Audit Report 09.30.2019
City Of Okeechobee, Florida
FINANCIAL STATEMENTS
For Year Ended September 30, 2019
City of Okeechobee, Florida
Table of Contents
For the year ended September 30, 2019
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Introductory Section
Title Page 1
Table of Contents 2
City Officials 3
Financial Section
Independent Auditors’ Report 5
Management’s Discussion and Analysis 9
Basic Financial Statements
Government-wide Financial Statements
• Statement of Net Position - Governmental Activities 18
• Statement of Activities - Governmental Activities 19
Fund Financial Statements
Governmental Funds
• Balance Sheet 20
• Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds 21
• Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances of Governmental Funds to the Statement of Activities
22
Fiduciary Funds (Component Units that are Fiduciary in Nature)
• Statement of Fiduciary Net Position - Pension Trust Funds 23
• Statement of Changes in Fiduciary Net Position - Pension Trust Funds 24
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
61
• Required Pension Supplementary Information 62
• Schedule of Changes in Total OPEB Liability and Related Ratios 68
• Notes to Required Supplementary Information 69
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 73
• Independent Auditors’ Management Letter 75
• Independent Accountants’ Report on Compliance with Local Government
Investment Policies 77
City of Okeechobee, Florida
City Officials
For the year ended September 30, 2019
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Dowling R. Watford, Jr.
Mayor, Chairman
Wes Abney
Monica Clark
Bob Jarriel
Bobby Keefe
Council Members
John R. Cook
City Attorney
Marcos Montes De Oca
City Administrator
Lane Gamiotea
City Clerk
India Riedel
Finance Director
Herbert Smith
Chief of Fire
Robert Peterson
Chief of Police
David Allen
Director of Public Works
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Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259-8648 (fax)
www.cricpa.com
INDEPENDENT AUDITORS’ REPORT
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the City of Okeechobee, Florida, as of and for
the year ended September 30, 2019, 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.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did
not audit the financial statements of the City of Okeechobee, Florida Municipal Police Officers’
Pension Trust Fund and City of Okeechobee, Florida Municipal Firefighters’ Pension Trust Fund and
the City of Okeechobee Employees’ Retirement System, which represent 100% of the assets, net
position and additions of the pension trust fiduciary funds. 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 City of Okeechobee, Florida Municipal Police Officers’ Pension Trust Fund and City of
Okeechobee, Florida Municipal Firefighters’ Pension Trust Fund and the City of Okeechobee
Employees’ Retirement System 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. The financial statements of the City of Okeechobee, Florida Municipal
Police Officers’ Pension Trust Fund, the City of Okeechobee, Florida Municipal Firefighters’ Pension
Trust Fund, and the City of Okeechobee Employees’ Retirement System were not audited in
accordance with Government Auditing Standards.
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
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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.
Opinions
In our opinion, based on our audit and the reports of other auditors, the financial statements
referred to above 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, 2019, 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 16), the budgetary comparison information
(page 63 and page 71), and the pension and other postemployment benefits information (pages 64
through 70 and pages 72 through 73) 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 is presented for purposes of additional analysis and is not a required part of the financial
statements.
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.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 22,
2020 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 solely to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the effectiveness of the City of Okeechobee’s 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 the City of
Okeechobee, Florida’s internal control over financial reporting and compliance.
Melbourne, Florida
May 22, 2020
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City of Okeechobee, Florida
Management's Discussion and Analysis
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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, 2019.
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, 2019:
• The City’s total assets exceeded its liabilities at September 30, 2019 by $20,400,951.
• The City’s total revenues were $7,166,137 for the year ended September 30, 2019,
compared to total expenses of $6,942,746, which resulted in a $223,391 increase 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 19 and 20 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.
City of Okeechobee, Florida
Management's Discussion and Analysis
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B. Fund Financial Statements (Continued)
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.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the City’s near-term financing
decisions. Both the governmental fund balance sheet and the statement of revenues, expenditures
and changes in fund balances provide reconciliations to facilitate this comparison between
governmental funds and governmental activities.
The basic governmental fund financial statements can be found on pages 21 through 23 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 24 and 25 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 27 through 59 of this report.
City of Okeechobee, Florida
Management's Discussion and Analysis
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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
2019 2018_
Current assets $ 11,822,942 $ 11,378,309
Capital assets 8,234,983 8,532,680
Noncurrent assets 1,764,508 1,226,289
Total assets 21,822,433 21,137,278
Deferred outflows 830,245 1,625,927
Current liabilities 281,767 299,389
Noncurrent liabilities 593,411 580,636
Total liabilities 875,178 880,025
Deferred inflows 1,376,549 1,705,620
Net position:
Net investment in capital assets 8,235,624 8,532,680
Restricted 1,111,541 1,184,520
Unrestricted 11,054,427 10,460,360
Total net position $ 20,400,951 $ 20,177,560
Governmental Activities
Total net position increased by $223,391 primarily as a result of $685,155 increase in total assets,
and a $4,847 decrease of total liabilities. Deferred outflows and inflows related to pensions
decreased by $795,682 and $329,071, respectively. The increase in total assets was primarily due to
a $444,633 increase in current assets, a $538,219 increase in noncurrent assets due to an increase
in net pension asset, offset by a decrease in capital assets of $297,697. The net change in current
and noncurrent liabilities was $4,847 as current liabilities decreased by $17,622 related to timing of
payables and non-current liabilities increased by $12,775 resulting from a $4,849 increase in the
OPEB obligation with the total offset by an increase in compensated absences of $7,926.
City of Okeechobee, Florida
Management's Discussion and Analysis
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The following table shows condensed revenue and expense data:
City of Okeechobee, Florida
Statement of Activities
2019 2018
REVENUES:
Program revenues:
Charges for services $ 785,739 $ 635,293
Operating grants and contributions 672,476 692,885
Capital grants and contributions 183,630 246,375
General revenues:
Property taxes 2,238,173 2,101,971
Public utility taxes 860,362 853,799
Franchise fees 568,062 553,565
Shared revenues 1,618,950 1,480,838
Investment income 222,420 154,650
Other income 16,325 99,508
Total revenues 7,166,137 6,818,884
EXPENSES:
General government 1,415,324 938,034
Public safety 3,918,479 3,789,940
Transportation 732,470 496,943
Physical environment 869,723 873,418
Culture and recreation 6,750 9,407
Total expenses 6,942,746 6,107,742
Change in net position 223,391 711,142
Net position, beginning of year 20,177,560 19,466,418
Net position, ending September 30 $ 20,400,951 $ 20,177,560
City of Okeechobee, Florida
Management's Discussion and Analysis
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The City experienced an increase of 5.1% in total revenues – a $347,253 increase to $7.16 million.
The increase is primarily due to a $150,446 increase in charges for services and the shared revenues
increase of $138,112 in general revenue. An increase in the assessed taxable values and continuing
millage rate of 7.9932 were the contributory factors in the increase of property tax revenue of
$136,202. Utility Tax and Franchise fee revenues increased $6,563 and $14,497 respectively,
primarily based on higher consumer consumption. The City experienced an increase of 13.7% in
total expenses – a $835,004 increase to $6.9 million. The increase is primarily due to a $477,290
increase in expenses for general government. The $235,527 increase in transportation expense and
$128,539 increase in public safety also were large contributors to the overall increase in
expenditures for the year. The combined increase in expense and increase in revenues resulted in
an increase in net position of $223,391.
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 $11,495,123 an increase of $458,977 in comparison with the prior year. Approximately
73% of this total amount $8,433,872, constitutes unassigned fund balance, which is available for
spending at the government's discretion. Assigned fund balances include $1,914,755 for subsequent
year’s expenditures. Public facilities fund balance of $1,103,396 plus law enforcement $8,145 are
restricted funds based on their specific stipulated purpose. The remainder of fund balance is non-
spendable inventory of $34,955.
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 $10,086,277 while total fund
balance was $11,224,628. 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 142%
and 158% respectively of total general fund expenditures.
Revenues from grants were used in the construction of infrastructure and other improvements in
the City in the prior year.
City of Okeechobee, Florida
Management's Discussion and Analysis
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General Fund Budgetary Highlights
The amount appropriated for expenditures in the original 18/19 budget decreased from $8,293,077
to $7,278,303 in the final 18/19 budget, a decrease of $1,014,774. The decrease in general
government expenses, fire and police public safety expenses, physical environment expenses,
transportation expenses and capital outlay largely contributed to the overall decrease in
expenditures.
CAPITAL ASSETS AND LONG-TERM LIABILITIES
Capital assets. The City’s investment in capital assets as of September 30, 2019, amounted to
$8,234,983, (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 $297,697.
The City’s major additions of $587,187 to capital assets during the current fiscal year included the
following:
• Replacement computers for (4)-Police Department
• Replace (11) police vehicles including equipment for Police Department; (1)
motorcycle; (1) Pickup for Public Works
• Roadside Radar (2) with trailers
• LED Solar blinking stop signs
• Mobile/Portable handheld radios (2) Fire Department; (4) Police Department
• Tasers (1) including harnesses, etc.; (1) Radar
• Replacement bunker gear
• Zero turn mower (finishing mower)
• 12 Grills for Centennial Park
City of Okeechobee, Florida
Management's Discussion and Analysis
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City’s Capital Assets
(net of depreciation)
2019 2018
Land $ 1,378,744 $ 1,378,744
Buildings 1,143,049 1,183,251
Improvements other than buildings 4,154,231 4,448,127
Equipment 1,558,959 1,522,558
Total $ 8,234,983 $ 8,532,680
Additional information on the City’s capital assets can be found in Note 4.C. on page 39 of this
report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The City Council adopted a millage rate of 7.6018 for budget year 2020. The adopted millage rate is
the same as the of the roll-back rate of 7.6018. A $40,515 increase in budgeted ad valorem revenue
is largely due to the increase in new construction added to this year’s assessed tax rolls.
Revenues for the fiscal year 2020 adopted budget for all funds of the City total approximately
$7,682,496, an increase from the prior year final budget of approximately $532,385. These
revenues include the General, Public Facility, Capital Projects and Special Law Enforcement fund
revenues. The change in revenue is based mostly on the expected increase in Ad Valorem Tax
revenue and Intergovernmental revenues.
Expenditures for the fiscal year 2020 adopted budget for all funds of the City total approximately
$9,622,593, an increase of 12.4% or $1,058,016 from the prior year budget. The increase in
expenditures is based mostly on the Increase general government and transportation related
expenditures
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Okeechobee’s finances
for all those with an interest. Questions concerning any of the information provided in this report
or requests for additional information should be addressed to the City of Okeechobee, 55 S.E. Third
Avenue, Okeechobee, Florida 34974.
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BASIC FINANCIAL STATEMENTS
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City of Okeechobee, Florida
Statement of Net Position - Governmental Activities
The accompanying notes are an integral part of these financial statements.
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September 30, 2019
ASSETS
Cash and cash equivalents 2,952,579$
Investments 8,470,359
Accounts receivable 167,811
Due from other governments 197,238
Inventory 34,955
Capital assets:
Nondepreciable
Land 1,378,744
Depreciable, net of accumulated depreciation
Buildings 1,143,049
Improvements other than buildings 4,154,231
Equipment 1,558,959
Net pension asset 1,764,508
Total assets 21,822,433
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflow - pensions 830,245
Total deferred outflows of resources 830,245
LIABILITIES
Accounts payable 209,111
Accrued expenses 72,656
Noncurrent liabilities:
Due within one year - compensated absences 43,516
Due in more than one year
Compensated absences 391,936
OPEB liability 157,959
Total liabilities 875,178
DEFERRED INFLOWS OF RESOURCES
Deferred inflow - business tax receipts 46,052
Deferred inflow - pensions 1,330,497
Total deferred inflows of resources 1,376,549
NET POSITION
Net investment in capital assets 8,234,983
Restricted for:
Law enforcement 8,145
Public facilities 1,103,396
Unrestricted 11,054,427
Total net position 20,400,951$
-
City of Okeechobee, Florida
Statement of Activities - Governmental Activities
The accompanying notes are an integral part of these financial statements.
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Program Revenues Net (Expense)
Operating Capital Revenue and
Charges for Grants and Grants and Changes in
Functions/Programs Expenses Services Contributions Contributions Net Position
General government 1,415,324$ 727,775$ -$ -$ (687,549)$
Public safety 3,918,479 30,540 - - (3,887,939)
Transportation 732,470 27,424 672,476 - (32,570)
Physical environment 869,723 - - 183,630 (686,093)
Culture & recreation 6,750 - - - (6,750)
Total governmental
activities 6,942,746$ 785,739$ 672,476$ 183,630$ (5,300,901)
General revenues:
Property taxes 2,238,173
Public utility taxes 860,362
Franchise fees 568,062
Shared revenues not restricted to specific programs 1,618,950
Unrestricted investment earnings 222,420
Miscellaneous 16,325
Total general revenues 5,524,292
Change in net position 223,391
Net position, beginning of year 20,177,560
Net position, end of year 20,400,951$
Year ended September 30, 2019
City of Okeechobee, Florida
Balance Sheet - Governmental Funds
The accompanying notes are an integral part of these financial statements.
