Audit Report 09.30.20101
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CM' of eli c't'('it r bee
'Gateway to South Florida"
CITY OF OKEECHOBEE, FLORIDA
Financial Statements
Year Ended September 30, 2010
CITY OF OKEECHOBEE, FLORIDA
Table of Contents
As of September 30, 2010
Page
Introductory Section
Title Page 1
Table of Contents 2
City Officials 3
Financial Section
Independent Auditors' Report 5
Management's Discussion and Analysis 7
Basic Financial Statements
Government -wide Financial Statements
• Statement of Net Assets - Governmental Activities 15
• Statement of Activities - Governmental Activities 16
Fund Financial Statements
Governmental Funds
• Balance Sheet 17
• Statement of Revenues, Expenditures, and Changes in Fund Balances 18
• Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 19
Fiduciary Funds (Component Units that are Fiduciary in Nature)
• Statement of Fiduciary Net Assets - Pension Trust Funds 20
• Statement of Changes in Fiduciary Net Assets - Pension Trust Funds 21
Notes to Financial Statements 23
Required Supplementary Information Other Than Management's Discussion and Analysis
• Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual -
General Fund 45
• Required Pension Supplementary Information - Schedule of Funding Progress 46
• Required Other Post Employment Benefits Supplementary Information - Schedule
of Funding Progress 47
• Notes to Required Supplementary Information 48
• Independent Auditors' Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 49
• Independent Auditors' Management Letter 51
• Affidavit of Impact Fee Compliance 53
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CITY OF OKEECHOBEE, FLORIDA
City Officials
As of September 30, 2010
James E. Kirk
Mayor, Chair nan
Roscoe Lowry Markham
Dowling R. Watford, Jr.
Clayton Williams
Mike O'Connor
Council Members
John R. Cook
City Attorney
Brian Whitehall
City Administrator
Lane Gamiotea
City Clerk
India Riedel
Account Supervisor
Herbert Smith
Chief of Fire
Denny Davis
Chief of Police
Donnie Robertson
Director of Public Works
Oscar Bermudez
City Engineer
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Independent Auditors' Report
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited the accompanying financial statements of the governmental activities, the major fund, and the
aggregate remaining fund information of the City of Okeechobee, Florida, as of and for the year ended September
30, 2010, which collectively comprise the City's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the City of Okeechobee, Florida's management. Our responsibility is to
express opinions on these financial statements based on our audit. We did not audit the financial statements of the
fiduciary fund type and the discretely presented component unit. Those financial statements were audited by
other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the
fiduciary fund type and the discretely presented component unit is based on the reports of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the major fund, and the aggregate remaining fund information of
the City of Okeechobee, Florida, as of September 30, 2010, and the respective changes in financial position thereof
for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated April 27, 2011, on our
consideration of the City of Okeechobee, Florida's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on the internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in assessing the results of our audit.
Certified Public Accountants
215 Baytree Drive Melbourne, FL 32940 p: (321) 255.0088 f: (321) 259.8648
4767 New Broad Street Orlando, FL 32814 p: (407) 422.1681 IF. (407) 514.2604
www.hoyman.com
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
The management's discussion and analysis (pages 7 through 12) and required supplementary information (pages 45
through 48) are not a required part of the basic financial statements but are supplementary information required by
accounting principles generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the information and express no
opinion on it.
Hoyman Dobson
Melbourne, Florida
April 27, 2011
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2010
Our discussion and analysis of the City of Okeechobee, Florida's (the City's) financial performance provides an
overview of the City's financial activities for the year ended September 30, 2010. Please read it in conjunction
with the City's basic financial statements, which immediately follow this discussion.
FINANCIAL HIGHLIGHTS
The following are highlights of financial activity for the year ended September 30, 2010:
• The City's total assets exceeded its liabilities at September 30, 2010 by $19,449,102.
• The City's total revenues were $6,019,330 for the year ended September 30, 2010, compared to
total expenses of $5,650,109, which resulted in a $369,221 increase in net assets.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The
basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund
financial statements, and 3) notes to basic financial statements.
A. Government -Wide Financial Statements
The government -wide financial statements, which consist of the following two statements, are designed to
provide readers with a broad overview of the City's finances, in a manner similar to a private sector business.
The statement of net assets presents information on all of the City's assets and liabilities, with the difference
between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the City's net assets changed during the year. All
changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of
the tuning of related cash flows. Thus, revenues and expenses are reported in this statement for some items that
will only result in cash flows in future fiscal periods.
The government -wide financial statements can be found on pages 15 and 16 of this report.
B. Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated
for specific activities or objectives. The City's funds can be divided into two fund types: governmental funds and
fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government -wide financial statements. However, unlike the government -wide
financial statements, governmental fund financial statements focus on near -term inflows and outflows of
spendable resources, as well as balances of spendable resources available at the end of the year. Such information
may be useful in evaluating a government's near -teen financing requirements.
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2010
B. Fund Financial Statements (continued)
Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is
useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government -wide financial statements. By doing so, readers may better understand
the long -term impact of the City's near -term financing decisions. Both the governmental fund balance sheet and
the statement of revenues, expenditures and changes in fund balances provide reconciliations to facilitate this
comparison between governmental funds and governmental activities.
The basic governmental fund financial statements can be found on pages 17 through 19 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government -wide financial statement because the resources
of those funds are not available to support the City's own programs.
The basic fiduciary fund financial statements can be found on pages 20 and 21 of this report.
C. Notes to Basic Financial Statements
The notes provide additional information that is essential for a full understanding of the data provided in the
government -wide and fund financial statements. The notes to basic financial statements can be found on pages
23 through 42 of this report.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of financial position. The following table
reflects the condensed government -wide statement of net assets.
City of Okeechobee
Statement of Net Assets
2010 2009
Current and other assets $ 12,884,693 $ 12,443,647
Capital assets 7,766,657 7,801,521
Total assets 20,651,350 20,245,268
Other liabilities 276,856 325,145
Noncurrent liabilities 925,392 840,142
Total liabilities 1,202,248 1,165,287
Net assets:
Invested in capital assets, net of related debt 7,351,097 7,291,924
Restricted 1,098,759 977,398
Unrestricted 10,999,246 10,810,559
Total net assets $ 19,449,102 $ 19,079,881
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2010
Governmental Activities
Total net assets increased by approximately $369,000 primarily as a result of an approximately $406,000 increase
in total assets, offset by the approximately $37,000 increase in total liabilities. The increase in total assets was
due to an approximately $475,961 increase in cash and cash equivalents, which was due primarily to an increase
in Capital grants and contributions of $145,671 and an overall decrease in expenses totaling $180,940.
The following table shows condensed revenue and expense data:
City of Okeechobee, Florida
Statement of Activities
2010 2009
REVENUES:
Program revenues:
Charges for services $ 715,166 $ 753,433
Operating grants and contributions 780,175 830,135
Capital grants and contributions 203,193 57,522
General revenues:
Property taxes 1,909,022 2,131,154
Public utility taxes 737,979 751,042
Franchise fees 543,080 582,859
Shared revenues 1,050,198 1,11 6,640
Investment income and other 80,517 123,300
Total revenues 6,019,330 6,346,085
EXPENSES:
General government 1,045,421 1,236,129
Public safety 3,124,852 3,073,326
Transportation 630,587 699,496
Physical environment 824,297 792,278
Interest on long -term debt 24,952 29,820
Total expenses 5,650,109 5,831,049
Change in net assets 369,221 515,036
NET ASSETS, beginning 19,079,881 18,564,845
NET ASSETS, ending $ 19,449,102 $ 19,079,881
The City experienced a decrease of approximately 5.1% in total revenues — an approximately $327,000 decrease
to $6 million. Property Tax revenue decreased approximately $222,000 based on a decrease in property values.
Shared revenues decreased $66,440 due to the general reduction of funds collected by the State. The
approximately $43,000 decrease in investment income and other revenue is due primarily to a general decrease in
available interest rates. Total expenses decreased approximately $181,000. The decrease in expenses is due
primarily to lower public safety cost as well as general services.
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2010
FUND FINANCIAL ANALYSIS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related
legal requirements.
Governmental funds. The focus of the City's governmental funds is to provide information on near -term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's
financing requirements. In particular, unreserved fund balance may serve as a useful measure of a
government's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of
$11,947,261, an increase of $503,505 in comparison with the prior year. Approximately 89.7 % of this total amount,
$10,721,960, constitutes unreserved fund balance, which is available for spending at the government's discretion.
The remainder of fund balance is reserved to indicate that it is not available for new spending because it has
already been committed 1) for public facilities of $1,096,151 and 2) for a variety of other restricted purposes of
$129,150.
The general fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund
balance of the general fund was $10,617,563 while total fund balance was $11,840,256. As a measure of the
general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total
fund expenditures. Unreserved fund balance and total fund balance represent approximately 171% and 191% of
total general fund expenditures, respectively.
