Audit Report 09.30.2011 1
GateWay to South Florida"
CITY OF OKEECHOBEE,FLORIDA
' Financial Statements
Year Ended September 30,2011
' CITY OF OKEECHOBEE FLORIDA
' Table of Contents
As of September 30,2011
' 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
' Govenunent-wide Financial Statements
• Statement of Net Assets-Governmental Activities 15
' • Statement of Activities-Governmental Activities 16
Fund Financial Statements
Goverunental 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 Postemployment 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
2
CITY OF OKEECHOBEE, FLORIDA
' City Officials
As of September 30,2011
James E.Kirk
Mayor,Chairman
' Devin R Maxwell
Dowling R.Watford,Jr.
Clayton Williams
Mike O'Connor
Council Members
r
Jolm R. Cook
City Attorney
Brian Whitehall
City Administrator
' Lane Gamiotea
City Clerk
' India Riedel
Finance Director
Herbert Smith
' Chief of Fire
' Denny Davis
Chief of Police
Donnie Robertson
Director of Public Works
Oscar Bennudez
' City Engineer
' 3
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4
' C A R R Carr,Riggs&Ingram,LLC
CRI RIGGS & 215 Baytree Drive
A
' I N G RA M Melbourne,Florida 32940
CPAs and Advisors
(321)255-0088
' (321)259-8648(fax}
Independent Auditors' Report www.cricpa.com
' 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, 2011, which collectively comprise the City's bask 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, 2011, 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.
tIn accordance with Government Auditing Standards, we have also issued our report dated April 18, 2012, 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.
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.
Carr,Riggs&Ingram,LLC
Melbourne,Florida
' April 18,2012
5
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6
CITY OF OKEECHOBEE, FLORIDA
' Management's Discussion and Analysis
September 30, 2011
' 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, 2011. 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, 2011:
• The City's total assets exceeded its liabilities at September 30, 2011 by$19,540,337.
' • The City's total revenues were $5,693,509 for the year ended September 30, 2011, compared to
total expenses of$5,602,274,which resulted in a$91,235 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 timing 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-term financing requirements.
' 7
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2011
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 statements 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
2011 2010
Current and other assets $ 12,260,394 $ 12,884,693
Capital assets 8,213,557 7,766,657
Total assets 20,473,951 20,651,350
Current liabilities 225,365 276,850
Noncurrent liabilities 708,249 925,392
Total liabilities 933,614 1,202,248
Net assets:
Invested in capital assets, net of related debt 8,171,639 7,351,097
Restricted 829,614 1,098,759
Unrestricted 10,539,084 10,999,246
Total net assets $ 19,540,337 $ 19,449,102
8
CITY OF OKEECHOBEE, FLORIDA
1 Management's Discussion and Analysis
September 30,2011
' Governmental Activities
Total net assets increased by approximately $91,200 primarily as a result of an approximately $268,600 decrease
' in total liabilities, offset by approximately $177,400 decrease in total assets. The decrease in total liabilities was
due to an approximately $217,143 decrease in noncurrent liabilities as the City purchased vehicles with cash
rather than purchasing through a capital lease. The decrease in total assets was due primarily to the use of cash to
purchase vehicles and make lease payments.
The following table shows condensed revenue and expense data:
City of Okeechobee,Florida
Statement of Activities
' 2011 2010
REVENUES:
Program revenues:
Charges for services $ 642,646 $ 715,166
Operating grants and contributions 757,411 780,175
Capital grants and contributions 255,476 203,193
' General revenues:
Property taxes 1,717,268 1,909,022
Public utility taxes 715,470 737,979
' Franchise fees 534,576 543,080
Shared revenues 1,039,239 1,050,198
Investment income and other 31,423 80,517
Total revenues 5,693,509 6,019,330
EXPENSES:
' General government 953,726 1,045,421
Public safety 3,177,859 3,124,852
Transportation 616,551 630,587
1 Physical environment 836,679 824,297
Interest on long-term debt 17,459 24,952
Total expenses 5,602,274 5,650,109
Change in net assets 91,235 369,221
NET ASSETS,beginning 19,449,102 19,079,881
NET ASSETS, ending $ 19,540,337 $ 19,449,102
' 9
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2011
The City experienced a decrease of approximately 5.4% in total revenues—an approximately $325,800 decrease
to $5.7 million. Charges for services decreased approximately $72,500 due to less commercial business permits
and fees. Property Tax revenue decreased approximately$192,000 based on a decrease in property values. Public
Utility Tax revenues decreased $22,509 based on lower consumer paid utilities. The approximately $49,000
decrease in investment income and other revenue is due primarily to a general decrease in available interest rates.
Total expenses decreased approximately $48,000. The decrease in expenses is due primarily to lower public
safety costs as well as general services.
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, unassigned 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 govermnental funds reported combined ending fund balances of
$11,386,431, a decrease of$560,830 in comparison with the prior year. Approximately 91.5 % of this total amount,
$10,421,175,constitutes unassigned fund balance, which is available for spending at the government's discretion.
