‐0300‐49900 Transfer From General Fund 9,456,916
50‐051‐0301‐58022 N Salem Water Impr (4,118,084)
50‐052‐0300‐49975 Transfer From Special Revenue Fund (375,000)
50‐052‐0300‐49900 Transfer From General Fund 375,000
Budget Appropriation
General Fund
10‐012‐0100‐49975 Transfer From Special Revenue Fund 9,666,491
Various Departments Salary/Fringe Benefits 9,666,491
Various Departments Salary/Fringe Benefits (9,666,491)
10‐012‐9100‐59410 Transfer To Capital Projects 209,575
10‐012‐9100‐59448 Transfer to Water & Sewer Capital Fund 9,456,916
Capital Projects Fund
20‐012‐0200‐49905 Transfer From General Fund ‐ Capital Projects 2,485,753
20‐032‐0205‐54310 Fire Station #2 Renovations 432,000
20‐032‐0205‐54311 Fire Station #2 Storage Building 515,000
20‐018‐0205‐54731 Library Flooring Replacement 190,000
20‐018‐0205‐54732 Library Co‐working Space 155,000
20‐070‐0205‐54733 Civic Center East/West Fields Restrooms 220,000
20‐018‐0205‐54734 Longwood Park Restroom Replacement #2 180,000
20‐018‐0205‐54418 Jury Room Expansion 400,000
20‐012‐0205‐54110 Excess Local Funding Reserve 393,753
Summary
Item #6B
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Presentation of the Annual Comprehensive Financial Report
for the year ended June 30, 2022.
SUBMITTED BY: Rosemarie B. Jordan, Director of Finance
SUMMARY OF INFORMATION:
All Virginia localities are required to have an annual audit and the auditor is required to
present the report and any findings in a public meeting before December 31st of each year.
John Aldridge, with the firm of Brown, Edwards & Company, LLC, has presented the audit
report to the City’s Audit-Finance committee. He also presented the report at City Council
work session prior to the regular Council meeting tonight.
STAFF RECOMMENDATION:
Staff recommends that Council accept the Annual Comprehensive Audit Report as
presented.
CITY OF SALEM, VIRGINIA
Annual Comprehensive Financial Report
Year Ended June 30, 2022
CITY OF SALEM, VIRGINIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
YEAR ENDED JUNE 30, 2022
DEPARTMENT OF FINANCE
CITY OF SALEM, VIRGINIA
TABLE OF CONTENTS
JUNE 30, 2022
INTRODUCTORY SECTION
Letter of Transmittal 3
Directory of Principal Officials 8
Organizational Chart 9
Certificate of Achievement for Excellence in Financial Reporting 10
FINANCIAL SECTION
Independent Auditor’s Report 12
Management’s Discussion and Analysis 16
Basic Financial Statements
Government-wide Financial Statements
Exhibit 1 Statement of Net Position 30
Exhibit 2 Statement of Activities 31
Governmental Funds’ Financial Statements
Exhibit 3 Balance Sheet 32
Exhibit 4 Reconciliation of the Governmental Funds’ Balance Sheet to the
Statement of Net Position 33
Exhibit 5 Statement of Revenues, Expenditures and Changes in Fund Balances 34
Exhibit 6 Reconciliation of the Governmental Funds’ Statement of Revenues,
Expenditures and Changes in Fund Balances to the Statement of Activities 35
Exhibit 7 Statement of Revenues, Expenditures and Changes in Fund Balances
Budget and Actual - General Fund 36
Proprietary Funds’ Financial Statements
Exhibit 8 Statement of Net Position 37
Exhibit 9 Statement of Revenues, Expenses and Changes in Net Position 38
Exhibit 10 Statement of Cash Flows 39
Fiduciary Funds’ Financial Statements
Exhibit 11 Statement of Fiduciary Net Position 40
Exhibit 12 Statement of Changes in Fiduciary Net Position 41
Component Units’ Financial Statements
Exhibit 13 Combining Statement of Net Position 42
Exhibit 14 Combining Statement of Activities 43
Notes to Financial Statements 44
Required Supplementary Information
Exhibit 15a Schedule of Changes in Net Pension Liability and Related Ratios 116
Exhibit 15b Schedule of Changes in Net Pension Liability (Asset) and Related Ratios 117
Exhibit 16 Schedule of Employer Pension Contributions 118
Exhibit 17 Schedule of Employer’s Share of Net Pension Liability - VRS Teacher
Retirement Plan 119
Exhibit 18 Schedule of Employer Pension Contributions - VRS Teacher Retirement Plan 120
Exhibit 19a Schedule of Changes in Net OPEB Liability and Related Ratios - Retiree
Health Plan 121
Exhibit 19b Schedule of Changes in Net OPEB Liability and Related Ratios - Retiree
Health Plan 122
Exhibit 20 Schedule of Employer OPEB Contributions - Retiree Health Plan 123
CITY OF SALEM, VIRGINIA
TABLE OF CONTENTS
JUNE 30, 2022
Exhibit 21 Schedule of Changes in Net OPEB Liability and Related Ratios - Political
Subdivision Health Insurance Credit Program 124
Exhibit 22 Schedule of Employer OPEB Contributions - Political Subdivision Health
Insurance Credit Program 125
Exhibit 23 Schedule of Employer’s Share of Net OPEB Liability - GLI and Teacher
Employee HIC Programs 126
Exhibit 24 Schedule of Employer OPEB Contributions - GLI and Teacher Employee
HIC Programs 127
Notes to Required Supplementary Information 128
Other Supplementary Information
Nonmajor Proprietary Funds’ Combining Schedules
Exhibit 25 Combining Statement of Net Position 132
Exhibit 26 Combining Statement of Revenues, Expenses and Changes in Net Position 133
Exhibit 27 Combining Statement of Cash Flows 134
Custodial Funds’ Combining Schedules
Exhibit 28 Combining Statement of Fiduciary Net Position 135
Exhibit 29 Combining Statement of Changes in Fiduciary Net Position 136
Economic Development Authority of the City of Salem
Exhibit 30 Balance Sheet 137
Exhibit 31 Statement of Revenues, Expenditures and Changes in Fund Balance 138
STATISTICAL SECTION
Table 1 Net Position by Component 141
Table 2 Changes in Net Position 142
Table 3 Fund Balances, Governmental Funds 144
Table 4 Changes in Fund Balance, Governmental Funds 145
Table 5 Assessed Value and Actual Value of Taxable Property 146
Table 6 Property Tax Levies and Collections 147
Table 7 Principal Real Estate Property Taxpayers 148
Table 8 Principal Electric Customers 148
Table 9 Ratios of General Bonded Debt Outstanding 149
Table 10 Legal Debt Margin Information 150
Table 11 Demographic Statistics 151
Table 12 Principal Employers 152
Table 13 Full-time Equivalent City Government Employees by Function 153
Table 14 Operating Indicators by Function 154
Table 15 Capital Asset Statistics by Function 155
COMPLIANCE SECTION
Schedule of Expenditures of Federal Awards 158
Independent Auditor’s Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 160
Independent Auditor’s Report on Compliance for Each Major Program and on
Internal Control Over Compliance Required by The Uniform Guidance 162
Summary of Compliance Matters 165
CITY OF SALEM, VIRGINIA
TABLE OF CONTENTS
JUNE 30, 2022
Schedule of Findings and Questioned Costs 166
Department of Finance Directory 168
INTRODUCTORY SECTION
The Introductory Section of the City of Salem, Virginia’s Annual Comprehensive Financial Report contains
the Letter of Transmittal, which presents an overview of the profile of the City of Salem government, the
local economic condition and outlook, major initiatives and accomplishments, and financial policies and
financial planning. Also included in this section are an organizational chart and the Certificate of
Achievement for Excellence in Financial Reporting awarded by the Government Finance Officers
Association of the United States and Canada (GFOA) for the Annual Comprehensive Financial Report for
the fiscal year ended June 30, 2021. It is the highest form of recognition in governmental financial reporting.
1
THIS PAGE INTENTIONALLY BLANK
2
November 17, 2022
The Honorable Mayor, Members of City Council
and Citizens of Salem, Virginia
We are pleased to present the City of Salem, Virginia (City) Annual Comprehensive Financial Report
(ACFR) for the fiscal year ended June 30, 2022, as required by state law. This report was prepared by the
Department of Finance in accordance with the standards of financial reporting as prescribed by the
Governmental Accounting Standards Board (GASB). Brown, Edwards & Company, L.L.P., has issued
unmodified opinions on the City’s basic financial statements as of and for the fiscal year ended June 30,
2022.
Responsibility for both the accuracy of the data and the completeness and fairness of the presentation,
including all disclosures, rests with City management. To the best of our knowledge and belief, the data as
presented is accurate in all material respects and is reported in a manner designed to present fairly the
financial position and results of operations of the City as measured by the financial activity of various funds
and component units. All disclosures necessary to enable the reader to gain an understanding of the City's
financial activities have been included.
The City has established a comprehensive internal control framework designed to both safeguard the
government’s assets against loss from unauthorized use or theft and to properly record and adequately
document transactions in order to compile information for the presentation of the City’s financial statements.
Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive
framework of internal controls has been designed to provide reasonable rather than absolute assurance
that the financial statements will be free from material misstatement.
Management’s discussion and analysis (MD&A) beginning on page 16 provides a narrative introduction,
overview, and analysis to assist users in interpreting the basic financial statements. This letter is meant to
complement the MD&A and should be read in conjunction with it.
Profile of the Government
Salem is located in Virginia’s Blue Ridge Mountains, approximately 190 miles west of Richmond and 250
miles southwest of Washington, DC. The City lies at the region’s crossroads of major rail and highway
systems, making it a part of the principal trade, industrial, transportation, medical and cultural center of
western Virginia.
Chartered by the Commonwealth of Virginia as a town in 1806 and as a city in 1968, Salem encompasses
a land area of 14.4 square miles. The City’s 2022 population, 25,373, accounts for approximately 8.1% of
the population in its metropolitan statistical area (MSA), which includes the neighboring City of Roanoke
and Counties of Botetourt, Craig, Franklin, and Roanoke.
The City of Salem operates under a Council-Manager form of government. Under this form of government,
City Council is elected by the voters and is comprised of five members, who elect two of their members as
Mayor and Vice-Mayor for a two-year term. The City Council employs a City Manager who is responsible
for administration of the City government. The Primary Government provides a full range of services
3
including general government administration, judicial administration, public safety, public works, health and
welfare, parks and recreation, community development activities and support for education. The City also
owns and operates an electric distribution system, water and sewage facilities and a civic center.
The financial reporting entity reflected in the Annual Comprehensive Financial Report includes all funds of
the City as well as its component units. Component units are legally separate entities for which the primary
government is financially accountable. The City’s reporting entity includes two discretely presented
component units, the City of Salem School Division and the Economic Development Authority of the City
of Salem (EDA). The discretely presented component units are presented in a separate column in the
government-wide financial statements to emphasize that they are legally separate from the primary
government and to differentiate their financial position and results of operations from that of the primary
government. Additional information concerning these legally separate organizations can be found in Note
1 to the financial statements.
There are several commissions and authorities where the City’s accountability is limited to appointments
to, or seats on, the respective boards. The City does not exercise financial or administrative control over
these entities, so they are excluded from this report.
Local Economic Condition and Outlook
Salem continues to provide an atmosphere and quality of life conducive to families and businesses. Over
the years, Salem has been able to maintain stable property values, steady tax rates, a strong educational
system and skilled workforce in a region with operating costs 18% lower than the national average (Moody’s
August 2021). These are significant reasons why employers have chosen to locate in Salem as well as
continue to grow and prosper.
As of June 2022, Salem’s unemployment rate was 3.0%, a drop from 4.0% in June of 2021. Salem’s
unemployment rate remained lower than the national unemployment rate of 3.8% and mirrored the state
unemployment rate of 3.0%.
A key factor to Salem establishing a low unemployment rate is having a diversified economy comprised of
industry in health care, manufacturing, higher education, retail trade and government. Manufacturers
include a strong mix of products comprising high-tech medical equipment, biopharmaceutical, tires, steel
products, tool and die, railroad equipment and concrete products, just to name a few. Health care remains
an important part of Salem’s economy as well. Two major hospitals operate in Salem. The Salem Veterans
Affairs (VA) Medical Center is the city’s largest employer with over 1,700 employees and HCA Health
System’s Lewis Gale Hospital employs over 1,200 people.
The City has been fortunate to have ongoing investment by new and existing businesses in historic
downtown and other historic buildings throughout the city. In January 2016, City Council adopted the
Downtown Plan and the Façade Grant Program. Over the years, both the downtown plan and façade grant
program have been a major success attracting significant investment in the adaptive reuse of several well-
known derelict properties. The Downtown plan has had the most visible improvements with new
streetscapes, landscaping and lighting completed with the first phase on College Avenue in 2020 and Main
Street at the Farmers Market in 2021. Engineering has begun for two more phases with approved funding
for construction in 2023.
Over the past year, Salem has been fortunate to see investment by existing and new business. Examples
of new investment include:
Ridge View Bank, whose parent bank is CNB Bank ($4.9 Billion in assets), is a new regional bank
constructing their first physical branch in downtown Salem.
RDG Filings is constructing a new 3-story modern office building for their North American
headquarters.
Phoenix Investors, investor of industrial properties, purchased the former General Electric building.
They are investing a substantial amount to modernize and market the building as one of Virginia’s
largest and modern industrial buildings for lease.
Layman Distributing, a mid-Atlantic distribution company, is expanding their operational footprint
and hiring new staff.
4
Lewis Gale Hospital received Department of Health approval and is investing in a new neonatal
intensive care unit. In addition, other operational investments are moving forward, including
modernization of commissary operations.
Roanoke College announced a new investment in the planned construction of the 150,000 square
foot Science Center Building, having reached a critical funding milestone this year.
Additional companies with recent investment and new jobs include: Yokohama, Graham White,
Carter Machinery, New Millennium and Integer.
The City announced a major revitalization project at the former Valleydale Meat Packing and Processing
plant. The proposed $50 million venture will bring more than 300 upscale apartment units and a variety of
resort style amenities to the property. A $10 million incentive package will be provided that includes a tax
rebate incentive grant, a site development grant, neighborhood streetscaping, the enhancement of public
utilities, and other considerations from the City and EDA. The real estate tax assessment of the property
is expected to grow from $1.27 million to more than $40 million at the conclusion of construction. Demolition
and site preparation are expected to begin in December 2022 with a tentative completion date of 2025.
The City of Salem is part of the Roanoke Region Metropolitan Area and located off Interstate 81. Salem
has seen the continued investment in restaurant establishments. Recent openings and groundbreakings
have taken place for Long John Silver’s, Sonic, Jersey Mike’s, and Tropical Smoothie to name a few.
As Salem is landlocked and near fully developed, leadership had the foresight to be a member of the
Western Virginia Regional Industrial Facility Authority (WVRIFA), which was formed in 2013. The Authority
provides a mechanism for localities to cooperate regionally on economic development projects to develop
property and benefit in future revenue sharing. The WVRIFA member localities include Roanoke County,
Botetourt County, Franklin County, Roanoke City, Salem City, and the Town of Vinton. The City of Salem,
Roanoke County and the City of Roanoke are the only participants in the Wood Haven Technology Park.
The 109-acre park is near the intersection of I-81 and I-581. Since 2019, the park was acquired, rezoned,
and utilities and roads were extended to the site. Grading of the site was completed at the end of last year.
The site represents a significant economic opportunity in the region and potential for a diversified revenue
stream for the City of Salem. Since completion of the park, there has been a significant spike in prospect
interest and on-site visits with industrial investment ranging from tens of millions to hundreds of millions of
dollars.
As allowed by the Code of Virginia, the City along with the EDA may enter into performance agreements
with businesses to provide economic development incentive payments for rehabilitation, renovation and
replacement of commercial or industrial properties. These agreements sometimes include grants.
Agreements are carefully analyzed to make sure the expected long-term benefit of the grants are based on
improved real estate value.
Major Initiatives and Accomplishments
Salem City Council and management are committed to making Salem a great place to live, work and raise
a family. To that end, the City and School Board work diligently to provide one of the finest school systems,
not only in the region, but throughout the Commonwealth.
Salem students demonstrated high levels of performance in academic, extracurricular, and athletic
activities. All six Salem schools were fully accredited by the Virginia Department of Education. The City of
Salem School Division has one of the highest on-time graduation rates in the area at 96.26%.
Approximately 78% of Salem High School graduates attend a 2-year or 4-year college or university.
Construction on the Salem High School renovation project continued. The multi-phase project includes
classroom additions in the front and back of the building, a new administrative area in the front, façade
improvements, a new roof, improved security, and a new cafeteria courtyard adjacent to the cafeteria.
Renovations are being done in a way that will enable future incremental classroom modernization of the
existing classrooms within the original structure. The project is scheduled for completion in December of
2022. The City issued $27 million in general obligation bonds including premiums in June 2020 to pay for
the renovation project.
5
Renovation of the Salem High School Fieldhouse is also underway. The project includes an addition that
will more than double the current square footage of the building, adding another weight room, additional
locker rooms, expanded training room space and additional storage space. The project is expected to cost
$4.2 million and be completed by December 2022.
The City completed design work on the renovation of the James I. Moyer Sports Complex in fiscal year
2022. The $27.5 million project will create new pickleball courts, replace lighting, enhance parking and
renovate the playground, skatepark and ballfields. The complex is in use an average of 230 days per
calendar year and hosts multiple conference championships. The project upholds Salem’s reputation as
Virginia’s Championship City, serving the citizens of Salem and boosting tourism in the greater Blue Ridge.
The City issued $15 million in general obligation public improvement bonds to help pay for the renovations.
Construction began in August 2022 and the facility is expected to reopen in February 2024.
In fiscal year 2022, the James I. Moyer Sports Complex hosted over 1,400 softball and baseball teams in
tournaments, filling over 15,000 hotel rooms in the Roanoke Valley. Over 34,000 people attended events
at the James I. Moyer Sports Complex during the past year. Approximately 17,000 athletes and 3,200
coaches participated in over 6,000 games at the Complex.
Salem hosts hundreds of high school, collegiate and amateur tournaments, and championships. The City
hosted Old Dominion Athletic Conference (ODAC) men’s and women’s basketball, indoor track and softball.
Virginia High School League (VHSL) championships in volleyball, football, wrestling, softball, baseball and
soccer were held in fiscal year 2022. Salem also hosted the Central Intercollegiate Athletic Association
(CIAA) championships in football, cross country and bowling. The City, in conjunction with ODAC and
Roanoke College, hosted the NCAA Division III women’s lacrosse championship and the Division III
women’s softball championship. Approximately 17,000 people traveled to Salem to attend events in fiscal
year 2022 with an estimated economic impact of $5 million.
The NCAA awarded Salem and its long-time partners, ODAC and Roanoke College, fifteen national
championship events beginning in fiscal year 2023. The City will be hosting Division III championships in
men’s and women’s soccer, women’s basketball, softball, lacrosse and volleyball and men’s volleyball. The
historic 50th annual Amos Alonzo Stagg Bowl, NCAA Division III football championship, will be returning to
Salem in 2023. Salem previously hosted the Stagg Bowl for 25 consecutive years, from 1993 to 2017.
Financial Policies and Financial Planning
City management is responsible for establishing and maintaining internal controls. Internal controls are
designed to provide reasonable, but not absolute, assurance that City assets are safeguarded against
unauthorized use or disposition and that financial transactions are conducted properly and in accordance
with City policy.
City Council adopted a formal fund balance policy to establish guidelines to maintain a prudent level of
financial resources to ensure that a strong financial position is maintained. The policy establishes a
minimum acceptable level of unassigned fund balance as 10% of the sum of General Fund, Debt Service
Fund and School Division operating expenditures, net of the General Fund transfer to School Division. As
of June 30, 2022, unassigned fund balance is 50.2%, well in excess of this minimum.
The City’s annual budget is based on the financial policies of the City and reflects the balance between
anticipated revenues and proposed expenditures. As required by City Code, the City Manager submits a
recommended budget to City Council at least thirty days prior to the last Council meeting in May of each
year for the fiscal year beginning July 1st. After an extensive study process and a public hearing to receive
citizen input, City Council adopts the budget on or before June 30th.
The budget function is used as a management tool, including performance objectives, goals, and long-
range planning, as well as maintaining budgetary controls. The objective of these budgetary controls is to
ensure compliance with legal provisions embodied in the annual appropriated budget approved by City
Council. For activities of the General Fund, which incorporates debt service, budgetary compliance is
established at the fund level (that is, the level at which expenditures cannot legally exceed the appropriated
amount.) The City also utilizes encumbrance accounting as a way to accomplish budgetary control.
Encumbered amounts lapse at year-end but are re-appropriated as part of the following year’s budget.
6
The City prepares a six-year capital improvement plan, which identifies and prioritizes major City projects
and includes cost estimates and potential funding sources. The City closely monitors available funding and
proceeds with capital purchases only as funds become available. The City may issue debt obligations to
finance the construction or acquisition of capital assets or major renovations to existing capital assets within
the guidelines established in the debt management policy.
Independent Audit
Virginia law and the Charter of the City of Salem require that the financial statements of the City be audited
by a certified public accountant. Brown, Edwards & Company, L.L.P., has performed an annual audit of
the basic financial statements and other supplementary information contained within the City’s Annual
Comprehensive Financial Report. Their audit was conducted in accordance with auditing standards
generally accepted in the United States of America; the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States; and the
Specifications for Audits of Counties, Cities and Towns and Specifications for Audits of Authorities, Boards,
and Commissions issued by the Auditor of Public Accounts of the Commonwealth of Virginia. The report
of the independent auditor, which includes their opinion on the financial statements of the City, is contained
in the Financial Section of this report. Other auditor’s reports are included in the Compliance Section.
Certificate of Achievement for Excellence in Financial Reporting
The Government Finance Officers Association of the United States and Canada (GFOA) has awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive
Financial Report for 2021. This represents the thirty-fourth year Salem has earned this distinction. In order
to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently
organized annual comprehensive financial report, whose contents conform to program standards. Such
reports must satisfy both generally accepted accounting principles and applicable legal requirements. We
believe this report conforms to the Certificate of Achievement Program requirements and standards and
are submitting it to the GFOA to determine its eligibility for another certificate.
Acknowledgments
We would like to express our appreciation to the staff of the Department of Finance for the dedication and
professionalism demonstrated daily assuring the financial integrity of the City and the preparation of this
report. We would also like to express our appreciation to you, City Council, for the continued insight you
bring to this City and the strong commitment you have made to its fiscal integrity and financial leadership.
Lastly, we would like to express our appreciation to our independent auditing firm, Brown, Edwards &
Company, L.L.P., for their cooperation and input in our efforts.
Respectfully submitted,
James E. Taliaferro, II Rosemarie B. Jordan
City Manager Director of Finance
7
CITY OF SALEM, VIRGINIA
DIRECTORY OF PRINCIPAL OFFICIALS
JUNE 30, 2022
MEMBERS OF CITY COUNCIL
Renée F. Turk ....................................................................................................................................... Mayor
James W. Wallace, III ................................................................................................................... Vice-Mayor
Byron R. Foley ................................................................................................................................... Member
William D. Jones ................................................................................................................................ Member
John E. Saunders ............................................................................................................................... Member
ELECTED OFFICERS
Danielle C. Crawford ....................................................................................................................... Treasurer
Kristie D. Chittum ........................................................................................... Commissioner of the Revenue
Thomas E. Bowers ................................................................................................ Commonwealth’s Attorney
Gary Chance Crawford .................................................................................................. Clerk of Circuit Court
April M. Staton. .............................................................................................................................. City Sheriff
GENERAL CITY GOVERNMENT
James E. Taliaferro, II ................................................................................................................ City Manager
H. Robert Light ........................................................................................................... Assistant City Manager
Rosemarie B. Jordan, CPA ............................................................................................... Director of Finance
Jim H. Guynn, Jr. ....................................................................................................................... City Attorney
Beth A. Rodgers .............................................................................................. Director of Human Resources
Patrick W. Morton ......................................................................................... Director of Technology Systems
Michael D. Crawley ...................................................................................................................... Police Chief
John W. Prillaman ........................................................................................................................... Fire Chief
Charles E. Van Allman, Jr. .................................................................... Director of Community Development
Norman M. Tyler, Jr. ............................................................... Director of Streets and General Maintenance
John P. Shaner ........................................................................................... Director of Parks and Recreation
Ann G. Tripp ........................................................................................................................... Library Director
Dana M. Oliver ................................................................................................................ Director of Elections
A. K. Briele, III ................................................................................................ Director of Electric Department
Larado M. Robinson ....................................................................... Director of Water and Sewer Department
Justin W. Kuzmich ......................................................................................................... Real Estate Assessor
Troy D. Loving ........................................................................................................................ Building Official
Thomas J. Miller ...................................................................................... Director of Economic Development
Wendy S. Delano ....................................................................................................Director of Civic Facilities
R. Carey Harveycutter, Jr. ................................................................................................ Director of Tourism
Mike Stevens ...................................................................................................... Director of Communications
Angela A. Sellers ............................................................ Process Improvement/Business Efficiency Director
MEMBERS OF SCHOOL BOARD
David H. Preston ............................................................................................................................. Chairman
Artice M. Ledbetter .................................................................................................................. Vice Chairman
Dr. Nancy A. Bradley .......................................................................................................................... Member
John A. (Andy) Raines ....................................................................................................................... Member
Teresa E. Sizemore-Hernandez ........................................................................................................ Member
SCHOOL ADMINISTRATION
Dr. Curtis N. Hicks ................................................................................................. Superintendent of Schools
Jamie C. Soltis ........................................................................................................ Assistant Superintendent
Kirstine M. Barber ........................................................................................... Director of Human Resources
Jennifer P. Dean ............................................................................... Assistant Superintendent of Instruction
Mandy C. Hall .................................................................................................................. Director of Business
Dr. Randy L. Jennings ........................................................................................ Director of Student Services
Dr. Forest I. Jones .................................................................................... Director of Administrative Services
Rosemarie B. Jordan, CPA ............................................................................................... Director of Finance
8
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9
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Salem
Virginia
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
10
FINANCIAL SECTION
The Financial Section of the City of Salem, Virginia’s Annual Comprehensive Financial Report includes the
independent auditor’s report, management’s discussion and analysis, and basic financial statements,
including accompanying notes, required supplementary information, notes to required supplementary
information, and other supplementary information.
11
Your Success is Our Focus
3906 Electric Road • Roanoke, Virginia 24018 • 540-345-0936 • Fax: 540-342-6181 • www.BEcpas.com
INDEPENDENT AUDITOR’S REPORT
To the Honorable Members of the City Council
City of Salem, Virginia
Salem, Virginia
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of the City of Salem, Virginia (the “City”),as of and for the year ended
June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s
basic financial statements as listed in the table of contents.
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, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of
the City, as of June 30, 2022, and the respective changes in financial position and, where applicable, cash
flows thereof and the Statement of Revenues, Expenditures, and Changes in Fund Balances –Budget and
Actual –General Fund for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, and Specifications for Audits of Counties, Cities,
and Towns and the Specifications for audits of Authorities, Boards, and Commissions, issued by the
Auditor of Public Accounts of the Commonwealth of Virginia. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report. We are required to be independent of the City 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 basis for our audit opinions.
Change in Accounting Principle
As described in Note 21 to the financial statements, in 2022, the City adopted new accounting guidance,
GASB Statement No. 87, Leases.Our opinion is not modified with respect to this matter.
12
Report on the Audit of the Financial Statements (Continued)
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a
going concern for twelve months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinions. 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 and
Government Auditing Standards 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, forgery, intentional omissions, misrepresentations, or the override of internal
control. Misstatements are considered material if there is a substantial likelihood that, individually or in
the aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.
In p erforming an audit in accordance with generally accepted auditing standards and Government Auditing
Standards, we:
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 a test basis, evidence regarding the amounts and disclosures in the financial
statements.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is
expressed.
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
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
13
Report on the Audit of the Financial Statements (Continued)
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and other required supplementary information, as listed in the table of contents,
be presented to supplement the basic financial statements. Such information is the responsibility of
management, and, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any assurance
on the information because the limited procedures do not provide us with sufficient evidence to express
an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The accompanying combining and individual nonmajor
fund financial statements and schedule of expenditures of federal 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, 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 combining and individual nonmajor fund financial statements and the schedule of expenditures of
federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a
whole.
Other Information
Management is responsible for the other information included in the annual report. The other information
comprises the introductory section, other supplemental schedules, and statistical section,but does not
include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial
statements do not cover the other information, and we do not express an opinion or any form of assurance
thereon.
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
exists, we are required to describe it in our report.
14
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
November 17, 2022 on our consideration of the City’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is solely to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an opinion on
the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering the
City’s internal control over financial reporting and compliance.
CERTIFIED PUBLIC ACCOUNTANTS
Roanoke, Virginia
November 17, 2022
15
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
The following discussion and analysis of the City of Salem, Virginia’s (the City) financial performance
provides an overview of the City’s financial activities for the fiscal year ended June 30, 2022. It should be
read in conjunction with the transmittal letter and the City’s basic financial statements.
FINANCIAL HIGHLIGHTS
As of June 30, 2022, the Primary Government had $187.8 million in total net position, an increase
of $18.7 million from prior year. Unrestricted net position available to fund future expenses was
$32.8 million or 17.4% of total net position.
As of June 30, 2022, the governmental activities had $71.6 million in total net position, which
increased $10.7 million from prior year. Unrestricted net position (deficit) was $(16.0) million or
(22.3%) of total net position.
As of June 30, 2022, the business-type activities had $116.2 million in total net position, an increase
of $8 million from prior year. Unrestricted net position available to fund future expenses was $48.8
million or 42% of total net position.
As of June 30, 2022, the General Fund had $60.4 million in total fund balance, which increased by
$10.5 million from prior year. Unassigned fund balance was $55.2 million or 91.3% of total fund
balance.
The City issued $15,080,000 in general obligation bonds in May 2022 to fund renovations to the
Moyer Sports Complex.
OVERVIEW OF THE FINANCIAL STATEMENTS
Our discussion and analysis is intended to serve as an introduction to the City’s basic financial statements.
The City’s financial statements present two types of statements, each with a different focus on the City’s
finances. The government-wide financial statements focus on the City as a whole and provide both short-
term and long-term information about the City’s overall financial status. The fund financials focus on the
individual parts of City government, reporting the City’s operations in more detail than the government-wide
statements. Presentation of both perspectives provides the user a broader overview, enhances the basis
for comparisons and better reflects the City’s accountability.
Government-Wide Financial Statements
The government-wide financial statements begin on page 30 and include the Statement of Net Position and
the Statement of Activities. These statements provide information about the City as a whole using the
accrual basis of accounting, which is the method used by most private-sector enterprises. All current year
revenues and expenses are reported in the Statement of Activities regardless of when cash is received or
paid. These statements allow readers to answer the question “Is the City’s financial position, as a whole,
better or worse as a result of the year’s activities?”
One of the main goals of these two statements is to report the City’s net position and changes that affected
net position during the fiscal year. The change in the City’s net position, which is the difference between
assets and deferred outflows and liabilities and deferred inflows, is one way to measure the City’s financial
health or financial position. Increases or decreases in net position are indicators of whether the City’s
financial health is improving or declining. Other non-financial factors, such as changes in the City’s property
tax base and the condition of the City’s infrastructure should also be considered in assessing the overall
financial health of the City.
In the Statement of Net Position and the Statement of Activities, the City’s fund-based activity is classified
as follows:
Governmental activities – Most of the City’s basic services are reported here including general
government, judicial administration, public safety, public works, health and welfare, education, parks
and recreation and community development. Property taxes, other local taxes, and federal and state
grants finance most of these activities.
16
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
Business-type activities – The City’s electric distribution system, water and sewage systems, Civic
Center and catering and concessions are reported here as the City charges a fee to customers
designed to cover all or most of the cost of services it provides.
Component units – Because of the City’s financial accountability for these organizations, the City
includes two discretely presented component units in this report, the City of Salem School Division
(School Division) and the Economic Development Authority of the City of Salem (Economic
Development Authority).
Fund Financial Statements
The fund financial statements begin on page 32 and provide detailed information about the most significant
funds, rather than the City as a whole. The City has three types of funds:
Governmental funds – Most of the City’s basic services are presented as governmental funds. Fund
based statements for these funds focus on how resources flow into and out of the funds and the
balances left at year-end that are available for future spending. In particular, unassigned fund balance
may serve as a useful measure of a government’s net resources available for spending at the end of
the fiscal year. These funds are reported on the modified accrual basis of accounting, which measures
cash and other liquid assets that can readily be converted to cash. The governmental fund statements
provide a detailed short-term overview that helps the reader determine the financial resources that can
be spent in the near future to finance the City’s programs. The City’s governmental funds include the
General Fund, Special Revenue Fund, Debt Service Fund and Capital Projects Fund. The differences
between governmental activities as reported in the government-wide and fund financial statements are
reconciled in Exhibits 4 and 6.
Proprietary funds – When the City charges customers for the services it provides, whether to outside
customers or to other units of the City, these services are generally reported in proprietary funds which,
like the government-wide statements, utilize the accrual basis of accounting and their statements
provide both short-term and long-term financial information.
The City’s enterprise funds, one type of proprietary fund, are accounted for in the same manner as the
government-wide business-type activities; however, the fund financial statements provide more detail
and additional information, such as cash flows. The City’s enterprise funds include the Electric Fund,
Water and Sewage Fund, Civic Center and Catering and Concessions.
The City utilizes an internal service fund to account for health and dental insurance coverage for
employees and retirees.
Fiduciary funds – Resources held for other governments or agencies not part of the City are reported
as fiduciary funds. These activities are excluded from the government-wide financial statements
because the City cannot use these assets to finance its operations. The accounting used for fiduciary
funds is much like that used for proprietary funds. The City reports resources for other postemployment
benefits (OPEB) related to its healthcare plan for retirees in an OPEB trust fund and accounts for
resources held on behalf of the Cardinal Criminal Justice Academy and the Court-Community
Corrections Program in custodial funds. In custodial funds, the City recognizes liabilities when events
occur that compel the City to disburse fiduciary resources.
17
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
A comparative analysis of government-wide information is as follows:
Summary of Net Position
The following table presents a condensed summary of net position:
2022 2021 2022 2021 2022 2021 2022 2021
Current and other assets 112.2$ 88.8$ 68.7$ 68.6$ 180.9$ 157.4$ 28.6$ 28.9$
Capital assets, net 98.5 97.9 102.5 96.0 201.0 193.9 67.8 60.2
Total assets 210.7 186.7 171.2 164.6 381.9 351.3 96.4 89.1
Deferred outflows of resources 8.6 9.9 2.6 3.0 11.2 12.9 9.1 10.8
Current and other liabilities 24.2 21.3 9.6 8.0 33.8 29.3 13.5 13.2
Long-term liabilities 103.0 111.1 42.3 50.4 145.3 161.5 27.1 46.3
Total liabilities 127.2 132.4 51.9 58.4 179.1 190.8 40.6 59.5
Deferred inflows of revenues 20.5 3.3 5.7 1.0 26.2 4.3 17.6 4.0
Net investment in capital assets 84.4 83.8 67.4 61.0 151.8 144.8 67.8 60.2
Restricted 3.2 2.3 - - 3.2 2.3 1.4 0.4
Unrestricted (16.0) (25.2) 48.8 47.2 32.8 22.0 (21.9) (24.2)
Total net position 71.6$ 60.9$ 116.2$ 108.2$ 187.8$ 169.1$ 47.3$ 36.4$
Summary of Net Position
Total Primary ComponentGovernmental Business-type
Activities Activities
(In Millions)
Government Units
The Primary Government net position increased from $169.1 million to $187.8 million. Net position of
governmental activities increased $10.7 million and net position of business-type activities increased $8
million. A detailed description of the changes in revenues and expenses that create the differences in net
position is discussed in the next section.
Net investment in capital assets represents the amount of capital assets owned by the City, including
infrastructure, net of accumulated depreciation and amortization, and any outstanding debt issued to fund
the asset purchase or construction.
The Primary Government’s unrestricted net position, the portion of net position that can be used to finance
the daily operations of the City, was $32.8 million. Debt totaling $1.3 million issued for Civic Center
improvements is being repaid by governmental activities while the related asset is recorded in business-
type activities. The City also assumed $36.5 million of debt including premiums issued for school
improvements while the School Division recorded the related asset. As such, $37.8 million is included in
governmental activities long-term liabilities, which directly reduced unrestricted net position.
Net position is reported as restricted when constraints on asset use are externally imposed by creditors,
grantors, contributors, regulators, or are imposed by law through constitutional provisions or enabling
legislation. The City had restricted net position totaling $3.2 million as of June 30, 2022, for governmental
activities. Approximately $2.6 million in state funding was received, but not yet spent, for highway
maintenance. Federal and state grant funding totaling $389,000 was received, but not yet spent, for fire
programs, asset forfeiture, four for life and hazardous materials grants. Unspent donations totaling
$254,000 were restricted for law enforcement and public safety programs.
18
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
As of June 30, 2022, component units had $47.3 million in total net position, an increase of $10.9 million.
Unrestricted net position (deficit) available to fund future expenses was ($21.9) million. Net investment in
capital assets was $67.8 million, an increase of $7.6 million.
Summary of Changes in Net Position
The following table presents a condensed summary of changes in net position.
Revenues 2022 2021 2022 2021 2022 2021 2022 2021
Program Revenues:
Charges for services 4.5$ 4.0$ 58.2$ 53.0$ 62.7$ 57.0$ 1.3$ 1.2$
Operating grants and contributions 9.9 9.9 1.3 - 11.2 9.9 17.4 12.9
Capital grants and contributions 2.0 8.6 0.2 0.5 2.2 9.1 0.6 -
General Revenues:
Property taxes 43.0 40.4 - - 43.0 40.4 - -
Local sales and use tax 9.1 7.8 - - 9.1 7.8 - -
Business license tax 6.2 5.5 - - 6.2 5.5 - -
Meals tax 5.8 5.0 - - 5.8 5.0 - -
Utility taxes 1.2 1.2 - - 1.2 1.2 - -
Other taxes 4.4 3.6 - - 4.4 3.6 - -
Intergovernmental revenue 3.7 7.2 - - 3.7 7.2 - -
Investment earnings 0.4 0.2 0.1 0.1 0.5 0.3 0.1 0.1
Gain on sale of capital assets 0.1 0.1 - - 0.1 0.1 - -
Payments from City of Salem - - - - - - 26.7 35.2
State aid - - - - - - 16.4 16.1
Other 0.7 0.7 - 0.2 0.7 0.9 0.9 0.2
Total revenues 91.0 94.2 59.8 53.8 150.8 148.0 63.4 65.7
Expenses
General government 6.9 7.4 - - 6.9 7.4 - -
Judicial administration 2.5 2.7 - - 2.5 2.7 - -
Public safety 18.6 19.7 - - 18.6 19.7 - -
Public works 10.8 16.7 - - 10.8 16.7 - -
Health and welfare 5.4 5.7 - - 5.4 5.7 - -
Education 26.6 34.6 - - 26.6 34.6 52.4 50.0
Parks, recreation and cultural 6.8 6.9 - - 6.8 6.9 - -
Community development 2.7 3.0 - - 2.7 3.0 0.1 1.1
Interest and other fiscal charges 1.6 1.6 - - 1.6 1.6 - -
Electric - - 35.5 32.8 35.5 32.8 - -
Water and sewage - - 9.9 10.5 9.9 10.5 - -
Civic center - - 4.1 2.7 4.1 2.7 - -
Catering and concessions - - 0.7 0.4 0.7 0.4 - -
Total expenses 81.9 98.3 50.2 46.4 132.1 144.7 52.5 51.1
Excess (deficit) before transfers 9.1 (4.1) 9.6 7.4 18.7 3.3 10.9 14.6
Transfers 1.6 1.7 (1.6) (1.7) - - - -
Increase (decrease) in net position 10.7 (2.4) 8.0 5.7 18.7 3.3 10.9 14.6
Net position, beginning 60.9 63.3 108.2 102.5 169.1 165.8 36.4 21.8
Net position, ending 71.6$ 60.9$ 116.2$ 108.2$ 187.8$ 169.1$ 47.3$ 36.4$
Government UnitsActivitiesActivities
(In Millions)
Summary of Changes in Net Position
Total Primary ComponentGovernmental Business-type
19
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
Governmental Activities – Revenues
The following graph presents revenues generated for governmental activities by category:
Property taxes, which were 47.3% of total governmental activities revenue, include real estate tax, the local
portion of personal property tax, machinery and tools tax and public service corporation taxes. Property
taxes in total increased $2.7 million or 6.6% from the previous year. Current year real estate tax revenue
was up approximately $1 million or 3.7% from the prior year due to higher assessments. The assessed
value of vehicles saw an unprecedented increase due to a shortage of vehicles available for purchase.
Current year personal property tax revenue increased $1.6 million or 18% after City Council provided a
rebate of approximately $831,000. Machinery and tools tax was up $130,000 or 4.1%
Capital grants and contributions, which were 2.2% of total governmental activities revenue, decreased $6.6
million. In the previous fiscal year, the Virginia Department of Transportation completed the East Main
Street improvement project which resulted in a $6.9 million contribution. Contributions in fiscal year 2022
included infrastructure valued at $1.1 million. In the previous year, approximately $976,000 in grant funding
was received for downtown improvements. Grant funding for downtown projects totaled only $72,000 in
fiscal year 2022. Capital grants and contributions vary from year to year based on active projects.