The capital improvement impact fee fund, the largest fund included in nomnajor funds, recorded a year -end fund
balance of $104,397, due to receipted and unexpended impact fees. Impact fees receipted are to be used for
capital improvements; projects and /or equipment needs identified within the City's Comprehensive Improvement
Plan.
General Fund Budgetary Highlights
The amount appropriated for expenditures in the original 09/10 budget decreased from $7,325,248 to $6,571,464
in the final 09/10 budget, a decrease of $663,784. The decrease in general services expenses and public safety
expenses largely contributed to the overall decrease in expenditures.
CAPITAL ASSETS AND LONG -TERM LIABILITIES
Capital assets. The City's investment in capital assets as of September 30, 2010, amounts $7,766,657 (net of
accumulated depreciation). This investment in capital assets includes land, buildings, improvements, equipment,
and construction in progress. During the year, the City's net capital asset balance decreased $34,864 from
$7,801,521.
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2010
The City's major additions of $823,505 to capital assets during the current fiscal year included the following:
• Entered into a lease for twenty police vehicles
• Repurchase of one lot of land within the commerce park
• Purchase of 2 vehicles, 1- Administration; 1 -Fire Department
• Addition of a fire brush truck
• Radar equipment for police vehicles (3)
• Addition of 15,000 plus linear feet of sidewalk and improvements
• Completion of the vertical lift in city hall
• Commencement of renovations for bathrooms and city hall
These additions were offset by depreciation expense of $470,901, and equipment disposals of $596,069, which
largely relates to the sale of 24 police vehicles.
Land
Buildings
Improvements other than
building
Equipment
Construction in progress
Total
City's Capital Assets
(net of depreciation)
2010
$ 1,378,744
1,132,040
4,063,216
1,1 50,168
42,489
$ 7,766,657
2009
$ 1,308,014
1,144,706
4,145,109
1,164,668
39,024
$ 7,801,521
Additional information on the City's capital assets can be found in Note 4.C. on pages 32 through 33 of this
report.
Long -term Liabilities
Capital leases
Net OPEB obligation
Compensated absences
Total
City's Outstanding Debt
Long -term Liabilities
2010
$ 415,560
148,767
361,065
$ 925,392
2009
$ 509,597
330,545
$ 840,142
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2010
The City's long -term liabilities increased by $85,250 during the current fiscal year. Fewer vehicles purchased
under capital lease equated to a decrease in capital lease liabilities. This decrease was offset by the increased
additional liability for compensated absences. Also, this is the first year of implementation of GASB 54, which
caused the increase in Net OPEB obligation.
Additional information on the City's long -term debt can be found in Notes 4.E. and 4.F. on pages 33 through 34
of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City Council adopted a millage rate 7.2432 for budget year 2011. The adopted 7.2432 millage rate is l 0.51%
less than the roll -back rate and will generate 9.3% or $184,534 less ad valorem revenue than last year.
Revenues for the fiscal year 2011 adopted budget for all funds of the City total approximately $17,836,909, a
decrease from the prior year budget of approximately $163,900. These revenues represent restricted and
unrestricted fund balances including General, Public Facility, Capital Projects, and Special Law Enforcement
funds. The change in revenue is based mostly on the expected decrease in ad valorem tax.
Expenditures for the fiscal year 2011 adopted budget for all funds of the City total approximately $6,900,000, an
increase of approximately .09% from the prior year budget. Collective decrease for all funds over the past 4
years resulted in approximate 11.78% decrease. The major changes occur in the General Fund and Public
Facilities Fund.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Okeechobee's finances for all those
with an interest. Questions concerning any of the information provided in this report or requests for additional
information should be addressed to the City of Okeechobee, 55 S.E. Third Avenue, Okeechobee, Florida 34974.
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BASIC FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
Statement of Net Assets - Governmental Activities
September 30, 2010
ASSETS
Cash and cash equivalents $ 11,833,233
Investments 123,269
Accounts receivable 97,665
Due from other governments 163,742
Inventory 18,186
Overfunded pension costs 648,598
Capital assets:
Nondepreciable
Land 1,378,744
Construction in progress 42,489
Depreciable, net of accumulated depreciation
Buildings 1,132,040
Improvements other than buildings 4,063,216
Equipment 1,150,168
Total assets 20,651,350
LIABILITIES
Accounts payable 82,320
Accrued expenses 150,677
Unearned revenue 43,859
Noncurrent liabilities:
Due within one year 204,353
Due in more than one year 721,039
Total liabilities 1,202,248
NET ASSETS
Invested in capital assets, net of related debt 7,351,097
Restricted for:
Law enforcement 2,608
Public facilities 1,096,151
Unrestricted 10,999,246
Total net assets $ 19,449,102
The accompanying notes are an integral part of this financial statement. 15
CITY OF OKEECHOBEE, FLORIDA
Statement of Activities - Governmental Activities
Year Ended September 30, 2010
Functions /Programs
General government
Public safety
Transportation
Physical environment
Interest on long term debt
Total governmental
activities
Expenses
$ 1,045,421
3,124,852
630,587
824,297
24,952
Charges for
Services
Program Revenues
Operating
Grants and
Contributions
$ 642,575
24,495
48,096
Capital
Grants and
Contributions
$ 127,811 $
4,179
648,185
$ 5,650,109 $ 715,166 $ 780,175
21,346
18,336
163,511
$ 203,193
General revenues:
Property taxes
Public utility taxes
Franchise fees
Shared revenues not restricted to specific programs
Unrestricted investment earnings
Miscellaneous
Total general revenues
Change in net assets
Net assets, beginning
Net assets, ending
The accompanying notes are an integral part of this financial statement.
Net (Expense)
Revenue and
Changes in
Net Assets
$ (275,035)
(3,074,832)
84,030
(660,786)
(24,952)
(3,951,575)
1,909,022
737,979
543,080
1,050,198
59,079
21,438
4,320,796
369,221
19,079,881
$ 19,449,102
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CITY OF OKEECHOBEE, FLORIDA
Balance Sheet - Governmental Funds
September 30, 2010
Total
Nonmaj or Governmental
General Funds Funds
ASSETS
Cash and cash equivalents $ 11,726,228 $ 107,005 $ 11,833,233
Investments 123,269 123,269
Accounts receivable 97,665 97,665
Due from other governments 1 63,742 163,742
Inventory 18,186 18,186
Total assets $ 12,129,090 $ 107,005 $ 12,236,095
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 82,320 $ $ 82,320
Accrued expenses 150,677 150,677
Unearned revenue 43,859 43,859
Deferred revenue 11,978 11,978
Total liabilities 288,834 - 288,834
Fund balances:
Reserved for:
Encumbrances 108,356 - 108,356
Inventory 18,186 18,186
Law enforcement - 2,608 2,608
Public facilities 1,096,151 - 1,096,151
Unreserved, undesignated 10,617,563 104,397 10,721,960
Total fund balances 11,840,256 107,005 11,947,261
Total liabilities and fund balances $ 12,129,090 $ 107,005
Amounts reported for governmental activities in the statement
of net assets are different because:
Negative net pension obligation resulting from overfunding of
the police officers' and firefighters' pension plans. 648,598
Deferred FEMA grant revenue recorded in the funds has been
reversed and recorded as revenue in governmental activities. 11,978
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds. 7,766,657
Long -term liabilities, including capital leases, net OPEB obligation
and compensated absences are not due and payable in the
current period and, therefore, are not reported in the funds.
Net assets of governmental activities
(925,392)
$ 19,449,102
The accompanying notes are an integral part of this financial statement. 17
CITY OF OKEECHOBEE, FLORIDA
Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds
Year Ended September 30, 2010
General
Total
Nonmajor Governmental
Funds Funds
Revenues
Taxes $ 2,581,314 $ $ 2,581,314
Intergovernmental 2,003,139 - 2,003,139
Charges for services 418,981 - 418,981
Permits and fees 694,100 34,212 728,312
Fines and forfeitures 32,366 32,366
Investment earnings 109,620 1 109,621
Miscellaneous 21,438 5,720 27,158
Total revenues 5,860,958 39,933 5,900,891
Expenditures
Current:
General government 1,042,948 1,042,948
Public safety 2,823,997 2,823,997
Transportation 615,710 615,710
Physical environment 513,833 513,833
Capital outlay 706,307 22,412 728,719
Debt service:
Principal retired 484,943 - 484,943
Interest 24,952 - 24,952
Total expenditures 6,212,690 22,412 6,235,102
Excess (deficiency) of revenues
over (under) expenditures (351,732) 17,521 (334,211)
Other financing sources (uses)
Transfers in/(out) 5,720 (5,720) -
Capital lease proceeds 390,906 - 390,906
Proceeds from sale of capital assets 446,810 - 446,810
Total other financing sources (uses) 843,436 (5,720) 837,716
Net change in fund balances 491,704 11,801 503,505
Fund balances, beginning of year 11,348,552 95,204 11,443,756
Fund balances, end of year $ 11,840,256 $ 107,005 $ 11,947,261
The accompanying notes are an integral part of this financial statement.
