Annual Report: Status update on the implementation of the strategic, operational, and marketing plans
Summary
The annual report of the Virginia Economic Development Partnership Authority (VEDP) for Fiscal Year 2019, the fiscal year ending June 30, 2019, opening with a letter from the Chairman of the VEDP Board of Directors dated November 1, 2019. It states that the report is submitted in accordance with the Code of Virginia and that VEDP has continued to make progress on the goals of its Strategic Plan for Economic Development of the Commonwealth. Its sections cover a VEDP overview, a status update on the strategic, operational and marketing plans, marketing in high-unemployment and rural areas, and the FY19 audited financial statements.
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Essel Propack, Danville 1901 Group, Montgomery County
Volvo Trucks, Pulaski County
Micron, Manassas
Annual Report
Fiscal Year 2019
Table of Contents
Letter from the Chairman of the VEDP Board of Directors 1
Introduction 2
VEDP overview 3
Status update on the implementation of the strategic, operational, and marketing plans 8
Marketing in high-unemployment and rural areas 17
FY19 audited financial statements 27
Chairman’s Letter
November 1, 2019
As Chairman of the Board of Directors for the Virginia Economic Development Partnership Authority
(VEDP), I am pleased to present our Annual Report for the fiscal year ending June 30, 2019. This report is
being submitted in accordance with the requirements of the Code of Virginia.
Over the past year, VEDP has continued to make progress against the goals set forth in its Strategic Plan
for Economic Development of the Commonwealth. This Strategic Plan not only outlines multiple
transformational goals for Virginia and VEDP, but also includes specific strategies and initiatives needed to
realize this vision over the next five years. To advance the initiatives set forth in its Strategic Plan, VEDP
develops an annual Operational Plan, which outlines major initiatives and activities, their owners, and
completion deadlines. An annual Marketing Plan describes its marketing goals, the specific activities that
will be undertaken to support each goal, and performance measures to track progress. Progress made in
FY19 against each of these plans is included in this annual report.
VEDP made substantial progress toward reasserting itself as a leader in the economic development
community in FY19, contributing to Virginia regaining its previous position as CNBC’s Top State for
Business, as well as being named by Site Selection as the most competitive state economic development
office in the U.S. Most importantly, VEDP has helped Virginia’s economy to grow with outstanding project
wins across the state in 2019, and an excellent pipeline of projects the Partnership will work to secure in
FY 20 and beyond.
VEDP’s Audited Basic Financial Statements for the year ended June 30, 2019 include an unmodified audit
opinion from the Auditor of Public Accounts. This is the 23rd consecutive year that an unmodified opinion
has been issued to VEDP. The Auditor also issued a separate letter on VEDP’s internal controls and
compliance dated October 18, 2019, with no findings identified.
I am thankful for the talented and dedicated VEDP team that will make our goals a reality. As we continue
to execute our ambitious strategic vision, I am also grateful for the support and guidance of the Governor
and his Administration, members of the General Assembly, the VEDP Board of Directors and staff, and our
state, regional, and local partners. I look forward to our continued collaboration in the year to come.
Sincerely,
Ned W. Massee
Chairman, VEDP Board of Directors
1
Introduction
The FY 2019 Annual Report of the Virginia Economic Development Partnership Authority (VEDP) is
submitted pursuant to
§ 2.2-2237.1 B and D of the Code of Virginia, which direct VEDP to report annually on its strategic,
operational, and marketing plans; any modifications to the plans; and its progress toward meeting
the goals and objectives stated in the plans; and
§ 2.2-2238 B, which requires VEDP to prepare and report on a plan to market high unemployment
areas of the state; and
§ 2.2-2242, which directs the Authority to submit an annual report containing financial statements
for the year ending June 30, 2019 (FY 2019) as audited by the Auditor of Public Accounts;
To offer context, this Annual Report also includes an overview of the Partnership, its governance structure,
and its performance. Additionally, the scope of this year’s report has been expanded to encompass the
annual status update on the Partnership’s progress in implementing the various plans that guide its
activities, which was reported as a separate document for FY18. This addition reflects statutory
requirements adopted in 2017 (§ 2.2-2237.1), which require VEDP to publish a Strategic Plan, Marketing
Plan, and Operational Plan along with annual progress reports. Combining many of the Partnership’s
annual reporting requirements into one document should make it easier for stakeholders to find salient
information, and also to see how all of VEDP’s strategies, plans, and initiatives fit together to grow the
Commonwealth’s economy for all Virginians.
2
VEDP Overview
In 1995, the General Assembly created the Virginia Economic Development Partnership Authority to
“encourage, stimulate and support the development and expansion of the economy of the Commonwealth
through economic development.” The Partnership is a state authority, which is governed by a 17-member
supervisory Board and led by a President and Chief Executive Officer of VEDP employed by the Board.
FY19 economic development results
Virginia’s economy benefited from a tremendous amount of economic development success in FY19. In
addition to winning landmark projects such as Amazon’s East Coast headquarters and Micron’s $3 billion
expansion, VEDP and its partners helped secure 110 other domestic projects involving companies locating
or expanding in Virginia. VEDP’s trade efforts also helped nearly 330 Virginia companies expand their
international presence, infusing over $720 million in sales into the state’s economy.
FY FY 2018 FY 2019
Metrics 2017 actuals actuals
actuals
VEDP-assisted project announcements
Capital investment ($) 2.0 2.1 10.4
1
Without Amazon HQ2 -- -- 7.9
Direct jobs 19,295 13,222 36,913
Without Amazon HQ21 -- -- 11,913
VEDP-generated leads
Number 212 306 406
2
Number converted -- 174 197
VEDP international trade programs
Companies enrolled 348 330 329
Projected international sales3 ($M) n/a $595 $793
Projected trade-supported jobs3 n/a 5,355 7,133
1
Only applicable to FY19, the year during which Amazon HQ2 was announced
2
Metrics for leads converted were not consistently utilized by VEDP during FY17
3
FY17 goals were more qualitative in nature, whereas a more quantitative approach has been used since
VEDP Board of Directors structure and members
The Board selects the President and Chief Executive Officer and ensures that VEDP complies with all
Board and statutory directives. The Board works with VEDP staff to develop, implement, and update
strategic and marketing plans for the Commonwealth and an operational plan for VEDP.
3
In accordance with reform legislation enacted in 2017, the current VEDP Board is comprised of:
• Six ex officio members: the Secretary of Commerce and Trade, the Secretary of Finance, the
Chairman of the Virginia Growth and Opportunity Board, the Executive Director of the Virginia
Port Authority, and the Staff Directors of the House Committee on Appropriations and the
Senate Committee on Finance;
• Seven nonlegislative citizen members appointed by the Governor; and
• Four nonlegislative citizen members appointed by the Joint Rules Committee.
A listing of Board members as of Fall 2019 follows.
The Honorable Brian Ball* – Carrie Hileman Chenery C. Daniel Clemente
Vice Chair Principal Chairman and Chief Executive
Secretary of Commerce and Valley Pike Partners Officer
Trade Term Expires: 6/30/2020 Clemente Development
Commonwealth of Virginia Company Inc.
Term Concurrent with Office Term Expires: 6/30/2018**
Heather Engel Greg B. Fairchild Thomas "Tom" Farrell, II*
Managing Partner Isidore Horween Research Chairman
Strategic Cyber Partners Associate Professor of Growth and Opportunity Board
Term Expires: 6/30/2020 Business Administration Term Concurrent with Position
Associate Dean for
Washington, D.C., Area
Initiatives and Academic
Director of Public Policy and
Entrepreneurship
University of Virginia
Term Expires: 6/30/2022
Deborah K. Flippo Richard “Rick” O. Harrell, III William "Bill" Hayter
Economic Development President (retired) President & CEO
Program Manager R.O. Harrell, Inc. The First Bank & Trust
Draper Aden Associates, Inc. Term Expires: 6/30/2022 Company
Term Expires: 6/30/2022 Term Expires: 6/30/2020
April Kees* The Honorable Aubrey L. Ned W. Massee – Chair
Co-Director*** Layne, Jr.* Croatan Advisors
Virginia Senate Finance Secretary of Finance Term Expires: 6/30/2022
Committee Commonwealth of Virginia
Term Concurrent with Office Term Concurrent with Office
Vincent J. Mastracco Dan M. Pleasant Jason Powell*
Partner Chief Operating Officer Co-Director***
Kaufman & Canoles PC Dewberry Virginia Senate Finance
Term Expires: 6/30/2022 Term Expires: 6/30/2022 Committee
Term Concurrent with Office
4
John F. Reinhart* Xavier R. Richardson Robert P. Vaughn*
CEO and Executive Director Executive Vice President, Director
The Port of Virginia Mary Washington Healthcare House Appropriations
Term Concurrent with Position President, Mary Washington Committee
Hospital & Stafford Hospital Term Concurrent with Office
Foundations
Term Expires: 6/30/2022
* Ex Officio Member
** C. Daniel Clemente’s term expired in 2018, however, Board members serve until they are officially reappointed or
replaced
*** Ms. Kees and Mr. Powell shared a seat on the Board
Overview of VEDP divisions
VEDP’s President and CEO oversees the fulfillment of the Partnership’s mission. All divisions report to
either the President and CEO or to the Executive Vice President. Each division within VEDP plays an
important role in operationalizing this mission, whether by interacting with clients or by providing the
support needed to win projects. The structure of the organization is illustrated in the chart below with
division leaders, and is followed by a brief description of the roles and responsibilities of each VEDP
division.
President & CEO
Stephen Moret
Executive Vice
President
Jason El Koubi
Business Economic Fiscal & Support Human Information
External Affairs
Investment Competitiveness Services Resources Technology
Christy Morton
Vince Barnett Sean Brazier Jack Nelson Melissa Cox John Mehfoud
Marketing & International Research
Talent Solutions Incentives
Communications Trade Nathalie
Mike Grundmann Johan Salén
Lori Melançon Vacant Molliet-Ribet
Virginia Virginia Jobs
Talent Investment
Accelerator Program
Program Tim Stuller
Business Investment
The Business Investment division is comprised of five teams: Lead Generation; Products; Technology and
Services; Business Retention and Expansion; and the Call Center. Business Investment collaborates with
regional and local partners to identify and convert high-potential leads and prospects into project
opportunities, as well as support the retention and growth of existing Virginia employers.
5
Economic Competitiveness
The Economic Competitiveness division is responsible for developing and initiating implementation of
strategies and initiatives to improve Virginia’s business environment, supporting productivity and prosperity
growth for its citizens.
External Affairs
The External Affairs division is responsible for managing VEDP’s relationships with the Administration, the
General Assembly, and Virginia’s congressional delegation. The division also manages VEDP’s external
relationships with local and regional economic development organizations, trade associations, and other
key stakeholders and partners to increase VEDP’s collaboration across the Commonwealth. In addition,
External Affairs is responsible for managing the MEI project approval process, budget and legislative
proposals, VEDP staff familiarization tours, VEDP orientations for all new economic development
professionals across Virginia, and various special projects.
Fiscal and Support Services
The Fiscal and Support Services division has primary responsibility for asset protection, internal control,
procurement, budget, and accounting and support services operations.
Human Resources
The Human Resources division is responsible for talent acquisition and retention, performance
management, rewards, and human capital risk management.
Incentives
The Incentives division is responsible for reviewing, vetting, tracking, and coordinating all incentives
administered by VEDP, as well as for setting VEDP’s incentives strategy and for structuring incentive offers
for major projects.
Information Technology
The Information Technology division is responsible for the strategic planning, implementation, security, and
technical support of VEDP’s technology platforms and custom applications.
International Trade
VEDP’s International Trade programs and services support Virginia companies seeking growth
opportunities through trade development. Numerous trade programs are available to increase the sales of
Virginia products and services in the international marketplace, including Virginia Leaders in Export Trade
(VALET), the Global Defense Program, Global Network, and trade missions.
Marketing & Communications
The Marketing and Communications division is responsible for marketing the Commonwealth for business,
including the VEDP and Virginia brands, websites, event and trade show marketing, publications, and
public relations.
Research
The Research division is made up of four teams: Analytics, Geographic Information Systems (GIS), Project
Support, and Sites & Buildings. Research assists market-facing divisions and internal decision makers by
creating customized and insightful analysis and data visualizations that facilitate an understanding of
6
Virginia’s full value proposition; maintaining knowledge of available sites and buildings to promote positive
location decisions for Virginia; and owning and supporting VEDP’s customer relationship management
software.
Talent Solutions
The Talent Solutions division offers statewide support to address the talent needs of new and expanding
businesses through collaboration with regional and statewide workforce partners and management of two
discretionary incentive programs: the Virginia Jobs Investment Program and the new Virginia Talent
Accelerator Program.
Office Locations
Most of VEDP’s operations are performed from its headquarters in Richmond, Virginia. The International
Trade division has several field offices around the state to support customers. The Business Investment
division also maintains three international offices where lead generation activities are conducted.
Headquarters
Richmond Office
901 E. Cary Street, Suite 900
Richmond, Virginia 23219
Telephone: 804.545.5600
Additional Virginia offices
Eastern Region Northern Region Northwest Region
101 West Main Street, Suite 600 8150 Leesburg Pike, Suite 710 491 Airport Road, Suite 100
Norfolk, Virginia 23510 Vienna, Virginia 22182 Winchester, Virginia 22602
Telephone: 757.314.2129 Telephone: 703.506.9742 Telephone: 540.490.1566
South Central Region Southwest Region
220 Roanoke Boulevard 16325 Taylor Place, Suite 300
Salem, Virginia 24153 Abingdon, Virginia 24211
Telephone: 540.387.2562 Telephone: 276.623.1536
International offices
Europe Republic of South Korea Japan
Pacellistrasse 6-8 13F, Seoul Square Building 11th Floor Aoyama Palacio
80333 Munich 416 Hangang-daero, Jung-gu Tower
Germany Seoul 3-6-7 Kita-Aoyama,
Telephone: 49.89.92.58.11.96 04637 Korea Minato-ku
Telephone: 82.10.4313.2070 Tokyo 107-0061 Japan
Telephone: 81.3.5778.7568
7
VEDP Status Update on Plan Implementation
This section offers an update on the progress made by the Virginia Economic Development Partnership
Authority (VEDP) in FY19 relative to several VEDP plans that are required by Code provisions adopted in
2017. Specifically, it fulfils the requirements for VEDP to report annually on progress against the following
plans:
Strategic Plan for Economic Development of the Commonwealth (Code of Virginia §2.2-2237.1. B.)
VEDP’s FY18 Operational Plan (Code of Virginia §2.2-2237.1. D.2.)
VEDP’s FY18 Marketing Plan (Code of Virginia §2.2-2237.1. D.1.)
These plans were previously submitted in accordance with Code and other requirements. Because most
elements of these plans are treated with confidentiality and are exempted from mandatory disclosure
provisions (Code of Virginia §2.2-3705.7. 33.), this progress report references specific elements of the
plans without revealing information that is protected by the Code for competitive purposes.
Strategic Plan update
The Strategic Plan for Economic Development of the Commonwealth of Virginia adopted by the VEDP
Board in FY18 is a five-year plan (FY19-FY23) for which implementation began on July 1, 2018.
Major advances in Strategic Plan implementation
With the support of two governors, the General Assembly, and hundreds of partners, much progress has
been made implementing many of the initiatives detailed in the Strategic Plan. Following are just a few
examples (not comprehensive):
With state funding support, VEDP launched a world-class, customized workforce recruitment and
training program, the Virginia Talent Accelerator Program, which is being implemented in collaboration
with the Virginia Community College System (VCCS) and other higher education partners. Within two
years, VEDP expects this program will be viewed as one of the very best in America.
With state funding support, VEDP and partners across the Commonwealth have characterized several
hundred identified development sites and are now poised to dramatically increase state matching funds
to support the development of those sites.
With new state support to partially fund a comprehensive marketing program, VEDP has been able to
implement a basic marketing program to expand awareness of Virginia’s assets for business among
corporate execs and site consultants.
Thanks to increased funding for marketing, implementation of a site consultant cultivation program, and
a variety of expanded and/or improved lead generation activities, VEDP lead generation has increased
more than 100% compared to pre-Strategic Plan levels.
With state funding support, Virginia is implementing the most ambitious expansion of computer science
education in the country with its Tech Talent Investment Program, which includes substantial new
investments in nearly every public university in Virginia and VCCS, as well as the development of two
tech campuses in Northern Virginia by George Mason University and Virginia Tech.
With dramatically increased state funding for rural broadband, Virginia is now on track to achieve near-
ubiquitous broadband access in less than a decade.
Working with a variety of in-state and national partners, VEDP helped to craft Virginia’s first
comprehensive international trade strategic plan, with a goal to increase exports by 50 percent.
VEDP established a dedicated Division of Incentives, as well as more systematic risk management and
performance monitoring processes.
VEDP has dramatically improved communication, transparency, and collaboration with partners,
including the creation of a Quarterly Partner Report, prospect protocols, and post-project partner
surveys, among other initiatives.
8
Despite the strong progress that has been made on several fronts, many initiatives detailed in the Strategic
Plan have not yet been implemented, often due to funding constraints. Accordingly, while substantial
progress has been made with respect to all five of the following transformational goals, Virginia has not yet
fully achieved them.
Status update on transformational goals
The Strategic Plan includes five transformational goals, the achievement of which would require the
implementation of dozens of new initiatives over a period of years (multiple biennium budgets). The five
transformational goals are outlined below, as well as a progress indicator, rating the Commonwealth’s
status in achieving each of these goals:
Legend Details
On track to achieve long-term goals with no major concerns
Will make progress against long-term goals but concerns (typically due to funding
challenges)
Additional funding will be required to meet these goals
Transformational
goal Details Status
1. Robust state Over the next several years, position Virginia to achieve a
growth growth rate (measured by employment and median earned
income of workers) among that of the top 5-10 states in the U.S.
2. Every region Ensure that every region participates in the growth of the
wins Commonwealth (i.e., all with positive growth in employment and
median earned income of workers)
3. Best state for Restore Virginia to its previous leadership position near the top
business of the national business climate rankings (i.e., average position
among the top 3-5 states)
4. Top state EDO Reestablish VEDP as one of America’s premier state economic
development organizations (principally to better enable
accomplishment of the top three transformational goals)
5. Super- Exhibit collaboration and coordination as hallmarks of VEDP
collaborator (i.e., place a central focus on the “P” in VEDP)
Some of the initiatives in the Strategic Plan require new funding to implement and, therefore, the
achievement of the five transformational goals will depend on resourcing levels.
9
Status update on 40 detailed initiatives
The 14 strategies developed in the Strategic Plan are as follows:
Cultivate target industry Push new boundaries as a U.S. leader in information
growth clusters technology
Assemble a world-class transportation and logistics hub
Position Virginia’s manufacturing base to be future ready
Create bus. services and ops. centers of excellence (e.g.,
HQs)
Capitalize on Virginia’s unique assets to become a leader in
promising disruptive technologies (e.g., unmanned systems,
genomics, personalized medicine)
Enhance VA’s economic Strengthen Virginia’s human capital development engine
competitiveness Assemble an ample, strategic portfolio of project-ready sites
and buildings across Virginia
Rigorously assess and steadily improve Virginia’s state,
regional, and local economic competitiveness
Leverage public-private partnerships to strengthen Virginia’s
digital infrastructure (i.e., broadband)
Place a special focus on achieving growth in Virginia’s rural
regions and small metros
Enhance VEDP’s Cultivate world-class execution at VEDP
capabilities Implement robust marketing/branding, lead generation, and
site consultant cultivation programs
Strengthen and expand business and international trade
development programs
Become a national leader in incentives administration
To advance these 14 strategies, the Strategic Plan provides 40 detailed initiatives for phased
implementation over a period of years (multiple biennium budgets). Some of the initiatives scheduled for
implementation in FY19 were not funded, slowing progress towards achieving the transformational goals
outlined in the Strategic Plan. Progress made on these initiatives during FY19 is summarized in the
following table.