Intergovernmental revenue not restricted, which was 4.1% of total governmental activities revenue,
decreased $3.5 million or 48.6%. In the previous fiscal year, $3.3 million in funding authorized by the
Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, was recognized. The CARES Act
required that funds be used to pay necessary expenditures incurred due to the public health emergency.
In addition, the Fire Department received Assistance to Firefighters grant funds which paid for the purchase
of a diesel exhaust removal system in the previous fiscal year.
Local sales and use taxes continued trending up, increasing $1.3 million or 16.7%. The cost of goods and
services has been steadily rising, resulting in higher gross sales and ultimately higher sales tax revenue.
Business license tax, which is based on gross receipts for the previous calendar year, increased $630,000
or 11.4%. Meals tax increased $0.8 million or 16.0% from the prior year. Most local tax revenue streams
have rebounded from COVID and several exceeded pre-pandemic amounts in fiscal year 2022.
Property taxes
47.3%
Other taxes
29.3%
Operating grants and
contributions
10.9%
Charges for services
4.9%
Intergovernmental
revenue
4.1%
Capital grants and
contributions
2.2%
Other
1.3%
20
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
Governmental Activities – Expenses
Expenses of the governmental activities are shown below by functional area:
Pension expense in all functions was lower than the previous year. Differences between actuarially
assumed investment returns and actual investment returns is amortized over a five-year closed period. The
expensed portion of current period differences between actual and projected earnings on plan investments
contributed to lower pension expense in fiscal year 2022. This is partially offset by an increase in the
expensed portion of current-period changes of assumptions.
Education expenses totaling $26.6 million, or 32.5% of governmental activities, represented the largest
allocation of resources. Education expenses decreased $8 million or 23.1%. Funding of $20.9 million was
allocated to the School Division to cover operating costs, an increase of $1.1 million or 5.4%. In fiscal year
2022, $5.3 million in bond proceeds were transferred to the School Division to cover Salem High School
renovation costs compared to $14.4 million transferred in fiscal year 2021. In addition, the City transferred
$414,000 in fiscal year 2022 to help fund Salem High School Fieldhouse renovations.
Public works expenses were 13.2% of total governmental activities expenses and decreased $5.9 million
or 35.3%. In fiscal year 2022, only $2,700 was spent on paving compared to $4.9 million in the previous
fiscal year. CARES Act funding of $390,000 was spent in this function in the prior year. Pension expense
decreased approximately $750,000 in this function. Decreases were partially offset by an increase in
depreciation expense of $171,000.
Public safety expenses, which were 22.6% of total governmental activities expenses, decreased $1.1
million or 6%. In the previous fiscal year, CARES Act funding of $1.1 million was expended in this function.
Payments to the Western Virginia Regional Jail (WVRJ) decreased by $315,000 from the prior year due to
a lower number of prisoner days and a lower payment for the City’s share of debt service.
Business-type Activities
The proprietary funds provide the same type of information reported in the government-wide financial
statements for business-type activities, but in more detail. Please refer to the MD&A’s section on Financial
Analysis of the City’s Funds - Proprietary Funds for detailed analysis of the business-type activities major
funds.
Component Units
Payments from the City of Salem totaled $26.7 million, a decrease of $8.5 million or 24.1%. Funding from
the City to the Economic Development Authority totaled $56,000 and decreased $569,000 from the previous
year due to lower incentive payments. Payments to the School Division totaled $26.6 million and were
Education
32.5%
Public safety
22.6%
Public works
13.2%
General
government
administration
8.4%
Parks, recreation
and cultural
8.3%
Health and
welfare
6.6%
Judicial
administration
3.1%
Community
development
3.3%Interest
2.0%
21
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
down $8 million or 23.1% from the previous year. Operating support totaled $20.9 million and $5.3 million
was transferred to cover Salem High School renovation costs, which was lower than the $14.4 million
provided in the previous year. Unrestricted state aid increased $288,000 or 1.8% due to higher sales tax
revenue, which was partially offset by a decrease in basic aid.
The School Division incurred expenses of $52.4 million for the year ended June 30, 2022, an increase of
$2.4 million or 4.8% from the prior year. Salary and benefit costs were higher in fiscal year 2022. Expenses
of the Economic Development Authority totaled $72,000 and decreased $1.1 million. In fiscal year 2021,
CARES Act funds were used to provide grants totaling $1,000,000 to businesses and non-profits.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
Governmental Funds
As of June 30, 2022, the governmental funds had $82.7 million in total fund balance, an increase of $20
million from prior year. Unassigned fund balances available to fund future expenditures were $55.2 million
or 66.7% of total fund balance. Unassigned fund balance, which contains all amounts not included in other
classifications, is available to pay for future years’ capital expenditures and provide for unforeseen
circumstances. Restricted fund balance totaled $22.5 million and included $19.3 million of unspent bond
proceeds and $3.2 million that can be spent only for specific purposes stipulated by grantors and donors.
Assigned fund balance totaled $3.8 million and represents amounts set aside to liquidate encumbrances.
Committed fund balance totaled $130,000 and represents funds appropriated for the E-summons program
and stormwater management.
General Fund
The General Fund is the chief operating fund of the City. As of June 30, 2022, the General Fund had $60.4
million in total fund balance, which increased $10.5 million from the prior year. Unassigned fund balance
available to fund future expenditures was $55.2 million or 91.3% of total fund balance and increased $9.2
million from the previous year. As a measure of the General Fund’s liquidity, it may be useful to compare
both total fund balance and unassigned fund balance to total fund expenditures. Total fund balance to total
fund expenditures increased from 64% to 82.1%. Unassigned fund balance to total fund expenditures
increased from 58.9% to 75%.
Property taxes, which were 48.8% of total General Fund revenue, increased $2.4 million or 5.9% from the
prior year. Current year real estate tax revenue was up $1 million or 3.7% due to higher assessed values.
Current year personal property tax revenue was up $1.4 million or 16.6% due to an unusually large increase
in car values. The shortage of vehicles available for sale drove values higher than normal. City Council
approved the rebate of approximately 19.5% of personal property tax received for vehicles, which reduced
current year personal property tax revenue. Machinery and tools tax reflected a more modest increase of
$130,000 or 4.1%.
Other local taxes, which comprised 30.2% of total General Fund revenue increased $3.6 million or 15.6%
from the previous year. Sales tax reflected growth of $1.2 million or 15.8% from the previous year. The
cost of goods and services has risen over the last year resulting in increased sales tax revenue. Higher
prices also resulted in higher meals taxes, which increased $862,000 or 17.3%. Lodging taxes increased
$683,000 or 69%. Business license tax, which is based on gross receipts of businesses, showed growth
of $630,000 or 11.4%. Sales, business license, meals and lodging tax revenue exceeded pre-pandemic
levels. Admissions tax increased $206,000 from the previous year but has not fully recovered to pre-
pandemic amounts.
Intergovernmental revenue decreased $3.5 million or 20.6%. In fiscal year 2021, the City recognized $3.3
million in CARES Act revenue, which was allocated to local governments as part of the first stimulus
package approved in March 2020 to help cover certain costs associated with the pandemic. No CARES
Act revenue was received in fiscal year 2022. The City also received $83,000 in game of skill tax in fiscal
year 2021, which was a one-time revenue from the state. The federal grants received by the Fire
Department were higher in the prior fiscal year due to the receipt of the Assistance to Firefighters grant that
funded the purchase of a diesel exhaust removal system.
22
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
Public works expenditures, which were 12.3% of total General Fund expenditures, decreased $6.1 million
or 40.3% from the prior year largely due to highway maintenance spending. Paving costs totaled $4.9
million in fiscal year 2021 compared to $2,700 in the current year. In fiscal year 2021, work done on the
Mill Lane bridge totaled $612,000 and $519,000 was spent on drainage improvements on Kesler Mill Road.
Education expenditures, which comprise 29% of total General Fund expenditures, increased $1.1 million
or 5.5%. Local operating support of $20.9 million was provided to the School Division in fiscal year 2022,
an increase of almost $1.1 million. The City also provided $414,062 to help fund Salem High School
Fieldhouse renovations. In the previous year, $360,000 of CARES Act funding was allocated to the School
Division to assist with the purchase of Chromebooks to promote distance learning.
Parks, recreation and cultural expenditures were $495,000 or 9.1% higher than the previous year. Salaries
and benefits were $237,000 higher than the previous year. Special events, summer camp and senior trip
expenditures were $91,000 higher than the prior year as activities resumed after COVID. An increase in
fee revenue partially offsets these increases. In addition, capital expenditures were $148,000 higher in
fiscal year 2022. Storm drain work and paving were done at the Salem Memorial Baseball Stadium and
field maintenance equipment was purchased.
Capital Projects Fund
During fiscal year 2022, Capital Projects fund expenditures were $8.3 million, which was $10.4 million lower
than the previous year. In fiscal year 2021, bond proceeds funded $14.4 million of the Salem High School
renovation project while only $5.3 million in bond proceeds were transferred to the School Division in fiscal
year 2022 for the project. General obligation public improvement bonds totaling $15 million were issued in
May 2022 to pay for Moyer Sports Complex renovations with $863,000 in project expenditures incurred. In
fiscal year 2022, bond proceeds funded the $678,000 purchase of a fire truck and $134,000 for the
Longwood Park restroom replacement. Grant funding covered design work totaling $415,000 on the
Colorado Street bridge project, $165,000 on the Apperson Drive bridge project, and $116,000 for downtown
improvements. In the previous year, bond proceeds of $1.7 million funded Salem Memorial Park seat
replacements, Kiwanis Field Lighting upgrades and Street Department equipment purchases, including two
garbage trucks, a dump truck, and a floor lift. Grant funding largely covered downtown improvements
totaling $1.6 million in the previous fiscal year and bridge work totaling $365,000.
Proprietary Funds
Revenues and expenses of the major enterprise funds are shown below:
Electric Fund
As of June 30, 2022, the Electric Fund had $62.2 million in total net position, which increased by $1.7 million
from the prior year. Net investment in capital assets was $28.3 million or 45.5% of total net position.
Unrestricted net position available to fund future expenses was $33.9 million or 54.5% of total net position.
For fiscal year 2022, operating revenue was $40.3 million and increased $2.3 million or 6.0% largely due
to higher charges for services. Penalties were $111,000 higher than the prior year. Penalties were waived
for a portion of fiscal year 2021 due to the pandemic, resulting in lower revenue in the previous fiscal year.
$- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0
Water
and
sewage
Electric
$9.9
$35.5
$14.7
$40.4
Millions
Revenue Expense
23
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
Operating expenses were $35.2 million and were $2.7 million higher than the prior year. Purchased power
costs increased $3.2 million or 12.4%. A decrease in administration costs due to lower pension expense
partially offset this increase.
Water and Sewage Fund
As of June 30, 2022, the Water and Sewage Fund had $53.8 million in total net position, an increase of
$4.8 million from prior year. Net investment in capital assets was $36.0 million or 67.0% of total net position.
Unrestricted net position available to fund future expenses was $17.7 million or 33.0% of total net position.
For fiscal year 2022, operating revenue was $14.7 million, which was $491,000 higher than the previous
year. Charges for services were up $342,000 or 2.5%. Operating expenses were $9.6 million, a decrease
of $470,000 or 4.7% from the prior year. Fringe benefit costs decreased $469,000 from the prior year due
to lower pension expense. Sewage treatment costs declined $293,000 or 14%. The rate paid to Western
Virginia Water Authority (WVWA) decreased and the gallons of sewage treated was lower than the prior
year. These decreases were partially offset by an increase in salary expense.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City’s budget is prepared in accordance with the Code of Virginia. Below is a condensed version of
the budgetary comparison of the General Fund original budget, amended budget and actual amounts.
Original Budget
Budget As Amended Actual
Revenues 80.9$ 81.1$ 88.8$
Expenditures (77.5) (80.0) (73.6)
Proceeds from sale of capital assets - - 0.2
Transfers in 3.3 3.4 3.3
Transfers out (6.7) (8.3) (8.2)
Use of fund balance -$ (3.8)$ 10.5$
Budgetary Highlights for 2022
(In Millions)
During the year, the City amended the original budget primarily for the following purposes:
To re-appropriate monies for encumbrances established prior to June 30, 2021.
To re-appropriate grants, donations and other revenues authorized in fiscal year 2021 or earlier,
but not expended or encumbered as of June 30, 2022.
To appropriate grants, donations and other revenues accepted or adjusted in fiscal year 2022 when
official notice of approval was received.
The Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual – General
Fund is shown on page 36. Property tax revenue exceeded budget by 6.5% for several reasons. Because
the City assesses and bills personal property in late spring, no current assessment data is available at the
time revenue estimates are developed for the subsequent fiscal year. The Finance Department works with
other City departments to determine a reasonable revenue estimate based on the information that is
available. In fiscal year 2022, vehicle assessments increased an unprecedented amount and exceeded
budget despite Council rebating a portion of personal property tax. Assessed values of real estate also
increased more than anticipated.
Other local taxes revenue exceeded budget by 21.3%. The cost of goods and services has gone up
dramatically over the last year, impacting several revenue streams that are based on gross sales. Sales,
meals and lodging taxes exceeded budget by 18%, 26% and 80%, respectively. Business license tax,
which is based on gross receipts, exceeded budget by $876,000 or 17%. Spurred by higher home prices
and sales, recordation tax exceeded budget by $281,000.
24
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
Several functions ended the year with expenditures less than budget. Public Safety expenditures were
under budget by $1.3 million or 7.1%. Amounts totaling $148,000 were encumbered but not spent as of
June 30, 2022. Jail expenditures were $694,000 less than budgeted due to a lower inmate population.
Salary and fringe expenditures were $360,000 below budget due to vacant positions. Public Works
expenditures were under budget by $2.6 million or 22%. Highway maintenance funding was under budget
by $1.3 million and $657,000 was encumbered, but not spent as of June 30, 2022. Unspent highway
maintenance funds are re-appropriated and spent in subsequent years. Waste disposal charges were
under budget by $157,000. Salary and fringe expenditures were $284,000 under budget in this function.
CAPITAL ASSETS
The City’s total Primary Government capital assets, net of accumulated depreciation and amortization,
increased 3.7% from $193.9 million to $201 million. This investment includes land, construction in progress,
machinery and equipment, buildings and improvements, public domain infrastructure, distribution and
transmission, utility plant, sewage treatment contract and intangible right-to-use lease assets. The following
table presents a summary of capital asset balances at the end of the year. The changes in each category
of capital assets, along with other important information regarding capital assets, are presented in Note 7
of the financial statements.
2022 2021 2022 2021 2022 2021 2022 2021
Land 6.4$ 6.5$ 1.6$ 1.6$ 8.0$ 8.1$ 1.1$ 1.1$
Construction in progress 3.4 1.9 18.2 11.8 21.6 13.7 29.4 21.2
Machinery and equipment 11.0 10.2 2.4 2.8 13.4 13.0 2.4 2.4
Buildings and improvements 19.6 20.4 14.0 14.6 33.6 35.0 34.8 35.5
Public domain infrastructure 58.0 58.9 - - 58.0 58.9 - -
Distribution and transmission - - 18.4 15.4 18.4 15.4 - -
Utility plant - - 29.9 31.0 29.9 31.0 - -
Sewage treatment contract - - 18.0 18.8 18.0 18.8 - -
Intangible, right-to-use 0.1 - - - 0.1 - - -
Total 98.5$ 97.9$ 102.5$ 96.0$ 201.0$ 193.9$ 67.7$ 60.2$
Component
Unit
Total Primary
Activities Activities Government
Governmental Business-type
Capital Assets, Net of Depreciation and Amortization
(In Millions)
Major capital asset additions in the governmental activities included:
Design work was completed on the Moyer Sports Complex Renovation project with $863,000
expended in fiscal year 2022.
A pumper fire truck was purchased at a cost of $678,000.
Improvements to the Mill Lane Bridge were capitalized at a cost of $639,000.
Four snow plow and salt spreader trucks were purchased at a total cost of $650,000.
Engineering work continued on the Apperson Drive and Colorado Street bridge replacements. In
fiscal year 2022, $580,000 was expended on the two projects.
Major capital asset additions in the business-type activities included:
The Electric Fund portion of the automated meter reading project was completed at a total cost of
$2.4 million. Water and Sewer Fund costs for the project totaled $2.3 million and are included in
construction in progress.
In the Electric Fund, the substation equipment replacement project proceeded, with $11.1 million
included in the construction in progress balance. Circuit breakers totaling almost $900,000 were
capitalized in fiscal year 2022.
25
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
The City paid $1,150,000 in fiscal year 2022 for their share of the renovation of the existing
anaerobic digestion facilities at the Western Virginia Water Authority Regional Wastewater
Treatment Plant. Costs totaling $1,356,000 were included in construction in progress.
The well siting project continued in the Water Fund with $744,000 included in construction in
progress.
LONG-TERM DEBT
At June 30, 2022, the City’s long-term liabilities, excluding financed purchase obligations, lease liabilities,
compensated absences, net pension liabilities, net OPEB liabilities, bond premiums, and bond discounts,
totaled $93.9 million. This amount was comprised of $64.2 million related to governmental activities
(including $33.6 million for debt held on behalf of the School Division and $385,000 recorded as a receivable
from Roanoke Valley Resource Authority) and $29.7 million related to business-type activities. The City
made $6.8 million in principal payments and amortized $772,000 in discounts and premiums. On May 26,
2022, the City issued $15,080,000 of series 2022B general obligation public improvement bonds to fund a
portion of the Moyer Sports Complex renovation project. In March 2022, the City closed on a $2,320,437
loan with Virginia Resources Authority to fund the City’s share of the cost to renovate the existing anaerobic
digestion facilities at the Western Virginia Water Authority Regional Wastewater Treatment Plant. Detailed
information regarding these changes in long-term debt is disclosed in Note 9 to the financial statements.
Total debt increased $9.5 million during the fiscal year.
With its most recent rating in May 2020, the City received a rating of Aa2 from Moody’s Investor Service,
an upgrade from the previous Aa3 rating. The City received a rating of AA+ from S&P Global Ratings.
The City Charter and the Code of Virginia limits the City’s net debt to 10% of the assessed valuation of real
estate within the City limits. This limit applies to governmental fund tax supported debt and certain long-
term liabilities of proprietary funds. The City considers long-term debt of its electric, water and sewage
funds to be self-supporting. Additionally, in accordance with its contractual agreement with Roanoke Valley
Resource Authority, the City will receive funding from RVRA toward $385,000 of general obligation debt.
The City’s tax-supported debt of $68.4 million is below the legal debt limit of $176.5 million. Table 10 of the
statistical section provides additional information related to the legal debt margin.
The School Division relies upon the City to provide full faith and credit for any debt obligations incurred.
Therefore, the City reports School Division long-term liabilities, other than financed purchase obligations,
compensated absences, net OPEB liabilities, and net pension liabilities, as its own. In addition to bonded
debt, the City’s long-term obligations include financed purchase obligations, lease liabilities, compensated
absences, net OPEB liabilities, and net pension liabilities. Additional information concerning the City’s long-
term liabilities is presented in Note 9 of the financial statements and Table 10 of the statistical section.
Interest and other fiscal charges for fiscal year 2022 were $1.6 million or 1.9% of total governmental
activities expenses.
FACTORS INFLUENCING FUTURE BUDGETS
High inflation and rising costs for goods and services continue to cause budgetary challenges. More
resources are required to cover operating costs. Despite salary increases, the City continues to struggle
with attracting and retaining employees. Higher interest rates and rising construction costs have affected
the funding needed for on-going renovation projects. Long lead times for purchasing larger pieces of
equipment make it more difficult to keep up with equipment replacement needs.
General Fund revenues budgeted for fiscal year 2023 reflect an increase of $26.7 million from the fiscal
year 2022 budget largely due to ARPA funding. ARPA funding of $16.3 million is included in the fiscal year
2023 budget to cover general government services. In addition, property and other local taxes are also
expected to increase in fiscal year 2023. A rise in operating expenditures is expected which will offset the
increases in property and other local tax revenues.
26
CITY OF SALEM, VIRGINIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED JUNE 30, 2022
On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law, providing Coronavirus
Local Fiscal Recovery Funds (CLFRF) to localities. As of June 30, 2022, the City had received $31.2 million
in funding. Funds must be obligated by December 31, 2024 and expended by December 31, 2026. The
City will be using ARPA funds to pay for general government services, freeing up monies to fund a variety
of projects.
Electric and water consumption is expected to increase slightly in fiscal year 2023. An increase in the
power cost adjustment was necessary in fiscal year 2023 to offset rising electric transmission expenses.
No increase in water or sewer rates was included in the fiscal year 2023 budget.
REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with
a general overview of the City’s finances and to demonstrate the City’s accountability for the resources it
receives. If you have any questions about this report or need additional information, contact the Director
of Finance, City of Salem, 114 North Broad Street, Salem, Virginia 24153, (540) 375-3061, or visit the City’s
website at www.salemva.gov.
Additional information on the Component Unit can be obtained from the Director of Business, Salem City
Schools, 510 South College Avenue, Salem, Virginia 24153, or visit the School Division’s website at
www.salem.k12.va.us.
27
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28
BASIC FINANCIAL STATEMENTS
The Basic Financial Statements subsection of the City of Salem, Virginia’s Annual Comprehensive Financial
Report includes the government-wide Statement of Net Position and Statement of Activities. Government-
wide statements incorporate governmental and business-type activities of the City and activities of the
component unit to provide an overview of the financial position and change in net position for the reporting
entity. Also, this section includes the fund financial statements for governmental, proprietary, and fiduciary
funds and the accompanying notes to the financial statements.
29
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Cash and cash equivalents 80,956,476$ 53,026,973$ 133,983,449$ 18,699,361$
Receivables, net 3,744,151 7,608,420 11,352,571 5,227,480
Lease receivable 1,251,337 367,659 1,618,996 -
Due from component unit - 5,164,713 5,164,713 -
Due from other governmental units 5,858,354 - 5,858,354 2,719,490
Net pension asset - - - 1,444,155
Inventories 715,896 2,308,215 3,024,111 138,419
Prepaid items 435,994 183,691 619,685 420,882
Restricted assets:
Cash and cash equivalents 19,282,547 - 19,282,547 -
Capital assets:
Nondepreciable 9,805,129 19,830,999 29,636,128 30,584,463
Depreciable, net 88,548,021 82,637,926 171,185,947 37,169,735
Intangible, right-to-use, net 116,685 5,615 122,300 -
Total assets 210,714,590 171,134,211 381,848,801 96,403,985
DEFERRED OUTFLOWS OF RESOURCES 8,579,666 2,609,887 11,189,553 9,066,342
LIABILITIES
Accounts payable and accrued liabilities 3,265,975 7,123,273 10,389,248 2,642,521
Accrued payroll and related liabilities 1,868,479 546,626 2,415,105 5,075,745
Accrued interest 397,753 170,162 567,915 -
Self-insurance claims liability 453,351 - 453,351 331,305
Due to primary government - - - 5,164,713
Unearned revenues 18,164,289 743,167 18,907,456 284,214
Customer security deposits - 1,033,824 1,033,824 -
Long-term liabilities due in less than one year:
Bonds payable 4,184,360 4,164,035 8,348,395 -
Financed purchase obligation 14,530 - 14,530 -
Lease liability 29,522 1,994 31,516 -
Compensated absences 1,715,793 515,647 2,231,440 466,234
Long-term liabilities due in more than one year:
Bonds payable 64,618,658 28,550,290 93,168,948 -
Financed purchase obligation 14,529 - 14,529 -
Lease liability 88,476 3,643 92,119 -
Compensated absences 622,451 188,281 810,732 351,719
Net pension liability 20,043,160 5,284,748 25,327,908 21,062,060
Net OPEB liability 11,675,792 3,549,560 15,225,352 5,176,050
Total liabilities 127,157,118 51,875,250 179,032,368 40,554,561
DEFERRED INFLOWS OF RESOURCES 20,504,811 5,690,853 26,195,664 17,632,257
NET POSITION
Net investment in capital assets 84,385,804 67,400,911 151,786,715 67,754,198
Restricted for:
Grant programs 388,655 - 388,655 -
Highway maintenance 2,598,715 - 2,598,715 -
Net pension asset - - - 1,444,155
Other 255,584 - 255,584 -
Unrestricted (deficit)(15,996,431) 48,777,084 32,780,653 (21,914,844)
Total net position 71,632,327$ 116,177,995$ 187,810,322$ 47,283,509$
CITY OF SALEM, VIRGINIA
STATEMENT OF NET POSITION
JUNE 30, 2022
Primary Government
EXHIBIT 1
The Notes to Financial Statements are an integral part of this statement.
30
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31
EXHIBIT 3
Total
Special Debt Capital Governmental
General Revenue Service Projects Funds
ASSETS
Cash and cash equivalents 56,932,443$ 18,035,527$ -$ 2,906,876$ 77,874,846$
Cash and cash equivalents, restricted - - - 19,282,547 19,282,547
Receivables, net 3,702,832 - - - 3,702,832
Lease receivable 1,251,337 - - - 1,251,337
Due from other governmental units 5,301,907 - 385,416 171,031 5,858,354
Inventories 715,896 - - - 715,896
Prepaid items 359,027 - - - 359,027
Total assets 68,263,442$ 18,035,527$ 385,416$ 22,360,454$ 109,044,839$
LIABILITIES
Accounts payable and accrued liabilities 2,959,647$ -$ -$ 99,121$ 3,058,768$
Accrued payroll and related liabilities 1,859,537 - - - 1,859,537
Unearned revenues 86,533 18,035,527 - - 18,122,060
Total liabilities 4,905,717 18,035,527 - 99,121 23,040,365
DEFERRED INFLOWS OF RESOURCES 2,917,462 - 385,416 - 3,302,878
FUND BALANCES
Nonspendable 1,074,923 - - - 1,074,923
Restricted 3,242,954 - - 19,276,969 22,519,923
Committed 129,601 - - - 129,601
Assigned 816,915 - - 2,984,364 3,801,279
Unassigned 55,175,870 - - - 55,175,870
Total fund balances 60,440,263 - - 22,261,333 82,701,596
Total liabilities, deferred inflows of
resources, and fund balances 68,263,442$ 18,035,527$ 385,416$ 22,360,454$ 109,044,839$
CITY OF SALEM, VIRGINIA
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2022
The Notes to Financial Statements are an integral part of this statement.
32
EXHIBIT 4
Total fund balance of governmental funds 82,701,596$
Capital assets used in governmental activities are not considered current financial resources
and, therefore, are not reported in the governmental funds. 98,469,835
Some long-term assets are not available to pay for current period expenditures
and, therefore, are deferred in the governmental funds.
Deferred inflows of resources for unavailable revenues 1,983,338
For debt refundings resulting in defeasance of debt, the difference between the reacquisition
price and the net carrying amount of the old debt should be reported as a deferred outflow
of resources or a deferred inflow of resources.
Deferred amounts on refunding 308,588
Long-term liabilities related to governmental fund activities are not due and payable in the
current period and, therefore, are not reported in the governmental funds.
Bonds payable (64,228,966)
Bond premiums (4,574,052)
Financed purchase obligation (29,059)
Lease liability (117,998)
Accrued interest (397,753)
Compensated absences (2,326,860)
Financial statement elements related to pensions are applicable to future periods and,
therefore, are not reported in the governmental funds.
Deferred outflows of resources related to pension 6,982,468
Deferred inflows of resources related to pension (16,963,821)
Net pension liability (19,853,994)
Financial statement elements related to OPEB are applicable to future periods and,
therefore, are not reported in the governmental funds.
Deferred outflows of resources related to OPEB 1,247,352
Deferred inflows of resources related to OPEB (2,116,540)
Net OPEB liability (11,649,271)
The internal service fund is used by management to charge the costs of health and dental
insurance to individual funds. The assets, liabilities and net position of the internal service
fund are included with governmental activities in the Statement of Net Position. 2,197,464
Net position of governmental activities 71,632,327$
CITY OF SALEM, VIRGINIA
RECONCILIATION OF THE GOVERNMENTAL FUNDS' BALANCE SHEET
TO THE STATEMENT OF NET POSITION
JUNE 30, 2022
The Notes to Financial Statements are an integral part of this statement.
33
EXHIBIT 5
Total
Special Debt Capital Governmental
General Revenue Service Projects Funds
REVENUES
Property taxes 43,241,702$ -$ -$ -$ 43,241,702$
Other local taxes 26,733,811 - - - 26,733,811
Permits, fees and licenses 411,600 - - - 411,600
Fines and forfeitures 123,352 - - - 123,352
Revenue from use of money and property 715,091 - - 35,444 750,535
Charges for services 3,561,617 - - - 3,561,617
Other 382,382 - - - 382,382
Intergovernmental 13,483,370 4,000 210,368 856,211 14,553,949
Total revenues 88,652,925 4,000 210,368 891,655 89,758,948
EXPENDITURES
Current:
General government 6,844,143 - - - 6,844,143
Judicial administration 2,458,099 - - - 2,458,099
Public safety 17,737,298 - - - 17,737,298
Public works 9,044,426 - - - 9,044,426
Health and welfare 5,253,983 - - - 5,253,983
Education 21,333,674 - - 5,277,634 26,611,308
Parks, recreation and cultural 5,967,259 - - - 5,967,259
Community development 2,776,253 4,000 - - 2,780,253
Non-departmental 2,168,819 - - - 2,168,819
Capital projects - - - 2,919,667 2,919,667
Debt service:
Principal retirement 26,292 - 3,204,191 - 3,230,483
Interest 3,264 - 1,677,508 - 1,680,772
Bond issuance costs - - - 79,400 79,400
Total expenditures 73,613,510 4,000 4,881,699 8,276,701 86,775,910
Excess (deficiency) of revenues
over (under) expenditures 15,039,415 - (4,671,331) (7,385,046) 2,983,038
OTHER FINANCING SOURCES (USES)
Issuance of long-term debt - - - 15,080,000 15,080,000
Proceeds from sale of capital assets 155,902 - - - 155,902
Inception of leases 63,096 - - - 63,096
Insurance recoveries 75,910 - - - 75,910
Transfers in 3,336,762 - 4,670,580 1,829,850 9,837,192
Transfers out (8,209,598) - - - (8,209,598)
Total other financing sources (uses), net (4,577,928) - 4,670,580 16,909,850 17,002,502
Net change in fund balances 10,461,487 - (751) 9,524,804 19,985,540
Fund balances, beginning 49,978,776 - 751 12,736,529 62,716,056
Fund balances, ending 60,440,263$ -$ -$ 22,261,333$ 82,701,596$
CITY OF SALEM, VIRGINIA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
The Notes to Financial Statements are an integral part of this statement.
34
EXHIBIT 6
Net changes in fund balances of governmental funds 19,985,540$
Governmental funds report capital outlays as expenditures while governmental activities report
depreciation expense and amortization expense to allocate the costs of those assets over
the lives of the assets.
Capital outlay 5,369,985
Depreciation expense (5,519,612)
Amortization expense (27,605)
The net effect of various transactions involving capital assets does not provide or use current
financial resources and is not reported as revenues or expenditures in the governmental funds. 699,481
Revenues in the Statement of Activities that do not provide current financial resources
are not reported as revenues in governmental funds. 48,912
Issuance of debt and other obligations provides current financial resources to governmental
funds but increases long-term liabilities in the Statement of Net Position. Repayment of bond
principal is an expenditure in the governmental funds, but repayment reduces long-term
liabilities in the Statement of Net Position. Governmental funds report the effect of premiums,
discounts, and similar items when debt is first issued, but these amounts are deferred
and amortized in the Statement of Activities.
Bond proceeds, net of payment to refunded bond escrow agent (15,080,000)
Inception of leases (63,096)
Principal payments 3,230,483
Amortization of current year bond premiums 337,692
Amortization of current year deferred amounts on refunding (90,716)
Some expenses reported in the Statement of Activities do not require the use of current financial
resources and, therefore, are not reported as expenditures in governmental funds.
Change in accrued interest payable (25,464)
Change in compensated absences 11,170
Governmental funds report employer pension contributions as expenditures. However, in the
Statement of Activities, the cost of pension benefits earned net of employee contributions
is reported as pension expense.
Employer pension contributions 3,432,073
Pension expense (2,008,191)
Governmental funds report employer OPEB contributions as expenditures. However, in the
Statement of Activities, the cost of OPEB benefits earned is reported as OPEB expense.
Employer OPEB contributions 1,610,926
OPEB expense (540,217)
The internal service fund is used by management to charge the costs of health and dental
insurance to individual funds. The change in net position of the internal service fund is reported
with governmental activities.(654,808)
Change in net position of governmental activities 10,716,553$
CITY OF SALEM, VIRGINIA
RECONCILIATION OF THE GOVERNMENTAL FUNDS' STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2022
The Notes to Financial Statements are an integral part of this statement.
35
EXHIBIT 7
Variance with
Final Budget
Positive
Original Final Actual Amounts (Negative)
REVENUES
Property taxes 40,605,600$ 40,605,600$ 43,241,702$ 2,636,102$
Other local taxes 22,027,515 22,049,228 26,733,811 4,684,583
Permits, fees and licenses 337,800 337,800 411,600 73,800
Fines and forfeitures 61,000 61,000 123,352 62,352
Revenue from use of
money and property 867,809 932,286 715,091 (217,195)
Charges for services 3,397,771 3,400,771 3,561,617 160,846
Other 223,000 274,000 382,382 108,382
Intergovernmental 13,347,921 13,466,353 13,483,370 17,017
Total revenues 80,868,416 81,127,038 88,652,925 7,525,887
EXPENDITURES
Current:
General government 7,139,561 7,686,312 6,844,143 842,169
Judicial administration 2,467,158 2,522,175 2,458,099 64,076
Public safety 18,376,147 19,082,394 17,737,298 1,345,096
Public works 10,579,981 11,611,512 9,044,426 2,567,086
Health and welfare 5,177,833 5,454,986 5,253,983 201,003
Education 20,897,899 21,333,674 21,333,674 -
Parks, recreation and cultural 6,271,065 6,606,962 5,967,259 639,703
Community development 2,715,986 2,894,023 2,776,253 117,770
Non-departmental 3,840,370 2,865,295 2,168,819 696,476
Debt service:
Principal retirement - - 26,292 (26,292)
Interest - - 3,264 (3,264)
Total expenditures 77,466,000 80,057,333 73,613,510 6,443,823
Excess of revenues over
expenditures 3,402,416 1,069,705 15,039,415 13,969,710
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 155,902 155,902
Inception of leases - - 63,096 63,096
Insurance recoveries - 75,913 75,910 (3)
Transfers in 3,341,000 3,341,000 3,336,762 (4,238)
Transfers out (6,743,416) (8,323,266) (8,209,598) 113,668
Total other financing uses, net (3,402,416) (4,906,353) (4,577,928) 328,425
Net change in fund balances -$ (3,836,648)$ 10,461,487$ 14,298,135$
Budgeted Amounts
CITY OF SALEM, VIRGINIA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - GENERAL FUND
YEAR ENDED JUNE 30, 2022
The Notes to Financial Statements are an integral part of this statement.
36
EXHIBIT 8
Nonmajor Internal
Water and Proprietary Service
Electric Sewage Funds Total Fund
ASSETS
Current assets:
Cash and cash equivalents 29,938,648$ 22,278,282$ 810,043$ 53,026,973$ 3,081,630$
Receivables, net 5,554,129 1,894,488 38,543 7,487,160 41,319
Lease receivable - 124,165 - 124,165 -
Due from other funds 420,000 - - 420,000 -
Due from component unit 1,057,356 - 1,568 1,058,924 -
Inventories 1,914,237 361,289 32,689 2,308,215 -
Prepaid items 45,829 29,098 108,764 183,691 76,967
Total current assets 38,930,199 24,687,322 991,607 64,609,128 3,199,916
Noncurrent assets:
Receivables, net 121,260 - - 121,260 -
Due from component unit 4,105,789 - - 4,105,789 -
Lease receivable - 243,494 - 243,494 -
Capital assets:
Nondepreciable 12,199,701 7,415,845 215,453 19,830,999 -
Depreciable, net 30,182,098 49,611,245 2,844,583 82,637,926 -
Intangible right-to-use, net - 5,615 - 5,615 -
Total capital assets 42,381,799 57,032,705 3,060,036 102,474,540 -
Total noncurrent assets 46,608,848 57,276,199 3,060,036 106,945,083 -
Total assets 85,539,047 81,963,521 4,051,643 171,554,211 3,199,916
DEFERRED OUTFLOWS OF RESOURCES 1,223,814 999,095 386,978 2,609,887 41,258
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 6,016,873 1,004,685 101,715 7,123,273 207,207
Accrued payroll and related liabilities 185,386 200,518 160,722 546,626 8,942
Accrued interest 78,516 91,646 - 170,162 -
Self-insurance claims liability - - - - 453,351
Due to other funds - - 420,000 420,000 -
Unearned revenues 15,483 - 727,684 743,167 42,229
Customer security deposits 1,033,824 - - 1,033,824 -
Bonds payable 1,316,671 2,847,364 - 4,164,035 -
Lease liability - 1,994 - 1,994 -
Compensated absences 197,099 233,092 85,456 515,647 7,666
Total current liabilities 8,843,852 4,379,299 1,495,577 14,718,728 719,395
Noncurrent liabilities:
Bonds payable 10,660,646 17,889,644 - 28,550,290 -
Lease liability - 3,643 - 3,643 -
Compensated absences 103,476 31,353 53,452 188,281 3,718
Net pension liability 1,994,381 2,136,791 1,153,576 5,284,748 189,166
Net OPEB liability 1,020,763 1,952,350 576,447 3,549,560 26,521
Total noncurrent liabilities 13,779,266 22,013,781 1,783,475 37,576,522 219,405
Total liabilities 22,623,118 26,393,080 3,279,052 52,295,250 938,800
DEFERRED INFLOWS OF RESOURCES 1,956,773 2,810,366 923,714 5,690,853 104,910
NET POSITION
Net investment in capital assets 28,300,436 36,040,439 3,060,036 67,400,911 -
Unrestricted (deficit)33,882,534 17,718,731 (2,824,181) 48,777,084 2,197,464
Total net position 62,182,970$ 53,759,170$ 235,855$ 116,177,995$ 2,197,464$
Enterprise Funds
JUNE 30, 2022
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
CITY OF SALEM, VIRGINIA
The Notes to Financial Statements are an integral part of this statement.
37
EXHIBIT 9
Nonmajor Internal
Water and Proprietary Service
Electric Sewage Funds Total Fund
OPERATING REVENUES
Charges for services 39,756,594$ 14,127,943$ 3,236,760$ 57,121,297$ 6,063,588$
Connections and transfers 30,050 199,261 - 229,311 -
Penalties 162,228 154,848 - 317,076 -
Pole rentals 267,261 - - 267,261 -
Commissions - - 21,691 21,691 -
Other 116,542 209,745 1,304,406 1,630,693 246,404
Total operating revenues 40,332,675 14,691,797 4,562,857 59,587,329 6,309,992
OPERATING EXPENSES
Salaries - 2,045,480 1,298,978 3,344,458 116,925
Fringe benefits - 681,912 344,573 1,026,485 39,510
Show expenses - - 1,789,429 1,789,429 -
Maintenance - 754,797 194,633 949,430 11,812
Billing and collection 604,548 556,719 - 1,161,267 -
Professional services 30,081 251,734 27,006 308,821 353,678
Insurance 26,388 61,827 28,878 117,093 -
Purchased water - 25,345 - 25,345 -
Purchased power 29,365,876 - - 29,365,876 -
Distribution - operations 1,000,599 - - 1,000,599 -
Distribution - maintenance 1,694,225 - - 1,694,225 -
Administration 608,789 405,858 117,578 1,132,225 3,074
Travel and training 16,073 22,896 4,602 43,571 -
Materials and supplies - 127,586 235,800 363,386 7,702
Expendable equipment and small tools 179,686 106,015 13,742 299,443 -
Utilities - 419,487 304,096 723,583 4,996
Miscellaneous 211,916 12,511 2,990 227,417 2,003
Depreciation 1,447,755 2,343,251 283,680 4,074,686 -
Amortization - 510 3,071 3,581 -
Treatment of sewage - 1,804,078 - 1,804,078 -
Commissions - - 174,261 174,261 -
Claims - - - - 6,435,662
Total operating expenses 35,185,936 9,620,006 4,823,317 49,629,259 6,975,362
Operating income (loss)5,146,739 5,071,791 (260,460) 9,958,070 (665,370)
NONOPERATING REVENUES (EXPENSES)
Investment income 85,278 9,455 - 94,733 10,562
Interest expense (309,402) (247,923) (96) (557,421) -
Bond issuance costs - (34,961) - (34,961) -
Gain (loss) on disposal of capital assets (25,911) 40,107 - 14,196 -
Net nonoperating revenues (expenses)(250,035) (233,322) (96) (483,453) 10,562
Income (loss) before contributions and
transfers 4,896,704 4,838,469 (260,556) 9,474,617 (654,808)
Capital contributions - 162,746 - 162,746 -
Transfers in - - 1,709,168 1,709,168 -
Transfers out (3,160,000) (176,762) - (3,336,762) -
Change in net position 1,736,704 4,824,453 1,448,612 8,009,769 (654,808)
Net position, beginning 60,446,266 48,934,717 (1,212,757) 108,168,226 2,852,272
Net position, ending 62,182,970$ 53,759,170$ 235,855$ 116,177,995$ 2,197,464$
Enterprise Funds
YEAR ENDED JUNE 30, 2022
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
CITY OF SALEM, VIRGINIA
The Notes to Financial Statements are an integral part of this statement.
