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

recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flow in future fiscal periods. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business- type activities). The governmental activities of the City include general government (city clerk, city council, city manager, human resources, finance, purchasing, fleet maintenance, service maintenance, and non- departmental expenses), public safety (police, fire, building, and code enforcement services), physical environment (cemetery), transportation (engineering, streets, public works, and right-of-way), economic development (Community Development Block Grant Program, and community redevelopment agency), and culture and recreation (parks, golf, library, and museum). The business-type activities of the City include utilities (water, sewer, and storm water), and sanitation. The government-wide financial statements include not only the City itself (known as the primary government), but a component unit, the Community Redevelopment Agency (CRA), which is a legally separate entity for which the City is financially accountable. The CRA is considered a blended component unit of the City and is presented as a special revenue fund as part of the primary government. The government-wide financial statements are found on pages 15-16 of this report. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been separated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. FUNDS Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements are reported using an accounting method called modified accrual accounting, the focus of which is on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial requirements. The basic governmental fund financial statements are on pages 17-20 of this report. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 5  The City maintains seven individual governmental funds (General Fund, Community Redevelopment Agency Fund, Florida Building Code Fund, Law Enforcement Trust Fund, Law Enforcement Training Fund, Community Development Block Grant Fund and Beal Memorial Cemetery Perpetual Care Fund). Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the General Fund, the Community Redevelopment Agency Fund and the Beal Memorial Cemetery Perpetual Care Fund. Data from the other four governmental funds is combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The Community Redevelopment Agency Fund and the Beal Memorial Cemetery Perpetual Care Fund are considered major funds for reporting purposes. The City of Fort Walton Beach adopts an annual appropriated budget for its General Fund, as well as each of the other governmental funds. Budgetary comparison schedules are provided for the General Fund and the major special revenue funds on pages 78-81 of this report. Proprietary Funds All proprietary funds of the City are maintained as enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the statement of net position and the statement of activities. The City uses enterprise funds to account for its utility operations (water operations and distribution, sewer collections and treatment, and stormwater management), and sanitation operations (garbage). Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information on utilities operations, sanitation operations, and stormwater operations, all of which are presented as major funds of the City. The basic proprietary fund financial statements are found on pages 21-25 of this report. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The City’s fiduciary funds include the pension trust funds (General Employees, Police Officers, and Firefighters). Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements are found on pages 26-27 of this report. NOTES TO THE FINANCIAL STATEMENTS The notes to the financial statements provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements begin on page 28 of this report. OTHER INFORMATION In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension and other post-employment benefits (OPEB) to its employees. The required supplementary information is found on pages 82-95 of this report. The combining and individual non-major funds statements and schedules referred to earlier in connection with non-major governmental funds immediately follows the required supplementary information on pension and OPEB plans and can be found beginning on page 96 of this report. 6 GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. Assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources by $99.0 million, as reported in Table 1. The City’s net position increased by $5.3 million for the fiscal year ended September 30, 2025. The governmental activities reported an increase of $3.4 million and the business-type activities reported an increase of $1.9 million. Table 1 Statement of Net Position As of September 30 (in Thousands of Dollars) Governmental Activities Business-Type Activities Total Primary Government 2025 2024 2025 2024 2025 2024 Assets Current & Other $ 47,242 $ 50,310 $ 16,757 $ 16,751 $ 63,999 $ 67,061 Capital Assets 60,047 54,574 36,502 34,975 96,549 89,549 Total Assets 107,289 104,884 53,259 51,726 160,548 156,610 Deferred Outflows of Resources 6,206 11,493 301 1,994 6,507 13,487 Liabilities Long-Term Liabilities * 36,245 44,413 13,042 15,751 49,287 60,164 Other Liabilities * 4,313 5,857 2,984 3,261 7,297 9,118 Total Liabilities 40,558 50,270 16,026 19,012 56,584 69,282 Deferred Inflows of Resources 10,018 6,557 1,494 545 11,512 7,102 Net Position Net Investment in Capital Assets 40,721 35,708 23,384 20,555 64,105 56,263 Restricted 14,805 14,946 813 590 15,618 15,536 Unrestricted * 7,393 8,896 11,843 13,018 19,236 21,914 Total Net Position $ 62,919 $ 59,550 $ 36,040 $ 34,163 $ 98,959 $ 93,713 * As restated due to implementation of GASB Statement (GASBS) No. 101, Compensated Absences. By far, the largest portion of the City’s net position, $64.1 million or 64.8%, reflects its investment in capital assets (e.g., land, infrastructure, buildings, machinery, and equipment) less any related debt still outstanding that was used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City reports the investment in its capital assets net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position of $15.6 million, or 15.8%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of $19.2 million is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors. Reported in Table 2 on the next page are the key elements of the increase in net position for the current and prior fiscal year. 7  Table 2 Statement of Activities For Year Ended September 30 Governmental Activities Business-Type Activities Total Primary Government 2025