Audit Report 09.30.2012 C A R R Carr,Riggs&Ingram,LLC
' I RI RIGGS & 215 Baytree Drive
INGRAM Melbourne,Florida 32940
CPAs and Advisors
(321)255-0088
(321)259-8648(fax)
www.cricpa.com
Communication with Those Charged with Governance
To the Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited the financial statements of the governmental activities, each major fund and the
aggregate remaining fund information of the City of Okeechobee, Florida (the "City") for the year ended
September 30, 2012. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards and Government Auditing Standards, as
well as certain information related to the planned scope and timing of our audit. We have
communicated such information in our letter to you dated July 8, 2010. Professional standards also
require that we communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the financial statements. No new
accounting policies were adopted and the application of existing policies was not changed during 2012.
We noted no transactions entered into by the governmental unit during the year for which there is a lack
of authoritative guidance or consensus. All significant transactions have been recognized in the
financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected. The most sensitive estimates affecting the financial
statements were:
,-Management's estimate of useful lives of capital assets is based on historical lives of
similar assets and market prices. We evaluated the key factors and assumptions used to
develop the estimated useful lives in determining that they are reasonable in relation to
the financial statements taken as a whole.
Management's estimate of the City's liability for its self-insured worker's compensation
claim is based on management's understanding of the circumstances surrounding the
claim, and information provided by the City's third party claims administrator. We
evaluated the key factors and assumptions used to develop the estimated liability in
determining that they are reasonable in relation to the financial statements taken as a
whole.
Management's estimate of the other postemployment benefit liability and current year
costs are based on healthcare cost and employment assumptions developed by
management. We evaluated the key factors and assumptions in determining they are
reasonable in relation to the financial statements taken as a whole.
'The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were:
The disclosure of pension trust funds in Note 5.B. to the financial statements due
to the reported performance of plan assets.
The disclosure of other postemployment benefits in Note 5.C. to the financial
statements due to GASB Statement No. 45, Accounting and Reporting by
Employers for Postemployment Benefits Other than Pensions (OPEB), for certain
postemployment health care benefits provided by the City.
The financial statement disclosures are neutral, consistent and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and
completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are trivial, and communicate them to the appropriate level
of management. Management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management were
material, either individually or in the aggregate, to each opinion unit's financial statements taken
as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management as a financial accounting,
reporting or auditing matter, whether or not resolved to our satisfaction, that could be significant
to the financial statements or the auditors' report. We are pleased to report that no such
disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the
management representation letter dated May 13, 2013.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a
consultation involves application of an accounting principle to the governmental unit's financial
statements or a determination of the type of auditors' opinion that may be expressed on those
statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
' The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Three
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the governmental unit's
auditors. However, these discussions occurred in the normal course of our professional
relationship and our responses were not a condition to our retention.
This information is intended solely for the use of the City Council and management of the City of
Okeechobee, Florida and is not intended to be and should not be used by anyone other than
these specified parties.
Very truly yours,
Melbourne, orida �� 0
May 13, 2013
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"Go tc wa X ttlt
CITY OF OKEECHOBEE, FLORIDA
Financial Statements
' For Year Ended September 30, 2012
I
1
.. CITY OF OKEECHOBEE, FLORIDA
Table of Contents
,r For Year Ended September 30, 2012
Page
.. Introductory Section
Title Page 1
Table of Contents 2
mm
City Officials 3
Financial Section
..
Independent Auditors' Report 5
Management's Discussion and Analysis 7
"" Basic Financial Statements
Government-wide Financial Statements
mo • Statement of Net Assets - Governmental Activities 15
• Statement of Activities - Governmental Activities 16
Fund Financial Statements
•• Governmental Funds
• Balance Sheet 17
• Statement of Revenues, Expenditures and Changes in Fund Balances 18
•• • Reconciliation of the Statement of Revenues Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 19
Fiduciary Funds (Component Units that are Fiduciary in Nature)
.. • Statement of Fiduciary Net Assets- Pension Trust Funds 20
• Statement of Changes in Fiduciary Net Assets- Pension Trust Funds 21
Notes to Financial Statements 23
Required Supplementary Information Other Than Management's Discussion and
Analysis
• Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and
mg Actual - General Fund 45
• Required Pension Supplementary Information - Schedule of Funding Progress 46
• Required Other Postemployment Benefits Supplementary Information - Schedule
m• 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
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2
CITY OF OKEECHOBEE, FLORIDA
City Officials
For Year Ended September 30, 2012
James E. Kirk
Mayor, Chairman
Devin R Maxwell
Dowling R. Watford, Jr.
Clayton Williams
Mike O'Connor
Council Members
John R. Cook
City Attorney
Brian Whitehall
City Administrator
Lane Gamiotea
City Clerk
India Riedel
Finance Director
Herbert Smith
Chief of Fire
Denny Davis
Chief of Police
David Allen
Director of Public Works
3
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4
/A cm CARR
R I G &
INGRAM Carr,Riggs&Ingram,am,LLC
215 Baytree Drive
Melbourne,
Florida 32940
«. CPAs and Advisors
(321)255-0088
INDEPENDENT AUDITORS' REPORT (321)259-8648(fax)
www.cricpa.com
or
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, each major fund
and the aggregate remaining fund information of the City of Okeechobee, Florida, as of and for the year
ended September 30, 2012, which collectively comprise the City's basic financial statements as listed in
the table of contents. These financial statements are the responsibility of the City of Okeechobee,
Florida's management. Our responsibility is to express opinions on these financial statements based on
our audit. We did not audit the financial statements of the fiduciary fund type and the discretely
presented component unit. Those financial statements were audited by other auditors whose reports
thereon have been furnished to us, and our opinion, insofar as it relates to the fiduciary fund type and
the discretely presented component unit is based on the reports of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
"e• 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 previously present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund and the aggregate remaining
fund information of the City of Okeechobee, Florida, as of September 30, 2012, and the respective
changes in financial position thereof for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated May 13, 2013,
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.
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis (pages 7 through 12) and the required supplementary
information (pages 45 through 48) be presented to supplement the basic financial statements. Such
dill
information, although not a part of the basic financial statements, is required by the Government
Accounting Standards Board who considers it to be an essential part of the financial reporting for
placing the basic financial statements in an appropriate operational, economic or historical context. We
P" have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of
5
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Two
Mr
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements and other knowledge we obtained during our audit of the basic financial statements. We do lab
not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
oft
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Okeechobee, Florida's basic financial statements. The introductory
section is presented for the purposes of additional analysis and is not a required part of the basic
financial statements. Such information has not been subjected to the auditing procedures applied in the
audit of the basic financial statements, and accordingly, we do not express an opinion or provide any
assurance on it.