Current Implementation Status of Strategic Plan Initiatives
Status of Initiatives
Generally on track
Count: 14
Partially on track (typically due to funding)
Count: 15
On hold (typically due to funding constraints)
Count: 5
Potential change in strategy and/or priority (to be re-evaluated in Strategic Plan biennial
update)
Count: 6
Total: 40
10
Cultivate Target Industry Clusters
FY 2019 Initiatives FY 2020 Initiatives
Collaborate with The Port of Virginia to Attract firms in the Cybersecurity 500 index
enhance its economic development efforts
Enhance the toolkits, strategies, and assets Commit state financial support for expanded
on hand to attract targeted firms 21st-century technology campus(es)*
Develop clusters built around IT-focused Embrace regulatory experimentation to
Big Push efforts develop the next-gen of transportation and
logistics
Enhance existing technology transfer efforts at
universities and federal labs
Expand the startup ecosystem through
dedicated resourcing and support
Create an InnoVAte team to enhance
Virginia’s innovation ecosystem and branding
* Part of Amazon HQ2 investment package
Cultivate Target Industry Clusters
FY 2019 Initiatives FY 2020 Initiatives
Create a turnkey, customized workforce Expand supply of high-need baccalaureate
recruitment and training incentive program degrees in critical fields
Expand supply of high-need Upgrade Virginia’s labor market data
subbaccalaureate degrees and other infrastructure to empower data-driven
credentials in critical fields* decision-making
Strategically enhance Virginia’s portfolio of Build excitement for 21st-century technology
development-ready sites and buildings education and careers in K-12*
Build a best-in-class Economic Provide targeted incentives to produce and
Competitiveness team within VEDP retain talent with high-demand skills and
experience
Pursue a national rankings initiative to Integrate employer partnerships more deeply
develop strategies and plans for marked into the workforce and education ecosystem*
improvement
Launch an Economic Development Develop a public-private partnership to launch
Innovation and Research Fund and manage a Site Improvement Fund
Proactively address key elements of Marshal the Commonwealth’s full support
regional economic competitiveness behind expanding broadband access
Develop framework for assessing local * Part of Amazon HQ2 investment package
economic competitiveness
Assess Virginia’s state/local tax burdens
and propose targeted solutions to improve
tax competitiveness
Pursue a focused economic development
strategy sufficient to position rural VA for
growth
11
Enhance VEDP’s Capabilities
FY 2019 Initiatives FY 2020 Initiatives
Implement protocols for alignment and Build deep, dedicated cluster expertise within
coordination VEDP’s Business Investment division**
Establish structured quarterly **VEDP had not yet requested state funding
communications program with economic for this initiative
development partners
Implement a training and professional
development program for VEDP staff
Implement a robust marketing, branding,
and site consultant cultivation program for
Virginia
Upgrade VEDP’s lead generation
capabilities
Implement a strategic site consultant
cultivation program
Expand VEDP’s Business Retention and
Expansion (BRE) program
Expand VEDP’s well-regarded and
oversubscribed International Trade
development programs
Strengthen VEDP’s approach to project
management to communicate Virginia’s
total value proposition
Launch a Project Development and Special
Opportunities Fund (note: partially
implemented in FY18)
Build a dedicated division of incentives
Develop best-in-class incentives reporting
functions
Position Virginia to secure transformational
economic development projects
12
FY19 Operational Plan update
VEDP’s annual Operational Plan is the primary tool for operationalizing the strategies and initiatives
identified in the Strategic Plan, and ultimately achieving VEDP’s transformational goals. VEDP’s FY19
Operational Plan covers activities that were planned between July 1, 2018 and June 30, 2019. The Plan
contained 15 major initiatives that, along with the workplans for ongoing activities for each of VEDP’s
divisions, guided the initial implementation of the detailed initiatives identified in the Strategic Plan. The
Operational Plan also established annual performance metrics for the fiscal year.
Performance metrics FY19 Goals vs. Actuals
% of
FY 2019 FY 2019 Measure
Performance metric Goals Results Goals
VEDP-assisted project announcements: Capital $10.4
$2.5 billion 416%
Investment billion
VEDP-assisted project announcements: Direct Jobs 13,000 36,913 283%
VEDP-generated leads: Number 350 406 116%
VEDP-generated leads: Number converted 125 197 157%
Virginia companies enrolled in International Trade
320 329 103%
programs
Projected international sales from Virginia companies $793
$600 million1 132%
participating in VEDP International Trade programs million
Projected trade-supported jobs from Virginia
companies participating in VEDP International Trade 5,4001 7,133 132%
programs
1
During the course of FY19, the goals relating to Virginia companies participating in International Trade
programs were adjusted by the VEDP Board to the figures presented here in order to reflect more accurate
survey methodology.
Major Initiatives
VEDP executed against each of the 15 Major Initiatives identified in its FY19 Operational Plan, as
summarized below:
Percentage
complete
(of FY19
1
Major Initiative goal) Overview
1. Develop and execute a 100% Held four company meetings in Phase 1
comprehensive strategy to cultivate with two leads generated; developed
rural technology centers hypotheses for future phases
2. Create a turnkey, customized 100% Updated timeline for hiring of SVP; made
workforce recruitment and training strong progress on org. design/key hires;
incentive program in collaboration began partner introductions; kicked off
with VCCS facilities planning
3. Work with key partners to identify 50% Continued interviewing tech sector
opportunities to expand supply of companies and sharing results with core
high-demand degrees and stakeholders; establishing process for
credentials in critical fields education stakeholder outreach
13
Percentage
complete
(of FY19
Major Initiative1 goal) Overview
4. Develop a strategy to enhance 100% Kicked off site characterization process
Virginia's portfolio of development with engineering firm partners for ~400
ready sites sites of 25+ acres; released RFP to
evaluate non-physical characteristics
5. Develop targeted strategies to 100% Changes to the workplan (e.g., additional
address key elements of local stakeholder input) delayed product
competitiveness delivery; stakeholder engagement
ongoing
6. Assess Virginia's state and local tax 100% Concluded initiative; developed targeted
burdens and propose targeted tax proposals, incl. modeled rankings and
solutions to improve overall tax revenue impacts
competitiveness
7. Pending sufficient funding, n/a (no new Initiated execution of short-term activities
implement a comprehensive talent funding in the absence of new funding, and
management program and improve allocated) drafted broader structure and processes
internal collaboration and pending new funding
communication
8. Build a best-in-class lead generation 100% Executed FY19 lead generation plan,
capability exceeding performance goals for leads
created and converted
9. Implement a robust inbound and 100% Secured consultant in-office visits and
outbound site consultant cultivation spring in-bound FAM tours.
program
10. Execute and expand VEDP’s 100% Continued target company visits with
Business Retention and Expansion EDOs; building corporate HQ visit
(BRE) program candidates from EDOs and from visits
11. Strengthen VEDP’s approach to 100% Reviewed data for value proposition for
project management by developing a target sectors (automotive, software,
repeatable process, focusing on cyber and data centers); surveyed
communicating Virginia's total value partners/clients on project manager
proposition effectiveness
12. Develop a transformational projects 100% Defining "transformational project" by
matrix, including top targets and region and industry; remainder of project
anticipated investment packages by postponed due to HQ2
region
13. Identify top opportunities to expand 100% Analyses completed; Int’l Trade Plan
trade and trade-related jobs in development substantially completed for
Virginia public launch in late 2019
14. Implement a comprehensive partner 100% Attended various meetings/events and
relations program met with partners and legislators across
Virginia to understand issues and align
resources
15. Deepen understanding of and 100% Completed state- and regional-level
summarize Virginia's value analysis of all target sectors; validated
proposition for each target sector and results with Business Investment
region Managers / leadership
1Reflects Board-endorsed adjustments made to the scope and/or timing of some initiatives during FY19
14
VEDP’s FY20 Operational Plan builds upon the progress made to date and is intended to further advance
the implementation of the 40 initiatives contained in the Strategic Plan. In FY20, VEDP will focus on the
following 11 Major Initiatives, along with other ongoing activities including implementation of the
International Trade Plan for the Commonwealth. Progress made against these Major Initiatives and other
activities outlined in its FY20 Operational Plan will be reported next year after the close of FY20.
1. Embed continuously-refined value proposition in VEDP messaging, materials, and industry
strategies
2. Modernize and redeploy Salesforce to mirror business processes and support decision making
3. Create a turnkey, customized workforce recruitment and training incentive program in collaboration
with VCCS
4. Develop a strategy to enhance Virginia’s portfolio of development-ready sites
5. Identify opportunities to address talent shortages in high-demand occupations
6. Develop and execute an outreach strategy to assess local and regional competitiveness, using the
community competitiveness framework
7. Develop rural and small metro tech centers across Virginia
8. In partnership with the Virginia Chamber, launch Team Virginia, an executive-to-executive 501(c)3
marketing organization
9. Develop a high-impact biennium budget package
10. Implement a comprehensive talent management program
11. Refresh FY19-23 Strategic Plan per Virginia Code
FY19 Marketing Plan update
A strong, comprehensive marketing program is critical to building awareness of Virginia’s assets among
businesses and site selection consultants. Because location decisions are influenced by perceptions as
well as by objective evaluations of more concrete factors that matter to companies, strategic marketing
efforts aimed at enhancing the state’s reputation can significantly improve its effectiveness in attracting
jobs and investment.
The Code of Virginia charges VEDP with economic development marketing responsibilities that include
seeing that effective economic development marketing and promotional programs are carried out,
and
developing and updating biennially a marketing plan for the Commonwealth as a whole.
VEDP focused its marketing efforts on seven target sectors: corporate services, food and beverage
processing, information/communication technologies, life sciences, manufacturing, supply chain
management, and unmanned systems.
In FY19, VEDP’s Marketing and Communications division made strategic investments to improve the brand
image of both Virginia and the organization, leveraging partial funding toward a comprehensive program for
recurring, third-party economic development marketing. These efforts included the launch of a new
quarterly publication, Virginia Economic Review, and the development of a c-level testimonial campaign
that can be used for sponsorship and digital advertising placements as well as on vedp.org. In addition,
VEDP implemented a targeted site selection consultant cultivation effort to raise awareness and improve
perceptions of Virginia as a premier business destination among this highly-valued influencer group.
To further promote Virginia as a top destination for business, the Business Investment division also
attended multiple trade shows and conducted marketing missions in conjunction with regional and local
economic development partners. These efforts were supported by lead generation calling campaigns and
activities conducted by representatives in VEDP’s foreign offices.
15
In FY20, VEDP plans to utilize $2.7 million to implement select strategic marketing initiatives, such as the
publication of the quarterly magazine for top site consultants and targeted corporate executives, expanded
site consultant cultivation efforts, sponsoring and hosting events, creating an expanded suite of marketing
collateral, and developing and pursuing the development of new digital marketing tools.
To shield strategic initiatives from competitors, the update provided in this document is purposely high
level. Additional details about VEDP’s marketing and lead generation activities in FY19 can be provided
anytime through in-person briefings.
16
Marketing in High-Unemployment
and Rural Areas
While VEDP’s strategies and initiatives are designed to position the entire Commonwealth to achieve
robust economic growth, many of the activities outlined in the strategic, marketing, and operational plans
will have particularly important and focused impacts on the economic opportunities available in Virginia’s
high-unemployment and rural areas.
A regional approach to economic development
One of VEDP’s five transformational goals is for every region to share in to the state’s overall economic
growth. Using a regional approach to execute the Partnership’s strategic and operational plans is key to
ensuring that job and income growth reach every part of the Commonwealth. When every region wins,
workers in every locality—especially those with high unemployment levels—benefit from job opportunities
created within commuting distance and their impact on the economy.
Project activity by region in FY19
Regional profile Visits Referrals Project wins
VEDP Marketing % of Number of VEDP Property3 Projects4 Projects New Capital
Region VA Distressed1 Prospect jobs invested
(see map below) work- Localities Visits2 ($M)
force
Central Virginia 4.2 0 1 42 29 3 340 39
Eastern Shore 0.5 2 2 8 7 - - -
Greater 4.1 2 9 113 37 2 150 28
Fredericksburg
Greater Richmond* 13.4 2 29 356 106 14 1,555 328
Greater Williamsburg 1.8 1 5 46 34 - - -
Hampton Roads 17.2 5 25 304 89 13 701 190
I-81 I-77 Crossroads 2.0 5 1 122 54 7 369 50
I-95 I-85 Intersection 1.5 6 13 120 70 2 222 30
(Virginia's Gateway
Region)*
Lynchburg Region 2.8 2 1 25 23 2 0 7
Middle Peninsula 1.1 1 2 22 5 1 20 2
New River Valley 2.0 2 4 58 34 5 1,431 404
Northern Neck 0.6 3 2 3 3 2 48 3
Northern 2.1 0 7 69 37 2 311 13
Shenandoah Valley
Northern Virginia 33.3 0 12 199 41 24 29,506 6,476
17
Regional profile Visits Referrals Project wins
VEDP Marketing % of Number of VEDP Property3 Projects4 Projects New Capital
Region VA Distressed1 Prospect jobs invested
(see map below) work- Localities Visits2 ($M)
force
Roanoke Region 3.8 3 6 89 49 7 332 315
Shenandoah Valley 4.1 3 11 142 59 13 657 1,259
South Central Virginia 1.6 7 15 149 59 4 222 1,072
(VA's Growth
Alliance)
Southern Virginia 2.3 6 22 129 61 8 966 171
Southwest Virginia 1.6 7 3 52 29 3 83 9
(e-Region)
Statewide Total 100.0 57 170 2,048 n/a4 112 36,913 10,394
Project activity is reported by Marketing Region and may not match the figures calculated by Regional EDO for other
VEDP reports, such as the Quarterly Partner Report
1Localities with an unemployment rate of 0.5 percentage points or more above the average unemployment rate for the
state as of Q1 2019 (3.0 percent)
2Count of visits made to properties by prospects
3Total number of times regional properties were referred by VEDP to prospects in support of VEDP-generated project
work. The same property can be referred multiple times during the year and is counted as a referral each time
4Count of unique VEDP-generated projects that received property referrals within the region. Projects may be referred to
multiple regions and cannot be added across regions to form a statewide total
*Chesterfield County is in two regions; to avoid double-counting, it has been reported only with Greater
Richmond
18
Regional marketing efforts are necessary to buck national trends for
distressed areas
Targeting economic development efforts at distressed localities specifically is unlikely to be successful
given historical trends: across the nation as well as in Virginia, over 80 percent of localities did not
experience a single project win on average over the past four years. Changing this dynamic significantly
would require, at a minimum, unprecedented efforts and fundamental changes in economic development
practices, and may ultimately not be feasible without employing other strategies. In contrast, over two-
thirds (68 percent) of Virginia regions experienced at least one project win during the same time period.
Based on employment forecasts, nearly all Virginia regions are expected to experience net job growth over
the next ten years. Only three regions (Northern Neck-Chesapeake Bay, Southern Virginia Regional
Alliance, and Virginia's e-Region) currently face a slightly negative job forecast, and they could be
positioned for net growth with no more than a few hundred additional jobs on average each year — an
addressable gap for VEDP.
The concept of a regional approach has already been validated by local efforts. Most local economic
developers rely on regional economic development organizations to market their broader region to
companies. State policy has also recognized the benefits of regional collaboration with the design of the
GO Virginia program.
Significant investments have been made to address long-standing,
state-specific challenges
Although states throughout the nation have wrestled with how to spur economic development in fiscally-
distressed areas, Virginia has long faced some unique challenges—particularly against major competitors.
Over the past year, meaningful progress has been made toward mitigating many of these challenges as a
result of budgetary and policy actions taken by the General Assembly and the Administration, combined
with initiatives carried out by VEDP. The progress made has enhanced the Commonwealth’s ability to
successfully compete for projects not only in distressed areas, but throughout the state. A lot more remains
to be done, beginning with the FY20 activities highlighted below.
Marketing and communications activities
Challenges
Economic developers throughout the state report that Virginia has historically not been well known to
business leaders and their site selection consultants outside of the Commonwealth. Until recently, no
funding had been allocated toward raising awareness of the strong business advantages presented by
Virginia generally, and its rural and high-unemployment areas specifically. A fully-funded marketing
program is a critical requirement for effectively branding and marketing rural regions in Virginia as a top
destination for certain target industries because of their business climate, assets, and workforce potential.
Actions taken
VEDP received funding to implement a limited integrated marketing program in FY 2019. As part of this
program, VEDP highlighted rural advantages and assets as a component of its overall marketing
communications, which include social media, a new quarterly publication, Virginia Economic Review, and
site consultant and media familiarization tours.
19
Social Media
VEDP is incorporating rural marketing into our social media strategy with posts highlighting: regional
assets, key companies, project announcements, available properties, executive quotes, company case
studies, and more. 57% of the partner mentions in FY19 on VEDP’s Twitter account were of a rural locality
or region.
Virginia Economic Review
Each issue of Virginia Economic Review provides an inside look at Virginia’s economy, its diverse array of
world-class companies, its amazing talent, and its stunning natural beauty, as well as insights from national
thought leaders. VEDP published two editions of Virginia Economic Review in FY19 with rural content
integrated into the each issue.
First Quarter 2019 (Tech Focus)
Rural Highlights:
Virginia Tech Corporate Research Center
Regional spotlight on Southwest Virginia
Second Quarter 2019 (Manufacturing Focus)
Rural Highlights:
Workforce development pipeline in Danville/Pittsylvania County
PBE Group’s (Tazewell) international trade successes
Regional spotlight on the I-81 corridor from Bristol to Winchester
Inbound Familiarization (FAM) Tours
In FY19, VEDP coordinated nine inbound site consultant FAM tours with regional partners. Eight of these
consultant FAM tours were conducted in predominantly rural regions. VEDP also conducted two inbound
media FAM tours in conjunction with seven regional partners, including six predominantly rural regions.
FY20 plan
Virginia Economic Review
The Third Quarter 2019 issue focuses on various dimensions of America’s rural growth challenge and
features thought leaders and others who are making a difference. The issue also dives into how Virginia is
seeking to leverage its distinctive strengths to buck national trends in rural economic development.
20
Highlights include:
Facts & figures about rural communities
Investments in broadband and site development
Virginia Talent Accelerator Program
Rural and small metro tech centers initiative
Interviews with rural thought leaders
Agricultural exports
Photo essay featuring 11 of Virginia’s regions
The Fourth Quarter CY2019 issue will focus on data in Virginia (e.g., data
science, data centers) and will highlight Microsoft’s investment in Southern
Virginia. The First Quarter of CY2020 issue will focus on food and beverage
processing in Virginia.
Additional Planned Activities
VEDP will continue to partner with regional EDOs to host familiarization tours in their regions for site
selection consultants & media as well as incorporate rural marketing into our social media strategy. The
M&C team will launch a limited C-level testimonial campaign featuring companies located in Virginia. VEDP
is also filming drone videos of Virginia’s certified sites which includes sites in 12 regions of state.
Incentives
Challenges
Virginia has long awarded companies lower incentives per job and dollar invested than competitor states,
relying instead on the many other strengths the Commonwealth has to offer (e.g., business friendliness,
highly-educated workforce). Despite the state’s many successes, certain locations face difficulties
attracting and retaining businesses if they face barriers such as long distances from a large population
center, as is often the case with distressed areas. Smaller incentives mean that grants are not as effective
at mitigating the impact of barriers or remedying them. Even when barriers do not present a major issue,
Virginia can be at a competitive disadvantage relative to other states that are far more aggressive with
financial incentives (see first chart below). As shown in the second chart below, Virginia’s new project
activity has underperformed many regional competitors over the past three years.
Virginia also lacks by-right state and local tax benefits for new manufacturing jobs and investment.
Although the state is regarded as having a generally competitive tax environment, new manufacturers
typically face a higher state and local tax burden in Virginia compared to many competitor states.
Actions taken
To enhance Virginia’s competitiveness in attracting new employers to the state, custom grants have been
more frequently used to secure major projects expected to have a transformational effect in an entire
region, including high-unemployment localities. The custom grants structured in collaboration with
legislative and Administration partners facilitated projects such as the $400 million and 770+ jobs
expansion of the Volvo Trucks facility in the New River Valley, and the $1 billion expansion of the Merck
facility that will add 152 high-paying jobs to the Shenandoah Valley region.
In addition, the 2018 General Assembly passed and the Governor signed House Bill 222 into law. The
“New Company Incentive Program” provides employers that are new to Virginia with an exemption from
income taxes and up to $2,000 per new job if they meet certain statutory requirements including:
Locating in a specified set of localities—many of which are distressed, and
Exceeding certain job and investment thresholds.
21
22
FY20 plan
Funding to the Virginia Jobs Investment Program (VJIP) has also been restored to previous, higher levels.
This program, which offers financial assistance and training to companies that seek to attract and retain
qualified employees in the Commonwealth, is particularly important in distressed localities where the
volume of trained workers may be insufficient to meet the needs of companies that might otherwise locate
in these areas. VEDP will continue to work with legislative and Administration partners to structure custom
grants for opportunities whose economic impact on the region warrant a competitive and tailored approach.