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Community Total
Development Nonmajor Governmental
September 30, 2019 General Capital Project Funds Funds
ASSETS
Cash and cash equivalents 2,673,781$ 261,757$ 17,041$ 2,952,579$
Investments 8,470,359 - - 8,470,359
Accounts receivable 167,811 - - 167,811
Due from other funds 8,303 - - 8,303
Due from other governments 197,238 - - 197,238
Inventory 34,955 - - 34,955 Total assets 11,552,447$ 261,757$ 17,041$ 11,831,245$
LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES
Liabilities
Accounts payable 209,111$ -$ -$ 209,111$
Accrued expenses 72,656 - - 72,656
Due to other funds - - 8,303 8,303
Total liabilities 281,767 - 8,303 290,070
Deferred inflows of resources:
Deferred revenue - business tax revenue 46,052 - - 46,052
Fund balances:
Nonspendable for:
Inventory 34,955 - - 34,955
Restricted for:
Public facilities 1,103,396 - - 1,103,396
Law enforcement - - 8,145 8,145
Assigned for:
Subsequent year's expenditures 1,914,755 - - 1,914,755
Unassigned 8,171,522 261,757 593 8,433,872
Total fund balances 11,224,628 261,757 8,738 11,495,123
Total liabilities, deferred inflows of resources and fund balances 11,552,447$ 261,757$ 17,041$
Amounts reported for governmental activities in the statement of net
position are different because:
Deferred outflows of resources related to pensions are not
recognized in the governmental funds; however, they are recorded
in the statement of net position under full accrual accounting.830,245
Deferred inflows of resources related to pensions are not recognized in
governmental funds; however, they are recorded in the statement
of net position under full accrual accounting.(1,330,497)
Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the funds.8,234,983
Net pension assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.1,764,508
Long-term liabilities, including the net OPEB obligation and compensated
absences are not due and payable in the current period and, therefore,(593,411)
are not reported in the funds.
Net position of governmental activities 20,400,951$
City of Okeechobee, Florida
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds
The accompanying notes are an integral part of these financial statements.
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Community Total
Development Nonmajor Governmental
Year ended September 30, 2019 General Capital Project Funds Funds
Revenues
Taxes 3,097,423$ -$ -$ 3,097,423$
Intergovernmental 2,528,480 183,630 - 2,712,110
Charges for services 420,181 - - 420,181
Permits and fees 802,084 - - 802,084
Fines and forfeitures 36,048 - 4,133 40,181
Investment earnings 222,420 - - 222,420
Miscellaneous 14,692 - - 14,692
Total revenues 7,121,328 183,630 4,133 7,309,091
Expenditures
Current:
General government 1,308,834 - - 1,308,834
Public safety 3,862,256 - 356 3,862,612
Transportation 1,116,651 - - 1,116,651
Physical environment 212,308 - - 212,308
Recreation 6,750 - - 6,750
Capital outlay 587,187 - - 587,187
Total expenditures 7,093,986 - 356 7,094,342
Excess of revenues
over expenditures 27,342 183,630 3,777 214,749
Other financing sources (uses)
Proceeds from sale of capital assets 244,228 - - 244,228
Total other financing sources (uses)244,228 - - 244,228
Net change in fund balances 271,570 183,630 3,777 458,977
Fund balances, beginning of year 10,953,058 78,127 4,961 11,036,146
Fund balances, end of year 11,224,628$ 261,757$ 8,738$ 11,495,123$
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City of Okeechobee, Florida
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances of Governmental Funds to the Statement of Activities
The accompanying notes are an integral part of these financial statements.
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Year ended September 30, 2019
Net change in fund balances - total governmental funds 458,977$
Amounts reported for governmental activities in the statement of activities
are different because:
Governmental funds report capital outlays as expenditures. However, in
the statement of activities, the cost of those assets is allocated over
their estimated useful lives as depreciation expense. This is the
amount by which capital outlay exceeded depreciation in the current
period.(49,626)
In the statement of activities, only the gain (loss) 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 net book value of the disposed capital assets.(248,071)
Pension contributions are reported as expenditures in the fund financial
statements and the change in net position asset and related outflows (inflows)
are reported on the statement of activities.74,886
Other post employment benefits are reported as expenditures in the fund
financial statements and the change in net position asset and related outflows
(inflows) are reported on the statement of activities.(4,849)
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 net amount of compensated absences reported in the statement of
activities in the prior year that have matured in the current year.(7,926)
Change in net position of governmental activities 223,391$
-
City of Okeechobee, Florida
Statement of Fiduciary Net Position - Pension Trust Funds
The accompanying notes are an integral part of these financial statements.
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Pension
September 30, 2019 Trust Funds
ASSETS
Cash equivalents 364,917$
Investments:
Mutual funds 18,721,021
Receivables 102,700
Prepaid expenses 1,318
Due from other plan 652
Total assets 19,190,608
LIABILITIES
Accounts payable 120,859
Due to other plan 652
Total liabilities 121,511
NET POSITION
Restricted for pension benefits 19,069,097$
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City of Okeechobee, Florida
Statement of Changes in Fiduciary Net Position - Pension Trust Funds
The accompanying notes are an integral part of these financial statements.
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Pension
Year ended September 30, 2019 Trust Funds
ADDITIONS
Contributions:
State 142,962$
City 330,199
Employees 140,325
Total contributions 613,486
Investment earnings:
Net appreciation in the
fair value of investments 106,033
Interest and dividends 582,547
Total investment earnings 688,580
Less investment expenses (61,629)
Net investment earnings 626,951
Total additions 1,240,437
DEDUCTIONS
Benefits paid to participants 595,687
Refunds on termination 22,233
DROP payments 310,165
Administrative expenses 144,036
Total deductions 1,072,121
Change in net position 168,316
Net position, beginning of year 18,900,781
Net position, end of year 19,069,097$
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City of Okeechobee, Florida
Notes to Financial Statements
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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.
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 City has no discretely presented component units.
The City reports the following component units:
Municipal Firefighters’ Pension Trust Fund – The fund is under the supervision of a five member local
independent Board of Trustees who are selected for office under the provisions of Florida Statutes,
Chapter 175. The Board of Trustees cannot amend the provisions of the plan without the approval of
the City Council. This plan covers all full-time firefighters of the City. The City funds the plan, according
to any contribution deficit as determined by an actuarial valuation for the plan, beyond the
contributions by employees and the State Insurance Premium Tax Contribution. It is accounted for in
the Pension Trust funds.
Municipal Police Officers’ Pension Trust Fund – The fund is under the supervision of a five member
local independent Board of Trustees who are selected for office under the provisions of Florida
Statutes, Chapter 185. The Board of Trustees cannot amend the provisions of the plan without the
approval of the City Council. This plan covers all full-time sworn officers of the City. The City funds the
plan, according to any contribution deficit as determined by an actuarial valuation for the plan,
beyond the contributions by employees and the State Insurance Premium Tax Contribution. It is
accounted for in the Pension Trust funds.
The Employees’ Retirement System of the City of Okeechobee, Florida – The fund is under the
supervision of a five member local independent Board of Trustees. The Board of Trustees cannot
amend the provisions of the plan without the approval of the City Council. This plan benefits the City
general employees. The City funds the plan. It is accounted for in the Pension Trust funds in 2019 as
the City does have fiduciary responsibility.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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 expenditures 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.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION
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.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION
(Continued)
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 not including grant funds that are instead included in the appropriations grant capital
project fund.
The City reports the following nonmajor governmental funds:
The law enforcement special revenue fund accounts for the assets that are restricted to fund
certain expenditures of the City’s police department.
The appropriations grant capital projects fund accounts for the financial resources related to
the construction of infrastructure and other improvements in the City provided by specific
grants and matching funds.
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 general employees’, 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 pro-
gram revenues. Therefore, general revenues include all taxes.
Expenditures 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.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY
1. Cash and investments
The investment of municipal funds is authorized by local ordinance and Florida Statutes. This allows
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.
The Florida PRIME has adopted operating procedures consistent with the requirements for an
investment pool under GASB I50: Investments to be reported at amortized cost. The fair value of the
City’s position in the pool is equal to the value of pooled shares. The funds can with withdrawn at any
time, and there are no unfunded commitments.
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 firefighters’, police officers’ and general employees’ 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.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
1. Cash and investments (continued)
Pension trust fund investments are reported at 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.
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, 2019 was 7.9932 mills, which is 4.76% more 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
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).
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
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
acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are
capitalized as projects are constructed.
Property, plant and equipment are depreciated using the straight-line method over the following esti-
mated useful lives:
Assets Years
Buildings 25-60
Building improvements 12-20
Vehicles 10
Equipment 5-15
5. Compensated absences
It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay
benefits. All sick and vacation pay is accrued when incurred in the government-wide financial
statements. A liability for these amounts is reported in governmental funds only if they have
matured, for example, as a result of employee resignations and retirements.
6. Deferred inflows and outflows of resources
The deferred outflows and inflows related to pensions are an aggregate of items related to
pensions as calculated in accordance with GASB Statement No. 68, Accounting and Financial
Reporting for Pensions. Total deferred inflows of resources related to pensions were $1,330,497,
and total deferred outflows were $830,245 for the year ended September 30, 2019. Note 5-B
includes a complete discussion of retirement commitments.
Resources received before time requirements have been met, for example business tax revenues,
are classified as deferred inflows of resources.
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.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
7. Long-term obligations (continued)
In the governmental fund financial statements, the face amount of debt issued is reported as other
financing sources.
8. 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.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
9. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred
inflows of resources related to pensions, and pension expense, information about the fiduciary net
position of the City's Police Officers’ and Firefighters’ pension trust funds and the Florida Retirement
System Pension Plan and Health Insurance Subsidy Program and additions to/deductions from the
plans’ fiduciary net position have been determined on the same basis as they are reported by the
plans. For this purpose, benefit payments (including refunds of employee contributions) are
recognized when due and payable in accordance with the benefit terms. Investments are reported at
fair value.
10. Other post-employment benefits
The City participates in a single employer, defined benefit, other post-employment plan. The City does
not have a trust for the plan, and there is no actuarially determined contribution. The OPEB liability is
determined in accordance with GASBC P52: Other Post-employment Benefits.
11. Use of estimates
The preparation of the financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions. This will affect the reported amounts of assets, liabilities, deferred inflows and
deferred outflows, the disclosure of contingent assets, liabilities, deferred inflows and deferred
outflows at the date of the financial statements, and the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from these
estimates.
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 reconciliation between fund balance-total
governmental funds and net position-governmental activities as reported in the government-wide
statement of net position.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 2: RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (Continued)
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE
SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET POSITION (Continued)
One element of that reconciliation states that "long-term liabilities, including the net OPEB obligation
and compensated absences, are not due and payable in the current period and, therefore, are not
reported in the funds." The details of this $(593,411) difference are as follows:
Net OPEB obligation $ (157,959)
Compensated absences (435,452)
Net adjustment to reduce fund balance - total governmental funds to
arrive at net position-governmental activities $ (593,411)
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 $(49,626) difference are as follows:
Capital outlay 587,187$
Depreciation expense (636,813)
Net adjustment to decrease net changes in fund balances - totalgovernmental funds to arrive at changes in net position of
governmental activities (49,626)$
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.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 4: DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
As of September 30, 2019, $250,000 of the City’s bank balances is 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 the close of the fiscal year, the City held investments in the Local Government Surplus Funds
Trust Fund (“Florida PRIME”) external investment pool. The Florida PRIME is administered by the
Florida State Board of Administration (“SBA”), who provides regulatory oversight. Florida PRIME
currently meets all of the necessary criteria set forth in Section I50: Investment Pools (External) of
the GASB Codification to measure its investments at amortized cost; therefore, the City’s account
balance in the SBA is also reported at amortized cost.
Fair Value
GASBC I50: Investments, establishes a framework for measuring fair value. That framework provides a
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3
measurements).
The three levels of the fair value hierarchy under GASBC I50 are described as follows:
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or
liabilities in active markets that the plan has the ability to access.
Level 2: Inputs to the valuation methodology include
• quoted prices for similar assets or liabilities in active markets;
• quoted prices for identical or similar assets or liabilities in inactive markets;
• inputs other than quoted prices that are observable for the asset or liability;
• inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable
for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the
lowest level of any input that is significant to the fair value measurement. Valuation techniques used
need to maximize the use of observable inputs and minimize the use of unobservable inputs.
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
A. DEPOSITS AND INVESTMENTS (Continued)
The following is a description of the valuation methodologies used for assets measured at fair value.
There have been no changes in the methodologies used at September 30, 2019.
Level 1 investments noted in the following table are valued at quoted market prices.
Level 2 investments noted in the following table are valued at quoted prices for similar liabilities in
active markets.
The money market fund is valued at amortized cost. They can be redeemed daily, and have no
unfunded commitments.
Mutual funds – equities are valued at quoted market prices.
Mutual funds – fixed income are valued using price models maximizing the use of observable inputs
for similar securities. This includes basing value on yield currently available on comparable securities
of issues with similar credit ratings.
