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

(232,826) Benefit payments (229,736) (229,736) - Administrative expense - (3,090) 3,090 Net changes (132,627) - (132,627) Reporting period ending September 30, 2025 $ 4,786,927 $ - $ 4,786,927 Sensitivity of the Total OPEB Liability to Changes in the Discount Rate Current 1% Decrease Discount Rate 1% Increase 3.06% 4.06% 5.06% Total OPEB liability $ 5,543,570 $ 4,786,927 $ 4,178,433 64  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2025 Sensitivity of the Total OPEB Liability to Changes in the Healthcare Trend Rates Healthcare Cost 1% Decrease Trend Rates 1% Increase 3.00%-5.75% 4.00%-6.75% 5.00%-7.75% Total OPEB liability $ 4,230,615 $ 4,786,927 $ 5,485,663 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, 2025, the City recognized OPEB expense of $147,500. On September 30, 2025, 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 $ - $ 1,321,211 Changes of assumptions 559,791 1,107,593 Employer contributions subsequent to the measurement date 220,067 - Total $ 779,858 $ 2,428,804 Deferred outflows of resources related to OPEB of $220,067 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, 2026. 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: 2026 $ (343,990) 2027 (502,308) 2028 (446,570) 2029 (446,570) 2030 (69,471) Thereafter (60,104) $ (1,869,013) 65  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2025 12. UNEARNED REVENUES The composition of unearned revenues as of September 30, 2025, was as follows: General Utilities Fund Fund Totals Unredeemed gift cards $ 37,891 $ - $ 37,891 Charges for services paid in advance - 52,974 52,974 $ 37,891 $ 52,974 $ 90,865 13. LONG-TERM DEBT Changes in Long-Term Debt Liabilities The table that follows summarizes changes in long-term liabilities of the City for the year ended September 30, 2025. Beginning Reductions / Ending Due Within Balance Additions Adjustments Balance One Year Governmental activities Direct placements: Capital Improvement Revenue Note, Series 2013 $ 1,966,584 $ - $ (259,906) $ 1,706,678 $ 267,883 Capital Improvement Revenue Note, Series 2013A 4,356,831 - (440,326) 3,916,505 452,171 Capital Improvement Revenue Bonds, Series 2018 10,520,145 - (547,078) 9,973,067 568,032 Direct borrowings: Golf Course Irrigation System Revenue Note, 2021 614,211 - (304,693) 309,518 309,518 Financing contract - fitness equipment 8,424 - (8,424) - - Financing contract - police equipment 214,361 - (71,454) 142,907 71,454 Financing contract - driving range equipment - 242,000 (4,033) 237,967 48,400 Lease obligations 421,986 320,094 (148,007) 594,073 156,282 Subscription liabilities 1,298,973 1,183,284 (677,271) 1,804,986 808,970 (1) Compensated absences 2,294,535 - (16,818) 2,277,717 569,429 Total governmental activities $ 21,696,050 $ 1,745,378 $ (2,478,010) $ 20,963,418 $ 3,252,139 66  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2025 Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-type activities Direct placements: Utility System Revenue Refunding Note, Series 2015 $ 5,185,000 $ - $ (512,000) $ 4,673,000 $ 527,000 Direct borrowings: State Revolving Fund Loan, 2015 8,941,531 - (777,151) 8,164,380 791,988 Lease obligations 102,468 - (66,651) 35,817 35,010 Subscription liabilities - 244,428 (64,590) 179,838 38,211 (1) Compensated absences 471,890 20,740 - 492,630 123,158 Total business-type activities $ 14,700,889 $ 265,168 $ (1,420,392) $ 13,545,665 $ 1,515,367 (1) Additions and reductions are reported on a net basis for compensated absences. Beginning balances have been restated to reflect the change in accounting principle described in Note 20. Description of Long-Term Debt Outstanding Governmental Activities – Direct Placements $4,470,610 City of Fort Walton Beach, Florida, Capital Improvement Refunding Revenue Note, Series 2013, 2.30% interest due semiannually and principal due annually ranging from $187,659 to $299,010 through 2031. Available non-ad valorem revenues are pledged for payment of the note. Proceeds were used for refunding Series 2001 revenue bonds for construction of certain capital improvements. $8,500,000 City of Fort Walton Beach, Florida, Capital Improvement Revenue Note, Series 2013A, 2.69% interest due semiannually and principal due annually ranging from $326,969 to $464,334 through 2027 with a balloon payment of $3,000,000 due in 2028. Budgeted and appropriated half-cent sales tax is pledged for payment of the note. Proceeds were used to finance the construction of the City's new recreational complex along with the purchase of a bucket truck and a grounds sweeper for City's municipal golf course. $12,520,000 City of Fort Walton Beach, Florida, Capital Improvement Revenue Bonds, Series 2018, bearing interest at 3.83%, due in semiannual payments of principal and interest ranging from $11,583 to $1,019,479 through 2038. Available non-ad valorem revenues are pledged for payment of the bond. Proceeds were used to finance the construction of a new field office complex on Hollywood Blvd. In the event of default (non-payment), the lender may declare all outstanding payments of principal and interest on the debt to be immediately due and payable for all the direct placement issuances discussed above. Furthermore, these direct placement issuances do not contain any subjective acceleration clauses. Governmental Activities – Direct Borrowings $1,500,000 golf course revenue note payable, 2021, due in monthly installments of $26,013 through October 2026, which includes principal and interest at 1.55%. The note is payable from pledged revenues of the golf course with any shortfalls funded by legally available non-ad valorem revenues. Proceeds were used for golf course repairs and renovations. In the event of default (non-payment), the lender may declare all outstanding payments of principal and interest on the debt to be immediately due and payable. This note does not contain any subjective acceleration clauses. 67  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2025 $75,135 fitness equipment contract, 2020, due in monthly installments of $1,430 through March 2025, which included principal and interest at 6.34%. The financing contract was fully repaid as of September 30, 2025. $304,825 police equipment financing contract, 2023, due in annual installments of