Sites and Buildings Development
Challenges
Unlike several of its main competitors (e.g., Tennessee, Georgia, Alabama, North Carolina), Virginia had
not until recently made any significant investment in developing sites and buildings to meet the short
timelines and expectations of major companies looking to start operations as soon as possible. Without an
adequate and diverse supply of quality sites in every Virginia region, the state may lose projects for which it
might otherwise have been competitive, and may face difficulties supporting robust job growth across the
state. An analysis of the reasons why Virginia lost projects over the past three years confirms that the
availability and readiness of sites are the leading “deal breaker” according to companies.
Actions taken
The 2018 General Assembly and the Governor appropriated $2 million in FY19 for VEDP to characterize all
Virginia sites over 25 acres. The characterization effort, which was undertaken as part of the Virginia
Business Ready Sites Program, was intended to produce an assessment of the current readiness of
available sites and to collect information that would help guide the allocation of future investments in site
development. Using these funds, VEDP worked with partners, engineering firms, and site selection
consultants to produce characterization reports and location competitiveness reports for 466 sites, as well
as ratings on the developability of each site and its suitability for a variety of sectors.
FY20 plan
Results from the characterization efforts will help guide decisions about investing in specific sites in any
geography or sector. Additional investment for site development will be needed to begin creating a
competitive portfolio of “shovel-ready” sites across the state.
Custom Workforce
Challenges
Despite having some of the country’s best educational attainment levels and higher education institutions,
Virginia has lacked a turnkey, custom workforce recruitment and training incentive program to compete
with other southeastern states (Georgia, Louisiana, Alabama, North Carolina, and South Carolina). By
offering highly customized solutions to qualified new and expanding companies, these states have been
able to overcome deficiencies that may exist with the availability, skill level, and quality of the workforce in
certain industries or locations, such as distressed areas. Further, companies and site-selection consultants
place a high premium on this type of incentive as it offers a very valuable, tangible benefit with a market
value that far exceeds the state’s cost to provide.
23
Actions taken
In FY18, the General Assembly and the Administration approved funding to launch Virginia’s own custom
workforce solutions program. Recently branded as the Virginia Talent Accelerator Program, the program
has been ramping up during FY19 and has strong leaders in key positions. The program has been offered
to several significant projects and its first customer was secured in October 2019, with the announcement
of Morgan Olson’s move to Danville-Pittsylvania County, Virginia.
FY20 plan
During FY20, the new leadership team will begin hiring instructional design, visualization, and learning
technology talent. Their area of focus will be on developing and delivering highly customized solutions for
the program’s first clients. They will also build the program’s infrastructure, including a suite of training
modules to supplement the highly customized deliverables which will be the program’s core service.
Familiarization and education activities
To better understand and market the specific advantages and assets that each region possesses for
VEDP’s target sectors, VEDP partnered with most regional EDOs to conduct familiarization tours. Business
Investment and Lead Generation managers participated in 21 familiarization tours in 15 regions and
several unaffiliated localities in FY19, focusing on regional assets relevant to their assigned sectors.
Another 10 asset-related tours in 10 regions are already planned for FY20. Tours with a broad regional
focus are planned to every Regional EDO in FY20.
Special initiatives for distressed communities
Rural think tank initiatives
Initiatives identified by the rural think tank group continue to progress in Virginia. Formed in 2017, the
group identified various initiatives that would significantly impact rural economic growth and advance rural
economic development. Nearly all of the identified initiatives have made some progress toward the
identified goals over the last two years. During FY 2019, the rural think tank group met to receive a
broadband update regarding the Virginia telecommunications initiative, a review of the site characterization
initiative, rural and small metro technology center initiative, local and regional economic competitiveness,
and other priorities. More details about the progress made is shown in the exhibit on the following page.
In FY20, VEDP plans to continue working with think tank members to maintain focus on the eight outlined
initiatives. While progress has been made on many of these initiatives, there is still much work to be done.
Increased funding will be needed to expand many of these, including the rural marketing initiative,
ubiquitous broadband, expanded site inventory, and the customized workforce program.
Additionally, VEDP is launching a local economic competitiveness survey initiative to help local and
regional economic developers have a better understanding of their readiness compared to their peers. This
initiative will help address the community competitiveness recommendation.
24
Rural and small metro tech centers
VEDP’s Rural and Small Metro Technology Centers Initiative is aimed at supporting the growth of high-
wage, tech sector jobs in rural and small metro Virginia. In FY19, VEDP focused on opportunities for
onshore delivery centers, and marketed rural and small metro Virginia communities to large technology
sector companies in pursuit of these opportunities. As a result, representatives from global tech companies
came to visit rural Virginia communities, and VEDP is continuing to work these project opportunities. In
FY20, VEDP will add “Software as a Service” (SaaS) firms and data centers to its growing focus for rural
and small metro technology sector growth. The initiative requires collaboration between technology
companies, higher education institutions, and other key stakeholders to create a hub for information
technology and computer science companies with the talent pipeline they need to succeed.
By fully implementing these initiatives as well as others outlined in the Strategic Plan, Virginia can achieve
a growth rate among the top 5-10 states in the U.S., while also ensuring that every region participates in
the growth of the Commonwealth (i.e., all regions with positive growth in employment and median earned
income of workers).
Board of Directors Rural Virginia Action Committee
During FY19, the Rural Virginia Action Committee of the VEDP Board of Directors focused their efforts on
supporting the initiatives identified by the rural think tank group as top priorities for rural economic growth.
The committee members engaged on several specific priorities including site development, broadband
expansion, local and regional economic competitiveness, and civic leadership development. The Rural
Virginia Action Committee of the VEDP Board of Directors received a presentation from the VRC on North
Carolina’s Rural Economic Development Institute and the VRC’s plans for a similar program in Virginia.
25
VEDP board members are supportive of the VRC’s efforts to create this program and address civic
leadership challenges in rural Virginia.
In the beginning of FY20, Mr. Ned Massee took over as Chairman of the VEDP Board of Directors and
stepped down as Chair of the Rural Action Committee. Mr. Rick Harrell, VEDP board member from South
Boston (GO Virginia Region 3), was appointed Chairman of the committee. In FY20, the committee plans
to support various initiatives focused on ways to better assist communities with their economic
development work with VEDP as a convener and partner in these efforts. Building upon past work, the
Committee will continue to support VEDP and other stakeholders in furthering policies and practices aimed
at enhancing economic development opportunities in underserved and distressed communities throughout
the Commonwealth.
26
FY19 audited financial statements
Following are the Virginia Economic Development Partnership’s Audited Basic Financial Statements for the
Fiscal Year Ended June 30, 2019, as well as an independent opinion letter issued by the Auditor of Public
Accounts.
27
VEDP.org
Virginia Economic Development Partnership
Audited Basic Financial Statements
Fiscal Year 2019
Virginia Economic Development Partnership
Audited Basic Financial Statements
For the Fiscal Year Ended June 30, 2019
- TABLE OF CONTENTS -
Pages
INTRODUCTORY SECTION
Appointed Officials 2
FINANCIAL SECTION
Management’s Discussion and Analysis 3-8
Basic Financial Statements
Statement of Net Position 9
Statement of Activities 10
Balance Sheet-Governmental Funds 11
Statement of Revenues, Expenditures, and Changes
in Fund Balances of Governmental Funds 12
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 13
Statement of Revenues, Expenditures, and Changes in Fund
Balances, Budget and Actual-Cash Basis-General and
Special Revenue Funds 14
Notes to Financial Statements 15-70
Required Supplementary Information 71-89
Independent Auditor’s Report on Financial Statements 90-92
INTRODUCTORY SECTION
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
Richmond, Virginia
APPOINTED OFFICIALS
As of June 30, 2019
Board of Directors
Ned W. Massee, Chair
The Honorable Brian Ball, Ex-Officio, Vice Chair
Carrie Hileman Chenery William “Bill” Hayter
C. Daniel Clemente Vincent J. Mastracco
Heather Engel Dan M. Pleasant
Greg B. Fairchild John F. Reinhart
Deborah K. Flippo Xavier R. Richardson
Richard “Rick” O. Harrell, III
The Honorable Aubrey L. Lane, Jr., Ex-Officio
April Kees, Ex-Officio
Jason Powell, Ex-Officio
Robert P. Vaughn, Ex-Officio
John O. “Dubby” Wynne, Ex-Officio
President and Chief Executive Officer
Stephen M. Moret
2
FINANCIAL SECTION
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
AS OF JUNE 30, 2019
The Virginia Economic Development Partnership (the Partnership) management offers the readers of the
Partnership’s financial statements this narrative overview and analysis of its financial activities for the fiscal
year ended June 30, 2019. We encourage the reader to consider this information presented here in conjunction
with the financial statements and accompanying notes.
Overview of the Financial Statements
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
Partnership in a manner similar to a private sector business.
The Statement of Net Position presents information on all of the Partnership’s assets and liabilities, with
the difference between the two reported as net position. Over time, increases or decreases in net position
may serve as a useful indicator of whether the financial position of the Partnership is improving or
deteriorating.
The Statement of Activities presents information showing how the Partnership’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods. For example, expenses that are accrued for the net pension liability in the current period are
expected to be paid with future funding appropriations from the Commonwealth of Virginia (COV).
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The Partnership, like other political subdivisions of the
COV, uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. The financial activities of the Partnership are reported in governmental funds.
Governmental Funds: Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating the Partnership’s near-term
financing requirements.
3
Reconciliations between Government-Wide and Fund Financial Statements
There are two reconciliations between the government-wide and the fund financial statements. The first
is found on the Balance Sheet and explains the difference between the fund balance on the Balance Sheet
and net position on the Statement of Net Position. The second is found on the Reconciliation of the
Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the
Statement of Activities, which reconciles the difference between the net change in fund balances on the
fund-based statement and the change in net position on the government-wide based statement. Both
statements describe in sufficient detail the amounts and the reasons for those differences.
Government-Wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of an organization’s financial
position. At the close of the fiscal year ended June 30, 2019, the Partnership had a net position of
($4,552,396) compared to a net position of ($9,004,302) as of June 30, 2018. Following is an analysis of
the changes in the net position of the Partnership.
Net Position
Increase
2019 2018 (Decrease)
Current and other assets $10,994,876 $ 5,687,632 $ 5,307,244
Capital assets, net of depreciation 1,043,091 1,250,911 (207,820)
Total assets 12,037,967 6,938,543 5,099,424
Deferred outflows of resources 3,023,129 1,924,945 1,098,184
Total assets and deferred outflows 15,061,096 8,863,488 6,197,608
Non-current liabilities 16,046,730 15,801,150 245,580
Other liabilities 1,489,160 491,592 997,568
Total liabilities 17,535,890 16,292,742 1,243,148
Deferred inflows of resources 2,077,602 1,575,048 502,554
Total liabilities and deferred inflows 19,613,492 17,867,790 1,745,702
Net position:
Net investment in capital assets 923,558 1,250,911 (327,353)
Restricted 508,000 412,000 96,000
Unrestricted (5,983,954) (10,667,213) 4,683,259
Total net position $ (4,552,396) $ (9,004,302) $ 4,451,906
4
Total assets increased this fiscal year by $5,099,424 when compared to last year, primarily due to an
increase of $4,778,711 in the Current asset, cash. The major components of the cash increase were
funding received in FY2019 for the Custom Workforce Solutions division ($2.4 million), the Business
Ready Sites Characterization program ($1.7 million), and the Business Ready Sites Mitigation program
($1.0 million) carried forward to the next fiscal year. The remaining increase in Total assets is due to an
increase of $424,481 in Prepaid expenses related to various international trade shows and site selector
events, as well as an increase of $96,000 in the Restricted net other postemployment asset recorded in
compliance with GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other
Than Pensions (GASB 75), related to the Partnership’s participation in the Virginia Retirement System
Disability Insurance Program. These increases were offset by a decrease of $207,820 in Capital assets,
net of depreciation, due to normal depreciation expense and disposal of computer equipment.
Deferred outflows of resources increased by $1,098,184. This increase is due primarily to changes in
proportion and differences between employer contributions and proportionate share of contributions
related to the Partnership’s participation in the Virginia Retirement System pension and other
postemployment benefit plans, recorded in compliance with GASB Statement No. 68, Accounting and
Financial Reporting for Pensions (GASB 68) and GASB 75.
Total liabilities increased by $1,243,148 due to an increase in the Non-current liabilities of the
Partnership’s net pension liability of $258,000, along with an increase of $1,065,973 in Accounts payable
due to the timing of year-end payments, offset by decreases in Accrued payroll and Unearned revenue
totaling $68,405.
Deferred inflows of resources increased by $502,554. This increase is due mainly to differences between
expected and actual experience related to the Partnership’s participation in the Virginia Retirement
System pension and other postemployment benefit plans, recorded in compliance with GASB 68 and
GASB 75.
Net investment in capital assets consists primarily of leasehold improvements, furniture, computers and
peripheral technology equipment used to deliver program services to clients, net of capital lease
obligations. The Partnership considers technology a vital asset in its efforts to market Virginia and will
continue to invest in technology to ensure that its equipment and software are updated to take advantage
of the latest data handling capabilities and increased processing speeds.
Restricted Net position represents the portion of fund balance related to the Restricted net other
postemployment asset recorded in compliance with GASB 75 due to the Partnership’s participation in the
Virginia Retirement System Disability Insurance Program. The remaining Net position balance of
($5,983,954) is classified as unrestricted. The Partnership has recorded $14,956,333 of net pension
liability and net other postemployment benefits liabilities that are expected to be paid with future
appropriations from the COV. The Partnership’s Current and other assets exceed its Other liabilities by
$9,505,716.
5
Changes in Net Position
Increase
2019 2018 (Decrease)
Revenues:
Program revenues:
Charges for services $ 490,332 $ 1,756,477 $ (1,266,145)
Operating grants 178,755 302,061 (123,306)
General revenues:
General Fund appropriations 33,945,246 28,495,883 5,449,363
Other 356,319 240,879 115,440
Total revenues 34,970,652 30,795,300 4,175,352
Expenses:
Workforce Solutions 837,571 1,050,713 (213,142)
Custom Workforce Solutions 141,144 - 141,144
Business Investment 5,210,905 5,097,254 113,651
International Trade 7,086,272 6,778,849 307,423
Research 2,207,695 2,141,567 66,128
Marketing and Communications 2,596,029 2,156,250 439,779
Economic Competitiveness 843,216 783,191 60,025
Information Technology 1,599,111 1,518,117 80,994
Incentives 591,364 - 591,364
Administration 5,873,761 7,969,813 (2,096,052)
Pass-Through Payments 3,531,678 5,105,731 (1,574,053)
Total expenses 30,518,746 32,601,485 (2,082,739)
Increase (Decrease) in net position 4,451,906 (1,806,185) 6,258,091
Beginning net position (9,004,302) (7,198,117) (1,806,185)
Ending net position $ (4,552,396) $ (9,004,302) $ 4,451,906
Net position for the Partnership increased by $4,451,906 during the current fiscal year. The total revenues
increase of $4,175,352 is due primarily to an increase in general fund appropriations provided by the COV
related to the Custom Workforce Solutions Division, the Business Ready Sites Characterization program,
and new marketing initiatives. In addition, program revenues decreased due to one-time payments from
various localities and other economic development organizations in support of corporate headquarters
recruitment efforts that were received in FY2018.
Total expenses for the Partnership decreased by $2,082,739. This decrease was primarily in
Administration and Pass-Through Payments. Administration decreased due to one-time expenses related
to corporate headquarters recruitment efforts in FY2018, while Pass-Through Payments decreased due to
reductions in payments to the Virginia Brownfields Restoration and Economic Redevelopment Assistance
Fund and the Commonwealth Center for Advanced Manufacturing. These decreases were offset by
increases in the Custom Workforce Solutions and Incentives Divisions created in FY2019, as well as
increased participation in International Trade export programs, and Marketing and Communications
advertising and new marketing initiatives.
6
Governmental Funds Analysis
The Partnership records all its financial activities in the General Fund, with the exception of International
Trade federal grant programs that are recorded in the Special Revenue Fund. The financial position of
the Partnership improved by $4,209,740 in FY2019 primarily due to the increase in cash as noted in the
Government-Wide Financial Analysis, resulting in a fund balance of $8,993,780 as of June 30, 2019.
$1,301,356 of the fund balance consists of Prepaid expenses and Lease deposits and is nonspendable, with
the remaining balance of $7,692,424 unassigned. The Special Revenue fund records revenues and
expenditures in equal amounts and has no fund balance. Activity for the Special Revenue fund decreased
from $302,061 in FY2018 to $178,755 in FY2019 due to an International Trade federal grant program
that ended in FY2018.
General and Special Revenue Fund Budgetary Highlights
The Statement of Revenues, Expenditures, and Changes in Fund Balance, Budget and Actual-Cash Basis
is presented to provide information on the budget as originally prepared and the final budget on which the
Partnership operated for the fiscal year. Also, the final budget is compared to the cash basis actual results
by revenue source and expenditure activity. The Partnership’s budget, as originally prepared, included
revenue provided by the COV of approximately $32.1 million. This amount was adjusted by $2.0 million
for Business Ready Sites Characterization funding, offset by a reduction of $.2 million for marketing and
trade missions. Operating grants were below budget due to the timing of payments from the federal
government, and Interest revenue exceeded budget due to the increase in interest rates and the
Partnership’s cash balance.
Actual expenditures were below the final budget by approximately $7.6 million for the fiscal year. This
underspending was primarily in Custom Workforce Solutions as the program started up later than
expected in FY2019, Marketing and Communications advertising and events, Administration consulting
services related to the Business Ready Sites Characterization program to be spent in FY2020, and Pass-
through Payments for Business Ready Sites Mitigation.
FY2020 Outlook
The Partnership received FY2020 COV funding for some of its key initiatives. This includes a $2.5
million increase for the Custom Workforce Solutions division to continue funding their customized,
turnkey workforce recruitment and training incentive program to secure high-quality economic
development projects, as well as a $1.0 million increase for several new marketing initiatives. The
Partnership will continue to seek funding for other important initiatives critical to its success.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the government-wide and fund financial statements. The notes describe the nature of the Partnership’s
reporting entity and the relationship to the COV as a whole, the basis on which the financial statements
were prepared, and the methods used for presentation. Further, the notes provide explanations of specific
accounts with significant balances.
7
Requests for Information
This financial report is designed to provide a general overview of the Partnership’s finances for all those
with an interest. Questions concerning any of the information provided in this report or requests for
additional financial information should be addressed to the President and Chief Executive Officer,
Virginia Economic Development Partnership, P.O. Box 798, Richmond, Virginia, 23218-0798.
8
BASIC FINANCIAL STATEMENTS
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
STATEMENT OF NET POSITION
As of June 30, 2019
Governmental
Activities
Assets
Cash and cash equivalents (Note 2) $ 9,134,244
Travel advances 2,338
Operating grants receivable 48,938
Prepaid expenses 1,282,216
Lease deposits (Note 5) 19,140
Restricted net other postemployment asset (Note 13) 508,000
Capital assets, net of accumulated depreciation (Note 6)
Leasehold improvements, furniture, and equipment 1,043,091
Total assets 12,037,967
Deferred outflows of resources (Notes 10, 11, 12, 13, and 14) 3,023,129
Total assets and deferred outflows of resources 15,061,096
Liabilities
Accounts payable 1,210,912
Accrued payroll 197,523
Unearned revenue 80,725
Long-term liabilities due within one year
Capital lease obligation (Note 8) 24,881
Compensated absences (Note 9) 820,442
Net other postemployment liability (Notes 11, 12, and 14) 53,622
Long-term liabilities due in more than one year
Compensated absences (Note 9) 150,522
Capital lease obligation (Note 8) 94,652
Net pension liability (Note 10) 11,643,000
Net other postemployment liability (Notes 11, 12, and 14) 3,259,611
Total liabilities 17,535,890
Deferred inflows of resources (Notes 10, 11, 12, 13, and 14) 2,077,602
Total liabilities and deferred inflows of resources 19,613,492
Net position
Net investment in capital assets 923,558
Restricted for net other postemployment asset (Note 13) 508,000
Unrestricted (5,983,954)
Total net position $ (4,552,396)
The accompanying notes are an integral part of the financial statements.