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CITY OF OKEECHOBEE, FLORIDA
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
Year Ended September 30, 2010
Net change in fund balances - total governmental funds $ 503,505
Amounts reported for governmental activities in the statement of activities
are different because:
Governmental funds report capital outlays as expenditures. However, in
the statement of activities, the cost of those assets is allocated over
their estimated useful lives as depreciation expense. This is the
amount by which capital outlays exceeded depreciation in the current
period. 257,818
The net effect of various miscellaneous transactions involving capital assets
(i.e. sales, trade ins, and donations) is to increase net assets. (292,682)
The net effect of overfunded pension contributions that are reported as
expenditures in the fund financial statements and are recorded
as a net pension asset on the statement of net assets. (14,170)
The issuance of long -term debt (e.g., bonds, leases) provides current financial
resources to governmental funds, while the repayment of the principal
of long -term debt consumes the current financial resources of
governmental funds. Neither transaction, however, has any effect on
net assets. This amount is the net effect of these differences in the
treatment of long -term debt and related items.
Other post employment benefit obligation reported in the statement of activities
does not require the use of current financial resources; therefore, is not
reported as an expenditure in governmental funds.
Compensated absences are reported in the statement of activities when earned.
As they do not require the use of current financial resources, they are not
reported as expenditures on governmental funds until they have matured.
This is the amount of compensated absences reported in the statement of
activities in the prior year that has matured in the current year.
94,037
(148,767)
(30,520)
Change in net assets of governmental activities $ 369,221
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CITY OF OKEECHOBEE, FLORIDA
Statement of Fiduciary Net Assets - Pension Trust Funds
September 30, 2010
COMPONENT
UNIT
General
Pension Employees'
Trust Funds Pension Trust
ASSETS
Cash equivalents $ 1,023,508 $ 1,012,994
Investments:
U.S. Government agencies 253,046 210,872
Corporate and foreign bonds 1,826,152 1,521,793
Common equity securities 4,595,595 3,876,868
Receivables 48,155 63,991
Accrued interest and dividends 23,837 19,884
Due from other funds 16,503 -
Total assets 7,786,796 6,706,402
LIABILITIES
Accounts payable 13,075
Due to other funds 16,503
Deferred revenue 9,456
Total liabilities 39,034
10,740
10,740
NET ASSETS
Held in trust for pension benefits $ 7,747,762 $ 6,695,662
The accompanying notes are an integral part of this financial statement. 20
CITY OF OKEECHOBEE, FLORIDA
Statement of Changes in Fiduciary Net Assets - Pension Trust Funds
Year Ended September 30, 2010
COMPONENT
UNIT
General
Pension Employees'
Trust Funds Pension Trust
ADDITIONS
Contributions:
State $ 127,811 $
City 149,940 386,421
Employees 70,338 189,422
Total contributions 348,089 575,843
Investment earnings:
Net appreciation in the
fair value of investments 629,370 508,527
Interest and dividends 140,721 117,091
Total investment earnings 770,091 625,618
Less investment expenses (69,896) (47,800)
Net investment earnings 700,195 577,818
Total additions 1,048,284 1,153,661
DEDUCTIONS
Benefits paid to participants 176,826 203,385
Refunds on termination - 23,157
Administrative expenses 33,781 16,321
Total deductions 210,607 242,863
Change in net assets 837,677 910,798
Net assets held in trust for pension
benefits, beginning of year 6,910,085 5,784,864
Net assets held in trust for pension
benefits, end of year $ 7,747,762 $ 6,695,662
The accompanying notes are an integral part of this financial statement. 21
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. REPORTING ENTITY
The City of Okeechobee (the "City ") was originally incorporated in 1915 and its present charter was adopted in
1919 under Chapter 8318 of Special Acts of 1919. The City operates under the council form of government and
provides the following services: general government, public safety, transportation, and physical environment.
These financial statements present the primary government and its component units. Blended component units,
although legally separate entities, are, in substance, part of the government's operations and so data from these units
are combined with data of the primary government. The City has no blended component units. Discretely presented
component units are entities that are legally separate from the City, but whose relationship with the City are such
that the exclusion would cause the City's financial statements to be misleading or incomplete. The financial data of
these entities are reported in a separate column in the combined financial statements.
Discretely Presented Component Unit
City of Okeechobee and Okeechobee Utility Authority Employees' Retirement System — Substantially all of the
City's general employees and the employees of the Okeechobee Utility Authority participate in this cost sharing,
multiple employer public employee retirement system. The plan was established by City Ordinance No. 655, as
amended and restated by City Ordinance No. 686.
Complete financial statements for this component unit may be obtained from the City's administrative offices
located at:
55 S. E. Third Avenue
Okeechobee, Florida 34974
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net
assets) report information on all of the nonfiduciary activities of the primary government. Governmental
activities are those which normally are supported by taxes and intergovernmental revenues. Likewise the primary
government is reported separately from certain legally separate component units for which the primary
government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by
program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program reve-
nues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting
the operational or capital requirements of a particular function. Taxes and other items not properly included
among program revenues are reported instead as general revenues.
23
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
The government -wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the fiduciary fund financial statements. Revenues are recorded when earned
and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property
taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues
to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures
generally are recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded
only when payment is due.
Property taxes, franchise taxes, licenses, charges for services, and interest associated with the current fiscal
period are all considered to be susceptible_ to accrual and so have been recognized as revenues of the current
fiscal period. All other revenue items are considered to be measurable and available only when cash is
received by the government.
The City reports the following major governmental fund:
The general fund is the City's primary operating fund. It accounts for all financial resources of the general
government, except those required to be accounted for in another fund.
The City reports the following nonmajor governmental funds:
The community development capital project fund accounts for the assets, liabilities, revenues and
expenditures related to the construction of infrastructure and other improvements in the City.
The impact fees capital project fund accounts for the City's collection and expenditure of impact fees,
which are restricted to be spent on capital projects related to law enforcement, fire protection and
transportation.
The industrial development capital project fund accounts for the assets, liabilities, revenues and
expenditures related to the construction of infrastructure and other improvements related to the industrial
development within the City.
The law enforcement special revenue fund accounts for the assets that are restricted to fund certain
expenditures of the City's police department.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION (CONTINUED)
Additionally, the City reports the following fund types:
The pension trust fund account is used to account for assets held by the City in a fiduciary capacity for the
police officers' and firefighters' pension plans. The funds are operated by carrying out specific terms of
statutes, ordinances and other governing regulations.
Private- sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are
followed in the government -wide financial statements to the extent that those standards do not conflict with or
contradict guidance of the Governmental Accounting Standards Board.
The effect of interfund activity has been eliminated from the government -wide financial statements.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or
privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally
dedicated resources are reported as general revenues rather than as program revenues. Likewise, general
revenues include all taxes.
Expenses for compensated absences are allocated based on the assigned function of the related employee.
When both restricted and unrestricted resources are available for use, it is the government's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY
I. Cash and investments
The investment of municipal funds is authorized by local ordinance and Florida Statutes which allow the City to
invest in the Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized
pursuant to the Florida Interlocal Cooperation Act, SEC registered money market funds with the highest credit
quality rating, interest - bearing time deposits or savings accounts in qualified public depositories, direct obligations
of the U.S. Treasury, commercial paper with certain ratings, pre - refunded municipal obligations, banker's
acceptances maturing within one year, investment agreements, direct and general long -term and short-term
obligations of any state with proper credit rating and full faith and credit pledge, municipal obligations with
proper credit rating and repurchase agreements with maturities of 30 days or less with organizations with certain
stipulations and requirements.
25
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED)
1. Cash and investments (continued)
The City invests certain surplus funds in an external investment pool, the Local Government Surplus Funds Trust
Fund (the "State Pool "). The State Pool is administered by the Florida State Board of Administration ( "SBA "), who
provides regulatory oversight. On September 30, 2008, the SBA reported that the State Pool was exposed to
potential risks due to indirect exposure in the sub -prime mortgage financial market. Consequently, the SBA placed
some restriction on how participants could access portions of their surplus funds and ultimately restructured the
State Pool into two separate pools ( "Florida PRIME" (formerly "LPIG ") and "Fund B ").
The Florida PRIME has adopted operating procedures consistent with the requirements for a 2a7 -like fund. The
City's investment in the Florida PRIME is reported at amortized cost. The fair value of the City's position in the
pool is equal to the value of pooled shares.
The Fund B is reported at fair value, determined by the fair value per share of the pool's underlying portfolio.