At September 30, 2019, the City had the following investments and effective duration presented in
terms of years and levels:
Investment type Fair Value Less than 1 1 - 5 6 - 10 More than 10 Rating Agency Level
Primary government:
SBA (Florida Prime)8,470,359 8,470,359$ -$ -$ -$ AAAm S&P -
Primary government total 8,470,359$ 8,470,359$ -$ -$ -$
Pension trust funds:
Mutual funds- equities 12,116,431 - - 12,116,431 - Not rated -L1
Mutual funds- fixed income 6,604,590 - - 6,604,590 - BBB - AA S&P L2
18,721,021$ -$ -$ 18,721,021$ -$
Cash Equivalents, at amortized cost
Money Market Fund 364,917
Total Cash Equivalents, at cost 364,917
Pension trust fund total 19,085,938$
Credit risk
Credit risk for fixed income securities is the risk that the issuer will not fulfill its obligations. The City’s
investment policy does not address credit risk; however, investments are limited to state sponsored
investment pools, which are diversified in their underlying portfolios so that potential losses will be
minimized. The investment policies for the firefighters’, police officers’ and general employees’
pension trust funds limit investments to securities with specific ranking criteria.
City of Okeechobee, Florida
Notes to Financial Statements
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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 loss that occurs as more investments are
acquired from one issuer (i.e. lack of diversification). The City’s investment policy and the
investment policies for the firefighters’, police officers’ and general employees’ pension trust funds
do not specifically address concentration of credit risk.
Foreign currency risk
The City’s firefighters’, police officers’, and general employees’ pension trust 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, 2019 are as follows:
General
Fund
Municipal
Police Officers’
Pension
Trust
Municipal
Firefighters’
Pension
Trust
General
Employees
Pension Trust
Franchise/Utility taxes 114,764$ -$ -$ -$
Contributions - 41,905 23,554 37,241
Other 53,047 - - -
Receivables, net 167,811$ 41,905$ 23,554$ 37,241$
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
C. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2019 was as follows:
Beginning
Balance Increases Decreases Ending Balance
Governmental activities:
Capital assets, not being depreciated:
Land 1,378,744$ -$ -$ 1,378,744$
Construction in progress - - - -
Total capital assets, not being depreciated 1,378,744 - - 1,378,744
Capital assets, being depreciated:
Buildings 2,267,258 35,865 - 2,303,123
Improvements other than buildings 8,155,303 32,200 (113,080) 8,074,423
Equipment 3,804,191 519,122 (484,111) 3,839,202
Total capital assets, being depreciated 14,226,752 587,187 (597,191) 14,216,748
Less accumulated depreciation for:
Buildings (1,084,007) (76,067) - (1,160,074)
Improvements other than buildings (3,707,176) (326,096) 113,080 (3,920,192)
Equipment (2,281,633) (234,650) 236,040 (2,280,243)
Total accumulated depreciation (7,072,816)(636,813) 349,120 (7,360,509)
Total capital assets, being depreciated, net 7,153,936 (49,626) (248,071) 6,856,239
Governmental activities capital assets, net $ 8,532,680 (49,626)$ (248,071)$ 8,234,983$
Depreciation expense was charged to functions/programs of the government as follows:
Governmental activities:
General government 109,985$
Public safety 226,438
Physical environment 300,390
Total depreciation expense - governmental activities $ 636,813
City of Okeechobee, Florida
Notes to Financial Statements
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NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
D. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund loans for short-term operating purposes resulted in a due to the General fund from the
Law Enforcement Trust fund of $8,303. All amounts are expected to be repaid within one year.
E. CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended September 30, 2019, was as follows:
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Governmental activities:
Compensated absences $ 427,526 172,211$ (164,285)$ 435,452$ 43,516$
Net OPEB liability 153,110 4,849 - 157,959 -
Long-term liabilities 580,636$ 177,060$ (164,285)$ 593,411$ 43,516$
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 loss, including, but not limited to theft, damage or destruction of
its buildings, equipment, records and monetary assets, and liability for personal injury, property
damage and consequences of employee and public official actions. The City participates in a non-
assessable public risk pool to cover significant loss exposure and purchases commercial insurance for
third party pollution liability coverage. The pool maintains a loss reserve and purchases specific
excess insurance, aggregate excess insurance and multiple loss coverage from commercial carriers
and underwriters.
City of Okeechobee, Florida
Notes to Financial Statements
- 39 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS
Plan Descriptions – The City contributes to two single-employer defined benefit pension plans: City of
Okeechobee Municipal Police Officers’ Pension Trust Fund and City of Okeechobee Municipal
Firefighters’ Pension Trust Fund (the “Plans”). The Plans provide retirement, disability and death
benefits to plan members and their beneficiaries. Chapters 185 and 175 of the Florida Statutes
establish the minimum benefits and the minimum standards for the operation and funding of the
Police Officers’ and the Firefighters’ Municipal Pension Trust Funds, respectively. Per City Ordinances
Nos. 750 and 749, sole responsibility for administering the Plans is vested in the Board of Trustees of
each plan. The Boards cannot amend the provisions of the plans without the approval of the City. The
Plans issue publicly available financial reports that include financial statements and required
supplementary information. The reports are available from the City of Okeechobee, Florida, 55 S.E.
Third Avenue, Okeechobee, Florida 34974.
At September 30, 2019, the Police Officers’ plan included 10 retirees or beneficiaries either receiving
or entitled to receive benefits, plus 4 survivor beneficiaries. The Police Officers’ plan also includes 1
terminated member with vested benefits, and has 3 DROP participants. There are 21 active current
employees of which 9 are vested and 12 are non-vested.
At September 30, 2019, the Firefighters’ plan included 5 retirees receiving or entitled to receive
benefits, plus 1 beneficiary receiving benefits. The Plan also included 2 DROP participants. There are
10 active current employees of which 5 are vested and 5 are non-vested.
Funding Policies – The contribution requirements of plan members and the City are established and
may be amended by City ordinance. Plan members are required to contribute 5% of their annual
covered salary for the Police Officers’ and Firefighters’ Municipal Trust Funds. The City is required to
contribute an amount equal to the difference in each year between the total aggregate member
contributions for the year, plus state contributions for such year, and the normal cost for the year, as
shown by the most recent actuarial valuation of the plan; the current contribution rate as a
percentage of covered payroll is 12.98% for the Police Officers’ plan and 17.72% 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 $90,152 and $52,810, respectively. These contributions are
funded by an excise tax upon certain casualty insurance companies on their gross receipts of
premiums from policy holders.
City of Okeechobee, Florida
Notes to Financial Statements
- 40 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
The City and employees contributions for the year ended September 30, 2019, are as follows:
City Employees
Police Officers'130,887$ 50,359$
Firefighters'83,988$ 23,945$
Plan Investment Policies and Allocation of Plan Investments - Florida statutes and the plan investment
policy authorize the Trustees to invest funds in various investments. The general investment objective
of the fund is to preserve the purchasing power of the fund's assets and earn a reasonable rate of
return (after inflation) over the long term while minimizing, to the extent reasonable, the short-term
volatility of returns. Best estimates of arithmetic real rates of return for each major asset class
included in the pension plan's target asset allocation as of September 30, 2019, and the current target
and actual allocation of these investments at market, per the performance analysis report, is as
follows as of September 30, 2019:
Actual Target
Investments Percent Percent
Domestic Equity 49.1%45.0%
International Equity 14.9%15.0%
Fixed Income 34.6%40.0%
Cash Equivalents 1.4%0.0%
Total 100.0%100.0%
Actual Target
Investments Percent Percent
Domestic Equity 48.0%45.0%
International Equity 14.1%15.0%
Fixed Income 36.5%40.0%
Cash Equivalents 1.4%0.0%
Total 100.0%100.0%
Firefighters'
Police Officers'
Money-Weighted Rate of Return - For the year ended September 30, 2019, the annual money-
weighted rate of return on the Police Officers’ pension plan investments was (3.1%) and on the
Firefighters’ pension plan investments was (2.39%). The money-weighted rate of return expresses
investment performance, net of plan investment expenses, as adjusted for the changing amounts
actually invested on a monthly basis.
City of Okeechobee, Florida
Notes to Financial Statements
- 41 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Net Pension Liability (Asset) – The City’s net pension liability (asset) was measured as of September 30,
2018, and the total pension liability (asset) used to calculate net pension liability (asset) was
determined by an actuarial valuation as of September 30, 2019 for the Police Officers’ and Firefighters
pension plan.
Total Pension Liability Police Officers'Firefighters'
Service cost 258,622$ 136,825$
Interest 580,995 257,407
Difference between actual & expected experience (276,621) (162,443)
Benefit payments, including refunds (281,028) (123,132)
Other 72,669 19,828
Net change in total pension liability 354,637 128,485
Total pension liability - beginning 8,504,923 3,811,073
Total pension liability - ending (a)8,859,560$ 3,939,558$
Plan Fiduciary Net Position Police Officers'Firefighters'
Contributions - employer (from City)151,492$ 115,253$
Contributions - employer (from State)81,690 52,793
Contributions - members 46,212 23,446
Net investment income 727,699 308,920
Benefit payments, including refunds (281,028) (123,132)
Administrative expense (45,827) (59,878)
Net change in plan fiduciary net position 680,238 317,402
Plan fiduciary net position - beginning 8,937,259 3,961,903
Plan fiduciary net position - ending (b)9,617,497 4,279,305
Net pension liability (asset) - Ending (a) - (b)(757,937)$ (339,747)$
Plan fiduciary net position as a percentage
or Total Pension Liability (Asset)108.56%108.62%
For the year ending September 30, 2019, the City recognized a pension expense of $166,229 for the
Police Officers’ Plan and $139,252 for the Firefighters’ Plan. On September 30, 2019, the Sponsor
reported deferred outflows of resources and deferred inflows of resources related to pensions from
the following sources:
City of Okeechobee, Florida
Notes to Financial Statements
- 42 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Deferred Deferred
Outflow of Inflow of
Resources Resources
Difference between expected and actual experience 53,678$ 441,000$
Change in assumptions 38,570 -
Net difference between projected and actual earnings on
pension plan investments - 191,406
Contributions subsequent to the measurement date 221,039 -
Total 313,287$ 632,406$
Deferred Deferred
Outflow of Inflow of
Resources Resources
Difference between expected and actual experience 34,421$ 217,899$
Change in assumptions 25,205 9,765
Net difference between projected and actual earnings on
pension plan investments - 70,593
Contributions subsequent to the measurement date 136,798 -
Total 196,424$ 298,257$
Police Officers'
Firefighters'
Deferred outflows of $357,837 resulting from City and State contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the fiscal year end
September 30, 2019 for both the Police and Firefighters pension plans. Amounts reported as deferred
outflows of resources and deferred inflows of resources related to pension will be recognized in
pension expense as follows:
Year ended September 30:
2020 (80,399)$
2021 (196,553)
2022 (178,617)
2023 (73,948)
2024 (10,641)
Total (540,158)$
Police Officers'
City of Okeechobee, Florida
Notes to Financial Statements
- 43 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Year ended September 30:
2020 (10,952)$
2021 (65,642)
2022 (62,240)
2023 (30,999)
2024 (30,277)
Thereafter (38,521)
Total (238,631)$
Firefighters'
Net Pension Liability of the City of Okeechobee – The components of the net pension liability of the
City at September 30, 2019, as follows, is presented in accordance with GASB Statement No. 67, while
the net pensions recognized by the City in the current financial statements represents the net pension
liability measured as of September 30, 2018 which is allowed by GASB Statement No. 68.
Police Fire
Total pension liability 9,051,402$ 4,073,426$
Plan fiduciary net position (9,656,318) (4,386,834)
City's net pension asset (604,916)$ (313,408)$
Plan fiduciary net position as a
percentage of total pension liability 106.68%107.69%
Expected Long-Term Rate of Return - The long-term expected rate of return on pension investments
was determined using a building-block method in which best estimate ranges of future real rates of
return (expected returns, net of pension plan investment expenses and inflation) are developed for
each major asset class. These ranges are combined to produce the long-term expected rate of return
by weighting the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation (2.5%) to arrive at a 5.65% projected long-term real rate of return net of
investment expenses. Best estimates of arithmetic real rates of return for each major asset class
included in the pension plan's target asset allocation as of September 30, 2019 are summarized as
follows:
City of Okeechobee, Florida
Notes to Financial Statements
- 44 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Percent Long-Term
Investments Target Rate of Return*
Domestic Equity 45.0%7.5%
International Equity 15.0%8.5%
Fixed Income 40.0%6.0%
Cash Equivalents 0.0%0.0%
Total 100.0%
*Net of long-term inflation assumption of 2.5%
Percent Long-Term
Investments Target Rate of Return*
Domestic Equity 45.0%7.5%
International Equity 15.0%8.5%
Fixed Income 40.0%6.0%
Cash Equivalents 0.0%0.0%
Total 100.0%
*Net of long-term inflation assumption of 2.5%
Police Officers'
Firefighters'
Discount Rate - The projection of cash flows used to determine the discount rate assumed that plan
member contributions will be made at the current contribution rate and that sponsor contributions
will be made at rates equal to the difference between actuarially determined contribution rates and
the member rate. Based on those assumptions, the pension plan's fiduciary net position was
projected to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on pension plan investments was applied to all
periods of projected benefit payments to determine the total pension liability.
