Fort Walton Beach — Comprehensive Financial Report September 30, 2015 — reading text

contributions 1,564,608 905,886 1,100,146 3,570,640 Investment income (loss) 277,427 (457,975) 94,341 (86,207) Less investment expense (291,133) (79,495) (74,101) (444,729) Net investment income (loss) (13,706) (537,470) 20,240 (530,936) Miscellaneous revenue 3,235 2,278 4,663 10,176 TOTAL ADDITIONS 1,554,137 370,694 1,125,049 3,049,880 DEDUCTIONS Benefits and refunds paid Retirement payments 2,610,841 1,550,125 1,116,465 5,277,431 Disability payments 46,851 102,023 5,894 154,768 Other 27,788 24,857 23,497 76,142 Total benefits and refunds paid 2,685,480 1,677,005 1,145,856 5,508,341 Administrative expenses Legal 2,325 4,123 6,005 12,453 Contractual 58,918 38,461 43,142 140,521 Other 9,349 3,742 17,879 30,970 Total administrative expenses 70,592 46,326 67,026 183,944 TOTAL DEDUCTIONS 2,756,072 1,723,331 1,212,882 5,692,285 NET INCREASE (DECREASE) (1,201,935) (1,352,637) (87,833) (2,642,405) BEGINNING OF YEAR 39,242,245 20,463,456 13,662,319 73,368,020 END OF YEAR $ 38,040,310 $ 19,110,819 $ 13,574,486 $ 70,725,615 64  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 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 in the name of each participant. 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 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 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 $130,684 and $130,684, respectively, for the year ending September 30, 2015. The City’s contributions vest 20% each year beginning after one year of employment. Participants are fully vested after 5 years of service. 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. Assets of the plan have a fair value of $2,502,883 at September 30, 2015. Contributions made by plan members during the year ended September 30, 2015, were $86,808. 65  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 10. OTHER POST EMPLOYMENT BENEFITS (OPEB) The latest actuarial valuation was performed as of September 30, 2014. GASB No. 45 allows for performing actuarial valuations biennially with results applicable to two reporting years. Unless otherwise noted, the following disclosures are represented as of September 30, 2015: 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. Funding Policy The City is financing the post employee benefits on a "pay-as-you-go" basis. Annual required contributions were $357,654 for the current fiscal year, towards which the City made a contribution of $167,728. Retiree contributions totaled $380,020 for the fiscal year ended September 30, 2015. At September 30, 2015, the City recorded a net OPEB obligation of $995,350 for governmental activities and $285,581 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. Membership At September 30, 2015, membership consisted of: Retirees and beneficiaries currently receiving benefits 94 Terminated employees entitled to benefits but not receiving them 0 Active employees 229 Total 323 Participating employers 1 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. 66  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 10. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED Annual OPEB Cost and Net OPEB Obligation – Continued The following table shows the components of the City's annual OPEB cost for the fiscal years ended September 30, 2015 and 2014, the amount actually contributed to the plan, and changes in the City's net OPEB obligation to the retiree health plan: Fiscal year ended 9/30/2015 9/30/2014 Annual required contributions $ 357,654 $ 501,876 Interest on net OPEB obligation 43,788 34,680 Adjustment to annual required contribution (47,501) (33,347) Annual OPEB cost (expense) total 353,941 503,209 Employer contributions (167,728) (275,495) Increase in net OPEB obligation 186,213 227,714 Net OPEB obligation – beginning of year 1,094,718 867,004 Net OPEB obligation – end of year $ 1,280,931 $ 1,094,718 For the governmental activities, the net other postemployment benefit obligation is generally liquidated by the general fund. The amounts broken out by plan for the fiscal year ended September 30, 2015, are as follows: General Police Fire Total Annual required contribution $ 237,679 $ 73,466 $ 46,509 $ 357,654 Interest on net OPEB obligation 30,049 9,268 4,471 43,788 Adjustment to annual required contribution (32,596) (10,054) (4,851) (47,501) Annual OPEB cost 235,132 72,680 46,129 353,941 Estimated net contributions made (115,101) (35,500) (17,127) (167,728) Anticipated increase (decrease) in net OPEB obligation 120,031 37,180 29,002 186,213 Net OPEB obligation – beginning of year 751,234 231,699 111,785 1,094,718 Final net OPEB obligation – end of year $ 871,265 $ 268,879 $ 140,787 $ 1,280,931 67  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 10. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED Annual OPEB Cost and Net OPEB Obligation – Continued The City’s funded status as of valuation dates of October 1, 2014 and 2013, are as follows: 10/1/2014 10/1/2013 Actuarial accrued liability (AAL) $ 5,868,248 $ 4,437,530 Actuarial value of assets (AVA) - - Unfunded actuarial accrued liability (UAAL) $ 5,868,248 $ 4,437,530 Funded ratio 0.0% 0.0% Covered payroll