The City pools the investments of its governmental funds. Investment earnings of the pool are allocated to the
participating funds at the end of each month based on the ratio of each participant funds' investment to the total
pooled investment.
Cash and cash equivalents include cash deposits, cash funds held in broker accounts, and investments held in the
Local Government Surplus Funds Trust Fund (Florida PRIME).
Within the pension trust funds, plan assets are managed by Bowen, Hanes and Company. The plans follow the
investment guidelines as established within the ordinance. The pension trust funds are allowed to invest in the State
Pool; obligations of the U.S. Government or agencies thereof; banking institutions within the state and other such
institutions within the guidelines of the state statutes which are insured by the Federal Deposit Insurance
Corporation; investments agreements; direct and general long -term obligations of any state with proper credit rating
and full faith and credit pledge; municipal obligations with proper credit rating; annuity and life insurance contracts;
bonds issued by the State of Israel; and stocks, bonds, and commingled funds administered by National or State
banks or evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United
States, provided that the corporation is listed on a nationally recognized exchange and holds proper credit ratings as
set forth by a major credit rating service. These equity investments are not to exceed 60% of the assets of the
pension trust funds on a cost basis. Temporary investment funds held by the custodian in a money market fund are
classified as cash equivalents within the investment account.
Pension trust fund investments are reported at fair value. Short-term investments are reported at cost, which
approximates fair value. Securities traded on a national or international exchange are valued at the last reported
sales price. Shares of mutual funds, including proprietary funds and common and collective funds, are valued at
quoted market prices, which represent the net asset value of shares held by the pension trust fund at year end.
Interest is recognized when earned. Gains and losses from the sale or exchange of investments are recognized on
the transaction date. The difference between the excess of fair value over cost represents unrealized gains.
26
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED)
2. Receivables and payables
All trade and property tax receivables are considered to be fully collectible.
The City's property tax is levied annually on the real and personal property located in the City on January 1st of
the prior year. Tax collections by the Okeechobee County tax collector begin in November of each year with a
due date of March 31 of the following year. All property taxes remaining unpaid at May 30 are subject to a tax
certificate sale.
The City is permitted by State law to levy taxes up to 10 mills on assessed valuation. During a Special Session in
June, 2007, the Florida Legislature adopted HB1B which limits municipal property tax rates beginning in the
2008 fiscal year. This legislation established reductions in the millage rate based on a calculated growth in per
capita taxes between the 2002 and 2007 fiscal years. The Legislature did authorize local governments to use the
rolled back millage rate if approved by a super majority vote of the governing body. The Okeechobee City
Council levy for the fiscal year ended September 30, 2010 was 6.7432 mills, which is was 15.33% less than the
rolled back rate.
The City Council determines the millage rates and adopts a tax levy by resolution prior to September 30 to fund the
next ensuing fiscal year's budget. The assessment of all properties and collection of municipal taxes are provided by
the County's Property Appraiser and Tax Collector. The ad valorem tax calendar is as follows:
Lien date
Levy date
Due date
Delinquent date
January 1
Prior to September 30
- November 1
April 1
All property taxes remaining unpaid at May 30 are subject to a tax certificate sale by the Tax Collector.
3. Inventory
Inventories are valued at cost which approximates market, using the first - in/first -out (FIFO) method. The costs of
inventories are recorded as expenditures when used (consumption method).
4, Capital assets
Capital assets, which include: property, plant, equipment, and infrastructure assets (e.g., roads, bridges,
sidewalks, and similar items), are reported in the government -wide financial statements. Capital assets are
defined by the government as assets with an initial, individual cost of more than $750 and an estimated useful life
in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets'
lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are
constructed.
27
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED)
4. Capital assets (continued)
Property, plant, and equipment is depreciated using the straight -line method over the following estimated useful
lives:
Assets Years
Buildings 25 -60
Building improvements 12 -20
Vehicles 10
Equipment 5 -15
5. Compensated absences
It is the government's policy to permit employees to accumulate earned but unused vacation and sick pay benefits.
All sick and vacation pay is accrued when incurred in the government -wide financial statements. A liability for
these amounts is reported in governmental funds only if they have matured, for example, as a result of employee
resignations and retirements.
6. Unearned revenues
Unearned revenues include amounts collected before the revenue recognition criteria are met. The unearned
items consist primarily of business tax revenues.
7. Deferred revenues
Deferred revenues include receivables which, under the modified accrual basis of accounting, are measurable
but not yet available to finance expenditures of the current fiscal period.
8. Long -term obligations
In the government -wide financial statements, long -term debt and other long -tern obligations are reported as
liabilities in the statement of net assets.
In the governmental fund financial statements, the face amount of debt issued is reported as other financing
sources.
9. Fund equity
In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not
available for appropriation or are legally restricted by outside parties for use for a specific purpose. Reserves for
encumbrances represent amounts remaining on outstanding purchase orders and contracts that are not available for
appropriation. Reserves for inventory represent amounts paid from current resources for use in future years that are
not available for appropriation. Reserves for law enforcement and public facilities represent amounts that are legally
restricted by outside parties for specific purposes.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
BALANCE SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS
The governmental fund balance sheet includes a reconciliation between fund balance -total governmental funds and
net assets - governmental activities as reported in the government -wide statement of net assets. One element of that
reconciliation states that "long -term liabilities, including capital leases, net OPEB obligation, and compensated
absences, are not due and payable in the current period and, therefore, are not reported in the funds." The details of
this $(925,392) difference are as follows:
Capital leases payable $ (415,560)
Net OPEB obligation (148,767)
Compensated absences (361,065)
Net adjustment to reduce fund balance - total governmental funds
to arrive at net assets - governmental activities $ (925,392)
B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE
GOVERNMENT -WIDE STATEMENT OF ACTIVITIES
The governmental fund statement of revenues, expenditures, and changes in fund balances includes a
reconciliation between net changes in fund balances - total governmental funds and changes in net assets of
governmental activities as reported in the government -wide statement of activities. One element of that
reconciliation explains that "governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense." The details of this $257,818 difference are as follows:
Capital outlay
Depreciation expense
Net adjustment to increase net changes in fund balances - total governmental
funds to arrive at changes in net assets of governmental activities
$ 728,719
(470,901)
$ 257,818
Another element of that reconciliation states that "The net effect of various miscellaneous transactions involving
capital assets (i.e., sales, trade -ins, and donations) is to decrease net assets ". The details of this $(292,682)
difference are as follows:
In the statement of activities, only the gain on the sale of capital assets is
reported. However, in the governmental funds, the proceeds from the sale
increase financial resources. Thus, the change in net assets differs from the
change in fund balance by the cost of the capital assets sold.
Donations of capital assets increase net assets in the statement of activities, but
do not appear in the governmental funds because they are not financial resources.
$ (461,663)
168,981
Net adjustment to decrease net changes in fund balances — total governmental
funds to arrive at changes in net assets of governmental activities $ (292,682)
29
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
(CONTINUED)
B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES EN FUND BALANCES AND THE
GOVERNMENT -WIDE STATEMENT OF ACTIVITIES (CONTINUED)
Another element of that reconciliation states that "the issuance of long -term debt (e.g., bonds, leases) provides
current financial resources to governmental funds, while the repayment of the principal of long -term debt
consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on
net assets." The details of this $94,037 difference are as follows:
Debt issued or incurred:
Capital lease financing $ (390,906)
Principal repayments 484,943
Net adjustment to increase net changes in fund balances — total governmental
funds to arrive at changes in net assets of governnzental activities $ 94,037
NOTE 3 — STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
As permitted by GASB Statement No. 34, Basic Financial Statements and Management Discussion and Analysis
for State and Local Governments, the City has elected to disclose all budgetary information in the notes to the
required supplementary information.
NOTE 4 — DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
At September 30, 2010, the City's carrying amount of deposits was $11,832,859 and the bank balance was
$12,035,286. In addition, the City maintained $324 of petty cash. As of September 30, 2010, $250,000 of the
City's bank balances are covered by federal depository insurance (FDIC). Monies invested in amounts greater
than the insurance coverage are secured by the qualified public depositories pledging securities with the State
Treasurer in such amounts required by the Florida Security for Public Depositories Act. In the event of a default
or insolvency of a qualified public depositor, the State Treasurer will implement procedures for payment of
losses according to the validated claims of the City pursuant to Section 280.08, Florida Statutes.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 4 — DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. DEPOSITS AND INVESTMENTS (CONTINUED)
At September 30, 2010, the City had the following investments:
More
Investment type Fair Value Less than 1 1 - 5 6 - 10 than 10 Rating Agency
Primary government:
SBA (Florida Prime) $ 50 $ 50 $ $ $ AAAm S &P
SBA Fund B 123,269 - 123,269 Not rated
$ 123,319 $ 50 $ $ 123,269 $
Pension trust funds:
Money market fund $ 2,036,502 $ 2,036,502 $ $ - $ - Not rated
U.S. Government agencies 463,918 - 237,920 225,998 AAA S &P
Corporate and foreign bonds 3,347,945 220,224 1,991,572 738,011 398,138 AAA - -BBB- S &P
Common equity securities 8,472,463 8,472,463 - - - -
$ 14,320,828 $ 10,729,189 $ 1,991,572 $ 975,931 $ 624,136
Credit risk
Fixed income securities have inherent financial risks, including credit risk and interest rate risk. Credit risk for fixed
income securities is the risk that the issuer will not fulfill its obligations. The City's investment policy and the
investment policies for the pension trust funds limit investments to securities with specific ranking criteria.
