Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2023 — reading text

447,121 Total depreciation/amortization expense – business-type activities $ 2,538,992 Construction Commitments In February 2023, the City engaged a construction contractor to perform the Fort Walton Beach Landing Phase I improvements for a total price of $2,279,137. The project costs are being funded from several sources including a grant from the Florida Department of Environmental Protection, tourist development tax proceeds, discretionary sales surtax proceeds, and tax increment revenues of the Fort Walton Beach Community Redevelopment Agency. As of September 30, 2023, the City has incurred total contract costs of $862,798, which includes unbilled retainage of $43,140. 49  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 7. DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES As of September 30, 2023, the City had various components of deferred outflows of resources and deferred inflows of resources as follows: Governmental activities: General Governmental Fund Activities Deferred outflows City pension contributions made subsequent to the measurement date $ - $ 3,651,356 Net difference between projected and actual earnings on pension plan investments - 6,603,223 Differences between expected and actual experience on pension plan actuarial assumptions - 1,186,549 Changes in assumptions related to pension plan - 1,040,057 City OPEB contributions made subsequent to the measurement date 176,888 Changes in assumptions related to OPEB plan - 911,017 Total deferred outflows $ - $ 13,569,090 Deferred inflows Differences between expected and actual experience on pension plan actuarial assumptions $ - $ 249,989 Net difference between projected and actual earnings on pension plan investments - - Changes in assumptions related to pension plan - - Differences between expected and actual experience on OPEB plan actuarial assumptions - 1,244,275 Changes in assumptions related to OPEB plan 1,298,723 Lease contracts 4,042,776 4,042,776 Unavailable revenue - special assessments 32,217 - Unavailable revenue - long-term receivable from sale of buildings 478,517 - Total deferred inflows $ 4,553,510 $ 6,835,763 50  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 7. DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES – CONTINUED Business-type activities: Utilities Sanitation Stormwater Business-Type Fund Fund Fund Activities Deferred outflows City pension contributions made subsequent to the measurement date $ 68,014 $ 51,981 $ 7,463 $ 127,458 Deferred loss on refunding 54,727 - - 54,727 City OPEB contributions made subsequent to the measurement date 24,584 16,374 6,460 47,418 Changes in assumptions related to OPEB plan 126,633 84,341 33,250 244,224 Total deferred outflows $ 1,554,367 $ 842,239 $ 266,519 $ 2,663,125 Deferred inflows Net difference between projected and actual earnings on pension plan investments $ - $ - $ - $ - Changes in assumptions related to OPEB plan 180,498 120,223 47,430 348,151 Differences between expected and actual experience on OPEB plan actuarial assumptions 172,931 115,182 45,441 333,554 Lease contracts 84,246 - - 84,246 Total deferred inflows $ 437,675 $ 235,405 $ 92,871 $ 765,951 8. DEFINED BENEFIT PENSION PLANS The City of Fort Walton Beach, Florida sponsors three single employer defined benefit pension plans: the General Employees' Retirement Fund (GERF), the Police Officers' Retirement Fund (PORF) and the Firefighters' Retirement Fund (FRF). These plans provide benefits for all qualifying employees of the City. The financial activity of each plan is reported as a Pension Trust Fund in the City of Fort Walton Beach, Florida's internal combined financial statements and can be found under subheading “Fund Financial Statements” of this note. There is no separate report available for the individual pension plans. Plan Description – General Employees’ Retirement Fund (GERF) Plan Administration The authority and responsibility for the establishment, amendment and administration of this Plan is vested in the City Council, and the Members thereof shall be designated as trustees of the fund. The trustees are authorized to adopt reasonable rules and regulations for the administration of the fund created by this Plan. 51  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 8. DEFINED BENEFIT PENSION PLANS – CONTINUED Plan Description – General Employees’ Retirement Fund (GERF) – Continued Plan Administration – Continued The Plan is a single employer defined benefit pension plan administered by the City’s Finance Director. The Finance Director shall administer this Plan for the trustees and participants, subject at all times to the limitations and conditions specified in or imposed by provisions of this Plan and the rules and regulations adopted by the City Council. The trustees and the plan administrator shall serve without additional compensation beyond that already provided by the City for their respective duties. Plan membership consists of all full-time City employees including the City Manager, Finance Director, and the Chief of Police, if they elect to participate, but not including City Council Members, police officers other than the Chief of Police, and firefighters. Effective January 1, 2010, the plan is closed to new entrants. Plan Membership as of October 1, 2021: Inactive Plan Members or Beneficiaries Current Receiving Benefits 174 Inactive Plan Members Entitled to But Not Yet Receiving Benefits 38 Active Plan Members 50 262 Benefits Provided The plan provides retirement, termination, disability and death benefits. A member may retire at age 52 with 10 years of credited service (early retirement) or at age 62 and 10 years of credited service (normal retirement). Benefits become 100% vested upon completion of 10 years of credited service. For the City Manager, Finance Director, or Department Heads, including the Chief of Police, the Member becomes vested at 20% per year, except that credited service other than that as a Charter Officer or Department Head will accrue at a rate of 10% per year. Retirement benefits are a percentage (2.75% or 2.50%) of final average earnings times the years of credited service with maximum of 75% or 100% of current compensation depending on vested status at April 5, 1999. Benefits are reduced by 3% for each year by which the early retirement date precedes the age of 62. Varied benefits exist for service and non-service-connected disabilities as well as death in the line of duty or other pre-retirement death. In accordance with the annual increase in CPI-U as measured in December, all retirees are entitled to an adjustment payable each April 1, subject to a minimum of 0% and a maximum of 3%. The adjustment does not apply to members who retire following a vested terminated status or disability retirees. Funding Policy and Contributions Contributions to the Plan are established based on an actuarially determined rate recommended by an independent actuary. For the year ended September 30, 2023, the participants’ contribution rate was 5.0%. The City is required to contribute the remaining amount necessary to fund the normal cost and amortize the unfunded actuarial accrued liability over not more than 15 years. For the year ended September 30, 2023, the City was required to contribute $289,455. 52  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 8. DEFINED BENEFIT PENSION PLANS – CONTINUED Net Pension Liability (Asset) – GERF The measurement date is September 30, 2022. The measurement period for the pension expense was October 1, 2021 to September 30, 2022. The reporting period is October 1, 2022 through September 30, 2023. The City’s net pension liability was measured as of September 30, 2022. The total pension liability used to calculate the net pension liability was determined as of that date. Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of October 1, 2021 updated to September 30, 2022 using the following actuarial assumptions: Inflation 2.50% Salary Increases Age-Based Discount Rate 7.00% Investment Rate of Return 7.00% Mortality rates for healthy lives were obtained from the PubG.H-2010 table and were projected generationally with Scale MP-2018 with the following adjustments: Males – (Below Median) for Employees and Healthy Retirees set back one-year Females – Employees and Healthy Retirees Mortality rates for disabled lives were obtained from the PubG.H-2010 table and were projected generationally with Scale MP-2018 with the following adjustments: Males – Disabled Retirees with three-year set forward Females – Disabled Retirees with three-year set forward The above mortality assumption rates were mandated by Chapter 2015-157, Laws of Florida. This mandate requires the use of