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

Employees' Officers' Firefighters' Retirement Retirement Retirement Retirement Funds ASSETS Cash and cash equivalents $ 590,890 $ 651,833 $ 500,960 $ 1,743,683 Accounts receivable - 21,371 26,771 48,142 Due from other governments - 267,370 339,159 606,529 Investments, at market U.S. Government and Agency obligations 6,034,086 4,173,378 2,597,663 12,805,127 Corporate obligations 897,877 648,034 449,340 1,995,251 Mutual and exchange-traded funds 33,324,603 15,971,960 15,174,733 64,471,296 Infrastructure investment funds 2,629,542 1,456,186 1,347,140 5,432,868 Real estate investment funds 6,015,136 2,829,203 2,524,241 11,368,580 Total investments, at market 48,901,244 25,078,761 22,093,117 96,073,122 TOTAL ASSETS 49,492,134 26,019,335 22,960,007 98,471,476 LIABILITIES Accounts payable 59,124 82,153 106,629 247,906 NET POSITION RESTRICTED FOR PENSIONS $ 49,433,010 $ 25,937,182 $ 22,853,378 $ 98,223,570 66  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 8. DEFINED BENEFIT PENSION PLANS – CONTINUED Fund Financial Statements – Continued COMBINING STATEMENT OF CHANGES IN PLAN NET POSITION Employee Retirement Funds Total General Police Employee Employees' Officers' Firefighters' Retirement Retirement Retirement Retirement Funds ADDITIONS Contributions Employer $ 391,098 $ 1,426,703 $ 1,431,211 $ 3,249,012 Plan members 107,036 176,335 263,765 547,136 State of Florida - 267,370 339,159 606,529 Total contributions 498,134 1,870,408 2,034,135 4,402,677 Investment income 4,341,624 2,646,705 2,225,196 9,213,525 Less investment expense (180,286) (54,998) (37,655) (272,939) Net investment income 4,161,338 2,591,707 2,187,541 8,940,586 Miscellaneous revenue 1,812 - 3 1,815 TOTAL ADDITIONS 4,661,284 4,462,115 4,221,679 13,345,078 DEDUCTIONS Benefits and refunds paid Retirement payments 3,490,231 1,832,226 1,617,235 6,939,692 Disability payments 33,583 156,874 5,894 196,351 Other - 36,882 47,724 84,606 Total benefits and refunds paid 3,523,814 2,025,982 1,670,853 7,220,649 Administrative expenses Legal 9,110 12,392 12,672 34,174 Contractual 72,311 76,560 75,921 224,792 Other 40,669 50,852 35,483 127,004 Total administrative expenses 122,090 139,804 124,076 385,970 TOTAL DEDUCTIONS 3,645,904 2,165,786 1,794,929 7,606,619 INCREASE IN PLAN NET POSITION 1,015,380 2,296,329 2,426,750 5,738,459 NET POSITION RESTRICED FOR PENSIONS Beginning of year 48,417,630 23,640,853 20,426,628 92,485,111 End of year $ 49,433,010 $ 25,937,182 $ 22,853,378 $ 98,223,570 67  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 9. DEFINED CONTRIBUTION PENSION PLAN City of Fort Walton Beach Defined Contribution Plan In December 2009, City Council closed the General Employees’ Defined Benefit Plan. All general, full-time employees hired on or after January 1, 2010, are members of the Defined Contribution Retirement Plan (the Plan). The Plan is a money purchase defined contribution retirement plan administered by ICMA Retirement Corporation and Mission Square Retirement, with the City serving as trustee. All funds are held in the ICMA Retirement Corporation Governmental Money Purchase Plan & Trust in the name of each participant. The City finance director serves as the coordinator for the Plan. The Plan requires a 5% payroll contribution by the employee with a 5% employer (City) match. Employees can increase their contribution; however, only an additional 2½% is eligible for City match. Members of the General Employees’ Defined Benefit Pension Plan, who were not fully or partially vested at the time the Plan was opened, were permitted to transfer their contributions to the Plan as a one-time, irrevocable election. The Plan participants individually select and make changes in funding options, which are made available by the independent plan administrator. Since participants select the investment fund or funds in which their deferred compensation accounts are invested, the city has no liability for investment losses. The authority for establishing and amending the Plan’s provisions lies with the City Council. The City Council also has the authority for amending contribution requirements. Contributions made to the Plan by the employees and by the City were $345,081 and $345,081, respectively, for the fiscal year ending September 30, 2023. The City’s contributions vest 20% each year beginning after one year of employment. Participants are fully vested after 5 years of service. 10. DEFERRED COMPENSATION PLAN The City offers employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457 (the Plan). The Plan is a tax-deferred supplemental retirement program that allows City employees to contribute a portion of their salary, before federal income taxes, to a retirement account. The assets are held in trust for the employees’ benefit. The Plan participants individually select and make changes in funding options, which are made available by the independent plan administrator. Since participants select the investment fund or funds in which their deferred compensation accounts are invested, the City has no liability for investment losses. The City’s fiduciary responsibility is to administer the Plan properly and to assure the investment alternatives made available are reasonable. Assets of the Plan have a fair value of $2,553,000 on September 30, 2023. Contributions made by Plan members during the fiscal year ended September 30, 2023, were $156,667. 68  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 11. OTHER POST EMPLOYMENT BENEFITS (OPEB) Plan Description The Fort Walton Beach’s Retiree Health Care Plan (the Plan) is a single employer defined benefit postemployment health care plan that covers eligible retired employees of the City. The Plan, which is administered by the City, allows employees who retire and meet retirement eligibility requirements under one of the City’s retirement plans to continue medical, dental, and life insurance coverage as a participant in the City’s plan. Plan Membership as of September 30, 2022: Inactive Plan Members or Beneficiaries Current Receiving Benefits 117 Inactive Plan Members Entitled to But Not Yet Receiving Benefits - Active Plan Members 262 379 Benefits Provided The benefits provided are the same as those provided for active employees. Spouses and dependents of eligible retirees are also eligible for medical coverage. All employees of the City are eligible to receive postemployment health care benefits. Contributions Retirees participating in the group insurance plans offered by the City are required to contribute 100% of the active premiums. In future years, contributions are assumed to increase at the same rate as premiums. Total OPEB Liability The City’s total OPEB liability was measured as of September 30, 2022. The total OPEB liability was determined by an actuarial valuation. The measurement period for OPEB expense was October 1, 2021 to September 30, 2022. The reporting period is October 1, 2022 to September 30, 2023. Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of September 30, 2022, using the following actuarial assumptions: Inflation 2.50% Salary Increases Service based Discount Rate 4.77% Initial Trend Rate 7.25% Ultimate Trend Rate 4.00% Years to Ultimate 52 69  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 11. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED Total OPEB Liability – Continued Actuarial Assumptions – Continued For general employees, mortality rates were based on the Pub-2010 mortality tables with fully generational improvement using Scale MP-2018. For female lives, the headcount-weighted PubG- 2010 female employee table was used. For male lives, the headcount-weighted PubG-2010 male below median income employee table, set back one year, was used. For disabled female lives, 100% of the Disabled Female table was used, set forward three years. For disabled male lives, 100% of the Disabled Male table was used, set forward three years. For police and fire employees, mortality rates were also based on the Pub-2010 mortality tables with fully generational improvement using Scale MP-2018. For both males and females, the PubS.H-2010 below median income employee table, set forward one year, was used. For both disabled males and females, the 80% PubG.H-2010 and 20%PubS.H-2010 for Disabled Retirees was used. Discount Rate Given the City’s decision not to fund the program, all future benefit payments were discounted using a high-quality municipal bond rate