Interest rate risk
Interest rate risk exists when there is a possibility that changes in interest rates could adversely affect an
investment's fair value. In accordance with Florida Statute 218.415(6), the City's policy is to match investment
maturities with known cash needs and anticipated cash flow requirements. The City's pension trust funds do not
address interest rate risk.
Concentration of credit risk
Concentration of credit risk is an increased risk of loss that occurs as more investments are acquired from one
issuer (i.e. lack of diversification). The City's investment policy and the investment policies for the pension trust
funds do not specifically address concentration of credit risk.
31
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 4 — DETAILED NOTES ON ALL FUNDS (CONTINUED)
B. RECEIVABLES
Receivables as of September 30, 2010 are as follows:
Municipal Municipal Component Unit
Police Officers' Firefighters' General
Pension Pension Employees
General Fund Trust Trust Pension Trust
Franchise/Utility taxes $ 89,929 $ $ - $
Contributions - 8,426 39,729 63,991
Other 7,736 - -
Receivables, net $ 97,665 $ 8,426 $ 39,729 $ 63,991
C. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2010 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental activities:
Capital assets, not being depreciated:
Land $ 1,308,014 $ 70,730 $ - $ 1,378,744
Construction in progress 39,024 44,585 (41,120) 42,489
Total capital assets, not being depreciated 1,347,038 115,315 (41,120) 1,421,233
Capital assets, being depreciated:
Buildings 1,673,013 42,560 - 1,715,573
Improvements other than buildings 5,364,902 172,711 - 5,537,613
Equipment 2,312,364 608,234 (596,069) 2,324,529
Total capital assets, being depreciated 9,350,279 823,505 (596,069) 9,577,715
Less accumulated depreciation for:
Buildings (528,307) (55,226) - (583,533)
Improvements other than buildings (1,219,793) (254,604) - (1,474,397)
Equipment (1,147,696) (161,071) 134,406 (1,174,361)
Total accumulated depreciation (2,895,796) (470,901) 134,406 (3,232,291)
Total capital assets, being depreciated, net
6,454,483 352,604 (461,663) 6,345,424
Governmental activities capital assets, net $ 7,801,521 $ 467,919 $ (502,783) $ 7,766,657
The current year increase in capital assets includes $168,981 of donated capital assets.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 4 — DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. CAPITAL ASSETS (CONTINUED)
Depreciation expense was charged to functions /programs of the government as follows:
Governmental activities:
General government $ 12,233
Public safety 168,974
Physical environment 289,694
Total depreciation expense - governmental activities $ 470,901
D. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
During the year ended September 30, 2010, the Impact Fee Capital Project fund (a nonmajor fund) transferred
$5,720 to the General fund. The transfer represented administrative fees that were earned from collecting impact
fees for the County, School Board, and the City, and was transferred for the purpose of removing all balances and
activity unrelated to the collection and expenditure of impact fees.
E. CAPITAL LEASE
The government has entered into lease agreements as lessee for financing the acquisition of certain computer
equipment and vehicles for the police, fire and public works departments. These lease agreements qualify as capital
leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease
payments as of the inception dates.
The assets acquired through the capital lease are as follows:
Asset:
Vehicles $ 390,906
Equipment 194,838
Total assets 585,744
Less: Accumulated depreciation (79,437)
Total $ 506,307
33
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 4 - DETAILED NOTES ON ALL FUNDS (CONTINUED)
E. CAPITAL LEASE (CONTINUED)
Obligations of governmental activities under capital leases at September 30, 2010, were as follows:
Year Ending Sept. 30,
2011
2012
2013
2014
2015
Total
Principal Interest
$ 112,149 $ 19,689
118,061 13,776
79,903 7,549
83,848 3,604
21,599 262
$ 415,560 $ 44,880
F. CHANGES IN LONG -TERM LIABILITIES
Long -term liability activity for the year ended September 30, 2010, was as follows:
Beginning
Balance Additions Reductions
Governmental
activities:
Capital lease
Net OPEB obligation
Compensated absences
Long -tern liabilities
$ 509,597 $ 390,906
148,767
330,545 159,361
$ 840,142 $ 699,034
Total
$ 131,838
131,837
87,452
87,452
21,861
$ 460,440
Ending
Balance
Due Within
One Year
$ (484,943) $ 415,560 $ 112,149
148,767 -
(128,841) 361,065 92,204
$ (613,784) $ 925,392 $ 204,353
For the governmental activities, compensated absences and capital leases are generally liquidated by the general
fund.
NOTE 5 - OTHER INFORMATION
A. RISK MANAGEMENT
The City is exposed to various risks of loss, including, but not limited to theft, damage or destruction of its
buildings, equipment, records, and monetary assets, and liability for personal injury, property damage, and
consequences of employee and public official actions. The City participates in a non - assessable public risk pool to
cover significant loss exposure and purchases commercial insurance for third party pollution liability coverage. The
pool maintains a loss reserve and purchases specific excess insurance, aggregate excess insurance and multiple
loss coverage from commercial carriers and underwriters.
34
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 — OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS
Plan Descriptions — The City contributes to two single - employer defined benefit pension plans: City of Okeechobee
Municipal Police Officers' Pension Trust Fund and City of Okeechobee Municipal Firefighters' Pension Trust Fund
(the Plans). The Plans provide retirement, disability, and death benefits to plan members and their beneficiaries.
Chapters 185 and 175 of the Florida Statutes establish the minimum benefits and the minimum standards for the
operation and funding of the Police Officers' and the Firefighters' Municipal Pension Trust Funds, respectively. Per
City Ordinances Nos. 750 and 749, sole responsibility for administering the Plans is vested in the Board of Trustees
of each plan. The Boards cannot amend the provisions of the plans without the approval of the City. The Plans issue
publicly available financial reports that include financial statements and required supplementary information. The
reports are available from the City of Okeechobee, Florida, 55 S.E. Third Avenue, Okeechobee, Florida 34974.
Funding Policies — The contribution requirements of plan members and the City are established and may be
amended by City ordinance. Plan members are required to contribute 5% of their annual covered salary for the
Police Officers' and Firefighters' Municipal Trust Funds. The City is required to contribute an amount equal to the
difference in each year between the total aggregate member contributions for the year, plus state contributions for
such year, and the normal cost for the year, as shown by the most recent actuarial valuation of the plan; the current
contribution rate as a percentage of covered payroll is 15.61% for the Police Officers' plan and 10.46% for the
Firefighters' plan.
The City recognized as revenues and expenditures on- behalf payments relating to pension contributions for its
public safety employees that the State of Florida paid to the Police Officers' and Firefighters' Plans in the amounts
of $78,274 and $49,537, respectively. These contributions are funded by an excise tax upon certain casualty
insurance companies on their gross receipts of premiums from policy holders.
Annual Pension Cost — The annual required pension contributions for the Plans were determined as part of the
October 1, 2010 actuarial valuations using the aggregate actuarial cost method. The aggregate actuarial cost method
does not identify or separately amortize unfunded actuarial liabilities. The actuarial assumptions included (a) 7%
investment rate of return (net of administrative expenses) for both the Police Officers' Trust and Firefighters' Trust
and (b) projected salary increases of 6% and 7% for the Police Officers' Trust and Firefighters' Trust, respectively.
Both (a) and (b) included an inflation component of 3.5% for the Police Officers' Trust and Firefighters' Trust. The
actuarial value of assets was determined using a method which recognizes actual investment return in excess of the
assumed return evenly over a four year period.
