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

of 4.77%. The high-quality municipal bond rate was based on the week closest but not later than the measurement date of the Bond Buyer 20-Bond Index as published by the Federal Reserve. The 20-Bond Index consists of 20 general obligation bonds that mature in 20 years. The average rating of the 20 bonds is roughly equivalent to Moody's “Aa2” rating and S&P's “AA” rating. Change in Total OPEB Liability Increase (Decrease) Total OPEB Plan Fiduciary Total OPEB Liability Net Position Liability (a) (b) (a) – (b) Balances at September 30, 2022 $ 7,000,692 $ - $ 7,000,692 Changes for the year: Service cost 399,330 - 399,330 Interest 176,997 - 176,997 Differences between expected and actual experience (978,450) - (978,450) Changes of assumptions (1,661,244) - (1,661,244) Contributions – employer - 236,797 (236,797) Benefit payments (233,797) (233,797) - Administrative expense - (3,000) 3,000 Net changes (2,297,164) - (2,297,164) Reporting period ending September 30, 2023 $ 4,703,528 $ - $ 4,703,528 70  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 11. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED Change in Total OPEB Liability – Continued Sensitivity of the Total OPEB Liability to Changes in the Discount Rate Current 1% Decrease Discount Rate 1% Increase 3.77% 4.77% 5.77% Total OPEB liability $ 5,395,710 $ 4,703,528 $ 4,141,955 Sensitivity of the Total OPEB Liability to Changes in the Healthcare Trend Rates Healthcare Cost 1% Decrease Trend Rates 1% Increase 3.00%-6.25% 4.00%-7.25% 5.00%-8.25% Total OPEB liability $ 4,191,918 $ 4,703,528 $ 5,340,195 OPEB Plan Fiduciary Net Position The plan is unfunded, so the OPEB plan’s fiduciary net position is $0. There are no OPEB assets accumulated in a GASB compliant trust to pay for related plan benefits. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended September 30, 2023, the City recognized OPEB expense of $275,372. On September 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ - $ 1,577,829 Changes of assumptions 1,155,241 1,646,874 Employer contributions subsequent to the measurement date 224,306 - Total $ 1,379,547 $ 3,224,703 71  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 11. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – Continued Deferred outflows of resources related to pensions of $224,306 resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the year ending September 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year ended September 30: 2024 $ (303,955) 2025 (303,959) 2026 (274,517) 2027 (432,837) 2028 (377,100) Thereafter (377,094) $ (2,069,462) 12. UNEARNED REVENUES The composition of unearned revenues as of September 30, 2023, was as follows: General Utilities Fund Fund Totals Federal grant proceeds received in advance of meeting eligibility requirements $ - $ 3,651,981 $ 3,651,981 Unredeemed gift cards 31,931 - 31,931 Charges for services paid in advance - 65,216 65,216 $ 31,931 $ 3,717,197 $ 3,749,128 The American Rescue Plan Act (ARPA) grant documents do not require unspent funds to be held in a separate bank account and since the revenue is not earned, it is not a component of net position at either the fund or government-wide level. The terms of the grant require the funds to be expended by specific dates, and unspent grant funds are not typically considered restricted assets of the governmental unit. Therefore, the City has not reported the unspent proceeds as restricted assets as of September 30, 2023. 72  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 13. FINANCED EQUIPMENT The City has entered into contracts for financing the acquisition of fitness equipment for its recreation complex, a ladder fire truck, and cameras for police vehicles. These agreements qualify as financed purchases for accounting purposes as a result of the transfer of title or bargain purchase option and therefore has been recorded at the present value of the future debt service payments as of the inception date in the General Fund. The assets acquired through financing contracts were as follows: Governmental Assets Activities Fitness equipment $ 75,385 Ladder fire truck 999,320 Police vehicle camera kits 356,030 Accumulated depreciation (323,114) Assets financed, net $ 1,107,621 14. LONG-TERM DEBT Changes in Long-Term Debt Liabilities The following is a summary of changes in long-term debt liabilities of the City for the year ended September 30, 2023: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities Direct placements: Capital Improvement Revenue Note, Series 2013 $ 2,475,784 $ - $ (252,694) $ 2,223,090 $ 256,506 Capital Improvement Revenue Note, Series 2013A 5,203,182 - (417,559) 4,785,623 428,792 Capital Improvement Revenue Bonds, Series 2018 11,365,436 - (414,704) 10,950,732 430,587 Direct borrowings: Golf Course Irrigation System Revenue Note, 2021 1,209,393 - (295,272) 914,121 274,723 Financing contract - fitness equipment 39,580 - (15,087) 24,493 16,070 Financing contract - ladder fire truck 561,165 - (334,892) 226,273 226,273 Financing contract - police equipment - 304,825 (19,010) 285,815 71,454 Lease obligations 393,186 - (200,139) 193,047 161,945 (1) Subscription liabilities 1,281,392 971,904 (538,665) 1,714,631 495,932 Compensated absences 958,865 1,037,605 (970,744) 1,025,726 256,432 Total governmental activities $ 23,487,983 $ 2,314,334 $ (3,458,766) $ 22,343,551 $ 2,618,714 (1) Beginning balances were the result of implementing GASB Statement No. 96 as of October 1, 2022. These liabilities are offset by a related subscription asset. See Note 6 for additional details. 73  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 14. LONG-TERM DEBT – CONTINUED Changes in Long-Term Debt Liabilities – Continued Beginning Ending Due Within Balance Additions