6041 L
Melbourne, Florida
May 13, 2013
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2012
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, 2012. 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, 2012:
• The City's total assets exceeded its liabilities at September 30, 2012 by $19,350,116.
• The City's total revenues were $5,584,857 for the year ended September 30, 2012,
compared to total expenses of$5,775,078, which resulted in a $190,221 decrease 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
r• 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
For Year Ended September 30, 2012 „o
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 41 of this report.
ar
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 Ira
Statement of Net Assets
2012 2011
Current and other assets $ 12,580,872 $ 12,260,394
Capital assets 8,035,056 8,213,557
Total assets 20,615,928 20,473,951
Current liabilities 463,558 225,365
Noncurrent liabilities 802,254 708,249 .�
Total liabilities 1,265,812 933,614
Net assets:
Invested in capital assets, net of related debt 8,035,056 8,171,639 ..
Restricted 888,161 829,614
Unrestricted 10,426,899 10,539,084
Total net assets $ 19,350,116 $ 19,540,337
8
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2012
Governmental Activities
Total net assets decreased by $190,221 primarily as a result of a $332,198 increase in total liabilities,
offset by $141,977 increase in total assets. The increase in total liabilities was due to a $238,193
increase in current liabilities related to the timing of payables and $94,005 in noncurrent liabilities due
mainly to increases in the net QPEB obligation offset by capital lease payments. The increase in total
assets was due primarily to the timing of receivables and cash inflows from a $40,081 increase in
shared revenues from the state and $36,581 increase in property tax revenues.
The following table shows condensed revenue and expense data:
City of Okeechobee, Florida
Statement of Activities
2012 2011
REVENUES:
Program revenues:
Charges for services $ 657,237 $ 642,646
Operating grants and contributions 744,966 757,411
Capital grants and contributions 106,197 255,476
General revenues:
.. Property taxes 1,753,849 1,717,268
Public utility taxes 723,650 715,470
Franchise fees 491,438 534,576
Shared revenues 1,079,320 1,039,239
Investment income and other 28,200 31,423
Total revenues 5,584,857 5,693,509
EXPENSES:
General government 1,047,664 953,726
Public safety 3,227,399 3,177,859
Transportation 538,315 616,551
Physical environment 959,233 836,679
Interest on long-term debt 2,467 17,459
Total expenses 5,775,078 5,602,274
"' Change in net assets (190,221) 91,235
NET ASSETS, beginning 19,540,337 19,449,102
wr
NET ASSETS, ending $ 19,350,116 $ 19,540,337
9
CITY OF OKEECHOBEE, FLORIDA 1.
Management's Discussion and Analysis
For Year Ended September 30, 2012 s
The City experienced a decrease of approximately 1.9% in total revenues — a $108,652 decrease to
$5.6 million. The decrease is primarily due to a $149,279 decrease in capital grants and contributions rok
from completion of sidewalk construction during the prior fiscal year which was donated by the Florida
Department of Transportation. New construction added to the assessed taxable values and was the
contributory factor in the increase in property tax revenue of $36,581. Franchise Fee revenues Ili
decreased $43,138 based on lower consumer paid utilities. The Shared Revenue for the State of
Florida (SRS) increased approximately $40,081. The $3,223 decrease in investment income and other
revenue is due primarily to a general decrease in available interest rates. Total expenses increased M.
approximately $172,800. The increase in expenses is due primarily to higher public safety costs,
physical environment costs and general services.
r
FUND FINANCIAL ANALYSIS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- ell
related legal requirements.
Governmental funds. The focus of the City's governmental funds is to provide information on near- NI
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.
IN
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $11,504,659, an increase of $118,228 in comparison with the prior year. Approximately
81.6% of this total amount, $9,391,910, constitutes unassigned fund balance, which is available for ai
spending at the government's discretion. Assigned fund balances include $824,372 for subsequent year's
expenditures, $300,000 for future capital projects and $63,514 for future qualified impact fee
expenditures. Public Facilities fund balance of $883,941 plus law enforcement $4,188 and community err
development of $32 are restricted funds based on their specific stipulated purpose. The remainder of
fund balance is non-spendable inventory of$36,702.
or
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 $10,516,282 while total fund balance was
$11,436,925. As a measure of the general fund's liquidity, it may be useful to compare both assigned fib
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 185% and 202%
respectively of total general fund expenditures.
■r
The impact fees capital project fund, a major fund, recorded a year-end fund balance of $63,514.
Impact fees receipted are to be used for capital improvements; projects and/or equipment needs
identified within the City's Comprehensive Improvement Plan. w
General Fund Budgetary Highlights
MI
The amount appropriated for expenditures in the original 11/12 budget decreased from $6,870,336 to
$5,774,601 in the final 11/12 budget, a decrease of $1,095,735. The decrease in general government
expenses, fire and police public safety expenses, transportation, physical environment and the capital at
outlay cost largely contributed to the overall decrease in expenditures.
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2012
CAPITAL ASSETS AND LONG-TERM LIABILITIES
Capital assets. The City's investment in capital assets as of September 30, 2012, amounted to
$8,035,056 (net of accumulated depreciation). This investment in capital assets includes land,
buildings, improvements, equipment, and construction in progress. During the year, the City's net
capital asset balance increased $178,501.
The City's major additions of $706,338 to capital assets during the current fiscal year included the
following:
• Purchase of 410JK Back hoe
• Various infrastructure improvements
• Replacement file server and computers for police department and additional
replacement computer for administration at the fire department
• Replacement and upgrade of additional air conditioning units at city hall and at the
police department, respectively
• Replaced 16 police vehicles including equipment
•. • Replaced laser fiche scanner
• City portion of the SLERS radios for our various departments
These additions were offset by depreciation expense of$526,071, and disposals of$451,566, which
.o largely relates to the sale of 16 police vehicles.
City's Capital Assets
(net of depreciation)
2012 2011
Land $ 1,378,744 $ 1,378,744
Buildings 1,208,723 1,261,121
Improvements other than
building 4,211,613 4,406,164
Equipment 1,235,976 1,167,528
Total $ 8,035,056 $ 8,213,557
dio
Additional information on the City's capital assets can be found in Note 4.C. on page 33 of this report.