Sensitivity of the Net Pension Liability to Changes in Discount Rate - The following presents the pension
liability of the City, calculated using the discount rate of 7%, as well as what the City's net pension
liability would be if it were calculated using a discount rate that is 1% lower (6%) or 1% higher (8%)
than the current rate:
City of Okeechobee, Florida
Notes to Financial Statements
- 45 -
NOTE 5: OTHER INFORMATION (Continued)
C. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
1% Decrease Current Discount 1% Increase
6.00%7.00%8.00%
Sponsor's net pension liability (asset)497,161$ (604,916)$ (1,518,714)$
1% Decrease Current Discount 1% Increase
6.00%7.00%8.00%
Sponsor's net pension liability (asset)195,787$ (313,408)$ (737,059)$
Police Officers'
Firefighters'
The Employees’ Retirement System (Fund) of the City of Okeechobee, Florida
Plan Description - Prior to October 1, 2016, both the Okeechobee Utility Authority (OUA) and the
general employees of the City of Okeechobee, Florida were covered by the City of Okeechobee and
Okeechobee Utility Authority Employee Retirement System. The plan was previously treated as a cost
sharing multiple-employer plan when combined with the Okeechobee Utility Authority. Effective
October 1, 2016, the City contributes to the Employees’ Retirement System (Fund) of the City of
Okeechobee, Florida (the “System”), a single employer, defined benefit contributory pension trust
administered by the System’s Board of Trustees. Substantially all of the City’s regular employees
participate in this public employee retirement system. The System was established by City
Ordinance No. 655, as amended and restated by City Ordinance No. 686. 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.
At September 30, 2019, the Plan included 17 retirees and/or beneficiaries currently receiving benefits
plus 4 terminated employees entitled to benefits but not yet receiving them, and 1 DROP participant.
There are 31 active current employees in the Plan, of which 14 are vested and 17 are non-vested.
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
10.44% of covered payroll. The City’s contributions for the year ended September 30, 2019, was
$114,875, which was $449 short of the actuarially required contribution for the year of $115,324.
Net Pension Liability (Asset) - For the year ending September 30, 2019, the City reported an asset of
$(666,824) for the Pension Plan’s net pension (asset). The net pension liability (asset) was measured
as of September 30, 2018, and the total pension liability (asset) used to calculate the net pension
liability (asset) was determined by an actuarial valuation as of October 1, 2019.
City of Okeechobee, Florida
Notes to Financial Statements
- 46 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Total Pension Liability
Service cost 154,529$
Interest 284,633
Difference between actual & expected experience 20,956
Benefit payments, including refunds (180,781)
Net change in total pension liability 279,337
Total pension liability - beginning 4,057,820
Total pension liability - ending (a)4,337,157
Plan Fiduciary Net Position
Contributions - employer (from City)75,793
Contributions - members 60,312
Net investment income 394,042
Benefit payments, including refunds (180,781)
Administrative expense (46,328)
Net change in plan fiduciary net position 303,038
Plan fiduciary net position - beginning 4,700,943
Plan fiduciary net position - ending (b)5,003,981
Net pension liability (asset) - Ending (a) - (b)(666,824)$
Plan fiduciary net position as a percentage
of Total Pension Liability (Asset)115.37%
General
The City and employees contributions for the year ended September 30, 2019, are as follows.
City Employees
General 115,324$ 66,021$
City of Okeechobee, Florida
Notes to Financial Statements
- 47 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Money-Weighted Rate of Return - The annual money-weighted rate of return on plan investments
(calculated as the internal rate of return on plan investments, net of plan investment expense) was
2.23% for the year ended September 30, 2019. The money-weighted rate of return expresses
investment performance, net of plan investment expenses, as adjusted for the changing amounts
actually invested on a monthly basis.
For the year ending September 30, 2019 the City recognized a pension expense of $443,349 for the
General Employees’ Retirement Plan. On September 30, 2019, the Sponsor reported deferred
outflows of resources and deferred inflows of resources related to pensions from the following
sources:
Deferred Deferred
Outflow of Inflow of
Resources Resources
Difference between expected and actual experience 33,242$ 300,003$
Change in assumptions 171,968 -
Net difference between projected and actual earnings on
pension plan investments - 99,831
Contributions subsequent to the measurement date 115,324 -
Total 320,534$ 399,834$
General
Deferred outflows of $115,324 resulting from City contributions subsequent to the measurement date
will be recognized as a reduction of the net pension liability in the fiscal year ended September 30,
2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related
to pension will be recognized in pension expense as follows:
Year ended September 30:
2020 58,447$
2021 (106,220)
2022 (85,910)
2023 (64,432)
2024 3,491
Total (194,624)$
General
Net Pension Liability of the City of Okeechobee – The components of the net pension liability of the
City at September 30, 2019, as follows, is presented in accordance with GASB Statement No. 67, while
the net pensions recognized by the City in the current financial statements represents the net pension
liability measured as of September 30, 2018 which is allowed by GASB Statement No. 68.
City of Okeechobee, Florida
Notes to Financial Statements
- 48 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
General
Total pension liability 4,383,118$
Plan fiduciary net position (5,028,097)
City's net pension asset (644,979)$
Plan fiduciary net position as a
percentage of total pension liability 114.72%
Plan Investment Policies and Allocation of Plan Investments - Florida statutes and the plan
investment policy authorize the Trustees to invest funds in various investments. The general
investment objective of the fund is to preserve the purchasing power of the fund's assets and earn
reasonable rate of return (after inflation) over the long term while minimizing, to the extent
reasonable, the short-term volatility of returns.
Percent Percent
Investments Actual Target
Domestic Equity 54.7%50.0%
International Equity 10.1%10.0%
Fixed Income 33.6%40.0%
Cash Equivalents 1.6%0.0%
Total 100.0%100.0%
General
Expected Long-Term Rate of Return - The long term expected rate of return on pension plan
investments was determined using a building-block method in which best estimate ranges of
expected future real rates of return (expected returns, net of pension plan investment expenses
and inflation) are developed for each major asset class. These ranges are combined to produce the
long term expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic
real rates of return for each major asset class included in the pension plan’s target asset allocation
and actual allocation as of September 30, 2019 are summarized in the following table:
Percent Long-Term
Investments Actual Rate of Return*
Domestic Equity 54.7%7.5%
International Equity 10.1%8.5%
Fixed Income 33.6%2.5%
Cash Equivalents 1.6%0.0%
Total 100.0%5.6%
*Net of long-term inflation assumption of 2.5%
General
City of Okeechobee, Florida
Notes to Financial Statements
- 49 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Discount Rate - The discount rate used to measure the total pension liability was 7.00%. The
Pension Plan’s fiduciary net position was projected to be available to make all projected future
benefit payments of the current plan members. Therefore, the long-term expected rate of return
on pension plan investments was applied to all periods of projected benefit payments to determine
the total pension liability.
Sensitivity of the City’s Proportionate Share of the Net Pension Liability to Changes in Discount Rate
– The following represents the City’s proportionate share of the net pension liability calculated
using the discount rate of 7% as well as what the City’s proportionate share of the net pension
liability would be if it was calculated using a discount rate that is one percentage point lower (6%)
or one percentage point higher (8%) than the current rate:
1% Decrease Current Discount 1% Increase
6.00%7.00%8.00%
Sponsor's net pension liability (asset)(145,707)$ (644,979)$ (1,065,575)$
General
Actuarial Assumptions – The total pension liability was determined by an actuarial valuation as of
October 1, 2019 using the following actuarial assumptions applied to all measurement periods.
Fire Police General
Actuarial Cost Method Aggregate Aggregate Aggregate
Inflation 2.50%2.50%2.50%
Salary Increases 7.00%6.00%6.00%
Investment Rate of Return 7.00%7.00%7.00%
Retirement Age
100% when first eligible
for Normal Retirement or
DROP entry
100% when first eligible
for Normal Retirement or
DROP entry
100% when first eligible for
Normal Retirement or
DROP entry
Cost of Living .05% every odd year .05% every odd year None
City of Okeechobee, Florida
Notes to Financial Statements
- 50 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Fire Police General
Mortality
For healthy participants
during employment, RP-
2000 Combined Healthy
Participant Mortality
Tables, with 90% Blue
Collar Adjustment/10%
White Collar Adjustment
for males and 100% White
Collar Adjustment for
females. Fully generational
mortality improvements
projected to each future
decrement date with Scale
BB. For disabled male
participants, 60% RP-2000
Disabled Male Mortality
Table setback four
years/40% RP-2000
Annuitant Male Mortality
Table with White Collar
Adjustment with no
setback, without projected
mortality improvements.
For disabled female
participants, 60% RP-2000
Disabled Female Mortality
Table setforward two
years/40% RP-2000
Annuitant Female
Mortality Table with
White Collar Adjustment
with no setback, without
projected mortality
improvements.
For healthy participants
during employment, RP-
2000 Combined Healthy
Participant Mortality
Tables, with 90% Blue
Collar Adjustment/10%
White Collar Adjustment
for males and 100% White
Collar Adjustment for
females. Fully generational
mortality improvements
projected to each future
decrement date with Scale
BB. For disabled male
participants, 60% RP-2000
Disabled Male Mortality
Table setback four
years/40% RP-2000
Annuitant Male Mortality
Table with White Collar
Adjustment with no
setback, without projected
mortality improvements.
For disabled female
participants, 60% RP-2000
Disabled Female Mortality
Table setforward two
years/40% RP-2000
Annuitant Female
Mortality Table with White
Collar Adjustment with no
setback, without projected
mortality improvements.
For healthy participants
during employment, RP-
2000 Combined Healthy
Participant Mortality
Tables, with 50% White
Collar/50% Blue Collar
Adjustment for male and
100% White Collar for
female. Fully generational
mortality improvements
projected to each future
decrement date with Scale
BB. For healthy participants
post employment, RP-2000
Annuitant Mortality Tables,
with 50% Blue Collar
Adjustment/50% White
Collar Adjustment for males
and 100% White Collar
Adjustment for females.
Fully generational mortality
improvements projected to
each future decrement date
with Scale BB. For disabled
male participants, RP-2000
Disabled Male Mortality
Table setback four years,
without projected mortality
improvements. For disabled
female participants, RP-
2000 Disabled Female
Mortality Table setforward
two years, without
projected mortality
improvements.
City of Okeechobee, Florida
Notes to Financial Statements
- 51 -
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS – DEFINED BENEFIT PLANS (Continued)
Pension trust funds fiduciary net position activity as of September 30, 2019 was as follows:
Firefighters'
Pension
Police
Officers'
Pension
General
Employees'
Pension
Total Pension
Trust Funds
ASSETS
Cash equivalents 62,797$ 221,527$ 80,593$ 364,917$
Investments:
Mutual funds 4,313,546 9,491,828 4,915,647 18,721,021
Receivables 23,554 41,905 37,241 102,700
Due from other plan 652 - - 652
Prepaid expenses - - 1,318 1,318
Total assets 4,400,549 9,755,260 5,034,799 19,190,608
LIABILITIES
Accounts payable 13,062 101,095 6,702 120,859
Due to other plan - - 652 652
Total liabilities 13,062 101,095 7,354 121,511
NET POSITION
Restricted for pension benefits 4,387,487$ 9,654,165$ 5,027,445$ 19,069,097$
City of Okeechobee, Florida
Notes to Financial Statements
- 52 -
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, 2019 was as
follows:
Firefighters'
Pension
Police
Officers'
Pension
General
Employees'
Pension
Total Pension
Trust Funds
ADDITIONS
Contributions
State 52,810$ 90,152$ -$ 142,962$
City 83,988 130,887 115,324 330,199
Employees 23,945 50,359 66,021 140,325
Total contributions 160,743 271,398 181,345 613,486
Investment earnings:
Net appreciation in the fair value
of investments 29,736 56,246 20,051 106,033
Interest and dividends 132,159 295,110 155,278 582,547
Total investment earnings 161,895 351,356 175,329 688,580
Less investment expenses (21,000) (21,129) (19,500) (61,629)
Net investment earnings 140,895 330,227 155,829 626,951
Total additions 301,638 601,625 337,174 1,240,437
DEDUCTIONS
Benefits paid to participants 141,381 276,697 177,609 595,687
Refunds on termination 8,400 12,835 998 22,233
DROP payments - 228,310 81,855 310,165
Administrative expenses 43,675 47,115 53,246 144,036
Total deductions 193,456 564,957 313,708 1,072,121
Change in net position 108,182 36,668 23,466 168,316
Net position, beginning of year 4,279,305 9,617,497 5,003,979 18,900,781
Net position, end of year 4,387,487$ 9,654,165$ 5,027,445$ 19,069,097$
City of Okeechobee, Florida
Notes to Financial Statements
- 53 -
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION
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 1 retiree receiving benefits and has a total of 62 active participants and dependents.