9
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2019
Net (Expense)
Program Revenues Revenue and
Charges for Operating Changes in
Expenses Services Grants Net Position
Governmental Activities
Workforce Solutions $ 837,571 $ - $ - $ (837,571)
Custom Workforce Solutions 141,144 - (141,144)
Business Investment 5,210,905 6,306 (5,204,599)
International Trade 7,086,272 365,276 178,755 (6,542,241)
Research 2,207,695 (2,207,695)
Marketing and Communications 2,596,029 85,000 (2,511,029)
Economic Competitiveness 843,216 (843,216)
Information Technology 1,599,111 (1,599,111)
Incentives 591,364 33,750 (557,614)
Administration 5,873,761 (5,873,761)
Pass-through Payments 3,531,678 (3,531,678)
Total governmental activities 30,518,746 490,332 178,755 (29,849,659)
General Revenues
Revenue provided by the General Fund
of the Commonwealth (Note 4) 33,945,246
Interest revenue 224,027
Loss on disposal of capital assets (9,825)
Other revenue 142,117
Total general revenues 34,301,565
Increase in net position 4,451,906
Net position, July 1, 2018 (9,004,302)
Net position, June 30, 2019 $ (4,552,396)
The accompanying notes are an integral part of the financial statements.
10
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
BALANCE SHEET
GOVERNMENTAL FUNDS
As of June 30, 2019
Special Total
General Revenue Governmental
Fund Fund Funds
Assets
Cash and cash equivalents (Note 2) $ 9,134,244 $ $ 9,134,244
Travel advances 2,338 2,338
Due from the special revenue funds 48,938
Operating grants receivable 48,938 48,938
Prepaid expenses 1,282,216 1,282,216
Lease deposits (Note 5) 19,140 19,140
Total assets $ 10,486,876 $ 48,938 $ 10,486,876
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 1,210,912 $ 1,210,912
Accrued payroll 197,523 197,523
Compensated absences 3,936 3,936
Due to the general fund 48,938
Unearned revenue 80,725 80,725
Total liabilities 1,493,096 48,938 1,493,096
Fund Balances:
Nonspendable 1,301,356 - 1,301,356
Committed - - -
Unassigned fund balance 7,692,424 0 7,692,424
Total fund balances 8,993,780 0 8,993,780
Total liabilities and fund balances $ 10,486,876 $ 48,938 $ 10,486,876
Amounts reported for governmental activities in the
statement of net position are different because:
Fund balances, Governmental Funds $ 8,993,780
Capital assets used in governmental activities
are not financial resources and, therefore, are
not reported in the funds. 1,043,091
Restricted net other postemployment asset is
not a financial resource and, therefore, is not 508,000
reported in the funds.
Noncurrent liabilities (compensated absences,
capital lease obligation, net pension liability
and net other postemployment obligation) are
not due and payable with current financial
resources and, therefore, are not reported in the (15,097,267)
funds.
Total net position of governmental activities $ (4,552,396)
The accompanying notes are an integral part of the financial statements.
11
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
OF GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2019
Special Total
General Revenue Governmental
Fund Fund Funds
Revenues
Revenue provided by the General Fund
of the Commonwealth (Note 4) $ 33,945,246 $ $ 33,945,246
Participation fees 371,582 371,582
Sponsorship fees 85,000 85,000
Operating grants - 178,755 178,755
Interest revenue 224,027 224,027
Other revenue 175,867 175,867
Total revenues 34,801,722 178,755 34,980,477
Expenditures
Workforce Solutions 863,277 863,277
Custom Workforce Solutions 137,453 137,453
Business Investment 5,283,478 5,283,478
International Trade 6,983,866 178,755 7,162,621
Research 2,254,592 2,254,592
Marketing and Communications 2,597,020 2,597,020
Economic Competitiveness 877,663 877,663
Information Technology 1,590,853 1,590,853
Incentives 645,613 645,613
Administration 5,826,489 5,826,489
Pass-through Payments 3,531,678 3,531,678
Total expenditures 30,591,982 178,755 30,770,737
Revenues over expenditures 4,209,740 - 4,209,740
Fund balance, July 1, 2018 4,784,040 - 4,784,040
Fund balance, June 30, 2019 $ 8,993,780 $ - $ 8,993,780
The accompanying notes are an integral part of the financial statements.
12
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2019
Amounts reported for governmental activities in the statement of activities are different
because:
Net increase (decrease) in fund balance of the governmental funds $ 4,209,740
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
depreciation expense exceeded capital outlays in the current period.
(207,820)
Some expenses reported in the statement of activities (compensated absences,
capital lease obligation, net pension liability and net other post employment
asset and obligation) do not require the use of current financial resources and,
therefore, are not reported as expenditures in governmental funds.
449,986
Increase in net position of governmental activities $ 4,451,906
The accompanying notes are an integral part of the financial statements.
13
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CASH BASIS
GENERAL AND SPECIAL REVENUE FUNDS
For the Fiscal Year Ended June 30, 2019
Special Variances with
Budgeted Amounts General Revenue Final Budget-
Fund Fund Positive
Original Final Actual Actual (Negative)
Revenues
Revenue provided by the General Fund
of the Commonwealth (Note 4) $ 31,597,198 $ 33,945,246 $ 33,945,246 $ - $ -
Participation fees 455,000 455,000 371,582 (83,418)
Sponsorship fees - - 85,000 85,000
Operating grants - 340,365 165,819 (174,546)
Interest revenue 25,000 75,000 224,027 149,027
Other revenue 165,255 165,255 175,867 10,612
Total revenues 32,242,453 34,980,866 34,801,722 165,819 (13,325)
Expenditures
Workforce Solutions 992,174 992,174 877,007 115,167
Custom Workforce Solutions 2,510,193 2,510,193 101,527 2,408,666
Business Investment 5,716,526 5,461,977 5,245,712 216,265
International Trade 7,152,832 7,493,197 7,041,026 178,755 273,416
Research 2,391,653 2,391,653 2,273,253 118,400
Marketing and Communications 3,186,796 3,607,621 2,912,947 694,674
Economic Competitiveness 929,294 929,294 860,401 68,893
Information Technology 1,516,145 1,616,145 1,603,762 12,383
Incentives 701,396 701,396 641,487 59,909
Administration 3,960,500 6,968,289 4,900,820 2,067,469
Pass-through Payments 4,896,004 5,146,004 3,531,678 1,614,326
Total expenditures 33,953,513 37,817,943 29,989,620 178,755 7,649,568
Revenues over (under) expenditures (1,711,060) (2,837,077) 4,812,102 (12,936) 7,636,243
Fund balance, July 1, 2018 1,711,060 2,837,077 3,594,484 681,347 1,438,754
Fund balance, June 30, 2019 (Note 3) $ - $ - $ 8,406,586 $ 668,411 $ 9,074,997
The accompanying notes are an integral part of the financial statements.
14
NOTES TO FINANCIAL STATEMENTS
VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The Virginia Economic Development Partnership (the Partnership) was established on July 1,
1996, by Chapter 638 of the 1995 Acts of Assembly and operates as an authority in accordance
with the provisions of Chapter 22 of Title 2.2 of the Code of Virginia. The Partnership’s major
activities are to encourage, stimulate, and support the development and expansion of the
economy of the Commonwealth.
The Partnership is a component unit of the Commonwealth of Virginia. A separate report is
prepared for the Commonwealth of Virginia, which includes all agencies, boards,
commissions, and authorities over which the Commonwealth exercises or has the ability to
exercise oversight authority. The Partnership is an integral part of the reporting entity of the
Commonwealth of Virginia; accordingly, the Partnership’s financial statements are included
in the financial statements of the Commonwealth as a discretely presented component unit.
B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The accompanying financial statements have been prepared in accordance with generally
accepted accounting principles. The Statement of Net Position and the Statement of Activities
are referred to as “government-wide” financial statements and are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are recorded
when earned and expenses are recorded when a liability is incurred, regardless of the timing
of related cash flows. Interfund activity and balances between the General Fund and Special
Revenue Fund have been eliminated in the government-wide financial statements. The
Statement of Activities shows the extent that direct expenses of governmental functions are
offset by program revenues. In cases where certain indirect costs have been allocated to the
various divisions by headcount, program expenses will include both direct and indirect costs.
Program revenues include charges for services and operating grants. Charges for services are
comprised primarily of participation fees, sponsorship fees, and shared mission
reimbursements. Operating grants are grants awarded to the Partnership from the federal
government.
The Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund
Balances are referred to as “governmental fund” financial statements and are reported using
the current financial resources measurement focus and the modified accrual basis of
accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the Partnership
considers revenues to be available if they are collected within 60 days of the end of the current
fiscal period. Expenditures generally are recorded when a liability is incurred, as in accrual
accounting. However, debt service payments and expenditures related to compensated
absences are only recorded when payment is due. The Partnership reports its activities in
15
governmental funds. The general fund is used for its primary operating fund and accounts for
all financial transactions not accounted for in the special revenue funds. The special revenue
fund is used to account for federal grant revenues and related expenditures for operating grants
awarded to the Partnership by the federal government. Both the General Fund and Special
Revenue Fund are reported as major governmental funds.
Fund balances for the Partnership’s governmental funds financial statements are classified in
accordance with Governmental Accounting Standards Board (GASB) Statement No. 54,
“Fund Balance Reporting and Governmental Fund Type Definitions.” Fund balances are
classified as restricted, committed or assigned if the related resources reported in governmental
funds have either externally or internally imposed restrictions on their usage. Nonspendable
fund balances represent assets such as prepaid expenses and lease deposits that are unavailable
to be spent on future operations. The unassigned fund balances represents the remainder of
the fund balances funds.
C. Operating Grants Receivable
Operating grants receivable represents the amount due from the federal government for grants
that are funded based on reimbursement of expenses paid by the Partnership.
D. Prepaid Expenses
The Partnership’s prepaid expenses include amounts paid for promotional activities, other
services and portions of insurance premiums for which the economic benefits had not been
received as of June 30, 2019.
E. Capital Assets
Capital assets are defined by the Partnership as those assets with an initial, individual cost of
more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded
at historical cost or estimated historical cost. Donated capital assets are valued at estimated
market value at the date of donation. Capital assets are comprised of leasehold improvements,
furniture, and equipment. The cost of normal maintenance and repairs that do not add to the
value of the asset or materially extend asset lives are not capitalized.
Capital assets are depreciated using the straight-line method over useful lives of five to ten
years.
F. Unearned Revenue
Unearned revenue includes amounts received for sponsorship and participation fees at June
30, 2019, for various events to be held in the next fiscal period.
G. Compensated Absences
Compensated absences represent the amounts of vacation, sick, and compensatory leave
earned by the Partnership employees, but not taken at June 30, 2019. Compensated absences
were calculated in accordance with GASB Statement No. 16, “Accounting for Compensated
Absences.” This statement requires the accrual of Social Security and Medicare taxes to be
paid by the Partnership on all accrued compensated absences.
16
H. Pensions
The Virginia Retirement System (VRS) State Employee Retirement Plan is a single employer
pension plan that is treated like a cost-sharing plan. For purposes of measuring the net pension
liability, deferred outflows of resources and deferred inflows of resources related to pensions,
and pension expense, information about the fiduciary net position of the VRS State Employee
Retirement Plan; and the additions to/deductions from the VRS State Employee Retirement
Plan’s net fiduciary position 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.
I. State Employee Health Insurance Credit Program
The VRS State Employee Health Insurance Credit Program is a single employer plan that is
presented as a multiple-employer, cost-sharing plan. The State Employee Health Insurance
Credit Program was established pursuant to §51.1-1400 et seq. of the Code of Virginia, as
amended, and which provides the authority under which benefit terms are established or may
be amended. The State Employee Health Insurance Credit Program is a defined benefit plan
that provides a credit toward the cost of health insurance coverage for retired state employees.
For purposes of measuring the net State Employee Health Insurance Credit Program OPEB
liability, deferred outflows of resources and deferred inflows of resources related to the State
Employee Health Insurance Credit Program OPEB, and the State Employee Health Insurance
Credit Program OPEB expense, information about the fiduciary net position of the VRS State
Employee Health Insurance Credit Program; and the additions to/deductions from the VRS
State Employee Health Insurance Credit Program’s net fiduciary position have been
determined on the same basis as they were reported by VRS. For this purpose, benefit
payments are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
J. Group Life Insurance Program
The VRS Group Life Insurance Program is a multiple employer, cost-sharing plan. It provides
coverage to state employees, teachers, and employees of participating political subdivisions.
The Group Life Insurance Program was established pursuant to §51.1-500 et seq. of the Code
of Virginia, as amended, and which provides the authority under which benefit terms are
established or may be amended. The Group Life Insurance Program is a defined benefit plan
that provides a basic group life insurance benefit for employees of participating employers.
For purposes of measuring the net Group Life Insurance Program OPEB liability, deferred
outflows of resources and deferred inflows of resources related to the Group Life Insurance
Program OPEB, and Group Life Insurance OPEB expense, information about the fiduciary net
position of the VRS Group Life Insurance Program OPEB and the additions to/deductions
from the VRS Group Life Insurance Program OPEB’s net fiduciary position have been
determined on the same basis as they were reported by VRS. In addition, benefit payments
are recognized when due and payable in accordance with the benefit terms. Investments are
reported at fair value.
17
K. Disability Insurance Program
The VRS Disability Insurance Program (Virginia Sickness and Disability Program) is a single
employer plan that is presented as a multiple-employer, cost-sharing plan. The Disability
Insurance Program was established pursuant to §51.1-1100 et seq. of the Code of Virginia, as
amended, and which provides the authority under which benefit terms are established or may
be amended. The Disability Insurance Program is a managed care program that provides sick,
family and personal leave and short-term and long-term disability benefits for state employees.
For purposes of measuring the net Disability Insurance Program OPEB asset, deferred
outflows of resources and deferred inflows of resources related to the Disability Insurance
Program OPEB, and Disability Insurance Program OPEB expense, information about the
fiduciary net position of the VRS Disability Insurance Program OPEB Plan and the additions
to/deductions from the VRS Disability Insurance Program OPEB Plan’s net fiduciary position
have been determined on the same basis as they were reported by VRS. In addition, benefit
payments are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
L. Pre-Medicare Retiree Healthcare Plan
The Commonwealth of Virginia State Health Plans Program for Pre-Medicare Retirees (Pre-
Medicare Retiree Healthcare Plan) is a single-employer defined benefit OPEB plan that is
treated like a cost-sharing plan for financial reporting purposes. This program was established
by Title 2.2, Chapter 28 of the Code of Virginia for retirees who are not yet eligible to
participate in Medicare. It is the same health insurance program offered to active employees
and managed by the Virginia Department of Human Resource Management. After retirement,
the Partnership no longer subsidizes the retiree’s premium; however, since both active
employees and retirees are included in the same pool for purposes of determining health
insurance rates, retiree rates are effectively lower than what might otherwise be available
outside of this benefit.
M. Deferred Inflows and Outflows of Resources
Deferred outflows of resources are defined as the consumption of net assets applicable to a
future reporting period. The deferred outflows of resources have a positive effect on net
position similar to assets.
Deferred inflows of resources are defined as the acquisition of net assets applicable to a future
reporting period. The deferred inflows of resources have a negative effect on net position
similar to liabilities.
N. Budgets and Budgetary Accounting
The Partnership’s budget was primarily established by the Appropriation Act as enacted by the
General Assembly of Virginia for the fiscal year ended June 30, 2019, which is the first year
of the biennium ended June 30, 2020. No payments were made to the Partnership out of the
state treasury except in pursuance of appropriations made by law. Payments from the state
treasury were deposited into Partnership bank accounts in accordance with the provisions of
Chapter 22 of Title 2.2 of the Code of Virginia and expended for purposes as stated in those
provisions. The budget is prepared on the cash basis. The budget is prepared collectively to
include both the General Fund and Special Revenue Fund.
18
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent deposits not with the Treasurer of Virginia and cash in the Local
Government Investment Pool (LGIP) with the Treasurer of Virginia. As of June 30, 2019, the Partnership’s
deposits with the LGIP were $8,994,477 and the Partnership’s deposits not with the Treasurer of Virginia were
$139,767. Cash on deposit is held in demand deposit accounts maintained for operating and payroll costs and
is covered by federal depository insurance and carry no significant risk. Cash on deposit includes deposits in
Chinese RMB and European Union Euros used to pay the Partnership’s international vendors and is valued in
U.S. dollars at cost. As of June 30, 2019, the Partnership’s holdings in Chinese RMB and European Union
Euros were valued at $5,336 and $3,803, respectively. The LGIP funds are held in pooled accounts, are
considered cash equivalents and, accordingly, also carry no significant risk as defined by Statement 40 of the
Governmental Accounting Standards Board. The LGIP enables governmental entities to maximize their return
on investments by providing for a State administered fund where monies can be commingled for investment
purposes in order to realize the economies of large-scale investing and professional funds management. The
LGIP is managed in accordance with the requirements of Governmental Accounting Standards Board (GASB)
Statement No. 79. The LGIP is in compliance with all of the standards of GASB Statement No. 79 and elects
to report its investments for financial reporting at amortized cost. Participants in the LGIP should also report
their investments in the LGIP at amortized cost. The LGIP is rated AAAm by Standard & Poor’s rating service.
The Partnership deposits are secured in accordance with the provisions of the Virginia Security for Public
Deposit Act § 2.2-4400 of the Code of Virginia.
3. RECONCILIATION OF BUDGETARY FUND BALANCE TO GAAP FUND BALANCE
The accompanying Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
- Cash Basis – General and Special Revenue Funds presents comparisons of the legally adopted budget prepared
on the cash basis with actual data prepared on the cash basis. To enhance this comparison, actual data on the
cash basis is reconciled to actual data on the GAAP basis as follows:
Total all Funds
Fund balance, cash basis, June 30, 2019 $ 9,074,997
Add: Prepaid expenses and other accrued receivables 1,331,154
Less: Accrued expenses and unearned revenues (1,412,371)
Fund balance, GAAP basis, June 30, 2019 $ 8,993,780
19
4. REVENUE PROVIDED BY THE GENERAL FUND OF THE COMMONWEALTH
The original appropriation from the General Fund of the Commonwealth has been adjusted as follows:
Original appropriation, Chapter 2 $ 31,597,198
Add: Business Ready Sites Funding 2,000,000
Marketing and Trade Mission Funding 245,451
Central Appropriations Adjustment 104,984
Less: FY2019 Other Budget Reductions (2,387)
Revenue provided by the General Fund of the Commonwealth $ 33,945,246
5. LEASE DEPOSITS
The Partnership maintains offices in Munich, Germany, Seoul, South Korea, Shanghai, China, and Tokyo,
Japan. Each landlord requires a lease deposit as part of the lease agreement for those locations.
The Munich lease deposit is held in a noninterest-bearing account in the amount of 5,117 European Union
Euros and was valued at $6,321 at June 30, 2019. The Seoul lease deposit is held in a noninterest-bearing
account in the amount of 1,760,000 South Korean Won and was valued at $1,571 at June 30, 2019. The
Shanghai lease deposit is held in a noninterest-bearing account in the amount of 26,223 Chinese RMB and was
valued at $4,181 at June 30, 2019. The Tokyo lease deposit is held in a noninterest-bearing account in the
amount of 930,000 Japanese Yen and was valued at $7,067 at June 30, 2019.
6. CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2019, was as follows:
Capital Assets Balance Balance
Being Depreciated June 30, 2018 Increases Decreases June 30, 2019
Leasehold improvements,
furniture and equipment $ 2,207,180 $ 72,704 $ (99,828) $ 2,180,056
Less: accumulated
depreciation 956,269 270,699 (90,003) 1,136,965
Leasehold improvements,
furniture and equipment,
net of accumulated
depreciation $ 1,250,911 $ (197,995) $ (9,825) $ 1,043,091
20
7. COMMITMENTS
The Partnership is committed under various operating leases and office use agreements for office facilities and
equipment through May 2027. Expense under these agreements for the fiscal year ended June 30, 2019,
amounted to $1,426,769. A summary of minimum future obligations under these agreements as of June 30,
2019, follows:
Year Ending
June 30 Obligations
2020 $ 1,511,816
2021 1,456,466
2022 1,504,954
2023 1,545,032
2024 1,586,150
2025-2029 4,865,552
Total future minimum rental payments $ 12,469,970
8. CAPITAL LEASE OBLIGATION
The Partnership has entered into an equipment lease agreement that is accounted for as a capital lease. The
term of the lease is five years and ownership of the assets will pass to the Partnership at the end of the lease
term. Gross minimum lease payments, as well as the present value of the net minimum lease payments as of
June 30, 2019, are as follows:
Year Ending Lease
June 30 Payments
2020 $ 28,072
2021 25,124
2022 25,124
2023 25,124
2024 25,123
Total gross minimum lease payments 128,567
Less: amount representing interest (9,034)
Present value of minimum lease payments $ 119,533
21
At June 30, 2019, assets purchased under the capital lease agreement were included in depreciable capital assets
as follows:
Gross capital assets $ 119,533
Less: accumulated depreciation (23,675)
Net book value $ 95,858
9. COMPENSATED ABSENCES
Compensated absences activity for the fiscal year ended June 30, 2019, was as follows:
Balance Balance
July 1, 2018 Increases Decreases June 30, 2019
$ 985,137 $ 721,246 $ 735,419 $ 970,964
Due Within One Year (820,442)
Due in More Than One Year $ 150,522
10. PENSION PLAN
General Information about the Pension Plan
Plan Description
All Partnership full-time, salaried permanent employees are automatically covered by the VRS State
Employee Retirement Plan upon employment. This plan is administered by the Virginia Retirement System
(the System) along with plans for other employer groups in the Commonwealth of Virginia. Members earn
one month of service credit for each month they are employed and for which they and their employer pay
contributions to VRS. Members are eligible 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 in the VRS State Employee
Retirement Plan – 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 in
the table below:
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
About Plan 1 About Plan 2 About the Hybrid
Plan 1 is a defined benefit plan. Plan 2 is a defined benefit plan. Retirement Plan
The retirement benefit is based on The retirement benefit is based on The Hybrid Retirement Plan
a member’s age, creditable a member’s age, creditable combines the features of a
service and average final service and average final defined benefit plan and a defined
compensation at retirement using compensation at retirement using contribution plan.
a formula. a formula. • The defined benefit is
based on a member’s age,
creditable service 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 Eligible Members Eligible Members
Employees are in Plan 1 if their Employees are in Plan 2 if their Employees are in the Hybrid
membership date is before July 1, membership date is on or after Retirement Plan if their
2010, and they were vested as of July 1, 2010, or their membership membership date is on or after
January 1, 2013, and they have date is before July 1, 2010, and January 1, 2014. This includes:
not taken a refund. they were not vested as of • State employees*
January 1, 2013.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Eligible Members
• Members in Plan 1 or
Plan 2 who elected to opt
into the plan during the
election window held
January 1-April 30, 2014;
the plan’s effective date
for opt-in members was
July 1, 2014
*Non-Eligible Members
Some employees are not eligible
to participate in the Hybrid
Retirement Plan.
Those employees eligible for an
optional retirement plan (ORP)
must elect the ORP plan or the
Hybrid Retirement Plan. If these
members have prior service under
Plan 1 or Plan 2, they are not
eligible to elect the Hybrid
Retirement Plan and must select
Plan 1 or Plan 2 (as applicable) or
ORP.
Hybrid Opt-In Election Hybrid Opt-In Election
VRS non-hazardous duty covered Eligible Plan 2 members were
Plan 1 members were allowed to allowed to make an irrevocable
make an irrevocable decision to decision to opt into the Hybrid
opt into the Hybrid Retirement Retirement Plan during a special
Plan during a special election election window held January 1
window held January 1 through through April 30, 2014.
April 30, 2014.
The Hybrid Retirement Plan’s
The Hybrid Retirement Plan’s effective date for eligible Plan 2
effective date for eligible Plan 1 members who opted in was July
members who opted in was July 1, 2014
1, 2014.
24
RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Hybrid Opt-In Election Hybrid Opt-In Election
If eligible deferred members If eligible deferred members
returned to work during the returned to work during the
election window, they were also election window, they were also
eligible to opt into the Hybrid eligible to opt into the Hybrid
Retirement Plan. Retirement Plan.
Members who were eligible for Members who were eligible for
an optional retirement plan (ORP) an optional retirement plan (ORP)
and had prior service under Plan and have prior service under Plan
1 were not eligible to elect the 2 were not eligible to elect the
Hybrid Retirement Plan and Hybrid Retirement Plan and
remain as Plan 1 or ORP. remain as Plan 2 or ORP.
Retirement Contributions Retirement Contributions Retirement Contributions
State employees, excluding state Same as Plan 1. A member’s retirement benefit is
elected officials, and optional funded through mandatory and
retirement plan participants, voluntary contributions made by
contribute 5% of their the member and the employer to
compensation each month to their both the defined benefit and the
member contribution account defined contribution components
through a pre-tax salary of the plan. Mandatory
reduction. Member contributions contributions are based on a
are tax-deferred until they are percentage of the employee’s
withdrawn as part of a retirement creditable compensation and are
benefit or as a refund. The required from both the member
employer makes a separate and the employer. Additionally,
actuarially determined members may choose to make
contribution to VRS for all voluntary contributions to the
covered employees. VRS invests defined contribution component
both member and employer of the plan, and the employer is
contributions to provide funding required to match those voluntary
for the future benefit payment. contributions according to
specified percentages.
Creditable Service Creditable Service Creditable Service
Creditable service includes active Same as Plan 1. Defined Benefit Component:
service. Members earn creditable Under the defined benefit
service for each month they are component of the plan, creditable
employed in a covered position. service includes active service.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Creditable Service Creditable Service
It also may include credit for Defined Benefit Component:
prior service the member has Members earn creditable service
purchased or additional creditable for each month they are
service the member was granted. employed in a covered position.
A member’s total creditable It also may include credit for
service is one of the factors used prior service the member has
to determine their eligibility for purchased or additional creditable
retirement and to calculate their service the member was granted.
retirement benefit. It also may A member’s total creditable
count toward eligibility for the service is one of the factors used
health insurance credit in to determine their eligibility for
retirement, if the employer offers retirement and to calculate their
the health insurance credit. retirement benefit. It also may
count toward eligibility for the
health insurance credit in
retirement, if the employer offers
the health insurance credit.
Defined Contribution
Component:
Under the defined contribution
component, creditable service is
used to determine vesting for the
employer contribution portion of
the plan.
Vesting Vesting Vesting
Vesting is the minimum length of Same as Plan 1. Defined Benefit Component:
service a member needs to Defined benefit vesting is the
qualify for a future retirement minimum length of service a
benefit. Members become vested member needs to qualify for a
when they have at least five years future retirement benefit.
(60 months) of creditable service. Members are vested under the
Vesting means members are defined benefit component of the
eligible to qualify for retirement Hybrid Retirement Plan when
if they meet the age and service they reach five years (60 months)
requirements for their plan. of creditable service. Plan 1 or
Plan 2 members with at least five
Members also must be vested to years (60 months) of creditable
receive a full refund of their service who opted into the Hybrid
member contribution account Retirement Plan remain vested in
balance if they leave employment the defined benefit component.
and request a refund.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Vesting Vesting
Members are always 100% vested Defined Contribution
in the contributions that they Component:
make. Defined contribution vesting
refers to the minimum length of
service a member needs to be
eligible to withdraw the employer
contributions from the defined
contribution component of the
plan.
Members are always 100% vested
in the contributions that they
make.
Upon retirement or leaving
covered employment, a member
is eligible to withdraw a
percentage of employer
contributions to the defined
contribution component of the
plan, based on service.
After two years, a
member is 50% vested
and may withdraw 50%
of employer
contributions.
After three years, a
member is 75% vested
and may withdraw 75%
of employer
contributions.
After four or more years,
a member is 100% vested
and may withdraw 100%
of employer
contributions.
Distribution is not required by
law until age 70½.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Calculating the Benefit Calculating the Benefit Calculating the Benefit
The Basic Benefit is calculated See definition under Plan 1. Defined Benefit Component:
based on a formula using the See definition under Plan 1.
member’s average final
compensation, a retirement Defined Contribution
multiplier and total service credit Component:
at retirement. It is one of the The benefit is based on
benefit payout options available contributions made by the
to a member at retirement. member and any matching
contributions made by the
An early retirement reduction employer, plus net investment
factor is applied to the Basic earnings on those contributions.
Benefit is the member retires with
a reduced retirement benefit or
selects a benefit payout option
other than the Basic Benefit.
Average Final Compensation Average Final Compensation Average Final Compensation
A member’s average final A member’s average final Same as Plan 2. It is used in the
compensation is the average of compensation is the average of retirement formula for the defined
the 36 consecutive months of their 60 consecutive months of benefit component of the plan.
highest compensation as a highest compensation as a
covered employee. covered employee.
Service Retirement Service Retirement Service Retirement
Multiplier Multiplier Multiplier
The retirement multiplier is a Same as Plan 1 for service Defined Benefit Component:
factor used in the formula to earned, purchased or granted The retirement multiplier for the
determine a final retirement prior to January 1, 2013. For defined benefit component is
benefit. The retirement multiplier non-hazardous duty members the 1.00%.
for non-hazardous duty members retirement multiplier is 1.65% for
is 1.70% creditable service earned, For members who opted into the
purchased or granted on or after Hybrid Retirement Plan from
January 1, 2013. Plan 1 or Plan 2, the applicable
multipliers for those plans will be
used to calculate the retirement
benefit for service credited in
those plans.
Defined Contribution
Component:
Not applicable.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Normal Retirement Age Normal Retirement Age Normal Retirement Age
Age 65. Normal Social Security Defined Benefit Component:
retirement age. Same as Plan 2.
Defined Contribution
Component:
Members are eligible to receive
distributions upon leaving
employment, subject to
restrictions.
Earliest Unreduced Earliest Unreduced Earliest Unreduced
Retirement Eligibility Retirement Eligibility Retirement Eligibility
Age 65 with at least five years Normal Social Security Defined Benefit Component:
(60 months) of creditable service retirement age with at least five Normal Social Security
or at age 50 with at least 30 years years (60 months) of creditable retirement age and have at least
of creditable service. service or when their age and five years (60 months) of
service equal 90. creditable service or when their
age and service equal 90.
Defined Contribution
Component:
Members are eligible to receive
distributions upon leaving
employment, subject to
restrictions.
Earliest Reduced Retirement Earliest Reduced Retirement Earliest Reduced Retirement
Eligibility Eligibility Eligibility
Age 55 with at least five years Age 60 with at least five years Defined Benefit Component:
(60 months) of creditable service (60 months) of creditable service. Age 60 with at least five years
or age 50 with at least 10 years of (60 months) of creditable service.
creditable service.
Defined Contribution
Component:
Members are eligible to receive
distributions upon leaving
employment, subject to
restrictions.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Cost-of-Living Adjustment Cost-of-Living Adjustment Cost-of-Living Adjustment
(COLA) in Retirement (COLA) in Retirement (COLA) in Retirement
The Cost-of-Living Adjustment The Cost-of-Living Adjustment Defined Benefit Component:
(COLA) matches the first 3% (COLA) matches the first 2% Same as Plan 2.
increase in the Consumer Price increase in the CPI-U and half of
Index for all Urban Consumers any additional increase (up to Defined Contribution
(CPI-U) and half of any 2%), for a maximum COLA of Component:
additional increase (up to 4%) up 3%. Not applicable.
to a maximum COLA of 5%.
Eligibility: Eligibility: Eligibility:
For members who retire with an Same as Plan 1. Same as Plan 1 and Plan 2.
unreduced benefit or with a
reduced benefit with at least 20
years of creditable service, the
COLA will go into effect on July
1 after one full calendar year
from the retirement date.
For members who retire with a
reduced benefit and who have
less than 20 years of creditable
service, the COLA will go into
effect on July 1 after one calendar
year following the unreduced
retirement eligibility date.
Exceptions to COLA Effective Exceptions to COLA Effective Exceptions to COLA Effective
Dates: Dates: Dates:
The COLA is effective July 1 Same as Plan 1. Same as Plan 1 and Plan 2.
following one full calendar year
(January 1 to December 31)
under any of the following
circumstances:
The member is within
five years of qualifying
for an unreduced
retirement benefit as of
January 1, 2013.
The member retires on
disability.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Cost-of-Living Adjustment
(COLA) in Retirement
Exceptions to COLA Effective
Dates:
The member retires
directly from short-term
or long-term disability
under the Virginia
Sickness and Disability
Program (VSDP).
The member is
involuntarily separated
from employment for
causes other than job
performance or
misconduct and is
eligible to retire under the
Workforce Transition Act
or the Transitional
Benefits Program.
The member dies in
service and the member’s
survivor or beneficiary is
eligible for a monthly
death-in-service benefit.
The COLA will go into
effect on July 1 following
one full calendar year
(January 1 to December
31) from the date the
monthly benefit begins.
Disability Coverage Disability Coverage Disability Coverage
Members who are eligible to be Members who are eligible to be State employees (including Plan 1
considered for disability considered for disability and Plan 2 opt-ins) participating
retirement and retire on disability, retirement and retire on disability, in the Hybrid Retirement Plan are
the retirement multiplier is 1.7% the retirement multiplier is 1.65% covered under the Virginia
on all service, regardless of when on all service, regardless of when Sickness and Disability Program
it was earned, purchased or it was earned, purchased or (VSDP), and are not eligible for
granted. granted. disability retirement.
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RETIREMENT PLAN PROVISIONS BY PLAN STRUCTURE
HYBRID
PLAN 1 PLAN 2 RETIREMENT PLAN
Disability Coverage Disability Coverage Disability Coverage
Most state employees are covered Most state employees are covered Hybrid members (including Plan
under the Virginia Sickness and under the Virginia Sickness and 1 and Plan 2 opt-ins) covered
Disability Program (VSDP), and Disability Program (VSDP), and under VSDP are subject to a one-
are not eligible for disability are not eligible for disability year waiting period before
retirement. retirement. becoming eligible for non-work-
related disability benefits.
VSDP members are subject to a VSDP members are subject to a
one-year waiting period before one-year waiting period before
becoming eligible for non-work- becoming eligible for non-work-
related disability benefits. related disability benefits.
Purchase of Prior Service Purchase of Prior Service Purchase of Prior Service
Members may be eligible to Same as Plan 1. Defined Benefit Component:
purchase service from previous Same as Plan 1, with the
public employment, active duty following exception:
military service, an eligible Hybrid Retirement Plan
period of leave or VRS refunded members are ineligible
service as creditable service in for ported service.
their Plan. Prior creditable
service counts toward vesting, Defined Contribution
eligibility for retirement and the Component:
health insurance credit. Only Not applicable.
active members are eligible to
purchase prior service. Members
also may be eligible to purchase
periods of leave without pay.
Contributions
The contribution requirement for active employees is governed by §51.1-145 of the Code of Virginia, as
amended, but may be impacted as a result of funding provided to the Partnership by the Virginia General
Assembly. Employees are required to contribute 5.00% of their compensation toward their retirement. The
Partnership’s contractually required contribution rate for the year ended June 30, 2019 was 13.52% of
covered employee compensation for employees in the VRS State Employee Retirement Plan. This rate was
based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. The actuarially
determined rate, when combined with employee contributions, was expected to finance the costs of benefits
earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
32
Contributions from the Partnership to the VRS State Employee Retirement Plan were $1,272,040 and
$1,242,786 for the years ended June 30, 2019 and June 30, 2018, respectively.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions
At June 30, 2019, the Partnership reported a liability of $11,643,000 for its proportionate share of the VRS
State Employee Retirement Plan Net Pension Liability. The Net Pension Liability was measured as of June
30, 2018 and the total pension liability used to calculate the Net Pension Liability was determined by an
actuarial valuation as of that date. The Partnership’s proportion of the Net Pension Liability was based on the
Partnership’s actuarially determined employer contributions to the pension plan for the year ended June 30,
2018 relative to the total of the actuarially determined employer contributions for all participating employers.
At June 30, 2018 the Partnership’s proportion of the VRS State Employee Retirement Plan was 0.21507% as
compared to 0.19536% at June 30, 2017.
For the year ended June 30, 2019, the Partnership recognized pension expense of $808,000 for the VRS State
Employee Retirement Plan. Since there was a change in proportionate share between June 30, 2017 and June
30, 2018, a portion of the pension expense was related to deferred amounts from changes in proportion and
from differences between employer contributions and the proportionate share of employer contributions.
At June 30, 2019 the Partnership reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience $ - $ 704,000
Net difference between projected and actual earnings on
pension plan investments - 304,000
Change in assumptions 78,000 -
Changes in proportion and differences between Employer
contributions and proportionate share of contributions 925,000 85,000
Employer contributions subsequent to the measurement
date 1,272,040 -
Total $ 2,275,040 $ 1,093,000
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$1,272,040 reported as deferred outflows of resources related to pensions resulting from the Partnership’s
contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension
Liability in the Fiscal Year ending June 30, 2020. Other amounts reported as deferred outflows of resources
and deferred inflows of resources related to pensions will be recognized in pension expense in future
reporting periods as follows:
Year Ended June 30
2020 $ 108,000
2021 $ 125,000
2022 $ (291,000)
2023 $ (32,000)
2024 $ -
Actuarial Assumptions
The total pension liability for the VRS State Employee Retirement Plan was based on an actuarial valuation
as of June 30, 2017, using the Entry Age Normal actuarial cost method and the following assumptions,
applied to all periods included in the measurement and rolled forward to the measurement date of June 30,
2018.
Inflation 2.5 percent
Salary increases, including
inflation 3.5 percent – 5.35 percent
Investment rate of return 7.0 percent, net of plan investment
expenses, including inflation*
* Administrative expenses as a percent of the market value of assets for the last experience
study were found to be approximately 0.06% of the market assets for all of the VRS plans. This
would provide an assumed investment return rate for GASB purposes of slightly more than the
assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0%
investment return assumption provided a projected plan net position that exceeded the projected
benefit payments, the long-term expected rate of return on investments was assumed to be 7.0%
to simplify preparation of pension liabilities.
Mortality rates:
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB; males set forward 1 year; females set back 1 year with 1.5% increase compounded
from ages 70 to 85.
34
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates;
females 130% of rates.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increase rate from 14% to 25%
Net Pension Liability
The net pension liability (NPL) is calculated separately for each system and represents that particular
system’s total pension liability determined in accordance with GASB Statement No. 67, less that system’s
fiduciary net position. As of June 30, 2018, NPL amounts for the VRS State Employee Retirement Plan
are as follows (amounts expressed in thousands):
State Employee
Retirement Plan
Total Pension Liability $ 23,945,821
Plan Fiduciary Net Position 18,532,189
Employers’ Net Pension Liability (Asset) $ 5,413,632
Plan Fiduciary Net Position as a Percentage of the
Total Pension Liability 77.39%
The total pension liability is calculated by the System’s actuary, and each plan’s fiduciary net position is
reported in the System’s financial statements. The net pension liability is disclosed in accordance with the
requirements of GASB Statement No. 67 in the System’s notes to the financial statements and required
supplementary information.
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
35
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 class are summarized in the
following table:
Weighted
Arithmetic Average
Long-Term Long-Term
Target Expected Expected
Asset Class (Strategy) Allocation Rate of Return Rate of Return
Public Equity 40.00% 4.54% 1.82%
Fixed Income 15.00% 0.69% 0.10%
Credit Strategies 15.00% 3.96% 0.59%
Real Assets 15.00% 5.76% 0.86%
Private Equity 15.00% 9.53% 1.43%
Total 100.00% 4.80%
Inflation 2.50%
* Expected arithmetic nominal return 7.30%
* The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into
account the volatility present in each of the asset classes. In setting the long-term expected return for the
system, stochastic projections are employed to model future returns under various economic conditions.
The results provide a range of returns over various time periods that ultimately proved a median return of
6.83%, including expected inflation of 2.50%.
Discount Rate
The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used
to determine the discount rate assumed that System member contributions will be made per the VRS
Statutes and the employer contributions will be made in accordance with the VRS funding policy at rates
equal to the difference between actuarially determined contribution rates adopted by the VRS Board of
Trustees and the member rate. Through the fiscal year ending June 30, 2018, the rate contributed by the
Partnership for the VRS State Employee Retirement Plan will be subject to the portion of the VRS Board-
certified rates that are funded by the Virginia General Assembly which was 100% of the actuarially
determined contribution rate. From July 1, 2018 on, all agencies are assumed to continue to contribute
100% of the actuarially determined contribution rates. Based on those assumptions, the pension plan’s
fiduciary net position was projected to be available to make all projected future benefit payments of current
active and inactive employees. Therefore the long-term expected rate of return was applied to all periods
of projected benefit payments to determine the total pension liability.