Assigned fund balance includes $12,898 for general govenunent and $113,267 for future qualified impact fee
expenditures. Public Facilities fund balance of$825,769 plus law enforcement$3,813 and community development
of $32 are restricted funds based on their specific stipulated purpose. The remainder of fund balance is non-
spendable inventory of$9,477.
The general fund is the chief operating fund of the City. At the end of the current fiscal year, assigned and
unassigned fund balance of the general fund was $10,434,073 while total fund balance was $11,269,319. As a
measure of the general fund's liquidity, it may be useful to compare both assigned and unassigned fund balance
and total fund balance to total fund expenditures. The total assigned and unassigned fund balance, and total fund
balance represent approximately 163%and 176%respectively of total general fund expenditures.
The capital improvement impact fee fund, the largest fund included in nomnajor funds, recorded a year-end fund
balance of $113,267, 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 10/11 budget decreased from $7,124,265 to $6,975,267
in the final 10/11 budget, a decrease of$148,998. The decrease in general services expenses and fire-public
safety expenses largely contributed to the overall decrease in expenditures.
10
t
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
' September 30, 2011
CAPITAL ASSETS AND LONGTERM LIABILITIES
Capital assets. The City's investment in capital assets as of September 30, 2011, amounted to $8,213,557 (net of
accumulated depreciation). This investment in capital assets includes land, buildings, improvments, equipment,
' and construction in progress. During the year, the City's net capital asset balance increased $446,900 and
includes $234,673 of assets donated.
' The City's major additions of$1,371,571 to capital assets during the current fiscal year included the following:
o Roadway improvements(resurfacing and striping)
1 o Curbing, along SW 3rd Street,4th Street, and 6th Street
o Sidewalk construction donated by the Department of Transportation
o Replaced 17 police vehicles and 1 fire department vehicle
' o Construction of equipment storage building
o Purchase of tractor and mower boom for the maintenance of roads and embankments
o Replacement of computers, server and renovation of server room including cabling for City hall
These additions were offset by depreciation expense of$495,555, and equipment disposals of$386,627, which
' largely relates to the sale of 19 police vehicles.
City's Capital Assets
' (net of depreciation)
2011 2010
Land $ 1,378,744 $ 1,378,744
Buildings 1,261,121 1,132,040
Improvements other than
building 4,406,164 4,063,216
Equipment 1,167,528 1,150,168
Construction in progress - 42,489
Total $ 8,213,557 $ 7,766,657
' Additional information on the City's capital assets can be found in Note 4.C. on page 34 of this report.
11
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2011
Long-term Liabilities
City's Outstanding Debt
Long-term Liabilities
2011 2010
Capital leases $ 41,918 $ 415,560
Net OPEB obligation 301,348 148,767
Compensated absences 364,983 361,065
Total $ 708,249 $ 925,392
The City's long-term liabilities decreased by $217,143 during the current fiscal year. In prior years, vehicles
were purchased under a capital lease, but this year the City chose to purchase vehicles with cash. This decrease
was offset by the increased additional liability for the OPEB liability. This is the second year of implementation
of GASB 45,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 page 35 of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City Council adopted a millage rate 7.7432 for budget year 2012. The adopted millage rate is 2.03% less
than the roll-back rate and will generate $3,080 less ad valorem revenue than last year.
Revenues for the fiscal year 2012 adopted budget for all funds of the City total approximately $17,565,659, a
decrease from the prior year budget of approximately $271,250. These revenues include the General, Public
Facility, Capital Projects, and Special Law Enforcement fund revenues. The change in revenue is based mostly
on the expected decrease in building and inspection fees.
Expenditures for the fiscal year 2012 adopted budget for all funds of the City total approximately $7,600,000, an
increase of approximately 10% from the prior year budget. These expenditures primarily increased due to the
Community Development Grant of$700,000 within the CDBG Fund to be received in 2012.
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.