38
EXHIBIT 10
Nonmajor Internal
Water and Proprietary Service
Electric Sewage Funds Total Fund
OPERATING ACTIVITIES
Receipts from customers 39,909,912$ 14,547,725$ 3,708,298$ 58,165,935$ 6,058,640$
Payments to suppliers (30,924,803) (4,561,777) (2,872,015) (38,358,595) (342,759)
Payments to employees (2,704,574) (3,006,475) (1,704,731) (7,415,780) (159,555)
Payments for claims - - - - (6,422,728)
Other receipts 116,542 202,548 1,304,406 1,623,496 246,404
Net cash provided by (used in) operating activities 6,397,077 7,182,021 435,958 14,015,056 (619,998)
NONCAPITAL FINANCING ACTIVITIES
Interfund loan 1,435,000 - (1,435,000) - -
Component unit loan 298,199 - - 298,199 -
Transfers in - - 1,709,168 1,709,168 -
Transfers out (3,160,000) (176,762) - (3,336,762) -
Net cash provided by (used in) noncapital financing activities (1,426,801) (176,762) 274,168 (1,329,395) -
CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from sale of capital assets - 40,107 - 40,107 -
Purchases of capital assets (7,052,612) (2,764,130) (59,144) (9,875,886) -
Proceeds from capital debt - 1,189,606 - 1,189,606 -
Payment of bond issuance costs - (34,961) - (34,961) -
Principal paid on capital debt (1,046,928) (2,553,806) (3,071) (3,603,805) -
Interest paid on capital debt (503,677) (532,310) (96) (1,036,083) -
Net cash provided by (used in) capital and related financing
activities (8,603,217) (4,655,494) (62,311) (13,321,022) -
INVESTING ACTIVITIES
Interest received 85,278 9,455 - 94,733 10,562
Net cash provided by investing activities 85,278 9,455 - 94,733 10,562
Net increase (decrease) in cash and cash equivalents (3,547,663) 2,359,220 647,815 (540,628) (609,436)
Cash and cash equivalents, beginning 33,486,311 19,919,062 162,228 53,567,601 3,691,066
Cash and cash equivalents, ending 29,938,648$ 22,278,282$ 810,043$ 53,026,973$ 3,081,630$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Operating income (loss)5,146,739$ 5,071,791$ (260,460)$ 9,958,070$ (665,370)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities
Depreciation and amortization 1,447,755 2,343,761 286,751 4,078,267 -
Pension expense, net of employer contributions (133,540) (473,661) (58,441) (665,642) (5,338)
OPEB expense, net of employer contributions (82,326) 172,664 (46,123) 44,215 (2,160)
Decrease (increase) in assets:
Receivables, net (308,988) 58,476 34,210 (216,302) 5,834
Inventories (140,380) (97,478) (6,628) (244,486) -
Prepaid items (45,829) (5,492) (8,310) (59,631) (35,179)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 453,113 90,046 35,938 579,097 40,506
Accrued payroll and related liabilities 34,009 22,624 51,788 108,421 852
Self-insurance claims liability - - - - 48,113
Unearned revenues (23,550) - 415,637 392,087 (10,782)
Customer security deposits payable 26,317 - - 26,317 -
Compensated absences 23,757 (710) (8,404) 14,643 3,526
Net cash provided by (used in) operating activities 6,397,077$ 7,182,021$ 435,958$ 14,015,056$ (619,998)$
Noncash investing, capital, and financing activities
Capital assets financed with accounts payable 2,502,277$ 363,442$ -$ 2,865,719$ -$
Capital asset contributions received -$ 162,746$ -$ 162,746$ -$
Enterprise Funds
YEAR ENDED JUNE 30, 2022
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
CITY OF SALEM, VIRGINIA
The Notes to Financial Statements are an integral part of this statement.
39
EXHIBIT 11
Custodial OPEB
Funds Trust Fund
ASSETS
Cash and cash equivalents 2,307,126$ -$
Investments held by trustee, fair value of pooled funds - 9,433,717
Receivables, net 735 -
Due from Commonwealth of Virginia 102,085 -
Total assets 2,409,946 9,433,717
LIABILITIES
Accounts payable and accrued liabilities 78,602 -
Accrued payroll and related liabilities 88,075 -
Due to City of Salem 9,710 -
Unearned revenues 108,560 -
Total liabilities 284,947 -
NET POSITION
Restricted for:
Individuals, organizations, and other governments 2,124,999 -
OPEB - 9,433,717
Total net position 2,124,999$ 9,433,717$
CITY OF SALEM, VIRGINIA
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2022
The Notes to Financial Statements are an integral part of this statement.
40
EXHIBIT 12
Custodial OPEB
Funds Trust Fund
ADDITIONS
Funds received for benefit of other organizations 2,266,899$ -$
Employer contributions - City - 1,888,352
Employer contributions - Custodial entities - 100,059
Investment income (loss)
Decrease in fair value of investments - (947,851)
Total additions 2,266,899 1,040,560
DEDUCTIONS
Funds disbursed for benefit of other organizations 2,364,228 -
Administrative - 11,334
Retirement benefits - City - 1,653,421
Retirement benefits - Custodial entities - 81,179
Total deductions 2,364,228 1,745,934
Change in fiduciary net position (97,329) (705,374)
Net position, beginning 2,222,328 10,139,091
Net position, ending 2,124,999$ 9,433,717$
FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2022
CITY OF SALEM, VIRGINIA
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
The Notes to Financial Statements are an integral part of this statement.
41
Economic
School Development
Division Authority Total
ASSETS
Cash and cash equivalents 18,308,180$ 391,181$ 18,699,361$
Receivables, net 51,230 5,176,250 5,227,480
Due from other governmental units 2,719,490 - 2,719,490
Net pension asset 1,444,155 - 1,444,155
Inventories 138,419 - 138,419
Prepaid items 420,882 - 420,882
Capital assets:
Nondepreciable 30,584,463 - 30,584,463
Depreciable, net 37,169,735 - 37,169,735
Total assets 90,836,554 5,567,431 96,403,985
DEFERRED OUTFLOWS OF RESOURCES 9,066,342 - 9,066,342
LIABILITIES
Accounts payable and accrued liabilities 2,642,083 438 2,642,521
Accrued payroll and related liabilities 5,075,745 - 5,075,745
Self-insurance claims liability 331,305 - 331,305
Due to primary government - 5,164,713 5,164,713
Unearned revenues 284,214 - 284,214
Long-term liabilities due in less than one year:
Compensated absences 466,234 - 466,234
Long-term liabilities due in more than one year:
Compensated absences 351,719 - 351,719
Net pension liability 21,062,060 - 21,062,060
Net OPEB liability 5,176,050 - 5,176,050
Total liabilities 35,389,410 5,165,151 40,554,561
DEFERRED INFLOWS OF RESOURCES 17,632,257 - 17,632,257
NET POSITION
Net investment in capital assets 67,754,198 - 67,754,198
Restricted for:
Net pension asset 1,444,155 - 1,444,155
Unrestricted (deficit) (22,317,124) 402,280 (21,914,844)
Total net position 46,881,229$ 402,280$ 47,283,509$
EXHIBIT 13
CITY OF SALEM, VIRGINIA
COMBINING STATEMENT OF NET POSITION
JUNE 30, 2022
COMPONENT UNITS
The Notes to Financial Statements are an integral part of this statement.
42
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43
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies
The Financial Reporting Entity
The Town of Salem was established by act of the Virginia General Assembly in 1806. The City of
Salem, Virginia (City) was established by act of the Virginia General Assembly in 1968. It is a political
subdivision of the Commonwealth of Virginia, operating under the council-manager form of government.
The City Council is elected by the voters and is comprised of five members, who elect two of their
members Mayor and Vice-Mayor for a two-year term. The City is not part of a county and has taxing
powers subject to statewide restrictions and tax limits. The City is the Primary Government of the
reporting entity.
The City provides a full range of services including general government administration, judicial
administration, public safety, public works, health and welfare, parks and recreation, community
development activities and support for education. The City also owns and operates an electric
distribution system, water and sewage facilities and a civic center.
Discretely Presented Component Units
The City of Salem discretely presents two component units: the City of Salem School Division and the
Economic Development Authority of the City of Salem.
The City of Salem School Division (School Division) is a legally separate entity which operates four
elementary schools, a middle school and a high school. School Board members are appointed by City
Council. City Council also provides fiscal guidance because it levies taxes for the School Division’s
operations and issues debt for its capital projects. Based on these facts, the City reports the School
Division as a discretely presented component unit. Separately issued financial statements may be
obtained by contacting the City of Salem Schools, Director of Business, 510 South College Avenue,
Salem, Virginia 24153.
During the current year, the City provided $20,897,899 of operating support and $435,775 of capital
support to the School Division and made debt service payments of $2,659,770 on behalf of the School
Division. Education expenses included amounts related to school buildings also.
The Economic Development Authority of the City of Salem (Economic Development Authority) is a
legally separate entity, which operates under the direction of City Council. The City provides financial
resources to the Economic Development Authority, which it then uses for economic development
incentives for local businesses and other operating costs. Based on these facts, the City reports the
Economic Development Authority as a discretely presented component unit. During the current year,
the City provided $56,010 in operating support to the Economic Development Authority. Separate
financial statements are not issued for the Economic Development Authority.
Government-wide Financial Statements
The government-wide financial statements report information on all nonfiduciary activities of the
Primary Government and its component unit. Governmental activities, which are normally supported
by taxes and intergovernmental revenues, are reported separately from business-type activities, which
rely to a significant extent on fees and charges for support. Likewise, the Primary Government is
reported separately from the legally separate component units for which the Primary Government is
financially accountable.
The Statement of Net Position presents both governmental and business-type activities on the
accrual basis of accounting, which incorporates long-term assets and receivables, as well as long-term
debt and obligations.
44
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Government-wide Financial Statements (Continued)
The Statement of Activities demonstrates the degree to which the direct expenses of a given function
are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific
function. Program revenues include 1) charges to customers or applicants for goods, services or
privileges provided, 2) operating grants and contributions and 3) capital grants and contributions,
including special assessments that are clearly identifiable with a specific function. Taxes, internally
dedicated resources and other items not reported among program revenues are reported instead as
general revenues.
Fund Financial Statements
These statements are organized based on funds, each of which is considered a separate accounting
entity. The emphasis is on major governmental and proprietary funds. The operation of each fund is
accounted for by providing a separate set of self-balancing accounts that comprise its assets, deferred
outflows of resources, liabilities, deferred inflows of resources, fund balances/net position, revenues
and expenditures/expenses, as appropriate.
Government resources are allocated to and accounted for in individual funds based upon the purposes
for which they are to be spent and the means by which spending activities are controlled. The various
funds are grouped in the basic financial statements into three broad fund categories as follows:
Governmental Funds account for expendable financial resources, other than proprietary fund types.
The City reports the following major governmental funds:
The General Fund is the government’s primary operating fund and accounts for all financial
resources of the general government, except those required to be accounted for in another
fund.
The Special Revenue Fund accounts for resources received from revenue sources that are
restricted or committed to expenditure for specific purposes other than debt service or capital
projects. The revenue source for this fund is federal Coronavirus Local Fiscal Recovery Funds
received under the American Rescue Plan Act, which was signed into law on March 11, 2021.
The Debt Service Fund accounts for the accumulation of resources and payments made for
principal and interest on long-term general obligation debt not being financed by the proprietary
funds.
The Capital Projects Fund accounts for resources to be used for the acquisition or construction
of major capital facilities not being financed by the proprietary funds.
Proprietary Funds account for operations that are financed and operated in a manner similar to private
business enterprises.
Enterprise Funds account for the financing of services to the general public where all or most of
the operating expenses involved are recovered in the form of charges to users of such services.
The City reports the following major enterprise funds:
The Electric Fund accounts for the activities of the electric distribution operations.
The Water and Sewage Fund accounts for the activities of the water and sewage operations.
Internal Service Funds account for the financing of goods or services provided solely to other
departments within the City government on a cost-reimbursement basis. The City reports the following
internal service fund:
The Health Insurance Fund accounts for funding, claims, and operating costs of the City’s self-
insurance program and the employee health clinic. This fund is included in governmental
activities for government-wide reporting purposes.
45
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Fund Financial Statements (Continued)
Fiduciary Funds account for assets held by the City in a trustee or custodial capacity for individuals,
other governmental units or other funds. The City reports the following fiduciary funds:
The OPEB Trust Fund accounts for the receipt and disbursement of assets held in trust for the
other postemployment benefit (OPEB) plan of the City.
The Custodial Funds account for monies held in a custodial capacity on behalf of the Cardinal
Criminal Justice Academy and the Court-Community Corrections Program. Since these assets
are being held for the benefit of a third party and cannot be used to address activities or
obligations of the City, these funds are not incorporated into the government-wide financial
statements.
Measurement Focus and Basis of Accounting
Government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are
recognized when a liability is incurred, regardless of the timing of related cash flows.
Generally, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are charges between the government’s proprietary funds
and various other functions of the government. Elimination of these charges would distort the direct
costs and program revenues reported for the various functions concerned.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized when
they become susceptible to accrual; that is, when they become both measurable and available to
finance expenditures of the current period. General fund tax revenues are considered measurable
when they have been levied and available if collected within 60 days of year-end. Interest revenues
are considered measurable and available if collected within 60 days of year-end. Grant revenues are
considered measurable when the legal and contractual requirements have been met and available if
collected within one year of the end of the current fiscal period. All other revenue items are considered
measurable and available when cash is received by the City. Expenditures are recorded when a liability
is incurred, as under accrual accounting. However, long-term debt service, compensated absences,
pension, and other postemployment benefit expenditures, as well as expenditures related to claims and
judgments are recorded only when payment is due. General capital asset acquisitions, including
entering into contracts giving the government right-to-use lease assets, are reported as expenditures.
Proceeds of long-term debt, financing through leases, and insurance recoveries are reported as other
financing sources.
As a result of the different measurement focus and basis of accounting used in preparing the
government-wide statements versus the governmental funds’ financial statements, a reconciliation
between the government-wide and fund financial statements is necessary. The reconciliations are
presented following the governmental funds’ financial statements.
Proprietary fund financial statements are reported using the economic financial resources
measurement focus and the accrual basis of accounting. These statements distinguish operating from
nonoperating revenues and expenses. Operating revenues and expenses generally result from
providing goods and services in connection with a fund’s principal ongoing operations. Operating
revenues include charges to customers for sales and services. Operating expenses include the cost
of sales and services, administrative expenses and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City’s policy to use
restricted resources first, then unrestricted resources, as they are needed.
46
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Measurement Focus and Basis of Accounting (Continued)
Fiduciary Fund financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting. In custodial funds, a liability is recognized when an event occurs
that compels the City to disburse fiduciary resources.
Budgets and Budgetary Accounting
The City’s budget is presented and adopted in accordance with accounting principles generally
accepted in the United States of America (GAAP). The following procedures are used by the City in
establishing the budgetary data reflected in the financial statements:
Annual Budget Adoption – Thirty days prior to the last council meeting in May, the City Manager
submits to City Council a proposed operating and capital budget for the fiscal year commencing July 1.
This budget includes proposed expenditures and the means of financing them. A public hearing is
conducted to obtain citizen comments. Prior to June 30, the budgets are legally adopted through
passage of an appropriation ordinance by City Council.
Projects/Grants – The Capital Projects Fund utilizes a project length budget, and the Special Revenue
Fund utilizes a grant length budget. These budgets are not legally enacted on an annual basis;
therefore, budgetary comparison statements are not presented.
Amendment – The City Manager is authorized to transfer amounts within and between departments
and categories within the same fund. City Council must approve budget amendments between funds
and any budget amendments increasing or decreasing appropriations. During the year, City Council
approved $4,171,183 of additional appropriations primarily for grants, capital outlay, unforeseen
operating expenditures and the reappropriation of fund balances for encumbrances.
Integration – Formal budgetary integration is employed as a management control device for the
General Fund. Formal budgetary integration is not employed for the Debt Service Fund because
effective budgetary control is alternatively achieved through budgeted transfers from the General Fund
to the Debt Service Fund for debt payments.
Legal Compliance – Legal budgetary control is maintained at the fund level. Department heads may
use discretion to transfer from one category to another within departments under their control within the
same fund as long as the total for the departments under their control does not change. The City
Manager may authorize a transfer of any unencumbered balance or portion thereof from one
department to another within a fund. All other transfers require approval of City Council. Actual
expenditures and operating transfers out may not legally exceed budget appropriations at the fund
level. All appropriations lapse on June 30 except for in the Capital Projects Fund and Special Revenue
Fund, which carry unexpended balances through a project’s life or the end of the grant period.
Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other commitments are
recorded in order to reserve the applicable appropriation, is employed as an extension of formal
budgetary integration in the General Fund, Special Revenue Fund, and Capital Projects Fund.
Encumbrances outstanding at year-end are reported as part of the restricted, committed, or assigned
fund balances since they do not constitute expenditures or liabilities. These encumbrances are subject
to reappropriation by City Council in the subsequent fiscal year. Significant encumbrances as of June
30, 2022, total $1,269,253 in the General Fund and $1,184,336 in the Capital Projects Fund.
Deposits and Investments
For purposes of the Statement of Cash Flows, cash and cash equivalents are defined as short-term,
highly liquid investments that are both readily convertible to known amounts of cash and investments
with maturities of 90 days or less. Cash includes unrestricted and restricted, if any, cash and cash
equivalents. Investments are recorded at fair value.
47
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Allowance for Uncollectible Accounts
The City calculates its allowance for uncollectible accounts using historical collection data and specific
account analysis.
Property Taxes
The City levies real estate taxes on all real estate within its boundaries, except that exempted by statute,
each year as of July 1 based on 100% of estimated fair market value of the property. The City
reassesses all property annually. Real estate taxes are due in equal semiannual payments on
December 5 and June 5 and are considered delinquent after each due date. Real estate taxes become
a lien on real property the first day of the levy year. The tax rate for 2022 was $1.20 per $100 of
assessed value.
The City levies personal property taxes on motor vehicles and business and other tangible personal
property each year as of January 1. Personal property taxes are due the following May 31 and are
considered delinquent after the due date. Personal property taxes do not create a lien on property;
however, a penalty of 10% of delinquent personal property tax or $10, whichever is greater, is due for
late payment. Interest on delinquent taxes is accrued monthly at a rate of 0.83%, or 10% annually.
Personal property transactions during the year are taxed on a prorated basis. The tax rate for personal
property for 2022 was $3.40 per $100 of assessed value. The tax rate for machinery and tools for 2022
was $3.20 per $100 of assessed value.
Interfund Balances
Outstanding balances between funds are reported as due to/from other funds. Any residual balances
outstanding between the governmental and business-type activities are reported in the government-
wide statements as internal balances. Outstanding balances between the City and its component units
are reported as due to/from component unit or due to/from Primary Government. Flows of cash or
goods between funds without a requirement of repayment are reported as interfund transfers. Interfund
transfers are reported as other financing sources/uses in governmental funds and after nonoperating
revenues/expenses in proprietary funds.
Inventory
Governmental fund inventories consist of street and building materials and general supplies held for
consumption. Inventories are valued at cost using the first-in, first-out (FIFO) method. The cost of
materials and supplies is recorded as an expenditure at the time inventory is withdrawn for use.
Enterprise fund inventories consist primarily of spare parts held for consumption. Electric fund
inventories are valued at cost using the average cost method. All other enterprise fund inventories are
valued at cost using the FIFO method. The cost of spare parts is recorded as an expense at the time
inventory is withdrawn for use.
Prepaid Items
Governmental fund prepaid items consist primarily of software maintenance and support for a
subsequent period. The payments are recorded as expenditures in the fiscal year related to the
agreement period.
Proprietary fund prepaid items consist primarily of fees for civic and community events held after year-
end. The costs of these events are expensed in the subsequent fiscal year to obtain a proper matching
of revenues and expenses.
48
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Leases
City as Lessee – The City recognizes a lease liability and an intangible right-to-use lease asset (lease
asset) in the applicable governmental or business-type activities column in the government-wide
financial statements. Proprietary fund lease liabilities and intangible right-to-use lease assets are
reported in the applicable fund financial statements. The City recognizes lease liabilities with an initial
value of $5,000 or more, individually or in aggregate.
At the commencement of a lease, the City initially measures the lease liability at the present value of
payments expected to be made during the lease term. Subsequently, the lease liability is reduced by
the principal portion of lease payments made. The lease asset is measured initially as the amount of
the lease liability, adjusted for lease payments made at or before the lease commencement date, plus
certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over the
shorter of the lease term or the useful life of the underlying asset, but if the lease contains a purchase
option the City is reasonably certain to exercise, the lease asset is amortized over the useful life of the
underlying asset. If the underlying asset is nondepreciable, the lease asset is not amortized.
Key estimates and judgments related to leases include how the City determines (1) the discount rate it
uses to discount the expected lease payments to present value, (2) lease term, and (3) lease
payments.
The City uses the interest rate charged by the lessor as the discount rate. When the interest
rate charged by the lessor is not provided, the City generally uses its estimated incremental
borrowing rate as the discount rate for equipment leases and prime for building and
infrastructure leases.
The lease term includes the noncancellable period of the lease. Lease payments included in
the measurement of the lease liability are composed of fixed payments and any purchase
option price that the City is reasonably certain to exercise.
The City monitors changes in circumstances that would require a remeasurement of its lease and will
remeasure the lease asset and liability if certain changes occur that are expected to significantly affect
the amount of the lease liability.
Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt
on the statement of net position.
City as Lessor – The City recognizes a lease receivable and a deferred inflow of resources in the
government-wide, governmental fund, and proprietary fund financial statements. At the commencement
of a lease, the City initially measures the lease receivable at the present value of payments expected
to be received during the lease term. Subsequently, the lease receivable is reduced by the principal
portion of lease payments received. The deferred inflow of resources is measured initially as the amount
of the lease receivable, adjusted for lease payments received at or before the lease commencement
date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease
term.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount
the expected lease receipts to present value, (2) lease term, and (3) lease receipts.
The City uses its estimated incremental borrowing rate as the discount rate for equipment
leases and prime for building and infrastructure leases.
The lease term includes the noncancellable period of the lease. Lease receipts included in the
measurement of the lease receivable are composed of fixed payments from the lessee.
The City monitors changes in circumstances that would require a remeasurement of its lease, and will
remeasure the lease receivable and deferred inflows of resources if certain changes occur that are
expected to significantly affect the amount of the lease receivable.
49
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Capital Assets
Capital assets, which include property, plant and equipment, infrastructure, and right-to-use lease
assets, are reported in the applicable governmental or business-type activities column in the
government-wide financial statements. Proprietary fund capital assets are reported in the applicable
fund financial statements. Nondepreciable and depreciable capital assets are defined by the City as
assets with initial individual costs in excess of $0 for land, $5,000 for machinery and equipment or
$10,000 for buildings, plant and infrastructure, and estimated useful lives in excess of five years. Such
assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated
capital assets are recorded at acquisition value on the date of donation. The leases section of this note
provides additional information about right-to-use lease assets. The City includes the costs of other
intangible assets with definite lives in the appropriate asset classes.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend the life of the asset are not capitalized. Major outlays for capital assets and improvements are
capitalized as projects are completed.
Depreciable capital assets are depreciated using the straight-line method over the following estimated
useful lives:
Machinery, furniture and equipment 5-25 years
Buildings and improvements 10-50 years
Distribution and transmission systems 35 years
Utility plant 35 years
Sewage treatment contract 40 years
Public domain infrastructure 25-50 years
Right-to-use lease assets are amortized as described in the leases section of this note. Other
amortizable capital assets are amortized using the straight-line method over the estimated useful lives
of the underlying assets. Depreciation expense and amortization expense are identified with functions,
whenever possible, and included as direct expenses. Upon the sale or retirement of a capital asset,
the cost and related accumulated depreciation or accumulated amortization, if applicable, are
eliminated from the respective accounts and any resulting gain or loss is included in the results of
operations.
According to the Code of Virginia, when a local government incurs a financial obligation payable over
more than one fiscal year to fund an acquisition, construction or improvement of public school property,
the local government acquires title to the school property as a tenant in common with the local school
board for the term of the financial obligation. For financial reporting purposes, the local government
may report the school property and related financial obligation. In these cases, at the time the financial
obligation is paid in full, the net value of the school property is transferred to the local school board and
reflected as program revenue and expense in the government-wide financial statements for the local
school board and the local government, respectively. In the City’s case, the City reports this debt in its
Statement of Net Position while the School Division reports the capital asset on its Statement of Net
Position.
Deferred Outflows/Inflows of Resources
In addition to assets, the statements that present net position report a separate section for deferred
outflows of resources. These items represent a consumption of net assets that applies to future periods
and will not be recognized as an outflow of resources (expense) until then.
In addition to liabilities, the statements that present net position report a separate section for deferred
inflows of resources. These items represent an acquisition of net assets that applies to future periods
and will not be recognized as an inflow of resources (revenue) until that time.
50
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Surety Bond Payable
Deposits may be received in lieu of bond insurance or letters of credit for a performance bond. The
amount is included in restricted cash and accounts payable and accrued liabilities since the funds will
be returned upon successful completion of the performance bond.
Unearned Revenues
Unearned revenues arise when assets are recognized before revenue recognition criteria can be
satisfied. Grants and entitlements received before the eligibility requirements are met have been
recorded as unearned revenue. Unearned revenues consist primarily of unspent Coronavirus Local
Fiscal Recovery Funds received under the American Rescue Plan Act, retiree health insurance
premiums billed in advance, event deposits and rentals.
Long-Term Obligations
In the government-wide and proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities, business-type activities,
or proprietary funds’ Statement of Net Position. Bonds payable are reported net of the applicable bond
premiums and discounts. Gains or losses on bond refundings are reported as deferred outflows or
inflows, respectively. Bond premiums and discounts are deferred and amortized over the life of the
bonds using the straight-line method. Deferred amounts on refunding are deferred and amortized as
a component of interest expense over the remaining life of the old debt or the life of the new debt,
whichever is shorter.
In the fund financial statements, governmental funds recognize bond premiums and discounts, as well
as bond issuance costs, during the period incurred. The face amount of debt issued is reported as
other financing sources. Premiums received on debt issuances are reported as other financing
sources, while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
Compensated Absences
The City and the School Division have policies to allow the accumulation and vesting of limited amounts
of paid leave and extended illness leave until termination or retirement. Amounts of such absences are
accrued when incurred in the government-wide, proprietary and fiduciary fund financial statements. An
expenditure and liability for these amounts is reported in governmental funds when the amounts are
due for payment.
Pensions
The Virginia Retirement System (VRS) Retirement Plan is a multi-employer, agent plan. The VRS
Teacher Retirement Plan is a multiple-employer, cost-sharing plan. For purposes of measuring the net
pension liabilities, deferred outflows of resources and deferred inflows of resources related to pensions,
and pension expense, information about the fiduciary net positions of the plans and the additions
to/deductions from the plans’ fiduciary net positions have been determined on the same basis as they
were reported by VRS. For this purpose, benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with the benefit terms. Investments
are reported at fair value.
Other Postemployment Benefits – Retiree Health Plan
In connection with the City’s funding of other postemployment benefits (OPEB) obligations, the City
participates in the Virginia Pooled OPEB Trust (OPEB Trust Fund). The City's policy is to fully fund
actuarially determined OPEB costs, which include both normal costs and amortization of unfunded
accrued liability. The OPEB Trust Fund assets and investments are recorded at fair value. The OPEB
Trust Fund’s Board of Trustees establishes investment objectives and risk tolerance and asset
allocation policies based on the investment policy, market and economic conditions and generally
prevailing prudent investment practices.
51
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit
The VRS Group Life Insurance Program and VRS Teacher Employee Health Insurance Credit Program
are multiple-employer, cost-sharing plans. The VRS Political Subdivision Health Insurance Credit
Program is a multiple-employer, agent defined benefit plan. The VRS Group Life Insurance Program
was established pursuant to §51.1-500 et seq. of the Code of Virginia, as amended, which provides the
authority under which benefit terms are established or may be amended. The VRS Political Subdivision
Health Insurance Credit Program and VRS Teacher Employee Health Insurance Credit Program were
established pursuant to §51.1-1400 et seq. of the Code of Virginia, as amended, which provides the
authority under which benefit terms are established or may be amended.
The VRS Group Life Insurance Program is a defined benefit plan that provides a basic group life
insurance benefit for employees of participating employers. The VRS Political Subdivision Health
Insurance Credit Program and VRS Teacher Employee Health Insurance Program are defined benefit
plans that provide credits toward the cost of health insurance coverage for retired political subdivision
employees of participating employers and retired teachers. For purposes of measuring the net OPEB
liability, deferred outflows of resources and deferred inflows of resources, and OPEB expense related
to each plan, information about the fiduciary net position and the additions to/deductions from fiduciary
net position for each plan have been determined on the same basis as they were reported by VRS. In
addition, benefit payments are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
Net Position
Net position represents the difference between assets and deferred outflows of resources and liabilities
and deferred inflows of resources. Net position is divided into three components:
Net investment in capital assets – consists of the historical cost of capital assets less
accumulated depreciation and less any debt that remains outstanding which was used to
finance those assets.
Restricted – consists of assets where there are limitations imposed on their use through the
enabling legislation adopted by the City or through external restrictions imposed by creditors,
grantors, laws or regulations of other governments.
Unrestricted – all other net position is reported in this category.
Net investment in capital assets for governmental activities excludes $36,546,364 of School Division
debt, $1,336,776 of Civic Center debt, and $385,416 of Roanoke Valley Resource Authority (RVRA)
debt reported by the City because the related assets are reported by the School Division, Civic Center,
and RVRA, respectively. Noncapital debt of $1,011,192, $7,302 and $177,643 is also excluded from
the net investment in capital assets for governmental activities, the Electric Fund, and the Water and
Sewage Fund, respectively.
The Catering and Concessions Fund, a Non-Major Proprietary Fund, has a deficit of $783,347 in total
net position as of June 30, 2022, because sales revenue has not covered operating expenses in that
fund.
Fund Balances
Fund balance is divided into five classifications based primarily on the extent to which the City is bound
to observe constraints imposed upon the use of the resources in the governmental funds. The
classifications are as follows:
Nonspendable – Amounts that cannot be spent because they are not in spendable form, or
legally or contractually required to be maintained intact. The “not in spendable form” criterion
includes items that are not expected to be converted to cash. It also includes the long-term
amount of interfund loans.
52
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
1. Summary of Significant Accounting Policies (Continued)
Fund Balances (Continued)
Restricted – Amounts constrained to specific purposes by their providers (such as grantors,
bondholders, and higher levels of government), through constitutional provisions, or by
enabling legislation.
Committed – Amounts constrained to specific purposes by the City, using its highest level of
decision making authority; to be reported as committed, amounts cannot be used for any other
purposes unless the same highest level of action is taken to remove or change the constraint.
Assigned – Amounts the City intends to use for a specified purpose; intent can be expressed
by the governing body (City Council) or by an official or body to which the governing body
designates the authority.
Unassigned – Amounts that are available for any purpose; positive amounts are reported only
in the General Fund.
City Council establishes (and modifies or rescinds) fund balance commitments by passage of an
ordinance. This is typically done through amendment of the budget. Assigned fund balance is
established by City Council as amounts intended for a specific purpose (such as the purchase of capital
assets, construction, debt service, or for other purposes). City Council has also delegated to the City
Manager and Director of Finance the authority to assign fund balance; however, before the assigned
funds can be spent, such amounts, excluding appropriations related to encumbrances that are carried
forward to the subsequent fiscal year, must be appropriated by City Council.
Restricted Amounts
The City applies restricted resources first when expenditures are incurred for purposes for which either
restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly,
within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then
unassigned amounts when expenditures are incurred for purposes for which amounts in any of the
unrestricted fund balance classifications could be used.
Minimum Fund Balance
The City’s fund balance policy establishes a minimum acceptable level of unassigned fund balance in
the General Fund equal to ten percent of the sum of the General Fund, Debt Service Fund, and School
Division operating expenditures net of the General Fund transfer to the School Division. For the
purposes of this calculation, the operating expenditures are the budget as originally adopted for the
current fiscal year.
Other governmental funds of the City do not have specified fund balance targets. Recommended levels
of committed and/or assigned fund balance will be determined on a case by case basis, based on the
needs of each fund and as recommended by officials and approved by the City Council.
Reclassifications
Certain amounts in the prior-year comparison information have been reclassified for comparative
purposes to conform with the presentation in the current-year financial statements.
Estimates
Management uses estimates and assumptions in preparing its financial statements. Those estimates
and assumptions affect the reported amounts of assets and deferred outflows of resources, liabilities
and deferred inflows of resources, the disclosure of contingent liabilities, and reported revenues,
expenditures and expenses. Actual results could differ from those estimates.
53
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
2. Deposits and Investments
The City maintains a concentration bank account used by all nonfiduciary funds, including the School
Division. Each fund’s portion of this account is presented in the basic financial statements as cash and
cash equivalents.
Restricted cash and cash equivalents consist of unspent bond proceeds in the City Capital Projects
Fund.
Deposits
Deposits with banks are covered by the Federal Deposit Insurance Corporation (FDIC) and
collateralized in accordance with the Virginia Security for Public Deposits Act (the “Act”) Section 2.2-
4400 et. seq. of the Code of Virginia. Under the Act, banks and savings institutions holding public
deposits in excess of the amount insured by the FDIC must pledge collateral to the Commonwealth of
Virginia Treasury Board. Financial institutions may choose between two collateralization
methodologies and depending upon that choice, will pledge collateral that ranges in the amounts from
50% to 130% of excess deposits. Accordingly, all deposits are considered fully collateralized.
Investments
Statutes authorize local governments and other public bodies to invest in obligations of the United
States or agencies thereof, obligations of the Commonwealth of Virginia or political subdivisions
thereof, obligations of the International Bank for Reconstruction and Development, the Asian
Development Bank, the African Development Bank, prime quality commercial paper and certain
corporate notes, bankers’ acceptances, repurchase agreements, the State Non-Arbitrage Program
(SNAP), and the Local Government Investment Pool (LGIP).
Pursuant to Sec. 2.1-234.7 of the Code of Virginia, the Treasury Board of the Commonwealth sponsors
the LGIP and has delegated certain functions to the State Treasurer. The LGIP reports to the Treasury
Board at their regularly scheduled monthly meetings and the carrying value of the position in LGIP is
the same as the value of the pool shares (i.e., the LGIP maintains a stable net asset value of $1 per
share) in accordance with GASB Statement No. 79.
All deposits and investments are reflected in the statements as follows:
Primary Component
Government Units Total
Cash and cash equivalents 133,983,449$ 18,699,361$ 152,682,810$
Cash and cash equivalents, restricted 19,282,547 - 19,282,547
153,265,996$ 18,699,361$ 171,965,357$
As of June 30, 2022, the City’s deposits and investments consisted of the following:
Investment Type Fair Value
S&P Credit
Rating
Primary Government
Demand & time deposits 133,072,883$ unrated
Cash on hand 7,985 unrated
Local Government Investment Pool (LGIP)16,922 AAAm
Local Government Investment Pool (LGIP) EM 885,659 AAAf/S1+
VA State Non-Arbitrage Program (SNAP) 19,282,547 AAAm
Total primary government 153,265,996
54
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
2. Deposits and Investments (Continued)
Investments (Continued)
Investment Type Fair Value
S&P Credit
Rating
Component Units
Demand & time deposits 18,698,846 unrated
Cash on hand 515 unrated
Total component units 18,699,361
Grand Total 171,965,357$
The City’s investments are subject to credit risk, concentration of credit risk, interest rate risk, and
custodial risk as described below.
Credit Risk
Credit risk is the risk that an issuer or counterparty to an investment will not fulfill its obligations. The
City’s investment policy states that the City shall invest only in securities allowed under the Code of
Virginia, Virginia Security of Public Deposits Act, Section 2.2-4400 through 2.2-4411 and the Code of
Virginia, Investment of Public Funds Act, Section 2.2-4500 through 2.2-4518.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributable to the magnitude of a government’s investment
in a single issuer. The City endeavors to diversify its investment portfolio to avoid incurring
unreasonable risks regarding an individual financial institution or issuing entity. Target asset allocation
strategies are developed by the Director of Finance to provide guidance as to appropriate levels of
diversification. The City’s investment policy states that, with the exception of U.S. Treasury securities
and authorized pools/funds, no more than 50% of the City’s total investment may be the obligation of a
single financial institution.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment. The City endeavors to diversify its investment portfolio to avoid incurring unreasonable
risks regarding maturity. To the extent possible, the City attempts to match its investments with
anticipated cash flow requirements. The City’s investment policy states that unless matched to a
specific cash flow, the City will not directly invest in securities maturing more than one year from the
date of purchase.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover deposits or will not be able to recover collateral
securities that are in the possession of an outside party. Custodial credit risk for investments is the risk
that, in the event of the failure of the counterparty to a transaction, a government will not be able to
recover the value of investments or collateral securities that are in the possession of an outside party.
The City’s investment policy requires that all securities purchased for the City be secured through third-
party custody and safekeeping procedures. Ownership shall be protected through third-party custodial
safekeeping. The securities must be in the City’s name or in the custodian’s nominee name and
identifiable on the custodian’s books as belonging to the City. Further, the custodian must be a third
party, not a counterparty (buyer, issuer, or seller) to the transaction. This requirement does not apply
to excess checking account funds invested overnight in a bank “sweep” agreement or similar vehicle
authorized under the City’s investment policy.
55
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
3. Receivables
Receivables, Net
Receivables other than lease receivables are aggregated into a single receivables line net of
allowances for uncollectible accounts. Details of receivables other than lease receivables are as
follows:
Governmental
Activities Electric
Water and
Sewage
Nonmajor
Proprietary
Component
Units
Tax receivables 2,174,325$ -$ -$-$ -$
Account receivables 41,319 5,780,593 1,930,146 42,791 -
Other receivables 1,995,388 - - - 5,227,480
Gross receivables 4,211,032 5,780,593 1,930,146 42,791 5,227,480
Allowance for
uncollectibles (466,881) (105,204) (35,658) (4,248) -
Receivables, net 3,744,151$ 5,675,389$ 1,894,488$ 38,543$ 5,227,480$
Business-type Activities
Lease Receivables
In fiscal year 2022, the City implemented the guidance in GASB No. 87, Leases, for accounting and
reporting of leases that had previously been reported as operating and capital leases.
The City, as a lessor, has entered into lease agreements involving a City-owned baseball facility, City-
owned office space, and space on certain City-owned water tanks and property. The total amount of
inflows of resources, including lease revenue, interest revenue, and other lease-related inflows,
recognized during the fiscal year was $301,068. This total includes $2,495 of variable and other
payments not previously included in the measurement of the lease receivable.
4.Interfund Balances and Transfers
The composition of the interfund balances is as follows:
Nonmajor
Enterprise
Due to (fund) Electric 420,000$
Due from (fund)
The amount due to the Electric Fund from the Nonmajor Enterprise Funds is a short-term loan to fund
operations in the Catering and Concessions Fund.
The composition of the interfund transfers is as follows:
General Electric
Water and
Sewage Total
General -$3,160,000$ 176,762$ 3,336,762$
Debt Service 4,670,580 - - 4,670,580
Capital Projects 1,829,850 - - 1,829,850
Nonmajor Enterprise 1,709,168 - - 1,709,168
Total 8,209,598$ 3,160,000$ 176,762$ 11,546,360$
Transfer out (fund)
T
r
a
n
s
f
e
r
i
n
(
f
u
n
d
)
56
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
4. Interfund Balances and Transfers (Continued)
Transfers to the General Fund are payments in lieu of taxes. Transfers to the Debt Service Fund include
principal and interest payments for general government and school debt. Transfers to the Capital
Projects Fund include funding for current projects. Transfers to Nonmajor Enterprise Funds include
funding assistance for operating expenses and building improvements.
5. Due from/to Primary Government and Component Unit
The amount due from a component unit to business-type activities is a loan from the Electric Fund to
the Economic Development Authority. The Economic Development Authority used these funds to
provide loans to four developers for rehabilitation projects within the City. In addition, a portion of the
balance is due to the Catering and Concessions Fund for services provided in June 2022.
The balance outstanding as of June 30, 2022, was $5,164,713. The loan is being repaid as follows:
$801,807 at the end of four years maturing January 31, 2021, with interest accrued at 4%
annually. On December 10, 2020, the Economic Development Authority approved an extension
of the loan to January 31, 2022, with an additional year of accrued interest. On November 16,
2021, the Economic Development Authority approved an additional extension of the loan to
January 31, 2023, with an additional year of accrued interest. As part of the latest extension,
interest as of January 31, 2022, was paid in full as of that date.
$2,204,429 over twenty years maturing February 1, 2039, with an interest rate of 3.79%.
$1,679,471 over twenty years maturing July 22, 2040, with an interest rate of 3.72%.
$477,438 over five years maturing September 24, 2025, with an interest rate of 4.25%.
$1,568 to the Catering Fund for services provided in June 2022.