36
Sensitivity of the Partnership’s Proportionate Share of the Net Pension Liability to Changes in the
Discount Rate
The following presents the Partnership’s proportionate share of the VRS State Employee Retirement Plan
net pension liability using the discount rate of 7.00%, as well as what the Partnership’s proportionate share
of the net pension liability would be if it were calculated using a discount rate that is one percentage point
lower (6.00%) or one percentage point higher (8.00%) than the current rate:
Current Discount
1.00% Decrease Rate 1.00% Increase
(6.00%) (7.00%) (8.00%)
Partnership’s proportionate share of
the VRS State Employee Retirement
Plan Net Pension Liability $ 17,628,000 $ 11,643,000 $ 6,605,000
Pension Plan Fiduciary Net Position
Detailed information about the VRS State Employee Retirement Plan’s Fiduciary Net Position is available
in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018
VRS CAFR may be downloaded from the VRS website at:
https://www.varetire.org/pdf/publications/2018-annual-report.pdf or by writing to the System’s Chief
Financial Officer at P.O. Box 2500, Richmond, VA 23218-2500.
11. STATE EMPLOYEE HEALTH INSURANCE CREDIT PROGRAM
General Information about the State Employee Health Insurance Credit Program
Plan Description
All Partnership full-time, salaried permanent employees are automatically covered by the VRS State
Employee Health Insurance Credit Program. This plan is administered by the Virginia Retirement System
(the System), along with pension and other OPEB plans, for public employer groups in the Commonwealth
of Virginia. Members earn one month of service credit toward the benefit for each month they are employed
and for which the Partnership 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 the State Health Insurance Credit Program OPEB, including eligibility,
coverage and benefits is set out in the table below:
37
STATE EMPLOYEE HEALTH INSURANCE CREDIT PROGRAM (HIC) PLAN PROVISIONS
Eligible Employees
The State Employee Retiree Health Insurance Credit Program was established January 1, 1990 for retired
state employees covered under VRS, SPORS, VaLORS and JRS who retire with at least 15 years of service
credit.
Eligible employees are enrolled automatically upon employment. They include:
Full-time and part-time permanent salaried state employees covered under VRS, SPORS,
VaLORS and JRS.
Benefit Amounts
The State Employee Retiree Health Insurance Credit Program provides the following benefits for eligible
employees:
At Retirement – For state employees who retire with at least 15 years of service credit, the
monthly benefit is $4.00 per year of service per month with no cap on the benefit amount.
Disability Retirement – For state employees who retire on disability or go on long-term
disability under the Virginia Sickness and Disability Program (VSDP), the monthly benefit is
$120.00 or $4.00 per year of service, whichever is higher.
For State police officers employees with a non-work-related disability who retire on disability
or go on long-term disability under the Virginia Sickness and Disability Program (VSDP) the
monthly benefit is $120.00 or $4.00 per year of service, whichever is higher.
For State police officers with a work-related disability, there is no benefit provided under the
State Employee Retiree Health Insurance Credit Program if the premiums are being paid under
the Virginia Line of Duty Act. However, they may receive the credit for premiums paid for
other qualified health plans.
Health Insurance Credit Program Notes:
The monthly Health Insurance Credit benefit cannot exceed the individual’s premium amount.
Employees who retire after being on long-term disability under VSDP must have at least 15
years of service credit to qualify for the Health Insurance Credit as a retiree.
Contributions
The contribution requirement for active employees is governed by §51.1-1400(D) of the Code of Virginia,
as amended, but may be impacted as a result of funding provided to the Partnership by the Virginia General
Assembly. The Partnership’s contractually required employer contribution rate for the year ended June 30,
2019 was 1.17% of covered employee compensation for employees in the VRS State Employee Health
Insurance Credit Program. This rate was based on an actuarially determined rate from an actuarial valuation
as of June 30, 2017. The actuarially determined rate was expected to finance the costs of benefits earned by
employees during the year, with an additional amount to finance any unfunded accrued liability.
Contributions from the Partnership to the VRS State Employee Health Insurance Credit Program were
$110,961 and $109,645 for the years ended June 30, 2019 and June 30, 2018, respectively.
38
State Employee Health Insurance Credit Program OPEB Liabilities, State Employee Health
Insurance Credit Program OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows
of Resources Related to State Employee Health Insurance Credit Program OPEB
At June 30, 2019, the Partnership reported a liability of $1,259,000 for its proportionate share of the VRS
State Employee Health Insurance Credit Program Net OPEB Liability. The Net VRS State Employee Health
Insurance Credit Program OPEB Liability was measured as of June 30, 2018 and the total VRS State
Employee Health Insurance Credit Program OPEB Liability used to calculate the Net VRS State Employee
Health Insurance Credit Program OPEB Liability was determined by an actuarial valuation as of that date.
The Partnership’s proportion of the Net VRS State Employee Health Insurance Credit Program OPEB
Liability was based on the Partnership’s actuarially determined employer contributions to the VRS State
Employee Health Insurance Credit Program OPEB plan for the year ended June 30, 2018 relative to the total
of the actuarially determined employer contributions for all participating employers. At June 30, 2018, the
Partnership’s proportion of the VRS State Employee Health Insurance Credit Program was 0.13799% as
compared to 0.12298% at June 30, 2017.
For the year ended June 30, 2019, the Partnership recognized VRS State Employee Health Insurance Credit
Program OPEB expense of $131,000. Since there was a change in proportionate share between measurement
dates, a portion of the VRS State Employee Health Insurance Credit Program Net OPEB expense was related
to deferred amounts from changes in proportion.
At June 30, 2019, the Partnership reported deferred outflows of resources and deferred inflows of resources
related to the VRS State Employee Health Insurance Credit Program OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience $ - $ -
Net difference between projected and actual earnings on
State HIC OPEB plan investments - 2,000
Change in assumptions - 11,000
Changes in proportionate share 122,000 -
Employer contributions subsequent to the measurement
date 110,961 -
Total $ 232,961 $ 13,000
$110,961 reported as deferred outflows of resources related to the State Employee HIC OPEB resulting
from the Partnership’s contributions subsequent to the measurement date will be recognized as a reduction
of the Net State Employee HIC OPEB Liability in the Fiscal Year ending June 30, 2020. Other amounts
reported as deferred outflows of resources and deferred inflows of resources related to the State Employee
HIC OPEB will be recognized in the State Employee HIC OPEB expense in future reporting periods as
follows:
39
Year Ended June 30
FY 2020 $ 21,000
FY 2021 $ 21,000
FY 2022 $ 21,000
FY 2023 $ 22,000
FY 2024 $ 24,000
Thereafter $ -
Actuarial Assumptions
The total State Employee HIC OPEB liability for the VRS State Employee Health Insurance Credit Program
was based on an actuarial valuation as of June 30, 2017, using the Entry Age Normal actuarial cost method
and the following assumptions, applied to all periods included in the measurement and rolled forward to the
measurement date of June 30, 2018.
Inflation 2.5 percent
Salary increases, including inflation -
General state employees 3.5 percent – 5.35 percent
SPORS employees 3.5 percent – 4.75 percent
VaLORS employees 3.5 percent – 4.75 percent
JRS employees 4.5 percent
Investment rate of return 7.0 percent, net of plan investment
expenses, including inflation*
* Administrative expenses as a percent of the market value of assets for the last experience
study were found to be approximately 0.06% of the assets for all of the VRS plans. This would
provide an assumed investment return rate for GASB purposes of slightly more than the
assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0%
investment return assumption provided a projected plan net position that exceeded the projected
benefit payments, the long-term expected rate of return on investments was assumed to be 7.0%
to simplify preparation of the OPEB liabilities.
Mortality rates – General State Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase
compounded from ages 70 to 85.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates;
females 130% of rates.
40
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 25%
Mortality rates – SPORS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 85%
41
Mortality rates – VaLORS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 50% to 35%
Mortality rates – JRS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% compounding
increase from ages 70 to 85.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates;
females 130% of rates.
42
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Decreased rates at first retirement eligibility
Withdrawal Rates No change
Disability Rates Removed disability rates
Salary Scale No change
Net State Employee HIC OPEB Liability
The net OPEB liability (NOL) for the State Employee Health Insurance Credit Program represents the
program’s total OPEB liability determined in accordance with GASB Statement No. 74, less the associated
fiduciary net position. As of June 30, 2018, NOL amounts for the VRS State employee Health Insurance
Credit Program is as follows (amounts expressed in thousands):
State Employee
HIC OPEB Plan
Total State Employee HIC OPEB Liability $1,008,184
Plan Fiduciary Net Position 95,908
State Employee net HIC OPEB Liability (Asset) $ 912,276
Plan Fiduciary Net Position as a Percentage of the
Total State Employee HIC OPEB Liability 9.51%
The total State Employee HIC OPEB liability is calculated by the System’s actuary, and the plan’s fiduciary
net position is reported in the System’s financial statements. The net State Employee HIC OPEB liability
is disclosed in accordance with the requirements of GASB Statement No. 74 in the System’s notes to the
financial statements and required supplementary information.
Long-Term Expected Rate of Return
The long-term expected rate of return on VRS System investments was determined using a log-normal
distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns,
net of VRS System investment expense and inflation) are developed for each major asset class. These
ranges are combined to produce the long-term expected rate of return by weighting the expected future real
rates of return by the target asset allocation percentage and by adding expected inflation. The target asset
allocation and best estimate of arithmetic real rates of return for each major class are summarized in the
following table:
43
Weighted
Arithmetic Average
Long-Term Long-Term
Target Expected Expected
Asset Class (Strategy) Allocation Rate of Return Rate of Return
Public Equity 40.00% 4.54% 1.82%
Fixed Income 15.00% 0.69% 0.10%
Credit Strategies 15.00% 3.96% 0.59%
Real Assets 15.00% 5.76% 0.86%
Private Equity 15.00% 9.53% 1.43%
Total 100.00% 4.80%
Inflation 2.50%
* Expected arithmetic nominal return 7.30%
* The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into
account the volatility present in each of the asset classes. In setting the long-term expected return for the
system, stochastic projections are employed to model future returns under various economic conditions.
The results provide a range of returns over various time periods that ultimately proved a median return of
6.83%, including expected inflation of 2.50%.
Discount Rate
The discount rate used to measure the total State Employee HIC OPEB was 7.00%. The projection of
cash flows used to determine the discount rate assumed that employer contributions will be made in
accordance with the VRS funding policy at rates equal to the actuarially determined rates adopted by the
VRS Board of Trustees. Through the fiscal year ending June 30, 2018, the rate contributed by the
Partnership for the VRS State Employee Health Insurance Credit Program will be subject to the portion of
the VRS Board-certified rates that are funded by the Virginia General Assembly, which was 100% of the
actuarially determined contribution rate. From July 1, 2018 on, all agencies are assumed to continue to
contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the State
Employee HIC OPEB plan’s fiduciary net position was projected to be available to make all projected
future benefit payments of current active and inactive employees. Therefore the long-term expected rate
of return was applied to all periods of projected benefit payments to determine the total State Employee
HIC OPEB liability.
Sensitivity of the Partnership’s Proportionate Share of the State Employee HIC Net OPEB Liability
to Changes in the Discount Rate
The following presents the Partnership’s proportionate share of the VRS State Employee Health Insurance
Credit Program net NIC OPEB liability using the discount rate of 7.00%, as well as what the Partnership’s
proportionate share of the net HIC OPEB liability would be if it were calculated using a discount rate that
is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate:
44
Current Discount
1.00% Decrease Rate 1.00% Increase
(6.00%) (7.00%) (8.00%)
Partnership’s proportionate share of
the VRS State Employee HIC OPEB
Plan Net HIC OPEB Liability $ 1,392,000 $ 1,259,000 $ 1,145,000
State Employee HIC OPEB Fiduciary Net Position
Detailed information about the VRS State Employee Health Insurance Credit Program’s Fiduciary Net
Position is available in the separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR).
A copy of the 2018 VRS CAFR may be downloaded from the VRS website at:
https://www.varetire.org/pdf/publications/2018-annual-report.pdf or by writing to the System’s Chief
Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.
12. GROUP LIFE INSURANCE PROGRAM
General Information about the Group Life Insurance Program
Plan Description
All full-time, salaried permanent employees of the state agencies, teachers and employees of participating
political subdivisions are automatically covered by the VRS Group Life Insurance Program upon
employment. This plan is administered by the Virginia Retirement System (the System), along with
pensions and other OPEB plans, for public employer groups in the Commonwealth of 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.
The specific information for the Group Life Insurance Program OPEB, including eligibility, coverage and
benefits is set out in the table below:
45
GROUP LIFE INSURANCE PROGRAM PLAN PROVISIONS
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 Schools Board
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 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 Safety belt 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 1 following one calendar year of
separation. The benefit amount reduces by an additional 25% on each subsequent January 1 until it
reaches 25% of its original value.
Minimum Benefit Amount and Cost-of-Living Adjustment (COLA)
For covered members with at least 30 years of creditable service, there is a minimum benefit payable
under the Group Life Insurance Program. The minimum benefit was set at $8,000 by statute. This
amount is increased annually based on the VRS Plan 2 cost-of-living adjustment and was increased to
$8,279 effective July 1, 2018.
46
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 the
Partnership by the Virginia General Assembly. The total rate for the Group Life Insurance Program was
1.31% of covered employee compensation. This was allocated into an employee and an employer component
using a 60/40 split. The employee component was 0.79% (1.31% X 60%) and the employer component was
0.52% (1.31% X 40%). Employers may elect to pay all or part of the employee contribution, however the
employer must pay all of the employer contribution. The Partnership’s contractually required employer
contribution rate for the year ended June 30, 2019 was 0.52% of covered employee compensation. This rate
was based on an actuarially determined rate from an actuarial valuation as of June 30, 2017. The actuarially
determined rate, when combined with employee contributions, was expected to finance the costs of benefits
payable during the year, with an additional amount to finance any unfunded accrued liability. Contributions
from the Partnership to the Group Life Insurance Program were $49,695 and $48,850 for the years ended
June 30, 2019 and June 30, 2018, respectively.
Group Life Insurance Program OPEB Liabilities, Group Life Insurance Program OPEB Expense,
and Deferred Outflows of Resources and Deferred Inflows of Resources Related to the Group Life
Insurance Program OPEB
At June 30, 2019, the Partnership reported a liability of $750,000 for its proportionate share of the Net Group
Life Insurance Program OPEB Liability. The Net Group Life Insurance Program Liability was measured as
of June 30, 2018 and the total Group Life Insurance Program Liability was determined by an actuarial
valuation as of that date. The Partnership’s proportion of the Net Group Life Insurance Program OPEB
Liability was based on the Partnership’s actuarially determined employer contributions to the Group Life
Insurance Program for the year ended June 30, 2018 relative to the total of the actuarially determined
employer contributions for all participating employers. At June 30, 2018, the Partnership’s proportion of
the Group Life Insurance Program was 0.04940% as compared to 0.04314% at June 30, 2017.
For the year ended June 30, 2019, the Partnership recognized Group Life Insurance Program OPEB expense
of $22,000. Since there was a change in proportionate share between measurement dates, a portion of the
Group Life Insurance Program OPEB expense was related to deferred amounts from changes in proportion.
At June 30, 2019, the Partnership reported deferred outflows of resources and deferred inflows of resources
related to the Group Life Insurance Program OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience $ 37,000 $ 14,000
Net difference between projected and actual earnings on
Group Life Insurance OPEB program investments - 24,000
Change in assumptions - 31,000
Changes in proportion 91,000 -
Employer contributions subsequent to the measurement
date 49,695 -
Total $ 177,695 $ 69,000
47
$49,695 reported as deferred outflows of resources related to the Group Life Insurance Program OPEB
resulting from the Partnership’s contributions subsequent to the measurement date will be recognized as a
reduction of the Net Group Life Insurance OPEB Liability in the Fiscal Year ending June 30, 2020. Other
amounts reported as deferred outflows of resources and deferred inflows of resources related to the Group
Life Insurance OPEB will be recognized in the Group Life Insurance Program OPEB expense in future
reporting periods as follows:
Year Ended June 30
FY 2020 $ 6,000
FY 2021 $ 6,000
FY 2022 $ 6,000
FY 2023 $ 12,000
FY 2024 $ 18,000
Thereafter $ 11,000
Actuarial Assumptions
The total Group Life Insurance Program OPEB liability was based on an actuarial valuation as of June 30,
2017, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all
periods included in the measurement and rolled forward to the measurement date of June 30, 2018.
Inflation 2.5 percent
Salary increases, including inflation -
General state employees 3.5 percent – 5.35 percent
Teachers 3.5 percent – 5.95 percent
SPORS employees 3.5 percent – 4.75 percent
VaLORS employees 3.5 percent – 4.75 percent
JRS employees 4.5 percent
Locality – General employees 3.5 percent – 5.35 percent
Locality – Hazardous Duty employees 3.5 percent – 4.75 percent
Investment rate of return 7.0 percent, net of plan investment
expenses, including inflation*
* Administrative expenses as a percent of the market value of assets for the last experience study
were found to be approximately 0.06% of the market assets for all of the VRS plans. This would
provide an assumed investment return rate for GASB purposes of slightly more than the assumed
7.0%. However, since the difference was minimal, and a more conservative 7.0% investment
return assumption provided a projected plan net position that exceeded the projected benefit
payments, the long-term expected rate of return on investments was assumed to be 7.0% to
simplify preparation of the OPEB liabilities.
48
Mortality rates – General State Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase
compounded from ages 70 to 85.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates;
females 130% of rates.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 25%
Mortality rates – Teachers
Pre-Retirement:
RP-2014 White Collar Employee Rates to age 80, White Collar Healthy Annuitant Rates at ages 81
and older projected with scale BB to 2020.
Post-Retirement:
RP-2014 White Collar Employee Rates to age 49, White Collar Annuitant Rates at ages 50 and
older projected with scale BB to 2020; males 1% increase compounded from ages 70 to 90;
females set back 3 years with 1.5% increase compounded from ages 65 to 70 and 2.0% increase
compounded from ages 75 to 90.
Post-Disablement:
RP-2014 Disability Life Mortality Rates projected with scale BB to 2020; 115% of rates for males
and females.
49
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Mortality rates – SPORS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 85%
50
Mortality rates – VaLORS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 50% to 35%
Mortality rates – JRS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% compounding
increase from ages 70 to 85.
51
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates;
females 130% of rates.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Decreased rates at first retirement eligibility
Withdrawal Rates No change
Disability Rates Removed disability rates
Salary Scale No change
Mortality rates – Largest Ten Locality Employers – General Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 95% of rates; females 105% of rates.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70
to 90.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; 110% of rates; females 125% of rates.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered retirement rates at older ages and
extended final retirement age from 70 to 75
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Lowered disability rates
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 20%
52
Mortality rates – Non-Largest Ten Locality Employers – General Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 95% of rates; females 105% of rates.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 3 years; females 1.0% increase compounded from ages 70
to 90.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; 110% of rates; females 125% of rates.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered retirement rates at older ages and
extended final retirement age from 70 to 75
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Lowered disability rates
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 15%
Mortality rates – Largest Ten Locality Employers – Hazardous Duty Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
53
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered retirement rates at older ages
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Increased disability rates
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 70%
Mortality rates – Non-Largest Ten Locality Employers – Hazardous Duty Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 45%
54
Net Group Life Insurance Program OPEB Liability
The net OPEB liability (NOL) for the Group Life Insurance Program represents the program’s total OPEB
liability determined in accordance with GASB Statement No. 74, less the associated fiduciary net position.
As of June 30, 2018, NOL amounts for the Group Life Insurance Program are as follows (amounts expressed
in thousands):
Group Life
Insurance
OPEB Program
Total Group Life Insurance Program OPEB Liability $ 3,113,508
Plan Fiduciary Net Position 1,594,773
Employers’ Net Group Life Insurance OPEB Liability
(Asset) $ 1,518,735
Plan Fiduciary Net Position as a Percentage of the
Total Group Life Insurance OPEB Liability 51.22%
The total Group Life Insurance Program OPEB liability is calculated by the System’s actuary, and the plan’s
fiduciary net position is reported in the System’s financial statements. The net Group Life Insurance
Program OPEB liability is disclosed in accordance with the requirements of GASB Statement No. 74 in the
System’s notes to the financial statements and required supplementary information.