12
1 BASIC FINANCIAL STATEMENTS
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14
CITY OF OKEECHOBE E, FLORIDA
Statement of Net Assets—Governmental Activities
September 30,2011
' ASSETS
Cash and cash equivalents $ 11,241,613
Investments 104,794
' Accounts receivable 95,678
Due from other governments 160,234
Inventory 9,477
Overfunded pension costs 648,598
Capital assets:
Nondepreciable
Land 1,378,744
Depreciable,net of accumulated depreciation
Buildings 1,261,121
Improvements other than buildings 4,406,164
Equipment 1,167,528
' Total assets 20,473,951
' LIABILITIES
Accounts payable 27,727
Accrued expenses 153,561
Unearned revenue 44,077
Noncurrent liabilities:
Due within one year 156,378
' Due in more than one year 551,871
Total liabilities 933,614
' NET ASSETS
Invested in capital assets,net of related debt 8,171,639
Restricted for:
Community development 32
Law enforcement 3,813
Public facilities 825,769
' Unrestricted 10,539,084
Total net assets $ 19,540,337
The accompanying notes are an integral part of these financial statements 15
CITY OF OKEECHOBEE, FLORIDA
Statement of Activities —Governmental Activities
Year Ended September 30,2011
Program Revenues Net(Expense)
Operating Capital Revenue and
Charges for Grants and Grants and Changes in
Functions/Programs Expenses Services Contributions Contributions Net Assets
General government $ 953,726 $ 561,426 $ 142,859 $ - $ (249,441)
Public safety 3,177,859 29,853 3,815 2,944 (3,141,247)
Transportation 616,551 51,367 610,737 5,976 51,529
Physical environment 836,679 - - 246,556 (590,123)
Interest on long term debt 17,459 - - - (17,459)
Total governmental
activities $ 5,601,274 $ 642,646 $ 757,411 $ 255,476 (3,946,741)
General revenues:
Property taxes 1,717,268
Public utility taxes 715,470
Franchise fees 534,576
Shared revenues not restricted to specific programs 1,039,239
Unrestricted investment earnings 23,641
Miscellaneous 7,782
Total general revenues 4,037,976
Change in net assets 91,235
Net assets,beginning 19,449,102
Net assets,ending $19,540,337
The accompaanyng notes are an integral part of these financial statements __ 16
CCITY OF OKEECHOBEE FLORIDA
,
' Balance Sheet-Governmental Funds
Year Ended September 30,2011
' Total
Nonmajor Governmental
General Funds Funds
' ASSETS
Cash and cash equivalents $ 11,124,679 $ 116,934 $ 11,241,613
Investments 104,794 - ,104,794
' Accounts receivable 90,678 5,000 95,678
Due from other funds 13,152 225 13,377
Due from other governments 148,914 11,320 160,234
' Inventory 9,477 - 9,477
Total assets $ 11,491,694 $ 133,479 $ 11,625,173
LIABILITIES AND FUND BALANCES
' Liabilities
Accounts payable $ 22,727 $ 5,000 $ 27,727
Accrued expenses 153,561 - 153,561
' Due to other funds 2,010 11,367 13,377
Unearned revenue 44,077 44,077
Total liabilities 222,375 16,367 238,742
' and balances:
Nonspendable for:
Inventory 9,477 - 9,477
' Restricted for:
Public facilities 825,769 825,769
Law enforcement - 3,813 3,813
' Community development 32 32
Assigned for:
General government 12,898 - 12,898
' Impact fees - 113267 113,267
Unassigned 10,421,175 10,421,175
Total fund balances 11,269,319 117,112 11,386,431
tTotal liabilities and fund balances $ 11,491,694 $ 133,479
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
' Capital assets used in governmental activities are not financial
resources and,therefore,are not reported in the funds. 8213,557
' 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. (708,249)
' Net assets of governmental activities $ 19,540,337
The accompanying notes are an integral part of these financial_statements 17
CITY OF OKEECHOBEE, FLORIDA
Statement of Revenues,Expenditures,and Changes in Fund Balances
Year Ended September 30,2011
Total
Nonmajor Governmental
General Funds Funds
Revenues
Taxes $ 2,392,319 $ - $ 2,392,319
Intergovernmental 1,954,626 11,320 1,965,946
Charges for services 426,319 - 426,319
Permits and fees 608,567 8,920 617,487
Fines and forfeitures 34,415 1,200 35,615
Investment earnings 41,039 5 41,044
Miscellaneous 7,782 1,705 9,487
Total revenues 5,465,067 23,150 5,488,217
Expe nditure s
Current:
General government 923,157 - 923,157
Public safety 2,883,380 - 2,883,380
Transportation 601,294 - 601,294
Physical environment 517,968 11,338 529,306
Capital outlay 1,094,409 - 1,094,409
Debt service:
Principal retired 373,642 - 373,642
Interest 17,459 - 17,459
Total expenditures 6,411,309 11,338 6,422,647
Excess (deficiency) of revenues
over (under) expenditures (946,242) 11,812 (934,430)
Other financing sources (uses)
Transfers in/(out) 1,705 (1,705) -
Proceeds from sale of capital assets C- "W} -' 773ZD0 - 373,600
T uiancin sources (uses) 3755305 (1,705) 373,600
Net change in fund balances --- - (570,937) 10,107 (560,830)
Fund balances,beginning of year 11,840,256 107,005 11,947,261
Fund balances,end of year $ 11,269,319 $ 117,112 $ 11,386,431
The accompanying notes are an integral part of these financial statements 18
' KEECHOBEE FLORIDA
CITY OF O ,
Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
Year Ended September 30,2011
1 Net change in fund balances -total governmental funds $ (560,830)
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. 598,854
The net effect of various miscellaneous transactions involving capital assets
(i.e. sales,trade ins,and donations) is to decrease net assets. (151,954)
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. 373,642
' Other postemployment 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. (152,581)
Under the modified accrual basis of accounting used in the governmental funds,
revenues are not recognized until funds are measurable and available to finance
' current expenditures. In the statement of activities,however,which is presented on
the accrual basis,revenues are reported regardless of when financial resources are
available. This is the additional revenue recognized under the modified accrual b, (11,978)
' 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. (3,918)
