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Audit 2022-2023City Of Okeechobee, Florida FINANCIAL STATEMENTS September 30, 2023 City of Okeechobee, Florida Table of Contents ■ For the year ended September 30, 2023 • Introductory Section TitlePage........................................................................................................................... 1 Tableof Contents.............................................................................................................. 2 CityOfficials...................................................................................................................... 3 Financial Section 63 Independent Auditor's Report ......................................................................................... 5 Management's Discussion and Analysis.......................................................................... 9 Basic Financial Statements 80 Government -wide Financial Statements Statement of Net Position — Governmental Activities ................................................. 19 Statement of Activities — Governmental Activities....................................................... 20 Fund Financial Statements 83 Governmental Funds 85 Balance Sheet —Governmental Funds..................................................................... 21 Statement of Revenues, Expenditures and Changes in Fund 87 Balances — Governmental Funds......................................................................... 22 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ...................... 23 Fiduciary Funds (Component Units that are Fiduciary in Nature) Statement of Fiduciary Net Position - Pension Trust Funds .................................... 24 Statement of Changes in Fiduciary Net Position - Pension Trust Funds ................. 25 Notes to Financial Statements......................................................................................... 27 Required Supplementary Information Other Than Management's Discussion and Analysis Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual - General Fund.......................................................................... 63 Required Pension Supplementary Information............................................................ 66 Schedule of Changes in Total OPEB Liability and Related Ratios ................................. 78 Notes to Required Supplementary Information........................................................... 80 Reports on Internal Control and Compliance Matters Independent Auditor's 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 .......................... 83 Independent Auditor's Management Letter................................................................. 85 Independent Accountant's Report on Compliance with Local Government Investment Policies.................................................................................................. 87 -2- City of Okeechobee, Florida City officials For the year ended September 30, 2023 Dowling R. Watford, Jr. Mayor, Chairman Monica Clark Vice Mayor Noel Candler Bob Jarriel David McAuley Council Members Gary Ritter City Administrator Lane Gamiotea City Clerk India Riedel Finance Director Donald Hagan Chief of Police David Allen Director of Public Works -3- INDEPENDENT AUDITOR'S REPORT To the City Council City of Okeechobee, Florida Report on the Audit of the Financial Statements Opinions 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, (the "City") as of and for the year ended September 30, 2023, 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. In our opinion, based on our report and the report of the 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, 2023 and the respective changes in financial position, ' and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of the pension trust funds of the City of Okeechobee, Florida. Those statements were audited by other auditors whose report has been furnished to us, hence our opinion relates to the pension trust funds' amounts included for the governmental activities of the City of Okeechobee, Florida, is based solely on the report of the other auditors. Basis for Opinions 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. Our responsibilities ' under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Okeechobee, Florida and to meet our other ethical responsibilities, in accordance with the relevant ' ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and 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. Carr, Riggs & Ingram, LLC 215 Baytree Drive Al CARR RIGGS & CRIINGRAM Melbourne, Florida 32940 321.255.0088 CPAs and Advisors 386.336.4189 (fax) CRlcpa.com INDEPENDENT AUDITOR'S REPORT To the City Council City of Okeechobee, Florida Report on the Audit of the Financial Statements Opinions 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, (the "City") as of and for the year ended September 30, 2023, 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. In our opinion, based on our report and the report of the 