6. Due from Other Governmental Units
Amounts due from other governmental units are as follows:
Governmental Component
Activities Units
Commonwealth of Virginia
Personal property tax relief 2,588,707$ -$
Local sales tax 1,482,402 -
Sales tax - 856,023
Children's Services Act 689,034 -
Capital projects funding 171,031 -
Communications tax 122,154 -
Compensation Board reimbursement 121,024
Other 276,492 108,573
Federal government
School funds - 1,754,894
Lease payment from General Services Administration 10,911 -
Other 11,183 -
Roanoke Valley Resource Authority 385,416 -
5,858,354$ 2,719,490$
57
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
7. Capital Assets
Capital asset activity for the year for the primary government is as follows:
Beginning
Balance*
Transfers and
Additions
Transfers and
Retirements
Ending
Balance
Governmental Activities
Capital assets, nondepreciable
Land 6,532,626$ 30,500$ (202,562)$ 6,360,564$
Construction in progress 1,874,278 2,645,744 (1,075,457) 3,444,565
Capital assets, nondepreciable 8,406,904 2,676,244 (1,278,019) 9,805,129
Capital assets, depreciable
Machinery and equipment 28,265,529 2,527,753 (1,341,465) 29,451,817
Buildings and improvements 41,339,950 171,256 - 41,511,206
Leasehold improvements 42,806 - - 42,806
Public domain infrastructure 115,785,120 2,145,716 (166,580) 117,764,256
Capital assets, depreciable 185,433,405 4,844,725 (1,508,045) 188,770,085
Accumulated depreciation
Machinery and equipment (18,033,780) (1,653,310) 1,241,343 (18,445,747)
Buildings and improvements (20,892,570) (1,051,925) - (21,944,495)
Leasehold improvements (14,744) (2,854) - (17,598)
Public domain infrastructure (57,032,823) (2,856,339) 74,938 (59,814,224)
Accumulated depreciation (95,973,917) (5,564,428) 1,316,281 (100,222,064)
Capital assets, depreciable, net 89,459,488 (719,703) (191,764) 88,548,021
Intangible right-to-use assets
Leased machinery and equipment 13,725 63,096 - 76,821
Leased public domain infrastructure 67,469 - - 67,469
Intangible right-to use assets 81,194 63,096 - 144,290
Accumulated amortization
Leased machinery and equipment - (17,850) - (17,850)
Leased public domain infrastructure - (9,755) - (9,755)
Accumulated amortization - (27,605) - (27,605)
Intangible right-to-use assets, net 81,194 35,491 - 116,685
Capital assets, net 97,947,586$ 1,992,032$ (1,469,783)$ 98,469,835$
Business-type Activities
Capital assets, nondepreciable
Land 1,585,417$ -$ -$ 1,585,417$
Construction in progress 11,824,689 9,848,257 (3,427,364) 18,245,582
Capital assets, nondepreciable 13,410,106 9,848,257 (3,427,364) 19,830,999
Capital assets, depreciable
Machinery and equipment 9,653,530 179,281 (89,837) 9,742,974
Buildings and improvements 27,497,701 103,623 - 27,601,324
Distribution and transmission 38,884,094 3,702,104 (791,616) 41,794,582
Utility plant 86,447,136 162,747 (1,137,757) 85,472,126
Sewage treatment contract 31,955,606 - - 31,955,606
Capital assets, depreciable 194,438,067 4,147,755 (2,019,210) 196,566,612
58
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
7. Capital Assets (Continued)
Beginning
Balance*
Transfers and
Additions
Transfers and
Retirements
Ending
Balance
Business-type Activities (Continued)
Accumulated depreciation
Machinery and equipment (6,872,235) (558,389) 89,837 (7,340,787)
Buildings and improvements (12,913,288) (715,515) - (13,628,803)
Distribution and transmission (23,489,233) (708,033) 765,704 (23,431,562)
Utility plant (55,442,666) (1,268,936) 1,137,758 (55,573,844)
Sewage treatment contract (13,109,030) (844,660) - (13,953,690)
Accumulated depreciation (111,826,452) (4,095,533) 1,993,299 (113,928,686)
Capital assets, depreciable, net 82,611,615 52,222 (25,911) 82,637,926
Intangible right-to-use assets
Leased machinery and equipment 3,071 6,125 - 9,196
Intangible right-to use assets 3,071 6,125 - 9,196
Accumulated amortization
Leased machinery and equipment - (3,581) - (3,581)
Accumulated amortization - (3,581) - (3,581)
Intangible right-to-use assets, net 3,071 2,544 - 5,615
Capital assets, net 96,024,792$ 9,903,023$ (3,453,275)$ 102,474,540$
* As restated, due to implementation of the guidance in GASB Statement 87, Leases
Depreciation expense is charged to functions/programs of the primary government as follows:
Governmental Activities Business-type Activities
General government 410,050$ Electric 1,447,755$
Judicial administration 47,959 Water and sewage 2,343,251
Public safety 1,069,010 Civic Center 279,297
Public works 2,969,021 Catering and concessions 4,383
Parks, recreation and cultural 1,008,277 Total depreciation expense 4,074,686$
Community development 15,295
Total depreciation expense 5,519,612$
Current year increases to accumulated depreciation shown in the capital asset table for governmental
activities exceed depreciation expense by $44,816 because the table includes accumulated
depreciation for machinery and equipment transferred from the Electric Department to the Street
Department.
Current year increases to accumulated depreciation shown in the capital asset table for business-type
activities exceed depreciation expense by $20,847 because the table includes accumulated
depreciation for machinery and equipment transferred from the Street Department to the Water
Department.
59
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
7. Capital Assets (Continued)
Amortization expense is charged to functions/programs of the primary government as follows:
Governmental Activities Business-type Activities
General government 7,782$ Water and sewage 510$
Judicial administration 3,825 Civic Center 3,071
Public safety 2,547 Total amortization expense 3,581$
Public works 996
Parks, recreation and cultural 2,700
Community development 9,755
Total amortization expense 27,605$
Capital asset activity for the year for the component unit is as follows:
Beginning
Balance
Transfers and
Additions
Transfers and
Retirements
Ending
Balance
Component Unit - School Division
Capital assets, nondepreciable
Land 1,123,637$ -$ -$ 1,123,637$
Construction in progress 21,216,515 8,884,315 (640,004) 29,460,826
Capital assets, nondepreciable 22,340,152 8,884,315 (640,004) 30,584,463
Capital assets, depreciable
Furniture and equipment 9,373,225 537,060 (859,337) 9,050,948
Buildings and improvements 71,156,860 1,299,854 (676,478) 71,780,236
Capital assets, depreciable 80,530,085 1,836,914 (1,535,815) 80,831,184
Accumulated depreciation
Furniture and equipment (6,956,626) (511,616) 850,196 (6,618,046)
Buildings and improvements (35,678,873) (1,964,624) 600,094 (37,043,403)
Accumulated depreciation (42,635,499) (2,476,240) 1,450,290 (43,661,449)
Capital assets, depreciable, net 37,894,586 (639,326) (85,525) 37,169,735
Capital assets, net 60,234,738$ 8,244,989$ (725,529)$ 67,754,198$
Intangible Right-to Use Assets
In fiscal year 2022, the City implemented the guidance in GASB No. 87, Leases, and recognized right-
to-use assets for the value of copiers leased under long-term contracts and a leased parking lot. The
intangible right-to-use assets are being amortized over the lease term for each lease. Terms of the
leases are described in Note 9.
60
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
8. Deferred Outflows/Inflows of Resources
Deferred outflows/inflows of resources reported in the Statement of Net Position are as follows:
Governmental
Activities
Business-type
Activities
Component
Units
Deferred outflows of resources
Deferred loss on refunding of debt 308,588$ 402,015$ -$
Pension 7,020,360 1,876,388 8,090,362
OPEB 1,250,718 331,484 975,980
Total deferred outflows of resources 8,579,666$ 2,609,887$ 9,066,342$
Deferred inflows of resources
Deferred gain on refunding of debt -$ 129,262$ -$
Property taxes collected in advance 68,669 - -
Leases 1,250,871 360,462
Pension 17,063,170 4,637,788 16,620,186
OPEB 2,122,101 563,341 1,012,071
Total deferred inflows of resources 20,504,811$ 5,690,853$ 17,632,257$
Deferred inflows of resources reported in the governmental funds are as follows:
General
Debt
Service
Total
Governmental
Funds
Deferred inflows of resources
Unavailable revenue - property taxes 1,280,577$ -$ 1,280,577$
Property taxes collected in advance 68,669 - 68,669
Unavailable revenue - charges for
services and fees 317,345 - 317,345
Unavailable revenue - transfer station
debt service reimbursement - 385,416 385,416
Leases 1,250,871 - 1,250,871
Total deferred inflows of resources 2,917,462$ 385,416$ 3,302,878$
Deferred outflows/inflows of resources reported in the proprietary funds are as follows:
Electric
Water and
Sewage
Nonmajor
Proprietary
Funds
Internal
Service
Fund
Deferred outflows of resources
Deferred loss on refunding of debt 402,015$ -$ -$ -$
Pension 715,811 832,087 328,490 37,892
OPEB 105,988 167,008 58,488 3,366
Total deferred outflows of resources 1,223,814$ 999,095$ 386,978$ 41,258$
Deferred inflows of resources
Deferred gain on refunding of debt -$ 129,262$ -$ -$
Leases - 360,462 - -
Pension 1,776,990 2,036,653 824,145 99,349
OPEB 179,783 283,989 99,569 5,561
Total deferred inflows of resources 1,956,773$ 2,810,366$ 923,714$ 104,910$
61
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
9. Long-Term Liabilities
Summary of Changes in Long-Term Liabilities
The government issues general obligation bonds to provide funds for the acquisition and construction
of major capital facilities. General obligation bonds have been issued for both governmental and
business-type activities. These bonds are direct obligations and pledge the full faith and credit of the
government and are subject to the provisions of the Internal Revenue Code of 1986 related to arbitrage,
interest and income tax regulations.
The following is a summary of changes in long-term liabilities:
Beginning
Balance* Increases Decreases
Ending
Balance
Due Within
One Year
Governmental Activities
General obligation bonds 52,338,627$ 15,080,000$ (3,189,661)$ 64,228,966$ 3,846,669$
Bond premiums 4,911,744 - (337,692) 4,574,052 337,691
Bonds payable 57,250,371 15,080,000 (3,527,353) 68,803,018 4,184,360
Financed purchase obligation 43,589 - (14,530) 29,059 14,530
Lease liability 81,194 63,096 (26,292) 117,998 29,522
Compensated absences 2,345,888 1,708,149 (1,715,793) 2,338,244 1,715,793
Net pension liability 39,877,736 5,589,573 (25,424,149) 20,043,160 -
Net OPEB liability 11,569,789 4,901,513 (4,795,510) 11,675,792 -
111,168,567$ 27,342,331$ (35,503,627)$ 103,007,271$ 5,944,205$
* As restated, due to implementation of the guidance in GASB Statement 87, Leases
The Debt Service Fund liquidates most long-term liabilities of governmental activities as shown above.
However, a portion of compensated absences, the pension plan and other postemployment benefits
(OPEB) are liquidated by the Internal Service Fund. The remaining portion of compensated absences,
other postemployment benefits, and leases are liquidated by the General Fund.
Beginning
Balance* Increases Decreases
Ending
Balance
Due Within
One Year
Business-type Activities
General obligation bonds 32,096,926$ 1,189,606$ (3,600,246)$ 29,686,286$ 3,729,517$
Bond premiums 3,462,556 - (434,517) 3,028,039 434,518
Bonds payable 35,559,482 1,189,606 (4,034,763) 32,714,325 4,164,035
Lease liability 3,071 6,125 (3,559) 5,637 1,994
Compensated absences 689,285 530,290 (515,647) 703,928 515,647
Net pension liability 10,666,483 1,519,249 (6,900,984) 5,284,748 -
Net OPEB liability 3,484,734 1,326,277 (1,261,451) 3,549,560 -
50,403,055$ 4,571,547$ (12,716,404)$ 42,258,198$ 4,681,676$
Component Unit - School Division
Compensated absences 853,459$ 430,728$ (466,234)$ 817,953$ 466,234$
Net pension liability 39,759,230 7,039,379 (25,736,549) 21,062,060 -
Net OPEB liability 5,688,039 1,644,279 (2,156,268) 5,176,050 -
46,300,728$ 9,114,386$ (28,359,051)$ 27,056,063$ 466,234$
* As restated, due to implementation of the guidance in GASB Statement 87, Leases
62
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
9. Long-Term Liabilities (Continued)
Bonds Payable
Details of long-term indebtedness for bonds payable are as follows:
Interest
Rates
Issue
Date
Maturity
Date
Issue
Amount
Governmental
Activities
Business-type
Activities
General Obligation Bonds
2004 Public Improvement 3.00% 04/04 07/26 11,052,222 -$ 3,142,061$
2010 Public Improvement 3.15% 09/10 03/30 3,648,124 - 1,805,518
2011 Refunding 2.14% 12/11 10/23 9,485,000 1,734,584 -
2012 Public Improvement 2.35% 12/12 08/32 9,545,000 5,249,750 -
2013 Public Improvement 1.25% 03/13 04/35 3,058,522 - 2,068,770
2013 Public Improvement 3.03% 12/13 08/33 7,275,000 4,355,000 -
2016B Public Improvement 2.50% 06/16 04/26 6,393,385 581,080 2,152,148
2018 Public Improvement 0.00% 05/18 07/38 5,452,854 - 4,856,222
2019 Public Improvement 3.24% 02/19 04/39 5,025,000 4,475,000 -
2020 Public Improvement 2.00-5.00% 06/20 05/40 26,555,000 25,855,000 -
2020 Refunding 2.00-5.00% 06/20 05/36 24,035,000 4,988,136 14,611,864
2021 Refunding 1.24% 05/21 02/28 1,555,000 1,525,000 -
2022 Public Improvement 1.15% 03/22 03/43 1,049,703 - 1,049,703
2022 Public Improvement 3.03% 05/22 05/42 15,080,000 15,080,000 -
General Obligation Bonds - RVRA
2011 Refunding 2.14% 12/11 10/23 385,416 -
64,228,966 29,686,286
Bond premiums 4,574,052 3,028,039
68,803,018$ 32,714,325$
The annual requirements to amortize bonds payable and related interest are as follows:
Fiscal Year Principal Interest Principal Interest Principal Interest
2023 3,651,234$ 2,002,526$ 195,435$ 6,156$ 3,729,517$ 870,610$
2024 3,688,294 1,929,105 189,981 2,033 3,903,600 768,921
2025 3,715,455 1,830,299 - - 4,079,816 634,507
2026 3,834,752 1,683,745 - - 4,210,399 503,422
2027 3,788,166 1,531,834 - - 3,422,129 366,721
2028-2032 19,350,399 5,435,582 - - 8,066,263 613,434
2033-2037 15,253,250 2,453,112 - - 1,837,548 5,651
2038-2042 10,562,000 687,326 - - 437,014 -
2043-2047 - - - - - -
63,843,550$ 17,553,529$ 385,416$ 8,189$ 29,686,286$ 3,763,266$
Governmental Activities
Governmental Activities Business-type ActivitiesRVRA
On November 1, 2016, the City became a member of the already established Roanoke Valley Resource
Authority (RVRA). Per the amended and restated Members and Facilities Use Agreement, the City
conveyed title of the City’s existing transfer station and all related equipment, property, and site work
to RVRA. RVRA agreed to pay the City amounts equal to the remaining debt service on the transfer
station building. As of June 30, 2022, the City has $385,416 in outstanding general obligation debt that
will be repaid contractually by RVRA over the remaining two-year amortization of the bonds. Further
details are presented in Note 19.
63
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
9. Long-Term Liabilities (Continued)
Current Year Bond Issuances
In March 2022, the City agreed to a financing agreement with the Virginia Resources Authority as
administrator of the Virginia Water Facilities Revolving Fund for the purpose of providing funds for the
City’s share of peak flow capacity and anaerobic digestion facility improvements at the Western Virginia
Water Authority’s Roanoke Regional Water Pollution Control Plant. The City agreed to borrow from the
Virginia Resources Authority a principal amount equal to the sum of principal disbursements for which
the City submits requisitions, not to exceed $2,320,437. The City evidenced its obligation to repay the
loan by issuing and selling series 2022 general obligation public improvement bonds to the Virginia
Resources Authority. Principal disbursements through June 30, 2022, totaled $1,049,703.
In May 2022, the City issued $15,080,000 of series 2022 general obligation public improvement bonds
for the purpose of providing funding for the Moyer Sports Complex renovation project.
Financed Purchase Obligation
On July 24, 2019, the City entered into a 60-month financed purchase obligation agreement with De
Lage Landen Public Finance LLC to purchase two Cisco Firepower 2120 NGFW Appliances. Under
the agreement, the City pays $14,526.60 annually to De Lage Landen Public Finance LLC, representing
principal payments only. Ownership transfers to the City at the end of the obligation. The City reported
this liability previously as a capital lease liability but began reporting the liability as a financed purchase
obligation in fiscal year 2022 due to implementation of the guidance in GASB Statement No. 87, Leases.
The assets and liability are accounted for in the Statement of Net Position. At June 30, 2022, the
original cost of the equipment was $72,648, and accumulated depreciation was $42,378. Financed
purchase obligation payments over the next five years are as follows:
Governmental
Fiscal Year Principal
2023 14,530$
2024 14,529
29,059$
Activities
Lease Liability
In fiscal year 2022, the City implemented the guidance in GASB Statement No. 87, Leases, for
accounting and reporting of leases that had previously been reported as operating and capital leases.
Copier Leases
The City leases a variety of copiers from Xerox Corporation, US Bank Equipment Finance, and De
Lage Landen Financial Services for terms ranging from 36 months to 60 months. For purposes of
discounting future payments, the City used its incremental borrowing rate at lease inception. The
leased equipment and accumulated amortization of the right-to-use assets are outlined in Note 7.
Future minimum lease payments include:
Fiscal Year Principal Interest Principal Interest
2023 20,410$ 1,546$ 1,994$ 148$
2024 18,442 954 2,057 84
2025 11,592 452 1,586 21
2026 6,789 183 - -
2027 2,300 17 - -
59,533$ 3,152$ 5,637$ 253$
Governmental Activities Business-type Activities
64
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
9. Long-Term Liabilities (Continued)
Parking Lot Lease
The City leases a parking lot from .com Properties IV LLC. The initial lease term began on June 1, 2018
for a five-year term with the option to renew for one additional five-year term. The current monthly
payment is $981. The lease payment shall escalate annually on June 1 of each lease year with an
adjustment due to CPI increase for the year, using April 1 as the base for adjustment. For purposes of
discounting future payments, the City used the prime rate as of the date of implementation of GASB
87. The leased infrastructure and accumulated amortization of the right-to-use asset is outlined in Note
7. Future minimum lease payments include:
Fiscal Year Principal Interest
2023 9,112$ 1,760$
2024 9,412 1,460
2025 9,722 1,150
2026 10,041 831
2027 10,371 501
2028-2032 9,807 160
58,465$ 5,862$
Governmental Activities
Legal Debt Limit
The Constitution of Virginia, Article VII, Section 10(a), sets forth the City’s legal debt limit as ten percent
of the assessed valuation of the real estate in the City subject to taxation. As of June 30, 2022, ten
percent of the assessed value of real property in the City is $244,987,011. The City’s net debt
applicable to the legal debt limit is $68,446,661, and the legal debt margin is $176,540,350. Additional
information about the City’s legal debt margin is available in Table 10.
10. Fund Balance
Fund balance is classified as nonspendable, restricted, committed, assigned and/or unassigned based
primarily on the extent to which the City is bound to observe constraints imposed upon the use of the
resources in the governmental funds. The constraints placed on fund balance for the governmental
funds are presented in the table below and on the following page:
General
Capital
Projects
Total
Governmental
Funds
Fund Balances:
Nonspendable:
Inventories 715,896$ -$ 715,896$
Prepaids 359,027 - 359,027
1,074,923 - 1,074,923
Restricted for:
Law enforcement 418,633 - 418,633
Fire and rescue 173,836 - 173,836
Street equipment - 20,156 20,156
Highway maintenance 2,598,715 - 2,598,715
Education - 3,892,353 3,892,353
Parks and recreation 51,770 15,364,460 15,416,230
3,242,954 19,276,969 22,519,923
65
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
10. Fund Balance (Continued)
General
Capital
Projects
Total
Governmental
Funds
Fund Balances (Continued):
Committed to:
Law enforcement 91,966 - 91,966
Stormwater management 37,635 - 37,635
129,601 - 129,601
Assigned to:
Technology systems 86,328 - 86,328
Law enforcement 9,943 - 9,943
Street equipment 260,748 - 260,748
Building maintenance and
improvements 162,859 - 162,859
Landscape management 11,197 - 11,197
Engineering 8,914 - 8,914
Public works - 139,013 139,013
Parks and recreation 191,200 1,057,334 1,248,534
Economic development 32,989 1,730,574 1,763,563
Other purposes 52,737 57,443 110,180
816,915 2,984,364 3,801,279
Unassigned:55,175,870 - 55,175,870
Total fund balances 60,440,263$ 22,261,333$ 82,701,596$
11. Risk Management
The risk management programs of the City and School Division are as follows:
Workers’ Compensation
Workers’ Compensation Insurance is provided through the Virginia Risk Sharing Association (VRSA)
for the City and through VACORP for the School Division. Benefits are those afforded through the
Commonwealth of Virginia as outlined in Code of Virginia §65.2-100. Premiums are based on covered
payroll, job rates and claims experience. Total premiums for the current year were $519,685 and
$102,383 for the City and School Division, respectively.
General Liability and Other
The City provides general liability and other insurance through VRSA. General liability and automotive
liability have a $1,000,000 limit per occurrence. Boiler and machinery coverage and property coverage
are covered per statement of values. The City maintains an additional $10,000,000 umbrella policy
over all forms of liability. The City has flood insurance coverage through Selective Insurance Company
of America for properties in designated flood zones or that are part of the water plant. Total premiums
for the current fiscal year were $442,735.
The School Division provides general liability and other insurance through VACORP. General liability,
automobile liability, and property damage have a $2,000,000 limit per occurrence. The School Division
also has a separate student accident insurance policy through VACORP. Total premiums for the
current fiscal year were $125,825.
66
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
11. Risk Management (Continued)
Line of Duty
The Line of Duty Act (LODA) provides benefits to local government employees who hold specified
hazardous duty positions (Code of Virginia §9.1-400 et seq.). By statute, LODA benefits must be
provided. The Virginia Department of Accounts administers the benefit. As of July 1, 2011, the General
Assembly shifted the financial responsibility from the state government to local governments. The City
provides an insured Line of Duty OPEB benefit plan through coverage with VRSA. In exchange for
annual premiums paid while employees are in active service, VRSA covers the Line of Duty OPEB of
those employees. The Line of Duty coverage provides a death benefit of $100,000 to beneficiaries of
public safety officers who die in the line of duty and a death benefit of $25,000 to beneficiaries of public
safety employees who die within five years of becoming disabled as a result of a qualifying illness as
defined in the LODA. A health insurance benefit is also provided to the disabled public safety
employees, their surviving spouses, and their dependents. The City retains an obligation for benefits
in the event of VRSA’s insolvency. The Commonwealth of Virginia has the authority to establish and
amend LODA. Total premiums for the current year to VRSA for Line of Duty coverage were $126,996.
Healthcare
The City’s professionally administered self-insurance program provides health coverage for employees
of the City and School Division on a cost-reimbursement basis. All active employees, retired City
employees and retired School Division employees pay a premium equivalent for participation. The
premium equivalent represents a minimum of 4% active or retired employee participation. The City is
obligated for claims payments under the program. A stop loss insurance contract executed with an
insurance carrier covers claims in excess of $250,000 per covered individual and approximately
$10,453,066 in the aggregate.
During the current fiscal year, total claim expenses of $9,042,833, which did not exceed the stop loss
provisions, were incurred. This represents claims processed and an estimate for claims incurred but
not reported (IBNR) as of June 30, 2022. The estimated liability for the City and School Division was
$444,351 and $321,305, respectively for a total of $765,657 at year-end.
Changes in the reported liability during the last three fiscal years are as follows:
Year Ended
June 30
Beginning
Balance
Claim
Expenses
Claim
Payments
Ending
Balance
2022 716,796$ 9,042,833$ 8,993,973$ 765,656$
2021 581,259 8,932,896 8,797,359 716,796
2020 936,640 8,952,998 9,308,379 581,259
Dental
The City’s professionally administered self-insurance program provides dental coverage for employees
of the City and School Division on a cost-reimbursement basis. The City began offering dental
coverage through the self-insurance program on January 1, 2020. All active employees, retired City
employees and retired School Division employees pay a premium equivalent for participation. The
premium equivalent represents a minimum of 0% active or retired employee participation. The City is
obligated for claims payments under the program.
During the current fiscal year, total claim expenses of $534,284 were incurred. This represents claims
processed and an estimate for claims incurred but not reported (IBNR) as of June 30, 2022. The
estimated liability for the City and School Division was $9,000 and $10,000, respectively for a total of
$19,000 at year-end.
67
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
11. Risk Management (Continued)
Dental (Continued)
Changes in the reported liability during the last three fiscal years are as follows:
Year Ended
June 30
Beginning
Balance
Claim
Expenses
Claim
Payments
Ending
Balance
2022 24,000$ 534,284$ 539,284$ 19,000$
2021 19,400 535,775 531,175 24,000
2020 - 220,597 201,197 19,400
Other
There were no significant changes in insurance coverage from the prior year and no settlements that
exceeded the amount of insurance coverage during the last three fiscal years.
12. Pension Plan
Plan Description
All full-time, salaried permanent (professional) employees of the City and all full-time, salaried
permanent (non-professional) employees of the School Division who are not classified as teachers or
administrative personnel are automatically covered by the VRS Retirement Plan upon employment.
This plan is administered by the Virginia Retirement System (VRS or System) along with plans for other
employer groups in the Commonwealth of Virginia. The VRS Retirement Plan is a multi-employer,
agent plan.
All full-time, salaried permanent (professional) teachers and administrative employees of the School
Division are automatically covered by the VRS Teacher Retirement Plan upon employment. This plan
is administered by VRS along with plans for other employer groups in the Commonwealth of Virginia.
The VRS Teacher Retirement Plan is a multiple-employer, cost-sharing plan.
Members earn one month of service credit for each month they are employed and for which they and
their employer pay contributions to VRS. Members are eligible to purchase prior service, based on
specific criteria as defined in the Code of Virginia, as amended. Eligible prior service that may be
purchased includes prior public service, active military service, certain periods of leave, and previously
refunded service.
The System administers three different benefit structures for covered employees - Plan 1, Plan 2, and
Hybrid. Each of these benefit structures has different eligibility criteria. The specific information for
each plan and the eligibility for covered groups within each plan are set out below.
VRS PLAN 1
About VRS Plan 1 – Plan 1 is a defined benefit plan. The retirement benefit is based on a member’s
age, service credit and average final compensation at retirement using a formula. Employees are in
Plan 1 if their membership date is before July 1, 2010, they were vested as of January 1, 2013, and
they have not taken a refund.
Hybrid Opt-In Election – VRS non-hazardous duty covered Plan 1 members were allowed to make
an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held
January 1 through April 30, 2014. The Hybrid Retirement Plan’s effective date for eligible Plan 1
members who opted in was July 1, 2014. If eligible deferred members returned to work during the
election window, they were also eligible to opt into the Hybrid Retirement Plan. Members who were
eligible for an optional retirement plan (ORP) and had prior service under VRS Plan 1 were not eligible
to elect the Hybrid Retirement Plan and remained as VRS Plan 1 or ORP members.
68
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Plan Description (Continued)
VRS PLAN 1 (Continued)
Retirement Contributions – Employees contribute 5% of their compensation each month to their
member contribution account through a pretax salary reduction. Member contributions are tax-deferred
until they are withdrawn as part of a retirement benefit or as a refund. The employer makes a separate
actuarially determined contribution to VRS for all covered employees. VRS invests both member and
employer contributions to provide funding for the future benefit payment.
Service Credit – Service credit includes active service. Members earn service credit for each month
they are employed in a covered position. It also may include credit for prior service the member has
purchased or additional service credit the member was granted. A member’s total service credit is one
of the factors used to determine their eligibility for retirement and to calculate their retirement benefit.
It also may count toward eligibility for the health insurance credit in retirement, if the employer offers
the health insurance credit.
Vesting – Vesting is the minimum length of service a member needs to qualify for a future retirement
benefit. Members become vested when they have at least five years (60 months) of service credit.
Vesting means members are eligible to qualify for retirement if they meet the age and service
requirements for their plan. Members also must be vested to receive a full refund of their member
contribution account balance if they leave employment and request a refund. Members are always
100% vested in the contributions that they make.
Calculating the Benefit – The basic benefit is determined using the average final compensation,
service credit and plan multiplier. An early retirement reduction is applied to this amount if the member
is retiring with a reduced benefit. In cases where the member has elected an optional form of retirement
payment, an option factor specific to the option chosen is then applied.
Average Final Compensation – A member’s average final compensation is the average of the 36
consecutive months of highest compensation as a covered employee.
Service Retirement Multiplier – The retirement multiplier is a factor used in the formula to determine
a final retirement benefit. The retirement multiplier for non-hazardous duty members is 1.70%. The
retirement multiplier for sheriffs and regional jail superintendents is 1.85%. The retirement multiplier of
eligible political subdivision hazardous duty employees other than sheriffs and regional jail
superintendents is 1.70% or 1.85% as elected by the employer.
Normal Retirement Age – The normal retirement age is age 65 for non-hazardous duty employees
and age 60 for hazardous duty employees.
Earliest Unreduced Retirement Eligibility – Members who are not in hazardous duty positions are
eligible for an unreduced retirement benefit at age 65 with at least five years of service credit or at age
50 with at least 30 years of service credit. Hazardous duty members are eligible for an unreduced
retirement benefit at age 60 with at least five years of service credit or age 50 with at least 25 years of
service credit.
Earliest Reduced Retirement Eligibility – Members who are not in hazardous duty positions may
retire with a reduced benefit at age 55 with at least five years of service credit or age 50 with at least
10 years of service credit. Hazardous duty members may retire with a reduced benefit at age 50 with
at least five years of service credit.
69
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Plan Description (Continued)
VRS PLAN 1 (Continued)
Cost-of-Living Adjustment (COLA) in Retirement – The COLA matches the first 3% increase in the
Consumer Price Index for all Urban Consumers (CPI-U) and half of any additional increase (up to 4%)
up to a maximum COLA of 5%.
For members who retire with an unreduced benefit or with a reduced benefit with at least 20 years of
service credit, the COLA will go into effect on July 1st after one full calendar year from the retirement
date. For members who retire with a reduced benefit and who have less than 20 years of service credit,
the COLA will go into effect on July 1st after one calendar year following the unreduced retirement
eligibility date.
The COLA is effective July 1st following one full calendar year (January 1st to December 31st) under any
of the following circumstances:
The member is within five years of qualifying for an unreduced retirement benefit as of January
1, 2013.
The member retires on disability.
The member retires directly from short-term or long-term disability.
The member is involuntarily separated from employment for causes other than job performance
or misconduct and is eligible to retire under the Workforce Transition Act or the Transitional
Benefits Program.
The member dies in service and the member’s survivor or beneficiary is eligible for a monthly
death-in-service benefit.
The COLA will go into effect on July 1st following one full calendar year (January 1st to December 31st)
from the date the monthly benefit begins.
Disability Coverage – For members who are eligible to be considered for disability retirement and
retire on disability, the retirement multiplier is 1.7% on all service, regardless of when it was earned,
purchased or granted.
Purchase of Prior Service – Members may be eligible to purchase service from previous public
employment, active duty military service, an eligible period of leave or VRS refunded service as service
credit in their plan. Prior service credit counts toward vesting, eligibility for retirement and the health
insurance credit. Only active members are eligible to purchase prior service. Members also may be
eligible to purchase periods of leave without pay.
VRS PLAN 2
VRS Plan 2 is the same as VRS Plan 1 except for the following:
Under the VRS Retirement Plan, employees are in VRS Plan 2 if their membership date is on or after
July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of July 1,
2013.
Under the VRS Teacher Retirement Plan, members are in VRS Plan 2 if their membership date is from
July 1, 2010, to December 31, 2013, and they have not taken a refund. Members are covered under
VRS Plan 2 if they have a membership date prior to July 1, 2010, and they were not vested as of
January 1, 2013.
70
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Plan Description (Continued)
VRS PLAN 2 (Continued)
Average Final Compensation – A member’s average final compensation is the average of the 60
consecutive months of highest compensation as a covered employee.
Service Retirement Multiplier – The service retirement multiplier is the same as Plan 1 for service
earned, purchased or granted prior to January 1, 2013. For non-hazardous duty members, the
retirement multiplier is 1.65% for service credit earned, purchased or granted on or after January 1,
2013.
Normal Retirement Age – The normal retirement age is normal Social Security retirement age for non-
hazardous duty employees.
Earliest Unreduced Retirement Eligibility – Members who are not in hazardous duty positions are
eligible for an unreduced retirement benefit when they reach normal Social Security retirement age with
at least five years (60 months) of service credit or when their age plus service credit equals 90.
Earliest Reduced Retirement Eligibility – Members who are not in hazardous duty positions may
retire with a reduced retirement benefit as early as age 60 with at least five years (60 months) of service
credit.
COLA in Retirement – The COLA matches the first 2% increase in the CPI-U and half of any additional
increase (up to 2%), for a maximum COLA of 3%.
Disability Coverage – For members who are eligible to be considered for disability retirement and
retire on disability, the retirement multiplier is 1.65% on all service, regardless of when it was earned,
purchased or granted.
HYBRID RETIREMENT PLAN
The Hybrid Retirement Plan is the same as VRS Plan 1 except for the following:
About the Hybrid Retirement Plan – The Hybrid Retirement Plan combines the features of a defined
benefit plan and a defined contribution plan.
The defined benefit is based on a member’s age, service credit and average final compensation
at retirement using a formula.
The benefit from the defined contribution component of the plan depends on the member and
employer contributions made to the plan and the investment performance of those
contributions.
In addition to the monthly benefit payment payable from the defined benefit plan at retirement,
a member may start receiving distributions from the balance in the defined contribution account,
reflecting the contributions, investment gains or losses, and any required fees.
Eligible Members – Employees are in the Hybrid Retirement Plan if their membership date is on or
after January 1, 2014. This includes:
Political subdivision employees*
School division employees
Members in VRS Plan 1 or VRS Plan 2 who elected to opt into the plan during the election
window held January 1 - April 30, 2014; the plan’s effective date for opt-in members was July
1, 2014
71
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Plan Description (Continued)
HYBRID RETIREMENT PLAN (Continued)
* Non-Eligible Members – Some employees are not eligible to participate in the Hybrid Retirement Plan.
They include:
Political subdivision employees who are covered by enhanced benefits for hazardous duty
employees
Those employees eligible for an optional retirement plan (ORP) must elect the ORP plan or the Hybrid
Retirement Plan. If these members have prior service under VRS Plan 1 or VRS Plan 2, they are not
eligible to elect the Hybrid Retirement Plan and must select VRS Plan 1 or VRS Plan 2 (as applicable)
or ORP.
Retirement Contributions – A member’s retirement benefit is funded through mandatory and
voluntary contributions made by the member and the employer to both the defined benefit and the
defined contribution components of the plan. Mandatory contributions are based on a percentage of
the employee’s creditable compensation and are required from both the member and the employer.
Additionally, members may choose to make voluntary contributions to the defined contribution
component of the plan, and the employer is required to match those voluntary contributions according
to specified percentages.
Service Credit – Under the defined benefit component of the plan, service credit includes active
service. Members earn service credit for each month they are employed in a covered position. It also
may include credit for prior service the member has purchased or additional service credit the member
was granted. A member’s total service credit is one of the factors used to determine their eligibility for
retirement and to calculate their retirement benefit. It also may count toward eligibility for the health
insurance credit in retirement, if the employer offers the health insurance credit.
Under the defined contribution component of the plan, service credit is used to determine vesting for
the employer contribution portion of the plan.
Vesting – Under the defined benefit component of the plan, defined benefit vesting is the minimum
length of service a member needs to qualify for a future retirement benefit. Members are vested under
the defined benefit component of the Hybrid Retirement Plan when they reach five years (60 months)
of service credit. VRS Plan 1 or VRS Plan 2 members with at least five years (60 months) of service
credit who opted into the Hybrid Retirement Plan remain vested in the defined benefit component.
Under the defined contribution component of the plan, defined contribution vesting refers to the
minimum length of service a member needs to be eligible to withdraw the employer contributions from
the defined contribution component. Members are always 100% vested in the contributions that they
make. Upon retirement or leaving covered employment, a member is eligible to withdraw a percentage
of employer contributions to the defined contribution component of the plan, based on service.
After two years, a member is 50% vested and may withdraw 50% of employer contributions.
After three years, a member is 75% vested and may withdraw 75% of employer contributions.
After four or more years, a member is 100% vested and may withdraw 100% of employer
contributions.
Distributions are not required, except as governed by law.
72
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Plan Description (Continued)
HYBRID RETIREMENT PLAN (Continued)
Calculating the Benefit – Under the defined contribution component of the plan, the benefit is based
on contributions made by the member and any matching contributions made by the employer, plus net
investment earnings on those contributions.
Average Final Compensation – The average final compensation is the same as under VRS Plan 2.
It is used in the retirement formula for the defined benefit component of the plan.
Service Retirement Multiplier – The retirement multiplier for the defined benefit component is 1.00%.
For members who opted into the Hybrid Retirement Plan from VRS Plan 1 or VRS Plan 2, the applicable
multipliers for those plans will be used to calculate the retirement benefit for service credited in those
plans. The service retirement multiplier is not applicable for hazardous duty employees or for the
defined contribution component of the plan.
Normal Retirement Age – Under the defined benefit component of the plan, the normal retirement age
is the same as under VRS Plan 2. The normal retirement age is not applicable to hazardous duty
employees. Under the defined contribution component of the plan, members are eligible to receive
distributions upon leaving employment, subject to restrictions.
Earliest Unreduced Retirement Eligibility – Under the defined benefit component of the plan,
members are eligible for an unreduced retirement benefit when they reach normal Social Security
retirement age and have at least five years (60 months) of service credit or when their age plus service
credit equals 90. The earliest unreduced retirement eligibility is not applicable to hazardous duty
employees. Under the defined contribution component of the plan, members are eligible to receive
distributions upon leaving employment, subject to restrictions.
Earliest Reduced Retirement Eligibility – Under the defined benefit component of the plan, members
may retire with a reduced benefit as early as age 60 with at least five years (60 months) of service
credit. The earliest reduced retirement eligibility is not applicable to hazardous duty employees. Under
the defined contribution component of the plan, members are eligible to receive distributions upon
leaving employment, subject to restrictions.
COLA in Retirement – Under the defined benefit component of the plan, the COLA in retirement is the
same as under VRS Plan 2. Under the defined contribution component of the plan, the COLA in
retirement is not applicable.
Disability Coverage – Employees of political subdivisions and school divisions (including VRS Plan 1
and VRS Plan 2 opt-ins) participate in the Virginia Local Disability Program (VLDP) unless their local
governing body provides an employer-paid comparable program for its members. Hybrid members
(including VRS Plan 1 and VRS Plan 2 opt-ins) covered under VLDP are subject to a one-year waiting
period before becoming eligible for non-work related disability benefits.
Purchase of Prior Service – Under the defined benefit component of the plan, the purchase of prior
service is the same as under VRS Plan 1, except Hybrid Retirement Plan members are ineligible for
ported service. Under the defined contribution component of the plan, the purchase of prior service is
not applicable.
73
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Employees Covered by Benefit Terms
As of the June 30, 2020, actuarial valuation, the following employees were covered by the benefit terms
of the VRS Retirement Plan:
Inactive members or their beneficiaries
currently receiving benefits 692 74
Inactive members:
Vested inactive members 166 19
Non-vested inactive members 203 43
Inactive members active elsewere in VRS 240 19
Total inactive members 609 81
Active members 492 62
Total covered employees 1,793 217
City of Salem
School Division
(Non-Professional)
Contributions
The contribution requirement for active employees is governed by §51.1-145 of the Code of Virginia,
as amended, but may be impacted as a result of funding options provided to political subdivisions and
school divisions by the Virginia General Assembly. Employees are required to contribute 5.00% of their
compensation toward their retirement.
The City’s contractually required contribution rate for the year ended June 30, 2022, was 18.23% of
covered employee compensation. This rate was based on an actuarially determined rate from an
actuarial valuation as of June 30, 2019. This rate, when combined with employee contributions, was
expected to finance the costs of benefits earned by the employees during the year, with an additional
amount to finance any unfunded accrued liability. Contributions to the VRS Retirement Plan from the
City were $4,356,901 and $4,093,089 for the years ended June 30, 2022, and June 30, 2021,
respectively.
The School Division’s non-professional employees’ contractually required contribution rate for the year
ended June 30, 2022, was 2.30% of covered employee compensation. This rate was based on an
actuarially determined rate from an actuarial valuation as of June 30, 2019. This rate, when combined
with employee contributions, was expected to finance the costs of benefits earned by the employees
during the year, with an additional amount to finance any unfunded accrued liability. Contributions to
the VRS Retirement Plan from the School Division were $22,143 and $19,987 for the years ended June
30, 2022, and June 30, 2021, respectively.
For the School Division’s professional employees covered under the VRS Teacher Retirement Plan,
each school division’s contractually required contribution rate for the year ended June 30, 2022, was
16.62% of covered employee compensation. This rate was based on an actuarially determined rate
from an actuarial valuation as of June 30, 2019. The actuarially determined rate, when combined with
employee contributions, was expected to finance the costs of benefits earned by employees during the
year, with an additional amount to finance any unfunded accrued liability. Contributions to the VRS
Teacher Retirement Plan from the School Division were $4,211,083 and $3,842,114 for the years
ended June 30, 2022, and June 30, 2021, respectively.
In June 2021, the Commonwealth made a special contribution of approximately $61.3 million to the
VRS Teacher Retirement Plan. This special payment was authorized by a budget amendment included
in Chapter 552 of the 2021 Appropriation Act and is classified as a non-employer contribution.