35
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 — OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (CONTINUED)
Trend information for each of the City's defined benefit plans:
Municipal Police Officers'
Municipal Firefighters'
Annual Percentage Net
Year Pension Of APC Pension
Ended Cost (APC) Contributed Obligation
9/30/08 $ 233,571 96 % $ (320,687)
9/30/09 215,068 95 (310,869)
9/30/10 220,824 95 (300,272)
9/30/08 $ 75,540 102 % $ (351,725)
9/30/09 66,669 100 (351,899)
9/30/10 84,167 96 (348,326)
Funding Status and Funding Progress — The funded status of the Plans as of October 1, 2010, the most recent
actuarial valuation date, is shown below:
Actuarial Overfunded
Accrued Liability AAL as a %
Actuarial Value (AAL) —Entry Overfunded Funded Covered of Covered
Of Assets Age * AAL Ratio Payroll Payroll
(a) (b) (a) -(b) (a) /(b) (c) (b- a) /(c)
Police Officers':
$ 5,666,207 $ 5,659,633 $ 6,574 100.1% $ 967,957 0.7%
Firefighters':
$ 2,417,688 $ 2,215,619 $ 202,069 109.1% $ 438,787 46.1%
* For purposes of this schedule, the AAL for the Plan is determined using the entry age actuarial cost method. Note
that the ARC for the Plan is calculated using the aggregate actuarial cost method.
The schedule of funding progress presented as required supplementary information (RSI) 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 AAL for benefits.
36
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 — OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (CONTINUED)
Pension Plan — Discretely Presented Component Unit
Plan Description - The City contributes to the City of Okeechobee and Okeechobee Utility Authority Employees'
Retirement System (the System), a cost - sharing multiple employer defined benefit pension plan administered by
the System's Board of Trustees. The System provides retirement, disability, and death benefits to plan members
and their beneficiaries. The Board of Trustees is authorized by City Ordinance No. 686 to establish and amend all
plan provisions. The System issues a publicly available financial report that includes financial statements and
required supplementary information. That report is available from the City of Okeechobee, Florida, 55 S.E. Third
Avenue, Okeechobee, Florida 34974.
Funding Policy - The contribution requirements of the plan members and the City are established and may be
amended by City ordinance. Plan members are required to contribute 6% of their covered annual salary. The City is
required to contribute at an actuarially determined rate; the current rate is 12.24% of covered payroll. The City's
contributions for the years ended September 30, 2010, 2009, and 2008 were $106,822, $99,150 and $91,285,
respectively, and were equal to the required contributions for each year.
37
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 — OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (CONTINUED)
Pension trust funds fiduciary net assets activity as of September 30, 2010 was as follows:
COMPONENT
UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
ASSETS
Cash equivalents $ 327,656 $ 695,852 $ 1,023,508 $ 1,012,994
Investments:
U.S. Government securities 73,805 179,241 253,046 210,872
Corporate and foreign bonds 532,628 1,293,524 1,826,152 1,521,793
Common equity securities 1,376,169 3,219,426 4,595,595 3,876,868
Receivables 39,729 8,426 48,155 63,99]
Accrued interest and dividends 6,982 16,855 23,837 19,884
Due from other funds - 16,503 16,503 -
Total assets 2,356,969 5,429,827 7,786,796 6,706,402
LIABILITIES
Accounts payable 3,886
Due to other funds 16,503
Deferred revenue 9,456
Total liabilities 29,845
9,189
9,189
13,075
16,503
9,456
39,034
10,740
10,740
NET ASSETS
Held in trust for pension
benefits $ 2,327,124 $ 5,420,638 $ 7,747,762 $ 6,695,662
38
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 - OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS - DEFINED BENEFIT PLANS (CONTINUED)
Pension trust funds increase in fiduciary net assets activity as of September 30, 2010 was as follows:
COMPONENT
UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
ADDITIONS
Contributions
State $ 49,537 $ 78,274 $ 127,811 $
City 31,057 118,883 149,940 386,421
Employees 21,940 48,398 70,338 189,422
Total contributions 102,534 245,555 348,089 575,843
Investment earnings:
Net appreciation in fair value
of investments 187,646 441,724 629,370 508,527
Interest and dividends 41,693 99,028 140,721 117,091
Total investment earnings 229,339 540,752 770,091 625,618
Less investment expenses (27,564) (42,332) (69,896) (47,800)
Net investment earnings 201,775 498,420 700,195 577,818
Total additions
304,309 743,975 1,048,284 1,153,661
DEDUCTIONS
Benefits paid to participants 30,937 145,889 176,826 203,385
Refunds on termination - - - 23,157
Administrative expenses 14,773 _ 19,008 33,781 16,321
Total deductions 45,710 164,897 210,607 242,863
Change in net assets 258,599 579,078 837,677 910,798
Net assets held in trust for
pension benefits, beginning
of year 2,068,525 4,841,560 6,910,085 5,784,864
Net assets held in trust for
pension benefits, end of year $ 2,327,124 $ 5,420,638 $ 7,747,762 $ 6,695,662
39
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 — OTHER INFORMATION (CONTINUED)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION
As of October 1, 2009, the City implemented Govenunental Accounting Standards Board Statement No. 45,
Accounting and Reporting by Employers for Post - employment Benefits Other than Pensions (OPEB), for certain
post - employment health care benefits provided by the City. The City elected to implement this statement
prospectively.
Plan description. The City of Okeechobee, Florida administers a single- employer defined benefit healthcare plan
(the "Plan ") that provides medical insurance to its employees and their eligible dependents. Pursuant to Section
112.0801 Florida Statutes, the City is required to provide eligible retirees (as defined in the City's pension plans) the
opportunity to participate in this Plan at the same cost that is applicable to active employees. Benefit provisions for
the Plan were established by City Council on January 7, 1991 and may only be amended by City Council. The City
has not established a trust or agency fund for the Plan. The City does not issue stand alone financial statements for
this Plan. All financial information related to the Plan is accounted for in the City's basic financial statements.
Employees and their dependents may elect to remain in the Plan upon retirement up to age 65. After age 65 the
City's insurance coverage becomes secondary to the retiree's Medicare insurance. The Plan has 2 retirees and
spouses receiving benefits and has a total of 62 active participants and dependents.
Funding policy. The City is funding the plan on a pay -as- you -go basis. Employees and their dependents are
required to pay 100% of the insurance premiums charged by the carrier. There is an implied subsidy in the insurance
premiums for these employees because the premium charged for retirees is the same as the premium charged for
active employees, who are younger than retirees on average.
For the year ended September 30, 2010, the City's contribution is $7,560, which represents an estimate of the
implied subsidy described above. Contributions of plan members totaled approximately $10,800 for the year ended
September 30, 2010.
Annual OPEB cost and net OPEB obligation. The City's annual OPEB cost (expense) is calculated based on the
annual required contribution (ARC) of the employer, an amount determined using the Alternative Measurement
Method, permitted by GASB Statement No. 45 for employers in plans with fewer than 100 total plan members. The
ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and
to amortize any unfunded actuarial accrued liabilities (or funding excess) over a period not to exceed thirty years.
The following table shows the components of the City's annual OPEB cost for the year ended September 30, 2010,
the amount actually contributed to the Plan, and changes in the City's net OPEB obligation to the Plan:
Annual required contribution $ 156,327
Interest on net OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost (expense) 156,327
Contributions made (7,560)
Interest on contributions made -
Increase in net OPEB obligation 148,767
Net OPEB obligation — beginning of year -
Net OPEB obligation -- end of year $ 148,767
40
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 — OTHER INFORMATION (CONTINUED)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (CONTINUED)
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB
obligation for the fiscal year ending September 30, 2010 was as follows:
Year Annual OPEB Percentage of Annual Net OPEB
Ending Cost OPEB Cost Contributed Obligation
9/30/10 $ 156,327 5% $ 148,767
Fiscal year 2010 was the year of implementation of GASB Statement No. 45. Therefore, prior year comparative data
is not available. In future years, three -year trend information will be presented.
Funded status and funding progress. Because the Plan has fewer than 200 members, the City is required to obtain
an actuarial valuation at least every three years. The most recent actuarial valuation was performed as of August 1,
2010. Accordingly, the City will be required to obtain a subsequent actuarial valuation within three years of that
date. As of August 1, 2010, the actuarial accrued liability for benefits was $776,235, all of which was unfunded. The
covered payroll (annual payroll of active employees covered by the Plan) was $2,515,729, and the ratio of unfunded
actuarial accrued liability (UAAL) to the covered payroll was 31 %.
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, future interest rates, mortality, medical cost inflation, Medicare coverage, and changes in
marital status. Amounts determined regarding the funded status of the Plan and the annual required contributions of
the employer are subject to continuous revision as actual results are compared to past expectations and new
estimates about the future are formulated.
The schedule of funding progress presented as required supplementary information following the notes to the
financial statements, will present multiyear trend information that shows whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Because fiscal year 2010
was the year of implementation of GASB Statement No 45 and the City elected to apply the statement prospectively,
only one year is presented in the schedule at this time. In future years, required trend data will be presented.
Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive
plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan
members to that point. The methods and assumptions used include techniques that are designed to reduce the effects
of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term
perspective of the calculations.