11
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2012
Long-term Liabilities
City's Outstanding Debt
Long-term Liabilities
ob
2012 2011
Capital leases $ - $ 41,918
Net OPEB obligation 456,060 301,348
Compensated absences 346,194 364,983
Total $ 802,254 $ 708,249
The City's long-term liabilities increased by $94,005 during the current fiscal year. In prior years, the
City had purchased a police CAD system under a capital lease. This lease was paid in full at the end of '®r
fiscal year 2012. The decrease of capital leases as well as the compensated absences was offset by
the increased additional liability for the OPEB liability. This is the third year of implementation of GASB
45, which caused the increase in Net OPEB liability.
Additional information on the City's long-term debt can be found in Notes 4.E. on page 34 of this
report. wr
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET 1110
The City Council adopted a millage rate 7.7432 for budget year 2013. The adopted millage rate is
5.84% less than the roll-back rate and will generate $50,183 less ad valorem revenue than last year.
Revenues for the fiscal year 2013 adopted budget for all funds of the City total approximately
$6,242,459, an increase from the prior year budget of approximately $66,197. 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 increase in grant funds provided for economic
development.
•
Expenditures for the fiscal year 2013 adopted budget for all funds of the City total approximately
$7,515,000, a decrease of approximately 1% from the prior year budget. These expenditures primarily
decreased due to the reduction in capital projects budgeted for the upcoming year. „r.
REQUESTS FOR INFORMATION
sir
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 rr,
Avenue, Okeechobee, Florida 34974.
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CITY OF OKEECHOBEE, FLORIDA
Statement of Net Assets - Governmental Activities
September 30, 2012
ASSETS
Cash and cash equivalents $ 11,531,311
Investments 108,135
Accounts receivable 119,403
Due from other governments 172,666
Inventory 36,702
Overfunded pension costs 612,655
Capital assets:
Nondepreciable
Land 1,378,744
Depreciable, net of accumulated depreciation
Buildings 1,208,723
Improvements other than buildings 4,211,613
Equipment 1,235,976
•. Total assets 20,615,928
LIABILITIES
s• Accounts payable 275,607
Accrued expenses 147,226
Unearned revenue 40,725
Noncurrent liabilities:
Due within one year 142,324
Due in more than one year 659,930
Total liabilities 1,265,812
NET ASSETS
Invested in capital assets, net of related debt 8,035,056
Restricted for:
Community development 32
Law enforcement 4,188
Public facilities 883,941
Unrestricted 10,426,899
Total net assets $ 19,350,116
The accompanying notes are an integral part of these financial statements. 15
CITY OF OKEECHOBEE, FLORIDA ao
Statement of Activities- Governmental Activities
Year Ended September 30, 2012 e„
Program Revenues Net (Expense)
Operating Capital Revenue and Ilb
Charges for Grants and Grants and Changes in
Functions/Programs Expenses Services Contributions Contributions Net Assets
General government $ 1,047,664 $ 596,765 $ 124,562 $ - $ (326,337) lob
Public safety 3,227,399 18,830 6,790 - (3,201,779)
Transportation 538,315 41,642 613,614 - 116,941
Physical environment 959,233 - - 106,197 (853,036)
Interest on long term debt 2,467 - - - (2,467)
Total governmental
activities $ 5,775,078 $ 657,237 $ 744,966 $ 106,197 (4,266,678)
General revenues:
Property taxes 1,753,849 rs
Public utility taxes 723,650
Franchise fees 491,438
Shared revenues not restricted to specific programs 1,079,320 „,o
Unrestricted investment earnings 16,620
Miscellaneous 11,580
Total general revenues 4,076,457 1111
Change in net assets (190,221)
Net assets, beginning 19,540,337
Net assets, ending $ 19,350,116
•
aft
The accompanying notes are an integral part of these financial statements. 16
CITY OF OKEECHOBEE, FLORIDA
Balance Sheet - Governmental Funds
.. September 30, 2012
Total
Impact Fees Nonmajor Governmental
General Capital Project Funds Funds
ASSETS
Cash and cash equivalents $ 11,395,231 $ 113,267 $ 22,813 $ 11,531,311
Investments 108,135 - - 108,135
Accounts receivable 119,403 - - 119,403
Due from other funds 23,834 - 375 24,209
"' Due from other governments 161,899 - 10,767 172,666
Inventory 36,702 - - 36,702
Total assets $ 11,845,204 $ 113,267 $ 33,955 $ 11,992,426
LIABILITIES AND FUND BALANCES
Liabilities
,a Accounts payable $ 220,328 $ 49,753 $ 5,526 $ 275,607
Accrued expenses 147,226 - - 147,226
Due to other funds - - 24,209 24,209
Unearned revenue 40,725 - - 40,725
as Total liabilities 408,279 49,753 29,735 487,767
Fund balances:
Nonspendable for:
Inventory 36,702 - - 36,702
Restricted for:
Public facilities 883,941 - - 883,941
•• Law enforcement - - 4,188 4,188
Community development - - 32 32
Assigned for:
,. Subsequent year's expenditures 824,372 - - 824,372
Future capital projects 300,000 - - 300,000
Impact fees - 63,514 - 63,514
Unassigned 9,391,910 - - 9,391,910
'., Total fund balances 11,436,925 63,514 4,220 11,504,659
Total liabilities and fund balances $ 11,845,204 $ 113,267 $ 33,955
"" Amounts reported for governmental activities in the statement
of net assets are different because:
Negative net pension obligation resulting from overfunding of
as the police officers' and firefighters' pension plans. 612,655
Capital assets used in governmental activities are not financial
a. resources and, therefore, are not reported in the funds. 8,035,056
Long-term liabilities, including the net OPEB obligation
and compensated absences are not due and payable in the
.. current period and, therefore, are not reported in the funds. (802,254)
Net assets of governmental activities $ 19,350,116
The accompanying notes are an integral part of these financial statements. 17
CITY OF OKEECHOBEE, FLORIDA M►
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds
Year Ended September 30, 2012 ,r,,,
Total
Impact Fees Nonmajor Governmental l"
General Capital Project Funds Funds
to
Revenues
Taxes $ 2,395,888 $ - $ - $ 2,395,888
Intergovernmental 2,005,106 - 106,197 2,111,303 rr
Charges for services 413,489 - - 413,489
Permits and fees 610,620 - - 610,620
Fines and forfeitures 23,425 - 500 23,925 alk
Investment earnings 44,473 - - 44,473
Miscellaneous 11,580 1,432 - 13,012
Total revenues 5,504,581 1,432 106,697 5,612,710 A„
Expenditures
Current:
s
General government 1,029,647 - - 1,029,647
Public safety 2,900,025 - 125 2,900,150
Transportation 893,744 - - 893,744 s
Physical environment 151,421 - 106,197 257,618
Capital outlay 656,585 49,753 - 706,338
Debt service: 410
Principal retired 41,918 - - 41,918
Interest 2,467 - - 2,467
Total expenditures 5,675,807 49,753 106,322 5,831,882 "'"
Excess (deficiency) of revenues
over(under) expenditures (171,226) (48,321) 375 (219,172)
w
Other financing sources (uses)
Transfers in/(out) 1,432 (1,432) - -
Proceeds from sale of capital assets 337,400 - - 337,400 "b
Total other financing sources (uses) 338,832 (1,432) - 337,400
Net change in fund balances 167,606 (49,753) 375 118,228
Fund balances, beginning of year 11,269,319 113,267 3,845 11,386,431 Mb
Fund balances, end of year $ 11,436,925 $ 63,514 $ 4,220 $ 11,504,659
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The accompanying notes are an integral part of these financial statements. 18
s
CITY OF OKEECHOBEE, FLORIDA
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
Year Ended September 30, 2012
Net change in fund balances -total governmental funds $ 118,228
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. 180,267
.. 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. (358,768)
The net effect of overfunded pension contributions that are reported as
expenditures in the fund financial statements and are recorded
as a net pension asset on the statement of net assets. (35,943)
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 repayment on principal of long-term debt. 41,918
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. (154,712)
a• 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. 18,789
�•• Change in net assets of governmental activities $ (190,221)
Al MO
a.
