Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2025 — reading text

CITY OF FORT WALTON BEACH, FLORIDA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2025 PREPARED BY: THE FINANCE DEPARTMENT City of Fort Walton Beach 107 Miracle Strip Parkway Fort Walton Beach, FL 32548 www.fwb.org  CITY OF FORT WALTON BEACH, FLORIDA TABLE OF CONTENTS FOR THE YEAR ENDED SEPTEMBER 30, 2025 Page CITY OFFICIALS I. INTRODUCTORY SECTION Table of Contents i Letter of Transmittal City Manager iv GFOA Certificate of Achievement x Organizational Chart xi II. FINANCIAL SECTION Independent Auditors' Report 1 A. MANAGEMENT'S DISCUSSION AND ANALYSIS 4 B. BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements Governmental Funds Balance Sheet 17 Reconciliation of the Balance Sheet to the Statement of Net Position 18 Statement of Revenues, Expenditures and Changes in Fund Balance 19 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities 20 Proprietary Funds Statement of Net Position 21 Statement of Revenues, Expenses and Changes in Net Position 23 Statement of Cash Flows 24 Fiduciary Funds Statement of Fiduciary Net Position 26 Statement of Changes in Fiduciary Net Position 27 Notes to the Financial Statements 28 i  CITY OF FORT WALTON BEACH, FLORIDA TABLE OF CONTENTS FOR THE YEAR ENDED SEPTEMBER 30, 2025 Page Schedule II. FINANCIAL SECTION – CONTINUED C. REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) Budgetary Comparison Information Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 78 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Community Redevelopment Agency 79 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Beal Memorial Cemetery Perpetual Care Fund 80 Notes to the Budgetary Comparison Schedules 81 Pension and OPEB Schedules Schedules of Changes in Net Pension Liability and Related Ratios 82 Schedule of Changes in Total OPEB Liability and Related Ratios 87 Schedule of Pension Contributions 88 Schedule of Investment Returns 89 Notes to the Schedule of Pension Contributions - General Employees' Retirement Fund 90 Notes to the Schedule of Pension Contributions - Police Officers' Retirement Fund 92 Notes to the Schedule of Pension Contributions - Firefighters' Retirement Fund 94 D. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Non-Major Governmental Funds Combining Balance Sheet 96 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 97 Budgetary Comparison Schedules Law Enforcement Trust Special Revenue Fund 98 Law Enforcement Trust Training Special Revenue Fund 99 Florida Building Code Special Revenue Fund 100 Community Development Block Grant Special Revenue Fund 101 III. STATISTICAL SECTION (UNAUDITED) Net Position by Component 102 1 Changes in Net Position 103 2 Fund Balances – Governmental Funds 105 3 Changes in Fund Balances – Governmental Funds 106 4 Revenues and Other Sources 107 5 Assessed Value of Taxable Property 108 6 ii  CITY OF FORT WALTON BEACH, FLORIDA TABLE OF CONTENTS FOR THE YEAR ENDED SEPTEMBER 30, 2025 Page Schedule III. STATISTICAL SECTION (UNAUDITED) – CONTINUED Property Tax Rates Per $1,000 of Taxable Value - All Direct and Overlapping Governments 109 7 Principal Taxpayers 110 8 Property Tax Levies and Collections 111 9 Ratios of Outstanding Debt by Type 112 10 Ratio of Net General Bonded Debt Outstanding 113 11 Pledged Revenue Coverage – Schedule of Revenue Bond Coverage 114 12 Direct and Overlapping Governmental Activities Debt – General Obligations 115 13 Major Employers 116 14 Miscellaneous Demographical Statistics 117 15 Full-Time Equivalent Employees by Function/Program 118 16 Permits, Licenses and Recreational Facilities 119 17 Elections – Okaloosa County Voter Registration 120 18 Special Assessment Billings and Collections 121 19 Major Revenue Sources 122 20 Water and Wastewater Service Rates 123 21 Sanitation and Recycling Service Rates 124 22 Operating Indicators by Function/Program 125 23 Capital Asset Statistics by Function/Program 126 24 Insurance Coverage 127 25 IV. COMPLIANCE SECTION Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 130 Independent Accountants' Report on an Examination of Compliance Requirements in Accordance with Chapter 10.550, Rules of the Florida Auditor General 132 Management Letter 133 iii  City of Fort Walton Beach “The Treasure of the Emerald Coast” 107 Miracle Strip Parkway SW * Fort Walton Beach, FL 32548 (850) 833-9504 * Fax (850) 833-9640 www.fwb.org March 27, 2026 Honorable Mayor, City Council Members, & Citizens of the City of Fort Walton Beach City of Fort Walton Beach 107 Miracle Strip Parkway SW Fort Walton Beach, FL 32548 Ladies and Gentlemen: The Comprehensive Annual Financial Report of the City of Fort Walton Beach, Florida for the fiscal year ended September 30, 2025, is hereby submitted herewith pursuant to Chapter 218.39(1)(d) of the Florida Statutes requiring each local government entity to complete an audit report within nine (9) months after the end of the fiscal year. This report consists of management’s representations concerning the finances of the City of Fort Walton Beach, Florida. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Fort Walton Beach has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformance with GAAP (Generally Accepted Accounting Principles). Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The financial statements of the City of Fort Walton Beach have been audited by Warren Averett, LLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ending September 30, 2025, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Fort Walton Beach’s