Funding policy. The City is funding the plan on a pay-as-you-go basis. Employees and their dependents
are required to pay 100% of the insurance premiums charged by the carrier. There is an implied
subsidy in the insurance premiums for these employees because the premium charged for retirees is
the same as the premium charged for active employees, who are younger than retirees on average.
Contributions of plan members for the year ended September 30, 2019 totaled $1,672.
Plan membership. Plan membership as of September 30, 2018 (the measurement date) was:
Number of covered
individuals
Inactive members currently receiving benefits 1
Inactive members entitled to but not yet receiving benefits -
Active members 62
Total 63
The OPEB liability was determined based on the following assumptions and information:
Employer’s reporting date: September 30, 2019
Measurement date: September 20, 2018
Valuation date: September 20, 2017
City of Okeechobee, Florida
Notes to Financial Statements
- 54 -
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (Continued)
Actuarial assumptions and other inputs. On the September 30, 2018 measurement date, the
actuarial assumptions and other inputs applied include the following:
Inflation 2.50 percent
Salary increases 6.00 percent
Discount rate 3.83 percent
Healthcare cost trend rates 9.00 percent for FY beginning 2018, 6.50 percent
for FY beginning 2019 and then gradually
decreasing to an ultimate trend of 4.25 percent
Mortality RP-2000 Generational Combined Healthy
Participant, projected from the year 2000 using
Projection Scale AA
Changes Include the change in the discount rate from
3.50% as of the beginning of the measurement
period to 3.83% as of September 30, 2018.
Change in Total OPEB Liability
Total OPEB
Liability
(a)
Balance as of September 30, 2018 153,110$
Changes for the year:
Service cost 12,580
Interest 5,640
Changes in assumptions and other inputs (4,290)
Benefit payments (9,081)
Net changes 4,849
Balance as of September 30, 2019 157,959$
Increase (Decrease)
City of Okeechobee, Florida
Notes to Financial Statements
- 55 -
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (Continued)
Sensitivity of the Total OPEB Liability – The following table represents the City’s total OPEB liability
calculated using the discount rate of 3.83%, as well as what the City’s net OPEB liability would be if it
were calculated using a discount rate that is one percentage point lower (2.83%) or one percentage
point higher (4.83%) than the current rate:
Current
1% Decrease Discount Rate 1% Increase
(2.83%)(3.83%)(4.83%)
Total OPEB Liability 170,095$ 157,959$ 144,392$
The following table represents the City’s total OPEB liability calculated using the ultimate health care
cost trend rate of 4.25%, as well as what the City’s total OPEB liability would be if it were calculated
using a health care cost trend that is one percentage point lower (3.25%) or one percentage point
higher (5.25%) than the current rate:
1% Decrease Ultimate Trend 1% Increase
(3.25%)(4.25%)(5.25%)
Total OPEB Liability 133,470$ 157,959$ 187,948$
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.
E. ASSET RETIREMENT OBLIGATIONS
Asset retirement obligations generally apply to legal obligations associated with the retirement of a
tangible long-lived asset that result from the acquisition, construction, or development and the
normal operation of a long-lived asset. The City assesses asset retirement obligations on a periodic
basis. If a reasonable estimate of fair value can be made, the fair value of a liability for an asset
retirement obligation is recognized in the period in which it is incurred or a change in estimate occurs.
The City has an above ground fuel storage tank which is regulated by Florida Administrative Code
(FAC) 62-762, and requires certain activities if use of the fuel storage tank is discontinued. The City has
determined it cannot reasonably estimate the fair value of the liability for disposal of this item and,
accordingly, has not recorded an asset retirement obligation for this matter.
City of Okeechobee, Florida
Notes to Financial Statements
- 56 -
NOTE 6: FUTURE ACCOUNTING PRONOUNCEMENTS
GASB Statement No. 84, Fiduciary Activities (“GASB 84”), seeks to improve guidance regarding the
identification of fiduciary activities for accounting and financial reporting purposes and how those
activities should be reported. GASB 84 will be effective for the fiscal years beginning after
December 15, 2019.
In June 2017, the GASB issued Statement No. 87, Leases. The objective of this Statement is to better
meet the information needs of financial statement users by improving accounting and financial
reporting for leases by governments. This Statement increases the usefulness of governments'
financial statements by requiring recognition of certain lease assets and liabilities for leases that
previously were classified as operating leases and recognized as inflows of resources or outflows of
resources based on payment provisions of the contract. It establishes a single model for lease
accounting based on the foundational principle that leases are financings of the right to use an
underlying asset. Under this Statement, a lessee is required to recognize a lease receivable and a
deferred inflow of resources, thereby enhancing the relevance and consistency of information about
governments' leasing activities. The requirements of this Statement are effective for reporting periods
beginning after June 15, 2021.
In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End
of a Construction Period. The objectives of this Statement are (1) to enhance the relevance and
comparability of information about capital assets and the cost of borrowing for a reporting period and
(2) to simplify accounting for interest cost incurred before the end of a construction period. This
Statement requires that interest cost incurred before the end of a construction period be recognized
as an expense in the period in which the cost is incurred for financial statements prepared using the
economic resources measurement focus. The requirements of this Statement are effective for
reporting periods beginning after December 15, 2020.
The City is evaluating the requirements of the above statements and the impact on reporting.
City of Okeechobee, Florida
Notes to Financial Statements
- 57 -
NOTE 7: SUBSEQUENT EVENTS
During October 2019, the City was awarded $300,000 for the Southeast 4th Street Boat Ramp Project.
During November 2019, the City awarded the annual police vehicle purchase bid to an unrelated
vendor for 12 police vehicles in the amount of approximately $478,932.
During December 2019, the City approved an agreement with the Florida Department of
Environmental Protection for $400,000 for the Okeechobee Taylor Creek Southwest 4th Street
Stormwater Conveyance.
In February 2020, the City awarded a bid to an unrelated party for the Centennial Park Restroom and
Pavilion Improvements Project in the amount of $175,562.
In March 2020, the World Health Organization made the assessment that the outbreak of a novel
coronavirus (COVID-19) can be characterized as a pandemic. As a result, broad domestic and
international stock market indices have declined and the City’s fair value of investments has declined
similarly. Such declines in the fair value of investments held by the City may materially and adversely
impact the City’s ability to achieve its investment objectives and therefore, its operational objectives.
In addition, the extent to which these events will affect the amounts reported in future financial
statements remains uncertain.
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THIS PAGE IS INTENTIONALLY LEFT BLANK.
- 59 -
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT’S DISCUSSION AND ANALYSIS
- 60 -
THIS PAGE IS INTENTIONALLY LEFT BLANK.
City of Okeechobee, Florida
Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual – General Fund
The accompanying notes to required supplementary information are an integral part of this schedule.
- 61 -
Actual Variance with
Original Final (on Budgetary Final Budget
Year ended September 30, 2019 Budget Budget Basis)Positive (Negative)
Revenues
Taxes 2,891,994$ 3,079,520$ 3,097,423$ 17,903$
Intergovernmental 2,540,998 2,354,720 2,528,480 173,760
Charges for services 399,814 417,100 420,181 3,081
Permits and fees 574,550 769,750 802,084 32,334
Fines and forfeitures 9,775 20,720 36,048 15,328
Investment earnings 110,500 218,100 222,420 4,320
Miscellaneous 3,850 30,600 14,692 (15,908)
Total revenues 6,531,481 6,890,510 7,121,328 230,818
Expenditures
Current:
General government:
Legislative 203,591 165,720 162,328 3,392
Executive 222,240 210,475 207,023 3,452
City clerk 239,384 225,183 220,211 4,972
Financial services 331,341 289,395 278,289 11,106
Legal council 116,260 79,370 77,192 2,178
General services 418,984 383,170 374,681 8,489
Total general government 1,531,800 1,353,313 1,319,724 33,589
Public safety:
Fire 1,662,316 1,577,970 1,545,843 32,127
Police 2,522,208 2,374,070 2,342,507 31,563
Total public safety 4,184,524 3,952,040 3,888,350 63,690
Transportation 1,480,107 1,150,350 1,113,299 37,051
Physical environment 503,800 293,000 272,850 20,150
Capital outlay 592,846 529,600 511,154 18,446
Total expenditures 8,293,077 7,278,303 7,105,377 172,926
Excess (deficiency) of revenues under
(over) expenditures (1,761,596) (387,793) 15,951 403,744
Other financing sources (uses)
Sale of capital assets 225,000 225,000 244,228 19,228
Net other financing sources (uses)225,000 225,000 244,228 19,228
Excess (deficiency) of revenues and other
financing sources over (under)
expenditures and other financing
sources (uses)(1,536,596) (162,793) 260,179 422,972
Fund balances, beginning of year 10,953,058 10,953,058 10,953,058 -
Fund balances, end of year 9,416,462$ 10,790,265$ 11,213,237 422,972$
Reconciliation of budgetary
to GAAP basis
Current year encumbrances 136,773
Prior year encumbrances (125,382)
Fund balance on GAAP basis 11,224,628$
-
City of Okeechobee, Florida
Required Pension Supplementary Information
The accompanying notes to required supplementary information are an integral part of this schedule.
- 62 -
Schedule of Changes in Net Pension Liability and Related Ratios
Last Six Fiscal Years
2019 2018*2017 2016 2015 2014
Total Pension Liability
Service cost 254,066$ 258,622$ 235,345$ 264,445$ 247,353$ 251,499$
Interest 607,391 580,995 573,285 543,946 506,147 479,146
Difference between actual & expected experience (153,927) (276,621) (270,100) 126,875 (219,850) (784)
Assumption changes - - 22,143 - 94,065 -
Benefit payments (502,852) (281,028) (255,731) (468,694) (203,855) (201,397)
Refunds (12,836) 72,669 - (25,003) (321) (26,953)
Net change in total pension liability 191,842 354,637 304,942 441,569 423,539 501,511
Total pension liability - beginning 8,859,560 8,504,923 8,199,981 7,758,412 7,334,873 6,833,362
Total pension liability - ending (a)9,051,402 8,859,560 8,504,923 8,199,981 7,758,412 7,334,873
Plan Fiduciary Net Position
Contributions - employer (from City)130,886 151,492 169,789 147,312 192,581 200,210
Contributions - employer (from State)90,153 81,690 78,659 73,960 70,807 67,639
Contributions - members 50,359 46,212 45,863 45,554 47,740 43,135
Net investment income 330,227 727,699 903,712 607,763 (95,964) 694,790
Benefit payments (502,852) (281,028) (255,731) (468,694) (203,855) (201,397)
Refunds (12,836) - - (25,003) (321) (26,953)
Administrative expense (47,116) (45,827) (41,855) (32,120) (30,198) (18,097)
Other - - (3,284) (6) 3,886 -
Net change in plan fiduciary net position 38,821 680,238 897,153 348,766 (15,324) 759,327
Plan fiduciary net position - beginning 9,617,497 8,937,259 8,040,106 7,691,340 7,706,664 6,947,337
Plan fiduciary net position - ending (b)9,656,318 9,617,497 8,937,259 8,040,106 7,691,340 7,706,664
Net pension liability (asset) - Ending (a) - (b)(604,916)$ (757,937)$ (432,336)$ 159,875$ 67,072$ (371,791)$
Plan fiduciary net position as a percentage
of Total Pension Liability 106.68%108.56%105.08%98.05%99.14%105.07%
Covered payroll**1,007,180$ 924,250$ 917,260$ 970,646$ 911,189$ 862,700$
Net pension liability as a percentage
of covered payroll -60.06%-82.01%-47.13%16.47%7.36%-43.10%
Assumption changes:
- Use of Insurance Tax Premium Revenue (IPTR) received by the State is subject to the default rules of Senate Bill 172 (codified in Chapter 2015-39) beginning with the IPTR received for
the 2015 calendar year.
- Effective 10/1/2016, the mortality rates were changed from the RP-2000 Combined Healthy Participant Mortality Tables, using projection scale AA to the mortality rates used by the
Florida Retirement System (FRS) for Special Risk Class members. This change was made in compliance with Florida House Bill 1309, which requires all public pension plans in Florida to use
the same mortality rates used in either of the last two actuarial valuation reports of FRS effective no later than 10/1/2016.
Police Officers'
** Covered payroll was calculated by dividing the total member contributions for the fiscal year, net of any known buyback contributions, by the member contribution rate of 5%.
* -The net pension liability recognized by the City in the current year financial statements represents the net position liability as of September 30, 2018, which is allowed by GASB 68.
Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is complied, the City presents information for those
years for which information is available.
City of Okeechobee, Florida
Required Pension Supplementary Information
The accompanying notes to required supplementary information are an integral part of this schedule.