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, 2012
COMPONENT
UNIT
General
Pension Employees'
Trust Funds Pension Trust
ASSETS
Cash equivalents $ 812,055 $ 860,011
Investments:
U.S. Government agencies 270,065 225,054
Municipal bonds 110,993 90,812
Corporate and foreign bonds 2,089,013 1,812,398 .r
Common equity securities 5,859,151 5,130,398
Receivables 33,562 54,559
Accrued interest and dividends 25,647 20,881 .,
Prepaid expenses 4,362 2,931
Total assets 9,204,848 8,197,044
LIABILITIES
Accounts payable 21,294 15,252
Total liabilities 21,294 15,252
NET ASSETS
Held in trust for pension benefits $ 9,183,554 $ 8,181,792
The accompanying notes are an integral part of these financial statements. 20
CITY OF OKEECHOBEE, FLORIDA
Statement of Changes in Fiduciary Net Assets - Pension Trust Funds
Year Ended September 30, 2012
COMPONENT
UNIT
General
Pension Employees'
Trust Funds Pension Trust
ADDITIONS
Contributions:
State $ 124,562 $ -
'" City 167,959 359,298
Employees 66,089 170,565
Total contributions 358,610 529,863
Investment earnings:
Net appreciation in the
fair value of investments 1,226,353 1,083,125
Interest and dividends 190,309 163,358
Total investment earnings 1,416,662 1,246,483
,.. Less investment expenses (81,729) (58,030)
Net investment earnings 1,334,933 1,188,453
•- Total additions 1,693,543 1,718,316
DEDUCTIONS
Benefits paid to participants 220,040 271,244
Refunds on termination - 37,464
DROP payment 4,295 -
Administrative expenses 46,084 19,886
Total deductions 270,419 328,594
Change in net assets 1,423,124 1,389,722
Net assets held in trust for pension
benefits, beginning of year 7,760,430 6,792,070
Net assets held in trust for pension
.• benefits, end of year $ 9,183,554 $ 8,181,792
The accompanying notes are an integral part of these financial statements. 21
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THIS PAGE IS INTENTIONALLY LEFT BLANK.
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IOW
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22
�.. CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. REPORTING ENTITY
The City of Okeechobee (the "City") was originally incorporated in 1915 and its present charter was
adopted in 1919 under Chapter 8318 of Special Acts of 1919. The City operates under the council form of
government and provides the following services: general government, public safety, transportation and
4111 physical environment.
These financial statements present the primary government and its component units. Blended component
do' units, although legally separate entities, are, in substance, part of the government's operations and so
data from these units are combined with data of the primary government. The City has no blended
component units. Discretely presented component units are entities that are legally separate from the
•.► City, but whose relationship with the City are such that the exclusion would cause the City's financial
statements to be misleading or incomplete. The financial data of this entity is 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 revenues 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
For Year Ended September 30, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION ,,b
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. 111"
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 el
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 funds:
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 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 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 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.
Sb
24
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
,V„ For Year Ended September 30, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION (CONTINUED)
Additionally, the City reports the following fund types:
The pension trust fund account is used to account for assets held by the City in a fiduciary capacity
for the police officers' and firefighters' pension plans. The funds are operated by carrying out
specific terms of statutes, ordinances and other governing regulations.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in the government-wide financial statements to the extent that those standards
.• do not conflict with or contradict guidance of the Governmental Accounting Standards Board.
The effect of interfund activity has been eliminated from the government-wide financial statements.
Amounts reported as program revenues include 1) charges to customers or applicants for goods,
services or privileges provided, 2) operating grants and contributions, and 3) capital grants and
contributions. Internally dedicated resources are reported as general revenues rather than as program
revenues. Likewise, general revenues include all taxes.
Expenses for compensated absences are allocated based on the assigned function of the related
IMO
employee.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
imp 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.
Ai
25
CITY OF OKEECHOBEE, FLORIDA eh
Notes to Financial Statements
For Year Ended September 30, 2012 ws
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) err
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 ,i„
Funds Trust Fund (the "State Pool"). The State Pool is administered by the Florida State Board of
Administration ("SBA"), who provides regulatory oversight. On September 30, 2008, the SBA reported
that the State Pool was exposed to potential risks due to indirect exposure in the sub-prime mortgage
financial market. Consequently, the SBA placed some restriction on how participants could access
portions of their surplus funds and ultimately restructured the State Pool into two separate pools ("Florida
PRIME" (formerly"LPIG") and "Fund B").