' Change in net assets of governmental activities $ 91,235
The accompanying notes are an integral part of these financial statements 19
CITY OF OKEECHOBEE, FLORIDA
Statement of Fiduciary Net Assets—Pension Trust Funds
September 30,2011
COMPONENT
UNIT
General
Pension Employees'
Trust Funds Pension Trust
ASSETS
Cash equivalents $ 711,503 $ 717,691
Investments:
U.S. Government agencies 262,218 218,515
Municipal bonds 107,051 87,587
Corporate and foreign bonds 1,902,992 1,588,027
Common equity securities 4,697,009 4,085,285
Receivables 64,305 90,409
Accrued interest and dividends 22,320 18,799
Prepaid expenses 4,451 2,887
Total assets 7,771,849 6,809,200
LIABILITIES
Accounts payable 11,419 17,130
Total liabilities 11,419 17,130
NET ASSETS
Held in trust for pension benefits $ 7,760,430 $ 6,792,070
The accompanying notes are an integral part of these financial statements 20
ECH BEE
CITY OF OKE O , FLORIDA
' Statement of Changes in Fiduciary Net Assets—Pension Trust Funds
September 30,2011
COMPONENT
UNIT
General
Pension Employees'
' Trust Funds Pension Trust
ADDITIONS
Contributions:
' State $ 142,857 $ -
City 242,003 389,940
' Employees 70,377 179,973
Total contributions 455,237 569,913
Investment earnings (loss):
' Net depreciation in the
fair value of investments (272,824) (240,019)
Interest and dividends 157,124 133,650
' Total investment earnings (loss) (115,700) (106,369)
Less investment expenses (74,332) (52,888)
Net investment earnings (loss) (190,032) (159,257)
Total additions 265,205 410,656
' DEDUCTIONS
Benefits paid to participants 213,251 212,404
Refunds on termination 6,958 87,138
' DROP payment 1,236 -
Administrative expenses 31,092 14,707
Total deductions 252,537 314,249
' Change in net assets 12,668 96,407
Net assets held in trust for pension
benefits, beginning of year 7,747,762 6,695,663
Net assets held in trust for pension
benefits, end of year $ 7,760,430 $ 6,792,070
The accompanying notes are an integral part of these financial statements 21
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22
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2011
I — ACCOUNTING POLICIES
NOTE 1 SUMMARY OF SIGNIFICANT ACC
' 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 govermnent'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 30,2011
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.
24
CITY OF OKEECHOBEE, FLORIDA
' Notes to Financial Statements
September 30,2011
NOTE I—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 teens 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
1. 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 30,2011
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 PRIlVIE"(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 PFJNM is reported at amortized cost. The fair value of the City's position in the
pool is equal to the value of pooled shares.
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 PRIlVIE).
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
CCITY OF OKEECHOBEE FLORIDA
,
' Notes to Financial Statements
September 30,2011
iNOTE 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 1 st 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, 2011 was 7.2432 mills, which is 10.51% less than the rolled
back rate.
' The City Council detennines 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 - January 1
Levy date - Prior to September 30
Due date - November 1
Delinquent date 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 30,2011
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-term 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.
28
' CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
'
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
' D. ASSETS,LIABILITIES,AND NET ASSETS OR EQUITY(CONTINUED)
9. Fund equity
' The City adopted GASB Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions, for the
year ended September 30, 2011. The governmental fund financial statements present fund balances based on
classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor
constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The
classifications used in the governmental fund financial statements are as follows:
Nonspendable Fund Balance-Amounts that are(a)not in spendable form or(b) legally or contractually required to
be maintained intact. "Not in spendable form" includes items that are not expected to be converted to cash(such as
' inventories and prepaid amounts) and items such as long-term amounts of loans and notes receivables, as well as
property acquired for resale. The corpus (or principal) of a permanent fund is an example of an amount that is
legally or contractually required to be maintained intact.
Restricted Fund Balance - Amounts that can be spent only for specific purposes stipulated by (a) external
resource providers such as creditors (by debt covenants), grantors, contributors, or laws or regulations of other
governments; or(b) imposed by law through constitutional provisions or enabling legislation.
Committed Fund Balance- Amounts that can be used only for the specific purposes determined by a formal action
(resolution)of the Council,the Council's highest level of decision making authority. Commitments may be changed
ior lifted only by the council taking the same formal action(resolution)that imposed the constraint originally.
Assigned Fund Balance—Includes spendable fund balance amounts established by the City Administrator or the
Council that are intended to be used for specific purposes that are neither considered restricted or committed.
Unassigned Fund Balance — Unassigned fund balance is the residual classification for the general fund. This
classification represents fund balance that has not been assigned to other funds and that has not been restricted,
committed, or assigned to specific purposes within the general fund. Unassigned fund balance may also include
negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned
for those specific purposes.