In the August 1, 2010 valuation, the entry age normal cost method was used. The assumptions included a discount
rate of 3.0 %, a general inflation rate of 2.8 %, and an annual healthcare cost trend rate of 10% initially, increased to
an ultimate rate of 20% after nine years. The unfunded actuarial accrued liability is being amortized as a level
percentage of projected payrolls on a closed basis. The remaining amortization period at September 30, 210 was 30
years. As authorized by GASB Statement No. 45, the Alternative Measurement Method with its simplifications of
certain assumptions was employed in measuring actuarial accrued liabilities and the ARC.
41
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2010
NOTE 5 — OTHER INFORMATION (CONTINUED)
D. CONCENTRATION — COLLECTIVE BARGAINING UNIT
Members of the City's fire department are covered by a collective bargaining agreement. The agreement with the
employees covered by the International Association of Firefighter's (IAFF) extended through September 30, 2009
and has not been renewed as of the date of our report.
NOTE 6 — RELATED PARTY TRANSACTIONS
During November 2009, the City purchased a police vehicle for approximately $26,000 from Okeechobee Ford
Company, which is owned by a City Council Member (and his family). The purchase was made in accordance
with the City's bid policy. The Council Member in question abstained from the Council vote required to approve
the vehicle purchase.
NOTE 7 — SUBSEQUENT EVENTS
During November 2010, the City entered into a contract for approximately $306,000 related to roadway
improvements.
During December 2010, the City purchased 11 police vehicles for approximately $240,000 from Okeechobee Motor
Company, which is owned by a City Council Member (and his family). During December 2010, the City purchased
7 additional police vehicles for approximately $162,000 from unrelated vendors.
During February 2011, the City entered into a contract with KST construction for the construction of a new building
in the amount of $127,620.
42
REQUIRED SUPPLEMENTARY INFORMATION OTHER TITAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
43
CITY OF OKEECHOBEE, FLORIDA
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
General Fund
Year Ended September 30, 2010
Revenues
Taxes
Intergovernmental
Charges for services
Permits and fees
Fines and forfeitures
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current:
General govermnent:
Legislative
Executive
City clerk
Financial services
Legal council
General services
Total general government
Public safety:
Fire
Police
Total public safety
Transportation
Physical environment
Capital outlay
Debt service:
Principal
Interest
Total debt service
Total expenditures
Deficiency of revenues under
expenditures
Other financing sources
Operating transfers in
Capital lease proceeds
Sale of capital assets
Net other financing sources
Excess (deficiency) of revenues and other
financing sources over (under) expenditures
and other financing uses (960,529) (186,988)
Fund balances, beginning of year 11,348,552 11,348,552
Fund balances, end of year $10,388,023 $ 11,161,564
Reconciliation of budgetary
to GAAP basis
Current year encumbrances
Prior year encumbrances
Fund balance on GAAP basis
Original
Budget
Final
Budget
$ 2,525,808 $ 2,515,234
1,824,030 1,878,732
391,527 408,959
604,713 651,833
30,641 30,575
39,000 48,037
2,500 19,900
5,418,219 5,553,270
Actual
(on Budgetary
Basis)
$ 2,581,314
2,003,139
418,981
694,100
32,366
109,620
21,438
5,860,958
Variance with
Final Budget
Positive (Negative)
$ 66,080
124,407
10,022
42,267
1,791
61,583
1,538
307,688
119,441 109,338 104,519 4,819
166,818 159,734 156,637 3,097
176,391 165,339 162,866 2,473
201,992 195,467 192,132 3,335
75,732 58,470 43,863 14,607
458,705 451,363 379,681 71,682
1,199,079 1,139,711 1,039,698 100,013
1,232,425 1,209,839 1,181,298 28,541
1,824,744 1,782,255 1,689,073 93,182
3,057,169 2,992,094 2,870,371 121,723
1,022,391 1,000,270 961,488 38,782
814,105 341,137 301,225 39,912
663,904 631,560 625,068 6,492
459,000 447,737 447,553 184
19,600 18,955 17,956 999
478,600 466,692 465,509 1,183
7,235,248 6,571,464 6,263,359 308,105
(1,817,029) (1,018,194) (402,401) 615,793
500 5,700 5,720 20
418,000 390,906 390,906
438,000 434,600 446,810 12,210
856,500 831,206 843,436 12,230
441,035 628,023
11,348,552 -
11,789,587 $ 628,023
108,356
(57,687)
$ 11,840,256
The accompanying notes to required supplementary information are an integral part of this financial schedule. 45
CITY OF OKEECHOBEE, FLORIDA
Required Pension Supplementary Information - Schedule of Funding Progress
Last Six Fiscal Years
Police Officers' Pension Plan
Actuarial
Valuation
Date
2010
2009
2008
2007
2006
2005
Actuarial
Value of
Assets (a)
$ 5,666,207
5,424,146
5,253,380
4,973,343
4,479,248
4,057,398
Firefighters' Pension Plan
Actuarial
Valuation
Date
2010
2009
2008
2007
2006
2005
Actuarial
Value of
Assets (a)
$ 2,417,688
2,330,746
2,255,117
2,123,157
1,908,512
1,717,461
Actuarial
Accrued
Liability
AAL
Entry Age (b)
$ 5,659,633
5,201,828
4,966,790
4,722,755
4,437,752
4,276,250
Actuarial
Accrued
Liability
AAL
Entry Age (b)
$ 2,215,619
2,104,641
1,898,670
1,705,380
1,529,760
1,354,645
(Unfunded)
Overfunded
AAL
(b -a)
$ 6,574
222,318
286,590
250,588
41,496
(218,852)
(Unfunded)
Overfunded
AAL
(b -a)
$ 202,069
226,105
356,447
417,777
378,752
362,816
Funded
Ratio Covered
(a/b) Payroll (c)
(Unfunded)
Overfunded
AAL as a %
of Covered
Payroll
((b -a) /c)
100.12% $ 967,957 0.7%
104.27% 947,296 23.5%
105.77% 917,647 31.2%
105.31% 896,164 28.0%
100.94% 862,664 4.8%
94.88% 779,567 -28.1%
Funded
Ratio Covered
(a/b) Payroll (c)
(Unfunded)
Overfunded
AAL as a %
of Covered
Payroll
((b -a) /c)
109.12% $ 438,787 46.1%
110.74% 456,742 49.5%
118.77% 461,494 77.2%
124.50% 450,792 92.7%
124.76% 404,892 93.5%
126.78% 396,381 91.5%
* The annual required contribution (ARC) is calculated using the aggregate actuarial cost method. Information in this
schedule is calculated using the entry age actuarial cost method as a surrogate for the funding progress of the Plan.
46
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
CITY OF OKEECHOBEE, FLORIDA
Required Other Post Employment Benefits Supplementary Information
Schedule of Funding Progress
UAAL
Actuarial Unfunded a % of
Actuarial Actuarial Accrued AAL Funded Covered
Valuation Value of Liability (UAAL) Ratio Covered Payroll
Date Assets (a) AAL (b) (b -a) (a/b) Payroll (c) ((b -a) /c)
8/1/2010 $ - $ 776,235 $ 776,235 0.0% $ 2,515,729 31%
Note: Because fiscal year 2010 was the first year of implementation of GASB Statement No. 45 and the City
elected to apply the statement prospectively, only one year is presented in the schedule at this time. In
future years, required trend data will be presented.
47
CITY OF OKEECHOBEE, FLORIDA
Notes to Required Supplementary Information
September 30, 2010
A. BUDGETARY INFORMATION
Annual budgets are adopted on a basis consistent with U.S. generally accepted accounting principles for all
governmental funds. All annual appropriations lapse at fiscal year end.
The City Administrator may make transfers of appropriations within a department as long as the total budget of
the department is not increased. Transfers of appropriations between departments require the approval of the
council. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed
appropriations) is the department level. The council made certain supplemental budgetary appropriations during
the year.
Encumbrances accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts)
outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities
because the commitments will be re- appropriated and honored during the subsequent year.
B. ADDITIONAL ACTUARIAL INFORMATION
The information presented in the required supplementary schedules was detennined as part of the actuarial
valuations at the dates indicated. Additional information as of the latest actuarial valuation follows:
Police
Firefighters' Officers'
Pension Plan Pension Plan
Actuarial valuation date 10/01/10 10/01/10
Actuarial cost method Aggregate Aggregate
Amortization method N/A N/A
Remaining amortization period N/A N/A
Asset valuation method Four year smoothed Four year smoothed
Market Market
Actuarial assumptions:
Investment rate of return*
Projected salary increases*
Cost -of- living adjustment
*Includes inflation at:
7.0%
7.0%
0.25%
3.5%
7.0%
6.0%
0.25%
3.5%
48
Independent Auditors' Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited the financial statements of the governmental activities, the major fund, and the aggregate remaining
fund information of the City of Okeechobee, Florida, as of and for the year ended September 30, 2010, which
collectively comprise the City of Okeechobee, Florida's basic financial statements and have issued our report
thereon dated April 27, 2011. Our report was modified to include a reference to other auditors. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States. Other auditors audited the financial statements of the fiduciary fund type and the discretely
presented component unit, as described in our report on the City of Okeechobee, Florida's financial statements.