■r
The Florida PRIME has adopted operating procedures consistent with the requirements for a 2a7-like
fund. The City's investment in the Florida PRIME is reported at amortized cost. The fair value of the City's
position in the pool is equal to the value of pooled shares. ap
Fund B is reported at fair value, determined by the fair value per share of the pool's underlying portfolio.
The City pools the investments of its governmental funds. Investment earnings of the pool are allocated
to the participating funds at the end of each month based on the ratio of each participant funds'
investment to the total pooled investment.
Cash and cash equivalents include cash deposits, cash funds held in broker accounts and investments
held in the Local Government Surplus Funds Trust Fund (Florida PRIME). op
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
s
to. CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY (CONTINUED)
2. Receivables and payables
All trade and property tax receivables are considered to be fully collectible.
The City's property tax is levied annually on the real and personal property located in the City on
January 1st of the prior year. Tax collections by the Okeechobee County tax collector begin in
""" November of each year with a due date of March 31 of the following year. All property taxes remaining
unpaid at May 30 are subject to a tax certificate sale.
The City is permitted by State law to levy taxes up to 10 mills on assessed valuation. During a Special
Session in June, 2007, the Florida Legislature adopted HB1B which limits municipal property tax rates
beginning in the 2008 fiscal year. This legislation established reductions in the millage rate based on a
'• calculated growth in per capita taxes between the 2002 and 2007 fiscal years. The Legislature did
authorize local governments to use the rolled back millage rate if approved by a super majority vote of
the governing body. The Okeechobee City Council levy for the fiscal year ended September 30, 2012
was 7.7432 mills, which is 2.03% less than the rolled back rate.
The City Council determines the millage rates and adopts a tax levy by resolution prior to September 30
to fund the next ensuing fiscal year's budget. The assessment of all properties and collection of
municipal taxes are provided by the County's Property Appraiser and Tax Collector. The ad valorem tax
calendar is as follows:
Lien date - 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
$500 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.
..r
27
CITY OF OKEECHOBEE, FLORIDA Or
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY(CONTINUED)
4. Capital assets (continued)
The costs of normal maintenance and repairs that do not add to the value of the asset or materially e,
extend assets' lives are not capitalized. Major outlays for capital assets and improvements are
capitalized as projects are constructed.
Property, plant and equipment is depreciated using the straight-line method over the following estimated ••
useful lives:
Assets Years
Buildings 25-60 r"
Building improvements 12-20
Vehicles 10
Equipment 5-15
5. Compensated absences
It is the City'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
wr
Unearned revenues include amounts collected before the revenue recognition criteria are met. The
unearned items consist primarily of business tax revenues.
rr
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 e.►
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. r
28
e.
.• CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012
�,. NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY(CONTINUED)
9. Fund equity
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
J. 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 or lifted only by the council taking the same formal action (resolution) that
imposed the constraint originally. The City had no committed fund balance at year end.
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.
as 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
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 ell
Notes to Financial Statements
For Year Ended September 30, 2012 rr
NOTE 2— RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS as
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS as
The governmental fund balance sheet includes a reconciliation between fund balance-total governmental
funds and net assets-governmental activities as reported in the government-wide statement of net assets. ..
One element of that reconciliation states that "long-term liabilities, including the 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 $(802,254) difference are as follows:
Net OPEB obligation $ (456,060)
Compensated absences (346,194)
Net adjustment to reduce fund balance - total governmental funds Oh
to arrive at net assets-governmental activities $ (802,254)
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 as depreciation expense." The details of this $180,267 difference are as follows: ,r,.,
Capital outlay $ 706,338
Depreciation expense (526,071)
Net adjustment to increase net changes in fund balances - total
governmental funds to arrive at changes in net assets of governmental
activities $ 180,267
am
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 ma
information in the notes to the required supplementary information.
30
■r
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 4— DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
At September 30, 2012, the City's carrying amount of deposits was $11,530,937 and the bank balance
was $11,635,353. In addition, the City maintained $324 of petty cash. As of September 30, 2012,
$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, 2012, the City had the following investments:
Investment Maturities(in years)
More
Investment type Fair Value Less than 1 1 -5 6-10 than 10 Rating Agency
Primary government:
"" SBA(Florida Prime) $ 50 $ 50 $ - $ - $ - AAAm S&P
SBA Fund B 108,135 - 108,135 - - Not rated -
$ 108,185 $ 50 $ 108,135 $ - $ -
Pension trust funds:
Money market fund $ 1,672,066 $ 1,672,066 $ - $ - $ - Not rated -
U.S.Government agencies 495,119 - - 273,999 221,120 MA S&P
dis
Corporate and foreign bonds 3,901,411 254,045 3,042,024 416,826 188,516 M+--BBB- S&P
Municipal bonds 201,805 - 201,805 - - N/R--Aa3 S&P
Common equity securities 10,989,549 10,989,549 - - - - -
$ 17,259,950 $ 12,915,660 $ 3,243,829 $ 690,825 $ 409,636
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.
31
i
F
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012 .►
NOTE 4— DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. DEPOSITS AND INVESTMENTS (CONTINUED)
NI
Concentration of credit risk
Concentration of credit risk is an increased risk of loss that occurs as more investments are acquired
NC
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 or
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
f.
Receivables as of September 30, 2012 are as follows:
Municipal Municipal Component Unit
Police Officers' Firefighters' General
General Pension Pension Employees
Fund Trust Trust Pension Trust
Franchise/Utility taxes $ 117,078 $
Contributions - 16,192 17,370 54,559
Other 2,325 - - -
Receivables, net $ 119,403 $ 16,192 $ 17,370 $ 54,559
rr►
Si
32
+n
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 4— DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2012 was as follows:
Beginning Ending
.. Balance Increases Decreases Balance
Governmental activities:
Capital assets, not being depreciated:
Land $ 1,378,744 $ - $ - $ 1,378,744
Total capital assets, not being depreciated 1,378,744 - - 1,378,744
Capital assets, being depreciated:
Buildings 1,901,826 8,830 (1,440) 1,909,216
Improvements other than buildings 6,152,516 85,711 - 6,238,227
Equipment 2,446,854 611,797 (450,126) 2,608,525
Total capital assets, being depreciated 10,501,196 706,338 (451,566) 10,755,968
Less accumulated depreciation for:
Buildings (640,705) (60,041) 253 (700,493)
Improvements other than buildings (1,746,352) (280,262) - (2,026,614)
Equipment (1,279,326) (185,768) 92,545 (1,372,549)
Total accumulated depreciation (3,666,383) (526,071) 92,798 (4,099,656)
Total capital assets, being depreciated, net 6,834,813 180,267 (358,768) 6,656,312
Governmental activities capital assets, net $ 8,213,557 $ 180,267 $ (358,768) $ 8,035,056
The current year increase in capital assets does not include any donated capital assets.