The City would typically use restricted fund balances first, followed by committed resources, and then
1 assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend unassigned
resources first to defer the use of these other classified funds
29
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
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 govermnental 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$(708,249)difference are as follows:
Capital lease payable $ (41,918)
Net OPEB obligation (301,348)
Compensated absences (364,983)
Net adjustment to reduce fund balance -total gevernmental funds to
arrive at net assets - governmental activities $ (708,249)
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 $598,854 difference are as follows:
Capital outlay $ 1,094,409
Depreciation expense (495,555)
Net adjustment to increase net changes in fund balances - total
governmental funds to arrive at changes in net assets of
governmental activities $ 598,854
30
CITY OF OKEECHOBEE, FLORIDA
' Notes to Financial Statements
September 30,2011
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 IN FUND BALANCES AND THE
GOVERNMENT-WIDE STATEMENT OF ACTIVITIES(CONTINUED)
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 $(151,954)
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. $ (386,627)
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. 234,673
Net adjustment to decrease net changes in fund balances - total
governmental funds to arrive at changes in net assets of
governmental activities. $ (151,954)
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 $373,642 difference are as follows:
' Principal repayments $ 373,642
Net adjustment to increase net changes in fund balance - total
governmental funds to arrive at changes in net assets of
governmental activities $ 373,642
' 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.
31
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
NOTE 4—DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
At September 30, 2011, the City's carrying amount of deposits was $11,241,239 and the bank balance was
$11,383,509. In addition, the City maintained $324 of petty cash. As of September 30, 2011, $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.
At September 30, 2011,the City had the following investments:
Investment Maturities (in years)
More than
Investment Type Fair Value Less than 1 1-5 Years 6-10 Years 10 Years Rating Agency
Primary Government:
SBA (Florida Prime) $ 50 $ 50 $ - $ - $ - AAAm S&P
SBA Fund B 104,794 - 104,794 - - Not Rated -
$ 104,844 $ 50 $ 104,794 $ - $ -
Pension Trust Funds:
Money market fund $ 1,429,194 $ 1,429,194 $ - $ - $ - Not Rated -
U.S. Government agencies 480,733 - - 255,404 225,329 AAA S&P
Corporate and foreign bonds 3,491,019 659,139 1,542,112 913,733 376,035 AA+-B- S&P
Municipal bonds 194,638 - 194,638 - - AAA-Aa3 S&P
Common equity securities 8,782,294 8,782,294 - - -
$ 14,377,878 $10,870,627 $ 1,736,750 $1,169,137 $601,364
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.
32
CITY OF OKEECHOBEE, FLORIDA
' Notes to Financial Statements
September 30,2011
NOTE 4—DETAILED NOTES ON ALL FUNDS(CONTINUED)
' A. DEPOSITS AND INVESTMENTS(CONTINUED)
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.
Foreign currency risk
' The City's pension funds contain investments in foreign corporate bonds;however, all of the investments are
denominated in U.S. dollars and are not exposed to foreign currency risk.
' B. RECEIVABLES
' Receivables as of September 30, 2011 are as follows:
Municipal Component
' Police Municipal Unit General
Nonmajor Officers' Firefighters' Employees
General Fund Funds Pension Trust Pension Trust Pension Trust
' Franchise/Utility tax $ 88,737 $ _ $ - $ - $ -
Contributions 39,763 24,542 90,409
Other 1,941 5,000 - - -
' Receivables,net $ 90,678 $ 5,000 $ 39,763 $ 24,542 $ 90,409
1
' 33
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
NOTE 4—DETAILED NOTES ON ALL FUNDS(CONTINUED)
C. CAPITAL ASSETS
Capital asset activity for the year ended September 30,2011 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Capital assets,not being depreciated:
Land $ 1,378,744 $ - $ - $ 1,378,744
Construction in progress 42,489 - (42,489) -
Total capital assets,not being depreciated 1,421,233 - (42,489) 1,378,744
Capital assets,being depreciated:
Buildings 1,715,573 186,253 - 1,901,826
Improvements other than buildings 5,537,613 614,903 - 6,152,516
Equipment 2,324,529 570,415 (448,090) 2,446,854
Total capital assets,being depreciated 9,577,715 1,371,571 (448,090) 10,501,196
Less accumulated depreciation for:
Buildings (583,533) (57,172) - (640,705)
Improvements other than buildings (1,474,397) (271,955) - (1,746,352)
Equipment (1,174,361) (166,428) 61,463 (1,279,326)
Total accumulated depreciation (3,232,291) (495,555) 61,463 (3,666,383)
Total capital assets,being depreciated,net 6,345,424 876,016 (386,627) 6,834,813
Governmental activities capital assets,net $ 7,766,657 $ 876,016 $ (429,116) $ 8,213,557
The current year increase in capital assets includes $234,673 of donated capital assets.
Depreciation expense was charged to functions/programs of the government as follows:
Governmental activities:
General government $ 11,953
Public safety 173,481
Physical environment 310,121
Total depreciation expense - governmental activities $ 495,555
34
' CITY OF OKEECHOBEE FLORIDA
ORI A
' Notes to Financial Statements
September 30,2011
NOTE 4—DETAILED NOTES ON ALL FUNDS(CONTINUED)
' D. INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS
During the year ended September 30, 2011, the Impact Fee Capital Project fund (a nonmajor fund) transferred
' $1,705 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. 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 capital leases are as follows:
' Asset:
Equipment $ 194,838
Less:Accumulated depreciation (73 131).
