Audit Report 09.30.2013CITY OF OKEECHOBEE, FLORIDA
Financial Statements
For Year Ended September 30, 2013
CITY OF OKEECHOBEE, FLORIDA
Table of Contents
For Year Ended September 30, 2013
Introductory Section
Title Page
Table of Contents
City Officials
Financial Section
Independent Auditors' Report
Page
1
2
3
5
Management's Discussion and Analysis 9
Basic Financial Statements
Government -wide Financial Statements
• Statement of Net Position - Governmental Activities 17
• Statement of Activities - Governmental Activities 18
Fund Financial Statements
Governmental Funds
• Balance Sheet 19
• Statement of Revenues, Expenditures and Changes in Fund Balances 20
• Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 21
Fiduciary Funds (Component Units that are Fiduciary in Nature)
• Statement of Fiduciary Net Position - Pension Trust Funds 22
• Statement of Changes in Fiduciary Net Position - Pension Trust Funds 23
Notes to Financial Statements 25
Required Supplementary Information Other Than Management's Discussion and
Analysis
• Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and
Actual - General Fund 47
• Required Pension Supplementary Information - Schedule of Funding Progress 48
• Required Other Postemployment Benefits Supplementary Information - Schedule
of Funding Progress 49
• Notes to Required Supplementary Information 50
Reports on Internal Control and Compliance Matters
• 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 51
• Independent Auditors' Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on the
Schedule of Expenditures of Federal Awards Required by OMB Circular A -133 53
• Schedule of Findings and Questioned Costs 55
• Schedule of Expenditures of Federal Awards 57
• Independent Auditors' Management Letter 59
2
CITY OF OKEECHOBEE, FLORIDA
City Officials
For Year Ended September 30, 2013
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
CRI CARR
RIGGS &
INGRAM
CPAs and Advisors
INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Report on the Financial Statements
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259-8648 (fax)
www.cricpa.com
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, 2013, and the related notes to the financial statements, which
collectively comprise the City of Okeechobee, Florida's basic financial statements as listed in the table
of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors' Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not
audit the financial statements of the fiduciary fund type and the discretely presented component unit.
Those financial statements were audited by other auditors whose reports thereon have been furnished
to us, and our opinion, insofar as it relates to the fiduciary fund type and the discretely presented
component unit is based on the reports of the other auditors. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
5
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Two
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, 2013, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis (pages 9 through 14), the budgetary comparison information
(page 47), pension and other postemployment benefits information (pages 48 through 50) be
presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We 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 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 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.
Other Information
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 and schedule of expenditures of federal awards, as required by the Office of Management and
Budget Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations (Circular A-
133) are presented for purposes of additional analysis and are not a required part of the financial
statements.
The schedule of expenditures of federal awards is the responsibility of management and was derived
from and relates directly to the underlying accounting and other records used to prepare the basic
financial statements. Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare
the basic financial statements or to the basic financial statements themselves and other additional
procedures in accordance with auditing standards generally accepted in the United States of America.
In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in
relation to the financial statements as a whole.
6
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Three
The introductory section 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 28,
2014 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 internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering
City of Okeechobee, Florida's internal control over financial reporting and compliance.
Melbourne, Flori
April 28, 2014
a
7
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8
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2013
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, 2013. 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, 2013:
• The City's total assets exceeded its liabilities at September 30, 2013 by $18,970,682.
• The City's total revenues were $6,109,473 for the year ended September 30, 2013,
compared to total expenses of $6,488,907, which resulted in a $379,434 decrease in net
position.
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 position presents information on all of the City's assets and liabilities, with the
difference between the two reported as net position. Over time, increases or decreases in net position
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 position changed during
the year. All changes in net position 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 17 and 18 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.
9
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2013
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 Tong -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 19 through 21 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 22 and 23 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 25 through 43 of this report.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of financial position. The
following table reflects the condensed government -wide statement of net position.
City of Okeechobee
Statement of Net Position
2013 2012
Current and other assets $ 12,643,327 $ 12,580,872
Capital assets 7,670,339 8,035,056
Total assets 20,313,666 20,615,928
Current liabilities 362,065 463,558
Noncurrent liabilities 980,919 802,254
Total liabilities 1,342,984 1,265,812
Net position:
Net investment in capital assets 7,670,339 8,035,056
Restricted 860,740 888,161
Unrestricted 10,439,603 10,426,899
Total net position $ 18,970,682 $ 19,350,116
10
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2013
Governmental Activities
Total net position decreased by $379,434 primarily as a result of a $302,262 decrease in total assets,
and a $77,172 increase of total liabilities. The decrease in total assets was primarily due to selling a
capital asset, police vehicles with a net book value of $305,227. The increase in total liabilities was due
to a $178,665 increase of noncurrent liabilities due mainly to increases in the net OPEB obligation.
The net change in current and noncurrent liabilities was $77,172 as current liabilities decreased by
$101,493 related to the timing of payables.
The following table shows condensed revenue and expense data:
City of Okeechobee, Florida
Statement of Activities
2013 2012
REVENUES:
Program revenues:
Charges for services $ 609,205 $ 657,237
Operating grants and contributions 729,829 744,966
Capital grants and contributions 565,863 106,197
General revenues:
Property taxes 1,786,371 1,753,849
Public utility taxes 776,493 723,650
Franchise fees 476,697 491,438
Shared revenues 1,121,364 1,079,320
Investment income and other 43,651 28,200
Total revenues 6,109,473 5,584,857
EXPENSES:
General government 1,107,412 1,047,664
Public safety 3,302,097 3,227,399
Transportation 632,237 538,315
Physical environment 1,447,161 959,233
Interest on long -term debt - 2,467
Total expenses 6,488,907 5,775,078
Change in net position (379,434) (190,221)
Net position, beginning 19,350,116 19,540,337
Net position, ending $ 18,970,682 $ 19,350,116
11
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2013
The City experienced an increase of approximately 9.4% in total revenues — a $524,616 increase to
$6.1 million. The increase is primarily due to a $459,666 increase in capital grants and contributions
for the rehabilitation grant and an economic development grant, both funded by the Small Cities
Community Development Block Grant Program. New construction added to the assessed taxable
values and was the contributory factor in the increase in property tax revenue of $32,522. Franchise
Fee revenues decreased $14,741 based on lower consumer paid utilities. The Shared Revenue for the
State of Florida (SRS) increased approximately $42,044. The $15,451 increase in investment income
is due primarily to an increase in the value of the State Board Account investment accounts. Total
expenses increased $713,829 due primarily to the expenditure of funds for the rehabilitation grant and
the economic grant as well as higher public safety costs, physical environment costs and general
services.
FUND FINANCIAL ANALYSIS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -
related legal requirements.