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, 2023 and the respective changes in financial position, ' and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of the pension trust funds of the City of Okeechobee, Florida. Those statements were audited by other auditors whose report has been furnished to us, hence our opinion relates to the pension trust funds' amounts included for the governmental activities of the City of Okeechobee, Florida, is based solely on the report of the other auditors. Basis for Opinions 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. Our responsibilities ' under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Okeechobee, Florida and to meet our other ethical responsibilities, in accordance with the relevant ' ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and 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. postemployment benefits information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 Management is responsible for the other information included in the annual report. The other ' information comprises the introductory section but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information ' and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards ' In accordance with Government Auditing Standards, we have also issued our report dated April 8, 2024, 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, Florida'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. ' . L.C. C.�it�, C ' Melbourne, Florida April 8, 2024 -7- City of Okeechobee, Florida Management's Discussion and Analysis 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, 2023. 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, 2023: • The City's total assets exceeded its liabilities at September 30, 2023 by $23,505,616. • The City's total revenues were $9,254,856 for the year ended September 30, 2023, compared to total expenses of $6,428,567, which resulted in a $2,826,289 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 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 2023 2022 Current assets $ 14,409,008 $ 14,701,977 Capital assets 9,179,395 7,637,011 Noncurrent assets 57,770 5,641,791 Total assets 23,646,173 27,980,779 Deferred outflows 3,448,485 334,124 Unearned revenue 1,599,380 2,912,965 Current liabilities 519,949 586,484 Long-term liabilities 574,852 609,282 Total liabilities 2,694,181 4,108,731 Deferred inflows 894,861 3,526,845 Net position: Net investment in capital assets 9,179,395 7,637,011 Restricted 4,012,012 3,795,194 Unrestricted 10,314,209 9,247,122 Total net position $ 23,505,616 $ 20,679,327 Governmental Activities Total net position increased by $2,826,289 primarily as a result of a $5,584,021 decrease in noncurrent assets. In addition, an increase in capital of assets of $1,542,384 and a $1,313,585 decrease unearned revenue also contributed to the increase in net position. The decrease in total assets of $4,334,606 was primarily due to a $5,584,021 decrease in net pension assets due to prior year investment losses that are recognized over the following five years through deferred inflows and outflows due to the difference between projected and actual earnings on pension investments in the actuarial valuation, offset by an increase of $1,542,384 in capital assets due to $2,251,940 in capital asset additions offset by $709,556 in depreciation expense. The net decrease in current and noncurrent liabilities was $100,965 as current liabilities decreased by $66,535 related to timing of payables and non-current liabilities decreased by $34,430 resulting from a decrease in the OPEB liability obligation of $41,547 and an increase in compensated absences of $7,117. Unearned revenue decreased $1,313,585 due to the City's current year expenditures of American Rescue Plan Act funds that were received in prior years and partially recognized as revenue in the current year. Now City of Okeechobee, Florida Management's Discussion and Analysis The City experienced an increase of 34% in total revenues, a $2,354,457 increase to $9.25 million. The increase is primarily due to a $1,146,206 increase in capital grants and contributions. Increase in investment income of $456,038 as interest income increased due to the City investing in certificates of deposit with a higher rate of return. Increases in charges for service of $193,496 due to an increase in building permits and fees and special detail revenues. The franchise fee revenue increase of $148,089 and public utility tax revenue of $144,246 are due to an increase in usage of utilities within the City. Shared revenues increase of $106,390 and $65,104 in operating grant revenues plus other income of $53,630 and property tax increase of $41,258 all contributed to the increase in revenues for the year. The City experienced an 18.4% increase in total expenses — a $996,877 increase to $6.4 million. The increase is primarily due to a $65,610 increase in expenses for general government, $501,842 increase in public safety, $378,139 increase in transportation expense, $43,186 increase in physical environment, and $8,100 in economic environment. The combined increase of revenues with the offset of increased expenses resulted in an increase in net position of $2,826,289. 