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

778 5,043 5,539 11,360 Contractual services 43,483 43,345 29,016 115,844 Other 9,678 (225) 16,652 26,105 Total administrative expenses 53,939 48,163 51,207 153,309 TOTAL DEDUCTIONS 2,526,563 1,650,776 1,093,540 5,270,879 NET INCREASE (DECREASE) 3,824,542 1,018,726 1,064,735 5,908,003 BEGINNING OF YEAR 33,298,096 18,137,430 11,436,927 62,872,453 END OF YEAR $ 37,122,638 $ 19,156,156 $ 12,501,662 $ 68,780,456 57  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 8 - DEFINED CONTRIBUTION PENSION PLAN City of Fort Walton Beach Defined Contribution Plan In December 2009, City Council closed the General Employees’ Defined Benefit Plan. All general, full-time employees hired on or after January 1, 2010, are members of the Defined Contribution Retirement Plan (Plan). The Plan is a money purchase defined contribution retirement plan administered by ICMA Retirement Corporation, with the City serving as trustee. All funds are held in the ICMA Retirement Corporation Governmental Money Purchase Plan & Trust. The City finance director serves as the coordinator for the Plan. The Plan requires a 5% payroll contribution by the employee with a 5% employer (City) match. Employees can increase their contribution; however, only an additional 2½% is eligible for City match. Members of the General Employees’ Defined Benefit Pension Plan, who were not fully or partially vested at the time the Plan was opened, were permitted to transfer their contributions to the Plan as a one-time, irrevocable election. The authority for establishing and amending the Plan's provisions lies with the City Council. The City Council also has the authority for amending contribution requirements. Contributions made to the Plan by the employees and by the City were $80,841 and $80,841, respectively, for the year ending September 30, 2013. NOTE 9 - DEFERRED COMPENSATION PLAN The City offers employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457 (Plan). The Plan is a tax-deferred supplemental retirement program that allows City employees to contribute a portion of their salary, before federal income taxes, to a retirement account. The assets are held in trust for the employees’ benefit. The Plan participants individually select and make changes in funding options, which are made available by the independent plan administrator. Since participants select the investment fund or funds in which their deferred compensation accounts are invested, the City has no liability for investment losses. The City’s fiduciary responsibility is to administer the Plan properly and to assure the investment alternatives made available are reasonable. In accordance with GASB Statement No. 32, the assets and liabilities of the Plan are not reflected in the City’s financial statements since the City has no fiduciary responsibilities, other than administrative, in connection with the Plan. Assets of the plan have a fair value of $2,793,835 at September 30, 2013. Contributions made by plan members during the year ended September 30, 2013, were $84,245. 58  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 10 - OTHER POST EMPLOYMENT BENEFITS (OPEB) The following disclosures are represented as of September 30, 2013, the date of the latest actuarial valuation (except for the plan funded status, which is represented as of October 1, 2012): A. Plan Description Pursuant to Section 112.0801, Florida Statutes, the City is mandated to permit eligible retirees (as defined in the City's pension plans) and their eligible dependents to participate in the health insurance program at a cost to the retiree that is no greater than the cost at which coverage is available for active employees. Retirees pay 100% of the blended (active and retiree combined) equivalent premium rates. The blended rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the plan on average than those of active employees. The City provides this benefit to its employees through a single- employer defined benefit plan. The plan does not issue a separate report. B. Funding Policy The City is financing the post employee benefits on a "pay-as-you-go" basis. For fiscal year 2013, 136 retirees and/or dependents received health care benefits. Annual required contributions were $483,101 for the current fiscal year, towards which the City made a contribution of $275,934. Retiree contributions totaled $325,621 for the fiscal year ended September 30, 2013. At September 30, 2013, the City recorded a net OPEB obligation of $598,055 for governmental activities and $268,949 for business- type activities in its government-wide statement of net position. The OPEB obligation is a function of the annual required contribution, interest, adjustments to the annual required contribution, annual pension costs, and actual employers' contributions made to the plan. C. Membership At September 30, 2013, membership consisted of: Retirees and beneficiaries currently receiving benefits 87 Terminated employees entitled to benefits but not receiving them - Active employees 224 Total 311 Participating employers 1 59  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 10 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. Annual OPEB Cost and Net OPEB Obligation The City's annual other post employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a closed period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the fiscal year ended September 30, 2013, the amount actually contributed to the plan, and changes in the City's net OPEB obligation to the retiree health plan: Annual required contribution $ 483,101 Interest on net OPEB obligation 26,353 Adjustment to annual required contribution (25,339) Annual OPEB cost (expense) total 484,115 Employer contributions (275,934) Increase in net OPEB obligation 208,181 Net OPEB obligation - beginning of year 658,823 Net OPEB obligation - end of year $ 867,004 For the governmental activities, the net other postemployment benefit obligation is generally liquidated by the general fund. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years, were as follows: Three-Year Trend Information Net OPEB Annual OPEB City* Percentage Obligation Cost Contributions Contributed (Asset) October 01, 2011 469,170 262,096 55.86 % 446,202 October 01, 2012 490,753 278,132 56.67 % 658,823 October 01, 2013 484,115 275,935 57.00 % 867,004 *Limited to the difference between age-adjusted and composite premiums paid for retirees during the year. 60  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 10 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED) E. Funded Status and Funding Progress As of October 1, 2012, the most recent actuarial valuation date, the plan funded status was as follows: Actuarial Accrued Annual Actuarial Value of Liability (AAL) Unfunded AAL Funded Ratio Covered UAAL as % Assets (a) Entry Age (b) (UAAL) (b-a) (a/b) Payroll (c) of Payroll $ - $ 5,651,699 $ 5,651,699 - % $ 7,300,258 77.42 % F. 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. The schedule of employer contributions can also be found in the supplemental information of this comprehensive annual report. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the