- 63 -
Schedule of Changes in Net Pension Liability and Related Ratios
Last Six Fiscal Years
2019 2018*2017 2016 2015 2014
Total Pension Liability
Service cost 145,856$ 136,825$ 156,989$ 156,107$ 144,773$ 130,539$
Interest 271,341 257,407 255,218 235,684 213,154 196,106
Difference between actual & expected experience (132,896) (162,443) (91,659) 56,393 (19,771) (741)
Assumption changes - - (13,449) - 49,797 -
Benefit payments (141,381) (107,105) (106,572) (102,590) (96,939) (142,060)
Refund (9,052) (16,027) (20,437) - - -
Other - 19,828 - 3,256 - -
Net change in total pension liability 133,868 128,485 180,090 348,850 291,014 183,844
Total pension liability - beginning 3,939,558 3,811,073 3,630,983 3,282,133 2,991,119 2,807,275
Total pension liability - ending (a)4,073,426 3,939,558 3,811,073 3,630,983 3,282,133 2,991,119
Plan Fiduciary Net Position
Contributions - employer (from City)83,988 115,253 107,123 97,709 92,863 82,058
Contributions - employer (from State)52,810 52,793 50,589 49,889 52,662 53,235
Contributions - members 23,945 23,446 25,409 27,433 26,324 23,854
Net investment income 140,894 308,920 404,267 246,381 (44,021) 318,708
Benefit payments (141,381) (107,105) (106,572) (102,590) (96,939) (142,060)
Refunds (9,052) (16,027) (20,437) - - -
Administrative expense (43,675) (59,878) (34,933) (31,639) (27,132) (16,233)
Other - - (6,375) (1,766) - -
Net change in plan fiduciary net position 107,529 317,402 419,071 285,417 3,757 319,562
Plan fiduciary net position - beginning 4,279,305 3,961,903 3,542,832 3,257,415 3,253,658 2,934,096
Plan fiduciary net position - ending (b)4,386,834 4,279,305 3,961,903 3,542,832 3,257,415 3,253,658
Net pension liability (asset) - Ending (a) - (b)(313,408)$ (339,747)$ (150,830)$ 88,151$ 24,718$ (262,539)$
Plan fiduciary net position as a percentage
of Total Pension Liability 107.69%108.62%103.96%97.57%99.25%108.78%
Covered payroll**478,900 468,920$ 508,180$ 563,285$ 523,119$ 477,080$
Net pension liability as a percentage
of covered payroll -65.44%-72.45%-29.68%15.65%4.73%-55.03%
Assumption changes:
- Effective 10/1/2016, the mortality rates were changed from the RP-2000 Combined Healthy Participant Mortality Tables, using projection scale AA to the mortality rates used by the
Florida Retirement System (FRS) for Special Risk Class members. This change was made in compliance with Florida House Bill 1309, which requires all public pension plans in Florida to use
the same mortality rates used in either of the last two actuarial valuation reports of FRS effective no later than 10/1/2016.
- Use of Insurance Tax Premium Revenue (IPTR) received by the State is subject to the default rules of Senate Bill 172 (codified in Chapter 2015-39) beginning with the IPTR received for
the 2015 calendar year.
Firefighters'
Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is complied, the City presents information for those
years for which information is available.
** Covered payroll was calculated by dividing the total member contributions for the fiscal year, net of any known buyback contributions, by the member contribution rate of 5%.
* -The net pension liability recognized by the City in the current year financial statements represents the net position liability as of September 30, 2018, which is allowed by GASB 68.
City of Okeechobee, Florida
Required Pension Supplementary Information
The accompanying notes to required supplementary information are an integral part of this schedule.
- 64 -
Schedule of Changes in Net Pension Liability and Related Ratios
Last Four Fiscal Years
2019 2018*2017 2016
Total Pension Liability
Service cost 152,255$ 154,529$ 136,373$ 421,387$
Interest 295,453 284,633 91,058 763,785
Difference between actual & expected experience (141,938) 20,956 - (524,849)
Assumption changes - - 133,790 -
Benefit payments (259,463) (164,189) (336,740) (331,215)
Refunds (346) (16,592) (17,378) (18,267)
Other ***- - 2,641,019 -
Net change in total pension liability 45,961 279,337 2,648,122 310,841
Total pension liability - beginning 4,337,157 4,057,820 1,409,698 11,400,112
Transfer of pension liability for Okeechobee
Utility Authority *****- - - (10,301,255)
Total pension liability - ending (a)4,383,118 4,337,157 4,057,820 1,409,698
Plan Fiduciary Net Position
Contributions - employer 115,324 75,793 94,009 446,184
Contributions - members 66,020 60,312 56,405 183,145
Net investment income 155,830 394,042 477,649 825,935
Benefit payments (259,463) (164,189) (336,740) (331,215)
Refunds (346) (16,592) (17,378) (18,267)
Administrative expense (53,249) (46,328) (48,490) (57,186)
Other****- - 3,117,018 (2,208)
Net change in plan fiduciary net position 24,116 303,038 3,342,473 1,046,388
Plan fiduciary net position - beginning 5,003,981 4,700,943 1,358,470 10,238,992
Transfer plan fiduciary net position to Okeechobee
Utility Authority*****- - - (9,926,910)
Plan fiduciary net position - ending (b)5,028,097 5,003,981 4,700,943 1,358,470
Net pension liability (asset) - Ending (a) - (b)(644,979)$ (666,824)$ (643,123)$ 51,228$
Plan fiduciary net position as a percentage
of Total Pension Liability 114.72%115.37%115.85%96.37%
Covered payroll**1,100,333$ 1,005,204$ 940,083$ 911,233$
Net pension liability as a percentage
of covered payroll -58.62%-66.34%-68.41%5.62%
General Employees'
City of Okeechobee, Florida
Required Pension Supplementary Information
The accompanying notes to required supplementary information are an integral part of this schedule.
- 65 -
Schedule of Changes in Net Pension Liability and Related Ratios
Last Four Fiscal Years
Assumption changes:
Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is complied, the
City presents information for those years for which information is available.
* The net pension liability recognized by the City in the current year financial statements represents the net position liability as of September 30, 2018,
which is allowed by GASB 68.
***** Due to the change in nature of the Plan, from a cost sharing to a single employer plan (effective October 1, 2016).
- Effective 10/1/2016, the mortality rates were changed from the RP-2000 Combined Healthy Participant Mortality Tables, using projection scale AA
to the mortality rates used by the Florida Retirement System (FRS) for Special Risk Class members. This change was made in compliance with Florida
House Bill 1309, which requires all public pension plans in Florida to use the same mortality rates used in either of the last two actuarial valuation
reports of FRS effective no later than 10/1/2016.
- Effective 10/1/2016, OUA employees are covered under a separately established Plan, the Okeechobee Utility Authority Employees’ Retirement
System, and are no longer covered under the City of Okeechobee General Employees’ Retirement System.
** Covered Payroll was calculated by dividing the total member contributions for the fiscal year by the member contribution rate of 6%.
*** The Total Pension Liability, the Plan Fiduciary Net Position, and the Net Pension Liability as of September 30, 2015 were allocated based on the
portion of the Employer's Total Required Contribution (from October 1, 2015 Actuarial Valuation dated April 25, 2016). The October 1, 2015 Valuation
determined the required employer contribution for the plan year end September 30, 2017.
**** Due to the change in nature of the Plan, from a cost sharing to a single employer plan (effective October 1, 2016). Also reflects $59, 910 post-
valuation adjustment to match audited financial statements.
City of Okeechobee, Florida
Required Pension Supplementary Information
The accompanying notes to required supplementary information are an integral part of this schedule.
- 66 -
9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014
Actuarially determined contributions 204,611$ 212,571$ 251,591$ 219,093$ 263,240$ 267,849$
Contributions in relation to the actuarially
determined contributions 221,039 233,182 248,448 221,272 263,388 267,849
Contribution deficiency (excess)(16,428)$ (20,611)$ 3,143$ (2,179)$ (148)$ -$
Covered payroll*1,007,180$ 924,250$ 917,260$ 970,646$ 911,189$ 862,700$
Contributions as a percentage of covered
payroll 21.95%25.23%27.09%22.80%28.91%31.05%
9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014
Actuarially determined contributions 139,143$ 167,871$ 170,269$ 143,632$ 138,914$ 122,212$
Contributions in relation to the actuarially
determined contributions 136,798 168,046 157,712 147,598 145,525 135,293
Contribution deficiency (excess)2,345$ (175)$ 12,557$ (3,966)$ (6,611)$ (13,081)$
Covered payroll*478,900$ 468,920$ 508,180$ 563,285$ 523,119$ 477,080$
Contributions as a percentage of covered
payroll 28.57%35.84%31.03%26.20%27.82%28.36%
9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014
Actuarially determined contributions 114,875$ 75,793$ 42,774$ 49,115$ 379,111$ 379,099$
Contributions in relation to the actuarially
determined contributions 115,324 75,793 94,009 110,448 379,111 379,099
Contribution deficiency (excess)(449)$ -$ (51,235)$ (61,333)$ -$ -$
Covered payroll 1,100,333$ 1,005,204$ 940,083$ 911,233$ 3,135,961$ 2,945,717$
Contributions as a percentage of covered
payroll 10.48%7.54%10.00%12.12%12.09%12.87%
Firefighters
Police Officers
Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is
compiled, the City presents information for those years for which information is available.
* Based on payroll provided for actuarial valuations; Covered payroll was calculated by dividing the total member contributions for the
fiscal year, net of any known buyback contributions, by the member contribution rate of 5%.
General Employees
City of Okeechobee, Florida
Required Pension Supplementary Information
The accompanying notes to required supplementary information are an integral part of this schedule.
- 67 -
Schedule of Investment Returns
Last Six Fiscal Years
9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014
Annual money-weighted rate of return
net of investment expense 3.10%8.73%10.68%7.59%-1.65%9.96%
9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014
Annual money-weighted rate of return
net of investment expense 2.39%6.11%10.76%6.83%-2.19%10.43%
9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014
Annual money-weighted rate of return
net of investment expense 2.23%7.55%9.78%7.78%-1.38%10.60%
Police Officers'
Fire Fighters'
Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year
trend is complied, the City presents information for those years for which information is available.
General Employees'
City of Okeechobee, Florida
Schedule of Changes in Total OPEB Liability and Related Ratios
- 68 -
Year Ending September 30,2019 2018
Total OPEB liability
Service cost 12,580$ 13,441$
Interest 5,640 4,977
Changes of assumptions or other inputs (4,290) (3,808)
Benefit payments (9,081) (17,198)
Net change in total OPEB liability 4,849 (2,588)
Total OPEB liability - beginning 153,110 155,698
Total OPEB liability - ending 157,959$ 153,110$
Covered employee payroll 2,984,722$ 2,809,503$
Total OPEB liability as a percentage of
covered employee payroll 5.29%5.45%
years which information is available.
* The following discount rate was used in each period:
9/30/2017 - 3.50%
9/30/2018 - 3.50%
9/30/2019 - 3.83%
* GASB 75 requires an employer to disclose a 10-year history.
full 10-year trend is compiled, information will be presented only
City of Okeechobee, Florida
Notes to Required Supplementary Information
- 69 -
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.
City of Okeechobee, Florida
Notes to Required Supplementary Information
- 70 -
B. ADDITIONAL ACTUARIAL INFORMATION
Valuation Date: 10/01/2019
Notes: Actuarially determined contribution rates are calculated as of October 1, which is two years
prior to the end of the fiscal year in which contributions are reported.
Methods and Assumptions Used to Determine Contributions Rates:
Police Officers’ Pension
Plan
Firefighters' Pension
Plan
General Pension Plan
Actuarial Cost
Method:Aggregate Aggregate Aggregate
Amortization
Method:N/A N/A N/A
Remaining
Amortization
Period:
N/A N/A N/A
Asset Valuation
Method:
4-year smoothed
market
4-year smoothed
market
4-year smoothed
market
Salary Increases:6.00%7.00%6.00%
Inflation:2.50%2.50%2.50%
Investment Rate
of Return:7.00%7.00%7.00%
Retirement Age:100% when first eligible
for Normal Retirement
or DROP entry
100% when first eligible
for Normal Retirement
or DROP entry.
100% when first eligible
for Normal Retirement
or DROP entry
Mortality:For healthy participants
during employment, RP-
2000 Combined Healthy
Participant Mortality
Tables, with 90% Blue
Collar Adjustment/10%
White Collar Adjustment
for males and 100%
White Collar Adjustment
for females. Fully
generational mortality
improvements
projected to each future
decrement date with
Scale BB.
For healthy participants
during employment, RP-
2000 Combined Healthy
Participant Mortality
Tables, with 90% Blue
Collar Adjustment/10%
White Collar Adjustment
for males and 100%
White Collar Adjustment
for females. Fully
generational mortality
improvements
projected to each future
decrement date with
Scale BB.
For healthy participants
during employement,
RP 2000 Combined
Healthy Participant
Mortality Table, with
50% White Collar/50%
Blue Collar Adjustment
for male and 100%
White Collar for female.
Fully generational
mortality improvements
projected to each future
decrement date with
Scale BB.
City of Okeechobee, Florida
Notes to Required Supplementary Information
- 71 -
Police Officers’ Pension
Plan
Firefighters' Pension
Plan
General Pension Plan
Mortality
(Continued):
For disabled male
participants, RP-2000
Disabled Male Mortality
Table setback four
years, without projected
mortality
improvements. For
disabled female
participants, RP-2000
Disabled Female
Mortality Table,
setforward two years,
without projected
mortality
improvements.