Depreciation expense was charged to functions/programs of the government as follows:
Governmental activities:
�. General government $ 32,750
Public safety 174,655
Physical environment 318,666
•• Total depreciation expense - governmental activities $ 526,071
D. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund loans of $24,209 for short term operating purposes resulted in $23,834 and $375 due to the
General Fund and Law Enforcement Fund, respectively, from the Community Development Capital
••• Project Fund. All amounts are expected to be repaid within one year.
During the year ended September 30, 2012, the Impact Fee Capital Project fund (a nonmajor fund)
transferred $1,432 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.
33
CITY OF OKEECHOBEE, FLORIDA +�
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 4— DETAILED NOTES ON ALL FUNDS (CONTINUED)
E. CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended September 30, 2012, was as follows:
Beginning Ending Due Within
Balance Add itions Reductions Balance One Year "a
Governmental activities:
Capital lease $ 41,918 $ - $ (41,918) $ - $ -
Net OPEB obligation 301,348 154,712 - 456,060 - •
Compensated absences 364,983 156,230 (175,019) 346,194 142,324
Long-term liabilities $ 708,249 $ 310,942 $ (216,937) $ 802,254 $ 142,324
For the governmental activities, compensated absences and capital leases are generally liquidated by
the general fund.
NOTE 5—OTHER INFORMATION
A. RISK MANAGEMENT �.
The City is exposed to various risks of loss, including, but not limited to theft, damage or destruction of its
buildings, equipment, records and monetary assets, and liability for personal injury, property damage and .r
consequences of employee and public official actions. The City participates in a non-assessable public
risk pool to cover significant loss exposure and purchases commercial insurance for third party pollution
liability coverage. The pool maintains a loss reserve and purchases specific excess insurance, ,I
aggregate excess insurance and multiple loss coverage from commercial carriers and underwriters.
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS au
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 as
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 rr
reports are available from the City of Okeechobee, Florida, 55 S.E. Third Avenue, Okeechobee, Florida
34974.
■r
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 12.91%
for the Police Officers' plan and 8.73% for the Firefighters' plan. """
34
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 5—OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (CONTINUED)
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 $74,973 and $49,589, 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, 2012 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
,,.s using a method which recognizes actual investment return in excess of the assumed return evenly over a
four year period.
,r Trend information for each of the City's defined benefit plans:
Annual Percentage Net
Year Pension Of APC Pension
Ended Cost (APC) Contributed Obligation
Municipal Police Officers' 9/30/10 $ 220,824 95 % $ (300,272)
9/30/11 253,958 95 (286,526)
9/30/12 220,605 95 (274,642)
Municipal Firefighters' 9/30/10 $ 84,167 96 % $ (348,326)
9/30/11 102,099 96 (343,855)
9/30/12 103,865 94 (338,013)
35
CITY OF OKEECHOBEE, FLORIDA **-
Notes to Financial Statements
For Year Ended September 30, 2012 .�
NOTE 5—OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (CONTINUED)
Funding Status and Funding Progress—The funded status of the Plans as of October 1, 2012, the most .�
recent actuarial valuation date, is shown below:
Unfunded
Actuarial (Assets in UAAL as a
Accrued Liability excess of) % of
Actuarial Value (AAL) —Entry AAL Funded Covered Covered
of Assets Age * (UAAL) Ratio Payroll Payroll
(a) (b) (b)-(a) (a)/(b) (c) (b-a)/(c)
vet
Police Officers':
$ 6,044,391 $ 6,187,990 $ 143,599 97.7% $ 928,285 15.5% .►
Firefighters': Wit
$ 2,595,508 $ 2,556,559 $ (38,949) 101.5% $ 429,008 (9.1)%
* For purposes of this schedule, the AAL for the Plan is determined using the entry age actuarial cost
method. Note that the ARC for the Plan is calculated using the aggregate actuarial cost method.
The schedule of funding progress presented as required supplementary information (RSI) immediately ..
following the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the AAL for benefits.
OW
Pension Plan— Discretely Presented Component Unit
Plan Description - The City contributes to the City of Okeechobee and Okeechobee Utility Authority
Employees' Retirement System (the "System"), a cost-sharing multiple employer defined benefit
pension plan administered by the System's Board of Trustees. The System provides retirement,
disability and death benefits to plan members and their beneficiaries. The Board of Trustees is
authorized by City Ordinance No. 686 to establish and amend all plan provisions. The System issues a
publicly available financial report that includes financial statements and required supplementary
information. That report is available from the City of Okeechobee, Florida, 55 S.E. Third Avenue,
Okeechobee, Florida 34974.
Funding Policy - The contribution requirements of the plan members and the City are established and
may be amended by City ordinance. Plan members are required to contribute 6% of their covered annual ..
salary. The City is required to contribute at an actuarially determined rate; the current rate is 12.64% of
covered payroll. The City's contributions for the years ended September 30, 2012, 2011 and 2010 were
$97,318, $112,980 and $106,822, respectively, and were equal to the required contributions for each ..
year.
36
... CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
o„ For Year Ended September 30, 2012
. NOTE 5-OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS-DEFINED BENEFIT PLANS (CONTINUED)
Pension trust funds fiduciary net assets activity as of September 30, 2012 was as follows:
COMPONENT
,0, UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
"" ASSETS
Cash equivalents $ 277,381 $ 534,674 $ 812,055 $ 860,011
Investments:
MO U.S. Government agencies 78,769 191,296 270,065 225,054
Municipal bonds 30,271 80,722 110,993 90,812
Corporate and foreign bonds 634,957 1,454,056 2,089,013 1,812,398
Common equity securities 1,762,370 4,096,781 5,859,151 5,130,398
Receivables 17,370 16,192 33,562 54,559
Accrued interest and dividends 7,316 18,331 25,647 20,881
am
Prepaid expenses 1,937 2,425 4,362 2,931
Total assets 2,810,371 6,394,477 9,204,848 8,197,044
.r
LIABILITIES
Accounts payable 8,462 12,832 21,294 15,252
,,. Total liabilities 8,462 12,832 21,294 15,252
NET ASSETS
Held in trust for pension benefits $ 2,801,909 $ 6,381,645 $ 9,183,554 $ 8,181,792
..