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 12,241,827, an increase of $1,087,194 in comparison with the prior year. Approximately 79% of this total amount $9,638,487, constitutes unassigned fund balance, which is available for spending at the government's discretion. Assigned fund balances include $1,153,575 for subsequent year's expenditures and $54,873 for community development expenditures. Public facilities fund balance of $1,330,817 and non -major fund balance of $21,949 for law enforcement are restricted funds based on their specific stipulated purpose. The remainder of the fund balance is non -spendable inventory of $42,126. 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 $10,802,007 while total fund balance was $12,174,950. 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 133% and 150% respectively of total general fund expenditures. -13- City of Okeechobee, Florida Management's Discussion and Analysis • Endcaps with landscaping for South Park Street • Tractor with arm attachment. • Tasers (1) including harnesses, etc. • Picnic tables, trash receptacles purchased for city parks • Completion of Stormwater System GIS Mapping • Chamber of Commerce Building carpeting City's Capital Assets (net of depreciation) 2023 2022 Land $ 1,435,648 $ 1,435,648 Construction in progress 66,937 151,898 Buildings 1,011,217 1,089,269 Improvements other than buildings 4,691,016 3,750,547 Equipment 1,974,577 1,209,649 Total $ 9,179,395 $ 7,637,011 Additional information on the City's capital assets can be found in Note 3.C. on page 40 and 41 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET The City Council adopted a millage rate of 6.3556 for budget year 2024. The adopted millage rate is the 2.84% more than the roll -back rate of 6.1801. A $139,248 increase in budgeted ad valorem revenue is largely due to the increase in new construction added to this year's assessed tax rolls and increase in taxable values from the prior year. Revenues for the fiscal year 2024 adopted budget for all funds of the City total approximately $12,490,021, an increase from the prior year final budget of approximately $3,543,631. These revenues include the General, Public Facility, Capital Projects, Grant and Special Law Enforcement fund revenues. The change in revenue is based on the expected increase in grant revenue of $3,509,246. Other expected increases in revenues, ad valorem Tax revenue, intergovernmental revenue, and charges for services revenue. However, an expected decrease in fines, forfeitures revenues offsets the budgeted increase. -15- f3r1;'I[��I►IeT►[�IIe1��►�i1�►T�� 17- City of Okeechobee, Florida Statement of Net Position - Governmental Activities September 30, 2023 ASSETS Cash and cash equivalents $ 6,379,992 Investments 7,521,184 Accounts receivable 163,468 Due from other governments 302,238 Inventory 42,126 Capital assets: 9,179,395 Nondepreciable Land 1,435,648 Construction in progress 66,937 Depreciable, net of accumulated depreciation 2,694,181 Buildings 1,011,217 Improvements other than buildings 4,691,016 Equipment 1,974,577 Net pension asset 57,770 Total assets 23,646,173 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows - pensions 3,448,485 Total deferred outflows of resources 3,448,485 LIABILITIES Accounts payable 349,362 Accrued expenses 170,587 Compensated absences- due within one year 42,518 Unearned revenue - American Rescue Plan Act 1,599,380 Noncurrent liabilities: 9,179,395 Due in more than one year Compensated absences 315,341 OPEB liability 216,993 Total liabilities 2,694,181 DEFERRED INFLOWS OF RESOURCES Deferred inflows - business tax receipts 47,852 Deferred inflows - pensions 847,009 Total deferred inflows of resources 894,861 NET POSITION Net investment in capital assets 9,179,395 Restricted for: Law enforcement 21,949 Public facilities 1,330,817 Pension benefits 2,659,246 Unrestricted 10,314,209 Total net position $ 23,505,616 The accompanying notes are an integral part of these financial statements. -19- City of Okeechobee, Florida Balance Sheet - Governmental Funds LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES Liabilities Accounts payable $ 309,530 $ Industrial Community $ 32,948 Total Accrued expenses 170,587 Development Development Nonmajor Governmental September 30, 2023 General Fund Capital Project Funds Funds ASSETS 1,471,221 128,159 - 1,599,380 Cash and cash equivalents $ 6,126,896 $ 139,726 $ 31,757 $ 81,613 $ 6,379,992 Investments 7,521,184 - - - 7,521,184 Accounts receivable 163,393 - 75 163,468 Due from other funds 18,303 30,000 48,303 Due from other governments 302,238 - 302,238 Inventory 42,126 - - - 42,126 Total assets $ 14,174,140 $ 139,726 $ 61,757 $ 81,688 $ 14,457,311 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES Liabilities Accounts payable $ 309,530 $ $ 6,884 $ 32,948 $ 349,362 Accrued expenses 170,587 in