Governmental funds. The focus of the City's governmental funds is to provide information on near -
term inflows, outflows and balances of spendable resources. Such information is useful in assessing
the City's financing requirements. In particular, unassigned fund balance may serve as a useful
measure of a government's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $11,686,199, an increase of $181,540 in comparison with the prior year. Approximately 81 %
of this total amount $9,470,608, constitutes unassigned fund balance, which is available for spending
at the government's discretion. Assigned fund balances include $955,633 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 $850,970 plus law enforcement $5,768 and community
development of $4,002 are restricted funds based on their specific stipulated purpose. The remainder of
fund balance is non - spendable inventory of $35,704.
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 $10,726,241 while total fund balance was
$11,612,915. As a measure of the general fund's liquidity, it may be useful to compare both assigned
and unassigned fund balance and total fund balance to total fund expenditures. The total assigned
and unassigned fund balance and total fund balance represent approximately 190% and 205%
respectively of total general fund expenditures.
The community development capital project fund, a major fund, recorded a year -end fund balance of
$4,002. Revenues from the rehabilitation grant and an economic development grant were used in the
construction of infrastructure and other improvements in the City.
General Fund Budgetary Highlights
The amount appropriated for expenditures in the original 12/13 budget decreased from $6,613,498 to
$6,238,772 in the final 12/13 budget, a decrease of $374,726. The decrease in general government
expenses, fire and police public safety expenses and transportation expenses largely contributed to the
overall decrease in expenditures.
12
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2013
CAPITAL ASSETS AND LONG -TERM LIABILITIES
Capital assets. The City's investment in capital assets as of September 30, 2013, amounted to
$7,670,339 (net of accumulated depreciation). This investment in capital assets includes land,
buildings, improvements, equipment and construction in progress. During the year, the City's net
capital asset balance decreased $364,717.
The City's major additions of $473,743 to capital assets during the current fiscal year included the
following:
• Replacement computers for (2)- Police Department, (1) Code Enforcement
• Renovation of office (Director of Public Works) along with office furnishings
• Replaced 14 police vehicles including equipment
• Replacement bunker gear for firefighters
• Bush -hog mower and rotary cutter
• Various infrastructure improvements including the SW Street Drainage Project
These additions were offset by depreciation expense of $533,233, and disposals with a net book value
of $305,227, which largely relates to the sale of 14 police vehicles.
Land
Buildings
Improvements other than
buildings
Equipment
Total
City's Capital Assets
(net of depreciation)
2013
$ 1,378,744
1,158,562
4,023,525
1,109,508
$ 7,670,339
2012
$ 1,378,744
1,208,723
4,211,613
1,235,976
$ 8,035,056
Additional information on the City's capital assets can be found in Note 4.C. on page 35 of this report.
13
CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
For Year Ended September 30, 2013
Long -term Liabilities
City's Outstanding Debt
Long -term Liabilities
2013 2012
Net OPEB obligation $ 628,643 $ 456,060
Compensated absences 352,276 346,194
Total $ 980,919 $ 802,254
The City's long -term liabilities increased by $178,665 during the current fiscal year. The largest
contributing factor is the additional liability for the OPEB liability of $172,583. This is the fourth year of
implementation of GASB 45, which caused the increase in Net OPEB liability.
Additional information on the City's Tong -term debt can be found in Note 4.E. on page 36 of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City Council adopted a millage rate 7.7432 for budget year 2014. The adopted millage rate is less
than 1% of the roll -back rate. A $42,648 increase in budgeted ad valorem revenue for the new year is
due to new construction added to this years assessed tax rolls.
Revenues for the fiscal year 2014 adopted budget for all funds of the City total approximately
$6,093,297, a decrease from the prior year budget of approximately $149,162. These revenues include
the General, Public Facility, Capital Projects and Special Law Enforcement fund revenues. The
change in revenue is based mostly on the expected decrease in grant funds provided for economic
development.
Expenditures for the fiscal year 2014 adopted budget for all funds of the City total approximately
$7,523,324, an increase of less than 1%, $8,317 from the prior year budget. The decrease in grant
expenditures offset the increase in public safety cost.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Okeechobee's finances for
all those with an interest. Questions concerning any of the information provided in this report or
requests for additional information should be addressed to the City of Okeechobee, 55 S.E. Third
Avenue, Okeechobee, Florida 34974.
14
BASIC FINANCIAL STATEMENTS
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16
CITY OF OKEECHOBEE, FLORIDA
Statement of Net Position - Governmental Activities
September 30, 2013
ASSETS
Cash and cash equivalents
Investments
Accounts receivable
Due from other governments
Inventory
Overfunded pension costs
Capital assets:
Nondepreciable
Land
Depreciable, net of accumulated depreciation
Buildings
Improvements other than buildings
Equipment
Total assets
LIABILITIES
Accounts payable
Accrued expenses
Unearned revenue
Noncurrent liabilities:
Due within one year
Due in more than one year
Total liabilities
$ 11,595,218
59,085
97,752
260,505
35,704
595,063
1,378,744
1,158, 562
4,023,525
1,109, 508
20,313,666
124,239
196,169
41,657
149,511
831,408
1,342,984
NET POSITION
Net investment in capital assets 7,670,339
Restricted for:
Community development 4,002
Law enforcement 5,768
Public facilities 850,970
Unrestricted 10,439,603
Total net position $ 18,970,682
The accompanying notes are an integral part of these financial statements. 17
CITY OF OKEECHOBEE, FLORIDA
Statement of Activities - Governmental Activities
Year Ended September 30, 2013
Functions /Programs
General government
Public safety
Transportation
Physical environment
Total governmental
activities
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
$ 1,107,412
3,302,097
632,237
1,447,161
$ 543,227
23,222
42,756
$ 132,007 $
2,202
595,620
- 565,863
$ 6,488,907 $ 609,205 $ 729,829 $ 565,863
Net (Expense)
Revenue and
Changes in
Net Position
$ (432,178)
(3,276,673)
6,139
(881,298)
(4,584,010)
General revenues:
Property taxes
Public utility taxes
Franchise fees
Shared revenues not restricted to specific programs
Unrestricted investment earnings
Miscellaneous
Total general revenues
Change in net position
Net position, beginning
Net position, ending
1,786,371
776,493
476,697
1,121,364
11,108
32,543
4,204,576
(379,434)
19,350,116
$ 18,970,682
The accompanying notes are an integral part of these financial statements. 18
CITY OF OKEECHOBEE, FLORIDA
Balance Sheet - Governmental Funds
September 30, 2013
ASSETS
Cash and cash equivalents
Investments
Accounts receivable
Due from other funds
Due from other governments
Inventory
Total assets
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable
Accrued expenses
Due to other funds
Unearned revenue
Total liabilities
Fund balances:
Nonspendable for:
Inventory
Restricted for:
Public facilities
Law enforcement
Community development
Assigned for:
Subsequent year's expenditures
Future capital projects
Impact fees
Unassigned
Total fund balances
Total liabilities and fund balances
General
$ 11,502,376
59,085
97,752
96,209
180,877
35,704
$ 11,972,003
Community
Development Nonmajor
Capital Project Funds
Total
Governmental
Funds
$ 23,560 $ 69,282 $ 11,595,218
-
59,085
- - 97,752
96,209
79,628 260,505
35,704
$ 103,188 $ 69,282 $ 12,144,473
$ 121,262 $
196,169
41,657
359,088
35,704
850,970
955,633
300,000
9,470,608
11,612,915 4,002
$ 11,972,003 $ 103,188
2,977 $
96,209
99,186
4,002
$ 124,239
196,169
96,209
41,657
458,274
35,704
-
850,970
5,768 5,768
4,002
955,633
300,000
63,514 63,514
9,470,608
69,282 11,686,199
$ 69,282
Amounts reported for governmental activities in the statement
of net position are different because:
Negative net pension obligation resulting from overfunding of
the police officers' and firefighters' pension plans.