For disabled male
participants, RP-2000
Disabled Male Mortality
Table setback four
years, without projected
mortality
improvements. For
disabled female
participants, RP-2000
Disabled Female
Mortality Table,
setforward two years,
without projected
mortality
improvements.
For disabled male
participants, RP-2000
Disabled Male Mortality
Table setback four
years, without projected
mortality
improvements. For
disabled female
participants, RP-2000
Disabled Female
Mortality Table,
setforward two years,
without projected
mortality
improvements.
- 72 -
THIS PAGE IS INTENTIONALLY LEFT BLANK.
- 73 -
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, 2019, 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 May 22, 2020. Other auditors
audited the financial statements of the City of Okeechobee, Florida Municipal Police Officers’
Pension Trust Fund and City of Okeechobee, Florida Municipal Firefighters’ Pension Trust Fund and
the City of Okeechobee Employees’ Retirement System, 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 a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity’s financial statements will not be prevented,
or detected and corrected, on a timely basis. 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 have not been identified. Given these limitations, during our audit we
did not identify any deficiencies in internal control that we consider to be material weaknesses.
- 74 -
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259-8648 (fax)
www.cricpa.com
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Okeechobee, Florida’s financial
statements are free from 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.
Melbourne, Florida
May 22, 2020
- 75 -
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259-8648 (fax)
www.cricpa.com
INDEPENDENT AUDITORS’ MANAGEMENT LETTER
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Report on the Financial Statements
We have audited the financial statements of the City of Okeechobee, Florida as of and for the fiscal
year ended September 30, 2019, and have issued our report thereon dated May 22, 2020.
Auditors’ Responsibility
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 and Chapter 10.550, Rules of the
Auditor General.
Other Reporting Requirements
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 and Independent Accountants’ Report on an
examination conducted in accordance with AICPA Professional Standards, AT-C Section 315,
regarding compliance requirements in accordance with Chapter 10.550, Rules of the Florida Auditor
General. Disclosures in those reports, which are dated May 22, 2020, should be considered in
conjunction with this management letter.
Prior Audit Findings
Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. Corrective action has been taken to fully address the
finding and recommendation made in the preceding annual financial audit report, as noted below:
IC 2018-01 CAPITAL ASSET DISPOSAL APPROVALS – Cleared
Official Title and Legal Authority
Section 10.554(1)(i)4., 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.
- 76 -
Financial Condition and Management
Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us to apply appropriate
procedures and communicate the results of our determination as to whether or not the City of
Okeechobee, Florida met one or more of the conditions described in Section 218.503(1), Florida
Statutes, and to identify 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.
Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied
financial condition assessment procedures for the City of Okeechobee, Florida. It is management's
responsibility to monitor the City of Okeechobee, Florida's financial condition, and our financial
condition assessment was based in part on representations made by management and review of
financial information provided by same.
Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any
recommendations to improve financial management. In connection with our audit, we did not have
any such recommendations.
Additional Matters
Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate 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.
Purpose of this Letter
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, the members of the City Council, and applicable
management, and is not intended to be and should not be used by anyone other than these specified
parties.
Melbourne, Florida
May 22, 2020
- 77 -
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259-8648 (fax)
www.cricpa.com
INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCE WITH LOCAL GOVERNMENT
INVESTMENT POLICIES
The Honorable Mayor and Members of the City Council
Of the City of Okeechobee, Florida
We have examined the City of Okeechobee, Florida’s compliance with the requirements of Section
218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30,
2019. Management of the City of Okeechobee, Florida is responsible for the City of Okeechobee,
Florida’s compliance with the specified requirements. Our responsibility is to express an opinion on
the City of Okeechobee, Florida’s compliance with the specified requirements based on our
examination.
Our examination was conducted in accordance with attestation standards established by the
American Institute of Certified Public Accountants. Those standards require that we plan and
perform the examination to obtain reasonable assurance about whether the City of Okeechobee,
Florida complied, in all material respects, with the specified requirements referenced above. An
examination involves performing procedures to obtain evidence about whether the City of
Okeechobee, Florida complied with the specified requirements. The nature, timing, and extent of
the procedures selected depend on our judgment, including as assessment of the risks of material
noncompliance, whether due to fraud or error. We believe that the evidence obtained is sufficient
and appropriate to provide a reasonable basis for our opinion.
Our examination does not provide a legal determination on the City of Okeechobee, Florida’s
compliance with specified requirements.
In our opinion, the City of Okeechobee, Florida complied, in all material respects, with the
requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, for the year
ended September 30, 2019.
This report is intended solely for the information and use of management and the State of Florida
Auditor General, is not intended to be, and should not be used by anyone other than these specified
parties.
Melbourne, Florida
May 22, 2020
C A R R
RIGGS &
CRIINGRAM
CPAs and Advisors
Required Communications
L A R R
RIGGS &
CRIINGRAM
CPAs and AcIvtsors
May 22, 2020
Honorable Mayor and City Council
City of Okeechobee, Florida
55 S.E. Third Avenue
Okeechobee, FL 34974
Carr. Rigg; & Ingram LLC
',Ie�itU .u'9. 1=tuJa � 4yli
2550,88
+21 t 259-8749 i fax )
'mhw rncpa :om
We are pleased to present the results of our audit of the financial statements of the City of
Okeechobee, Florida (the "City') for the year ended September 30, 2019.
This report to the Honorable Mayor and City Council summarizes our audit, the report issued and
various analyses and observations related to the City's accounting and reporting. The document also
contains the communications required by our professional standards.
Our audit was designed, primarily, to express an opinion on the City's basic financial statements for
the year ended September 30, 2019. We considered the City's current and emerging needs, along
with an assessment of risks that could materially affect the financial statements, and aligned our audit
procedures accordingly. We conducted the audit with the objectivity and independence that the City
expects. We received the full support and assistance of City personnel.
At Carr, Riggs & Ingram, LLC (CRI), we are continually evaluating the quality of our professionals' work
in order to deliver audit services of the highest quality that will meet or exceed your expectations.
We encourage you to provide any feedback you believe is appropriate to ensure that we do not
overlook a single detail as it relates to the quality of our services.
This report is intended solely for the information and use of the Honorable Mayor, City Council and
management of the City and should not be used by anyone other than these specified parties.
We appreciate this opportunity to work with you. If you have any questions or comments, please
contact me at 321.255.0088 or dgoode@cricpa.com.
Very truly yours,
Deborah A. Goode, CPA
Partner
Carr, Riggs & Ingram, LLC
- 1 -
Required Communications
As discussed with management during our planning process, our audit plan represented an approach
responsive to the assessment of risk for the City. Specifically, we planned and performed our audit
to:
• Perform an audit, as requested by the Honorable Mayor and City Council, in accordance with
auditing standards generally accepted in the United States of America, in order to express an
opinion on the City's financial statements for the year ended September 30, 2019;
• Communicate directly with the Honorable Mayor and City Council and management
regarding the results of our procedures;
• Address with the Honorable Mayor, City Council and management any accounting and
financial reporting issues;
• Anticipate and respond to concerns of the Honorable Mayor, City Council and management;
and
• Other audit -related projects as they arise and upon request.
- 2 -
Required Communications
We have audited the financial statements of the City for the year ended September 30, 2019, and
have issued our report thereon dated May 22, 2020. Professional standards require that we provide
you with the following information related to our audit:
MATTER • BE COMMUNICATED••RESPONSE
Auditors' responsibility under Generally
As stated in our engagement letter dated August
Accepted Auditing Standards, Government
31, 2016, our responsibility, as described by
Auditing Standards and Chapter 10.550, Rules
professional standards, is to express an opinion
of the Florida Auditor General
about whether the financial statements prepared
by management with your oversight are fairly
presented, in all material respects, in conformity
with accounting principles generally accepted in
the United States of America (GAAP) and Chapter
10.550 Rules of the Florida Auditor General. Our
audit of the financial statements does not relieve
you or management of your responsibilities.
As part of our audit, we considered the internal
control of the City and compliance with laws and
regulations. Such considerations were solely for
the purpose of determining our audit procedures
and not to provide any assurance concerning such
internal control and compliance with laws and
regulations.
Client's responsibility
Management, with oversight from those charged
with governance, is responsible for establishing
and maintaining internal controls, including
monitoring ongoing activities; for the selection
and application of accounting principles; and for
the fair presentation in the financial statements of
financial position and results of operations in
conformity with the applicable framework.
Management is responsible for the design and
implementation of programs and controls to
prevent and detect fraud.
Planned scope and timing of the audit
Our initial audit plan was not significantly altered
during our fieldwork.
Management judgments and accounting
Please see the following section titled "Accounting
estimates
Policies, Judgments and Sensitive Estimates and
The process used by management in forming
CRI Comments on Quality."
particularly sensitive accounting estimates and the
basis for the auditors' conclusion regarding the
reasonableness of those estimates.
3-
Required Communications
MATTER TO BE COMMUNICATED
AUDITORS' RESPONSE
Potential effect on the financial statements
No such risks or exposures were noted.
of any significant risks and exposures
Major risks and exposures facing the City and how they
are disclosed.
Significant accounting policies, including
Management is responsible for the selection and
critical accounting policies and alternative
use of appropriate accounting policies. The
treatments within generally accepted
significant accounting policies used by the City are
accounting principles and the auditor's
described in Note 1 to the financial statements.
judgment about the quality of accounting
principles
We noted no transactions entered into by the
• The initial selection of and changes in
governmental unit during the year for which there
significant accounting policies or their
is a lack of authoritative guidance or consensus. All
application; methods used to account for
significant transactions have been recognized in
significant unusual transactions; and effect of
the financial statements in the proper period.
significant policies in controversial or
emerging areas for which there is a lack of
authoritative guidance or consensus.
• Alternative treatments within GAAP for
accounting policies and practices related to
material items, including recognition,
measurement, presentation and disclosure
alternatives, that have been discussed with
client management during the current audit
period, the ramifications of the use of such
alternative disclosures and treatments.
Significant difficulties encountered in the
None.
audit
Any significant difficulties, for example, unreasonable
logistical constraints or lack of cooperation by
management.
Disagreements with management
None.
Disagreements, whether or not subsequently
resolved, about matters significant to the financial
statements or auditor's report. This does not include
those that came about based on incomplete facts or
preliminary information.
Other findings or issues
None.
Matters significant to oversight of the financial
reporting practices by those charged with
governance. For example, an entity's failure to obtain
the necessary type of audit, such as one under
Government Auditing Standards, in addition to GARS.
-4-
Required Communications
MATTER TO BE COMMUNICATED
AUDITORS' RESPONSE
Matters arising from the audit that were
None.
discussed with, or the subject of
correspondence with management
Business conditions that might affect risk or
discussions regarding accounting practices or
application of auditing standards.
Corrected and uncorrected misstatements
During the course of our audit, we accumulate
All significant audit adjustments arising from the
differences between amounts recorded by the City
audit whether or not recorded by the Plan, that could
and amounts that we believe are required to be
individually or in the aggregate have a significant
recorded under GAAP and GASB reporting
effect on the financial statements. We should also
guidelines. Those adjustments are either recorded
inform the Committee about uncorrected
(corrected) by the City or passed (uncorrected).
misstatements aggregated by us during the current
engagement and pertaining to the latest period
presented, that were determined by management to
There were no adjustments, either corrected or
be immaterial, both individually and in the aggregate,
uncorrected, as a result of our audit procedures.
to the financial statements taken as a whole. Any
internal control deficiencies that could have prevented
the misstatements.
Major issues discussed with management
None.
prior to retention
Any major accounting, auditing or reporting issues
discussed with management in connection with our
initial or recurring retention.
Consultations with other accountants
In some cases, management may decide to consult
When management has consulted with other
with other accountants about auditing and
accountants about significant accounting or auditing
accounting matters, similar to obtaining a "second
matters.
opinion" on certain situations. If a consultation
involves application of an accounting principle to
the governmental unit's financial statements or a
determination of the type of auditors' opinion that
may be expressed on those statements, our
professional standards require the consulting
accountant to check with us to determine that the
consultant has all the relevant facts. To our
knowledge, there were no such consultations with
other accountants.
Written representations
See "Draft Management Representation Letter"
A description of the written representations the
section.
auditor requested (or a copy of the representation
letter).
Internal control deficiencies
None.
Any significant deficiencies or material weaknesses in
the design or operation of internal control that came
to the auditor's attention during the audit.
-5-
Required Communications
Fraud and illegal acts
Fraud involving senior management the Plan
Administrator or those responsible for internal
controls, or causing a material misstatement of the
financial statements, where the auditor determines
there is evidence that such fraud may exist. Any illegal
acts coming to the auditor's attention involving senior
management and any other illegal acts, unless clearly
inconsequential.
We are unaware of any fraud or illegal acts
involving management or causing material
misstatement of the financial statements.
Other information in documents containing
Our responsibility related to documents (including
audited financial statements
annual reports, websites, etc.) containing the
The external auditors' responsibility for information in
financial statements is to read the other
a document containing audited financial statements,
information to consider whether:
as well as any procedures performed and the results.