74
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Net Pension Liability
Under the VRS Retirement Plan, the net pension liability 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 City’s and School Division’s net
pension liabilities under the VRS Retirement Plan were measured as of June 30, 2021. The total
pension liability used to calculate the net pension liability was determined by an actuarial valuation
performed as of June 30, 2020, rolled forward to the measurement date of June 30, 2021.
Under the VRS Teacher Retirement Plan, the School Division reported a liability of $21,062,060 for its
proportionate share of the net pension liability at June 30, 2022. The net pension liability was measured
as of June 30, 2021, and the total pension liability used to calculate the net pension liability was
determined by an actuarial valuation performed as of June 30, 2020, and rolled forward to the
measurement date of June 30, 2021. The School Division’s proportion of the net pension liability was
based on the School Division’s actuarially determined employer contributions to the pension plan for
the year ended June 30, 2021, relative to the total of the actuarially determined employer contributions
for all participating employers. At June 30, 2021, the School Division’s proportion was 0.27131% as
compared to 0.27321% at June 30, 2020.
Under the VRS Teacher Retirement Plan, the net pension liability is calculated separately for each
system and represents that particular system’s total pension liability determined in accordance with
GAAP, less that system’s fiduciary net position. As of June 30, 2021, net pension liability amounts for
the VRS Teacher Retirement Plan are as follows (amounts expressed in thousands):
Teacher
Employee
Retirement Plan
Total Pension Liability 53,381,141$
Plan Fiduciary Net Position 45,617,878
Employers' Net Pension Liability 7,763,263$
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 85.46%
The total pension liability is calculated by the System’s actuary, and each plan’s fiduciary net position
is reported in the System’s financial statements. The net pension liability is disclosed in accordance
with the requirements of GAAP in the System’s notes to the financial statements and required
supplementary information.
Actuarial Assumptions – General Employees
The total pension liability for general employees in the VRS Retirement Plan was based on an actuarial
valuation performed as of June 30, 2020, using the Entry Age Normal actuarial cost method and the
following assumptions, applied to all periods included in the measurement and rolled forward to the
measurement date of June 30, 2021.
Inflation 2.50%
Salary increases, including inflation 3.50% - 5.35%
Investment rate of return 6.75%, net of pension plan investment
expenses, including inflation
75
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Actuarial Assumptions – General Employees (Continued)
Mortality Rates – Largest Ten – Non-Hazardous Duty: 20% of deaths are assumed to be service-related
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; 95% of rates for males; 105% of rates for females set forward 2 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 110% of rates for males; 105% of rates for females set forward 3 years
Post-Disablement – Pub-2010 Amount Weighted General Disabled Rates projected
generationally; 95% of rates for males set back 3 years; 90% of rates for females set back 3
years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally; 110% of rates for males and females set forward 2 years
Mortality Improvement – Rates projected generationally with Modified MP-2020 Improvement
Scale that is 75% of the MP-2020 rates
Mortality Rates – All Others (Non-Ten Largest) – Non-Hazardous Duty: 15% of deaths are assumed to
be service-related
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; 95% of rates for males; 105% of rates for females set forward 2 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 110% of rates for males; 105% of rates for females set forward 3 years
Post-Disablement – Pub-2010 Amount Weighted General Disabled Rates projected
generationally; 95% of rates for males set back 3 years; 90% of rates for females set back 3
years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally; 110% of rates for males and females set forward 2 years
Mortality Improvement – Rates projected generationally with Modified MP-2020 Improvement
Scale that is 75% of the MP-2020 rates
The actuarial assumptions used in the June 30, 2020, 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 a result of the experience study and VRS Board action are as follows:
Largest Ten – Non-Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age
Withdrawal Rates – Adjusted rates to better fit experience at each year age and service through
9 years of service
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
76
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Actuarial Assumptions – General Employees (Continued)
All Others (Non-Ten Largest) – Non-Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age
Withdrawal Rates – Adjusted rates to better fit experience at each year age and service through
9 years of service
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
Actuarial Assumptions – Public Safety Employees with Hazardous Duty Benefits
The total pension liability for public safety employees with hazardous duty benefits in the VRS
Retirement Plan was based on an actuarial valuation as of June 30, 2020, using the Entry Age Normal
actuarial cost method and the following assumptions, applied to all periods included in the
measurement and rolled forward to the measurement date of June 30, 2021:
Inflation 2.50%
Salary increases, including inflation 3.50% - 4.75%
Investment rate of return 6.75%, net of pension plan investment
expenses, including inflation
Mortality Rates – Largest Ten – Hazardous Duty: 70% of deaths are assumed to be service-related
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally with a Modified MP-2020 Improvement Scale; 95% of rates for males; 105% of
rates for females set forward 2 years
Post-Retirement – 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 forward 3 years
Post-Disablement – 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 set back 3 years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingency Annuitant
Rates projected generationally with a Modified MP-2020 Improvement Scale; 110% of rates for
males and females set forward 2 years
Mortality Improvement – Rates projected generationally with Modified MP-2020 Improvement
Scale that is 75% of the MP-2020 rates
77
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Actuarial Assumptions – Public Safety Employees with Hazardous Duty Benefits (Continued)
Mortality Rates – All Others (Non-Ten Largest) – Hazardous Duty: 45% of deaths are assumed to be
service-related
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally with a Modified MP-2020 Improvement Scale; 95% of rates for males; 105% of
rates for females set forward 2 years
Post-Retirement – 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 forward 3 years
Post-Disablement – 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 set back 3 years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingency Annuitant
Rates projected generationally with a Modified MP-2020 Improvement Scale; 110% of rates for
males and females set forward 2 years
Mortality Improvement – Rates projected generationally with Modified MP-2020 Improvement
Scale that is 75% of the MP-2020 rates
The actuarial assumptions used in the June 30, 2020, 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 a result of the experience study and VRS Board action are as follows:
Largest Ten – Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; increased disability life expectancy; for future mortality
improvements, replace load with a modified Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience and changed final retirement age
from 65 to 70
Withdrawal Rates – Decreased rates
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
All Others (Non-Ten Largest) – Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; increased disability life expectancy; for future mortality
improvements, replace load with a modified Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience and changed final retirement age
from 65 to 70
Withdrawal Rates – Decreased rates and changed from rates based on age and service to
rates based on service only to better fit experience and to be more consistent with Locals
Largest 10 Hazardous Duty
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
78
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Actuarial Assumptions – VRS Teacher Retirement Plan
The total pension liability for the VRS Teacher Retirement Plan was based on an actuarial valuation
performed as of June 30, 2020, using the Entry Age Normal actuarial cost method and the following
assumptions, applied to all periods included in the measurement and rolled forward to the measurement
date of June 30, 2021.
Inflation 2.50%
Salary increases, including inflation 3.50% - 5.95%
Investment rate of return 6.75%, net of pension plan investment
expenses, including inflation
Mortality rates:
Pre-Retirement – Pub-2010 Amount Weighted Teachers Employee Rates projected
generationally; 110% of rates for males
Post-Retirement – Pub-2010 Amount Weighted Teachers Healthy Retiree Rates projected
generationally; males set forward 1 year; 105% of rates for females
Post-Disablement – Pub-2010 Amount Weighted Teachers Disabled Rates projected
generationally; 110% of rates for males and females
Beneficiaries and Survivors – Pub-2010 Amount Weighted Teachers Contingent Annuitant
Rates projected generationally
Mortality Improvement – Rates projected generationally with Modified MP-2020 Improvement
Scale that is 75% of the MP-2020 rates
The actuarial assumptions used in the June 30, 2020, 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 a result of the experience study and VRS Board action are as follows:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan2/Hybrid; changed final retirement age from 75 to 80 for all
Withdrawal Rates – Adjusted rates to better fit experience at each year age and service through
9 years of service
Disability Rates – No change
Salary Scale – No change
Discount Rate – No change
Long-Term Expected Rate of Return
The long-term expected rate of return on pension System investments was determined using a log-
normal distribution analysis in which best-estimate ranges of expected future real rates of return
(expected returns, net of pension System investment expense and inflation) are developed for each
major asset class. These ranges are combined to produce the long-term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation. The target asset allocation and best estimate of arithmetic real rates of return
for each major asset class are summarized in the table on the following page.
79
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Long-Term Expected Rate of Return (Continued)
Asset Class (Strategy)
Target
Allocation
Arithmetic
Long-Term
Expected
Rate of Return
Weighted
Average
Long-Term
Expected
Rate of Return*
Public Equity 34.00% 5.00% 1.70%
Fixed Income 15.00% 0.57% 0.09%
Credit Strategies 14.00% 4.49% 0.63%
Real Assets 14.00% 4.76% 0.67%
Private Equity 14.00% 9.94% 1.39%
MAPS - Multi-Asset Public Strategies 6.00% 3.29% 0.20%
PIP - Private Investment Partnership 3.00% 6.84% 0.21%
Total 100.00% 4.89%
Inflation 2.50%
Expected arithmetic nominal return* 7.39%
* The above allocation provides a one-year expected return of 7.39%. However, one-year returns
do not take into account the volatility present in each of the asset classes. In setting the long-term
expected return for the System, stochastic projections are employed to model future returns under
various economic conditions. These results provide a range of returns over various time periods
that ultimately provide a median return of 6.94%, including expected inflation of 2.50%.
* On October 10, 2019, the VRS Board elected a long-term rate of 6.75%, which was roughly at
the 40th percentile of expected long-term results of the VRS fund asset allocation at that time,
providing a median return of 7.11%, including expected inflation of 2.50%.
Discount Rate
The discount rate used to measure the total pension liability was 6.75%. The projection of cash flows
used to determine the discount rate assumed that member contributions will be made per the VRS
Statutes and the employer contributions will be made in accordance with the VRS funding policy at
rates equal to the difference between actuarially determined contribution rates adopted by the VRS
Board of Trustees and the member rate.
Consistent with the phased-in funding provided by the General Assembly for state and teacher
employer contributions, political subdivisions were also provided with an opportunity to use an alternate
employer contribution rate. For the year ended June 30, 2021, the alternate rate was the employer
contribution rate used in fiscal year 2012 or 100% of the actuarially determined employer contribution
rate from the June 30, 2017, actuarial valuations, whichever was greater.
80
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Discount Rate (Continued)
Through the fiscal year ending June 30, 2021, the rate contributed by the School Division for the VRS
Teacher Retirement Plan was subject to the portion of the VRS Board-certified rates that were funded
by the Virginia General Assembly, which was 100% of the actuarially determined contribution rates.
From July 1, 2021, on, participating employers and school divisions are assumed to contribute 100%
of the actuarially determined contribution rates. Based on those assumptions, the pension plan’s
fiduciary net position was projected to be available to make all projected future benefit payments of
current active and inactive employees. Therefore, the long-term expected rate of return was applied to
all periods of projected benefit payments to determine the total pension liability.
Changes in Net Pension Liability (Asset)
The changes in the net pension liability (asset) for City employees and School Division non-professional
employees are as follows:
Total
Pension
Liability
(a)
Plan
Fiduciary
Net Position
(b)
Net
Pension
Liability
(a) - (b)
City of Salem
Balances at June 30, 2020 205,730,759$ 155,186,540$ 50,544,219$
Changes for the year:
Service cost 2,579,718 - 2,579,718
Interest 13,532,366 - 13,532,366
Changes of assumptions 7,635,262 - 7,635,262
Difference between expected
and actual experience (1,898,137) - (1,898,137)
Contributions - employer - 4,093,089 (4,093,089)
Contributions - employee - 1,214,809 (1,214,809)
Net investment income - 41,862,509 (41,862,509)
Benefit payments, including refunds
of employee contributions (12,415,757) (12,415,757) -
Administrative expenses - (108,142) 108,142
Other changes - 3,255 (3,255)
Net changes 9,433,452 34,649,763 (25,216,311)
Balances at June 30, 2021 215,164,211$ 189,836,303$ 25,327,908$
Increase (Decrease)
81
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Changes in Net Pension Liability (Asset) (Continued)
Total
Pension
Liability
(a)
Plan
Fiduciary
Net Position
(b)
Net
Pension
Liability
(Asset)
(a) - (b)
School Division (Non-Professional Staff)
Balances at June 30, 2020 5,290,395$ 5,655,835$ (365,440)$
Changes for the year:
Service cost 106,418 - 106,418
Interest 344,320 - 344,320
Changes of assumptions 150,153 - 150,153
Difference between expected
and actual experience (89,731) - (89,731)
Contributions - employer - 19,987 (19,987)
Contributions - employee - 57,197 (57,197)
Net investment income - 1,516,515 (1,516,515)
Benefit payments, including refunds
of employee contributions (378,725) (378,725) -
Administrative expenses - (3,965) 3,965
Other changes - 141 (141)
Net changes 132,435 1,211,150 (1,078,715)
Balances at June 30, 2021 5,422,830$ 6,866,985$ (1,444,155)$
Increase (Decrease)
Sensitivity of the Net Position Liability (Asset) to Changes in the Discount Rate
The following presents the City’s and School Division’s net pension liabilities (assets) under the VRS
Retirement Plan and the School Division’s proportionate share of the net pension liability under the
VRS Teacher Retirement Plan using the discount rate of 6.75%, as well as what the net pension
liabilities (assets) would be if they 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%)
Current
Discount
(6.75%)
1%
Increase
(7.75%)
Retirement Plan 51,612,339$ 25,327,908$ 3,500,297$
School Division
Retirement Plan (Non-Professional Staff) (837,005) (1,444,155) (1,952,075)
Teacher Retirement Plan 40,648,635 21,062,060 4,949,486
City of Salem
Net Pension Liability (Asset)
82
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions
For the year ended June 30, 2022, the City and School Division recognized pension expense of
$2,568,975 and $(264,187) respectively, under the VRS Retirement Plan.
For the year ended June 30, 2022, the School Division recognized pension expense of $72,383 under
the VRS Teacher Retirement Plan. Since there was a change in proportionate share between
measurement dates, a portion of the pension expense was related to deferred amounts from changes
in proportion and from differences between employer contributions and the proportionate share of
employer contributions.
At June 30, 2022, the City and School Division reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Outflows of
Resources
Deferred Inflows of
Resources
City of Salem
Differences between expected and actual
experience 209,894$ 1,076,433$
Changes in assumptions 4,329,953 -
Net difference between projected and actual
earnings on pension plan investments - 20,624,525
Employer contributions subsequent to the
measurement date 4,356,901 -
8,896,748$ 21,700,958$
School Division (Non-Professional Staff)
Differences between expected and actual
experience -$ 41,489$
Changes in assumptions 69,426 -
Net difference between projected and actual
earnings on pension plan investments - 750,019
Employer contributions subsequent to the
measurement date 22,143 -
91,569$ 791,508$
School Division - Teacher Retirement Plan
Differences between expected and actual
experience -$ 1,793,939$
Changes in assumptions 3,690,018 -
Net difference between projected and actual
earnings on pension plan investments - 13,272,746
Changes in proportion and differences
between employer contributions and
proportionate share of contributions 97,692 761,993
Employer contributions subsequent to the
measurement date 4,211,083 -
7,998,793$ 15,828,678$
83
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
12. Pension Plan (Continued)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions (Continued)
The deferred outflow of resources related to pensions resulting from the City’s contributions of
$4,356,901 subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the fiscal year ending June 30, 2023. The deferred outflows of resources related to pensions
resulting from the School Division’s contributions of $22,143 and $4,211,083 subsequent to the
measurement date will be recognized as an increase to the net pension asset and a decrease to the
net pension liability, respectively, in the fiscal year ended June 30, 2023. Other amounts reported as
deferred outflows of resources and deferred inflows of resources related to pensions will be recognized
in pension expense in future reporting periods as follows:
Year ended June 30,
2023 (2,126,590)$ (147,790)$ (2,846,918)$
2024 (3,919,351) (170,810) (2,566,504)
2025 (4,802,118) (174,470) (2,835,854)
2026 (6,313,052) (229,012) (3,794,796)
2027 - - 3,104
(17,161,111)$ (722,082)$ (12,040,968)$
School Division -
Teacher
Retirement PlanCity of Salem
School Division
(Non-Professional)
Payable to the Pension Plan
At June 30, 2022, $486,263 and $7,987 were payable to the System under the VRS Retirement Plan
for the legally required contributions of the City and School Division, respectively, related to the June
2022 payroll. At June 30, 2022, $524,424 was payable to the System under the VRS Teacher
Retirement Plan for the legally required contributions related to the June 2022 payroll.
Pension Plan Data and VRS Teacher Retirement Plan Fiduciary Net Position
Information about the VRS Retirement Plan and the VRS Teacher Retirement Plan, including detailed
information about the VRS Teacher Retirement Plan’s Fiduciary Net Position, is available in the
separately issued VRS 2021 Annual Comprehensive Financial Report (ACFR). A copy of the VRS
2021 ACFR may be downloaded from the VRS website at
http://www.varetire.org/pdf/publications/2021-annual-report.pdf, or by writing to the System’s Chief
Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.
13. Summary of Pension Elements
A summary of the pension-related financial statement elements is as follows:
Governmental
Activities
Business-Type
Activities
Total Primary
Government
Component
Units
Pension Expense
VRS Retirement Plan 2,019,952$ 549,023$ 2,568,975$ (264,187)$
VRS Teacher Retirement Plan - - - 72,383
Total Pension Expense 2,019,952$ 549,023$ 2,568,975$ (191,804)$
84
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
13. Summary of Pension Elements (Continued)
Governmental
Activities
Business-Type
Activities
Total Primary
Government
Component
Units
Net Pension Asset
VRS Retirement Plan -$ -$ -$ 1,444,155$
Net Pension Liability
VRS Retirement Plan 20,043,160$ 5,284,748$ 25,327,908$ -$
VRS Teacher Retirement Plan - - - 21,062,060
Total Pension Liability 20,043,160$ 5,284,748$ 25,327,908$ 21,062,060$
Deferred Outflows of Resources
Differences between expected and actual
experience
VRS Retirement Plan 165,037$ 44,857$ 209,894$ -$
Changes in assumptions
VRS Retirement Plan 3,404,584 925,369 4,329,953 69,426
VRS Teacher Retirement Plan - - - 3,690,018
Changes in proportion and differences
between employer contributions and
proportionate share of contributions
VRS Teacher Retirement Plan - - - 97,692
Employer contributions subsequent to the
measurement date
VRS Retirement Plan 3,450,739 906,162 4,356,901 22,143
VRS Teacher Retirement Plan - - - 4,211,083
Total Deferred Outflows of Resources 7,020,360$ 1,876,388$ 8,896,748$ 8,090,362$
Deferred Inflows of Resources
Differences between expected and actual
experience
VRS Retirement Plan 846,385$ 230,048$ 1,076,433$ 41,489$
VRS Teacher Retirement Plan - - - 1,793,939
Net difference between projected and actual
earnings on pension plan investments
VRS Retirement Plan 16,216,785 4,407,740 20,624,525 750,019
VRS Teacher Retirement Plan - - - 13,272,746
Changes in proportion and differences
between employer contributions and
proportionate share of contributions
VRS Teacher Retirement Plan - - - 761,993
Total Deferred Inflows of Resources 17,063,170$ 4,637,788$ 21,700,958$ 16,620,186$
14. Other Postemployment Benefits – Retiree Health Plan
Plan Description
The City and School Division participate in a single-employer defined benefit healthcare plan (Retiree
Health Plan) administered and sponsored by the City. Full-time employees retiring directly from the
City must have at least 15 years of service, unless approved for VRS disability, to participate in the
Retiree Health Plan. In addition, they must be eligible for retirement under VRS.
Eligible employees and dependents covered at the time of retirement may continue participation in the
Retiree Health Plan at the same premium levels as active employees. This creates a benefit to the
retiree in the form of a lower insurance rate by blending retirees with active employees, also known as
an implicit rate subsidy.
85
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
14. Other Postemployment Benefits – Retiree Health Plan (Continued)
Plan Description (Continued)
In addition to the implicit rate subsidy, all pre-65 retirees who retired on or before October 1, 2010
receive a premium subsidy based on their coverage election. If the retiree elects retiree-only coverage,
the City contributes between 86% and 96% of the subscriber-only premium. If the retiree elects
retiree/spouse, retiree/children, or family coverage, the City contributes between 51% and 60% of the
retiree/spouse, retiree/children, or family premium. If the retiree elects retiree/child coverage, the City
contributes between 74% and 84% of the retiree/child premium. The actual City contribution within
each range depends on the health plan selected by the retiree.
For individuals retiring after October 1, 2010, and who were hired before July 1, 2010, the City will
contribute 3% of the retiree-only premium for each year of service up to 96% of the total retiree-only
premium for the lifetime of the retiree. For employees hired on or after July 1, 2010, the City will
contribute 3% of the retiree-only premium for each year of service up to 50% of the total retiree-only
premium for the lifetime of the retiree.
When a retiree turns age 65 or otherwise becomes eligible for Medicare, the retiree transfers to a
Medicare health supplement plan and/or drug plan. These individuals no longer receive the implicit
rate subsidy; however, they still receive a premium subsidy. The City contributes 3% of the retiree-only
premium for each year of service up to 96% not to exceed $3,300. Employees hired on or after July 1,
2010 are not eligible to receive the Medicare health supplement plan and/or drug plan benefit.
Individuals retiring after October 1, 2010, do not receive a premium subsidy for dependents and are
responsible to pay the difference in the actual premium rates above the premium subsidy. School
Division retirees do not receive any premium subsidy and are responsible to pay the entire premium.
The benefits are governed by City Council or School Board policy and can be amended through Council
or School Board action. The Retiree Health Plan does not issue a publicly available financial report.
The City participates in the OPEB Trust Fund, an irrevocable trust established for the purpose of
accumulating assets to fund postemployment benefits other than pensions. The Virginia Pooled OPEB
Trust Fund issues a separate report, which may be obtained from VML/VACo Finance Program, 919
East Main Street, Suite 1100, Richmond, Virginia 23219.
Employees Covered by Benefit Terms
As of June 30, 2021, the date of the latest actuarial valuation for the City and School Division, the
following employees were covered by the benefit terms of the Retiree Health Plan:
Active employees 478 532
Retired participants 304 29
Total participants 782 561
City of Salem School Division
Contributions
The Retiree Health Plan is funded through member and employer contributions on a pay-as-you-go
basis. City Retirees receiving benefits contribute a minimum of 4% to 14%, 16% to 26%, 40% to 49%,
40% to 48%, and 40% to 48% of the health insurance premium rate for retiree only, retiree + one minor
child, retiree + spouse, retiree + children, and family coverage, respectively. The actual contribution
within each range depends on the health plan selected by the retiree. School Division Retirees
receiving benefits contribute 100% of the health insurance premium rate. During the current year,
retired City and School Division members contributed $501,754 and $218,150, respectively, of the total
premiums through their required contributions of between $16.40 and $1,707, depending on the type
of coverage and years of service.
86
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
14. Other Postemployment Benefits – Retiree Health Plan (Continued)
Contributions (Continued)
The City and School Division contributed $1,653,422 and $140,032, respectively, in pay-as-you-go
contributions to the Retiree Health Plan for the year ended June 30, 2022. In addition, the City and
School Division contributed $234,930 and $97,135, respectively, to the OPEB Trust Fund. It is the
intent of the City and School Division to fully fund the actuarially determined contributions each year.
Net OPEB Liability
Under the Retiree Health Plan, the City’s and School Division’s net OPEB liabilities were measured as
of June 30, 2022. The total OPEB liability used to calculate the net OPEB liability was determined by
an actuarial valuation performed as of June 30, 2021. The components of the net OPEB liability as of
June 30, 2022, were as follows:
City of Salem School Division
Total OPEB liability 22,891,289$ 2,324,032$
Plan fiduciary net position 8,956,239 2,062,855
Net OPEB liability 13,935,050$ 261,177$
Plan fiduciary net position as a percentage of
total OPEB liability 39.13% 88.76%
Actuarial Assumptions
The total OPEB liability was determined as part of the actuarial valuation at the date indicated, using
the following actuarial assumptions:
Valuation date June 30, 2021
Measurement date June 30, 2022
Inflation 2.50%
Investment rate of return 6.5%, net of investment expense
Pre-65 healthcare cost trend rates City: 5.70% for 2021 graded to 4.00% by 2073
School Division: 5.70% for 2021 graded to 4.00% by 2073
Post-65 healthcare cost trend rates City: 4.80% for 2021 graded to 4.00% by 2073
School Division: N/A
Pre-retirement mortality RP-2014 Employee Rates to age 80, Healthy Annuitant
Rates at ages 81 and older projected with scale BB to
2020 set back 1 year for males at 85% of rates and set
back 1 year for females
Post-retirement mortality RP-2014 Employee Rates to age 49, Healthy Annuitant
Rates at ages 50 and older projected with scale BB to
2020 set forward 1 year for males and set back 1 year for
females with 1.5% increase compounded from ages 70 to
85
Plan Investments
In an effort to assist local governments in funding their OPEB liabilities, the Virginia Association of
Counties and the Virginia Municipal League established the VACo/VML Pooled OPEB Trust (Trust).
The Trust is an irrevocable trust offered to local governments and authorities and is governed by a
Board of Trustees consisting of local officials of participants in the Trust. The Board of Trustees has
adopted an investment policy to achieve a compound annualized rate of return over a market cycle,
including current income and capital appreciation, in excess of 5 percent after inflation, in a manner
consistent with prudent risk-taking. Investment decisions of the funds’ assets are made by the Board
of Trustees.
87
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
14. Other Postemployment Benefits – Retiree Health Plan (Continued)
Plan Investments (Continued)
The Board of Trustees establishes investment objectives, risk tolerance and asset allocation policies in
light of the investment policy, market and economic conditions, and prevailing prudent investment
practices. The Board of Trustees monitors the investments to ensure adherence to the adopted policies
and guidelines, while also reviewing and evaluating the performance of the investments and its
investment advisors in light of available investment opportunities, market conditions, and publicly
available indices for the generally accepted evaluation and measurement of such performance. The
Trust provides a diversified portfolio consisting of investments in various asset classes such as bonds,
domestic equities, international equities and cash. Specific investment information for the Trust can be
obtained by writing to VML/VACo Finance Program, 919 East Main Street, Suite 1100, Richmond,
Virginia 23219.
The Trust categorizes its investments within the fair value hierarchy established by GAAP. A
government is permitted in certain circumstances to establish the fair value of an investment that does
not have a readily determinable fair value by using the NAV per share (or its equivalent) of the
investment. Investments in the Trust are valued using the NAV per share, which is determined by
dividing the total value of the Trust by the number of outstanding shares. The NAV per share changes
with the value of the underlying investments in the Trust. Generally, participants may redeem their
investment at the end of a calendar quarter upon 90 days’ written notice. The Trust currently invests in
the following assets classes and strategies:
Asset Class
Core Fixed Income 21.00% 1.39% 1.28%
Large Cap US Equities 26.00% 4.94% 3.46%
Small Cap US Equities 10.00% 6.73% 4.18%
Foreign Developed Equities 13.00% 6.27% 4.52%
Emerging Market Equities 5.00% 8.82% 5.31%
Private Real Estate Property 7.00% 4.61% 3.58%
Private Equity 5.00% 10.36% 6.15%
Commodities 3.00% 1.99% 0.61%
Hedge FOF Strategic 10.00% 3.58% 2.67%
Assumed Inflation - Mean 2.40% 2.40%
Assumed Inflation - Standard Deviation 1.23% 1.23%
Portfolio Real Mean Return 4.76% 3.97%
Portfolio Nominal Mean Return 7.16% 6.46%
Portfolio Standard Deviation 12.28%
Long-Term Expected Rate of Return 6.50%
Arithmetic
Long-Term
Target Expected
Allocation Rate of Return
Geometric
Long-Term
Expected
Rate of Return
At June 30, 2022, the Plan held no investments in any one organization that represented 5% or more
of fiduciary net position.
88
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
14. Other Postemployment Benefits – Retiree Health Plan (Continued)
Rate of Return
As of June 30, 2022, the annual money-weighted rate of return on the plan investments, net of OPEB
plan investment expense, was -9.32% for the City and -9.39% for the School Division. The money-
weighted rate of return expresses investment performance, net of investment expense, adjusted for the
changing amounts actually invested.
Discount Rate
The discount rate used to measure the total OPEB liability was 6.50%. The projection of cash flows
used to determine the discount rate assumed that employer contributions will be made at current
contribution rates. Based on the current and historical commitment of the City to fully fund actuarially
determined contribution amounts, the Retiree Health Plan’s fiduciary net position combined with future
contributions is sufficient to cover all projected future benefit payments. The long-term expected rate of
return on plan investments is 6.50% and, when applied to the periods of projected benefit payments, it
is not anticipated that the Retiree Health Plan’s assets will be exhausted; therefore, the expected
municipal bond rate was not applied in determining the discount rate.
Changes in Net OPEB Liability
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
(a) (b) (a) - (b)
City of Salem
Balances at June 30, 2021 22,796,606$ 9,644,999$ 13,151,607$
Changes for the year:
Service cost 296,489 - 296,489
Interest 1,451,615 - 1,451,615
Contributions - employer - 1,888,352 (1,888,352)
Net investment income - (912,887) 912,887
Benefit payments (1,653,421) (1,653,421) -
Administrative expenses - (10,804) 10,804
Net changes 94,683 (688,760) 783,443
Balances at June 30, 2022 22,891,289$ 8,956,239$ 13,935,050$
School Division
Balances at June 30, 2021 2,239,811$ 2,173,845$ 65,966$
Changes for the year:
Service cost 78,070 - 78,070
Interest 146,183 - 146,183
Contributions - employer - 237,167 (237,167)
Net investment income - (205,312) 205,312
Benefit payments (140,032) (140,032) -
Administrative expenses - (2,813) 2,813
Net changes 84,221 (110,990) 195,211
Balances at June 30, 2022 2,324,032$ 2,062,855$ 261,177$
Increase (Decrease)
89
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
14. Other Postemployment Benefits – Retiree Health Plan (Continued)
Changes in Net OPEB Liability (Continued)
(The previous table presents amounts associated with the primary government. The OPEB Trust Fund
financial statements present amounts associated with the primary government and custodial entities.)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability calculated using the discount rate of 6.50%, as well as
what the net OPEB liability would be if it were calculated using a discount rate that is one percentage
point lower (5.50%) or one percentage point higher (7.50%) than the current rate:
1%
Decrease
(5.50%)
Current
Discount
(6.50%)
1%
Increase
(7.50%)
City of Salem 16,162,849$ 13,935,050$ 12,007,906$
School Division 439,970 261,177 95,701
Net OPEB Liability
Sensitivity of the Net OPEB Liability to Changes in Healthcare Cost Trend Rates
The following presents the net OPEB liability calculated using the current healthcare cost trend rate as
well as what the net OPEB liability would be if it were calculated using healthcare cost trend rates that
are one percentage point lower or one percentage point higher than the current rate:
1%
Decrease
Current Trend
Rate
1%
Increase
City of Salem 12,557,135$ 13,935,050$ 15,538,719$
School Division 25,473 261,177 534,004
Net OPEB Liability
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to OPEB
For the year ended June 30, 2022, the City and School Division recognized OPEB expense of $656,164
and $64,280, respectively. At June 30, 2022, the City and School Division reported deferred outflows
of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
City of Salem
Differences between expected and actual
experience -$ 1,019,887$
Changes in assumptions 882,530 1,075,013
Net difference between projected and actual
earnings on plan investments 329,141 -
Total 1,211,671$ 2,094,900$
School Division
Differences between expected and actual
experience 9,350$ 39,241$
Changes in assumptions 52,993 144,918
Net difference between projected and actual
earnings on plan investments 79,817 -
Total 142,160$ 184,159$
90
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
14. Other Postemployment Benefits – Retiree Health Plan (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to OPEB (Continued)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB
will be recognized in OPEB expense as follows:
Year ended June 30,
2023 (447,546)$ (16,321)$
2024 (479,360) (23,245)
2025 (527,754) (33,900)
2026 398,565 41,371
2027 157,150 (12,911)
Thereafter 15,716 3,007
(883,229)$ (41,999)$
City of Salem School Division
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit
Plan Description
All full-time, salaried permanent employees of the City and School Division are automatically covered
by the VRS Group Life Insurance Program upon employment. This multiple-employer, cost-sharing
plan is administered by the Virginia Retirement System (VRS or System), along with pensions and
other OPEB plans, for public employer groups in the Commonwealth of Virginia.
In addition to the Basic Group Life Insurance benefit, members are also eligible to elect additional
coverage for themselves as well as a spouse or dependent children through the Optional Group Life
Insurance Program. For members who elect the optional group life insurance coverage, the insurer
bills employers directly for the premiums. Employers deduct these premiums from members’
paychecks and pay the premiums to the insurer. Since this is a separate and fully insured program, it
is not included as part of the Group Life Insurance Program OPEB.
All full-time, salaried permanent (non-professional) employees of the School Division are automatically
covered by the multiple-employer, agent defined benefit VRS Political Subdivision Health Insurance
Credit Program upon employment. All full-time, salaried permanent (professional) employees of the
School Division are automatically covered by the multiple-employer, cost-sharing VRS Teacher
Employee Health Insurance Credit Program. The plans are administered by VRS, along with pension
and other OPEB plans, for public employer groups in the Commonwealth of Virginia. Members earn
one month of service credit toward the benefit for each month they are employed and for which their
employer pays contributions to VRS. The health insurance credit is a tax-free reimbursement in an
amount set by the General Assembly for each year of service credit against qualified health insurance
premiums retirees pay for single coverage, excluding any portion covering the spouse or dependents.
The credit cannot exceed the amount of the premiums and ends upon the retiree’s death. The specific
information about each plan, including eligibility, coverage and benefits is set out below:
GROUP LIFE INSURANCE PROGRAM
Eligible Employees – The Group Life Insurance Program was established July 1, 1960, for state
employees, teachers and employees of political subdivisions that elect the program, including the
following employers that do not participate in VRS for retirement:
City of Richmond
City of Portsmouth
City of Roanoke
City of Norfolk
Roanoke City School Board
91
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Plan Description (Continued)
GROUP LIFE INSURANCE PROGRAM (Continued)
Basic group life insurance coverage is automatic upon employment. Coverage ends for employees
who leave their position before retirement eligibility or who take a refund of their accumulated member
contributions and accrued interest.
Benefit Amounts – The benefits payable under the Group Life Insurance Program have several
components.
Natural Death Benefit – The natural death benefit is equal to the employee’s covered
compensation rounded to the next highest thousand and then doubled.
Accidental Death Benefit – The accidental death benefit is double the natural death benefit.
Other Benefit Provisions – In addition to the basic natural and accidental death benefits, the
program provides additional benefits provided under specific circumstances. These include:
o Accidental dismemberment benefit
o Seatbelt benefit
o Repatriation benefit
o Felonious assault benefit
o Accelerated death benefit option
Reduction in Benefit Amounts – The benefit amounts provided to members covered under the Group
Life Insurance Program are subject to a reduction factor. The benefit amount reduces by 25% on
January 1st following one calendar year of separation. The benefit amount reduces by an additional
25% on each subsequent January 1st until it reaches 25% of its original value.
Minimum Benefit Amounts and Cost-of-Living Adjustment (COLA) – For covered members with at
least 30 years of service credit, there is a minimum benefit payable under the Group Life Insurance
Program. The minimum benefit was set at $8,000 by statute in 2015. This will be increased annually
based on the VRS Plan 2 cost-of-living adjustment calculation. The minimum benefit adjusted for the
COLA was $8,722 as of June 30, 2022.
POLITICAL SUBDIVISION HEALTH INSURANCE CREDIT PROGRAM
Eligible Employees – The Political Subdivision Health Insurance Credit Program was established July
1, 1993, for retired political subdivision employees of employers who elect the benefit and who retire
with at least 15 years of service credit. Eligible employees are enrolled automatically upon employment.
They include:
Full-time permanent salaried employees of the participating political subdivision who are
covered under the VRS pension plan.
Benefit Amounts – The Political Subdivision Health Insurance Credit Program provides the following
benefits for eligible employees:
At Retirement – For employees who retire, the monthly benefit is $1.50 per year of service per
month with a maximum benefit of $45.00 per month.
Disability Retirement – For employees who retire on disability or go on long-term disability
under the Virginia Local Disability Program (VLDP), the monthly benefit is $45.00 per month.
92
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Plan Description (Continued)
POLITICAL SUBDIVISION HEALTH INSURANCE CREDIT PROGRAM (Continued)
Health Insurance Credit Program Notes:
The monthly health insurance credit benefit cannot exceed the individual premium amount.
No health insurance credit for premiums paid and qualified under LODA; however, the
employee may receive the credit for premiums paid for other qualified health plans.
Employees who retire after being on long-term disability under VLDP must have at least 15
years of service credit to qualify for the health insurance credit as a retiree.
TEACHER EMPLOYEE HEALTH INSURANCE CREDIT PROGRAM
Eligible Employees – The Teacher Employee Health Insurance Credit Program was established July
1, 1993, for retired teacher employees covered under VRS who retire with at least 15 years of service
credit. Eligible employees are enrolled automatically upon employment. They include:
Full-time permanent (professional) salaried employees of public school divisions covered under
VRS.
Benefit Amounts – The Teacher Employee Health Insurance Credit Program provides the following
benefits for eligible employees:
At Retirement – For teachers and other professional school employees who retire, the monthly
benefit is $4.00 per year of service per month with no cap on the benefit amount.
Disability Retirement – For teachers and other professional school employees who retire on
disability or go on long-term disability under the VLDP, the monthly benefit is either:
o $4.00 per month, multiplied by twice the amount of service credit, or
o $4.00 per month, multiplied by the amount of service earned had the employee been
active until age 60, whichever is lower.
Health Insurance Credit Program Notes:
The monthly health insurance credit benefit cannot exceed the individual premium amount.
Employees who retire after being on long-term disability under VLDP must have at least 15
years of service credit to qualify for the health insurance credit as a retiree.
Employees Covered by Benefit Terms
As of the June 30, 2020, actuarial valuation, the following employees were covered by the benefit terms
of the Political Subdivision Health Insurance Credit OPEB plan:
Inactive members or their beneficiaries
currently receiving benefits 25
Inactive members:
Vested inactive members 2
Total inactive members 27
Active members 62
Total covered employees 89
93
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Contributions
The contribution requirements for the Group Life Insurance Program are governed by §51.1-506 and
§51.1-508 of the Code of Virginia, as amended, but may be impacted as a result of funding provided to
state agencies and school divisions by the Virginia General Assembly. The total rate for the Group Life
Insurance Program was 1.34% of covered employee compensation. This was allocated into an
employee and an employer component using a 60/40 split. The employee component was 0.80%
(1.34% x 60%), and the employer component was 0.54% (1.34% x 40%). Employers may elect to pay
all or part of the employee contribution, however the employer must pay all of the employer contribution.
Each employer’s contractually required employer contribution rate for the year ended June 30, 2022,
was 0.54% of covered employee compensation. This rate was based on an actuarially determined rate
from an actuarial valuation as of June 30, 2019. The actuarially determined rate, when combined with
employee contributions, was expected to finance the costs of benefits payable during the year, with an
additional amount to finance any unfunded accrued liability. Employer contributions from the City were
$133,026 and $125,503 for the years ended June 30, 2022, and June 30, 2021, respectively. Employer
contributions from the School Division for non-professional employees were $7,833 and $6,864 for the
years ended June 30, 2022, and June 30, 2021, respectively. Employer contributions from the School
Division for professional employees were $141,458 and $128,847 for years ended June 30, 2022, and
June 30, 2021, respectively.
The contribution requirement for active employees in the Political Subdivision Health Insurance Credit
Program is governed by §51.1-1402(E) of the Code of Virginia, as amended, but may be impacted as
a result of funding options provided to political subdivisions by the Virginia General Assembly. The
School Division’s contractually required employer contribution rate for the year ended June 30, 2022,
was 0.68% of covered employee compensation. This rate was based on an actuarially determined rate
from an actuarial valuation as of June 30, 2019. The actuarially determined rate was expected to
finance the costs of benefits earned by employees during the year, with an additional amount to finance
any unfunded accrued liability. The School Division elected to provide an additional optional employer
contribution of 0.45% of covered employee compensation for the year ended June 30, 2022.
Contributions from the School Division were $16,387 and $8,589 for years ended June 30, 2022, and
June 30, 2021, respectively.
During the 2020 session, House Bill 1513 was enacted. This bill required the addition of health
insurance credit benefits for non-teacher school division employees effective July 1, 2021. While
benefit payments became effective July 1, 2021, employers were required to pre-fund the benefits
beginning July 1, 2020. The bill impacted 95 employers and resulted in approximately $2.5 million of
additional employer contributions in fiscal year 2021.
The contribution requirement for active employees in the Teacher Employee Health Insurance Credit
Program is governed by §51.1-1401(E) of the Code of Virginia, as amended, but may be impacted as
a result of funding provided to school divisions by the Virginia General Assembly. Each school
division’s contractually required employer contribution rate for the year ended June 30, 2022, was
1.21% of covered employee compensation. This rate was based on an actuarially determined rate
from an actuarial valuation as of June 30, 2019. The actuarially determined rate was expected to
finance the costs of benefits earned by employees during the year, with an additional amount to finance
any unfunded accrued liability. Contributions from the School Division were $316,973 and $287,648
for years ended June 30, 2022, and June 30, 2021, respectively.
Net OPEB Liability
Under the Political Subdivision Health Insurance Credit Program, the School Division’s net OPEB
liability was measured as of June 30, 2021. The total OPEB liability for this program was determined
by an actuarial valuation performed as of June 30, 2020, using updated actuarial assumptions, applied
to all periods included in the measurement and rolled forward to the measurement date of June 30,
2021.