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
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.
Net position of governmental activities
595,063
7,670,339
(980, 919)
$ 18,970,682
The accompanying notes are an integral part of these financial statements. 19
CITY OF OKEECHOBEE, FLORIDA
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds
Year Ended September 30, 2013
Revenues
Taxes
Intergovernmental
Charges for services
Permits and fees
Fines and forfeitures
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current:
General government
Public safety
Transportation
Physical environment
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses)
Transfers in /(out)
Proceeds from sale of capital assets
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
General
Community Total
Development Nonmajor Governmental
Capital Project Funds Funds
$ 2,468,199 $
2,048,800
419,588
534,842
26,543
23,841
21,597
5,543,410
1,000,453
3,000,393
986,156
192,635
473,743
5,653,380
(109,970)
$ - $ 2,468,199
565,863 75 2,614,738
419,588
- 534,842
1,890 28,433
- 23,841
10,871 97 32,565
576,734 2,062 6,122,206
97
285,863
285,960
175,990
11,436,925
$ 11,612,915 $
572,764
572,764
3,970 1,677 (104,323)
1,000,453
385 3,000,778
986,156
765,399
473,743
385 6,226,529
(97)
285,863
(97) 285,863
3,970 1,580 181,540
32 67,702 11,504,659
4,002 $ 69,282 $ 11,686,199
The accompanying notes are an integral part of these financial statements. 20
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, 2013
Net change in fund balances - total governmental funds $ 181,540
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 depreciation exceeded capital outlays in the current
period.
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 position differs from the
change in fund balance by the cost of the capital assets sold.
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 position. (17,592) _
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. (172,583)
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. (6,082)
(59,490)
(305,227)
Change in net position of governmental activities $ (379,434)
The accompanying notes are an integral part of these financial statements. 21
CITY OF OKEECHOBEE, FLORIDA
Statement of Fiduciary Net Position - Pension Trust Funds
September 30, 2013
ASSETS
Cash equivalents
Investments:
Mutual funds
Common equity securities
Receivables
Accrued interest and dividends
Total assets
LIABILITIES
Accounts payable
Total liabilities
COMPONENT
UNIT
General
Pension Employees'
Trust Funds Pension Trust
$ 246,846 $ 211,317
2,848,468
6,690,619
90,352
27,019
9,903,304
2,617,654
6,127,932
28,297
23,908
9,009,108
27,769 32,597
27,769 32,597
NET POSITION
Held in trust for pension benefits $ 9,875,535 $ 8,976,511
The accompanying notes are an integral part of these financial statements. 22
CITY OF OKEECHOBEE, FLORIDA
Statement of Changes in Fiduciary Net Position - Pension Trust Funds
Year Ended September 30, 2013
COMPONENT
UNIT
General
Pension Employees'
Trust Funds Pension Trust
ADDITIONS
Contributions:
State $ 132,007 $
City 219,298
Employees 65,624
Total contributions 416,929
Investment earnings:
Net appreciation in the
fair value of investments 534,403
Interest and dividends 239,833
Total investment earnings 774,236
Less investment expenses (70,406)
Net investment earnings 703,830
361,172
169,160
530,332
523,281
216,540
739,821
(49,167)
690,654
Total additions 1,120,759 1,220,986
DEDUCTIONS
Benefits paid to participants 256,742 290,578
Refunds on termination - 113,477
DROP payment 124,216 -
Administrative expenses 47,820 22,212
Total deductions 428,778 426,267
Change in net position 691,981 794,719
Net position held in trust for pension
benefits, beginning of year 9,183,554 8,181,792
Net position held in trust for pension
benefits, end of year $ 9,875,535 $ 8,976,511
The accompanying notes are an integral part of these financial statements. 23
THIS PAGE IS INTENTIONALLY LEFT BLANK.
24
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. REPORTING ENTITY
The City of Okeechobee (the "City ") was originally incorporated in 1915 and its present charter was
adopted in 1919 under Chapter 8318 of Special Acts of 1919. The City operates under the council form of
government and provides the following services: general government, public safety, transportation and
physical environment.
These financial statements present the primary government and its component units. Blended component
units, although legally separate entities, are, in substance, part of the government's operations and so
data from these units are combined with data of the primary government. The City has no blended
component units. Discretely presented component units are entities that are legally separate from the
City, but whose relationship with the City are such that the exclusion would cause the City's financial
statements to be misleading or incomplete. The financial data of 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 position and the statement of
changes in net position) 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.
25
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
The government -wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the fiduciary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing
of related cash flows. Property taxes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by
the provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon
as they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period or soon enough thereafter to pay liabilities of the current period.
For this purpose, the government considers revenues to be available if they are collected within 60
days of the end of the current fiscal period. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures
related to compensated absences and claims and judgments, are recorded only when payment is
due.
Property taxes, franchise taxes, licenses, charges for services and interest associated with the
current fiscal period are all considered to be susceptible to accrual and so have been recognized as
revenues of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the government.
The City reports the following major governmental 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 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 City reports the following nonmajor governmental funds:
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 law enforcement special revenue fund accounts for the assets that are restricted to fund
certain expenditures of the City's police department.
26
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
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.
The effect of interfund activity has been eliminated from the government -wide financial statements.
Amounts reported as program revenues include 1) charges to customers or applicants for goods,
services or privileges provided, 2) operating grants and contributions and 3) capital grants and
contributions. Internally dedicated resources are reported as general revenues rather than as program
revenues. Likewise, general revenues include all taxes.
Expenses for compensated absences are allocated based on the assigned function of the related
employee.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. ASSETS, LIABILITIES AND NET POSITION 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.
The City invests certain surplus funds in an external investment pool, the Local Government Surplus
Funds Trust Fund (the "State Pool "). The State Pool is administered by the Florida State Board of
Administration ( "SBA "), who provides regulatory oversight. On September 30, 2008, the SBA reported
that the State Pool was exposed to potential risks due to indirect exposure in the sub -prime mortgage
financial market. Consequently, the SBA placed some restriction on how participants could access
portions of their surplus funds and ultimately restructured the State Pool into two separate pools ( "Florida
PRIME" (formerly "LPIG ") and "Fund B ").