Long-Term Expected Rate of Return
The long-term expected rate of return on VRS System investments was determined using a log-normal
distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns,
net of VRS System investment expense and inflation) are developed for each major asset class. These
ranges are combined to produce the long-term expected rate of return by weighting the expected future real
rates of return by the target asset allocation percentage and by adding expected inflation. The target asset
allocation and best estimate of arithmetic real rates of return for each major class are summarized in the
following table:
55
Weighted
Arithmetic Average
Long-Term Long-Term
Target Expected Expected
Asset Class (Strategy) Allocation Rate of Return Rate of Return
Public Equity 40.00% 4.54% 1.82%
Fixed Income 15.00% 0.69% 0.10%
Credit Strategies 15.00% 3.96% 0.59%
Real Assets 15.00% 5.76% 0.86%
Private Equity 15.00% 9.53% 1.43%
Total 100.00% 4.80%
Inflation 2.50%
* Expected arithmetic nominal return 7.30%
* The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into
account the volatility present in each of the asset classes. In setting the long-term expected return for the
system, stochastic projections are employed to model future returns under various economic conditions.
The results provide a range of returns over various time periods that ultimately provide a median return of
6.83%, including expected inflation of 2.50%.
Discount Rate
The discount rate used to measure the total Group Life Insurance Program OPEB was 7.00%. The
projection of cash flows used to determine the discount rate assumed that member contributions will be
made per the VRS guidance and the employer contributions will be made in accordance with the VRS
funding policy at rates equal to the difference between actuarially determined contribution rates adopted
by the VRS Board of Trustees and the member rate. Through the fiscal year ending June 30, 2018, the
rate contributed by the Partnership for the Group Life Insurance Program OPEB will be subject to the
portion of the VRS Board-certified rates that are funded by the Virginia General Assembly which was
100% of the actuarially determined contribution rate. From July 1, 2018 on, employers are assumed to
continue to contribute 100% of the actuarially determined contribution rates. Based on those assumptions,
the Group Life Insurance Program OPEB’s fiduciary net position was projected to be available to make all
projected future benefit payments of eligible employees. Therefore the long-term expected rate of return
was applied to all periods of projected benefit payments to determine the total Group Life Insurance
Program liability.
56
Sensitivity of the Partnership’s Proportionate Share of the Net Group Life Insurance Program OPEB
Liability to Changes in the Discount Rate
The following presents the Partnership’s proportionate share of the net Group Life Insurance Program
OPEB liability using the discount rate of 7.00%, as well as what the Partnership’s proportionate share of
the net Group Life Insurance Program OPEB liability would be if it were calculated using a discount rate
that is one percentage point lower (6.00%) or one percentage point higher (8.00%) than the current rate:
Current Discount
1.00% Decrease Rate 1.00% Increase
(6.00%) (7.00%) (8.00%)
Partnership’s proportionate share of
the Group Life Insurance Program Net
OPEB Liability $ 980,000 $ 750,000 $ 563,000
Group Life Insurance Program Fiduciary Net Position
Detailed information about the Group Life Insurance Program’s Fiduciary Net Position is available in the
separately issued VRS 2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS
CAFR may be downloaded from the VRS website at: https://www.varetire.org/pdf/publications/2018-
annual-report.pdf or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA,
23218-2500.
13. DISABILITY INSURANCE PROGRAM
General Information about the VRS Disability Insurance Program
Plan Description
All Partnership full-time and part-time permanent salaried employees who are covered under the Virginia
Retirement System (VRS) hired on or after January 1, 1999 are automatically covered by the Disability
Insurance Program (VSDP) upon employment. The Disability Insurance Program also covers state
employees hired before January 1, 1999 who elected to transfer to VSDP rather than retain eligibility to be
considered for disability retirement. This plan is administered by the Virginia Retirement System (the
System), along with pensions and other OPEB plans, for public employer groups in the Commonwealth of
Virginia.
The specific information for the State Health Insurance Credit Program OPEB, including eligibility,
coverage and benefits is set out in the table below:
57
DISABILITY INSURANCE PROGRAM (VSDP) PLAN PROVISIONS
Eligible Employees
The Virginia Sickness and Disability Program, also known as the Disability Insurance Trust Fund was
established January 1, 1999 to provide short-term and long-term disability benefits for non-work-related
and work-related disabilities.
Eligible employees are enrolled automatically upon employment. They include:
Full-time and part-time permanent salaried state employees covered under VRS.
State employees hired before January 1, 1999, who elected to transfer to VSDP rather than retain
their eligibility to be considered for VRS disability retirement.
Public college and university faculty members who elect the VRS defined benefit plan. They
may participate in VSDP or their institution’s disability program, if offered. If the institution
does not offer the program or the faculty member does not make an election, he or she is enrolled
in VSDP.
Benefit Amounts
The Virginia Sickness and Disability Program provides the following benefits for eligible employees:
Leave – Sick, family and personal leave. Eligible leave benefits are paid by the employer.
Short-Term Disability – The program provides a short-term disability benefit beginning after
a seven-calendar-day waiting period for the first day of disability. The benefit provides income
replacement beginning at 100% of the employee’s pre-disability income, reducing to 80% and
then 60% based on the period of the disability and the length of service of the employee. Short-
term disability benefits are paid by the employer.
Long-Term Disability – The program provides a long-term disability benefit beginning after
125 workdays of short-term disability and continuing until the employee reaches his or her
normal retirement age. The benefit provides income replacement of 60% of the employee’s pre-
disability income. If an employee becomes disabled within five years of his or her normal
retirement age, the employee will receive up to five years of VSDP benefits, provided he or she
remains medically eligible. Long-term disability benefits are paid for by the Virginia Disability
Insurance Program OPEB Plan.
Income Replacement Adjustment – The program provides for an income replacement
adjustment to 80% for catastrophic conditions.
VSDP Long-Term Care Plan – The program also includes a self-funded long-term care plan
that assists with the cost of covered long-term care services.
58
DISABILITY INSURANCE PROGRAM (VSDP) PLAN PROVISIONS
Disability Insurance Program (VSDP) Plan Notes:
Employees hired or rehired on or after July 1, 2009, must satisfy eligibility periods before
becoming eligible for non-work-related short-term disability benefits and certain income-
replacement levels.
A state employee who is approved for VSDP benefits on or after the date that is five years prior
to his or her normal retirement date is eligible for up to five years of VSDP benefits.
Employees on work-related short-term disability receiving only a workers’ compensation
payment may be eligible to purchase service credit for this period if retirement contributions are
not being withheld from the workers’ compensation payment. The rate will be based on 5.00%
of the employee’s compensation.
Cost-of-Living Adjustment (COLA)
During periods an employee receives long-term disability (LTD) benefits, the LTD benefit may
be increased annually by an amount recommended by the actuary and approved by the Board.
o Plan 1 employees vested as of 1/1/2013 – 100% of the VRS Plan 1 COLA (The first 3%
increase in the Consumer Price Index for all Urban Consumers (CIP-U) and half of any
additional increase (up to 4%) up to a maximum COLA of 5%).
o Plan 1 employees non-vested as of 1/1/2013, Plan 2 and Hybrid Plan employees – 100%
of the VRS Plan 2 and Hybrid COLA (The first 2% increase in the Consumer Price
Index for all Urban Consumers (CPI-U) and half of any additional increase (up to 2%)
up to a maximum COLA of 3%).
For participating full-time employees taking service retirement, the creditable compensation
may be increased annually by an amount recommended by the actuary and approved by the
Board, from the date of the commencement of the disability to the date of retirement.
o 100% of the increase in the pay over the previous plan year for continuing VSDP
members in the State Plan, with a maximum COLA of 4.00%.
For participating full-time employees receiving supplemental (work-related) disability benefits,
the creditable compensation may be increased annually by an amount recommended by the
actuary and approved by the Board, from the date of the commencement of the disability to the
date of retirement.
o 100% of the increase in the pay over the previous plan year for continuing VSDP
members in the State Plan, with a maximum COLA of 4.00%.
Contributions
The contribution requirements for the Disability Insurance Program are governed by §51.1-1140 of the Code
of Virginia, as amended, but may be impacted as a result of funding provided to the Partnership by the
Virginia General Assembly. The Partnership’s contractually required employer contribution rate for the
Disability Insurance Program for the year ended June 30, 2019 was 0.62% of covered employee
compensation. This rate was based on an actuarially determined rate from an actuarial valuation as of June
30, 2017. The actuarially determined rate was expected to finance the costs of benefits payable during the
year, with an adjustment to amortize the accrued OPEB assets. Contributions from the Partnership to the
59
Disability Insurance Program were $56,243 and $58,685 for the years ended June 30, 2019 and June 30,
2018, respectively.
Disability Insurance Program (VSDP) OPEB Assets, VSDP OPEB Expense, and Deferred Outflows
of Resources and Deferred Inflows of Resources Related to the VSDP OPEB
At June 30, 2019, the Partnership reported an asset of $508,000 for its proportionate share of the Net VSDP
OPEB Asset. The Net VSDP OPEB Asset was measured as of June 30, 2018 and the total VSDP OPEB
Liability used to calculate the Net VRS VSDP OPEB Asset was determined by an actuarial valuation as of
that date. The Partnership’s proportion of the Net VSDP OPEB Asset was based on the Partnership’s
actuarially determined employer contributions to the VSDP OPEB plan for the year ended June 30, 2018
relative to the total of the actuarially determined employer contributions for all participating employers. At
June 30, 2018, the Partnership’s proportion was 0.22545% as compared to 0.20066% at June 30, 2017.
For the year ended June 30, 2019, the Partnership recognized VSDP OPEB expense of $21,000. Since there
was a change in proportionate share between measurement dates, a portion of the VSDP OPEB expense was
related to deferred amounts from changes in proportion.
At June 30, 2019, the Partnership reported deferred outflows of resources and deferred inflows of resources
related to the VSDP OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience $ - $ 21,000
Net difference between projected and actual earnings on
VSDP OPEB plan investments - 30,000
Change in assumptions - 30,000
Changes in proportionate share - 37,000
Employer contributions subsequent to the measurement
date 56,243 -
Total $ 56,243 $ 118,000
$56,243 reported as deferred outflows of resources related to the VSDP OPEB resulting from the
Partnership’s contributions subsequent to the measurement date will be recognized as a reduction of the Net
VSDP OPEB Asset in the Fiscal Year ending June 30, 2020. Other amounts reported as deferred outflows
of resources and deferred inflows of resources related to the VSDP OPEB will be recognized in VSDP
OPEB expense in future reporting periods as follows:
60
Year Ended June 30
FY 2020 $ (24,000)
FY 2021 $ (24,000)
FY 2022 $ (24,000)
FY 2023 $ (15,000)
FY 2024 $ (15,000)
Thereafter $ (16,000)
Actuarial Assumptions
The total VSDP OPEB liability was based on an actuarial valuation as of June 30, 2017, using the Entry
Age Normal actuarial cost method and the following assumptions, applied to all periods included in the
measurement and rolled forward to the measurement date of June 30, 2018.
Inflation 2.5 percent
Salary increases, including inflation -
General state employees 3.5 percent – 5.35 percent
SPORS employees 3.5 percent – 4.75 percent
VaLORS employees 3.5 percent – 4.75 percent
Investment rate of return 7.0 percent, net of plan investment
expenses, including inflation*
* Administrative expenses as a percent of the market value of assets for the last experience
study were found to be approximately 0.06% of the market assets for all of the VRS plans. This
would provide an assumed investment return rate for GASB purposes of slightly more than the
assumed 7.0%. However, since the difference was minimal, and a more conservative 7.0%
investment return assumption provided a projected plan net position that exceeded the projected
benefit payments, the long-term expected rate of return on investments was assumed to be 7.0%
to simplify preparation of the OPEB liabilities.
Mortality rates – General State Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males set back 1 year, 85% of rates; females set back 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year; females set back 1 year with 1.5% increase
compounded from ages 70 to 85.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males 115% of rates;
females 130% of rates.
61
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 25%
Mortality rates – SPORS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 85%
62
Mortality rates – VaLORS Employees
Pre-Retirement:
RP-2014 Employee Rates to age 80, Healthy Annuitant Rates to 81 and older projected with Scale
BB to 2020; males 90% of rates; females set forward 1 year.
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males set forward 1 year with 1.0% increase compounded from ages 70 to
90; females set forward 3 years.
Post-Disablement:
RP-2014 Disability Life Mortality Table projected with scale BB to 2020; males set forward 2
years; unisex using 100% male.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2012 through June 30, 2016. Changes to the actuarial
assumptions as a result of the experience study are as follows:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 50% to 35%
Net VSDP OPEB Asset
The net OPEB asset (NOA) for the VSDP represents the program’s total OPEB liability determined in
accordance with GASB Statement No. 74, less the associated fiduciary net position. As of the Measurement
Date of June 30, 2018, NOA amounts for the VSDP are as follows (amounts expressed in thousands):
Disability
Insurance
Program
Total VSDP OPEB Liability $ 237,733
Plan Fiduciary Net Position 462,961
Employers’ Net OPEB Liability (Asset) ($225,228)
Plan Fiduciary Net Position as a Percentage of the
Total VSDP OPEB Liability 194.74%
63
The total VSDP OPEB liability is calculated by the System’s actuary, and the plan’s fiduciary net position
is reported in the System’s financial statements. The net OPEB asset is disclosed in accordance with the
requirements of GASB Statement No. 74 in the System’s notes to the financial statements and required
supplementary information.
Long-Term Expected Rate of Return
The long-term expected rate of return on VRS System investments was determined using a log-normal
distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns,
net of VRS System investment expense and inflation) are developed for each major asset class. These
ranges are combined to produce the long-term expected rate of return by weighting the expected future real
rates of return by the target asset allocation percentage and by adding expected inflation. The target asset
allocation and best estimate of arithmetic real rates of return for each major class are summarized in the
following table:
Weighted
Arithmetic Average
Long-Term Long-Term
Target Expected Expected
Asset Class (Strategy) Allocation Rate of Return Rate of Return
Public Equity 40.00% 4.54% 1.82%
Fixed Income 15.00% 0.69% 0.10%
Credit Strategies 15.00% 3.96% 0.59%
Real Assets 15.00% 5.76% 0.86%
Private Equity 15.00% 9.53% 1.43%
Total 100.00% 4.80%
Inflation 2.50%
* Expected arithmetic nominal return 7.30%
* The above allocation provides a one-year return of 7.30%. However, one-year returns do not take into
account the volatility present in each of the asset classes. In setting the long-term expected return for the
system, stochastic projections are employed to model future returns under various economic conditions.
The results provide a range of returns over various time periods that ultimately proved a median return of
6.83%, including expected inflation of 2.50%.
Discount Rate
The discount rate used to measure the total VSDP OPEB liability was 7.00%. The projection of cash
flows used to determine the discount rate assumed that employer contributions will be made per the VRS
Statutes and that they will be made in accordance with the VRS funding policy and at rates equal to the
actuarially determined rates adopted by the VRS Board of Trustees. Through the fiscal year ending June
30, 2018, the rate contributed by the Partnership to the VSDP OPEB Program will be subject to the
portion of the VRS Board-certified rates that are funded by the Virginia General Assembly which was
100% of the actuarially determined contribution rate. From July 1, 2018 on, participating employers are
64
assumed to continue to contribute 100% of the actuarially determined contribution rates. Based on those
assumptions, the VSDP OPEB Program’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
VSDP OPEB liability.
Sensitivity of the Partnership’s Proportionate Share of the Net VSDP OPEB Asset to Changes in the
Discount Rate
The following presents the Partnership’s proportionate share of the net VSDP OPEB asset using the
discount rate of 7.00%, as well as what the Partnership’s proportionate share of the net VSDP OPEB asset
would be if it were calculated using a discount rate that is one percentage point lower (6.00%) or one
percentage point higher (8.00%) than the current rate:
Current Discount
1.00% Decrease Rate 1.00% Increase
(6.00%) (7.00%) (8.00%)
Partnership’s proportionate share of
the total VSDP Net OPEB Asset $ 490,000 $ 508,000 $ 524,000
VSDP OPEB Fiduciary Net Position
Detailed information about the VSDP Fiduciary Net Position is available in the separately issued VRS
2018 Comprehensive Annual Financial Report (CAFR). A copy of the 2018 VRS CAFR may be
downloaded from the VRS website at: https://www.varetire.org/pdf/publications/2018-annual-report.pdf
or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500
14. PRE-MEDICARE RETIREE HEALTHCARE
General Information about the Commonwealth of Virginia State Health Plans Program for Pre-Medicare
Retirees
Plan Description
The Commonwealth provides a healthcare plan established by Title 2.2, Chapter 28 of the Code of Virginia
for retirees who are not yet eligible to participate in Medicare.
Following are eligibility requirements for Virginia Retirement System (VRS) retirees:
You are a retiring state employee who is eligible for a monthly retirement benefit from VRS, and
You start receiving (do not defer) your retirement benefit immediately upon retirement*, and
Your last employer before retirement was the Commonwealth of Virginia, and
You were eligible for (even if you were not enrolled) coverage as an active employee in the State
Health Benefits Program until your retirement date (not including Extended Coverage/COBRA),
and
You enroll no later than 31 days from your retirement date
65
*For VRS retirees, this means that your employing agency reported a retirement contribution or leave
without pay status for retirement in the month immediately prior to your retirement date. Some faculty
members may also be eligible if they are paid on an alternate pay cycle but maintain eligibility for active
coverage until their retirement date.
Effective January 1, 2017**, following are eligibility requirements for Optional Retirement Plan retirees:
You are a terminating state employee who participates in one of the qualified Optional Retirement
Plans, and
Your last employer before termination was the Commonwealth of Virginia, and
You were eligible for (even if you were not enrolled) coverage in the State Employee Health
Benefits Program for active employees at the time of your termination, and
You meet the age and service requirements for an immediate retirement benefit under the non-
ORP Virginia Retirement System plan that you would have been eligible for on your date of hire
had you not elected the ORP, and
You enroll in the State Retiree Health Benefits Program no later than 31 days for the date you
lose coverage (or lose eligibility for coverage) in the State Health Benefits Program for active
employees due to your termination of employment.
**This change applies to ORP terminations effective January 1, 2017 or later. Eligibility for those who
terminated employment prior to January 1 should be determined based on the policy in place at the time of
their termination.
The employer does not pay a portion of the retirees’ healthcare premium; however, since both active
employees and retirees are included in the same pool for purposes of determining health insurance rates,
this generally results in a higher rate for active employees. Therefore, the employer effectively subsidizes
the costs of the participating retirees’ healthcare through payment of the employer’s portion of the premiums
for active employees.
This fund is reported as part of the Commonwealth’s Healthcare Internal Service Fund. Benefit payments
are recognized when due and payable in accordance with the benefit terms. Pre-Medicare Retiree
Healthcare is a single-employer defined benefit OPEB plan that is treated like a cost-sharing plan for
financial reporting purposes, and is administered by the Department of Human Resource Management.
There were approximately 5,200 retirees and 91,800 active employees in the program in fiscal year 2018.
There are no inactive employees entitled to future benefits who are not currently receiving benefits. There
are no assets accumulated in a trust to pay benefits.
Pre-Medicare Retiree Healthcare OPEB Liabilities, OPEB Expense, and Deferred Outflows of
Resources and Deferred Inflows of Resources
At June 30, 2019, the Partnership reported a liability of $1,304,233 for its proportionate share of the
collective total Pre-Medicare Retiree Healthcare OPEB liability of $1.0 billion. The Pre-Medicare Retiree
Healthcare OPEB liability was measured as of June 30, 2018 and was determined by an actuarial valuation
as of June 30, 2018. The Partnership’s proportion of the Pre-Medicare Retiree Healthcare OPEB was based
on the Partnership’s healthcare premium contributions as a percentage of the total employer’s healthcare
premium contributions for all participating employers. At June 30, 2018, the Partnership’s proportion was
0.12969% as compared to 0.11875% at June 30, 2017. For the year ended June 30, 2019, the Partnership
recognized Pre-Medicare Retiree Healthcare OPEB expense of $70,486.