94
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Net OPEB Liability (Continued)
Under the Group Life Insurance Program, the City, School Division non-professional employees, and
School Division professional employees reported liabilities of $1,290,302, $71,486, and $1,341,822,
respectively, for their proportionate shares of the Group Life Insurance Program net OPEB liability as
of June 30, 2022. Under the Teacher Employee Health Insurance Credit Program, the School Division
reported a liability of $3,445,100 for its proportionate share of the Teacher Employee Health Insurance
Credit Program net OPEB liability as of June 30, 2022. The net OPEB liabilities for the Group Life
Insurance Program and Teacher Employee Health Insurance Credit Program were measured as of
June 30, 2021, and the total OPEB liabilities used to calculate the net OPEB liabilities for each plan
were determined by an actuarial valuation performed as of June 30, 2020, and rolled forward to the
measurement date of June 30, 2021. The covered employer’s proportions of the net OPEB liabilities
for the Group Life Insurance Program and Teacher Employee Health Insurance Credit program were
based on the covered employer’s actuarially determined employer contributions to the plans for the
year ended June 30, 2021, relative to the total of the actuarially determined employer contributions for
all participating employers.
At June 30, 2021, the proportions of the Group Life Insurance Program for the City, School Division
non-professional employees, and School Division professional employees were 0.11657%, 0.00614%,
and 0.11525%, respectively, as compared to 0.11949%, 0.00623%, and 0.11525%, respectively, at
June 30, 2020. At June 30, 2021, the proportion of the Teacher Employee Health Insurance Credit
Program for the School Division was 0.26840%, as compared to 0.27051% at June 30, 2020.
The net OPEB liabilities for the Group Life Insurance Program and the Teacher Employee Health
Insurance Credit Program represent each program’s total OPEB liability determined in accordance with
GAAP, less the associated fiduciary net position. As of the measurement date of June 30, 2021, net
OPEB liability amounts are as follows (amounts expressed in thousands):
Group Life Teacher
Insurance Employee HIC
OPEB Program OPEB Program
Total OPEB liability 3,577,346$ 1,477,874$
Plan fiduciary net position 2,413,074 194,305
Net OPEB liability 1,164,272$ 1,283,569$
Plan fiduciary net position as a
percentage of total OPEB liability 67.45%13.15%
The total OPEB liabilities for the Group Life Insurance Program and Teacher Employee Health
Insurance Credit Program are calculated by the System’s actuary, and each plan’s fiduciary net position
is reported in the System’s financial statements. The net OPEB liabilities for the Group Life Insurance
Program and Teacher Employee Health Insurance Credit Program are disclosed in accordance with
the requirements of GAAP in the System’s notes to the financial statements and required
supplementary information.
95
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Actuarial Assumptions – General Employees
The total OPEB liabilities for general employees in the Group Life Insurance Program and Political
Subdivision Health Insurance Credit Program were based on actuarial valuations as of June 30, 2020,
using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods
included in the measurement and rolled forward to the measurement date of June 30, 2021.
Inflation 2.50%
Salary increases, including inflation
Teachers 3.50% - 5.95%
Locality – General employees 3.50% - 5.35%
Locality – Hazardous Duty employees 3.50% - 4.75%
Investment rate of return 6.75%, net of plan investment expenses,
including inflation
Group Life Insurance Program – Mortality Rates – Largest Ten Locality Employers – Non-Hazardous
Duty:
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; males set forward 2 years; 105% of rates for females set forward 3 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 95% of rates for males set forward 2 years; 95% of rates for females set forward
1 year
Post-Disablement – 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
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally
Mortality Improvement Scale – Rates projected generationally with Modified MP-2020
Improvement Scale that is 75% of the MP-2020 rates
Group Life Insurance Program – Mortality Rates – Non-Largest Ten Locality Employers – Non-
Hazardous Duty:
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; males set forward 2 years; 105% of rates for females set forward 3 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 95% of rates for males set forward 2 years; 95% of rates for females set forward
1 year
Post-Disablement – 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
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally
Mortality Improvement Scale – Rates projected generationally with Modified MP-2020
Improvement Scale that is 75% of the MP-2020 rates
96
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Actuarial Assumptions – General Employees (Continued)
For general employees in the Group Life Insurance Program, the actuarial assumptions used in the
June 30, 2020, 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 a result of the
experience study and VRS Board action are as follows:
Largest Ten Locality Employers – Non-Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age from 75 to 80 for all
Withdrawal Rates – Adjusted rates to better fit experience at each age and service decrement
through 9 years of service
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
Non-Largest Ten Locality Employers – Non-Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age from 75 to 80 for all
Withdrawal Rates – Adjusted rates to better fit experience at each age and service decrement
through 9 years of service
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
Political Subdivision Health Insurance Credit Program – Mortality Rates – Largest Ten Locality
Employers – Non-Hazardous Duty:
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; 95% of rates for males; 105% of rates for females set forward 2 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 110% of rate for males; 105% of rates for females set forward 3 years
Post-Disablement – Pub-2010 Amount Weighted General Disabled Rates projected
generationally; 95% of rates for males set back 3 years; 90% of rates for females set back 3
years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally; 110% of rates for males and females set forward 2 years
Mortality Improvement Scale – Rates projected generationally with Modified MP-2020
Improvement Scale that is 75% of the MP-2020 rates
97
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Actuarial Assumptions – General Employees (Continued)
Political Subdivision Health Insurance Credit Program – Non-Largest Ten Locality Employers – Non-
Hazardous Duty:
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; 95% of rates for males; 105% of rates for females set forward 2 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 110% of rate for males; 105% of rates for females set forward 3 years
Post-Disablement – Pub-2010 Amount Weighted General Disabled Rates projected
generationally; 95% of rates for males set back 3 years; 90% of rates for females set back 3
years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally; 110% of rates for males and females set forward 2 years
Mortality Improvement Scale – Rates projected generationally with Modified MP-2020
Improvement Scale that is 75% of the MP-2020 rates
For general employees in the Political Subdivision Health Insurance Credit Program, the actuarial
assumptions used in the June 30, 2020, 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 a result of the experience study and VRS Board action in the Political Subdivision
Health Insurance Credit Program are as follows:
Largest Ten Locality Employers – Non-Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age from 75 to 80 for all
Withdrawal Rates – Adjusted rates to better fit experience at each age and service decrement
through 9 years of service
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
Non-Largest Ten Locality Employers – Non-Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age from 75 to 80 for all
Withdrawal Rates – Adjusted rates to better fit experience at each age and service decrement
through 9 years of service
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
98
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Actuarial Assumptions – Public Safety Employees with Hazardous Duty Benefits
The total OPEB liability for public safety employees with hazardous duty benefits in the Group Life
Insurance Program was based on an actuarial valuation as of June 30, 2020, using the Entry Age
Normal actuarial cost method and the following assumptions, applied to all periods included in the
measurement and rolled forward to the measurement date of June 30, 2021.
Inflation 2.50%
Salary increases, including inflation
Teachers 3.50% - 5.95%
Locality – General employees 3.50% - 5.35%
Locality – Hazardous Duty employees 3.50% - 4.75%
Investment rate of return 6.75%, net of plan investment expenses,
including inflation
Group Life Insurance Program – Mortality Rates – Largest Ten Locality Employers – Hazardous Duty:
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; 95% of rates for males; 105% of rates for females set forward 2 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 110% of rates for males; 105% of rates for females set forward 3 years
Post-Disablement – Pub-2010 Amount Weighted General Disabled Rates projected
generationally; 95% of rates for males set back 3 years; 90% of rates for females set back 3
years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally; 110% of rates for males and females set forward 2 years
Mortality Improvement Scale – Rates projected generationally with Modified MP-2020
Improvement Scale that is 75% of the MP-2020 rates
Group Life Insurance Program – Mortality Rates – Non-Largest Ten Locality Employers – Hazardous
Duty:
Pre-Retirement – Pub-2010 Amount Weighted Safety Employee Rates projected
generationally; 95% of rates for males; 105% of rates for females set forward 2 years
Post-Retirement – Pub-2010 Amount Weighted Safety Healthy Retiree Rates projected
generationally; 110% of rates for males; 105% of rates for females set forward 3 years
Post-Disablement – Pub-2010 Amount Weighted General Disabled Rates projected
generationally; 95% of rates for males set back 3 years; 90% of rates for females set back 3
years
Beneficiaries and Survivors – Pub-2010 Amount Weighted Safety Contingent Annuitant Rates
projected generationally; 110% of rates for males and females set forward 2 years
Mortality Improvement Scale – Rates projected generationally with Modified MP-2020
Improvement Scale that is 75% of the MP-2020 rates
99
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Actuarial Assumptions – Public Safety Employees with Hazardous Duty Benefits (Continued)
For hazardous duty employees in the Group Life Insurance Program, the actuarial assumptions used
in the June 30, 2020, 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 a result of the
experience study in the Group Life Insurance Program are as follows:
Largest Ten Locality Employers – Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age from 65 to 70
Withdrawal Rates – Decreased rates
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
Non-Largest Ten Locality Employers – Hazardous Duty:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience and changed final retirement age
from 65 to 70
Withdrawal Rates – Decreased rates and changed from rates based on age and service to
rates based on service only to better fit experience and to be more consistent with Locals Top
10 Hazardous Duty
Disability Rates – No change
Salary Scale – No change
Line of Duty Disability – No change
Discount Rate – No change
Actuarial Assumptions – Teachers
The total OPEB liabilities for teachers and administrative employees of the School Division in the Group
Life Insurance Program and Teacher Employee Health Insurance Credit Program were based on
actuarial valuations as of June 30, 2020, using the Entry Age Normal actuarial cost method and the
following assumptions, applied to all periods included in the measurement and rolled forward to the
measurement date of June 30, 2021.
Inflation 2.50%
Salary increases, including inflation
Teachers 3.50% - 5.95%
Locality – General employees 3.50% - 5.35%
Locality – Hazardous Duty employees 3.50% - 4.75%
Investment rate of return 6.75%, net of plan investment expenses,
including inflation
100
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Actuarial Assumptions – Teachers (Continued)
Group Life Insurance Program and Teacher Employee Health Insurance Credit Program – Mortality
Rates:
Pre-Retirement – Pub-2010 Amount Weighted Teachers Employee Rates projected
generationally; 110% of rates for males
Post-Retirement – Pub-2010 Amount Weighted Teachers Healthy Retiree Rates projected
generationally; males set forward 1 year; 105% of rates for females
Post-Disablement – Pub-2010 Amount Weighted Teachers Disabled Rates projected
generationally; 110% of rates for males and females
Beneficiaries and Survivors – Pub-2010 Amount Weighted Teachers Contingent Annuitant
Rates projected generationally
Mortality Improvement Scale – Rates projected generationally with Modified MP-2020
Improvement Scale that is 75% of the MP-2020 rates
For teachers and administrative employees of the School Division in the Group Life Insurance Program
and Teacher Employee Health Insurance Credit Program, the actuarial assumptions used in the June
30, 2020, valuation were based on the results of an actuarial experience study for the four-year 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 of the
experience study and VRS Board action in the Group Life Insurance Program and Teacher Employee
Health Insurance Credit Program are as follows:
Mortality Rates (Pre-retirement, post-retirement healthy, and disabled) – Updated to Pub-2010
public sector mortality tables; for future mortality improvements, replace load with a modified
Mortality Improvement Scale MP-2020
Retirement Rates – Adjusted rates to better fit experience for Plan 1; set separate rates based
on experience for Plan 2/Hybrid; changed final retirement age from 75 to 80 for all
Withdrawal Rates – Adjusted rates to better fit experience at each age and service decrement
through 9 years of service
Disability Rates – No change
Salary Scale – No change
Discount Rate – No change
Long-Term Expected Rate of Return
The long-term expected rate of return on the System’s investments was determined using a log-normal
distribution analysis in which best-estimate ranges of expected future real rates of return (expected
returns, net of System’s investment expense and inflation) are developed for each major asset class.
These ranges are combined to produce the long-term expected rate of return by weighting the expected
future real rates of return by the target asset allocation percentage and by adding expected inflation.
The target asset allocation and best estimate of arithmetic real rates of return for each major asset
class are summarized in the table on the next page.
101
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Long-Term Expected Rate of Return (Continued)
Asset Class (Strategy)
Target
Allocation
Arithmetic
Long-Term
Expected
Rate of Return
Weighted
Average
Long-Term
Expected
Rate of
Return*
Public Equity 34.00% 5.00% 1.70%
Fixed Income 15.00% 0.57% 0.09%
Credit Strategies 14.00% 4.49% 0.63%
Real Assets 14.00% 4.76% 0.67%
Private Equity 14.00% 9.94% 1.39%
MAPS - Multi-Asset Public Strategies 6.00% 3.29% 0.20%
PIP - Private Investment Partnership 3.00% 6.84% 0.21%
Total 100.00% 4.89%
Inflation 2.50%
* Expected arithmetic nominal return 7.39%
* The above allocation provides a one-year return of 7.39%. However, one-year returns do not
take into account the volatility present in each of the asset classes. In setting the long-term
expected return for the System, stochastic projections are employed to model future returns under
various economic conditions. These results provide a range of returns over various time periods
that ultimately provide a median return of 6.94%, including expected inflation of 2.50%.
* On October 10, 2019, the VRS Board elected a long-term rate of 6.75%, which was roughly at
the 40th percentile of expected long-term results of the VRS fund asset allocation at that time,
providing a median return of 7.11%, including expected inflation of 2.50%.
Discount Rate – Group Life Insurance Program and Teacher Employee Health Insurance Credit
Program
For the Group Life Insurance Program and Teacher Employee Health Insurance Credit Program, the
discount rate used to measure the total OPEB liability was 6.75%. The projection of cash flows used
to determine the discount rate assumed that employer contributions will be made in accordance with
the VRS funding policy and at rates equal to the actuarially determined contribution rates adopted by
the VRS Board of Trustees. Through the fiscal year ending June 30, 2021, the rate contributed by the
entity for OPEB will be subject to the portion of the VRS Board-certified rates that are funded by the
Virginia General Assembly, which was 100% of the actuarially determined contribution rate. From July
1, 2021, on, employers are assumed to continue to contribute 100% of the actuarially determined
contribution rates. Based on those assumptions, the OPEB plans’ fiduciary net positions were 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 OPEB liabilities.
102
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Discount Rate – Political Subdivision Health Insurance Credit Program
For the Political Subdivision Health Insurance Credit Program, the discount rate used to measure the
total OPEB liability was 6.75%. The projection of cash flows used to determine the discount rate
assumed that employer contributions will be made in accordance with the VRS funding policy at rates
equal to the difference between actuarially determined contribution rates adopted by the VRS Board of
Trustees and the member rate. Through the fiscal year ending June 30, 2021, the rate contributed by
the entity for OPEB was 100% of the actuarially determined contribution rates. From July 1, 2021, on,
employers are assumed to continue to contribute 100% of the actuarially determined contribution rates.
Based on those assumptions, the OPEB plan’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 OPEB
liability.
Changes in Net OPEB Liability
Total
OPEB
Liability
(a)
Plan
Fiduciary
Net Position
(b)
Net
OPEB
Liability
(a) - (b)
Balances at June 30, 2020 127,808$ 61,885$ 65,923$
Changes for the year:
Service cost 4,085 - 4,085
Interest 8,118 - 8,118
Changes in assumptions 2,663 - 2,663
Differences between expected
and actual experience (750) - (750)
Contributions - employer - 8,589 (8,589)
Net investment income - 15,149 (15,149)
Benefit payments (15,100) (15,100) -
Administrative expenses - (164) 164
Net changes (984) 8,474 (9,458)
Balances at June 30, 2021 126,824$ 70,359$ 56,465$
School Division - Political Subdivision
Health Insurance Credit
Increase (Decrease)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the City’s and School Division’s proportionate shares of the Group Life
Insurance Program net GLI OPEB liability, the School Division’s Political Subdivision Health Insurance
Credit Program net HIC OPEB liability, and the School Division’s proportionate share of the Teacher
Employee Health Insurance Credit Program net HIC OPEB liability using the discount rate of 6.75%,
as well as what the net OPEB liabilities would be if they 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:
103
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate (Continued)
1%
Decrease
(5.75%)
Current
Discount
(6.75%)
1%
Increase
(7.75%)
Group Life Insurance 1,885,179$ 1,290,302$ 809,913$
School Division
Group Life Insurance (Non-Professional) 104,444 71,486 44,871
Group Life Insurance (Professional) 1,960,451 1,341,822 842,251
Political Subdivision Health Insurance Credit 68,810 56,465 45,883
Teacher Employee Health Insurance Credit 3,878,228 3,445,100 3,078,571
Net OPEB Liability
City of Salem
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to OPEB
For the year ended June 30, 2022, the City and School Division recognized Group Life Insurance OPEB
expense of $27,972 for City employees, $1,800 for non-professional School Division employees, and
$44,769 for professional School Division employees. For the year ended June 30, 2022, the School
Division recognized Political Subdivision Health Insurance Credit Program OPEB expense of ($2,311)
and Teacher Employee Health Insurance Credit Program OPEB expense of $255,734. Since there
were changes in proportionate share between measurement dates for the Group Life Insurance
Program and the Teacher Employee Health Insurance Credit Program, portions of the OPEB expenses
for those plans were related to deferred amounts from changes in proportion.
At June 30, 2022, the City and School Division reported deferred outflows of resources and deferred
inflows of resources related to Group Life Insurance (GLI) Program and Health Insurance Credit (HIC)
Program OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
City of Salem - GLI
Differences between expected and actual
experience 148,769$ 9,939$
Net difference between projected and actual
earnings on program investments - 311,332
Changes in assumptions 71,912 178,469
Changes in proportion 16,824 90,802
Employer contributions subsequent to the
measurement date 133,026 -
Total 370,531$ 590,542$
104
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to OPEB (Continued)
Deferred Outflows
of Resources
Deferred Inflows
of Resources
School Division - Non-Professional GLI
Differences between expected and actual
experience 8,153$ 545$
Net difference between projected and actual
earnings on program investments - 17,062
Changes in assumptions 3,941 9,781
Changes in proportion 653 5,746
Employer contributions subsequent to the
measurement date 7,833 -
Total 20,580$ 33,134$
School Division - Professional GLI
Differences between expected and actual
experience 153,040$ 10,224$
Net difference between projected and actual
earnings on program investments - 320,264
Changes in assumptions 73,974 183,590
Changes in proportion 1,326 34,601
Employer contributions subsequent to the
measurement date 141,458 -
Total 369,798$ 548,679$
School Division - Political Subdivision HIC
Differences between expected and actual
experience -$ 9,380$
Changes in assumptions 2,844 -
Net difference between projected and actual
earnings on program investments - 6,987
Employer contributions subsequent to the
measurement date 16,387 -
Total 19,231$ 16,367$
School Division - Teacher Employee HIC
Differences between expected and actual
experience -$ 60,117$
Net difference between projected and actual
earnings on program investments - 45,382
Changes in assumptions 93,127 13,846
Changes in proportion 14,111 110,387
Employer contributions subsequent to the
measurement date 316,973 -
Total 424,211$ 229,732$
105
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
15. Other Postemployment Benefits – Group Life Insurance and Health Insurance Credit (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to OPEB (Continued)
The deferred outflow of resources related to OPEB resulting from the City’s contribution of $133,026
subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the
fiscal year ending June 30, 2023. The deferred outflows of resources related to OPEB resulting from
the School Division’s contributions of $7,833, $141,458, $16,387, and $316,973 subsequent to the
measurement date will be recognized reductions of the net pension liabilities in the fiscal year ended
June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to OPEB will be recognized in OPEB expense in future reporting periods as follows:
Year ended
June 30,
2023 (89,726)$
2024 (71,568)
2025 (60,487)
2026 (105,356)
2027 (25,900)
(353,037)$
GLI
City of Salem
Year ended
June 30,
2023 (4,650)$ (76,306)$ (5,578)$ (29,057)$
2024 (4,102) (60,425) (3,887) (29,572)
2025 (4,270) (59,303) (1,954) (25,498)
2026 (6,091) (104,601) (2,104) (22,426)
2027 (1,274) (19,704) - (10,304)
Thereafter - - - (5,637)
(20,387)$ (320,339)$ (13,523)$ (122,494)$
School Division
GLI
Non-Professional
GLI
Professional
Political
Subdivision HIC
Teacher
Employee HIC
Payables to the OPEB Plans
At June 30, 2022, the City had a payable of $29,155 to VRS under the Group Life Insurance Program,
the School Division had a payable of $1,808 to VRS under the Group Life Insurance Program for non-
professional employees, and the School Division had a payable of $33,796 to VRS under the Group
Life Insurance Program for professional employees. These payables related to contributions for the
June 2022 payroll.
At June 30, 2022, the School Division had a payable of $1,525 to VRS under the Political Subdivision
Health Insurance Credit Program and a payable of $30,513 to VRS under the Teacher Employee Health
Insurance Credit Program. These payables related to contributions for the June 2022 payroll.
Program Plan Data
Information about the Group Life Insurance Program, the Political Subdivision Health Insurance Credit
Program, and the Teacher Employee Health Insurance Credit Program is available in the separately
issued VRS 2021 Annual Comprehensive Financial Report (ACFR). A copy of the VRS 2021 ACFR
may be downloaded from the VRS website at http://www.varetire.org/pdf/publications/2021-annual-
report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-
2500.
106
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
16. Summary of Other Postemployment Benefit Elements
A summary of the other postemployment benefit financial statement elements is as follows:
Governmental
Activities
Business-Type
Activities
Total Primary
Government
Component
Units
OPEB Expense
Retiree Health Plan 519,246$ 136,918$ 656,164$ 64,280$
VRS Retirement Plan - GLI 21,994 5,978 27,972 1,800
VRS Retirement Plan - HIC - - - (2,311)
VRS Teacher Retirement Plan - GLI - - - 44,769
VRS Teacher Retirement Plan - HIC - - - 255,734
Total OPEB Expense 541,240$ 142,896$ 684,136$ 364,272$
Net OPEB Liability
Retiree Health Plan 10,669,278$ 3,265,772$ 13,935,050$ 261,177$
VRS Retirement Plan - GLI 1,006,514 283,788 1,290,302 71,486
VRS Retirement Plan - HIC - - - 56,465
VRS Teacher Retirement Plan - GLI - - - 1,341,822
VRS Teacher Retirement Plan - HIC - - - 3,445,100
Total OPEB Liability 11,675,792$ 3,549,560$ 15,225,352$ 5,176,050$
Deferred Outflows of Resources
Differences between expected and actual
experience
Retiree Health Plan -$ -$ -$ 9,350$
VRS Retirement Plan - GLI 116,976 31,793 148,769 8,153
VRS Teacher Retirement Plan - GLI - - - 153,040
Net difference between projected and actual
earnings on program investments
Retiree Health Plan 260,461 68,680 329,141 79,817
VRS Retirement Plan - GLI 56,543 15,369 71,912 -
Changes in assumptions
Retiree Health Plan 698,376 184,154 882,530 52,993
VRS Retirement Plan - GLI - - - 3,941
VRS Retirement Plan - HIC - - - 2,844
VRS Teacher Retirement Plan - GLI - - - 73,974
VRS Teacher Retirement Plan - HIC - - - 93,127
Changes in proportion
VRS Retirement Plan - GLI 13,228 3,596 16,824 653
VRS Teacher Retirement Plan - GLI - - - 1,326
VRS Teacher Retirement Plan - HIC - - - 14,111
Employer contributions subsequent to the
measurement date
VRS Retirement Plan - GLI 105,134 27,892 133,026 7,833
VRS Retirement Plan - HIC - - - 16,387
VRS Teacher Retirement Plan - GLI - - - 141,458
VRS Teacher Retirement Plan - HIC - - - 316,973
Total Deferred Outflows of Resources 1,250,718$ 331,484$ 1,582,202$ 975,980$
107
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
16. Summary of Other Postemployment Benefit Elements (Continued)
Governmental
Activities
Business-Type
Activities
Total Primary
Government
Component
Units
Deferred Inflows of Resources
Differences between expected and actual
experience
Retiree Health Plan 807,072$ 212,815$ 1,019,887$ 39,241$
VRS Retirement Plan - GLI 7,815 2,124 9,939 545
VRS Retirement Plan - HIC - - - 9,380
VRS Teacher Retirement Plan - GLI - - - 10,224
VRS Teacher Retirement Plan - HIC - - - 60,117
Net difference between projected and actual
earnings on program investments
VRS Retirement Plan - GLI 244,794 66,538 311,332 17,062
VRS Retirement Plan - HIC - - 6,987
VRS Teacher Retirement Plan - GLI - - - 320,264
VRS Teacher Retirement Plan - HIC - - - 45,382
Changes in assumptions
Retiree Health Plan 850,695 224,318 1,075,013 144,918
VRS Retirement Plan - GLI 140,328 38,141 178,469 9,781
VRS Teacher Retirement Plan - GLI - - - 183,590
VRS Teacher Retirement Plan - HIC - - - 13,846
Changes in proportion
VRS Retirement Plan - GLI 71,397 19,405 90,802 5,746
VRS Teacher Retirement Plan - GLI - - - 34,601
VRS Teacher Retirement Plan - HIC - - - 110,387
Total Deferred Inflows of Resources 2,122,101$ 563,341$ 2,685,442$ 1,012,071$
17. Commitments and Contingencies
Construction Commitments
Active construction projects at the end of the year are as follows:
Spent
To Date
Remaining
Contract
Digester Project - WVWA (Salem Portion) 1,297,409$ 1,023,028$
Electric Substation Upgrades 10,994,145 604,547
Salem High School Renovation 25,396,312 1,732,359
Salem High School Fieldhouse Renovation 620,068 3,160,591
East Salem Elementary HVAC Upgrades 581,535 232,073
West Salem Elementary Roof Replacement - 456,887
38,889,469$ 7,209,485$
Electrical Service
On July 1, 2006, the City entered into an agreement with American Electric Power Service Corporation
to purchase electricity for consumption and resale to City residents. The rates are recalculated annually
based on the supplier’s cost. As part of the agreement, an annual cost true-up is required based upon
American Electric Power’s FERC filing. The City’s policy is to recognize the true-up as an expense
when it is billed. The true-up for December 31, 2021 resulted in an expense of $247,762 in the current
fiscal year. The agreement expires May 31, 2026 with two possible five-year period renewals and may
be terminated under certain circumstances.
On July 1, 2006, the City entered into an agreement with the United States Department of Energy to
purchase electricity during American Electric Power’s peak usage periods. The agreement requires a
37-month notification prior to termination.
108
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
17. Commitments and Contingencies (Continued)
Water and Wastewater Treatment Contract
On July 1, 2021, the City entered into a new agreement with the Western Virginia Water Authority to
sell surplus water at a bulk rate determined by a mutually agreed upon formula. The agreement
automatically renews for 10-year terms upon expiration and requires a 24-month notification prior to
termination.
On November 1, 2003, the City entered into an agreement with the City of Roanoke, Virginia for the
transportation and treatment of wastewater and to fund a portion of certain sewage treatment plant
improvements. Rates for the former services are adjusted annually, while the costs recognized by the
City for the latter have been capitalized as the sewage treatment contract in capital assets. The
agreement expires October 31, 2033.
On July 1, 2004, the Western Virginia Water Authority (WVWA) was created by the County of Roanoke
and the City of Roanoke. The WVWA is a full-service authority that provides water and wastewater
treatment to the Roanoke Valley region. This authority assumed the previously mentioned wastewater
treatment contractual obligation.
Special Services
On July 1, 1973, the City entered into an agreement with the County of Roanoke, Virginia for social
services, agricultural and home demonstration services and jail services. The agreement can be
renewed or terminated at the end of any two-year period with proper notice.
Participation Agreement
On October 10, 2016, the City entered into a participation agreement with the Western Virginia Regional
Industrial Facility Authority (WVRIFA), the County of Roanoke, and the City of Roanoke to acquire the
property at Wood Haven Road to be used for an industrial park or other economic development
purpose. The City’s proportionate share of this agreement is 11.6% and costs will not exceed
$1,200,000 payable through 2037.
Consent Order
On December 8, 2005, the Virginia Department of Environmental Quality issued a State Water Control
Board Enforcement Action Special Order by Consent to the City for the purpose of resolving certain
alleged violations of the State Water Control Law and the Regulations. The action requires the City to
identify sources of inflow and infiltration into the sanitary sewer system that lead to overflows and
Wastewater Treatment Plant bypasses and perform actions to improve the system on the approved
schedule as defined in the Corrective Action Plan completed on September 28, 2007. The project costs
through 2029 are anticipated to be approximately $15.7 million.
Special Purpose Grants
Special purpose grants are subject to audit to determine compliance with their requirements. City
officials believe that if any refunds are required, they will be immaterial.
Litigation
Various claims and lawsuits are pending against the City. In the opinion of management, after
consulting with legal counsel, the potential loss on all claims and lawsuits will not materially affect the
City’s financial position.
109
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
18. Tax Abatements
Under the authority provided by the Code of Virginia sections 15.2-4905 and 58.1-3221, the City, along
with the Economic Development Authority, entered into several performance agreements with
companies to provide economic development incentive payments for rehabilitation, renovation, and
replacement of commercial or industrial properties. Each company must meet certain capital
expenditure and development requirements as specified in the performance agreement in order to
qualify for the incentive payments. Incentive payments may include one of the following or any
combination of the following:
Annual rebate payments equal to the difference in additional real estate taxes resulting from
rehabilitation, renovation, or replacement of the associated property.
Annual rebate payments based on personal property taxes, retail sales tax, meals tax, lodging
tax, and business license tax received by the City from the company.
One-time grant payments to assist in costs of rehabilitation, renovation, or replacement of the
associated property.
Rebate payments commence upon completion of the rehabilitation, renovation, or replacement, or on
January 1 of the year following completion of the rehabilitation, renovation, or replacement and shall
run for a period as specified in each performance agreement, typically between five and ten years. In
fiscal year 2022, tax abatements for economic development incentives totaled $60,616.
19. Jointly Governed Organizations
The following entities are considered to be jointly governed. The City has no ongoing financial
responsibility or interest in jointly governed organizations.
Roanoke Valley Resource Authority
The County of Roanoke, the Cities of Roanoke and Salem, and the Town of Vinton jointly participate in
the Roanoke Valley Resource Authority (RVRA), which operates the regional sanitary landfill, waste
collection and transfer station, and related treatment facilities. RVRA is governed by a seven-member
board, of which one member is appointed by the City. The City has control over the budget and
financing for RVRA only to the extent of representation by the board member appointed. The
participating localities are each responsible for their pro rata share, based on population, of any year-
end operating deficit. For the fiscal year ended June 30, 2022, the City remitted $906,260 to RVRA for
services. Financial statements may be obtained from RVRA at 1020 Hollins Road NE, Roanoke,
Virginia 24012.
Blue Ridge Behavioral Healthcare
The Counties of Botetourt, Craig and Roanoke and the Cities of Roanoke and Salem formed Blue Ridge
Behavioral Healthcare (BRBH) to provide a system of comprehensive community mental health,
intellectual disability and substance abuse services. BRBH is governed by a 16-member board; three
members are appointed by the City. Each locality’s financial obligation is based on the type and amount
of services performed for individuals in the locality. For the year ended June 30, 2022, the City remitted
$199,455 to BRBH for services. Financial statements may be obtained from BRBH at 301 Elm Avenue
SW, Roanoke, Virginia, 24016.
Roanoke Valley Detention Commission
The Counties of Botetourt, Franklin and Roanoke and the Cities of Roanoke and Salem formed the
Roanoke Valley Detention Commission (Commission) to renovate, expand and operate a detention
facility for juveniles. The Commission is governed by a six-member board, of which one member is
appointed by the City. Each locality’s financial obligation is calculated as its percentage of utilization
or average daily population, for the previous three fiscal years. The Commission has the authority to
issue debt and such debt is the responsibility of the Commission. For the year ended June 30, 2022,
the City remitted $100,956 to the Commission for per diem charges. Financial statements may be
obtained from the Commission at 498 Coyner Springs Road, Roanoke, Virginia 24012.
110
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
19. Jointly Governed Organizations (Continued)
Roanoke Valley Regional Fire/EMS Training Center
The County of Roanoke, the Cities of Roanoke and Salem and the Town of Vinton jointly operate a
fire/EMS training center (Center). The Center is governed by a committee designated by the
participating jurisdictions. New fire/EMS recruits are required to take a 17-week training course at the
facility before being assigned to a station. After completion of the training, the new recruits are state
certified. Each jurisdiction is responsible for a percentage of the annual operating costs of the facility.
The City of Salem is responsible for 8% of the annual operating costs. For the year ended June 30,
2022, the City remitted $7,090 for operating costs of the facility. Financial statements may be obtained
from the Center at 1220 Kessler Mill Road, Salem, Virginia 24153.
Western Virginia Regional Jail Authority
The Counties of Franklin, Montgomery and Roanoke and the City of Salem formed the Western Virginia
Regional Jail Authority (Jail Authority) to develop and operate a regional jail. The Jail Authority is
governed by a 12-member board; three from each participating locality. Each locality’s financial
obligation, which includes operating expenses and debt, is based on the number of prisoner days used
and a share of the capital costs to build the facility. For the year ended June 30, 2022, the City remitted
$756,901 for per diem charges and $234,553 for debt service to the Jail Authority. Financial statements
may be obtained from the Jail Authority at 5885 West River Road, Salem, Virginia 24153.
Roanoke Valley Broadband Authority
The Counties of Botetourt and Roanoke and the Cities of Salem and Roanoke formed the Roanoke
Valley Broadband Authority (RVBA) in order to acquire, finance, construct, operate, manage, and
maintain a broadband system and related facilities pursuant to the Virginia Wireless Services
Authorities Act. RVBA is governed by a five-member board, of which one member is appointed by the
City. Based upon participation in the fiber expansion project, the Cities of Salem and Roanoke share
equally in the operating and debt service costs of the Authority. For the year ending June 30, 2022,
the City remitted $310,838 for operating costs and $333,186 for debt service to the RVBA. Financial
statements may be obtained from RVBA at 601 South Jefferson Street SW, Suite 110, Roanoke,
Virginia 24011.
Western Virginia Regional Industrial Facility Authority
The Counties of Botetourt, Roanoke and Franklin, the Cities of Roanoke and Salem and the Town of
Vinton formed the Western Virginia Regional Industrial Facility Authority (WVRIFA) in order to enhance
the economic base of each such locality through the developing, owning and operating of one or more
facilities on a cooperative basis in the region. WVRIFA is governed by a twelve-member board, of
which two members are appointed by the City. Each locality’s financial obligation is based on their
percentage of participation in each economic development project. For the year ended June 30, 2022,
the City remitted $4,500 for operating budget member dues and $30,951 for debt service to WVRIFA.
Financial statements may be obtained from WVRIFA at PO Box 2569, Roanoke, Virginia 24010.
Roanoke Valley Governor’s School
The Counties of Bedford, Botetourt, Craig, Franklin and Roanoke and the Cities of Roanoke and Salem
jointly participate in a regional education program focusing on science, technology, engineering and
mathematics operated by Roanoke Valley Governor’s School (RVGS). RVGS is governed by a seven
member board, with one member from each participating locality. The School Division has control over
budget and financing only to the extent of representation by the one board member appointed. Each
locality’s financial obligation is based on their proportionate share of students attending RVGS. For the
year ended June 30, 2022, the School Division remitted $53,285 for services. Financial statements may
be obtained from RVGS at 2104 Grandin Road, Roanoke, Virginia 24015.
111
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
19.Jointly Governed Organizations (Continued)
Roanoke Regional Airport Commission
The County of Roanoke and the Cities of Roanoke and Salem jointly participate in the Roanoke
Regional Airport Commission (Commission), owner and operator of the Roanoke-Blacksburg Regional
Airport. The Commission is governed by a seven-member board, of which one member is appointed
by the City. Financial obligations of participating localities include any year end operating deficit and
the current payment with respect to approved capital expenditures. Each locality’s pro rata financial
obligation is based on their population. For the year ended June 30, 2022, the City did not have a
financial obligation to the Commission. Financial statements may be obtained from the Commission at
5202 Aviation Drive NW, Roanoke, VA 24012.
20. Subsequent Events
In July 2022, City Council authorized execution of a contract for renovation of the James I. Moyer Sports
Complex in an amount not to exceed $20,539,000.
In November 2022, the City entered into a performance agreement and memorandum of understanding
with Valleydale Catalyst, LLC and the EDA for a project at the former Valleydale Meat Packing and
Processing plant. The developer will invest at least $50,000,000 in the project which includes
construction of approximately 300 upscale apartment units and amenities. The EDA will provide a grant
of $5,000,000 and annual incentive payments based on real estate tax, not to exceed $5,000,000. The
City agrees to complete streetscape improvements totaling $1,500,000.
21. Accounting Change
In fiscal year 2022, the City adopted GASB Statement No. 87, Leases. This statement required
recognition of certain lease assets and liabilities for leases that were classified previously as operating
leases and recognized as inflows of resources or outflows of resources based on the payment
provisions of the lease agreements. The adoption of this statement had no effect on beginning net
positions, but the primary government recognized the following beginning balances in assets, liabilities,
and deferred inflows of resources related to leases:
Governmental
Activities
Business-Type
Activities
Total Primary
Government
ASSETS
Lease receivable 1,426,166$ 323,653$ 1,749,819$
Capital assets:
Intangible, right-to-use, net 81,194 3,071 84,265
Total assets 1,507,360$ 326,724$ 1,834,084$
LIABILITIES
Long-term liabilities due in less than one year:
Lease liability 17,009$ 3,071$ 20,080$
Long-term liabilities due in more than one year:
Lease liability 64,185 - 64,185
Total liabilities 81,194$ 3,071$ 84,265$
DEFERRED INFLOWS OF RESOURCES 1,426,166$ 323,653$ 1,749,819$
112
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
21. Accounting Change (Continued)
Adoption of GASB Statement No. 87, Leases, had no effect on beginning fund balances or beginning
net positions, but the governmental funds and proprietary funds recognized the following beginning
balances in assets, liabilities, and deferred inflows of resources related to leases:
Governmental
Funds
Proprietary
Funds
General Water and Sewage
ASSETS ASSETS
Lease receivable 1,426,166$ Current assets:
Lease receivable 95,263$
DEFERRED INFLOWS Noncurrent assets:
OF RESOURCES 1,426,166$ Lease receivable 228,390
Capital assets:
Intangible right-to-use, net 3,071
Total noncurrent assets 231,461
Total assets 326,724$
LIABILITIES
Current liabilities:
Lease liability 3,071$
DEFERRED INFLOWS OF
RESOURCES 323,653$
Comparative prior year information, to the extent presented, has not been restated because the
necessary information is not available.
22. New Accounting Standards
The GASB has issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability
Payment Arrangements, to improve financial reporting by addressing issues related to public-private
and public-public partnership arrangements (PPPs). This statement also provides guidance for
accounting and financial reporting for availability payment arrangements. The provisions of this
statement are effective for fiscal years beginning after June 15, 2022. Management has not completed
the process of evaluating the impact that will result from adoption of the standard and is, therefore,
unable to disclose the impact of adoption.
The GASB has issued Statement No. 96, Subscription-Based Information Technology Arrangements,
to provide guidance on the accounting and financial reporting for subscription-based information
technology arrangements for government end users. This statement defines a subscription-based
information technology arrangement, establishes that a subscription-based information technology
arrangement results in a right-to-use subscription asset (an intangible asset) and a corresponding
subscription liability, provides the capitalization criteria for outlays other than subscription payments,
including implementation costs of a subscription-based information technology arrangement, and
requires note disclosures regarding a subscription-based information technology arrangement. The
provisions of this statement are effective for fiscal years beginning after June 15, 2022. Management
has not completed the process of evaluating the impact that will result from adoption of the standard
and is, therefore, unable to disclose the impact of adoption.
113
CITY OF SALEM, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
22. New Accounting Standards (Continued)
The GASB has issued Statement No. 99, Omnibus 2022, to enhance comparability in accounting and
financial reporting and to improve the consistency of authoritative literature by addressing practice
issues that have been identified during implementation and application of certain GASB Statements
and accounting and financial reporting for financial guarantees. Some provisions of this statement are
effective upon issuance, other provisions of this statement are effective for fiscal years beginning after
June 15, 2022, and other provisions of this statement are effective for fiscal years beginning after June
15, 2023. Management has not completed the process of evaluating the impact that will result from full
adoption of the standard and is, therefore, unable to disclose the impact of adoption.
The GASB has issued Statement No. 100, Accounting Changes and Error Corrections – An
Amendment of GASB Statement No. 62, to enhance accounting and financial reporting requirements
for accounting changes and error corrections to provide more understandable, reliable, relevant,
consistent, and comparable information for making decisions or assessing accountability. The
provisions of this statement are effective for fiscal years beginning after June 15, 2023. Management
has not completed the process of evaluating the impact that will result from adoption of the standard
and is, therefore, unable to disclose the impact of adoption.
The GASB has issued Statement No. 101, Compensated Absences, to update the recognition and
measurement guidance for compensated absences. The provisions of this statement are effective for
fiscal years beginning after December 15, 2023. Management has not completed the process of
evaluating the impact that will result from adoption of the standard and is, therefore, unable to disclose
the impact of adoption.
114
REQUIRED SUPPLEMENTARY INFORMATION
The Required Supplementary Information subsection of the City of Salem, Virginia’s Annual
Comprehensive Financial Report includes changes in the net pension liability (asset) and related ratios, the
employer’s share of net pension liability for the VRS Teacher Retirement Plan, employer pension
contributions for the VRS Retirement Plan and VRS Teacher Retirement Plan, changes in net OPEB liability
and related ratios, and employer other postemployment benefits contributions.
