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

pages 27-28 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 29 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 of Fort Walton Beach’s progress in funding its obligation to provide pension benefits to its employees. The required supplementary information is found on pages 76-78 of this report. 5  The combining statements referred to earlier in connection with non-major governmental funds immediately follow the required supplementary information on Pension funds and can be found beginning on page 79 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City of Fort Walton Beach, assets exceeded liabilities by $65.4 million (net position), as reported in Table 1. The government’s net position increased by $480,684 for the fiscal year ended September 30, 2013. By far, the largest portion of the City’s assets, $44.3 million or 67.7%, 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 of Fort Walton Beach reports 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 assets, 9.0%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of $15.2 million is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors. Table 1 Statement of Net Position As of September 30 (In Thousands of Dollars) Governmental Activities Business-Type Activities Total 2013 2012 2013 2012 2013 2012 Current and Other $23,855 $18,004 $10,916 $ 11,127 $34,771 $ 29,131 Capital Assets 29,478 30,469 37,834 24,900 67,312 55,369 Total Assets 53,333 48,473 48,750 36,027 102,083 84,500 Long-Term Liabilities Outstanding 14,159 5,900 17,193 10,292 31,352 16,192 Other Liabilities 1,819 1,400 3,478 1,955 5,297 3,355 Total Liabilities 15,978 7,300 20,671 12,247 36,649 19,547 Net position Invested in Capital Net of Related Debt 23,532 25,379 20,767 14,930 44,299 40,309 Restricted 4,494 4,306 1,393 298 5,887 4,604 Unrestricted 9,329 11,488 5,919 8,552 15,248 20,040 Total Net Position $37,355 $41,173 $28,079 $23,780 $65,434 $ 64,953 The overall increase in the City’s net position was $480,684 during the fiscal year. The governmental activities experienced a decrease, primarily related to the forgiveness of an advance made to the golf fund, an increase in the other post-employment benefits (OPEB) liability, and an impairment loss on the disposal of a recreation center due to the construction of a new, consolidated complex. The business activities experienced an increase primarily related to the forgiveness of an advance made to the golf fund by the general fund, coupled with an increase in capital contributions and grants due to a joint project with Okaloosa County and reduction in expenses due to budgetary constraints. This increase was partially offset by an impairment loss of $786,713, due to the disposition of a re-use water filtration 6 system that was no longer viable. The details related to this increase are analyzed further in the Financial Impacts section of this discussion. Reported in Table 2 are the key elements of the increase in net position for the current year. Table 2 Governmental Activities Business-Type Activities Total Activities 2013 2012 2013 2012 2013 2012 Revenues Program Revenue: Charges for Services $ 1,985,972 $ 1,820,410 $ 14,472,546 $ 13,642,515 $ 16,458,518 $ 15,462,925 Operating Grants & 786,652 589,253 1,071 - 787,723 589,253 Contributions Capital Grants & Contributions 80,936 156,794 1,871,295 331,609 1,952,231 488,403 General Revenue: Property Taxes 4,175,136 4,295,068 - - 4,175,136 4,295,068 Other Taxes 6,002,679 5,937,581 - - 6,002,679 5,937,581 Tax Increments for 1,311,101 1,386,521 - - 1,311,101 1,386,521 Redevelopment Other Revenue 2,789,436 3,071,232 38,273 153,283 2,827,709 3,170,515 Total Revenues 17,131,912 17,202,859 16,383,185 14,127,407 33,515,097 31,330,266 Expenses Primary Government General Government 2,262,406 4,314,050 - - 2,262,406 4,314,050 Public Safety 9,729,228 9,805,368 - - 9,729,228 9,805,368 Physical Environment 379,681 383,970 - - 379,681 383,970 Transportation 1,631,665 1,592,150 - - 1,631,665 1,592,150 Economic Development 1,090,025 707,603 - - 1,090,025 707,603 Culture & Recreation 2,715,977 2,880,815 - - 2,715,977 2,880,815 Debt Service Interest 324,405 254,516 - - 324,405 254,516 Business-Type Activities Utilities - - 7,644,240 7,017,160 7,644,240 7,017,160 Sanitation - - 3,163,638 2,741,266 3,163,638 2,741,266 Golf - - 2,023,186 2,012,165 2,023,186 2,012,165 Other - - 611,962 497,211 611,962 497,211 Total Expenses 18,533,387 19,938,472 13,443,026 12,267,802 31,976,413 32,206,274 Increase/(Decrease) in Net Position (1,401,475) (2,735,613) 2,940,159 1,859,605 1,538,684 (876,008) before Transfers Transfers (2,145,441) 1,656,032 2,145,441 (1,656,032) - - Special Item – Impairment Loss (271,287) - (786,713) (588,652) (1,058,000) (588,652) Increase/(Decrease) in Net (3,818,203) (1,079,581) 4,298,887 (385,079) 480,684 (1,464,660) Position Nets Position – 10/1/2012 41,173,477 42,253,058 23,779,613 24,164,692 64,953,090 66,417,750 Net Position – 9/30/2013 $ 37,355,274 $ 41,173,477 $ 28,078,500 $ 23,779,613 $ 65,433,774 $ 64,953,090 Current Year Impacts – Governmental Activities Governmental activities decreased the City’s net position by $3.8 million for the fiscal year ended September 30, 2013. Key elements of this change are as follows:  Operating grants increased $197,399, or 33.5% due to an additional funding received through the Assistance to Firefighters and the Local Agency Program grants.  Capital grants for governmental activities decreased $75,858, or 37.5% as a result of the prior year’s receipt of an infrastructure grant, the loss of which was offset by an increase in the Florida Department of Transportation local agency grant.  Other revenue decreased $281,763, or 9.2%, attributable primarily to lower investment earnings and decreased franchise fees due to the final piece of the correction in the method of allocation by one of the primary revenue sources. 7  Other post-employment benefits (OPEB) liability and an impairment loss related to the demolition of an outdated recreation complex resulted in a decrease in net position of $371,683.  Overall, expenses for governmental activities decreased from prior year by $1.4 million, or 7.0%. This decrease was offset by a related revenue decrease due to the reclassification of the expense reimbursements related to the cost allocation plan from transfers to expense reductions.  Expenses for economic development increased by $382,422, or 54.0%, attributable to economic incentive grants provided through the Community Redevelopment Agency.  The general fund forgave an advance made to the golf fund, which resulted in a decrease of $2.6 million. Chart 1 Expense and Program Revenue – Governmental Activities $10,000,000 $8,000,000 $6,000,000 Expenses $4,000,000 Revenues $2,000,000 $‐ Chart 2 Revenues by Source – Governmental Activities Other Revenue, Charges for Services, Operating Grants & Franchise Fees, $206,664 , 1.2% $1,985,972 , 11.6% Contributions, $1,764,733 , 10.3%