. Such information is materially inconsistent
with the financial statements; and
• We believe such information represents a
material misstatement of fact.
We applied certain limited procedures to
management's discussion and analysis and the
required supplementary information ("RSI") as
listed in the table of contents of the financial
statements that supplements the basic financial
statements. Our procedures consisted of inquiries
of management regarding 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 did not audit the RSI and do not express an
opinion or provide any assurance on the RSI.
-6-
Accounting Policies, Judgments and Sensitive Estimates & CRI Comments on
Quality
We are required to communicate our judgments about the quality, not just the acceptability, of the
City's accounting principles as applied in its financial reporting. We are also required to communicate
critical accounting policies and sensitive accounting estimates. Management may wish to monitor
throughout the year the process used to compute and record these accounting estimates. The table
below summarizes our communications regarding these matters.
CRITICAL
JUDGMENTS &
COMMENTSON QUALITY
ACCOUNTINGAREA POLICY
POLICY?
OF • POLICY
APPLICATION
Investments
Except as noted below, the
X
The City relies on
The City's policies are in
City reports their
investment valuation
accordance with all
investments at fair value.
information from the
applicable accounting
Money market
City's investment
guidelines and GASB.
investments and certain
manager (investment
interest-earning
consultant) and from
investment contracts with
information from
a remaining maturity of
investment pool
one-year or less at the
sponsors based on
date of purchase may be
financial market
reported at amortized
information.
cost.
The City follows the
provisions of Section 150:
Investments, of the GASB
Codification when
reporting investments.
Depreciation
Based on the audit
X
Management's estimate
We evaluated the key
of Capital
procedures we performed
of the useful lives of
factors and assumptions
Assets
with respect to the City's
capital assets is based
used to develop the
capital assets, we noted
on the historical lives of
estimated useful lives in
that the City estimates the
similar assets and
determining that they
useful lives of capital
market prices.
are reasonable in
assets in accordance with
relation to the financial
all applicable standards
statements taken as a
and guidelines of GASB.
whole.
The City follows the
provisions of Section 1400:
Reporting Capital Assets,
of the GASB Codification
when reporting
depreciation of its capital
assets.
-7-
Accounting Policies, Judgments and Sensitive Estimates & CRI Comments on
Quality
1-2
COMMENTS . QUALITY
AREA
• ••
POLICY?
SENSITIVE ESTIMATE
POLICY
Other Post-
Based on the audit
X
Management's estimate
We evaluated the key
Employment
procedures we
of the other
factors and assumptions
Benefits
performed with respect
postemployment
in determining they are
to the City's OPEB Plan,
benefit liability is based
reasonable in relation to
we noted that it appears
on healthcare costs and
the financial statements
the City accounts for its
employment
taken as a whole.
OPEB liability and related
assumptions developed
costs in accordance with
by management. A third
all applicable standards
party actuary utilized
and guidelines of GASB.
these assumptions to
calculate the year-end
The City follows the
liability.
provisions of Section P52:
Postemployment Benefits
Other Than Pensions —
Reporting for Benefits Not
Provided Through Trusts,
of the GASB Codification
when reporting its OPEB
liability and related costs.
Pension
Based on the audit
X
The estimate of current
The City is following the
Trust Funds
procedures we
pension expense and
requirements of GASB
performed with respect
future net pension
68 and has noted in
to the City's pension
obligation are based on
footnote 5-B that the
funds, we noted that the
actuarially determined
liability of the City may
City uses an actuary to
factors. The actuary
vary.
determine the pension
estimates certain future
obligation in accordance
conditions in their
with all applicable
conclusions. These
standards and guidelines
estimates include
of GASB.
factors such as market
performance and life
The City follows the
expectancy. Actual
provisions of Section
results may differ from
1500: Reporting
projections.
Liabilities, of the GASB
Codification when
reporting pension
liabilities.
1-2
Accounting Policies, Judgments and Sensitive Estimates & CRI Comments on
Quality
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were:
The disclosure of pension trust funds in Note 5-B to the financial statements due to
the reported performance of plan assets.
The disclosure of Post -Employment Benefit Obligations in Note 5-C to the financial
statements since this represents a future liability to the City.
MM
Draft Management Representation Letter
May 22, 2020
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
This representation letter is provided in connection with your audit of the financial statements of the
City of Okeechobee, Florida, which comprise the respective financial position of the governmental
activities, each major fund and the aggregate remaining fund information as of September 30, 2019
and the respective changes in financial position and the related notes to the financial statements, for
the purpose of expressing opinions as to whether the financial statements are presented fairly, in all
material respects, in accordance with accounting principles generally accepted in the United States
of America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items
are considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by the omission or
misstatement. An omission or misstatement that is monetarily small in amount could be considered
material as a result of qualitative factors.
We confirm, to the best of our knowledge and belief, as of May 22, 2020, the following
representations made to you during your audit.
Financial Statements
1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter
dated August 31, 2016, including our responsibility for the preparation and fair presentation of
the financial statements and for preparation of the supplementary information in accordance
with the applicable criteria.
2) The financial statements referred to above are fairly presented in conformity with U.S. GAAP
and include all properly classified funds and other financial information of the primary
government and all component units required by generally accepted accounting principles to
be included in the financial reporting entity.
3) We acknowledge our responsibility for 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.
4) We acknowledge our responsibility for the design, implementation, and maintenance of
internal control to prevent and detect fraud.
5) Significant assumptions we used in making accounting estimates, including those measured at
fair value, are reasonable.
6) Related party relationships and transactions, including revenues, expenditures/expenses,
loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or
payable to related parties have been appropriately accounted for and disclosed in accordance
with U.S. GAAP.
-10-
Draft Management Representation Letter
7) Adjustments or disclosures have been made for all events, including instances of
noncompliance, subsequent to the date of the financial statements that would require
adjustments to or disclosure in the finance statements.
8) The effects of all known actual or possible litigation, claims, and assessments have been
accounted for and disclosed in accordance with U.S. GAAP.
9) Guarantees, whether written or oral, under which the City is contingently liable, if any, have
been properly recorded or disclosed.
10) All workers compensation claims are being processed through the insurance company and all
applicable deductibles have been accrued.
Information Provided
11) We have provided you with:
a) Access to all information, of which we are aware, that is relevant to the preparation and
fair presentation of the financial statements, such as records, documentation, and other
matters and all audit or relevant monitoring reports, if any, received from funding
sources.
b) Additional information that you have requested from us for the purpose of the audit.
c) Unrestricted access to persons within the City from whom you determined it necessary
to obtain audit evidence.
d) Minutes of the meetings of City Council or summaries of actions of recent meetings for
which minutes have not yet been prepared.
12) All material transactions have been recorded in the accounting records and are reflected in the
financial statements.
13) We have disclosed to you the results of our assessment of the risk that the financial statements
may be materially misstated as a result of fraud.
14) We have no knowledge of any fraud or suspected fraud that affects the City and involves:
a) Management,
b) Employees who have significant roles in internal control, or
c) Others where the fraud could have a material effect on the financial statements.
15) We have no knowledge of any allegations of fraud or suspected fraud affecting the City's
financial statements communicated by employees, former employees, regulators, or others.
16) We have no knowledge of instances of noncompliance or suspected noncompliance with
provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects should
be considered when preparing financial statements.
17) We have disclosed to you all know actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the financial statements.
18) We have disclosed to you the identity of the City's related parties and all the related party
relationships and transactions of which we are aware. There are none.
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Government—specific
19) There have been no communications from regulatory agencies concerning noncompliance with,
or deficiencies in, financial reporting practices.
20) We have identified to you any previous audits, attestation engagements, and other studies
related to the audit objectives and whether related recommendations have been implemented.
21) The City has no plans or intentions that may materially affect the carrying value or classification
of assets, liabilities, or equity.
22) We are responsible for compliance with the laws, regulations, and provisions of contracts and
grant agreements applicable to us, including tax or debt limits and debt contracts; and we have
identified and disclosed to you all laws, regulations and provisions of contracts and grant
agreements that we believe have a direct and material effect on the determination of financial
statement amounts or other financial data significant to the audit objectives, including legal
and contractual provisions for reporting specific activities in separate funds.
23) There are no violations or possible violations of budget ordinances, laws and regulations
(including those pertaining to adopting, approving and amending budgets), provisions of
contracts and grant agreements, tax or debt limits, and any related debt covenants whose
effects should be considered for disclosure in the financial statements, or as a basis for
recording a loss contingency, or for reporting on noncompliance.
24) As part of your audit, you assisted with preparation of the financial statements and related
notes. We acknowledge our responsibility as it relates to those nonaudit services and any other
nonattest services that were provided, including that we assume all management
responsibilities; oversee the services by designating an individual, preferably within senior
management, who possesses suitable skill, knowledge, or experience (India Riedel); evaluate
the adequacy and results of the services performed; and accept responsibility for the results of
the services. We have reviewed, approved, and accepted responsibility for those financial
statements and related notes and any other nonattest services provided.
25) The City has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral.
26) The City has complied with all aspects of contractual agreements that would have a material
effect on the financial statements in the event of noncompliance.
27) The financial statements include and properly disclose all component units and other related
organizations.
28) The financial statements properly classify all funds and activities in accordance with GASB No.
34, as amended, and GASB No.84.
29) All funds that meet the quantitative criteria in GASB Statements No. 34 and 37 for presentation
as major are identified and presented as such and all other funds that are presented as major
are particularly important to financial statement users.
30) Components of net position (net investment in capital assets; restricted; and unrestricted) and
classification of fund balance (nonspendable, restricted, committed, assigned, and unassigned)
are properly classified and, if applicable, approved.
31) Provisions for uncollectible receivables have been properly identified and recorded.
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Draft Management Representation Letter
32) Expenses have been appropriately classified in or allocated to functions and programs in the
statement of activities, and allocations have been made on a reasonable basis.
33) Revenues are appropriately classified in the statement of activities within program revenues,
general revenues, contributions to term or permanent endowments, or contributions to
permanent fund principal.
34) Interfund, internal, and intra -entity activity and balances have been appropriately classified and
reported.
35) Deposits and investment securities and derivative instruments are properly classified as to risk
and are properly disclosed.
36) Receivables recorded in the financial statements represent valid claims against debtors for
transactions arising on or before the balance sheet date and have been reduced to their
estimated net realizable value.
37) The City is in compliance with Florida Statute 218.415, local government investment policies, in
all respects.
a) We are responsible for establishing and maintaining effective internal control over
compliance.
b) We have performed an evaluation of the City's compliance with Florida Statute 218.415,
local government investment policies.
c) All relevant matters are reflected in the measurement or evaluation of City's compliance
with the specified requirements.
d) We are responsible for selecting the specified requirements and for determining that the
specified requirements are appropriate for our purposes.
e) We have provided you with all relevant information and access to information and
personnel in connection with your examination of compliance with Florida Statute
218.415, local government investment policies.
f) We have disclosed to you all known matters that may contradict City's compliance with
the specified requirements and we have disclosed to you all communications from
regulatory agencies, internal auditors, other independent accountants or consultants,
and others regarding possible noncompliance with Florida Statute 218.415, local
government investment policies, including communications received between
September 30, 2019 and the date of the examination report.
g) We have responded fully to all inquiries made to us by you during the engagement.
38) Capital assets, including infrastructure and intangible assets, are properly capitalized, reported,
and, if applicable, depreciated.
39) Capital assets have been evaluated for impairment as a result of significant and unexpected
decline in service utility. Impairment loss and insurance recoveries have been properly
recorded.
40) Provision has been made to reduce excess or obsolete inventories to their estimated net
realizable value.
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Draft Management Representation Letter
41) We believe that the actuarial assumptions and methods used to measure pension and OPEB
liabilities and costs for financial accounting purposes are appropriate in the circumstances.
42) We have appropriately disclosed the City's policy regarding whether to first apply restricted or
unrestricted resources when an expense is incurred for purposes for which both restricted and
unrestricted net position is available and have determined that net position is properly
recognized under the policy.
43) We acknowledge our responsibility for the required supplementary information (RSI). The RSI
is measured and presented within prescribed guidelines and the methods of measurement and
presentation have not changed from those used in the prior period. We have disclosed to you
any significant assumptions and interpretations underlying the measurement and presentation
of the RSI.
44) With respect to the introductory section ("supplementary information"):
Signed:
a) We acknowledge our responsibility for presenting the supplementary information in
accordance with accounting principles generally accepted in the United States of America,
and we believe the supplementary information, including its form and content, is fairly
presented in accordance with accounting principles generally accepted in the United
States of America. The methods of measurement and presentation of the supplementary
information have not changed from those used in the prior period, and we have disclosed
to you any significant assumptions or interpretations underlying the measurement and
presentation of the supplementary information.
b) If the supplementary information is not presented with the audited financial statements,
we will make the audited financial statements readily available to the intended users of
the supplementary information no later than the date we issue the supplementary
information and the auditor's report thereon.
Signed:
Title: City Administrator Title: Finance Director
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