..
..
or
37
CITY OF OKEECHOBEE, FLORIDA ...
Notes to Financial Statements
For Year Ended September 30, 2012 .,`,
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, 2012 was as follows:
COMPONENT
UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
ADDITIONS
Contributions OW
State $ 49,589 $ 74,973 $ 124,562 $ -
City 46,256 121,703 167,959 359,298
Employees 21,837 44,252 66,089 170,565
Total contributions 117,682 240,928 358,610 529,863
Investment earnings: ow
Net appreciation in the fair value
of investments 370,105 856,248 1,226,353 1,083,125
Interest and dividends 56,482 133,827 190,309 163,358 .w
Total investment earnings 426,587 990,075 1,416,662 1,246,483
Less investment expenses (32,426) (49,303) (81,729) (58,030)
Net investment earnings 394,161 940,772 1,334,933 1,188,453 ..
Total additions 511,843 1,181,700 1,693,543 1,718,316
DEDUCTIONS
Benefits paid to participants 31,091 188,949 220,040 271,244
Refunds on termination - - - 37,464 "�
DROP payment - 4,295 4,295 -
Administrative expenses 18,924 27,160 46,084 19,886
Total deductions 50,015 220,404 270,419 328,594 ark
Change in net assets 461,828 961,296 1,423,124 1,389,722
Net assets held in trust for „a
pension benefits,
beginning of year 2,340,081 5,420,349 7,760,430 6,792,070
Net assets held in trust for "®
pension benefits, end of year $ 2,801,909 $ 6,381,645 $ 9,183,554 $ 8,181,792
..
38
eft
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For Year Ended September 30, 2012
NOTE 5—OTHER INFORMATION (CONTINUED)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION
400 As of October 1, 2009, the City implemented Governmental Accounting Standards Board Statement No.
45, Accounting and Reporting by Employers for Postemployment 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, 2012, the City's contribution is $10,129, which represents an estimate
of the implied subsidy described above. Contributions of plan members totaled approximately $23,094 for
the year ended September 30, 2012.
din
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, 2012, the amount actually contributed to the
Plan, and changes in the City's net OPEB obligation to the Plan:
aso
Annual required contribution $ 165,846
Interest on net OPEB obligation 9,040
,,• Adjustment to annual required contribution (10,045)
Annual OPEB cost (expense) 164,841
Contributions made (10,129)
Interest on contributions made -
Increase in net OPEB obligation 154,712
Net OPEB obligation — beginning of year 301,348
Net OPEB obligation — end of year $ 456,060
ass
39
CITY OF OKEECHOBEE, FLORIDA .�
Notes to Financial Statements
For Year Ended September 30, 2012 .�
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, 2012 was as follows:
Year Annual OPEB Percentage of Annual Net OPEB
Ending Cost OPEB Cost Contributed Obligation
9/30/12 $ 164,841 6% $ 456,060
9/30/11 160,520 5% 301,348
9/30/10 156,327 5% 148,767
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. r.
The schedule of funding progress presented as required supplementary information following the notes to
the financial statements, will present multiyear trend information that shows whether the actuarial value of "`
Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Because fiscal year 2010 was the year of implementation of GASB Statement No 45 and the City elected
to apply the statement prospectively, only one year is presented in the schedule at this time. In future
years, required trend data will be presented.
Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the „F
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 emk
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 over a period of 30 years. aft
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.
eft
40
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
..
For Year Ended September 30, 2012
do
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 Firefighters (IAFF) extended through
September 30, 2009 and has not been renewed as of the date of our report.
00 NOTE 6— FUTURE ACCOUNTING PRONOUCNEMENTS
The following statements of the Governmental Accounting Standards Board will be effective for the City's
2013 fiscal year:
Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements
.. Statement No. 61, The Financial Reporting Entity: Omnibus
Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in
Pre-November 30, 1989 FASB and AICPA Pronouncements
law Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of
Resources, and Net Position
The City is currently evaluating the effects that these statements will have on its financial statements for
., the year ended September 30, 2013.
NOTE 7—SUBSEQUENT EVENT
During November 2012, the City awarded the annual police vehicle purchase bid to an unrelated vendor
"' for 14 police vehicles in the amount of approximately$297,000.
MO
MP
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41
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42
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.r
,. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
..
!.
.•
..
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44
CITY OF OKEECHOBEE, FLORIDA
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
General Fund
.. Year Ended September 30, 2012
Actual Variance with
Original Final (on Budgetary Final Budget
as Budget Budget Basis) Positive (Negative;
Revenues
Taxes $ 2,350,679 $ 2,366,066 $ 2,395,888 $ 29,822
Intergovernmental 1,832,940 1,897,416 2,005,106 107,690
"`" Charges for services 388,219 351,840 413,489 61,649
Permits and fees 570,031 604,886 610,620 5,734
Fines and forfeitures 30,742 23,422 23,425 3
Investment earnings 7,500 14,307 44,473 30,166
Miscellaneous 2,500 4,278 11,580 7,302
Total revenues 5,182,611 5,262,215 5,504,581 242,366
Expenditures
Current:
General government:
Legislative 111,136 109,383 108,322 1,061
Executive 171,526 163,248 161,540 1,708
. City clerk 179,244 172,999 171,600 1,399
Financial services 223,561 212,655 208,778 3,877
Legal council 70,642 50,183 45,600 4,583
s General services 314,609 327,517 321,404 6,113
Total general government 1,070,718 1,035,985 1,017,244 18,741
Public safety:
Fire 1,273,993 1,220,744 1,207,465 13,279
.' Police 1,902,714 1,728,938 1,692,064 36,874
Total public safety 3,176,707 2,949,682 2,899,529 50,153
Transportation 1,031,413 926,183 893,746 32,437
Physical environment 706,823 327,374 248,355 79,019
,. Capital outlay 840,289 490,990 481,744 9,246
Debt service:
Principal 41,919 41,920 41,918 2
,.• Interest 2,467 2,467 2,467 -
Total debt service 44,386 44,387 44,385 2
Total expenditures 6,870,336 5,774,601 5,585,003 189,598
Deficiency of revenues under
"" expenditures (1,687,725) (512,386) (80,422) 431,964
Other financing sources
Operating transfers in 50 1,430 1,432 2
a„ Sale of capital assets 288,000 327,400 337,400 10,000
Net other financing sources 288,050 328,830 338,832 10,002
Excess (deficiency)of revenues and other
financing sources over(under)
expenditures and other financing uses (1,399,675) (183,556) 258,410 441,966
Fund balances, beginning of year 11,269,319 11,269,319 11,269,319 -
Fund balances, end of year $ 9,869,644 $ 11,085,763 11,527,729 $ 441,966
Reconciliation of budgetary
'� to GAAP basis
Current year encumbrances 4,198
Prior year encumbrances (95,002)
"" Fund balance on GAAP basis $ 11,436,925
r
The accompanying notes to required supplementary information are an integral part of this schedule. 45
CITY OF OKEECHOBEE, FLORIDA
Required Pension Supplementary Information - Schedule of Funding Progress
