Fort Walton Beach — Comprehensive Financial Report September 30, 2017 — reading text

General Fund $500,000 to purchase a Fire Engine. The loan from the Sanitation Fund will be paid back over a 10-year period at an interest rate of 2.00%. The balance of the advance as of September 30, 2017 is $360,253. 79  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 17. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS – CONTINUED Transfers In Other Governmental Transfers Out General Fund Funds Total General Fund $ - $ 1,012,463 $ 1,012,463 Other Governmental Funds 20,217 - 20,217 Utilities Fund 618,208 - 618,208 Sanitation Fund 143,531 - 143,531 $ 781,956 $ 1,012,463 $ 1,794,419 The transfers out of the General Fund are $1,012,463. These transfers consist of a $990,703 transfer to the Debt Service Fund (Other Governmental Funds) for principal and interest payments on debt, and a $21,760 transfer to the Cemetery Perpetual Care Fund (Other Governmental Funds) for maintenance. Transfers in to the General Fund of $781,956 consist of a $20,217 transfer from the Cemetery Perpetual Care Fund (Other Governmental Funds) for the purchase of a niche wall and mower, franchise fees from the Utilities Fund of $618,208, and compensation from the Sanitation Fund for additional roadway wear & tear caused by the heavy trucks in the amount of $143,531. 18. ENCUMBRANCES The amount of encumbrances outstanding as of September 30, 2017, were as follows: Governmental Funds – General Fund $ 720,525 Other Governmental Funds 211,730 $ 932,255 Encumbrances at year end do not constitute expenditures or liabilities; therefore, they are not reflected in the financial statements. 80  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 19. GOVERNMENTAL FUND BALANCES At September 30, 2017, the City's governmental fund balances were classified as follows: Community Other Total Redevelopment Governmental Governmental General Fund Agency Funds Funds Nonspendable Inventory $ 245,181 $ - $ - $ 245,181 Restricted for Improvement districts - 1,552,484 - 1,552,484 Library 87,465 - - 87,465 Public safety - - 426,892 426,892 Debt service - - 21,156 21,156 Other purposes 5,991 - - 5,991 Total restricted 93,456 1,552,484 448,048 2,093,988 Committed Cemetery maintenance - - 2,739,865 2,739,865 Natural disaster recovery 6,687,557 - - 6,687,557 Total committed 6,687,557 - 2,739,865 9,427,422 Assigned to Capital projects 753,061 - - 753,061 Citizen police academy 2,232 - - 2,232 Long-term debt 850,000 - - 850,000 Other purposes 286,262 - - 286,262 Total assigned 1,891,555 - - 1,891,555 Unassigned 3,561,586 - (5,861) 3,555,725 $ 12,479,335 $ 1,552,484 $ 3,182,052 $ 17,213,871 81  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 20. COMMITMENTS AND CONTINGENCIES 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 collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time, although the City expects such amount, if any, to be immaterial. Wastewater Service Interlocal Agreement with Okaloosa County On August 11, 2009, the City adopted the Wastewater Service Interlocal Agreement with Okaloosa County (Agreement). The Agreement outlines a long–term association with Okaloosa County Water & Sewer 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. On a monthly basis, the County will bill the City at a rate equal to $2.77 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 $4,347 per month. Each year in March, the Readiness to Serve Fee will increase by 3%. The minimum commitment by the City under the Agreement is as follows: Fiscal Year Ending September 30 2018 $ 56,313 2019 58,002 2020 59,742 2021 61,534 2022 63,380 2023 through 2027 346,584 2028 through 2032 401,783 2033 through 2037 465,776 2038 through 2039 206,459 Total $ 1,719,573 Fees paid for wastewater treatment to Okaloosa County, Florida during the year ended September 30, 2017, were $2,513,276. 82  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 21. CHANGE IN ACCOUNTING PRINCIPLE – RESTATEMENT OF NET POSITION The GASB issued Statement No. 75, Accounting and Reporting for Postemployment Benefits Other Than Pensions, effective for fiscal years beginning after June 15, 2017. The scope of this statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local government employers. This statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. The City has elected to implement GASB 75 during the year ended September 30, 2017. The impact of the City’s adoption of GASB 75 during the current fiscal year requires it to restate the beginning net position for both the governmental activities and business-type activities in the City’s government- wide financial statements. In addition, the City will also restate its beginning net position in the proprietary funds statement of revenue, expenses, and changes in net position. The table below summarizes the components of the restatement of net position as of October 1, 2016. Business-Type Activities Governmental Primary Activities Utilities Sanitation Stormwater Total Government Net position, as previously reported $ 32,110,729 $18,367,071 $ 3,596,132 $ 2,611,485 $ 24,574,688 $ 56,685,417 Effect of restatement (2,916,667) (540,792) (277,706) (58,466) (876,964) (3,793,631) Net position, restated $ 29,194,062 $17,826,279 $ 3,318,426 $ 2,553,019 $ 23,697,724 $ 52,891,786 83 THIS PAGE IS LEFT INTENTIONALLY BLANK  CITY OF FORT WALTON BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS (UNAUDITED) GENERAL EMPLOYEES RETIREMENT FUND Measurement Date 2016 2015 2014 Total Pension Liability Service cost $ 557,163 $ 569,712 $ 622,382 Interest 3,317,396 3,314,990 3,222,809 Differences between expected and actual experience 400,221 (1,074,244) - 1 Changes of assumptions 4,485,495 - - Benefit payments, including refunds of employee contributions (2,858,889) (2,676,038) (2,575,304) Net change in total pension liability 5,901,386 134,420 1,269,887 Total pension liability – beginning 42,864,631 42,730,211 41,460,324 Total pension liability – ending (a) $ 48,766,017 $ 42,864,631 $ 42,730,211 Plan Fiduciary Net Position Contributions – employer $ 1,280,082 $ 1,355,041 $ 1,296,450 Contributions – member 202,268 209,567 212,790