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

project, which includes unbilled retainage of $91,554. The project is expected to be completed in April 2026. Heritage Park and Cultural Center Museum Addition In August 2023, the City engaged a construction contractor to perform the Heritage Park and Cultural Center museum addition. The addition includes a new entrance for the museum, a larger gift shop, administrative offices, storage, and an area for specialty programs. As of September 30, 2025, the total contract price was $1,896,422, which includes change orders. The project costs are being funded from multiple sources including tourist development tax proceeds, discretionary sales surtax proceeds, and tax increment revenues of the CRA. The City reported total contract costs of $1,872,711, as of September 30, 2025, which includes unbilled retainage of $153,638. The project was completed in November 2025. 46  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2025 7. DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES As of September 30, 2025, 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 of resources City pension contributions made subsequent to the measurement date $ - $ 3,948,635 Differences between expected and actual experience on pension plan actuarial assumptions - 1,448,861 Changes in assumptions related to pension plan - 193,549 City OPEB contributions made subsequent to the measurement date 173,546 Changes in assumptions related to OPEB plan - 441,446 Total deferred outflows of resources $ - $ 6,206,037 Deferred inflows of resources Differences between expected and actual experience on pension plan actuarial assumptions $ - $ 724,921 Net difference between projected and actual earnings on pension plan investments - 4,369,403 Differences between expected and actual experience on OPEB plan actuarial assumptions - 1,041,904 Changes in assumptions related to OPEB plan 873,450 Leases 3,007,854 3,007,854 Unavailable revenue - special assessments 35,714 - Unavailable revenue - long-term receivables from sale of buildings 313,515 - Total deferred inflows of resources $ 3,357,083 $ 10,017,532 Business-type activities: Utilities Sanitation Stormwater Business-Type Fund Fund Fund Activities Deferred outflows of resources City pension contributions made subsequent to the measurement date $ 49,467 $ 37,806 $ 5,428 $ 92,701 Deferred loss on refunding 43,501 - - 43,501 City OPEB contributions made subsequent to the measurement date 24,119 16,064 6,338 46,521 Changes in assumptions related to OPEB plan 61,364 40,870 16,111 118,345 Total deferred outflows of resources $ 178,451 $ 94,740 $ 27,877 $ 301,068 Deferred inflows of resources Net difference between projected and actual earnings on pension plan investments $ 523,238 $ 399,895 $ 57,415 $ 980,548 Changes in assumptions related to OPEB plan 121,382 80,849 31,912 234,143 Differences between expected and actual experience on OPEB plan actuarial assumptions 144,811 96,452 38,044 279,307 Total deferred inflows of resources $ 789,431 $ 577,196 $ 127,371 $ 1,493,998 47  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2025 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’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. 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, 2023: Inactive Plan Members or Beneficiaries Current Receiving Benefits 173 Inactive Plan Members Entitled to But Not Yet Receiving Benefits 39 Active Plan Members 35 247 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 on 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. 48  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2025 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, 2025, 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, 2025, the City was required to contribute $228,642. Net Pension Liability – GERF The measurement date is September 30, 2024. The measurement period for the pension expense was October 1, 2023 to September 30, 2024. The reporting period is October 1, 2024 through September 30, 2025. The City’s net pension liability was measured as of September 30, 2024. 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, 2023 updated to September 30, 2024 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 assumptions used by the Florida Retirement System (FRS). The above rates are those outlined in Milliman’s July 1, 2021, FRS valuation report for non-special risk employees, with appropriate adjustments made based on plan demographics. The long-term expected rate of return on pension plan