the statement of net position under full accrual accounting. - - 170,587 Due to other funds - 40,000 (847,009) 8,303 48,303 Unearned revenue 1,471,221 128,159 - 1,599,380 Total liabilities 1,951,338 168,159 6,884 41,251 2,167,632 Deferred inflows of resources: Deferred revenue - business tax receipts 47,852 - 47,852 Fund balances: Nonspendable for: Inventory 42,126 42,126 Restricted for: Public facilities 1,330,817 - 1,330,817 Law enforcement - - 21,949 21,949 Assigned for: Community development - 54,873 - 54,873 Subsequent year's expenditures 1,153,575 - - 1,153,575 Unassigned 9,648,432 (28,433) - 18,488 9,638,487 Total fund balances 12,174,950 (28,433) 54,873 40,437 12,241,827 Total liabilities, deferred inflows of resources and fund balances $ 14,174,140 $ 139,726 $ 61,757 $ 81,688 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. 3,448,485 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. (847,009) Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 9,179,395 Net pension assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 57,770 Long-term liabilities, including the net OPEB obligation of $216,993 and compensated absences of $357,859 are not due and payable in the current period and, therefore, are not reported in the funds. (574,852) Net position of governmental activities $ 23,505,616 The accompanying notes are an integral part of these financial statements. -21- City of Okeechobee, Florida Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year ended September 30, 2023 Net change in fund balances - total governmental funds $ 1,087,194 ' Amounts reported for governmental activities in the statement of activities are different because: Capital assets used in government activities are not financial resources and, therefore, are not reported in the funds. Capital outlay $ 2,251,940 Depreciation expense (709,556) 1,542,384 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. 162,281 1 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. 41,547 Compensated absences are reported in the statement of activities when earned. Only compensated absences that require the use of current financial resources ' are reported as expenditures in the governmental funds. This is the difference between the two. (7,117) Change in net position of governmental activities $ 2,826,289 iThe accompanying notes are an integral part of these financial statements. -23- City of Okeechobee, Florida Statement of Changes in Fiduciary Net Position - Pension Trust Funds Pension Year ended September 30, 2023 Trust Funds ADDITIONS Contributions: State $ 181,506 City 73,557 Employees 144,991 Total contributions 400,054 Investment earnings: Net appreciation in the fair value of investments 1,726,235 Interest and dividends 622,002 Total investment earnings 2,348,237 Less investment expenses (67,150) Net investment gain 2,281,087 Total additions 2,681,141 DEDUCTIONS Benefits paid to participants 866,441 Refunds on termination 20,907 DROP payments 268,238 Administrative expenses 185,375 Total deductions 1,340,961 Change in net position 1,340,180 Net position, beginning of year 18,555,395 Net position, end of year $ 19,895,575 The accompanying notes are an integral part of these financial statements. -25- City of Okeechobee, Florida Notes to Financial Statements 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. iThe 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 2023 as the City does have fiduciary responsibility. -27- City of Okeechobee, Florida Notes to Financial Statements 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 Industrial Development fund accounts for all financial resources used for infrastructure construction, improvement and equipment purchases. 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 pro- gram revenues. Therefore, general revenue includes 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. -29- City of Okeechobee, Florida iNotes to Financial Statements Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued) 1. Cash, Cash Equivalents 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 1-16113, 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, 2023 was 6.8987 mills, which is 11.63% 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). -31- City of Okeechobee, Florida ' Notes to Financial Statements ' Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued) 8. Long-term Obligations ' In the government -wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. In the governmental fund financial statements, the face amount of debt issued is reported as other financing sources. ' 9. Fund Equity ' The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows: Nonspendable Fund Balance — Amounts that are (a) not in spendable form or (b) legally or ' contractually required to be maintained intact. "Not in spendable form" includes items that are not expected to be converted to cash (such as inventories and prepaid amounts) and items such as long- term amounts of loans and notes receivables, as well as property acquired for resale. The corpus (or ' principal) of a permanent fund is an example of an amount that is legally or contractually required to be maintained 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. -33- City of Okeechobee, Florida ' Notes to Financial Statements ' Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued) ' 14. Recently Issued and Implemented Accounting Pronouncements ' In May 2019, the GASB issued Statement No. 91, Conduit Debt Obligations. The primary objectives of this statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements ' associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and ' financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. There were no significant impacts of implementing this Statement. ' In May 2020, the GASB issued Statement No. 93, Replacement of Interbank Offered Rates. The objectives of this Statement are to address financial reporting issues that result from the replacement ' of an Interbank Offered Rate (IBOR) by providing exceptions for certain hedging derivative instruments to the hedge accounting termination provisions when an IBOR is replaced as the reference rate of the hedging derivative instrument's variable payment and clarification of the hedge accounting termination provisions when a hedged item is amended to replace the reference rate; replacing LIBOR as an appropriate benchmark interest rate for the evaluation of the effectiveness of an interest rate swap with a Secured Overnight Financing Rate or the Effective Federal Funds Rate; and providing ' exceptions to the lease modifications guidance in Statement 87 for lease contracts that are amended solely to replace an IBOR used to determine variable payments. As of July 1, 2023, derivate instruments that hedge the interest rate risk of taxable debt and use an IBOR as a reference rate are no longer eligible for hedge accounting. There were no significant impacts of implementing this Statement. ' In May 2020, the GASB issued GASB Statement No. 96, Subscription -Based Information Technology Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription -based information technology arrangements (SBITAs) for government end users ' (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right -to -use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of ' a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all ' reporting periods thereafter. Assets and liabilities resulting from SBITAs should be recognized and measured using the facts and circumstances that existed at the beginning of the fiscal year in which this Statement is implemented. Governments are permitted, but are not required, to include in the ' measurement of the subscription asset capitalizable outlays associated with the initial implementation stage and the operation and additional implementation stage incurred prior to the implementation of this Statement. There were no significant impacts of implementing this Statement. 35 City of Okeechobee, Florida Notes to Financial Statements Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. BUDGETARY INFORMATION As permitted by GASB Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments, the City has elected to disclose all budgetary information in the notes to the required supplementary information. Note 3: DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS As of September 30, 2023, $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 150: 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\/nIiia GASBC 150: 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). -37- City of Okeechobee, Florida Notes to Financial Statements Note 3: DETAILED NOTES ON ALL FUNDS (Continued) A. DEPOSITS AND INVESTMENTS (Continued) At September 30, 2023, 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) $ 7,521,184 $ 7,521,184 $ $ $ AAAm 5&P Primary government total $ 7,521,184 $ 7,521,184 $ $ $ Pension trust funds: ' Mutual funds- equities $ 11,793,052 $ _ $ - $ 11,793,052 $ - Not rated - Ll Mutual funds- fixed income 7,697,900 7,697,900 BBB - AA S&P L2 19,490,952 $ $ $ 19,490,952 $ Cash Equivalents, at amortized cost ' Money Market Fund 236,572 Total Cash Equivalents, at cost 236,572 Pension trust fund total $ 19,727,524 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. 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. -39- 1 City of Okeechobee, Florida Notes to Financial Statements Note 3: DETAILED NOTES ON ALL FUNDS (Continued) C. CAPITAL ASSETS (Continued) Depreciation expense was charged to functions/programs of the government as follows: ' Governmental activities: General government $ 140,566 Public safety 184,235 ' Physical environment 384,755 Total depreciation expense -governmental activities $ 709,556 ' 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 Special Revenue fund of $8,303 and of $10,000 from the Industrial Development fund, and a due to the Community Development Capital Projects fund from the Industrial Development fund of $30,000. ' Due from: Industrial ' Development Nonmajor Funds Fund Total Due to: tGeneral Fund $ 8,303 $ 10,000 $ 18,303 Community