' Total $ 121,707
Obligations of governmental activities under capital leases at September 30,2011,were as follows:
Prinicpal Interest Total
Year Ending September 30,2012 $ 41,918 $ 2,467 $ 44,385
' Total $ 41,918 $ 2,467 $ 44,385
F. CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended September 30, 2011, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Capital lease $ 415,560 $ - $ (373,642) $ 41,918 $ 41,918
Net OPEB obligation 148,767 152,581 - 301,348 -
Compensated absences 361,065 141,887 (137,969) 364,983 114,460
Long-term liabilities $ 925,392 $ 294,468 $ (511,611) $ 708,249 $ 156,378
' For the governmental activities, compensated absences and capital leases are generally liquidated by the general
fund.
1
' 35
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
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 cormnercial 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.
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 4.04% 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 $84,860 and $57,997, 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.
36
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
NOTE 5—OTHER INFORMATION(CONTINUED)
' B. RETIREMENT COMMITMENTS—DEFINED BENEFIT PLANS(CONTINUED)
' Trend information for each of the City's defined benefit plans:
Annual Percentage
' Year Pension Of APC Net Pension
Ended Cost(APC) Contributed Obligation
Municipal Police Officers' 9/30/2008 $ 233,571 96% $ (320,687)
' 9/30/2009 215,068 95% (310,869)
9/30/2010 220,824 95% (300,272)
' Municipal Firefighters' 9/30/2008 $ 75,540 102% $ (351,725)
9/30/2009 66,669 100% (351,899)
9/30/2010 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) (a-b)/(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(RSl) 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.
' 37
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
NOTE 5-OTHER INFORMATION(CONTINUED)
B. RETMEMENT 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 11.00% of covered payroll. The City's
contributions for the years ended September 30, 2011, 2010, and 2009 were $112,980, $106,822 and $99,150,
respectively,and were equal to the required contributions for each year.
Pension trust funds fiduciary net assets activity as of September 30,2011 was as follows:
COMPONENT
UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
ASSETS
Cash Equivalents $ 233,112 $ 478,391 $ 711,503 $ 717,691
Investments:
U.S. Government securities 76,480 185,738 262,218 218,515
Municipal bonds 29,196 77,855 107,051 87,587
Corporate and foreign bonds 555,589 1,347,403 1,902,992 1,588,027
Common equity securities 1,416,461 3,280,548 4,697,009 4,085,285
Receivables 24,542 39,763 64,305 90,409
Accrued interest and dividends 6,561 15,759 22,320 18,799
Prepaid expenses 1,983 2,468 4,451 2,887
Total assets 2,343,924 5,427,925 7,771,849 6,809,200
LIABILITIES
Accounts payable 3,843 7,576 11,419 17,130
Total liabilities 3,843 7,576 11,419 17,130
NET ASSETS
Held in trust for pension benefits $ 2,340,081 $ 5,420,349 $ 7,760,430 $ 6,792,070
38
CITY OF OKEECHOBEE, F
LORMA
' Notes to Financial Statements
September 30,2011
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, 2011 was as follows:
SCOMPONENT
UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
ADDITIONS
Contributions
State $ 57,997 $ 84,860 $ 142,857 $ -
City 52,475 189,528 242,003 389,940
Employees 21,511 48,866 70,377 179,973
Total contributions 131,983 323,254 455,237 569,913
Investment earnings:
Net depreciation in fair value of investments (83,965) (188,859) (272,824) (240,019)
' Interest and dividents 46,907 110,217 157,124 133,650
Total investment earnings (37,058) (78,642) (115,700) (106,369)
Less investment expenses (28,972) (45,360) (74,332) (52,888)
Net investment earnings (66,030) (124,002) (190,032) (159,257)
Total additions 65,953 199,252 265,205 410,656
DEDUCTIONS
Benefits paid to participants 30,936 182,315 213,251 212,404
Refunds on termination 6,958 - 6,958 87,138
DROP payments 1,236 1,236
Administrative expenses 15,102 15,990 31,092 14,707
' Total deductions 52,996 199,541 252,537 314,249
Change in net assets 12,957 (289) 12,668 96,407
Net assets held in trust for pension benefits,
beginning of year 2,327,124 5,420,638 7,747,762 6,695,663
Net assets held in trust for pension benefits,
' end of year $ 2,340,081 $ 5,420,349 $ 7,760,430 $ 6,792,070
39
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2011
NOTE 5—OTHER INFORMATION(CONTINUED)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION
As of October 1, 2009, the City implemented Governmental Accounting Standards Board Statement No. 45,
Accounting and Reporting by Employers for Posteniployment Benefits Other than Pensions (OPEB), for certain
postemployment 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 3 retirees and
spouses receiving benefits and has a total of 60 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, 2011, the City's contribution is $7,939, which represents an estimate of the
implied subsidy described above. Contributions of plan members totaled approximately $14,047 for the year ended
September 30,2011.