115
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117
Contributions in
Relation to Contributions
Contractually Contractually Contribution as a % of
Year Ended Required Required Deficiency Covered Covered
June 30 Contribution Contribution (Excess) Payroll Payroll
(a) (b) (a-b) (c) (b/c)
2022 4,356,901$ 4,356,901$ -$ 23,899,622$ 18.23%
2021* 4,093,089 4,093,089 - 22,452,490 18.23%
2020 3,730,748 3,730,748 - 22,944,330 16.26%
2019 3,615,284 3,615,284 - 22,234,219 16.26%
2018 3,449,144 3,449,144 - 21,264,760 16.22%
2017 3,496,819 3,496,819 - 21,558,687 16.22%
2016 3,915,838 3,915,838 - 21,598,665 18.13%
2015 3,942,152 3,942,152 - 21,743,806 18.13%
School Division (Non-Professional Staff)
2022 22,143$ 22,143$ -$ 962,739$ 2.30%
2021 19,987 19,987 - 869,000 2.30%
2020 39,178 39,178 - 1,061,734 3.69%
2019**40,178 40,178 - 1,088,835 3.69%
2018 51,406 51,406 - 1,187,206 4.33%
2017 51,554 51,554 - 1,190,624 4.33%
2016 92,100 92,100 - 1,173,248 7.85%
2015 93,028 93,028 - 1,185,071 7.85%
** Prior to 2019, VRS contributions were made over twelve months for all employees, regardless of contract
term. In fiscal year 2019, the School Division began contributing to VRS over each employee's contract term.
For employees with contract terms less than twelve months, contributions and covered payroll recognized in
fiscal year 2019 include amounts accrued for July and August of 2018, in addition to the full annual amount for
fiscal year 2019.
* Revised to reflect actual 2021 amounts as shown in the VRS actuarial report rather than estimated amounts
used in the prior year ACFR.
Schedule is intended to show information for 10 years. Since 2022 is the eighth year for this presentation, only
seven additional years of data are available. However, additional years will be included as they become
available.
City of Salem
EXHIBIT 16
CITY OF SALEM, VIRGINIA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER PENSION CONTRIBUTIONS
YEAR ENDED JUNE 30, 2022
118
Employer's Share
Employer's of the Net
Employer's Proportionate Pension Liability Plan Fiduciary
Plan Proportion of Share of the as a % of Net Position as a
Year Ended the Net Pension Net Pension Covered Covered % of the Total
June 30 Liability Liability Payroll Payroll Pension Liability
(a) (b) (a/b)
2021 0.27131% 21,062,060$ 23,117,413$ 91.11% 85.46%
2020 0.27321% 39,759,230 23,135,236 171.86%71.47%
2019 0.27613% 36,340,277 22,568,718 161.02%73.51%
2018 0.28140% 33,092,000 22,299,761 148.40%74.81%
2017 0.27878% 34,284,000 21,639,120 158.44%72.92%
2016 0.28026% 39,276,000 21,368,521 183.80%68.28%
2015 0.28555% 35,941,000 21,230,718 169.29%70.68%
2014 0.29170% 35,251,000 19,575,450 180.08%70.88%
The amounts presented have a measurement date (plan year) of the previous fiscal year end.
YEAR ENDED JUNE 30, 2022
Schedule is intended to show information for 10 years. Since fiscal year 2022 (plan year 2021) is the eighth
year for this presentation, only seven additional years of data are available. However, additional years will be
included as they become available.
VRS TEACHER RETIREMENT PLAN
EXHIBIT 17
CITY OF SALEM, VIRGINIA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER'S SHARE OF NET PENSION LIABILITY
119
Contributions in
Relation to Contributions
Contractually Contractually Contribution as a % of
Year Ended Required Required Deficiency Covered Covered
June 30 Contribution Contribution (Excess) Payroll Payroll
(a) (b) (a-b) (c) (b/c)
2022 4,211,083$ 4,211,083$ -$ 25,337,443$ 16.62%
2021* 3,842,114 3,842,114 - 23,117,413 16.62%
2020 3,627,605 3,627,605 - 23,135,236 15.68%
2019** 3,538,775 3,538,775 - 22,568,718 15.68%
2018 3,639,321 3,639,321 - 22,299,761 16.32%
2017 3,172,295 3,172,295 - 21,639,120 14.66%
2016 3,004,414 3,004,414 - 21,368,521 14.06%
2015 3,078,454 3,078,454 - 21,230,718 14.50%
EXHIBIT 18
CITY OF SALEM, VIRGINIA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER PENSION CONTRIBUTIONS
** Prior to 2019, VRS contributions were made over twelve months for all employees, regardless of contract
term. In fiscal year 2019, the School Division began contributing to VRS over each employee's contract term.
For employees with contract terms less than twelve months, contributions and covered payroll recognized in
fiscal year 2019 include amounts accrued for July and August of 2018, in addition to the full annual amount for
fiscal year 2019.
* Revised to reflect actual 2021 amounts as shown in the VRS actuarial report rather than estimated amounts
used in the prior year ACFR.
YEAR ENDED JUNE 30, 2022
Schedule is intended to show information for 10 years. Since 2022 is the eighth year for this presentation, only
seven additional years of data are available. However, additional years will be included as they become
available.
VRS TEACHER RETIREMENT PLAN
120
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122
Contributions in Contributions
Relation to as a % of
Actuarially Actuarially Contribution Covered Covered
Year Ended Determined Determined Deficiency Employee Employee
June 30 Contribution* Contribution* (Excess)Payroll Payroll
(a)(b)(a-b)(c)(b/c)
City of Salem
2022 1,110,672$ 1,888,352$ (777,680)$ 23,727,114$ 7.96%
2021 1,081,831 1,912,020 (830,189) 23,727,114 8.06%
2020 1,159,709 1,731,271 (571,562) 23,606,599 7.33%
2019 1,111,485 1,698,429 (586,944) 23,606,599 7.19%
2018 1,516,523 1,824,467 (307,944) 22,779,070 8.01%
2017 1,475,809 1,772,562 (296,753) 22,779,070 7.78%
School Division
2022 94,871$ 237,167$ (142,296)$ 24,787,563$ 0.96%
2021 92,108 236,285 (144,177) 24,787,563 0.95%
2020 120,718 233,192 (112,474) 23,962,730 0.97%
2019 114,675 248,535 (133,860) 23,962,730 1.04%
2018 140,801 233,189 (92,388) 23,076,891 1.01%
2017 136,700 211,531 (74,831) 23,076,891 0.92%
* Contribution amounts for the City of Salem do not include contributions for custodial entities.
Notes to Schedule
There have been no significant changes to the benefit provisions since the prior actuarial valuation.
Methods and assumptions used to determine contribution rates:
Valuation date June 30, 2021
Measurement date June 30, 2022
Actuarial cost method Entry age normal
Amortization method Level percent of payroll
Amortization period Closed over 25 years
Asset valuation method Market value
Investment rate of return 6.50%
Projected long-term salary increases 3.00%
Schedule is intended to show information for 10 years. Since 2022 is the sixth year for this presentation, only
five additional years of data are available. However, additional years will be included as they become
available.
EXHIBIT 20
CITY OF SALEM, VIRGINIA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER OPEB CONTRIBUTIONS
YEAR ENDED JUNE 30, 2022
RETIREE HEALTH PLAN
123
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124
Contributions in
Relation to Contributions
Contractually Contractually Contribution as a % of
Year Ended Required Required Deficiency Covered Covered
June 30 Contribution Contribution (Excess) Payroll Payroll
(a) (b) (a-b) (c) (b/c)
2022 9,862$ 16,387$ (6,525)$ 1,450,177$ 1.13%
2021* 8,589 8,589 - 1,263,088 0.68%
2020 7,533 7,533 - 1,276,780 0.59%
2019** 7,318 7,318 - 1,240,339 0.59%
2018 8,875 8,875 - 1,286,232 0.69%
** Prior to 2019, VRS contributions were made over twelve months for all employees, regardless of contract
term. In fiscal year 2019, the School Division began contributing to VRS over each employee's contract term.
For employees with contract terms less than twelve months, contributions and covered payroll recognized in
fiscal year 2019 include amounts accrued for July and August of 2018, in addition to the full annual amount for
fiscal year 2019.
* Revised to reflect actual 2021 amounts as shown in the VRS actuarial report rather than estimated amounts
used in the prior year ACFR.
Schedule is intended to show information for 10 years. Since 2022 is the fifth year for this presentation, only
four additional years of data are available. However, additional years will be included as they become
available.
POLITICAL SUBDIVISION HEALTH INSURANCE CREDIT PROGRAM
EXHIBIT 22
CITY OF SALEM, VIRGINIA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER OPEB CONTRIBUTIONS
YEAR ENDED JUNE 30, 2022
125
Employer's Share
Employer's of the Net
Employer's Proportionate OPEB Liability Plan Fiduciary
Plan Proportion of Share of the as a % of Net Position as a
Year Ended the Net OPEB Net OPEB Covered Covered % of the Total
June 30 Liability Liability Payroll Payroll OPEB Liability
(a) (b) (a/b)
City of Salem - Group Life Insurance Program
2021 0.11657% 1,290,302$ 23,241,296$ 5.55% 67.45%
2020 0.11949%1,902,916 23,655,385 8.04%52.64%
2019 0.12131%1,883,072 22,818,462 8.25%52.00%
2018 0.11921%1,726,760 21,687,115 7.96%51.22%
2017 0.12390%1,778,837 22,853,532 7.78%48.86%
School Division - Group Life Insurance Program (Non-Professional Staff)
2021 0.00614%71,486$ 1,271,111$ 5.62%67.45%
2020 0.00623%103,968 1,285,000 8.09%52.64%
2019 0.00634%103,169 1,243,077 8.30%52.00%
2018 0.00676%102,000 1,286,154 7.93%51.22%
2017 0.00687%103,000 1,268,277 8.12%48.86%
School Division - Group Life Insurance Program (Professional Staff)
2021 0.11525%1,341,822$ 23,860,556$ 5.62%67.45%
2020 0.11525%1,923,334 23,770,577 8.09%52.64%
2019 0.11726%1,908,133 22,986,731 8.30%52.00%
2018 0.11861%1,801,000 22,553,654 7.99%51.22%
2017 0.11835%1,781,000 21,829,358 8.16%48.86%
School Division - Teacher Employee Health Insurance Credit Program
2021 0.26840%3,445,100$ 23,772,562$ 14.49%9.95%
2020 0.27051%3,528,848 23,716,667 14.88%9.95%
2019 0.27380%3,584,308 22,965,750 15.61%8.97%
2018 0.27878%3,540,000 22,545,854 15.70%8.08%
2017 0.27639%3,506,000 21,812,560 16.07%7.04%
The amounts presented have a measurement date (plan year) of the previous fiscal year end.
YEAR ENDED JUNE 30, 2022
Schedule is intended to show information for 10 years. Since fiscal year 2022 (plan year 2021) is the fifth year
for this presentation, only four additional years of data are available. However, additional years will be included
as they become available.
EXHIBIT 23
CITY OF SALEM, VIRGINIA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER'S SHARE OF NET OPEB LIABILITY
GLI AND TEACHER EMPLOYEE HIC PROGRAMS
126
Contributions in
Relation to Contributions
Contractually Contractually Contribution as a % of
Year Ended Required Required Deficiency Covered Covered
June 30 Contribution Contribution (Excess) Payroll Payroll
(a) (b) (a-b) (c) (b/c)
City of Salem - Group Life Insurance Program
2022 133,026$ 133,026$ -$ 24,634,444$ 0.54%
2021*125,503 125,503 - 23,241,296 0.54%
2020 123,008 123,008 - 23,655,385 0.52%
2019 118,656 118,656 - 22,818,462 0.52%
2018 112,773 112,773 - 21,687,115 0.52%
School Division - Group Life Insurance Program (Non-Professional Staff)
2022 7,833$ 7,833$ -$ 1,450,556$ 0.54%
2021*6,864 6,864 - 1,271,111 0.54%
2020 6,682 6,682 - 1,285,000 0.52%
2019**6,464 6,464 - 1,243,077 0.52%
2018 6,688 6,688 - 1,286,154 0.52%
School Division - Group Life Insurance Program (Professional Staff)
2022 141,458$ 141,458$ -$ 26,195,926$ 0.54%
2021*128,847 128,847 - 23,860,556 0.54%
2020 123,607 123,607 - 23,770,577 0.52%
2019**119,531 119,531 - 22,986,731 0.52%
2018 117,279 117,279 - 22,553,654 0.52%
School Division - Teacher Employee Health Insurance Credit Program
2022 316,973$ 316,973$ -$ 26,196,116$ 1.21%
2021*287,648 287,648 - 23,772,562 1.21%
2020 284,600 284,600 - 23,716,667 1.20%
2019**275,589 275,589 - 22,965,750 1.20%
2018 277,314 277,314 - 22,545,854 1.23%
** Prior to 2019, VRS contributions were made over twelve months for all employees, regardless of contract
term. In fiscal year 2019, the School Division began contributing to VRS over each employee's contract term.
For employees with contract terms less than twelve months, contributions and covered payroll recognized in
fiscal year 2019 include amounts accrued for July and August of 2018, in addition to the full annual amount for
fiscal year 2019.
* Revised to reflect actual 2021 amounts as shown in the VRS actuarial report rather than estimated amounts
used in the prior year ACFR.
Schedule is intended to show information for 10 years. Since 2022 is the fifth year for this presentation, only
four additional years of data are available. However, additional years will be included as they become
available.
EXHIBIT 24
CITY OF SALEM, VIRGINIA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER OPEB CONTRIBUTIONS
GLI AND TEACHER EMPLOYEE HIC PROGRAMS
YEAR ENDED JUNE 30, 2022
127
CITY OF SALEM, VIRGINIA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2022
1. Changes of Benefit Terms
Pension
There have been no actuarially material changes to the Virginia Retirement System (VRS) benefit
provisions since the prior actuarial valuation.
Other Postemployment Benefits (OPEB)
There have been no actuarially material changes to the VRS benefit provisions since the prior actuarial
valuation.
2.Changes of Assumptions
The actuarial assumptions used in the June 30, 2020, 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 a result of the experience study and VRS Board action are as follows:
Largest Ten – Non-Hazardous Duty:
Update mortality table to Pub-2010 public sector mortality tables; for future mortality
improvements, replace load with a modified Mortality Scape MP-2020
Adjusted retirement rates to better fit experience for Plan 1; set separate rates based on
experience for Plan2/Hybrid; changed final retirement age
Adjusted withdrawal rates to better fit experience at each year and service through 9 years of
service
No change to disability rates
No change to salary scale
No change to line of duty rates
No change to discount rate
Largest Ten – Hazardous Duty/Public Safety Employees:
Update mortality table to Pub-2010 public sector mortality tables; for future mortality
improvements, replace load with a modified Mortality Scape MP-2020
Adjusted retirement rates to better fit experience and changed final retirement age from 65 to
70
Decreased withdrawal rates
No change to disability rates
No change to salary scale
No change to line of duty rates
No change to discount rate
All Others (Non-Ten Largest) – Non-Hazardous Duty:
Update mortality table to Pub-2010 public sector mortality tables; for future mortality
improvements, replace load with a modified Mortality Scape MP-2020
Adjusted retirement rates to better fit experience for Plan 1; set separate rates based on
experience for Plan2/Hybrid; changed final retirement age
Adjusted withdrawal rates to better fit experience at each year and service through 9 years of
service
No change to disability rates
No changes to salary scale
No change to line of duty rates
No change to discount rate
128
CITY OF SALEM, VIRGINIA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2022
2.Changes of Assumptions (Continued)
All Others (Non-Ten Largest) – Hazardous Duty/Public Safety Employees:
Update mortality table to Pub-2010 public sector mortality tables; for future mortality
improvements, replace load with a modified Mortality Scape MP-2020
Adjusted retirement rates to better fit experience and changed final retirement age from 65 to
70
Decreased withdrawal rates and changed from rates based on age and service to rates based
on service only to better fit experience and to be more consistent with Locals Largest 10
Hazardous Duty
No change to disability rates
No change to salary scale
No change to line of duty rates
No change to discount rate
Teacher Cost-Sharing Pool:
Update mortality table to Pub-2010 public sector mortality tables; for future mortality
improvements, replace load with a modified Mortality Scape MP-2020
Adjusted retirement rates to better fit experience for Plan 1; set separate rates based on
experience for Plan2/Hybrid; changed final retirement age from 78 to 80 for all
Adjusted withdrawal rates to better fit experience at each year and service through 9 years
of service
No change to disability rates
No changes to salary scale
No change to discount rate
129
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130
OTHER SUPPLEMENTARY INFORMATION
The Other Supplementary Information subsection of the City of Salem, Virginia’s Annual Comprehensive
Financial Report includes the Combining Statement of Net Position; Combining Statement of Revenues,
Expenses, and Changes in Fund Net Position; and Combining Statement of Cash Flows for the Nonmajor
Proprietary Funds. This subsection also includes the Combining Statement of Fiduciary Assets and
Liabilities and the Combining Statement of Changes in Fiduciary Assets and Liabilities for the Custodial
Funds; and the Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance
for the Economic Development Authority of the City of Salem.
131
EXHIBIT 25
Catering Total Nonmajor
Civic and Proprietary
Center Concessions Funds
ASSETS
Current assets:
Cash and cash equivalents 744,283$ 65,760$ 810,043$
Receivables, net 4,622 33,921 38,543
Due from component unit - 1,568 1,568
Inventories - 32,689 32,689
Prepaid items 108,764 - 108,764
Total current assets 857,669 133,938 991,607
Noncurrent assets:
Capital assets:
Nondepreciable 215,453 - 215,453
Depreciable, net 2,815,940 28,643 2,844,583
Total capital assets 3,031,393 28,643 3,060,036
Total noncurrent assets 3,031,393 28,643 3,060,036
Total assets 3,889,062 162,581 4,051,643
DEFERRED OUTFLOWS OF RESOURCES 328,027 58,951 386,978
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 84,335 17,380 101,715
Accrued payroll and related liabilities 128,945 31,777 160,722
Due to other funds - 420,000 420,000
Unearned revenues 727,684 - 727,684
Compensated absences 73,972 11,484 85,456
Total current liabilities 1,014,936 480,641 1,495,577
Noncurrent liabilities:
Compensated absences 53,452 - 53,452
Net pension liability 878,792 274,784 1,153,576
Net OPEB liability 479,366 97,081 576,447
Total noncurrent liabilities 1,411,610 371,865 1,783,475
Total liabilities 2,426,546 852,506 3,279,052
DEFERRED INFLOWS OF RESOURCES 771,341 152,373 923,714
NET POSITION
Net investment in capital assets 3,031,393 28,643 3,060,036
Unrestricted (deficit) (2,012,191) (811,990) (2,824,181)
Total net position 1,019,202$ (783,347)$ 235,855$
Enterprise Funds
CITY OF SALEM, VIRGINIA
COMBINING STATEMENT OF NET POSITION
NONMAJOR PROPRIETARY FUNDS
JUNE 30, 2022
132
EXHIBIT 26
Catering Total Nonmajor
Civic and Proprietary
Center Concessions Funds
OPERATING REVENUES
Charges for services 2,555,524$ 681,236$ 3,236,760$
Commissions 21,691 - 21,691
Other 1,287,325 17,081 1,304,406
Total operating revenues 3,864,540 698,317 4,562,857
OPERATING EXPENSES
Salaries 1,035,080 263,898 1,298,978
Fringe benefits 300,578 43,995 344,573
Show expenses 1,789,429 - 1,789,429
Maintenance 192,671 1,962 194,633
Professional services 15,722 11,284 27,006
Insurance 27,138 1,740 28,878
Administration 101,102 16,476 117,578
Travel and training 4,602 - 4,602
Materials and supplies 20,372 215,428 235,800
Expendable equipment and small tools 9,087 4,655 13,742
Utilities 303,942 154 304,096
Miscellaneous 2,986 4 2,990
Depreciation 279,297 4,383 283,680
Amortization 3,071 - 3,071
Commissions - 174,261 174,261
Total operating expenses 4,085,077 738,240 4,823,317
Operating loss (220,537) (39,923) (260,460)
NONOPERATING REVENUES (EXPENSES)
Interest expense (96) - (96)
Net nonoperating revenues (expenses) (96) - (96)
Loss before transfers (220,633) (39,923) (260,556)
Transfers in 1,659,168 50,000 1,709,168
Change in net position 1,438,535 10,077 1,448,612
Net position, beginning (419,333) (793,424) (1,212,757)
Net position, ending 1,019,202$ (783,347)$ 235,855$
Enterprise Funds
CITY OF SALEM, VIRGINIA
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
NONMAJOR PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2022
133
EXHIBIT 27
Catering Total Nonmajor
Civic and Proprietary
Center Concessions Funds
OPERATING ACTIVITIES
Receipts from customers 3,041,609$ 666,689$ 3,708,298$
Payments to suppliers (2,450,759) (421,256) (2,872,015)
Payments to employees (1,379,924) (324,807) (1,704,731)
Other receipts 1,287,325 17,081 1,304,406
Net cash provided by (used in) operating activities 498,251 (62,293) 435,958
NONCAPITAL FINANCING ACTIVITIES
Interfund Loan (1,355,000) (80,000) (1,435,000)
Transfers in 1,659,168 50,000 1,709,168
Net cash provided by (used in) noncapital financing activities 304,168 (30,000) 274,168
CAPITAL AND RELATED FINANCING ACTIVITIES
Purchases of capital assets (59,144) - (59,144)
Principal paid on capital debt (3,071) - (3,071)
Interest paid on capital debt (96) - (96)
Net cash used in capital and related financing activities (62,311) - (62,311)
Net increase (decrease) in cash and cash equivalents 740,108 (92,293) 647,815
Cash and cash equivalents, beginning 4,175 158,053 162,228
Cash and cash equivalents, ending 744,283$ 65,760$ 810,043$
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Operating loss (220,537)$ (39,923)$ (260,460)$
Adjustments to reconcile operating loss to
net cash provided by (used in) operating activities
Depreciation and amortization 282,368 4,383 286,751
Pension expense, net of employer contributions (52,531) (5,910) (58,441)
OPEB expense, net of employer contributions (40,942) (5,181) (46,123)
Decrease (increase) in assets:
Receivables, net 48,757 (14,547) 34,210
Inventories - (6,628) (6,628)
Prepaid items (8,310) - (8,310)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 24,602 11,336 35,938
Accrued payroll and related liabilities 42,324 9,464 51,788
Unearned revenues 415,637 - 415,637
Compensated absences 6,883 (15,287) (8,404)
Net cash provided by (used in) operating activities 498,251$ (62,293)$ 435,958$
Enterprise Funds
CITY OF SALEM, VIRGINIA
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2022
134
EXHIBIT 28
Cardinal Court-
Criminal Community Total
Justice Corrections Custodial
Academy Program Funds
ASSETS
Cash and cash equivalents 534,475$ 1,772,651$ 2,307,126$
Receivables, net 48 687 735
Due from Commonwealth of Virginia 54,820 47,265 102,085
Total assets 589,343 1,820,603 2,409,946
LIABILITIES
Accounts payable and accrued liabilities 2,302 76,300 78,602
Accrued payroll and related liabilities 47,987 40,088 88,075
Due to City of Salem 3,182 6,528 9,710
Unearned revenues 108,560 - 108,560
Total liabilities 162,031 122,916 284,947
NET POSITION
Restricted for:
Individuals, organizations, and other governments 427,312 1,697,687 2,124,999
Total net position 427,312$ 1,697,687$ 2,124,999$
CITY OF SALEM, VIRGINIA
COMBINING STATEMENT OF FIDUCIARY NET POSITION
CUSTODIAL FUNDS
JUNE 30, 2022
135
EXHIBIT 29
Cardinal Court-
Criminal Community Total
Justice Corrections Custodial
Academy Program Funds
ADDITIONS
Funds received for benefit of other organizations 782,662$ 1,484,237$ 2,266,899$
Total additions 782,662 1,484,237 2,266,899
DEDUCTIONS
Funds disbursed for benefit of other organizations 845,125 1,519,103 2,364,228
Total deductions 845,125 1,519,103 2,364,228
Change in fiduciary net position (62,463) (34,866) (97,329)
Net position, beginning 489,775 1,732,553 2,222,328
Net position, ending 427,312$ 1,697,687$ 2,124,999$
CITY OF SALEM, VIRGINIA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
YEAR ENDED JUNE 30, 2022
CUSTODIAL FUNDS
136
EXHIBIT 30
ASSETS
Cash and cash equivalents 391,181$
Receivables, net 5,176,250
Total assets 5,567,431$
LIABILITIES
Accounts payable and accrued liabilities 438$
Due to primary government 5,164,713
Total liabilities 5,165,151
FUND BALANCE
Committed 50,000
Assigned 352,280
Total fund balance 402,280
Total liabilities and fund balance 5,567,431$
GOVERNMENTAL FUND
CITY OF SALEM, VIRGINIA
BALANCE SHEET
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF SALEM
JUNE 30, 2022
137
EXHIBIT 31
REVENUES
Revenue from use of money and property 119,298$
Intergovernmental 56,010
Total revenues 175,308
EXPENDITURES
Community development 71,742
Total expenditures 71,742
Net change in fund balance 103,566
Fund balance, beginning 298,714
Fund balance, ending 402,280$
GOVERNMENTAL FUND
YEAR ENDED JUNE 30, 2022
CITY OF SALEM, VIRGINIA
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF SALEM
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
138
STATISTICAL SECTION
The Statistical Section of the City of Salem, Virginia’s Annual Comprehensive Financial Report presents
additional detail, context, and historical information to assist in understanding the information in the financial
statements, note disclosures and required supplementary information.
Contents Page
Financial Trends 141
These schedules contain trend information to help the reader understand how the City’s financial
performance and well-being have changed over time.
Revenue Capacity 146
These schedules contain information to help the reader assess the City’s most significant local revenue
sources, property tax and sale of electricity.
Debt Capacity 149
These schedules present information to help the reader assess the affordability of the City’s current level
of outstanding debt and the government’s ability to issue additional debt in the future.
Demographic and Economic Information 151
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the City’s financial activities take place.
Operating Information 153
These schedules contain service and infrastructure data to help the reader understand how the information
in the City’s financial report relates to the services the government provides and the activities it performs.
139
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140
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147
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Lewis-Gale Medical Center LLC (1) 63,942,600$ 1 2.55% 36,118,600$ 1 1.81%
Yokohama Industries 15,155,300 2 0.60% 13,946,300 3 0.70%
Lowes/VALO LLC 14,778,300 3 0.59% 12,462,800 5 0.63%
Carter Machinery/Carthy Corp/Mount Sinai 12,882,400 4 0.51% 7,586,000 10 0.38%
Spartan Square 11,797,000 5 0.47% 8,953,000 8 0.45%
US Foods 11,123,000 6 0.44% 10,683,600 6 0.54%
Phoenix Investors 9,922,700 7 0.40%
TKC CCXXIX LLC 9,496,300 8 0.38%
Chateau Riviera Apartments 9,401,300 9 0.37% 9,466,900 7 0.47%
Salem Terrace 9,365,100 10 0.37% 8,361,700 9 0.42%
Lewis-Gale Clinic/HRT 22,095,300 2 1.11%
General Electric 12,685,600 4 0.64%
Notes:
(1) In 2018, Lewis-Gale Medical Center LLC acquired the assets of Lewis-Gale Hospital HCA and Lewis Gale Clinic/HRT.
CITY OF SALEM, VIRGINIA
PRINCIPAL ELECTRIC CUSTOMERS
CURRENT YEAR AND NINE YEARS AGO
2022 2013
Percentage Percentage
of Total of Total
Services Services Services Services
Customer Billed Rank Billed Billed Rank Billed
Lewis Gale Hospital HCA 2,484,498$ 1 6.50% 2,012,086$ 1 5.04%
Roanoke College 1,650,229 2 4.32% 1,485,268 2 3.72%
Lake Regional Medical 1,025,356 3 2.68%
US Foods 944,674 4 2.47% 778,241 5 1.95%
Graham White 785,225 5 2.05% 904,802 3 2.27%
Rowe Furniture/Salem Frame 639,989 6 1.67% 815,651 4 2.04%
Kroger 573,742 7 1.50% 589,700 6 1.48%
Sewell Products 564,280 8 1.48% 551,815 7 1.38%
Carter Machinery 524,958 9 1.37% 507,042 8 1.27%
Novozymes 428,800 10 1.12%
Wal-Mart, Inc.375,485 9 0.94%
Old Virginia Brick Co.363,011 10 0.91%
Note:
TABLE 8
UNAUDITED
Source: City of Salem Finance Department
2022 2013
Source: City of Salem Real Estate Valuation Department
TABLE 7
CITY OF SALEM, VIRGINIA
PRINCIPAL REAL ESTATE PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
UNAUDITED
148
Governmental Business-Type
Activities Activities
General General Total Financed
Fiscal Obligation Obligation Primary Purchase
Year Bonds Bonds Government Obligation
(1)
2022 68,803,018$ 32,714,325$ 101,517,343$ 29,059$
2021 57,250,371 35,559,482 92,809,853 43,589
2020 60,686,620 39,296,513 99,983,133 99,520
2019 32,910,038 40,780,877 73,690,915 121,467
2018 30,897,265 41,669,640 72,566,905 198,016
2017 33,916,905 45,723,894 79,640,799 271,203
2016 36,971,375 49,665,950 86,637,325 341,175
2015 34,681,163 47,663,394 82,344,557 -
2014 37,640,582 49,258,943 86,899,525 -
2013 32,625,067 50,697,384 83,322,451 -
Percentage Percentage of
of Estimated Bonded Debt
Total Taxable Actual Value Per Capita Per Capita
Fiscal Assessed of Taxable Bonded Debt Personal to Per Capita
Year Value Property Population Per Capita Income Personal Income
(2) (3)(3)
2022 2,970,621,977$ 3.42%25,373 4,001$ 54,977$ 7.00%
2021 2,808,194,315 3.30%25,346 3,662 53,489 7.00%
2020 2,701,785,905 3.70%25,301 3,952 52,248 8.00%
2019 2,600,807,782 2.83%25,643 2,874 49,860 6.00%
2018 2,549,817,563 2.85%25,862 2,806 48,384 6.00%
2017 2,501,620,017 3.18%25,549 3,117 48,047 6.00%
2016 2,451,813,919 3.53%25,432 3,407 45,577 7.00%
2015 2,428,048,133 3.39%25,483 3,231 43,418 7.00%
2014 2,413,737,695 3.60%25,299 3,435 42,288 8.00%
2013 2,393,085,987 3.48%25,267 3,298 40,688 8.00%
The City is independent from any county, town, or other political subdivisions of the Commonwealth of Virginia. There is no
overlapping general obligation debt or taxing powers.
TABLE 9
UNAUDITED
CITY OF SALEM, VIRGINIA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(3) See Table 12 for population and per capita personal income.
(1) Outstanding debt for the School Division is included with Governmental Activities.
Source: City of Salem Finance Department
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
(2) See Table 5 for actual value of taxable property.
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Fiscal Total Personal Per Capita Public
Year Income Personal School Unemployment
Ended Population (In Thousands) Income Enrollment Rate
(1)(2)(3)(3)(4)(5)
2022 25,373 6,588,916$ 54,977$ 3,701 3.0%
2021 25,346 6,391,212 53,489 3,756 4.0%
2020 25,301 6,254,966 52,248 3,882 7.7%
2019 25,643 5,962,802 49,860 3,872 2.9%
2018 25,862 5,785,780 48,384 3,889 3.4%
2017 25,549 5,758,037 48,047 3,843 4.1%
2016 25,432 5,435,865 45,577 3,751 4.0%
2015 25,483 5,159,100 43,418 3,797 5.2%
2014 25,299 4,984,547 42,288 3,770 5.2%
2013 25,267 4,789,030 40,688 3,823 6.6%
Notes:
TABLE 11
UNAUDITED
CITY OF SALEM, VIRGINIA
DEMOGRAPHIC STATISTICS
LAST TEN FISCAL YEARS
(1) Population, public school enrollment and unemployment rate figures are based on fiscal years ending June
30. Per capita personal income figures are as of November 2021.
(2) Population is based on intercensal estimates of the resident population for counties of Virginia: April 1, 2000
to July 1, 2010. U.S. Census Bureau, Population Division. Population for 2012 through 2021 was obtained
from U.S. Census Bureau Population Estimates Program.
(3) Bureau of Economic Analysis (BEA). Total personal income reported is for Roanoke County and the City of
Salem. No data is available for the City of Salem only. Per capita personal income was computed using
Census Bureau midyear population estimates.
(4) Director of Business, School Division
(5) Virginia Employment Commission
151
Number of Number of
Employer Rank Ownership Employees Rank Ownership Employees
Veterans Administration Medical Center 1 Fed Govt. 1500-1999 1 Fed Govt. 1500-1999
Lewis-Gale Hospital HCA 2 Private 1000-1499 2 Private 1000-1499
Virginia Department of Transportation 3 State Govt. 500-999 5 State Govt. 500-999
Yokohama Industries 4 Private 500-999 3 Private 500-999
Lewis Gale Physicians 5 Private 500-999
City of Salem Schools 6 Local Govt. 500-999 6 Local Govt. 500-999
City of Salem 7 Local Govt. 250-499 7 Local Govt. 250-499
Roanoke College 8 Private 250-499 8 Private 250-499
Integer 9 Private 250-499
Carter Machinery 10 Private 250-499 10 Private 250-499
US Foods 9 Private 250-499
General Electric 4 Private 500-999
Notes:
Source: City of Salem Economic Development Department
2022 2013
TABLE 12
CITY OF SALEM, VIRGINIA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
UNAUDITED
152
Function 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
General government 74 71 77 71 76 70 69 69 67 66
Judicial administration 22 22 22 21 19 20 18 19 19 19
Public safety 158 163 166 167 153 152 157 157 159 162
Public works 79 80 84 84 82 79 89 88 94 94
Parks, recreation and cultural 34 33 34 33 32 30 32 32 31 32
Community development 3 2 3 3 3 3 2 3 3 3
Electric 27 23 28 29 28 27 27 29 27 26
Water and sewage 46 49 48 49 48 47 48 52 49 49
Civic Center 16 17 19 18 15 15 16 17 17 17
Catering and concessions 2 3 3 4 4 4 4 4 4 4
Total 461 463 484 479 460 447 462 470 470 472
Note:
Source: City of Salem Finance Department
TABLE 13
UNAUDITED
CITY OF SALEM, VIRGINIA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
153
Function 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
General government
Finance
Accounts payable checks issued 10,600 11,518 10,983 10,817 9,926 10,942 9,238 8,601 9,280 8,937
Human resources
Positions filled (full-time and temporary) 223 126 138 156 164 158 154 140 184 142
Registrar
Number of registered voters 17,756 17,542 17,158 16,785 16,887 16,704 16,584 16,282 16,695 16,625
Fleet
Pieces of equipment maintained 584 593 573 576 568 575 567 583 576 572
Judicial administration
Sheriff
Inmates housed 1,867 1,987 2,373 2,790 2,961 3,132 2,681 2,730 2,885 2,776
Inmate transports 427 354 1,039 1,479 1,489 1,333 1,222 1,137 1,240 1,062
Courts worked 536 589 500 462 525 680 595 614 699 686
Public safety
Police
Calls for service 44,501 40,504 35,830 30,790 32,905 31,651 27,017 27,018 27,990 39,519
Accidents 911 830 917 1,079 1,026 1,015 1,108 983 1,053 905
DUI Arrests 58 60 66 109 137 91 92 63 68 107
Fire
Calls for service 5,875 5,272 5,123 5,264 5,135 4,872 4,274 3,991 3,784 3,776
Emergency Responses - Fire 80 79 95 82 111 93 95 71 101 83
Emergency Responses - EMS 4,855 4,278 4,122 4,321 4,169 4,048 3,446 3,264 3,042 2,999
Building inspections
Residential construction permits 187 183 177 181 188 175 158 150 198 106
Commercial construction permits 93 104 98 126 133 120 133 139 148 110
Public works
Refuse collection
Refuse collected (tons per year)*15,351 16,040 17,424 16,409 16,261 18,208 88,565 80,827 82,905 80,609
Tons recycled 1,599 3,195 4,350 7,419 9,139 9,152 5,060 1,404 1,386 2,315
Other public works
Tons of asphalt used in resurfacing - 27,480 - - 13,263 - 15,453 - 639 5,770
Square yards of milling completed - 546,965 1,208 - 219,862 - 302,937 - 10,718 92,988
Tons of salt used 729 650 85 915 1,330 315 848 705 769 1,098
Leaves collected (loads)285 246 335 302 350 113 295 360 293 316
Parks, recreation and cultural
Parks and recreation
Tournaments hosted 35 41 23 58 52 48 52 47 58 62
Special events held 27 22 29 35 28 26 25 26 24 24
Youth sports teams 127 51 130 135 148 151 151 155 164 170
Adult sports teams 20 17 34 30 27 28 29 27 29 39
Library
Circulation 148,771 86,953 147,646 194,000 212,350 227,443 230,454 240,516 252,237 271,600
Children's program attendance 1,862 2,149 5,077 9,516 10,901 7,226 8,972 3,622 3,616 3,924
Patron visits to the library 71,798 27,034 102,485 152,091 167,389 170,879 172,012 178,323 195,878 211,605
New patrons 830 188 773 769 904 879 968 1,049 1,138 1,373
Internet sessions 26,022 26,332 41,008 55,932 39,884 28,554 25,944 27,571 28,965 33,885
Electric
Number of customer accounts 13,333 13,227 13,217 13,129 13,084 12,838 12,880 13,021 13,204 13,198
Water
Number of customer accounts 9,739 9,720 9,665 9,636 9,482 9,567 9,486 9,381 9,372 9,375
Million gallons sold to customers 871 862 859 910 861 850 932 989 876 838
Sewage
Number of customer accounts 9,181 9,160 9,108 9,072 9,041 9,018 8,952 8,929 8,824 8,823
Waste/water treated (million gallons/day) 5.8 7.9 7.3 8.7 6.0 7.2 9.1 6.8 7.8 7.0
Civic Center
Concerts 13 5 13 13 15 13 11 6 9 11
Meetings 609 522 475 614 599 660 852 778 721 614
Tickets sold 81,276 16,531 66,954 78,745 93,510 88,662 93,373 73,668 82,929 83,638
Arena utilization days 156 86 108 155 162 202 215 198 191 175
Notes:
Source: Various City of Salem Departments
*In FY2017, Roanoke Valley Resource Authority (RVRA) started managing waste disposal services instead of the City Transfer Station.
TABLE 14
UNAUDITED
CITY OF SALEM, VIRGINIA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
154
Function 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Public safety
Police station 111111 1 1 1 1
Law enforcement vehicles 60 57 52 53 48 47 47 46 48 47
Fire stations 333333 3 3 3 3
Fire trucks 655677 7 6 6 6
Ambulances 544444 4 4 4 4
Public works
Primary streets (lane miles)68 68 68 68 68 68 68 68 68 68
Secondary streets (lane miles)272 272 272 272 272 272 272 272 272 272
Alleys (lane miles)12 12 12 12 12 12 12 12 12 12
Garbage trucks 18 19 17 17 16 16 16 16 14 13
Parks, recreation and cultural
Community center/senior center 111111 1 1 1 1
Parks/athletic fields 15 15 15 15 15 15 15 15 15 15
Acres of parks maintained 495 495 495 495 495 495 495 495 495 495
Library 111111 1 1 1 1
Golf course 111111 1 1 1 1
Dog park 111111 1 1 1 1
Electric
Substations 11 11 11 11 11 11 11 11 11 11
Overhead distribution lines (miles) 161 161 161 163 163 166 165 172 172 172
Underground distribution lines (miles) 41 41 41 42 42 40 42 38 38 38
Transmission lines (miles)17 17 17 17 17 17 17 17 17 17
Water and sewage
Water treatment plant 111111 1 1 1 1
Water distribution lines (miles)177 176 176 176 176 176 176 175 175 175
Sanitary sewer lines (miles)171 171 171 170 170 170 170 170 170 170
Notes:
Source: City of Salem Finance Department
TABLE 15
UNAUDITED
CITY OF SALEM, VIRGINIA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
155
THIS PAGE INTENTIONALLY BLANK
156
COMPLIANCE SECTION
The Compliance Section of the City of Salem, Virginia’s Annual Comprehensive Financial Report includes
reports from the independent auditors.