Development Capital Project - 30,000 30,000 ' Total $ 8,303 $ 40,000 $ 48,303 E. CHANGES IN LONG-TERM LIABILITIES Long-term liability activity for the year ended September 30, 2023, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Compensated absences $ 350,742 $ 217,699 $ (210,582) $ 357,859 $ 42,518 Net OPEB liability 258,540 27,730 (69,277) 216,993 - Long-term liabilities $ 609,282 $ 245,429 $ (279,859) $ 574,852 $ 42,518 For the governmental activities, compensated absences are generally liquidated by the general fund. -41- City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued) The City recognized as revenues and expenditures on -behalf payments relating to pension contributions for its public safety employees that the State of Florida paid to the Police Officers' and Firefighters' Plans in the amounts of $103,937 and $77,569, respectively. These contributions are funded by an excise tax upon certain casualty insurance companies on their gross receipts of premiums from policy holders. The City and employees contributions for the year ended September 30, 2023, are as follows: City Employees Police Officers' $ 38,602 $ 63,770 Firefighters' $ - $ 13,566 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, 2023, and the current target and actual allocation of these investments at market, per the performance analysis report, is as follows as of September 30, 2023: Police Officers' Firefighters' Actual Target ' Investments Percent Percent Domestic Equity 49.1% 50.0% International Equity 10.2% 10.0% ' Fixed Income 39.9% 40.0% Cash Equivalents 0.8% 0.0% Total 1 100.0% 100.0% Firefighters' -43- Actual Target Investments Percent Percent Domestic Equity 44.3% 50.0% International Equity 15.1% 10.0% Fixed Income 39.2% 40.0% Cash Equivalents 1.4% 0.0% Total 100.0% 100.0% -43- City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued) For the year ending September 30, 2023, the City recognized a pension expense (income) of $292,254 for the Police Officers' Plan and $(285,573) for the Firefighters' Plan. On September 30, 2023, the Sponsor reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Police Officers' Deferred Outflow of Resources Deferred I nflow of Resources Difference between expected and actual experience $ - $ 184,973 Change in assumptions - 118,110 Net difference between projected and actual earnings on pension plan investments 1,648,432 - Contributions subsequent to the measurement date 142,539 - Total $ 1,790,971 $ 303,083 Firefighters' Deferred outflows relating to subsequent contributions of $142,539 and $77,569 for the Police Officers' and Firefighters' Pension Plans, respectively will be recognized as a reduction in net pension liability in the fiscal year ending September 30, 2023. -45- Deferred Outflow of Resources Deferred Inflow of Resources Difference between expected and actual experience $ 5,125 $ 284,678 Change in assumptions 613 62,269 Net difference between projected and actual earnings on pension plan investments 700,601 - Contributions subsequent to the measurement date 77,569 - Total $ 783,908 $ 346,947 Deferred outflows relating to subsequent contributions of $142,539 and $77,569 for the Police Officers' and Firefighters' Pension Plans, respectively will be recognized as a reduction in net pension liability in the fiscal year ending September 30, 2023. -45- City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) B. RETIREMENT COMMITMENTS— DEFINED BENEFIT PLANS (Continued) 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, 2023 are summarized as follows: Police Officers' Investments Percent Target Long -Term Rate of Return* Domestic Equity 50.0% 7.5% International Equity 10.0% 8.5% Fixed Income 40.0% 2.5% Real Estate 0.0% 4.5% Cash Equivalents 0.0% 0.0% Total 100.0% *Net of long-term inflation assumption of 2.5% Firefighters' Percent Long -Term Investments Target Rate of Return* Domestic Equity 50.0% 7.5% International Equity 10.0% 8.5% Domestic Fixed Income 40.0% 2.5% Global Fixed Income 0.0% 3.5% Cash Equivalents 0.0% 0.0% Total 100.0% *Net of long-term inflation assumption of 2.5% 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 for Police Officers' Pension: -47- City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) B. RETIREMENT COMMITMENTS— DEFINED BENEFIT PLANS (Continued) Net Pension Liability (Asset) - For the year ending September 30, 2023, the City reported an asset of $(113,794) for the Pension Plan's net pension (asset). The net pension liability (asset) was measured as of September 30, 2022, and the total pension liability (asset) used to calculate the net pension liability (asset) was determined by an actuarial valuation as of October 1, 2023. General Total Pension Liability Service cost $ 185,154 Interest 333,968 Difference between actual & expected experience (170,274) Benefit payments, including refunds (313,369) Net change in total pension liability 35,479 Total pension liability -beginning 4,912,707 Total pension liability - ending (a) 4,948,186 Plan Fiduciary Net Position Contributions - employer (from City) 