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, 2011,
the amount actually contributed to the Plan,and changes in the City's net OPEB obligation to the Plan:
Annual required contribution $ 161,016
Interest on net OPEB obligation 4,463
Adjustment to annual required contribution (4,959)
Annual OPEB cost(expense) 160,520
Contributions made (7,939)
Interest on contributions made - ij1�T\
Increase in net OPEB obligation 152,581 C(74 r rc
Net OPEB obligation- beginning of year 148,767 0
Net OPEB obligation- end of year $ 301,348 �ia+i
40
' F OKEECHOBEE FLORIDA
CITY O ,
Notes to Financial Statements
September 30,2011
' 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 30,2011 was as follows:
Year Annual OPEB Percentage of Annual Net OPEB
' Ending Cost OPEB Cost Contributed Obligation
9/30/2011 $ 160,520 5% $ 301,348
9/30/2010 156,327 5% 148,767
' Fiscal year 2010 was the year of implementation of GASB Statement No. 45. Therefore, fiscal year 2009
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 infonnation 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 30,2011 was 29
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 30,2011
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—SUBSEQUENT EVENT
During November 2011,the City purchased 16 police vehicles for approximately$350,080 from Okeechobee Dodge
Chrysler Jeep.
42
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' REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
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THIS PAGE IS INTENTIONALLY LEFT BLANK.
44
' FLORIDA
CITY OF OKEECHOBEE,
' Schedule of Revenues,Expenditures,and Changes in Fund Balances-Budget and Actual
General Fund
' Year End September 30,2011
Actual Variance with
Original Final (on Budgetary Final Budget
Budget Budget Basis) Positive(Negative)
Revenues
Taxes $ 2,353,463 $ 2,353,463 $ 2,392,319 $ 38,856
' Intergovernmental 1,867,302 1,867,302 1,954,626 87,324
Charges for services 401,774 401,774 426,319 24,545
Permits and fees 708,958 583,444 608,567 25,123
Fines and forfeitures 30,641 30,641 34,415 3,774
Investment earnings 9,500 9,500 41,039 31,539
Miscellaneous 2,500 2,500 7,782 5,282
Total revenues 5,374,138 5,248,624 5,465,067 216,443
' Expenditures
Current:
General government:
Legislative 103,374 102,822 96,917 5,905
Executive 158,452 164,257 157,542 6,715
City clerk 182,879 182,695 163,949 18,746
Financial services 201,288 198,521 195,090 3,431
' Legal council 70,461 70,461 44,444 26,017
General services 476,538 354,941 281,243 73,698
Total general government 1,192,992 1,073,697 939,185 134,512
' Public safety:
Fire 1,255,849 1,234,767 1,200,794 33,973
Police 1,847,171 1,851,745 1,725,480 126,265
Total public safety 3,103,020 3,086,512 2,926,274 160,238
' Transportation 1,016,462 1,003,267 968,753 34,514
Physical environment 771,223 771,223 730,535 40,688
Capital outlay 672,533 672,533 486,493 186,040
' Debt service:
Principal 361,985 361,985 334,052 27,933
Interest 6,050 6,050 12,663 (6,613)
Total debt service 368,035 368,035 346,715 21,320
Total expenditures 7,124,265 6,975,267 6,397,955 577,312
Deficiency of revenues under
expenditures (1,750,127) (1,726,643) (932,888) 793,755
' Other financing sources
Operating transfers in 500 500 1,705 1,205
Sale of capital assets 342,000 342,000 373,600 31,600
Net other financing sources 342,500 342,500 375,305 32,805
Excess (deficiency)of revenues and other
financing sources over(under)
expenditures and other financing uses (1,407,627) (1,384,143) (557,583) 826,560
Fund balances,beginning of year 11,840,256 11,840,256 11,840,256 -
' Fund balances,end of year $ 10,432,629 $ 10,456,113 11,282,673 $ 826,560
Reconciliation of budgetary
to GAAP basis .
' Current year encumbrances 95,002
Prior year encumbrances (108,356)
Fund balance on GA"basis $ 11,269,319
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
(Unfunded)
Actuarial Overfunded
Accrued (Unfunded) AAL as a%
Actuarial Actuarial Liability Overfunded Funded of Covered
Valuation Value of AAL AAL Ratio Covered Payroll
Date Assets (a) Entry Age (b) (b-a) (a/b) Payroll(c) ((b-a)/c)
2010 $ 5,666207 $ 5,659,633 $ 6,574 100.12% $ 967,957 0.7%
2009 5,424,146 5,201,828 222,318 104.27% 947,296 23.5%
2008 5253,380 4,966,790 286,590 105.77% 917,647 31.2%
2007 4,973,343 4,722,755 250,588 105.31% 896,164 28.0%
2006 4,479248 4,437,752 41,496 100.94% 862,664 4.8%
2005 4,057,398 4,276,250 (218,852) 94.88% 779,567 -28.1%
Firefighters' Pension Plan_
(Unfunded)
Actuarial Overfunded
Accrued (Unfunded) AAL as a%
Actuarial Actuarial Liability Overfunded Funded of Covered
Valuation Value of AAL AAL Ratio Covered Payroll
Date Assets (a) Entry Age (b) (b-a) (a/b) Payroll(c) ((b-a)/c)
2010 $ 2,417,688 $ 2,215,619 $ 202,069 109.12% $ 438,787 46.1%
2009 2,330,746 2,104,641 226,105 110.74% 456,742 49.5%
2008 2,255,117 1,898,670 356,447 118.77% 461,494 77.2%
2007 2,123,157 1,705,380 417,777 124.50% 450,792 92.7%
2006 1,908,512 1,529,760 378,752 124.76% 404,892 93.5%
2005 1,717,461 1,354,645 362,816 126.78% 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 methos as a surrogate for the funding progress of the
Plan.