27
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES AND NET POSITION OR EQUITY (CONTINUED)
1. Cash and investments (continued)
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.
Fund B is reported at fair value, determined by the fair value per share of the pool's underlying portfolio.
The City pools the investments of its governmental funds. Investment earnings of the pool are allocated
to the participating funds at the end of each month based on the ratio of each participant funds'
investment to the total pooled investment.
Cash and cash equivalents include cash deposits, cash funds held in broker accounts and investments
held in the Local Government Surplus Funds Trust Fund (Florida PRIME).
Within the pension trust funds, plan assets are managed by Bowen, Hanes and Company. The plans
follow the investment guidelines as established within the ordinance. The pension trust funds are allowed
to invest in the State Pool; obligations of the U.S. Government or agencies thereof; banking institutions
within the state and other such institutions within the guidelines of the state statutes which are insured by
the Federal Deposit Insurance Corporation; investments agreements; direct and general long -term
obligations of any state with proper credit rating and full faith and credit pledge; municipal obligations with
proper credit rating; annuity and life insurance contracts; bonds issued by the State of Israel; and stocks,
bonds, and commingled funds administered by National or State banks or evidences of indebtedness
issued or guaranteed by a corporation organized under the laws of the United States, provided that the
corporation is listed on a nationally recognized exchange and holds proper credit ratings as set forth by a
major credit rating service. These equity investments are not to exceed 60% of the assets of the pension
trust funds on a cost basis. Temporary investment funds held by the custodian in a money market fund
are classified as cash equivalents within the investment account.
Pension trust fund investments are reported at fair value. Short -term investments are reported at cost,
which approximates fair value. Securities traded on a national or international exchange are valued at
the last reported sales price. Shares of mutual funds, including proprietary funds and common and
collective funds, are valued at quoted market prices, which represent the net asset value of shares
held by the pension trust fund at year end. Interest is recognized when earned. Gains and losses from
the sale or exchange of investments are recognized on the transaction date. The difference between
the excess of fair value over cost represents unrealized gains.
28
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES AND NET POSITION 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, 2013
was 7.7432 mills, which is 5.84% 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.
29
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES AND NET POSITION OR EQUITY (CONTINUED)
4. Capital assets (continued)
The costs of normal maintenance and repairs that do not add to the value of the
extend assets' lives are not capitalized. Major outlays for capital assets and
capitalized as projects are constructed.
Property, plant and equipment are depreciated using the straight -line method over the
useful lives:
Assets
Buildings
Building improvements
Vehicles
Equipment
5. Compensated absences
Years
25 -60
12 -20
10
5 -15
asset or materially
improvements are
following estimated
It is the City's policy to permit employees to accumulate earned but unused vacation and
benefits. All sick and vacation pay is accrued when incurred in the government -wide
statements. A liability for these amounts is reported in governmental funds only if they have
for example, as a result of employee resignations and retirements.
6. Unearned revenues
sick pay
financial
matured,
Unearned revenues include amounts collected before the revenue recognition criteria are met. The
unearned items consist primarily of business tax revenues.
7. Long -term obligations
In the government -wide financial statements, long -term debt and other long -term obligations are
reported as liabilities in the statement of net position.
In the governmental fund financial statements, the face amount of debt issued is reported as other
financing sources.
30
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES AND NET POSITION OR EQUITY (CONTINUED)
S. 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
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.
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.
E. ACCOUNTING CHANGES
The City has implemented GASB Statement No. 62, "Codification of Accounting and Financial
Reporting Guidance Contained in Pre - November 30, 1989 FASB and AICPA Pronouncements ". The
Statement is intended to enhance the usefulness of GASB Codifications by incorporating certain
accounting guidance issued by the FASB and the AICPA that is applicable to state and local
governments.
31
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. ACCOUNTING CHANGES (CONTINUED)
The City has implemented GASB Statement No. 63, "Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources and Net Position ". The Statement requires governments to
account for deferred outflows of resources, deferred inflows of resources, and net position elements in
GASB Concepts Statement No. 4 as it relates to GASB Statement No. 53, "Accounting and Financial
Reporting for Derivative Instruments" and GASB Statement No. 60, "Accounting and Financial
Reporting for Service Concession Arrangements ". The City does not have derivatives or service
concession arrangements, and therefore does not report deferred outflows of resources or deferred
inflows of resources in the financial statements dated September 30, 2013. The Statement of Net
Position incorporates GASB Statement No. 63 by displaying three components of net position: net
investment in capital assets, restricted and unrestricted.
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
BALANCE SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET POSITION
The governmental fund balance sheet includes a reconciliation between fund balance -total governmental
funds and net position- governmental activities as reported in the government -wide statement of net
position. One element of that reconciliation states that 'gong -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 $(980,919) difference are as follows:
Net OPEB obligation $ (628,643)
Compensated absences (352,276)
Net adjustment to reduce fund balance - total governmental funds
to arrive at net position - governmental activities $ (980,919)
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
position 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 $(59,490) difference are as follows:
Capital outlay
Depreciation expense
Net adjustment to increase net changes in fund balances - total governmental
funds to arrive at changes in net position of governmental activities
$ 473,743
(533,233)
$ (59,490)
32
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
As permitted by GASB Statement No. 34, Basic Financial Statements and Management Discussion
and Analysis for State and Local Governments, the City has elected to disclose all budgetary
information in the notes to the required supplementary information.
NOTE 4 — DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
At September 30, 2013, the City's carrying amount of deposits was $11,594,844 and the bank balance
was $11,718,532. In addition, the City maintained $324 of petty cash. As of September 30, 2013,
$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, 2013, the City had the following investments:
Investment type
Investment Maturities (in years)
More
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 59,085 - 59,085 - Not rated
$ 59,135 $ 50 $ 59,085 $ $ -
Pension trust funds:
Money market fund $ 458,163 $ 458,163 $ - $ - $ - Not rated
Mutual funds 5,466,122 - 5,466,122 - BBB -AA S &P
Common equity securities - domestic 11,870,406 11,870,406 - - Not rated
Common equity securities - foreign 948,145 948,145 - Not rated
$ 18,742,836 $ 13,276,714 $ - $ 5,466,122 $ -
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.
33
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 4 — DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. DEPOSITS AND INVESTMENTS (CONTINUED)
Interest rate risk
Interest rate risk exists when there is a possibility that changes in interest rates could adversely affect an
investment's fair value. In accordance with Florida Statute 218.415(6), the City's policy is to match
investment maturities with known cash needs and anticipated cash flow requirements. The City's
pension trust funds do not address interest rate risk.