Last Six Fiscal Years
Police Officers' Pension Plan
Actuarial Unfunded
Accrued (Assets in UAAL as a %
Actuarial Actuarial Liability excess of) AAL Funded of Covered
Valuation Value of AAL (UAAL) Ratio Covered Payroll
Date Assets (a) Entry Age (b) (b-a) (a/b) Payroll (c) ((b-a)/c)
2012 $ 6,044,391 $ 6,187,990 $ 143,599 97.68%- $ 928,285 15.5%
2011 5,712,560 5,886,480 173,920 97.05% 936,580 18.6%
2010 5,666,207 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 5,253,380 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%
Firefighters' Pension Plan
Actuarial Unfunded
Accrued (Assets in UAAL as a %
Actuarial Actuarial Liability excess of)AAL Funded of Covered
Valuation Value of AAL (UAAL) Ratio Covered Payroll to
Date Assets (a) Entry Age (b) (b-a) (a/b) Payroll (c) ((b-a)/c)
2012 $ 2,595,508 $ 2,556,559 $ (38,949) 101.52% $ 429,008 -9.1%
2011 2,428,618 2,318,524 (110,094) 104.75% 457,776 -24.0%
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%
* The annual required contribution (ARC) is calculated using the aggregate actuarial cost method.
Information in this schedule is calculated using the entry age actuarial cost method as a surrogate
for the funding progress of the Plan. ..
Ns
NO
+rr
46
CITY OF OKEECHOBEE, FLORIDA
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 30.9%
.. 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
For Year Ended September 30, 2012 +IS
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.
+rr
The City Administrator may make transfers of appropriations within a department as long as the total
budget of the department is not increased. Transfers of appropriations between departments require the
approval of the council. The legal level of budgetary control (i.e., the level at which expenditures may
not legally exceed appropriations) is the department level. The council made certain supplemental
budgetary appropriations during the year.
For the year ended September 30, 2012, budgeted expenditures exceeded budgeted revenues in the
general fund. However, this was pursuant to the legally adopted budget to expend available fund equity
(cash carry forward) and did not constitute a deficit.
rir
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 g,
The information presented in the required supplementary schedules was determined as part of the
actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation
follows: 116
Police
Firefighters' Officers'
Pension Plan Pension Plan
Actuarial valuation date 10/01/12 10/01/12
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: ,r„t
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: 3.5% 3.5%
.r.
48
4
_`` cm C A R R Carr,Riggs&Ingram,LLC
RIGGS & 215 Baytree Drive
INGRAM Melbourne,Florida 32940
CPAs and Advisors
(321)255-0088
(321)259-8648(fax)
www.cricpa.com
-r 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, each major fund, and the
aggregate remaining fund information of the City of Okeechobee, Florida, as of and for the year ended
September 30, 2012, which collectively comprise the City of Okeechobee, Florida's basic financial
statements and have issued our report thereon dated May 13, 2013. Our report was includes 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
MIN 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 defined previously.
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 es
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. 1111
•
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 ,.o
General, and is not intended to be and should not be used by anyone other than these specified parties.
I 16-6:421' -742-01, 41.Z VD
Melbourne, Florida
May 13, 2013
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1111
50
MOW C A R R Carr,Riggs&Ingram,LLC
A c I INGRAM 215 Baytree Drive
Melbourne,Florida 32940
.r CPAs and Advisors
(321)255-0088
(321)259-8648(fax)
,,. www.cricpa.com
Independent Auditors' Management Letter
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited the financial statements of the City of Okeechobee, Florida as of and for the fiscal
year ended September 30, 2012, and have issued our report thereon dated May 13, 2013.
dip
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
"al Auditors' Report on Internal Control over Financial Reporting and Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with Government Auditing
Standards, dated May 13, 2013, should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor
General, which governs the conduct of local governmental entity audits performed in the State of
Florida. This letter includes the following information, which is not included in the aforementioned
auditors' report:
.. ❖ Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. There were no findings and recommendations made in
the preceding annual financial audit report.
• Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of
the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In
.. connection with our audit, we determined that the City of Okeechobee, Florida complied with
Section 218.415, Florida Statutes.
❖ Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the
management letter any recommendations to improve financial management. In connection with
our audit, we did not have any such recommendations.
• Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of
provisions of contracts or grant agreements, fraud, illegal acts or abuse, that have occurred, or
are likely to have occurred, that have an effect on the financial statements that is less than
material but more than inconsequential. In connection with our audit, we did not have any such
findings.
• Section 10.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on
professional judgment, report the following matters that have an inconsequential effect on
financial statements, considering both quantitative and qualitative factors: (1) violations of
provisions of contracts or grant agreements, fraud, illegal acts, or abuse, and (2) deficiencies in
internal control that are not significant deficiencies. In connection with our audit, we did not have
any such findings.
51
MIN
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 r•
connection with our audit, we determined that the City of Okeechobee, Florida did not meet any
of the conditions described in Section 218.503(1), Florida Statutes.
• Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the
annual financial report for the City of Okeechobee, Florida for the fiscal year ended September
30, 2012, filed with the Florida Department of Financial Services pursuant to Section „e
218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the
fiscal year ended September 30, 2012. In connection with our audit, we determined that these
two reports were in agreement.
• Pursuant to Sections 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied
financial condition assessment procedures. It is management's responsibility to monitor the City
of Okeechobee, Florida's financial condition, and our financial condition assessment was based
in part on representations made by management and the review of financial information
provided by same.
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representative, the Florida Auditor
General, Federal and other granting agencies, applicable management, the Honorable Mayor and City
Council, and is not intended to be and should not be used by anyone other than these specified parties.
61)vL, A ZGj241/24)
Melbourne, Florida
May 13, 2013
52