85,670 Contributions - members 69,461 Net investment income (1,219,252) Benefit payments, including refunds (313,369) Administrative expense (42,586) Net change in plan fiduciary net position (1,420,076) Plan fiduciary net position - beginning 6,482,056 Plan fiduciary net position - ending (b) 5,061,980 Net pension liability (asset) - Ending (a) - (b) $ (113,794) Plan fiduciary net position as a percentage of Total Pension Liability (Asset) 102.30% The City and employees contributions for the year ended September 30, 2023, are as follows. City Employees General $ 34,955 $ 67,655 -49- City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued) General Total pension liability $ 4,893,392 Plan fiduciary net position (5,406,391) City's net pension liability (asset) $ (512,999) Plan fiduciary net position as a percentage of total pension liability (asset) 110.48% 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. 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, 2023 are summarized in the following table: General Investments General Long -Term Rate of Return* Domestic Equity Percent Percent Investments Actual Target Domestic Equity 49.1% 50.0% International Equity 10.2% 10.0% Fixed I ncome 39.9% 40.0% Cash Equivalents 0.8% 0.0% Total 100.0% 100.0% 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, 2023 are summarized in the following table: General Investments Percent Target Long -Term Rate of Return* Domestic Equity 50.0% 7.5% International Equity 10.0% 8.5% Fixed Income 40.0% 2.5% Cash Equivalents 0.0% 0.0% Total 100.0% *Net of long-term inflation assumption of 2.5% -51- City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued) IMortality Fire Police General For healthy participants For healthy participants For healthy participants during employment, PUB- during employment, PUB- during employment, PUB - 2010 Headcount Weighted 2010 Headcount Weighted 2010 Headcount Weighted Safety Employee Female Safety Employee Female General Below Median Mortality Table and Safety Mortality Table and Safety Employee Mortality Table, Below Median Employee Below Median Employee separate rates for males and Male Mortality Table, both Male Mortality Table, both females, set back 1 year for set forward 1 year, with set forward 1 year, with males, with fully generational fully generational mortality fully generational mortality mortality improvements improvements projected to improvements projected to projected to each future each future decrement date each future decrement date decrement date with Scale with Scale MP -2018. For with Scale MP -2018. For MP -2018. For healthy healthy participants healthy participants participants post postemployment, PUB -2010 postemployment, PUB -2010 employment, PUB -2010 Headcount Weighted Safety Headcount Weighted Safety Headcount Weighted Healthy Retiree Female Healthy Retiree Female General Below Median Mortality Table and Safety Mortality Table and Safety Healthy Retiree Mortality Below Median Healthy Below Median Healthy Table, separate rates for Retiree Male Mortality Retiree Male Mortality males and females, set back Table, both set forward 1 Table, both set forward 1 1 year for males, with fully year, with fully generational year, with fully generational generational mortality mortality improvements mortality improvements improvements projected to projected to each future projected to each future each future decrement date decrement date with Scale decrement date with Scale with Scale MP -2018. For MP -2018. For disabled MP -2018. For disabled disabled participants, PUB - participants, 80% PUB -2010 participants, 80% PUB -2010 2010 Headcount Weighted Headcount Weighted Headcount Weighted General Disabled Retiree General Disabled Retiree General Disabled Retiree Mortality Table, separate Mortality Table/20%PUB- Mortality Table/20%PUB- ratesfor males and females, 2010 Headcount Weighted 2010 Headcount Weighted both set forward 3 years, Safety Disabled Retiree Safety Disabled Retiree without projected mortality Mortality Table, separate Mortality Table, separate improvements. rates for males and females, rates for males and females, without projected mortality without projected mortality improvements. improvements. &7%11 City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) B. RETIREMENT COMMITMENTS- DEFINED BENEFIT PLANS (Continued) Pension trust funds increase in fiduciary net position activity as of September 30, 2023 was as follows: Total additions 594,763 1,382,433 General 2,681,141 Firefighters' Police Officers' Employees' Total Pension DEDUCTIONS Pension Pension Pension Trust Funds ADDITIONS 231,868 397,518 237,055 866,441 Contributions - - 20,907 20,907 State $ 77,569 $ 103,937 $ - $ 181,506 City - 38,602 34,955 73,557 Employees 13,566 63,770 67,655 144,991 Total contributions 91,135 206,309 102,610 400,054 Investment earnings: 4,007,141 9,486,273 5,061,981 18,555,395 Net depreciation in the fair value $ 4,307,711 $ 10,179,480 $ 5,408,384 $ 19,895,575 of investments 387,784 877,786 460,665 1,726,235 Interest and dividends 138,594 