Concentration of credit risk
Concentration of credit risk is an increased risk of Toss that occurs as more investments are acquired
from one issuer (i.e. lack of diversification). The City's investment policy and the investment policies for
the pension trust funds do not specifically address concentration of credit risk.
Foreign currency risk
The City's pension funds contain investments in foreign corporate bonds; however, all of the
investments are denominated in U.S. dollars and are not exposed to foreign currency risk.
B. RECEIVABLES
Receivables as of September 30, 2013 are as follows:
Franchise /Utility taxes
Contributions
Other
Receivables, net
General
Fund
$ 97,535
217
$ 97,752
Municipal
Police Officers'
Pension
Trust
Municipal
Firefighters'
Pension
Trust
$
56,053 34,299
Component Unit
General
Employees
Pension Trust
28,297
56,053 $ 34,299 $ 28,297
34
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 4 — DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2013 was as follows:
Governmental activities:
Capital assets, not being depreciated:
Land
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Equipment
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Equipment
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net
Beginning
Balance
$1,378,744
1,378,744
Increases Decreases
$ - $ $ 1,378,744
- 1,378,744
Ending
Balance
1,909,216 10,369
6,238,227 93,828
2,608,525 369,546
10,755,968 473,743
(700,493)
(2,026,614)
(1,372,549)
(4,099,656)
6,656,312
$ 8,035,056
(60, 530)
(281,916)
(190,787)
(533,233)
(385,375)
(385,375)
1,919,585
6,332,055
2,592,696
10,844,336
(761,023)
(2,308,530)
80,148 (1,483,188)
80,148 (4,552,741)
(59,490) (305,227) 6,291,595
$ (59,490) $ (305,227) $ 7,670,339
r 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
Public safety
Physical environment
Total depreciation expense - governmental activities
D. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
$ 47,590
162,612
323,031
$ 533,233
lnterfund loans of $96,209 for short term operating purposes resulted in a due to the General Fund
from the Community Development Capital Project Fund. All amounts are expected to be repaid within
one year.
35
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 4 — DETAILED NOTES ON ALL FUNDS (CONTINUED)
D. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (CONTINUED)
During the year ended September 30, 2013, the Impact Fee Capital Project fund (a nonmajor fund)
transferred $97 to the General fund. The transfer represented administrative fees that were earned
from collecting impact fees for the County, School Board and the City, and was transferred for the
purpose of removing all balances and activity unrelated to the collection and expenditure of impact
fees.
E. CHANGES IN LONG -TERM LIABILITIES
Long -term liability activity for the year ended September 30, 2013, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Net OPEB obligation $ 456,060 $ 172,583 $ - $ 628,643 $ -
Compensated absences 346,194 151,246 (145,164) 352,276 149,511
Long -term liabilities $ 802,254 $ 323,829 $ (145,164) $ 980,919 $ 149,511
For the governmental activities, compensated absences are generally liquidated by the general fund.
NOTE 5 — OTHER INFORMATION
A. RISK MANAGEMENT
The City is exposed to various risks of Toss, including, but not limited to theft, damage or destruction of its
buildings, equipment, records and monetary assets, and liability for personal injury, property damage and
consequences of employee and public official actions. The City participates in a non - assessable public
risk pool to cover significant Toss exposure and purchases commercial insurance for third party pollution
liability coverage. The pool maintains a loss reserve and purchases specific excess insurance,
aggregate excess insurance and multiple loss coverage from commercial carriers and underwriters.
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS
Plan Descriptions — The City contributes to two single - employer defined benefit pension plans: City of
Okeechobee Municipal Police Officers' Pension Trust Fund and City of Okeechobee Municipal
Firefighters' Pension Trust Fund (the Plans). The Plans provide retirement, disability and death benefits to
plan members and their beneficiaries. Chapters 185 and 175 of the Florida Statutes establish the
minimum benefits and the minimum standards for the operation and funding of the Police Officers' and
the Firefighters' Municipal Pension Trust Funds, respectively. Per City Ordinances Nos. 750 and 749,
sole responsibility for administering the Plans is vested in the Board of Trustees of each plan. The Boards
cannot amend the provisions of the plans without the approval of the City. The Plans issue publicly
available financial reports that include financial statements and required supplementary information. The
reports are available from the City of Okeechobee, Florida, 55 S.E. Third Avenue, Okeechobee, Florida
34974.
36
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 5 — OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (CONTINUED)
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 17.59%
for the Police Officers' plan and 11.80% for the Firefighters' plan.
The City recognized as revenues and expenditures on- behalf payments relating to pension contributions
for its public safety employees that the State of Florida paid to the Police Officers' and Firefighters' Plans
in the amounts of $75,947 and $56,060, 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, 2013 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 and cost -of- living increases of 6% and 7%
for the Police Officers' Trust and Firefighters' Trust, respectively. Both (a) and (b) included an inflation
component of 3.5% for the Police Officers' Trust and Firefighters' Trust. The actuarial value of assets was
determined using a method which recognizes actual investment return in excess of the assumed return
evenly over a four year period.
Trend information for each of the City's defined benefit plans:
Municipal Police Officers'
Municipal Firefighters'
Net
Annual Percentage Pension
Year Pension Of APC Obligation
Ended Cost (APC) Contributed (Asset)
9/30/11 $ 253,958 95 % $ (286,526)
9/30/12 220,605 95 (274,642)
9/30/13 249,342 95 (263,654)
9/30/11 $ 102,099 96 % $ (343,855)
9/30/12 103,865 94 (338,013)
9/30/13 110,519 94 (331,409)
37
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
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, 2013, 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)
Police Officers':
$ 6,534,588 $ 6,631,287 $ 96,699 98.5% $ 928,602 10.4%
Firefighters':
$ 2,795,908 $ 2,749,620 $ (46,288)
101.7% $ 473,939 (9.8)%
* 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.
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 12.19% of
covered payroll. The City's contributions for the years ended September 30, 2013, 2012 and 2011 were
$361,172 $359,298, and $389,940, respectively, and were equal to the required contributions for each
year.