66
At June 30, 2019, the Partnership reported deferred outflows of resources and deferred inflows of resources
related to Pre-Medicare Retiree Healthcare from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience $ - $ 262,971
Change in assumptions - 521,631
Changes in proportion 227,568 -
Amounts associated with transactions subsequent to the
measurement date 53,622 -
Total $ 281,190 $ 784,602
$53,622 reported as deferred outflows of resources related to the Pre-Medicare Retiree Healthcare OPEB
resulting from amounts associated with transactions subsequent to the measurement date will be recognized
as a reduction of the total OPEB Liability in the fiscal year ending June 30, 2019. Other amounts reported
as deferred outflows of resources and deferred inflows of resources related to the Pre-Medicare Retiree
Healthcare OPEB will be recognized in the Pre-Medicare Retiree Healthcare OPEB expense as follows:
Year Ended June 30
FY 2020 $ (116,196)
FY 2021 $ (116,196)
FY 2022 $ (116,196)
FY 2023 $ (116,196)
FY 2024 $ (81,679)
Thereafter $ (10,571)
Sensitivity of the Partnership’s Proportionate Share of the OPEB Liability to Changes in the Discount
Rate
The following presents the Partnership’s proportionate share of the Pre-Medicare Retiree Healthcare OPEB
liability using the discount rate of 3.87%, as well as what the Partnership’s proportionate share of the Pre-
Medicare Retiree Healthcare OPEB liability would be if it were calculated using a discount rate that is one
percentage point lower (2.87%) or one percentage point higher (4.87%) than the current rate:
Current Discount
1.00% Decrease Rate 1.00% Increase
(2.87%) (3.87%) (4.87%)
Partnership’s proportionate share of
the OPEB Liability $ 1,395,493 $ 1,304,233 $ 1,217,453
67
Sensitivity of the Partnership’s Proportionate Share of the OPEB Liability to Changes in the
Healthcare Cost Trends Rates
The following presents the Partnership’s proportionate share of the Pre-Medicare Retiree Healthcare OPEB
liability using a healthcare cost trend of 8.21% decreasing to 5.00%, as well as what the Partnership’s
proportionate share of the Pre-Medicare Retiree Healthcare OPEB liability would be if it were calculated
using a healthcare cost trend rate that is one percentage point lower (7.21% decreasing to 4.00%) or one
percentage point higher (9.21% decreasing to 6.00%) than the current rate.
1.00% Decrease Trend Rate 1.00% Increase
(7.21% decreasing (8.21% decreasing (9.21% decreasing
to 4.00%) to 5.00%) to 6.00%)
Partnership’s proportionate share of
the OPEB Liability $ 1,163,292 $ 1,304,233 $ 1,469,901
Actuarial Assumptions and Methods
The total Pre-Medicare Retiree Healthcare OPEB liability was based on an actuarial valuation with a valuation
date of June 30, 2018. The Department of Human Resource Management selected the economic, demographic
and healthcare claim cost assumptions. The actuary provided guidance with respect to these assumptions.
Initial healthcare costs trend rates used were 8.21 percent for medical and pharmacy and 4.0 percent for dental.
The ultimate trend rates used were 5.0 percent for medical and pharmacy and 4.0 percent for dental.
Valuation Date Actuarially determined contribution rates are
calculated as of June 30, one year prior to the end
of the fiscal year in which contributions are
reported.
Measurement Date June 30, 2018 (one year prior to the end of the
fiscal year)
Actuarial Cost Method Entry Age Normal
Amortization Method Level dollar, Closed
Effective Amortization Period 6.19 years
Discount Rate 3.87%
Projected Salary Increases 4.0%
Medical Trend Under 65 Medical & Rx: 8.21% to 5.00%
Dental: 4.00%
Before reflecting Excise tax
Year of Ultimate Trend 2025
68
Mortality rates vary by participant status:
Pre-Retirement:
RP-2014 Employee Rates projected with Scale BB to 2020; males setback 1 year, 85% of rates,
85% of rates; females setback 1 year
Post-Retirement:
RP-2014 Employee Rates to age 49, Healthy Annuitant Rates at ages 50 and older projected with
Scale BB to 2020; males and females setback 1 year
Post-Disablement:
RP-2014 Disability Mortality Rates projected with scale BB to 2020; males 115% of rates;
females 130% of rates.
The discount rate was based on the Bond Buyers GO 20 Municipal Bond Index as of the measurement
date which is June 30, 2018.
Changes of Assumptions
The following actuarial assumptions were updated since the June 30, 2017 valuation based on recent
experience:
Spousal Coverage Reduced the rate from 50% to 35%
Retiree Participation Reduced the rate from 70% to 60%
Spousal coverage and retiree participation were both reduced based on a blend of recent experience and
the prior year assumptions. The mortality assumption was modified slightly to reflect mortality
improvement projection scale BB to 2020. Additionally, the discount rate was increased from 3.58% to
3.87% based on the Bond Buyers GO 20 Municipal Bond Index.
15. DEFERRED COMPENSATION PLAN
Employees of the Partnership may participate in the Commonwealth’s Deferred Compensation Plan.
Participating employees can contribute to the plan each pay period with the Partnership matching up to
$20 per pay period. The dollar amount of the match can change depending on the funding available in the
Partnership’s budget. The Deferred Compensation Plan is a qualified defined contribution plan under
Section 401(a) of the Internal Revenue Code. Employer contributions under the Deferred Compensation
Plan were $30,610 for the fiscal year 2019.
69
16. RISK MANAGEMENT
The Partnership is exposed to various risks of loss related to torts; theft, damage, or destruction of assets;
errors and omissions; non-performance of duty; injuries to employees; and natural disasters. The
Partnership is insured for these risks through commercial insurance policies. Further, the Partnership is
insured for workers compensation and for loss from employee actions by an insurance policy issued by the
Chubb Group and the Great Northern Insurance Company. Policy coverage for loss from employee actions
is $50,000 per year with a $1,000 deductible for each loss.
The Partnership participates in the state health care insurance plan maintained by the Commonwealth of
Virginia, which is administered by DHRM. The Partnership pays premiums to DHRM for health insurance
coverage. Information relating to the Commonwealth's insurance plan is available at the statewide level
in the Commonwealth of Virginia's Comprehensive Annual Financial Report.
70
REQUIRED SUPPLEMENTARY INFORMATION
Required Supplementary Information
Schedule of Employer's Share of Net Pension Liability
VRS State Employee Retirement Plan
For the Measurement Dates of June 30, 2018, 2017, 2016, 2015 and 2014
2018 2017 2016 2015 2014
Employer’s
Proportion of the Net
Pension Liability 0.21507% 0.19536% 0.19429% 0.20111% 0.19015%
(Asset)
Employer’s
Proportionate Share
of the Net Pension $11,643,000 $11,385,000 $12,805,000 $12,313,000 $10,646,000
Liability (Asset)
Employer’s Covered $9,212,635 $7,937,681 $7,675,614 $ 7,745,983 $7,349,371
Payroll
Employer’s
Proportionate Share
of the Net Pension 126.38 % 143.43% 166.83% 158.96% 144.86%
Liability (Asset) as a
Percentage of its
Covered Payroll
Plan Fiduciary Net
Position as a
Percentage of the 77.39% 75.33% 71.29% 72.81% 74.28%
Total Pension
Liability
Schedule is intended to show information for 10 years. Since 2018 is the fifth year for this presentation,
there are only five years available. However, additional years will be included as they become available.
71
Required Supplementary Information
Schedule of Employer Contributions
VRS State Employee Retirement Plan
For the Years Ended June 30, 2010 through 2019
Contributions
in Relation to Contributions
Contractually Contractually Contribution Employer’s as a % of
Required Required Deficiency Covered Covered
Date Contribution Contribution (Excess) Payroll Payroll
2019 $1,272,040 $1,272,040 $ - $9,408,574 13.52%
2018 $1,242,786 $1,242,786 $ - $9,212,635 13.49%
2017 $1,070,793 $1,070,793 $ - $7,937,681 13.49%
2016 $1,073,588 $1,073,588 $ - $7,675,614 13.99%
2015 $955,080 $955,080 $ - $7,745,983 12.33%
2014 $643,805 $643,805 $ - $7,349,371 8.76%
2013 $653,491 $653,491 $ - $7,459,946 8.76%
2012 $482,844 $482,844 $ - $7,338,059 6.58%
2011 $444,254 $444,254 $ - $6,751,577 6.58%
2010 $349,116 $349,116 $ - $7,005,326 4.98%
72
VRS State Employee Retirement Plan
Notes to Required Supplementary Information for the Year Ended June 30, 2019
Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions
since the prior actuarial valuation.
Changes of assumptions – The following changes in actuarial assumptions were made for the VRS - State
Employee Retirement Plan effective June 30, 2016 based on the most recent experience study of the System for
the four-year period ending June 30, 2016:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 25%
73
Required Supplementary Information
Schedule of Employer's Share of Net OPEB Liability
Health Insurance Credit Program (HIC)
For the Measurement Dates of June 30, 2018 and 2017
2018 2017
Employer’s Proportion of the Net HIC OPEB Liability
(Asset) 0.13799% 0.12298%
Employer’s Proportionate Share of the Net HIC OPEB
Liability (Asset) $1,259,000 $1,120,000
Employer’s Covered Payroll $9,291,985 $7,937,681
Employer’s Proportionate Share of the Net HIC OPEB 13.55% 14.11%
Liability (Asset) as a Percentage of its Covered Payroll
Plan Fiduciary Net Position as a Percentage of the Total
HIC OPEB Liability 9.51% 8.03%
Schedule is intended to show information for 10 years. Since 2018 is the second year for this presentation,
only two years of data is available. However, additional years will be included as they become available.
74
Schedule of Employer Contributions
Health Insurance Credit Program (HIC)
For the Years Ended June 30, 2010 through 2019
Contributions
in Relation to Contributions
Contractually Contractually Contribution Employer’s as a % of
Required Required Deficiency Covered Covered
Date Contribution Contribution (Excess) Payroll Payroll
2019 $110,961 $110,961 $ - $9,483,774 1.17%
2018 $109,645 $109,645 $ - $9,291,985 1.18%
2017 $93,665 $93,665 $ - $7,937,681 1.18%
2016 $80,594 $80,594 $ - $7,675,614 1.05%
2015 $81,333 $81,333 $ - $7,745,983 1.05%
2014 $73,494 $73,494 $ - $7,349,371 1.00%
2013 $74,599 $74,599 $ - $7,459,946 1.00%
2012 $72,647 $72,647 $ - $7,338,059 0.99%
2011 $66,841 $66,841 $ - $6,751,577 0.99%
2010 $55,769 $55,769 $ - $7,005,326 0.80%
75
Health Insurance Credit Program (HIC)
Notes to Required Supplementary Information for the Year Ended June 30, 2019
Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions
since the prior actuarial valuation.
Changes of assumptions – The following changes in actuarial assumptions were made effective June 30, 2016
based on the most recent experience study of the System for the four-year period ending June 30, 2016:
General State Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-2014
healthy, and disabled) projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year age
and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 25%
SPORS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 85%
76
Health Insurance Credit Program (HIC)
Notes to Required Supplementary Information for the Year Ended June 30, 2019
VaLORS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 50% to 35%
JRS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Decreased rates at first retirement eligibility
Withdrawal Rates No change
Disability Rates Removed disability rates
Salary Scale No change
77
Required Supplementary Information
Schedule of Employer's Share of Net OPEB Liability
Group Life Insurance Program
For the Measurement Dates of June 30, 2018 and 2017
2018 2017
Employer’s Proportion of the Net Group Life Insurance
Program OPEB Liability (Asset) 0.4940% 0.04314%
Employer’s Proportionate Share of the Net Group Life
Insurance Program OPEB Liability (Asset) $750,000 $649,000
Employer’s Covered Payroll $9,394,198 $7,948,514
Employer’s Proportionate Share of the Net Group Life
Insurance OPEB Liability (Asset) as a Percentage of its 7.98% 8.17%
Covered Payroll
Plan Fiduciary Net Position as a Percentage of the Total
Group Life Insurance OPEB Liability 51.22% 48.86%
Schedule is intended to show information for 10 years. Since 2018 is the second year for this presentation,
only two years of data is available. However, additional years will be included as they become available.
78
Schedule of Employer Contributions
Group Life Insurance Program
For the Years Ended June 30, 2010 through 2019
Contributions
in Relation to Contributions
Contractually Contractually Contribution Employer’s as a % of
Required Required Deficiency Covered Covered
Date Contribution Contribution (Excess) Payroll Payroll
2019 $49,695 $49,695 $ - $9,556,475 0.52%
2018 $48,850 $48,850 $ - $9,394,198 0.52%
2017 $41,332 $41,332 $ - $7,948,514 0.52%
2016 $36,876 $36,876 $ - $7,682,448 0.48%
2015 $37,181 $37,181 $ - $7,745,983 0.48%
2014 $35,277 $35,277 $ - $7,349,371 0.48%
2013 $35,839 $35,839 $ - $7,466,428 0.48%
2012 $30,447 $30,447 $ - $7,426,087 0.41%
2011 $28,346 $28,346 $ - $6,913,712 0.41%
2010 $16,872 $16,872 $ - $7,030,061 0.24%
79
Group Life Insurance Program
Notes to Required Supplementary Information for the Year Ended June 30, 2019
Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions
since the prior actuarial valuation.
Changes of assumptions – The following changes in actuarial assumptions were made effective June 30, 2016
based on the most recent experience study of the System for the four-year period ending June 30, 2016:
General State Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-2014
healthy, and disabled) projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year age
and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 25%
Teachers:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
80
Group Life Insurance Program
Notes to Required Supplementary Information for the Year Ended June 30, 2019
SPORS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 85%
VaLORS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 50% to 35%
JRS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Decreased rates at first retirement eligibility
Withdrawal Rates No change
Disability Rates Removed disability rates
Salary Scale No change
81
Group Life Insurance Program
Notes to Required Supplementary Information for the Year Ended June 30, 2019
Largest Ten Locality Employers – General Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered retirement rates at older ages and
extended final retirement age from 70 to 75
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Lowered disability rates
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 20%
Non-Largest Ten Locality Employers – General Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered retirement rates at older ages and
extended final retirement age from 70 to 75
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Lowered disability rates
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 15%
Largest Ten Locality Employers – Hazardous Duty Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Lowered retirement rates at older ages
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Increased disability rates
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 70%
82
Group Life Insurance Program
Notes to Required Supplementary Information for the Year Ended June 30, 2019
Non-Largest Ten Locality Employers – Hazardous Duty Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted termination rates to better fit experience
at each age and service year
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 45%
83
Required Supplementary Information
Schedule of Employer's Share of Net OPEB Liability
Disability Insurance Program
For the Measurement Dates of June 30, 2018 and 2017
2018 2017
Employer’s Proportion of the Net Disability Insurance
Program OPEB Liability (Asset) 0.22545% 0.20066%
Employer’s Proportionate Share of the Net Disability
Insurance Program OPEB Liability (Asset) ($508,000) ($412,000)
Employer’s Covered Payroll $8,891,622 $7,561,543
Employer’s Proportionate Share of the Net Disability
Insurance Program OPEB Liability (Asset) as a Percentage 5.71% 5.45%
of its Covered Payroll
Plan Fiduciary Net Position as a Percentage of the Total
Disability Insurance Program OPEB Liability 194.74% 186.63%
Schedule is intended to show information for 10 years. Since 2018 is the second year for this presentation,
only two years of data is available. However, additional years will be included as they become available.
84
Required Supplementary Information
Schedule of Employer Contributions
Disability Insurance Program
For the Years Ended June 30, 2010 through 2019
Contributions
in Relation to Contributions
Contractually Contractually Contribution Employer’s as a % of
Required Required Deficiency Covered Covered
Date Contribution Contribution (Excess) Payroll Payroll
2019 $56,243 $56,243 $ - $9,071,488 0.62%
2018 $58,685 $58,685 $ - $8,891,622 0.66%
2017 $49,907 $49,907 $ - $7,561,543 0.66%
2016 $48,365 $48,365 $ - $7,327,940 0.66%
2015 $48,911 $48,911 $ - $7,410,796 0.66%
2014 $32,971 $32,971 $ - $7,015,051 0.47%
2013 $33,930 $33,930 $ - $7,219,081 0.47%
2012 $48,686 $48,686 $ - $7,376,631 0.66%
2011 $44,745 $44,745 $ - $6,779,490 0.66%
2010 $55,889 $55,889 $ - $7,022,198 0.80%
85
Disability Insurance Program
Notes to Required Supplementary Information for the Year Ended June 30, 2019
Changes of benefit terms – There have been no actuarially material changes to the System benefit provisions
since the prior actuarial valuation.
Changes of assumptions – The following changes in actuarial assumptions were made effective June 30, 2016
based on the most recent experience study of the System for the four-year period ending June 30, 2016:
General State Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-2014
healthy, and disabled) projected to 2020
Retirement Rates Lowered rates at older ages and changed final
retirement from 70 to 75
Withdrawal Rates Adjusted rates to better fit experience at each year age
and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 14% to 25%
SPORS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 60% to 85%
86
Disability Insurance Program
Notes to Required Supplementary Information for the Year Ended June 30, 2019
VaLORS Employees:
Mortality Rates (Pre-retirement, post-retirement Updated to a more current mortality table – RP-
healthy, and disabled) 2014 projected to 2020 and reduced margin for
future improvement in accordance with experience
Retirement Rates Increased age 50 rates and lowered rates at older
ages
Withdrawal Rates Adjusted rates to better fit experience at each year
age and service through 9 years of service
Disability Rates Adjusted rates to better match experience
Salary Scale No change
Line of Duty Disability Increased rate from 50% to 35%
87
Required Supplementary Information
Schedule of Employer's Share of Total OPEB Liability
Pre-Medicare Retiree Healthcare Program
For the Measurement Dates of June 30, 2018 and 2017
2018 2017
Employer’s Proportion of the collective total OPEB
liability 0.12969% 0.11875%
Employer’s Proportionate Share of the collective total
OPEB liability $1,304,233 $1,542,480
Employer’s Covered-Employee Payroll $9,358,038 $7,945,015
Employer’s Proportionate Share of the collective total
OPEB liability as a Percentage of its Covered-Employee 13.94% 19.41%
Payroll
Schedule is intended to show information for 10 years. Since 2018 is the second year for this presentation,
only two years of data is available. However, additional years will be included as they become available.
88
Pre-Medicare Retiree Healthcare Program
Notes to Required Supplementary Information for the Year Ended June 30, 2019
There are no assets accumulated in a trust to pay related benefits.
Changes of benefit terms – There have been no changes to the benefit provisions since the prior actuarial
valuation.
Changes of assumptions – The following actuarial assumptions were updated since the June 30, 2017 valuation
based on recent experience:
Spousal Coverage Reduced the rate from 50% to 35%
Retiree Participation Reduced the rate from 70% to 60%
Spousal coverage and retiree participation were both reduced based on a blend of recent experience and the prior
year assumptions. The mortality assumption was modified slightly to reflect mortality improvement projection
scale BB to 2020. Additionally, the discount rate was increase from 3.58% to 3.87% based on the Bond Buyers
GO 20 Municipal Bond Index.
89
October 18, 2019
The Honorable Ralph S. Northam
Governor of Virginia
The Honorable Thomas K. Norment, Jr.
Chairman, Joint Legislative Audit
and Review Commission
Board of Directors
Virginia Economic Development Partnership
INDEPENDENT AUDITOR’S REPORT
Report on Financial Statements
We have audited the accompanying financial statements of the governmental activities and each
major fund of the Virginia Economic Development Partnership as of and for the year ended
June 30, 2019, and the related notes to the financial statements, which collectively comprise the
Partnership’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement.
www.apa.virginia.gov | (804) 225-3350 | reports@apa.virginia.gov
90
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall financial
statement presentation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
reasonable basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the governmental activities and each major fund of the Virginia Economic
Development Partnership as of June 30, 2019, and the respective changes in the financial position
thereof and the respective budgetary comparison for the General Fund and Special Revenue Fund for
the year then ended, in accordance with accounting principles generally accepted in the United States
of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
following be presented to supplement the basic financial statements: Management’s Discussion and
Analysis on pages 3 through 8; the Schedule of Employer’s Share of Net Pension Liability, the Schedule
of Employer Contributions, and the Notes to the Required Supplementary Information on pages 71
through 73; the Schedule of Employer’s Share of Net OPEB Liability, the Schedule of Employer
Contributions, and the Notes to the Required Supplementary Information for the Health Insurance
Credit, Group Life Insurance, and Disability Insurance programs on pages 74 through 87; and the
Schedule of Employer’s Share of Total OPEB Liability and the Notes to the Required Supplementary
Information for the Pre-Medicare Retiree Healthcare program on pages 88 through 89. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of the 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
91
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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 18, 2019, on our consideration of the Virginia Economic Development Partnership’s internal
control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the 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 Partnership’s internal control over financial reporting and
compliance.
Martha S. Mavredes
AUDITOR OF PUBLIC ACCOUNTS
MSM/vks
92
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