157
Federal Grantor Federal Pass-Through Passed
Pass-through Grantor ALN Entity Identifying Federal Through to
Program Title or Cluster Title Number Number Expenditures Subrecipients
Department of Agriculture
Local Environmental Agricultural Project Inc
Food Insecurity Nutrition Incentive Grants Program 10.331 FINI-120 2,843$
Virginia Department of Agriculture and Consumer Services
SNAP Cluster:
Supplemental Nutrition Assistance Program 10.551 -- 4,063$
Total SNAP Cluster 4,063
Child Nutrition Cluster:
Food Distribution - Commodities 10.555 -- 197,081
Summer Food Service Program for Children 10.559 -- 15,291
10.649 202121S900941 3,063
Virginia Department of Education
Child Nutrition Cluster (Continued):
National School Breakfast Program 10.553 202121N11994 1 53,328
National School Breakfast Program 10.553 202221N11994 1 228,478
National School Breakfast Program 10.553 202222N11994 1 248,754
National School Lunch Program 10.555 202121N11994 1 217,874
National School Lunch Program 10.555 202221N11994 1 991,014
National School Lunch Program 10.555 202222N11994 1 582,631
National School Lunch Program - Supply Chain Assistance 10.555 202221N89034 1 63,378
Child Nutrition Discretionary Grants Limited Availability 10.579 202020N81034 1 14,790
Department of Justice
Direct Payments
Bulletproof Vest Partnership Program 16.607 -- 295
Equitable Sharing Program 16.922 -- 6,630
Virginia Department of Criminal Justice Services
COVID-19 Coronavirus Emergency Supplemental Funding Program 16.034 20-A5109CE20 5,000
Crime Victim Assistance 16.575 22-O1281VW19 66,126
Edward Byrne Memorial Justice Assistance Grant Program 16.738 21-U1117LO18 1,118
Department of Labor
Goodwill Industries of the Valleys
YouthBuild Program 17.274 -- 2,260
Department of Transportation
Virginia Department of Transportation
Highway Planning and Construction Cluster:
Highway Planning and Construction:
Hanging Rock Battlefield Phase 2 20.205 UPC 106268 13,468
Downtown Streetscape and Intersection Improvements 20.205 UPC 109612 4,471
Apperson Drive Bridge Replacement 20.205 UPC 110574 132,012
Mason Creek Greenway Phase 3 20.205 UPC 111367 58,726
Downtown Streetscape and Intersection Improvements 20.205 UPC 111371 46,764
Elizabeth Campus Greenway 20.205 UPC 113566 45,661
Total Highway Planning and Construction Cluster 301,102
Virginia Division of Motor Vehicles
Highway Safety Cluster:
State and Community Highway Safety:
Selective Enforcement - Speed FY21 20.600 FCS-2021-51002-21002 3,207
Selective Enforcement - Speed FY22 20.600 FCS-2022-52190-22190 11,420
Selective Enforcement - Pedestrian/Bicycle FY21 20.600 FHLE-2021-51003-21003 805
Selective Enforcement - Pedestrian/Bicycle FY22 20.600 FPS-2022-52191-22191 1,498
Total Highway Safety Cluster 16,930
Alcohol Open Container Requirements:
Selective Enforcement - Alcohol FY21 20.607 154AL-2021-51001-21001 711
Selective Enforcement - Alcohol FY22 20.607 154AL-2022-52192-22192 9,780
Department of the Treasury
Virginia Department of Accounts
COVID-19 Coronavirus State and Local Fiscal Recovery Funds - City 21.027 Not available 4,000
21.027 Not available 53,155
Virginia Department of Education
21.027 SLFRP1026 50,080
Federal Communications Commission (FCC)
Direct Payments
Emergency Connectivity Fund Program 32.009 BEAR202110520 648,725
Emergency Connectivity Fund Program 32.009 BEAR202201311 459,675
Institute of Museum and Library Services
Library of Virginia
State Library Program 45.310 LS-250242-OLS-21 18,007
(Continued)
COVID-19 Coronavirus State and Local Fiscal Recovery Funds - Municipal
Utility Relief Program to Assist Residential Customers
COVID-19 Coronavirus State and Local Fiscal Recovery Funds - School
Division
CITY OF SALEM, VIRGINIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
JUNE 30, 2022
COVID-19 State Pandemic Electronic Benefit Transfer (P-EBT) Administrative
Costs Grant
158
Federal Grantor Federal Pass-Through Passed
Pass-through Grantor ALN Entity Identifying Federal Through to
Program Title or Cluster Title Number Number Expenditures Subrecipients
U.S. Small Business Administration
Direct Payments
COVID-19 Shuttered Venue Operators Grant 59.075 -- 593,541
Environmental Protection Agency (EPA)
Direct Payments
Diesel Emission Reduction Act (DERA) National Grants 66.039 -- 20,000
Department of Education
Virginia Department of Education
Adult Education - Basic Grants to States 2020 84.002 V002A200047 44,571 10,658
Adult Education - Basic Grants to States 2021 84.002 V002A210047 333,833 158,692
Title I Grants to Local Educational Agencies 2019 84.010 S010A190046 12,378
Title I Grants to Local Educational Agencies 2020 84.010 S010A200046 65,405
Title I Grants to Local Educational Agencies 2021 84.010 S010A210046 482,365
Special Education Cluster (IDEA)
Special Education - Grants to States (IDEA, Part B) 2020 84.027 H027A200107 85,223
Special Education - Grants to States (IDEA, Part B) 2021 84.027 H027A210107 764,337
Special Education - Grants to States (IDEA, Part B) 2022 84.027 H027A220107 58,307
Special Education - Grants to States (IDEA, Part B ARP) 2021 84.027X H027X210107 74,138
Special Education - Preschool Grants (IDEA Preschool) 2020 84.173 H173A200112 1,033
Special Education - Preschool Grants (IDEA Preschool) 2021 84.173 H173A210112 16,241
Total Special Education Cluster (IDEA)999,279
Career and Technical Education - Basic Grants to States (Perkins IV) 2020 84.048 V048A200046 2,012
Career and Technical Education - Basic Grants to States (Perkins IV) 2021 84.048 V048A210046 56,852
English Language Acquisition State Grants 2018 84.365 S365A180046 283
English Language Acquisition State Grants 2019 84.365 S365A190046 374
English Language Acquisition State Grants 2020 84.365 S365A200046 2,527
English Language Acquisition State Grants 2021 84.365 S365A210046 16,000
Supporting Effective Instruction State Grants 2019 84.367 S367A190044 6,861
Supporting Effective Instruction State Grants 2020 84.367 S367A200044 55,085
Supporting Effective Instruction State Grants 2021 84.367 S367A200044 88,979
Student Support and Academic Enrichment Grants 2019 84.424 S424A190048 82
Student Support and Academic Enrichment Grants 2020 84.424 S424A200048 6,007
Student Support and Academic Enrichment Grants 2021 84.424 S424A210048 37,993
COVID-19 Governor's Emergency Education Relief (GEER) Fund 84.425C S425C200042 95,766
84.425D S425D200008 165,281
84.425D S425D210008 1,253,923
84.425U S425U210008 1,061,774
The College of William & Mary
84.425W S425W210048 8,345
Department of Health and Human Services
Virginia Department of Health
Child Nutrition Cluster (Continued):
COVID-19 Summer Food Service Program for Children 10.559 202121N11994 1 140,836
Total Child Nutrition Cluster 2,738,665
Preventative Health and Health Services Block Grant 93.991 709BI220076 11,578
Virginia Office of Children's Services
Social Services Block Grant 93.667 -- 33,492
Goodwill Industries of the Valleys
Affordable Care Act (ACA) Health Profession Opportunity Grants 93.093 90FX0038-01-01 296
Department of Homeland Security
Virginia Department of Emergency Management
Homeland Security Grant Program 97.067 8306 12,726
Homeland Security Grant Program 97.067 8318 39,085
Total Expenditures of Federal Awards 9,913,711$ 169,350$
Note 1: Basis of Accounting
This schedule was prepared on the modified accrual basis of accounting.
Note 2: Nonmonetary Assistance
Note 3: Indirect Cost Rate
The City and School Division did not elect to use the 10% de minimis indirect cost rate.
Note 4: Outstanding Loan Balances
At June 30, 2022, the City and School Division had no outstanding loan balances requiring continuing disclosure.
CITY OF SALEM, VIRGINIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED)
JUNE 30, 2022
Nonmonetary assistance is reported in the Schedule of Expenditures of Federal Awards at the fair market value of the food commodities disbursed. As of June 30, 2022,
the City of Salem School Division (School Division) had food commodities in inventory of $109,073.
COVID-19 American Rescue Plan Elementary and Secondary School
Emergency Relief – Homeless Children and Youth
COVID-19 American Rescue Plan Elementary and Secondary School
Emergency Relief Fund (ARP ESSER)
COVID-19 Elementary and Secondary School Emergency Relief (ESSER)
Fund 2020
COVID-19 Elementary and Secondary School Emergency Relief (ESSER)
Fund 2021
159
Your Success is Our Focus
3906 Electric Road • Roanoke, Virginia 24018 • 540-345-0936 • Fax: 540-342-6181 • www.BEcpas.com
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Honorable Members of City Council
City of Salem, Virginia
Salem, Virginia
We have audited, in accordance with auditing standards generally accepted in the United States of
America, the standards applicable to financial audits contained in Government Auditing Standards,issued
by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and
Towns, and the Specifications for Audits of Authorities, Boards, and Commissions, issued by the Auditor
of Public Accounts of the Commonwealth of Virginia, the financial statements of the governmental
activities, the business-type activities, the aggregate discretely presented component units, each major
fund, and the aggregate remaining fund information of the City of Salem, Virginia (the “City”), as of and
for the year ended June 30, 2022, and the related notes to the financial statements, which collectively
comprise the City’s basic financial statements, and have issued our report thereon dated
November 17, 2022.
Report on Internal Control over Financial Reporting
In p lanning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit, we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
160
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements, noncompliance with which could have a direct and material effect on the financial
statements. However, providing an opinion on compliance with those provisions was not an objective of
our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
CERTIFIED PUBLIC ACCOUNTANTS
Roanoke, Virginia
November 17, 2022
161
Your Success is Our Focus
3906 Electric Road • Roanoke, Virginia 24018 • 540-345-0936 • Fax: 540-342-6181 • www.BEcpas.com
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR
PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE
UNIFORM GUIDANCE
To the Honorable Members of City Council
City of Salem, Virginia
Salem, Virginia
Report on Compliance for Each Major Federal Program
Opinion on Compliance for Each Major Federal Program
We have audited the City of Salem, Virginia’s (the “City”) compliance with the types of compliance
requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct
and material effect on each of the City’s major federal programs for the year ended June 30, 2022. The
City’s major federal programs are identified in the summary of auditor’s results section of the
accompanying schedule of findings and questioned costs.
In our opinion, the City complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the
year ended June 30, 2022.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2
U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards
and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of
Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance
with relevant ethical requirements related to our audit. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major
federal program. Our audit does not provide a legal documentation of the City’s compliance with the
compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design,
implementation, and maintenance of effective internal control over compliance with the requirements of
laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s
federal programs.
162
Report on Compliance for Each Major Federal Program (Continued)
Auditor’s Responsibilities for the Audit of Compliance
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
on the City’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 judgement made by a reasonable user of the report on
compliance about the City’s compliance the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing
Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risk 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 City’s compliance with the compliance requirements referred
to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of the City’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 City’s 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 of the audit and any significant deficiencies and material weaknesses in internal
control over compliance that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance which are required to
be reported in accordance with the Uniform Guidance and which are described in the
accompanying schedule of findings and questioned costs as item 2022-01. Our opinion on each
major federal program is not modified with respect to these matters.
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response
to the noncompliance findings identified in our audit is described in the accompanying schedule of
findings and questioned costs. The City’s response was not subjected to the other auditing procedures
applied in the audit of compliance and, accordingly, we express no opinion the response.
163
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or combination of deficiencies, in internal control over compliance, such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of a federal
program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all
deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did not
identify any deficiencies in internal control over compliance that we consider to be material
weaknesses as defined above. However, material weaknesses or significant deficiencies in internal
control over compliance may exist that have not been identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing
of internal control over compliance and the results of that testing based on the requirements of the Uniform
Guidance. Accordingly, this report is not suitable for any other purpose.
CERTIFIED PUBLIC ACCOUNTANTS
Roanoke, Virginia
November 17, 2022
164
CITY OF SALEM, VIRGINIA
SUMMARY OF COMPLIANCE MATTERS
June 30, 2022
As more fully described in the Independent Auditor’s Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government
Auditing Standards,we performed tests of the City’s compliance with certain provisions of the laws, regulations,
contracts, and grants shown below.
STATE COMPLIANCE MATTERS
Code of Virginia:State Agency Requirements:
Budget and Appropriation Laws Education
Cash and Investment Laws Highway Maintenance Funds
Conflicts of Interest Act
Debt Provisions
Local Retirement Systems
Procurement Laws
Uniform Disposition of Unclaimed Property Act
Sheriff Internal Controls
Comprehensive Services Act
Fire Programs Aid to Localities
FEDERAL COMPLIANCE MATTERS
Compliance Supplement for Single Audits of State and Local Governments
Provisions and conditions of agreements related to federal programs selected for testing.
165
CITY OF SALEM, VIRGINIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2022
A.SUMMARY OF AUDITOR’S RESULTS
1.The auditor’s report expresses an unmodified opinion on the basic financial statements.
2.No significant deficiencies related to the audit of the financial statements are reported in the
Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards.
3.No instances of noncompliance material to the basic financial statements were disclosed during
the audit.
4.No significant deficiencies relating to the audit of the major federal award programs were reported
in the Independent Auditor’s Report on Compliance for Each Major Program and on Internal
Control over Compliance required by the Uniform Guidance.
5.The auditor’s report on compliance for the major federal award programs expresses an
unmodified opinion.
6.The audit disclosed one audit finding relating to major programs.
7.The programs tested as major programs include:
Name of Programs
Assistance
Listing #
Emergency Connectivity Fund Program 32.009
Special Education Cluster:
Special Education –Grants to States 84.027
Special Education –Preschool Grants 84.173
CARES Act ESSERF LEA Activities, ESSR, GEER 84.425
8.The threshold for distinguishing Types A and B programs was $750,000.
9.The City was determined to be a low-risk auditee.
B.FINDINGS –FINANCIAL STATEMENT AUDIT
None.
C.FINDINGS AND QUESTIONED COSTS –MAJOR FEDERAL AWARD PROGRAMS
2022-01: Emergency Connectivity Fund Program –Assistance Listing #32.009, Equipment and
Real Property Management
Condition:
In our testing of the City Schools’ inventory of devices for the ECF program, we noted one instance
of a user appearing twice on the listing giving the appearance they could have had two devices issued
to them. We also noted that the listing appeared to contain one more additional asset than that
purchased with program funds.
166
CITY OF SALEM, VIRGINIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2022
(Continued)
C.FINDINGS AND QUESTIONED COSTS –MAJOR FEDERAL AWARD PROGRAMS
(Continued)
2022-01: Emergency Connectivity Fund Program –Assistance Listing #32.009, Equipment and
Real Property Management (Continued)
Criteria:
The Schools should strive to maintain an accurate listing of all devices and all users that have devices
assigned to them. A key requirement of the program is to maintain an accurate listing of all devices
and who they are assigned to.
Cause:
The inventory listings of devices appear to be maintained in Excel for the program, which means that
errors could result from simple data entry errors, failure to catch all changes or updates that should be
recorded, or other
Effect:
Errors in the listing could result in devices being unaccounted for accidentally as they could be
reported as assigned when they are not, may be on the listing when they should no longer be, or may
not be recorded when they should be.
Questioned Costs:
Not applicable.
Perspective Information:
Not applicable.
Repeat Finding:
Not applicable.
Recommendation:
The Schools should work to maintain accurate listings that provide all the required information for
the program. Given the nature of the equipment for the ECF program, it is important that these listings
are reconciled periodically to ensure their accuracy and completeness.
Views of Responsible Officials and Planned Corrective Action:
The Division leverages a true inventory tracking system for purposes of maintaining the thousands of
laptops and Chromebooks in Salem City Schools. Even with a system in place, there can be
opportunities for keying errors or duplicate entry when dealing with such a large amount of devices
being tracked. T he Technology Department will review the asset listings, the processes for generation,
and continue to seek efficiencies for existing and future management of assets.
D.FINDINGS –COMMONWEALTH OF VIRGINIA
None.
167
Department of Finance
City of Salem, Virginia
Rosemarie B. Jordan, CPA Director of Finance
Accounting/Accounts Payable/Purchasing
Patricia L. Bidanset Senior Accountant
Ellen T. Bowen, CPA Financial Services Supervisor
Jordan M. Doyle Accountant
Vacant Senior Accountant
Dawn M. Layne Accounting Supervisor
Amy R. Morris, CPA Special Projects Accountant
Troy P. Philpott Buyer
Tammy H. Todd, CPA, CPFO Assistant Director of Finance
Administrative
Alyson R. Chaisson Finance Administrative Secretary/
Accounting Technician
Payroll
Tara N. Pugh Payroll Technician
Carrington R. Sumner Payroll Manager
168
Item #6C
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Request to appropriate funds from the Library of Virginia
SUBMITTED BY: Rosemarie B. Jordan, Director of Finance
SUMMARY OF INFORMATION:
Each year, the Library of Virginia provides state aid to the Salem Public Library. The City
was awarded more funding than was budgeted for fiscal year 2023 so the budget needs to
be increased by $23,687 to account for the total State allocation.
FISCAL IMPACT:
Additional grant funds will be used to purchase additional books and materials for the
Salem Public Library.
STAFF RECOMMENDATION:
Staff recommends appropriating $23,687 to the Library Grants In Aid State revenue
account, 10-076-0100-48370. Increase the budget for the Books and Subscriptions –
State account, 10-076-7300-56013, by $23,687 for the purpose stated above.
Budget Entry
Date GL Account Account Name
Increase/
(Decrease)Description
12/12/2022 10‐076‐0100‐48370 Library Grant In Aid State 23,687 Appropriate add'l state grant funds per 12/12 council action
12/12/2022 10‐076‐7300‐56013 Books And Subscriptions ‐ State 23,687 Appropriate add'l state grant funds per 12/12 council action
Item #6D
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Request to amend the School Grant Fund budget and School
Cafeteria Fund Budget as approved by the School Board on
November 8, 2022
SUBMITTED BY: Rosemarie B. Jordan, Director of Finance
SUMMARY OF INFORMATION:
The School Grant Fund budget and the School Cafeteria Fund budgets were amended for
fiscal year 2022-2023 by the School Board at their meeting on November 8, 2022. The
Board amended the School Grant Fund budget to increase revenues and expenditures by
$17,402 and the School Cafeteria Fund budget to increase revenues and expenditures by
$66,374. The attached memo details the appropriation changes.
FISCAL IMPACT:
Appropriation changes totaling $17,402 and $66,374 are to be made to the School Grant
Fund and School Cafeteria Fund, respectively.
STAFF RECOMMENDATION:
Staff recommends that Council approve the School Board’s appropriation changes of
$17,402 and $66,374 to the School Grant Fund and School Cafeteria Fund, respectively,
per the attached report.
Salem City Schools
Budget Adjustments Report
November 8, 2022
Summary of Issue:
At times during the year, additional funding may be r eceived by the school division through
donation, grant, increased funding due to ADM (Average Daily Membership) increases, or some
other means. This revenue increases the budget requiring Board approval before the funds can
be utilized.
Grant fund budgets need to be adjusted at this time because a new grant has been awarded since
budget adoption and needs to accounted for on the books
We received notification from the Virginia Department of Health (VDH) on October 11, 2022, that
we were awarded $17,402 for the Epidemiology and Laboratory Capacity of Infectious Diseases
(ELC) competitive grant. The purpose of the grant is to provide support for COVID-19 testing in
K-12 schools, to include the implementation of testing programs and supplies that might support
that goal. The plan is to provide upgrades to school-based technology that houses the student
health record databases, and to purchase portable high -efficiency particulate air (HEPA) fans and
filters for all schools.
Cafeteria fund budgets need to be adjusted at this time because a new grant has been awarded
since budget adoption and needs to be accounted for on the books.
On October 18, 2022, we received notification from the Virginia Department of Education (VDOE)
that we were allocated another round (#2) of U.S. Department of Agriculture (USDA) Supply Chain
Assistance Funding in the amount of $66,373.44 to address the ongoing supply chain disruptions
related to the COVID-19 pandemic. The funds are for the exclusive purchase of unprocessed or
minimally processed domestic food products to help address supply chain challenges such as
unanticipated contract cancellations, price fluctuations, and item shortages.
Policy Reference:
DA-BR Budget Transfers
Fiscal Impact:
These budget adjustments will increase the revenue and expenditure budgets in the School Grant
Fund by $17,402 and the School Cafeteria Fund by $66,374 (attachment A).
Recommended Action:
Move approval of the budget adjustments in the School Grant Fund & the School Cafeteria Fund
as presented and recommend that City Council approve the same
To set up budget for new revenues received in FY 23
Account Code Description
Revenue
Amount
Expenditure
Amount
Grant Fund
32-650-00-00-9-000-62455 Epidemiology & Lab Capacity for Infectious Diseases (ELC) 93.323 17,402.00$
32-650-62-62-9-222-76045 Furniture & Equipment 17,402.00$
17,402.00$ 17,402.00$
General Fund
33-111-65-65-9-510-62365 Supply Chain Assistance 10.555 15,266.00$
33-112-65-65-9-510-62365 Supply Chain Assistance 10.555 15,930.00$
33-113-65-65-9-510-62365 Supply Chain Assistance 10.555 10,620.00$
33-114-65-65-9-510-62365 Supply Chain Assistance 10.555 7,301.00$
33-115-65-65-9-510-62365 Supply Chain Assistance 10.555 9,292.00$
33-116-65-65-9-510-62365 Supply Chain Assistance 10.555 7,965.00$
33-111-65-65-9-510-76120 Food Products 15,266.00$
33-112-65-65-9-510-76120 Food Products 15,930.00$
33-113-65-65-9-510-76120 Food Products 10,620.00$
33-114-65-65-9-510-76120 Food Products 7,301.00$
33-115-65-65-9-510-76120 Food Products 9,292.00$
33-116-65-65-9-510-76120 Food Products 7,965.00$
66,374.00$ 66,374.00$
Salem City Schools
Budget Adjustments 11/02/2022
Attachment A
Item #6E
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Request to amend the School Grants Fund budget
SUBMITTED BY: Rosemarie B. Jordan, Director of Finance
SUMMARY OF INFORMATION:
The School Grants Fund budget was amended for fiscal year 2022-2023 by the School
Board at their meeting on October 11, 2022. The Board amended the School Grants Fund
budget to increase revenues and expenditures by $2,097,748 but the amount of the
increase was actually $2,235,211, a difference of $137,463 . The attached details the
appropriation changes. City Council approved changes of $2,097,748 on November 14,
2022, but the total appropriation needs to be amended to be $2,235,211.
FISCAL IMPACT:
Appropriation changes totaling $137,463 need to be made to the School Grants Fund.
STAFF RECOMMENDATION:
Staff recommends that Council approve the School Board’s appropriation changes of
$137,463 to the School Grants Fund, per the attached report.
Grant Budget Adjustments
Attachment A
G/L Account Number Account Description
2023 City Council/Board
Approval Revised Budget Difference
32-560-00-00-9-000-62212 ARP Flow Thru Pre-K 84.173X 0.00 26,996.00 26,996.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
32-570-00-00-9-000-62123 ARP Flow Thru 84.027X 0.00 110,467.00 110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $137,463.00 $137,463.00
32-560-61-10-8-180-71151 Compensation-Instructional Asst 0.00 6,001.00 6,001.00
32-560-61-10-8-180-72100 FICA 0.00 497.00 497.00
32-560-61-10-8-180-73037 Contractual Services - Other 0.00 7,000.00 7,000.00
32-560-61-10-8-180-76435 Supplies - Instructional 0.00 13,498.00 13,498.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
$0.00 $26,996.00 $26,996.00
32-570-61-10-2-120-71120 Compensation-Instructional Salaries 0.00 67,858.00 67,858.00
32-570-61-10-2-120-71151 Compensation-Instructional Asst 0.00 7,052.00 7,052.00
32-570-61-10-2-120-72100 FICA 0.00 5,730.00 5,730.00
32-570-61-10-2-120-72220 VRS Hybrid Pension Contribution 0.00 7,560.00 7,560.00
32-570-61-10-2-120-72300 Group Health and Dental Insurance 0.00 10,068.00 10,068.00
32-570-61-10-2-120-72400 VRS Group Life Insurance 0.00 996.00 996.00
32-570-61-10-2-120-72510 Hybrid Disability Insurance 0.00 109.00 109.00
32-570-61-10-2-120-72750 VRS Retiree Health Care Credit 0.00 912.00 912.00
32-570-61-10-2-120-73037 Contractual Services - Other 0.00 10,182.00 10,182.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
$0.00 $110,467.00 $110,467.00
Department: 560 - ARP Flow Thru Pre-K 84.173X
Cost Center: 00 - Revenue
Fund: 32 - School Grants Fund
REVENUES
Level: 9 - District Wide
Sub-Function: 00 - Revenues
Level: 9 - District Wide
Program: 000 - General Revenue
Program Total: 000 - General Revenue
Level Total: 9 - District Wide
Sub-Function Total: 00 - Revenues
Cost Center Total: 00 - Revenue
Department Total: 560 - ARP Flow Thru Pre-K 84.173X
Department: 570 - ARP Flow Thru 84.027X
Cost Center: 00 - Revenue
Sub-Function: 00 - Revenues
REVENUES Total
EXPENSES
Program: 000 - General Revenue
Program Total: 000 - General Revenue
Level Total: 9 - District Wide
Sub-Function Total: 00 - Revenues
Cost Center Total: 00 - Revenue
Department Total: 570 - ARP Flow Thru 84.027X
Department Total: 560 - ARP Flow Thru Pre-K 84.173X
Department: 560 - ARP Flow Thru Pre-K 84.173X
Cost Center: 61 - Instruction
Sub-Function: 10 - Classroom Instruction
Level: 8 - Pre-K
Program: 180 - Pre-K Non- Sp Ed
Program Total: 180 - Pre-K Non- Sp Ed
Level Total: 8 - Pre-K
Sub-Function Total: 10 - Classroom Instruction
Cost Center Total: 61 - Instruction
Level Total: 2 - Elementary
Sub-Function Total: 10 - Classroom Instruction
Cost Center Total: 61 - Instruction
Department Total: 570 - ARP Flow Thru 84.027X
Department: 570 - ARP Flow Thru 84.027X
Cost Center: 61 - Instruction
Sub-Function: 10 - Classroom Instruction
Level: 2 - Elementary
Program: 120 - Special Education
Program Total: 120 - Special Education
Grant Budget Adjustments
Attachment A
G/L Account Number Account Description
2023 City Council/Board
Approval Revised Budget Difference
$0.00 $137,463.00 $137,463.00
$0.00 $137,463.00 $137,463.00
$0.00 $137,463.00 $137,463.00
$0.00 $0.00 $0.00
$0.00 $137,463.00 $137,463.00
$0.00 $137,463.00 $137,463.00
$0.00 $0.00 $0.00
REVENUE GRAND Totals:
EXPENSE GRAND Totals:
Grand Totals:
EXPENSES Total
Fund REVENUE Total: 32 - School Grants Fund
Fund EXPENSE Total: 32 - School Grants Fund
Fund Total: 32 - School Grants Fund
Item # 6F
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Consider setting bond for erosion and sediment control and
landscaping for Layman – Apperson Fill Site
SUBMITTED BY: Chuck Van Allman, Director of Community Development
SUMMARY OF INFORMATION:
The City Engineer’s office has reviewed the estimate for erosion and sediment control and
landscaping for Layman- Apperson Fill Site located at 2157 & 2181 Apperson Drive.
STAFF RECOMMENDATION:
It is recommended that the project be bonded in the amount of $21,507.00 for a time frame
for completion set at twelve (12) months.
Item # 6G
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA HELD
AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Resolution adopting a Legislative Program for the 2023 session of the
Virginia General Assembly and petitioning the General Assembly to
favorably consider the issues and topics addressed herein
SUBMITTED BY: Jay Taliaferro, City Manager
SUMMARY OF INFORMATION:
This resolution will adopt priorities for use in working with our local legislative delegation and others
to promote the interests of the City.
For reference, the following reflects the major changes in the attached draft 2023 Legislative
Program from those adopted for the 2022 General Assembly session:
Deletions
1. Support HB 599 and request the state fund local police departments as stipulated in
the Code of Virginia (Note: item already included in VML program supported in the
draft City program).
2. Allow municipalities to operate independent of state interference.
3. Modernize the requirements for legal notices to provide localities the option to use
electronic or other forms of notification as an alternative to newspaper advertising.
4. Consider legislation to transition from Dillon’s Rule to a Home Rule or a mixed rule
form of governance for localities.
5. Provide for expanded remote participation flexibility, especially for non-elected
bodies (ex. 50% of a member’s participation remotely).
Additions
1. Provide funding for the Roanoke-Blacksburg Regional Airport to support runway
extension and other improvements.
2. Support and direct funding towards more mental health initiatives.
3. Amend the Code of Virginia section § 46.2-818.2 to include exceptions allowing
handheld personal communication device use in vehicles for commercial
dispatching purposes and governmental activities.
Lastly, the item related to VDOT support of projects for 2022 was amended to specifically
incorporate the widening of Interstate 81 from Christiansburg to Daleville.
FISCAL IMPACT:
There is no fiscal impact for the development of the legislative program.
STAFF RECOMMENDATION:
Staff recommends Council make any desired changes to this draft resolution if applicable and adopt
the 2023 General Assembly Legislative Program for the City.
IN THE COUNCIL OF THE CITY OF SALEM, VIRGINIA, December 12, 2022:
RESOLUTION 1442
WHEREAS, the Council of the City of Salem is concerned with certain specific issues that may
come before the 2023 session of the Virginia General Assembly; and
WHEREAS, Council is desirous of expressing to its representatives its official position on the
following matters:
1. Reverse legislation passed in the 2021 General Assembly regular session that requires
localities to hold local elections in November.
2. Opposed to any effort mandating collective bargaining for public employees.
3. Provide funding for the Roanoke-Blacksburg Regional Airport to support runway
extension and other improvements.
4. Support and direct funding towards more mental health initiatives.
5. Encourage the support of transportation projects in the Roanoke Valley (including
greenways and the widening of Interstate 81 from Christiansburg to Daleville).
6. Amend the Code of Virginia section § 46.2-818.2 to include exceptions allowing
handheld personal communication device use in vehicles for commercial dispatching
purposes and governmental activities.
7. An exemption should be added to Section 2.2-3711 of the Freedom of Information Act
(FOIA) to permit governing bodies to discuss in closed meetings the granting of
economic development incentives for projects which already have been announced
publicly.
8. Consider positively priorities and positions made by the Salem School Board. (See
attached).
9. Carefully consider those recommendations set forth by the Virginia Municipal League in
its 2023 Legislative Program.
Upon a call for an aye and a nay vote, the same stood as follows:
John E. Saunders –
William D. Jones –
Byron Randolph Foley –
James W. Wallace III –
Renee F. Turk –
ATTEST:
H. Robert Light
Clerk of Council
Item # 6H
Date: 12/12/2022
AT A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SALEM, VIRGINIA
HELD AT CITY HALL
MEETING DATE: December 12, 2022
AGENDA ITEM: Consider the adoption of Resolution 1443 authorizing the City
Attorney of Salem to take the necessary steps to obtain a
“Certificate of No Objection” to a waiver of the requirement for
polling places to be within one mile of the nearest boundary as
set forth in VA Code §24.2-310 (A) from the Office of the Attorney
General of Virginia such that the City may then request a waiver
from the Department of Elections pursuant to VA Code §24.2-
310 (G) to move the polling places for the West Salem and
Beverly Heights precincts to the Salem Civic Center.
SUBMITTED BY: Jim Guynn, City Attorney
SUMMARY OF INFORMATION:
The Electoral Board for the City of Salem has requested that the polling places for the West
Salem and Beverly Heights electoral precincts be relocated to the Salem Civic Center.
The Electoral Board has been unable to find suitable locations within the precincts or within
one mile of the respective precinct boundaries of each precinct. The Code of Virginia provides
a process by which such polling locations can be moved elsewhere in the City in such
instances.
This resolution would direct the City Attorney to proceed with the aforementioned steps
necessary for the relocation of polling places to the Civic Center for both precincts.
{00495136.DOCX }
IN THE COUNCIL OF THE CITY OF SALEM, VIRGINIA, December 12, 2022:
RESOLUTION NO. 1443
WHEREAS, the Electoral Board and General Registrar has been unable to find suitable
buildings to establish polling places within one mile of the boundaries of the electoral precincts of
West Salem and Beverly Heights; and
Whereas, the Electoral Board and Registrar has recommended that the polling places for
Beverly Heights and West Salem electoral precincts be moved to the Salem Civic Center, located
at 1001 Boulevard, Salem, Virginia; and
Whereas, the Salem Civic Center is more than one mile from the nearest boundary of the
Beverly Heights and West Salem precincts and therefore requires a waiver from the Virginia
Department of Elections to move the polling places; and
Whereas, this Council is of the belief that moving the polling places for the West Salem
and Beverly Heights electoral precincts to the Salem Civic Center is in the best interest of citizens
who live in the electoral precincts of Beverly Heights and West Salem, and all citizens of the City
of Salem.
NOW, THEREFORE, BE IT RESOLVED, that the City Attorney of Salem is directed to
take the necessary steps to obtain a “Certificate of No Objection” to a waiver of the requirement
for polling places to be within one mile of the nearest boundary as set forth in VA Code §24.2-310
(A) from the Office of the Attorney General of Virginia such that the City may then request a
waiver from the Department of Elections pursuant to VA Code §24.2-310 (G) to move the polling
places for the West Salem and Beverly Heights precincts to the Salem Civic Center.
Upon a call for an aye and a nay vote, the same stood as follows:
John E. Saunders –
William D. Jones –
Byron Randolph Foley –
James W. Wallace III –
Renee F. Turk –
ATTEST:
H. Robert Light
Clerk of Council
Item #6I
Date: 12/12/2022
December 12, 2022
Council of the City of Salem
Salem, Virginia 24153
Dear Council Members:
For your information, I am listing appointments and vacancies on various boards and commissions:
Board or Commission
Recommendation
Social Services Advisory Board Recommend appointing Dr. Heath Rickmond for four-year
term ending December 1, 2026.
Vacancies
Board of Appeals (USBC) Need one alternate, five-year term
Sincerely,
Laura Lea Harris
Laura Lea Harris
Deputy Clerk of Council
CITY OF SALEM, VIRGINIA
BOARDS AND COMMISSIONS
December 12, 2022
MEMBER EXPIRATION OF TERM
BLUE RIDGE BEHAVIORAL HEALTHCARE
Term of Office: 3 years (3 terms only)
Ann Tripp 12-31-24
Rev. C. Todd Hester 12-31-25
Dr. Forest Jones 12-31-23
AT LARGE MEMBERS:
Patrick Kenney 12-31-25
Helen Ferguson 12-31-23
Bobby Russell 12-31-24
BOARD OF APPEALS (USBC BUILDING CODE)
Term of Office: 5 years
John R. Hildebrand 1-01-26
Robert S. Fry, III 1-01-28
David A. Botts 1-01-25
Nathan Routt 5-11-25
Joseph Driscoll 1-01-28
ALTERNATES:
David Hodges 12-12-26
Chelsea Dyer 8-09-25
BOARD OF EQUALIZATION OF REAL ESTATE
ASSESSMENTS
Term of Office: 3 years (appointed by Circuit Court)
Wendel Ingram 11-30-24
N. Jackson Beamer, III 11-30-24
David A. Prosser 11-30-25
Janie Whitlow 11-30-23
Kathy Fitzgerald 11-30-24
BOARD OF ZONING APPEALS
Term of Office: 5 years (appointed by Circuit Court)
F. Van Gresham 3-20-27
Frank Sellers 3-30-23
Winston J. DuBois 6-05-24
Gary Lynn Eanes 3-20-25
Tom Copenhaver 3-20-27
ALTERNATES:
Tony Rippee 10-12-23
Jeff Zoller 3-1-23
Steve Belanger 11-13-23
CHIEF LOCAL ELECTED OFFICIALS (CLEO)
CONSORTIUM
No Term Limit
John E. Saunders
Alternate: James E. Taliaferro, II
MEMBER EXPIRATION OF TERM
CONVENTION & VISITORS BUREAU
John Shaner No term limit
COMMUNITY POLICY AND MANAGEMENT TEAM
No term limit except for Private Provider
(Names) (Alternates)
Rosie Jordan Tammy Todd
Laura Lea Harris Crystal W illiams
Jasmin Lawson Kevin Meeks
Cheryl Wilkinson Tamara Starnes
Additional alternate
Additional alternate
Parent Rep Vacant Frank Turk
Shannon Brabham Joyce Earl
Randy Jennings Deborah Coker
Darryl Helems Mandy Hall
Derek Weeks Danny Crouse
Health Dept. - Vacant Vacant
W endel Cook Jessica Cook
*Note: Rosie Jordan will serve as Fiscal Agent
For the City of Salem
ECONOMIC DEVELOPMENT AUTHORITY
Term of Office: 4 years (Requires Oath of Office)
William Q. Mongan 3-09-23
Paul C. Kuhnel 3-09-24
J. David Robbins 3-09-24
Cindy Shelor 4-10-25
Macel Janoschka 3-09-25
Sean B. Kosmann 12-14-24
Clark “Rob” Robinson Jr. 12-14-24
FAIR HOUSING BOARD
Term of Office: 3 years
Betty Waldron 7-01-25
Melton Johnson 7-01-23
Cole Keister 8-09-24
Pat Dew 3-01-24
Janie Whitlow 4-09-24
MEMBER EXPIRATION OF TERM
FINE ARTS COMMISSION (INACTIVE)
Term of Office: 4 years
Cameron Vest 5-01-15
Julie E. Bailey Hamilton 5-01-15
Brenda B. Bower 7-26-12
Vicki Daulton 10-26-12
Hamp Maxwell 10-26-12
Fred Campbell 5-01-13
Rosemary A. Saul 10-26-13
Rhonda M. Hale 10-12-14
Brandi B. Bailey 10-12-14
STUDENT REPRESENTATIVES
LOCAL OFFICE ON AGING
Term of Office: 3 years
John P. Shaner 3-01-24
Partnership for a Livable Roanoke Valley
Term of Office: Unlimited
James E. Taliaferro, II
PERSONNEL BOARD
Term of Office: 2 years
William R. Shepherd 6-09-23
J. Chris Conner 8-12-23
Margaret Humphrey 8-12-23
Garry Lautenschlager 11-23-24
Teresa Sizemore-Hernandez 4-26-23
PLANNING COMMISSION AND
NPDES CITIZENS' COMMITTEE
Term of Office: 4 years
Neil Conner 7-31-26
Denise “Dee” King 7-31-26
Vicki Daulton 7-26-23
Reid Garst 7-31-26
N. Jackson Beamer 8-28-23
REAL ESTATE TAX RELIEF REVIEW BOARD
Term of Office: 3 years
David G. Brittain 2-14-25
Wendel Ingram 6-11-24
Daniel L. Hart 2-14-24
ROANOKE REGIONAL AIRPORT COMMISSION
Term of Office: 4 years
Dale T. Guidry 7-1-24
ROANOKE VALLEY-ALLEGHANY REGIONAL
COMMISSION
Term of Office: 3 years
John E. Saunders 6-30-24
Dee King 6-30-23
James W. Wallace, III 6-30-24
*Losing one seat on this Board due to RVARC reorganization
MEMBER EXPIRATION OF TERM
ROANOKE VALLEY BROADBAND AUTHORITY
Term of Office: 4 years
James E. Taliaferro, II 12-14-23
Mike McEvoy (Citizen At-large) 12-13-25
ROANOKE VALLEY DETENTION COMMISSION
No Terms
Member Alternate
James Taliaferro Rosemarie Jordan
ROANOKE VALLEY GREENWAY COMMISSION
Term of Office: 3 years
Dr. Steven L. Powers 11-08-24
Russ Craighead 7-25-25
Skip Lautenschlager 9-26-23
ROANOKE VALLEY RESOURCE AUTHORITY
Term of Office: 4 years
Mike Tyler 12-31-23
ROANOKE VALLEY TRANSPORTATION PLANNING
ORGANIZATION (TPO) POLICY BOARD
Term of Office: 3 years
Renee F. Turk 6-30-23
W illiam “Bill” Jones 6-30-23
Alternate: Byron R. Foley 6-30-23
Alternate: John Saunders 6-30-23
SCHOOL BOARD OF THE CITY OF SALEM
Term of Office: 3 years
Nancy Bradley 12-31-24
Teresa Sizemore-Hernandez 12-31-24
Andy Raines 12-31-25
Stacey Danstrom 12-31-25
David Preston 12-31-23
SOCIAL SERVICES ADVISORY BOARD
Term of Office: 4 years, 2 term limit
Betty McCrary 12-1-22
TOTAL ACTION FOR PROGRESS
Term of Office: 2 years
Byr on Randolph Foley 11-13-23
(vacant - full-time alternate) 11-13-21
TRANSPORTATION TECHNICAL COMMITTEE (TTC)
Term of office: 3 years
Crystal Williams 6-30-23
Charles E. Van Allman, Jr. 6-30-23
Alternate: James E. Taliaferro, II 6-30-23
Alternate: Josh Pratt 6-30-23
MEMBER EXPIRATION OF TERM
VIRGINIA W ESTERN COMMUNITY COLLEGE LOCAL
ADVISORY
Term of Office: 4 years (2 term s only)
Dr. Forest I. Jones, Jr. 6-30-26
VIRGINIA’S BLUE RIDGE BOARD
Term of Office:
James E. Taliaferro, II
WESTERN VIRGINIA EMERGENCY MEDICAL
SERVICES COUNCIL
Term of office: 3 years
Deputy Chief Matt Rickman 12-31-25
WESTERN VIRGINIA REGIONAL INDUSTRIAL
FACILITY AUTHORITY
Term of Office: 4 years (Requires Oath of Office)
James E. Taliaferro, II 2-3-26
H. Robert Light 2-3-24
Crystal Williams(Alternate for Taliaferro) 2-3-26
vacant (Alternate for Light) 2-3-24
WESTERN VIRGINIA REGIONAL JAIL AUTHORITY
Term of Office: 1 year – Expires 12-31-23
(Requires Oath of Office)
W illiam D. Jones
Alternate: Byron R. Foley
James E. Taliaferro, II
Alternate: Rosemarie Jordan
April M. Staton
Alternate: Chief Deputy-Major Steve Garber