46
' EE FLORIDA
CITY OF OKEECHOB ,
' Required Other Postemployment 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 30,2011
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 snake 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.
For the year ended September 30, 2011, actual expenditures for interest exceeded budgeted amounts by
approximately $6,600 and actual expenditures exceeded revenues in the general fund. However, this is pursuant to
the legally adopted budget to expend available fund equity(cash carry forward)and does not constitute a deficit.
Encumbrances accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts)
outstanding at year end are reported as restricted or assigned 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* 7.0% 7.0%
Projected salary increases* 7.0% 6.0%
Cost-of-living adjustment 0.25% 0.25%
*Includes inflation at: 4.0% 3.5%
48
A CR� C A R R Carr,Riggs&Ingram,LLC
RIGGS & 215 Baytree Drive
N G RA M Melbourne,Florida 32940
CPAs and Advisors
(321)255-0088
(321)259-8648(tax)
www.cricpa.corn
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, 2011, which
collectively comprise the City of Okeechobee, Florida's basic financial statements and have issued our report
thereon dated April 18, 2012. 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
Management of the City of Okeechobee, Florida is responsible for establishing and maintaining effective 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.
' 49
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.
Cam,, 49. 1-kyu^, LL-C
Carr,Riggs&Ingram,LLC
Melbourne,Florida
April 18,2012
50
rC A R R Carr,Riggs&Ingram,LLC
CRI RIGGS & 2156aytreeDrive
A I N G RAM Melbourne,Florida 32940
CPAs and Advisors
(321)255-0088
' 1321)259-86481fax)
www.cricpa.com
Independent Auditors'
Management Letter
r The Honorable Mayor and Members of the City Council
of the City of Okeechobee,Florida
r We have audited the financial statements of the City of Okeechobee, Florida as of and for the fiscal year ended
September 30, 2011, and have issued our report thereon dated April 18,2012.
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
r over Financial Reporting and Compliance and Other Matters, dated April 18, 2012, 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
rgoverns the conduct of local governmental entity audits perfonned in the State of Florida. This letter includes the
following information,which is not included in the aforementioned auditors' report:
r ❖ Section 10.554(1)(i)l.,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
r provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection
with our audit, we detennined that the City of Okeechobee, Florida complied with Section 218.415,
Florida Statutes.
r ❖ Section 10.554(l)(i)3., Rules of the Auditor General, requires that we address in the management letter
any reconunendations to improve financial management. In connection with our audit, we did not have
rany such recommendations.
❖ Section 10.554(l)(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 determination of financial statement amounts that is less than material but more than
inconsequential. In connection with our audit,we did not have any such findings.
r ❖ 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
r 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.
1
51
r
The Honorable Mayor and Members of the City Council
of the City of Okeechobee,Florida
Page Two
❖ Section 10.554(1)(i)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
detennined 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, 2011, 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, 2011. 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 infornation 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.
Carr,Riggs &Ingram,LLC
Melbourne,Florida
April 18, 2012
52
i
'OF ' C
iti� tim
m
a
�s 1975 City of Okeechobee
i
' AFFIDAVIT OF IMPACT FEE COMPLIANCE
iThe City of Okeechobee,Florida has complied with Section 163.3 18 01 of Florida Statute
regarding accounting and reporting of impact fee collections and expenditures for Fiscal
1 Year 201!4,
1
Zee/
Brian iteh h
City Acfministrator
iSworn to and subscribed before me this of DES..- 2011.
iI hereby state E U personally know to me or provided
as personal identification hereby signed the above document.
J. NATHAN PIPPIN
Notary Public.State of Florida
1 Not Public signature0y MY comm.exp.May 13,2012
Comm. No.DD 785153
Print, Type of Stamp,Name of Notary Public
i
i India Riedel
Account Supervisor
iSworn to and subscribed before me this of�,2011.
I hereby state r�JP-TA EEDU personally know to me or provided
ias personal identification hereby signed the above document.
J.NATHAN PIPPIN
Notary Public,State of Florida
My comm.exp.May 13,2012
Nat y Nblic sign a Comm.No. DD 788153
1 Print, Type of Stamp,Name of Notary Public
55 S.E.Third Avenue•Okeechobee,Florida 34974-2903 •(863)763-3372•Fax: (863)763-1686 53