38
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 5 — OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (CONTINUED)
Pension trust funds fiduciary net position activity as of September 30, 2013 was as follows:
ASSETS
Cash equivalents
Investments:
Mutual funds
Common equity securities
Receivables
Accrued interest and dividends
Total assets
LIABILITIES
„w Accounts payable
Total liabilities
COMPONENT
UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
$ 96,939 $ 149,907 $ 246,846 $ 211,317
818,015
1,986,421
34,299
7,805
2,943,479
2,030,453
4,704,198
56,053
19,214
6,959,825
9,383 18,386
9,383 18,386
2,848,468
6,690,619
90,352
27,019
9,903,304
2,617,654
6,127,932
28,297
23,908
9,009,108
27,769 32,597
27,769 32,597
NET POSITION
Held in trust for pension benefits $ 2,934,096 $ 6,941,439 $ 9,875,535 $ 8,976,511
39
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 5 - OTHER INFORMATION (CONTINUED)
B. RETIREMENT COMMITMENTS - DEFINED BENEFIT PLANS (CONTINUED)
Pension trust funds increase in fiduciary net position activity as of September 30, 2013 was as follows:
COMPONENT
UNIT
Police Total General
Firefighters' Officers' Pension Employees'
Pension Pension Trust Funds Pension
ADDITIONS
Contributions
State $ 56,060 $ 75,947 $ 132,007 $
City 55,917 163,381 219,298 361,172
Employees 21,822 43,802 65,624 169,160
Total contributions 133,799 283,130 416,929 530,332
Investment earnings:
Net appreciation in the fair
value of investments
Interest and dividends
Total investment earnings
Less investment expenses
Net investment earnings
Total additions
DEDUCTIONS
Benefits paid to participants
Refunds on termination
DROP payment
Administrative expenses
Total deductions
Change in net position
Net position held in trust for
pension benefits,
beginning of year
159,377
70,647
230,024
375,026
169,186
544,212
534,403
239,833
774,236
523,281
216,540
739,821
(28,778) (41,628) (70,406) (49,167)
201,246 502,584 703,830 690,654
335,045 785,714 1,120,759 1,220,986
56,346 200,396 256,742 290,578
- - - 113,477
124,216 - 124,216 -
22,296 25,524 47,820 22,212
202,858 225,920 428,778 426,267
132,187 559,794 691,981 794,719
2,801,909 6,381,645
9,183,554 8,181,792
Net position held in trust for
pension benefits, end of year $ 2,934,096 $ 6,941,439 $ 9,875,535 $ 8,976,511
40
IWO
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 5 — OTHER INFORMATION (CONTINUED)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION
As of October 1, 2009, the City implemented Governmental Accounting Standards Board Statement No.
45, Accounting and Reporting by Employers for 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, 2013, the City's contribution is $38,537, which represents an estimate
of the implied subsidy described above. Contributions of plan members totaled approximately $39,893 for
the year ended September 30, 2013.
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, 2013, the amount actually contributed to the
Plan, and changes in the City's net OPEB obligation to the Plan:
41
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 5 — OTHER INFORMATION (CONTINUED)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (CONTINUED)
Annual required contribution $ 212,216
Interest on net OPEB obligation 13,682
Adjustment to annual required contribution (14,778)
Annual OPEB cost (expense) 211,120
Contributions made (38,537)
Increase in net OPEB obligation 172,583
Net OPEB obligation — beginning of year 456,060
Net OPEB obligation — end of year $ 628,643
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, 2013 was as follows:
Year Annual OPEB Percentage of Annual Net OPEB
Ending Cost OPEB Cost Contributed Obligation
9/30/13 $ 211,120 18% $ 628,643
9/30/12 164,841 6% 456,060
9/30/11 160,520 5% 301,348
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 September 30, 2013. Accordingly, the City will be required to obtain a subsequent
actuarial valuation within three years of that date. As of September 30, 2013, the actuarial accrued liability
for benefits was $1,255,666, all of which was unfunded. The covered payroll (annual payroll of active
employees covered by the Plan) was $2,345,956, and the ratio of unfunded actuarial accrued liability
(UAAL) to the covered payroll was 54 %.
The projection of future benefit payments for an ongoing plan involves estimates of the value of reported
amounts and assumptions about the probability of occurrence of events far into the future. Examples
include assumptions about future employment, future interest rates, mortality, medical cost inflation,
Medicare coverage and changes in marital status. Amounts determined regarding the funded status of
the Plan and the annual required contributions of the employer are subject to continuous revision as
actual results are compared to past expectations and new estimates about the future are formulated.
The schedule of funding progress presented as required supplementary information following the notes to
the financial statements, will present multiyear trend information that shows whether the actuarial value of
Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Because fiscal year 2010 was the year of implementation of GASB Statement No 45 and the City elected
to apply the statement prospectively, only one year is presented in the schedule at this time. In future
years, required trend data will be presented.
42
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
For The Year Ended September 30, 2013
NOTE 5 — OTHER INFORMATION (CONTINUED)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (CONTINUED)
Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the
substantive plan (the plan as understood by the employer and the Plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and Plan members to that point. The methods and assumptions used include
techniques that are designed to reduce the effects of short -term volatility in actuarial accrued liabilities
and the actuarial value of assets, consistent with the long -term perspective of the calculations.
In the September 30, 2013 valuation, the entry age normal cost method was used. The assumptions
included a discount rate of 3.0 %, a general inflation rate of 2.8 %, and an annual healthcare cost trend
rate of 10% initially, increased to an ultimate rate of 20% after nine years. The unfunded actuarial accrued
liability is being amortized as a level percentage of projected payrolls on a closed basis over a period of
30 years. As authorized by GASB Statement No. 45, the Alternative Measurement Method with its
simplifications of certain assumptions was employed in measuring actuarial accrued liabilities and the
ARC.
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.
NOTE 6 — FUTURE ACCOUNTING PRONOUCNEMENTS
The Governmental Accounting Standards Board ( "GASB ") has issued statements that will become in
subsequent fiscal years. The Statements address:
• Items previously reported as assets and liabilities;
• Accounting and financial reporting for pensions;
• Mergers, acquisitions and transfers of operations; and
• Financial guarantees.
The City is currently evaluating the effects that these statements will have on its financial statements
for subsequent fiscal years.
NOTE 7 — SUBSEQUENT EVENT
During November 2013, the City awarded the annual police vehicle purchase bid to an unrelated vendor
for 13 police vehicles in the amount of approximately $275,000.
43
THIS PAGE IS INTENTIONALLY LEFT BLANK.
44
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
45
THIS PAGE IS INTENTIONALLY LEFT BLANK.
