Fort Walton Beach — Comprehensive Annual Financial Report September 30, 2013 — reading text

Individual Entry Age Entry Age Normal Entry Age Normal Amortization method Normal Cost, closed Level percentage of Level percentage of pay, closed pay, closed Remaining amortization period 15 years 30 years 30 Years Asset valuation method 5-year smoothed 4-year smoothed 4-year smoothed market market market Actuarial assumptions Invested rate of return 7.9 % 8.0 % 8.0 % Projected salary increases** 0.0-6.5% 7.5 % 6.5 % ** Includes inflation at 3.0 % 3.0 % 3.0 % Post retirement COLA Up to 3% 3.0 % 3.0 % (3) *Beginning 9/30/2012, this includes both City and State contributions (1) GERF does not include State (2) Until 75% maximum accrued is a attained, and .5% thereafter (3) Starting at age 58 54  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 7 - DEFINED BENEFIT PENSION PLANS (CONTINUED) C. Contributions, Funding Policy and Annual Pension Cost (Continued) GERF PORF FRF Three-Year Trend Information Actuarially Determined Percentage Net Pension Year Ending Contribution Contribution Obligation (Asset) GERF October 1, 2011 $ 1,091,338 106 % $ (70,081) October 1, 2012 1,258,659 104 % (112,809) October 1, 2013 1,268,253 104 % (152,674) PORF October 1, 2011 521,425 100 % (36,146) October 1, 2012 875,055 * 111 % (129,254) October 1, 2013 881,697 * 105 % (174,368) FRF October 1, 2011 514,872 100 % (175,351) October 1, 2012 700,045 * 112 % (263,340) October 1, 2013 817,997 * 101 % (279,588) *Beginning 9/30/2012, this includes both City and State contributions The components of net pension cost, the increase in Net Pension Asset, and the Net Pension Asset for the year ended September 30, 2013, most recent actuarial date, for the General Employees', Police Officers' and Firefighters' Retirement Funds are as follows: General Police Employees' Officers' Firefighters' Actuarially determined contribution $ 1,268,253 $ 881,697 * $ 817,997 * Interest on net pension asset (8,912) (10,340) (21,067) Adjustment to actuarially determined annual pension cost 19,584 9,118 16,067 Annual pension cost 1,278,925 880,475 812,997 Contribution made 1,318,790 925,589 * 829,245 * Change in net pension asset 39,865 45,114 16,248 Net pension asset - beginning of year 112,809 129,254 263,340 Net pension asset - end of year $ 152,674 $ 174,368 $ 279,588 *Beginning 9/30/2012, this includes both City and State contributions 55  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 7 - DEFINED BENEFIT PENSION PLANS (CONTINUED) C. Contributions, Funding Policy and Annual Pension Cost (Continued) The funded status of each plan as of October 1, 2013, the most recent actuarial valuation date, is as follows: Actuarial Accrued Liability Annual Actuarial Value (AAL) Entry Age Unfunded AAL Funded Covered UAAL as % of Assets (a) (b) (UAAL) (b-a) Ratio (a/b) Payroll (c) of Payroll GERF $ 37,122,638 $ 42,285,695 $ 5,163,057 87.79 % $ 4,259,070 121.22 % PORF 19,091,795 25,634,521 6,542,726 74.48 % 2,038,886 320.90 % FRF 11,979,697 18,477,592 6,497,895 64.83 % 2,153,568 301.73 % D. Required Supplementary Information The schedule of funding progress immediately following the notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits over time. The schedule of employer contributions can also be found in the supplemental information of this comprehensive annual report. E. Fund Financial Statements The following are the financial statements for the individual pension trust funds (GERF, PORF and FRF) for the year ended September 30, 2013: COMBINING STATEMENT OF PLAN NET POSITION Employee Retirement Funds Total General Police Employee Employees' Officers' Firefighters' Retirement Retirement Retirement Retirement Funds ASSETS Cash and cash equivalents $ 1,641,053 $ 832,663 $ 519,216 $ 2,992,932 Due from State of Florida - - 18,571 18,571 Investments, at market U.S. Government and Agency obligations 5,420,607 2,889,854 1,324,794 9,635,255 Corporate obligations 4,035,043 2,501,784 1,978,767 8,515,594 Corporate equity 17,692,322 8,972,261 6,928,381 33,592,964 Mutual funds 8,333,613 3,959,594 1,731,933 14,025,140 Total investments, at market 35,481,585 18,323,493 11,963,875 65,768,953 TOTAL ASSETS $ 37,122,638 $ 19,156,156 $ 12,501,662 $ 68,780,456 NET POSITION HELD IN TRUST FOR PENSION BENEFITS AND OTHER PURPOSES $ 37,122,638 $ 19,156,156 $ 12,501,662 $ 68,780,456 56  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 7 - DEFINED BENEFIT PENSION PLANS (CONTINUED) E. Fund Financial Statements (Continued) COMBINING STATEMENT OF CHANGES IN PLAN NET POSITION Employee Retirement Funds Total General Police Employee Employees' Officers' Firefighters' Retirement Retirement Retirement Retirement Funds ADDITIONS Contributions Employer $ 1,318,790 $ 754,704 $ 703,618 $ 2,777,112 Plan members 227,204 95,840 133,633 456,677 State of Florida - 170,885 204,226 375,111 Total contributions 1,545,994 1,021,429 1,041,477 3,608,900 Investment income (loss) 4,890,131 1,670,230 1,169,128 7,729,489 Less investment expense (154,599) (61,974) (52,532) (269,105) Net investment income (loss) 4,735,532 1,608,256 1,116,596 7,460,384 Miscellaneous revenue 69,579 39,817 202 109,598 TOTAL ADDITIONS 6,351,105 2,669,502 2,158,275 11,178,882 DEDUCTIONS Benefits and refunds paid Retirement payments 2,364,007 1,487,713 1,029,423 4,881,143 Disability payments 48,340 102,023 5,894 156,257 Other 60,277 12,877 7,016 80,170 Total benefits and refunds paid 2,472,624 1,602,613 1,042,333 5,117,570 Administrative expenses Legal