Okaloosa County BOCC — May 20, 2014 — reading text

Okaloosa County, Florida NOTES TO FINANCIAL STATEMENTS Fiscal Year Ended September 30, 2013 NOTE 16 - RISK MANAGEMENT - CONTINUED A. Method of Risk Management Special Risk Policies - Continued County Commissioners purchases a commercial policy. The County bears no risk of loss under this type of coverage. The Sheriff insures this exposure separately. B. Claim Liabilities for Retained Risk Claim liabilities for workers’ compensation, general liabilities (including errors and omissions), and auto liability (both bodily injury and property damage) have been determined based on an actuarial evaluation of all claims reported and all claims incurred but not reported (IBNR) as of September 30, 2013. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The actuarial estimation of ultimate losses does not include any future recoveries from the Florida Special Disability Fund, subrogation or third party liens, etc. except to the degree they are implicitly included in the trending process of estimating ultimate losses. The ultimate loss calculation does take into consideration specific excess reinsurance recoverable. Claims liabilities recognized in the Self Insurance Fund of the Board of County Commissioners at September 30, 2013 were as follows: Current Long-term Total Workers' compensation $ 1,133,245 $ 1,414,985 $ 2,548,230 General liability 691,516 1,192,005 1,883,521 Auto liability 15,284 6,792 22,076 Property 41,176 - 41,176 Total claims liability recognized $ 1,881,221 $ 2,613,782 $ 4,495,003 C. Funding of Claims Liabilities The Self Insurance Fund charges the other funds of the Board and other participating elected officials for the cost of claim liabilities based on actuarially projected budget requirements for expected yearly cash payouts. This funding method results in a deficit fund balance that will be charged back to the other funds over a reasonable period of time so that service fund revenues and expenses will be approximately equal. 82 Packet Pg. 140  Okaloosa County, Florida NOTES TO FINANCIAL STATEMENTS Fiscal Year Ended September 30, 2013 NOTE 16 - RISK MANAGEMENT - CONTINUED D. Reconciliation of Claims Liabilities As of September 30, 2013 As of September 30, 2012 Workers' Workers' Compensation Liability Property Total Compensation Liability Property Total Unpaid claims and adjustment expenses at beginning of year $ 2,975,931 $ 1,020,210 $ 8,500 $ 4,004,641 $ 2,852,811 $ 729,115 $ - $ 3,581,926 Incurred claims and claim adjustment expenses A) Provision for insured events of current fiscal year 762,011 1,411,577 71,707 2,245,295 1,071,551 668,214 8,500 1,748,265 B) Increases (decreases) in provision for insured events of prior fiscal years (331,257) (221,086) 54,636 (497,707) 121,283 (260,820) - (139,537) Total incurred claims and claim adjustment expenses 430,754 1,190,491 126,343 1,747,588 1,192,834 407,394 8,500 1,608,728 Payments A) Claims and claim adjustment expenses attributable to insured events of current fiscal year 203,613 248,564 30,531 482,708 254,864 19,090 - 273,954 B) Claims and claim adjustment expenses attributable to insured events of prior fiscal year 654,842 56,540 63,136 774,518 814,850 97,209 - 912,059 Total payments 858,455 305,104 93,667 1,257,226 1,069,714 116,299 - 1,186,013 Unpaid claims and claim adjustment expenses at end of year $ 2,548,230 $ 1,905,597 $ 41,176 $ 4,495,003 $ 2,975,931 $ 1,020,210 $ 8,500 $ 4,004,641 83 Packet Pg. 141  Okaloosa County, Florida NOTES TO FINANCIAL STATEMENTS Fiscal Year Ended September 30, 2013 NOTE 17 – COMMITMENTS AND CONTINGENCIES Wastewater Service Interlocal Agreement with Fort Walton Beach In 2009, the Board adopted the Wastewater Service Interlocal Agreement with the City of Fort Walton Beach (Agreement). The Agreement outlines a long-term association for the treatment of the City’s influent wastewater flow at a set percentage of the County’s base sewer rate plus a locked-in annual rate escalator. The agreement provides other ancillary benefits to the City such as the provision of “no cost” tertiary treated effluent for use as irrigation water at the City’s 36-hole municipal Golf Club. The Agreement is effective for 30 years and can be automatically extended for up to two additional terms for a period of ten years for each extension term. The City will be billed monthly at a rate equal to $2.46 per each 1,000 gallons of wastewater flow. Additionally, the City will pay to the County the Sewer Readiness to Serve Fee, which is equal to $3,750 per month. Beginning March 2011, and each year thereafter, the Readiness to Serve Fee will increase by 3% annually. Service to the City began March 2010. Fees of $2,331,997 paid by the City during 2013 are reflected as Charges for Services in the Water and Sewer fund. The minimum commitment to the County under the Agreement is as follows: Fiscal Year Ending September 30, Payment 2014 $ 49,910 2015 51,407 2016 52,949 2017 54,537 2018 56,173 2019-2023 307,177 2024-2028 356,106 2028-2032 412,830 2033-2038 478,584 2039 104,501 Total $ 1,924,174 Convention Center Expansion Okaloosa County contracted with a company for construction of additional boat ramp parking and an outdoor exhibit area for $1,064,464. The Convention Center will expand the outdoors facilities by adding a fenced 30,000 square feet concrete pad with a small building to provide utilities and audio services. The Convention Center’s $974,577 portion of the project will be provided by Tourist Development Tax Revenue. The project began in 2013 with $46,649 reported in construction in progress. The project is scheduled to be completed in April 2014. Customer Facility Charge Agreement As of December 1, 2004, the County entered into a Customer Facility Charge Agreement with the on- airport rental car companies. In accordance with Ordinance No. 04-64, the County imposes and the rental car companies collect on behalf of the County, a Customer Facility Charge (CFC). Effective July 2007, Ordinance 04-64 was amended to increase the CFC charge from two dollars and fifty cents ($2.50) to three dollars and twenty-five cents ($3.25) per rental car transaction day on all rental car contracts. In December 2010, Ordinance 10-16 was implemented increasing the CFC charge from three dollars and 84 Packet Pg. 142  Okaloosa County, Florida NOTES TO FINANCIAL STATEMENTS Fiscal Year Ended September 30, 2013 NOTE 17 – COMMITMENTS AND CONTINGENCIES - CONTINUED Customer Facility Charge Agreement - Continued twenty-five cents ($3.25) to three dollars and seventy-five cents ($3.75). CFC revenue will be utilized by the County to construct, operate and maintain facilities and services for the rental car operators and their customers at the Northwest Florida Regional Airport. The facilities were completed and began operations in fiscal year 2009. CFC collections for the year ended September 30, 2013 were $1,570,156 and will be used for debt service on the Series 2007 taxable airport revenue bonds. In fiscal year 2013, the Airport used $518,767 of CFC revenue generated from the rental car companies for abatement of certain facility rent. Emergency Operations Center Okaloosa County and Northwest Florida State College executed a memorandum of understanding in 2005 for a joint use facility which would house the College’s Community Life, Safety and Military Science programs, and the County’s Public Safety Administration, Emergency Operation Center, and the 911 Dispatch Center. The facility also may serve as a hurricane evacuation shelter. The County’s rent is $10 per year for the facility located on the College’s Niceville, Florida campus. The County funded approximately $7,000,000 in contributions to the project. The joint use facility was completed and operations began in December 2010. Grants Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already