46
CITY OF OKEECHOBEE, FLORIDA
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
General Fund
Year Ended September 30, 2013
Revenues
Taxes
Intergovernmental
Charges for services
Permits and fees
Fines and forfeitures
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current:
General government:
Legislative
Executive
City clerk
Financial services
Legal council
General services
Total general government
Public safety:
Fire
Police
Total public safety
Transportation
Physical environment
Capital outlay
Total expenditures
Deficiency of revenues under
expenditures
Other financing sources
Operating transfers in
Sale of capital assets
Net other financing sources
Excess (deficiency) of revenues and other
financing sources over (under)
expenditures and other financing uses
Fund balances, beginning of year
Fund balances, end of year
Reconciliation of budgetary
to GAAP basis
Current year encumbrances
Prior year encumbrances
Fund balance on GAAP basis
Original
Budget
$ 2,299,745
1,881,838
400,079
543,470
22,900
7,100
3,000
5,158,132
Final
Budget
$ 2,449,097
1,986,835
413,551
532,576
25,225
17,979
14,644
5,439,907
Actual
(on Budgetary
Basis)
$ 2,468,199
2,048,800
419,588
534,842
26,543
23,841
21,597
5,543,410
115,919 109,273 109,171
174,334 168,149 166,697
190,416 190,416 172,301
256,404 215,551 210,666
71,823 47,957 44,284
374,595 351,862 297,334
1,183,491 1,083,208 1,000,453
Variance with
Final Budget
Positive (Negative;
$ 19,102
61,965
6,037
2,266
1,318
5,862
6,953
103,503
1,320,331
1,962,012
3,282,343
1,067,746
620,823
459,095
6,613,498
1,261,322 1,245,473
1,800,031 1,761,166
3,061,353 3,006,639
1,014,293 994,623
620,823 312,653
459,095 354,428
6,238,772 5,668,796
(1,455,366)
(798,865) (125,386)
500 97 97
252,000 252,000 285,863
252,500 252,097 285,960
102
1,452
18,115
4,885
3,673
54,528
82,755
15,849
38,865
54,714
19,670
308,170
104,667
569,976
673,479
33,863
33,863
(1,202,866) (546,768)
11,436, 925 11,436, 925
$10,234,059 $ 10,890,157
160,574 707,342
11,436,925
11,597,499 $ 707,342
19,614
(4,198)
$ 11,612,915
The accompanying notes to required supplementary information are an integral part of this schedule. 47
CITY OF OKEECHOBEE, FLORIDA
Required Pension Supplementary Information - Schedule of Funding Progress
Last Six Fiscal Years
Police Officers' Pension Plan
Actuarial
Valuation
Date
2013
2012
2011
2010
2009
2008
Actuarial
Value of
Assets (a)
Actuarial
Accrued
Liability
AAL*
Entry Age (b)
Unfunded
(Assets in
excess of) AAL
(UAAL)
(b -a)
Funded
Ratio
(a /b)
Covered
Payroll (c)
$ 6,534,588
6,044,391
5,712,560
5,666,207
5,424,146
5,253,380
$ 6,631,287
6,187,990
5,886,480
5,659,633
5,201,828
4,966,790
Firefighters' Pension Plan
Actuarial
Valuation
Date
2013
2012
2011
2010
2009
2008
Actuarial
Value of
Assets (a)
$ 2,795,908
2,595,508
2,428,618
2,417,688
2,330,746
2,255,117
Actuarial
Accrued
Liability
AAL*
Entry Age (b)
$ 2,749,620
2,556,559
2,318,524
2,215,619
2,104,641
1,898,670
$ 96,699
143,599
173,920
(6,574)
(222,318)
(286,590)
Unfunded
(Assets in
excess of) AAL
(UAAL)
(b -a)
$ (46,288)
(38, 949)
(110, 094)
(202,069)
(226,105)
(356,447)
98.54%
97.68%
97.05%
100.12%
104.27%
105.77%
Funded
Ratio
(a /b)
101.68%
101.52%
104.75%
109.12%
110.74%
118.77%
$ 928,602
928,285
936,580
967,957
947,296
917,647
Covered
Payroll (c)
$ 473,939
429,008
457,776
438,787
456,742
461,494
UAAL as a %
of Covered
Payroll
((b -a) /c)
10.4%
15.5%
18.6%
- 0.7%
-23.5%
-31.2%
UAAL as a %
of Covered
Payroll
((b -a) /c)
- 9.8%
- 9.1%
-24.0%
-46.1%
- 49.5%
- 77.2%
*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.
48
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)
9/30/2013 $ $ 1,255,666 $ 1,255,666 0.0% $ 2,345,956 53.5%
8/1/2010 $ $ 776,235 $ 776,235 0.0% $ 2,515,729 30.9%
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 two actuarial
valuations are presented in the schedule at this time. In future years, required trend data
will be presented.
Note:
49
CITY OF OKEECHOBEE, FLORIDA
Notes to Required Supplementary Information
For Year Ended September 30, 2013
A. BUDGETARY INFORMATION
Annual budgets are adopted on a basis consistent with U.S. generally accepted accounting principles
for all governmental funds. All annual appropriations lapse at fiscal year end.
The City Administrator may make transfers of appropriations within a department as long as the total
budget of the department is not increased. Transfers of appropriations between departments require the
approval of the council. The legal level of budgetary control (i.e., the level at which expenditures may
not legally exceed appropriations) is the department level. The council made certain supplemental
budgetary appropriations during the year.
Encumbrances accounting is employed in governmental funds. Encumbrances (e.g., purchase orders,
contracts) outstanding at year end are reported as restricted or assigned fund balances and do not
constitute expenditures or liabilities because the commitments will be re- appropriated and honored during
the subsequent year.
B. ADDITIONAL ACTUARIAL INFORMATION
The information presented in the required supplementary schedules was determined as part of the
actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation
follows:
Actuarial valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return*
Projected salary increases*
Cost -of- living adjustment
*Includes inflation at:
Firefighters'
Pension Plan
10/01/13
Aggregate
N/A
N/A
Four year smoothed
Market
7.0%
7.0%
0.25%
3.5%
Police
Officers'
Pension Plan
10/01/13
Aggregate
N/A
N/A
Four year smoothed
Market
7.0%
6.0%
0.25%
3.5%
50
CRI CARR
RIGGS &
INGRAM
CPAs and Advisors
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259 -8648 (fax)
www.cricpa.com
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, 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, 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, 2013, and the related notes to the financial
statements, which collectively comprise the City of Okeechobee, Florida's basic financial statements,
and have issued our report thereon dated April 28, 2014. Other auditors audited the financial statements
of the fiduciary fund type and the discretely presented component unit, as described in our report on
the City of Okeechobee, Florida's financial statements. This report does not include the results of the
other auditors' testing of internal control over financial reporting or compliance and other matters that
are reported on separately by those auditors.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of Okeechobee,
Florida's internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions 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. Accordingly, we do not express an opinion on the effectiveness of
the City of Okeechobee, Florida's internal control.
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
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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies, and therefore material weaknesses or significant deficiencies
may exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
51
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Okeechobee, Florida's financial
statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the result of that testing, and not to provide an opinion on the effectiveness of the
entity's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
ttli2. , c. z�%� . 5�,1,, is L
Melbourne, Florida A/ f
April 28, 2014
52
CRI CARR
RIGGS &
INGRAM
CPAs and Advisors
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259-8648 (fax)
www.cricpa.com
Independent Auditors' Report on Compliance For Each Major Federal Program; Report on
Internal Control Over Compliance; and Report on the Schedule of Expenditures
of Federal Awards Required by OMB Circular A -133
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Report on Compliance for Each Major Federal Program
We have audited the City of Okeechobee, Florida's compliance with the types of compliance
requirements described in the OMB Circular A -133 Compliance Supplement that could have a direct
and material effect on each of the City of Okeechobee, Florida's major federal programs for the year
ended September 30, 2013. The City of Okeechobee, Florida's major federal programs are identified in
the summary of auditors' results section of the accompanying schedule of findings and questioned
costs.