This report does not include the results of the other auditors' testing of internal control over financial reporting or
compliance and other matters that are reported on separately by those auditors.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City of Okeechobee, Florida's internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of
Okeechobee, Florida's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City of Okeechobee, Florida's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control such that there is a reasonable possibility that a material misstatement of the entity's financial statements
will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over financial
reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as described
above.
Certified PublicAcenuntants
215 Baytree Drive I Melbourne, FL 32940 p: (321) 255.0088 If: (321) 259.8648
4767 New Broad Street l Orlando, FL 32814 p: (407) 422.1681 I f: (407) 514.2604
www.hoyman.com
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Okeechobee, Florida's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those provisions
was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
This report is intended solely for the information and use of management, the Honorable Mayor and Members of the
City Council, others within the entity, and the State of Florida Office of the Auditor General, and is not intended to
be and should not be used by anyone other than these specified parties.
Hoyman Dobson
Melbourne, Florida
April 27, 2011
50
Independent Auditors'
Management Letter
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited the financial statements of the City of Okeechobee, Florida as of and for the fiscal year ended
September 30, 2010, and have issued our report thereon dated April 27, 2011.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. We have issued our Independent Auditors' Report on Internal Control
over Financial Reporting and Compliance and Other Matters. Disclosures in that report, which is dated April 27,
2011, should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which
governs the conduct of local governmental entity audits performed in the State of Florida. This letter includes the
following information, which is not included in the aforementioned auditors' report:
❖ Section 1 0.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective
actions have been taken to address findings and recommendations made in the preceding annual financial
audit report. There were no findings and recommendations made in the preceding annual financial audit
report.
+ Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the
provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection
with our audit, we determined that the City of Okeechobee, Florida complied with Section 218.415,
Florida Statutes.
+ Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter
any recommendations to improve financial management. In connection with our audit, we did not have
any such recommendations.
Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of
contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an
effect on the financial statements that is less than material but more than inconsequential. In connection with
our audit, we did not have any such findings.
Certified Public Accountants
215 Baytree Drive I Melbourne, FL 32940 1 p: (321) 255.0088 f: (321) 259.8648
4767 New Broad Street I Orlando, FL 32814 p: (407) 422.1681 f: (407) 514.2604
www.hoyman.com
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
• Section 10.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on professional
judgment, report the following matters that have an inconsequential effect on financial statements,
considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant
agreements, fraud, illegal acts, or abuse, and (2) deficiencies in internal control that are not significant
deficiencies. In connection with our audit, we did not have any such findings.
• Section 10.554(1)(1)6., Rules of the Auditor General, requires that the name or official title and legal
authority for the primary government and each component unit of the reporting entity be disclosed in this
management letter, unless disclosed in the notes to the financial statements. The legal authority of the
City of Okeechobee, Florida and its component unit are disclosed in the footnotes.
• Section 10.554(1)(i)7.a., Rules of the Auditor General, requires a statement be included as to whether or
not the local governmental entity has met one or more of the conditions described in Section 218.503(1),
Florida Statutes, and identification of the special condition(s) met. In connection with our audit, we
determined that the City of Okeechobee, Florida did not meet any of the conditions described in Section
218.503(1), Florida Statutes.
• Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the annual
financial report for the City of Okeechobee, Florida for the fiscal year ended September 30, 2010, filed
with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is
in agreement with the annual financial audit report for the fiscal year ended September 30, 2010. In
connection with our audit, we determined that these two reports were in agreement.
• Pursuant to Sections 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied financial
condition assessment procedures. It is management's responsibility to monitor the City of Okeechobee,
Florida's financial condition, and our financial condition assessment was based in part on representations
made by management and the review of financial information provided by same.
Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited.
Auditing standards generally accepted in the United States of America require us to indicate that this letter is
intended solely for the information and use of management, the Florida Auditor General, the Honorable Mayor and
City Council and others within the entity, and is not intended to be and should not be used by anyone other than
these specified parties.
A41e,14 ► 0O a Adri,
Hoyman Dobson
Melbourne, Florida
April 27, 2011
52
City of Okeechobee
AFFIDAVIT OF IMPACT FEE COMPLIANCE
The City of Okeechobee, Florida has complied with Section 163.31801 of Florida Statute
regarding accounting and reporting of impact fee collections and expenditures for Fiscal
Year 2010.
=�L
Brian W
City Ad
ite ,' 11
ini trator
Sworn to and subscribed before me this Tell
ofD3Cendar2010.
I hereby state B ('CU\ \NI til -khc k( personally know to me or provided
as personal identification hereby signed the above document.
v)/1 8au'r\w-
Notary Public signature
Vs\■ Barnes.
Print, Type of Stamp, Name of Notary Public
India Riedel
Account Supervisor
Sworn to and subscribed before me this All
I hereby state Z3 `ci► &z_
ry;,
(407)3w-0153 FloridallotarySe■ice.com
KIM BARNES
M.Y COMMISSION # DD778252
EXPIRES April 25, 2012
of l- C,erkt jt;;'2010.
personally know to me or provided
as personal identification hereby signed the above document.
Notary Public signature
oCC CS ! sir BARNES
1 °° OOMMiSSiON # DD7Th2
Print, Type of Stamp, Name of No:J a =� slic
EXPIRES April 25, 2012
(AD?) 388 C i S FloridalloiaryServrco.com_
55 S.E. Third Avenue • Okeechobee, Florida 34974 -2903 • (863) 763 -3372 • Fax: (863) 763 -1686 53���
Communication with Those Charged with Governance
To the Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited the financial statements of the governmental activities, the major fund, and the aggregate
remaining fund information of the City of Okeechobee, Florida (the "City ") for the year ended September
30, 2010. Professional standards require that we provide you with information about our responsibilities
under generally accepted auditing standards and Government Auditing Standards, as well as certain
information related to the planned scope and timing of our audit. We have communicated such
information in our letter to you dated July 8, 2010. Professional standards also require that we
communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the financial statements. As described in
Note 5.C. to the financial statements, during 2010 the City of Okeechobee, Florida adopted Governmental
Accounting Standards (GASB) Statement No. 45, Accounting and Reporting by Employers for Post -
employment Benefits Other than Pensions (OPEB). The new standard was implemented prospectively.
Accordingly, there is no cumulative effect of the accounting change as of the beginning of the year.
However, implementation of the new standard caused the City to recognize a liability of approximately
$149,000 for its net OPEB obligation in the September 30, 2010 statement of net assets. We noted no
transactions entered into by the governmental unit during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial
statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
Management's estimate of useful lives of capital assets is based on historical lives of
similar assets and market prices. We evaluated the key factors and assumptions used to
develop the estimated useful lives in determining that they are reasonable in relation to
the financial statements taken as a whole.
Certified blit ,lrevrrrrrtaruts
215 Baytree Drive Melbourne, FL 32940 p: (321) 255.0088 f: (321) 259.8648
4767 New Broad Street Orlando, FL 32814 I p: (407) 422.1681 I f: (407) 514.2604
www.hoyman.com
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
Management's estimate of the City's liability for its self - insured worker's compensation
claim is based on management's understanding of the circumstances surrounding the
claim, and information provided by the City's third party claims administrator. We
evaluated the key factors and assumptions used to develop the estimated liability in
determining . that they are reasonable in relation to the financial statements taken as a
whole.
Management's estimate of the other postemployment benefit liability and current year
costs are based on healthcare cost and employment assumptions developed by
management. We evaluated the key factors and assumptions in determining they are
reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial
statement users. The most sensitive disclosures affecting the financial statements were:
The disclosure of pension trust funds in Note 5.B. to the financial statements due to the
reported performance of plan assets.
The disclosure of other postemployment benefits in Note 5.C. to the financial statements
due to the implementation of GASB Statement No. 45, Accounting and Reporting by
Employers for Post - employment Benefits Other than Pensions (OPEB), for certain post -
employment health care benefits provided by the City.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Management has corrected all such misstatements. In addition, none of the misstatements detected as a
result of audit procedures and corrected by management were material, either individually or in the
aggregate, to each opinion unit's financial statements taken as a whole.
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Three
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditors' report. We are pleased to report that no such
disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated April 27, 2011.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves
application of an accounting principle to the governmental unit's financial statements or a determination
of the type of auditors' opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the governmental unit's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses were
not a condition to our retention.
This information is intended solely for the use of the City Council and management of the City of
Okeechobee, Florida and is not intended to be and should not be used by anyone other than these
specified parties.
Very truly yours,
Hoyman Dobson
Melbourne, Florida
April 27, 2011