Management's Responsibility
Management is responsible for compliance with the requirements of Taws, regulations, contracts and
grants applicable to its federal programs.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance for each of the City of Okeechobee, Florida's
major federal programs based on our audit of the types of compliance requirements referred to above.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133,
Audits of States, Local Governments, and Non - Profit Organizations. Those standards and OMB
Circular A -133 require that we plan and perform the audit to obtain reasonable assurance about
whether noncompliance with the types of compliance requirements referred to above that could have a
direct and material effect on a major federal program occurred. An audit includes examining, on a test
basis, evidence about the City of Okeechobee, Florida's compliance with those requirements and
performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the City of Okeechobee,
Florida's compliance.
Opinion on Each Major Federal Program
In our opinion, the City of Okeechobee, Florida complied, in all material respects, with the types of
compliance requirements referred to above that could have a direct and material effect on its major
federal program for the year ended September 30, 2013.
53
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
Report on Internal Control Over Compliance
Management of the City of Okeechobee, Florida is responsible for establishing and maintaining
effective internal control over compliance with the types of compliance requirements referred to above.
In planning and performing our audit of compliance, we considered the City of Okeechobee, Florida's
internal control over compliance with the types of requirements that could have a direct and material
effect on each major federal program to determine the auditing procedures that are appropriate in the
circumstances for the purpose of expressing an opinion on compliance for each major federal program
and to test and report on internal control over compliance in accordance with OMB Circular A -133, but
not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the City of Okeechobee, Florida's
internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal
program that is Tess severe than a material weakness in internal control over compliance, yet important
enough to merit attention by those charged with governance.
Our consideration of internal control over compliance 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
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
OMB Circular A -133. Accordingly, this report is not suitable for any other purpose.
ki.1(
Melbourne, Florida
April 28, 2014
54
THE CITY OF OKEECHOBEE, FLORIDA
Schedule of Findings and Questioned Costs
Fiscal Year Ended September 30, 2013
SUMMARY OF AUDITORS' RESULTS
Financial Statements
Type of auditors' report issued:
Unmodified
Internal control over financial reporting:
• Material weakness(es) identified? yes X no
• Significant deficiency(ies) identified: yes X none reported
Noncompliance material to financial statements noted?
Federal Awards
yes X no
Internal control over major federal programs:
• Material weakness(es) identified? yes X no
• Significant deficiency(ies) identified? _ yes X none reported
Type of auditors' report issued on compliance for major
federal programs: Unmodified
Any audit findings disclosed that are required to be
reported in accordance with Section 510(a) of
OMB Circular A -133? yes X no
Identification of major federal program:
Federal CFDA Numbers Federal Program or Cluster
14.228 Community Development Block Grant — 2011 -2012
Dollar threshold used to distinguish between type A and B programs was $300,000 for major federal
programs.
Auditee qualified as a low -risk auditee for federal purposes? _ yes X no
MOP
55
THE CITY OF OKEECHOBEE, FLORIDA
Schedule of Findings and Questioned Costs (Continued)
Fiscal Year Ended September 30, 2013
FINDINGS - FINANCIAL STATEMENTS AUDIT
No matters were reported.
FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS
No matters were reported.
OTHER ISSUES
No Summary Schedule of Prior Audit Findings is required because there were no prior audit findings
related to federal programs or state projects.
No Corrective Action Plan is required because there were no findings required to be reported under
OMB Circular A -133.
56
CITY OF OKEECHOBEE, FLORIDA
Schedule of Expenditures of Federal Awards
For the Year Ended September 30, 2013
Federal Agency/ Grant
Pass - through Entity/ CFDA Contract
Federal Program No. No.
Expenditures
U.S. Department of Housing and Urban
Development
Indirect Program
Passed through
Florida Department of Economic Opportunity
Community Development Block Grant 2011 14.228 11 DB- C5- 07- 57 -02 -H 08 $ 533,853
Community Development Block Grant 2012 14.228 12DB- OH- 07- 57- 02 -E08 38,465
Total - U.S. Department of Housing and Urban
Development 572,318
U.S. Department of Justice
Indirect Program
Passed through
Florida Department of Law Enforcement
Justice Assistance Grant (JAG)
16.738 2013 - JAGD - OKEE -1 D8 -133 2,202
Total Expenditures of Federal Awards $ 574,520
Note A - Significant Accounting Policies:
The Schedule of Expenditures of Federal Awards is a summary of the City's federal award programs
presented on the accrual basis of accounting in accordance with generally accepted accounting
principles.
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THIS PAGE IS INTENTIONALLY LEFT BLANK.
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MI
4ICRICARR RIG GS &
INGRAM
CPAs and Advisors
Independent Auditors' Management Letter
The Honorable Mayor and Members of the City Council
Of the City of Okeechobee, Florida
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255 -0088
(321) 259-8648 (fax)
www.cricpa.com
We have audited the financial statements of the City of Okeechobee, Florida as of and for the fiscal
year ended September 30, 2013, and have issued our report thereon dated April 28, 2014.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, OMB Circular A -133, Audits of States, Local
Governments, and Non - Profit Organizations. We have issued our Independent Auditors' Report on
Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of
the Financial Statements Performed in Accordance with Government Auditing Standards, Independent
Auditors' Report on Compliance With Requirements That Could Have a Direct and Material Effect on
Each Major Federal Program and State Project and on Internal Control over Compliance in Accordance
with OMB Circular A -133 and Chapter 10.550 Rules of the Florida Auditor General, and Schedule of
Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated April 28,
2014, 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' reports or schedule:
❖ Section 10.554(I)(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(I)(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(I)(i)4., Rules of the Auditor General, requires that we address noncompliance
with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to
have occurred, that have an effect on the financial statements that is less than material but
which warrants the attention of those charged with governance. In connection with our audit, we
did not have any such findings.
59
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Page Two
❖ Section 10.554(I)(i)5., 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 units are disclosed in
the footnotes.
• Section 10.554(I)(i)6.a., Rules of the Auditor General, requires a statement be included as to
whether or not the local government entity has met one or more of the conditions described in
Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In
connection with our audit, we determined that the City of Okeechobee, Florida did not meet any
of the conditions described in Section 218.503(1), Florida Statutes.
• Section 10.554(I)(i)6.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, 2013, filed with the Florida Department of Financial Services pursuant to Section
218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the
fiscal year ended September 30, 2013. In connection with our audit, we determined that these
two reports were in agreement.
❖ Pursuant to Sections 10.554(i)6.c. and 10.556(7), Rules of the Auditor General, we applied
financial condition assessment procedures. It is management's responsibility to monitor 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 Representatives, the Florida Auditor
General, Federal and other granting agencies, and applicable management, and is not intended to be
and should not be used by anyone other than these specified parties.
etc/A. J /C 4. -1 tcav>
Melbourne, Fl rida
April 28, 2014
60