321,488 161,920 622,002 Total investment earnings 526,378 1,199,274 622,585 2,348,237 Less investment expenses (22,750) (23,150) (21,250) (67,150) Net investment gain 503,628 1,176,124 601,335 2,281,087 Total additions 594,763 1,382,433 703,945 2,681,141 DEDUCTIONS Benefits paid to participants 231,868 397,518 237,055 866,441 Refunds on termination - - 20,907 20,907 DROP payments - 233,034 35,204 268,238 Administrative expenses 62,325 58,674 64,376 185,375 Total deductions 294,193 689,226 357,542 1,340,961 Change in net position 300,570 693,207 346,403 1,340,180 Net position, beginning of year 4,007,141 9,486,273 5,061,981 18,555,395 Net position, end of year $ 4,307,711 $ 10,179,480 $ 5,408,384 $ 19,895,575 -55- City of Okeechobee, Florida Notes to Financial Statements Note 4: OTHER INFORMATION (Continued) C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (Continued) Actuarial assumptions and other inputs. On the September 30, 2022 measurement date, the actuarial assumptions and other inputs applied include the following: Inflation 2.25 percent Salary increases 6.00 percent Discount rate 4.40 percent Healthcare cost trend rates 6.00 percent for FY beginning 2022, 5.75 percent for FY beginning 2023 and then gradually decreasing to an ultimate trend of 3.75 percent Mortality Mortality tables used in the July 1, 2021 actuarial valuation of the Florida Retirement System for non -K-12 Instructional Regular Class members. These rates were taken from adjusted PUB -2010 mortality tables published by the Society of Actuaries with generational mortality improvements using Scale MP -2018. Adjustments to referenced tables are based on the results of a statewide experience study covering the period 2013 through 2018. Changes Changes in assumptions and other inputs include the change in the discount rate from 2.19% as of the beginning of the measurement period to 4.40% as of September 30, 2022. This change is reflected in the Schedule of Changes in Total OPEB Liability. Change in Total OPEB Liability There were no benefit changes during the year. Increase (Decrease) Total OPEB Liability (a) Balance as of September 30, 2022 $ 258,540 Changes for the year: Service cost 22,010 Interest 5,720 Changes in assumptions and other inputs (30,595) Benefit payments (38,682) Net changes (41,547) Balance as of September 30, 2023 $ 216,993 WIVA City of Okeechobee, Florida iNotes to Financial Statements Note 5: SUBSEQUENT EVENTS Management evaluated all events or transactions that occurred after September 30, 2023 through ' April 8, 2024, the date the current year's financial statements were available to be issued. The following events occurred: ' • Approval to sell two parcels of land for $420,000 and $140,000 • Approval of police/fire pension plan merger • Grant award of $1,200,000 from State of Florida Department of Commerce ' • Grant award of $334,951 is extended from FDOT Small County Outreach Program Grant -59- REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT'S DISCUSSION AND ANALYSIS 61- City of Okeechobee, Florida Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund Actual Variance with Original Final (on Budgetary Final Budget Year ended September 30, 2023 Budget Budget Basis) Positive (Negative) Revenues 3,926,472 3,901,400 3,793,764 107,636 Taxes $ 3,311,716 $ 3,624,900 $ 3,665,950 $ 41,050 Intergovernmental 2,907,051 3,097,000 4,530,244 1,433,244 Charges for services 706,700 794,500 805,484 10,984 Permits and fees 681,600 866,800 938,499 71,699 Fines and forfeitures 40,200 53,290 60,883 7,593 Investment earnings 11,200 434,300 528,394 94,094 Miscellaneous 4,600 75,600 51,684 (23,916) Total revenues 7,663,067 8,946,390 10,581,138 1,634,748 Expenditures (1,377,225) (1,377,225) Current: General government: Legislative 182,766 154,266 150,914 3,352 Executive 265,142 247,760 228,738 19,022 City clerk 323,086 302,500 295,716 6,784 Financial services 343,600 321,270 305,373 15,897 Legalcouncil 188,900 114,100 113,280 820 General services 585,637 537,400 501,641 35,759 Total general government 1,889,131 1,677,296 1,595,662 81,634 Public safety: Fire 706,214 735,600 729,347 6,253 Police 3,220,258 3,165,800 3,064,417 101,383 Total public safety 3,926,472 3,901,400 3,793,764 107,636 Transportation 1,637,263 1,573,175 1,540,208 32,967 Physical environment 1,156,251 770,800 576,785 194,015 Capital outlay 857,000 699,600 687,405 12,195 Total expenditures 9,466,117 8,622,271 8,193,824 428,447 Excess (deficiency) of revenues under (over) expenditures (1,803,050) 324,119 2,387,314 2,063,195 Other financing sources (uses) Operating transfers out - (1,377,225) (1,377,225) Net other financing sources (uses) (1,377,225) (1,377,225) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing sources (uses) (1,803,050) 324,119 1,010,089 685,970 Fund balances, beginning of year 11,102,972 11,102,972 11,102,972 - Fund balances, end of year $ 9,299,922 $ 11,427,091 12,113,061 $ 685,970 Reconciliation of budgetary to GAAP basis Current year encumbrances Prior year encumbrances Fund balance on GAAP basis 357,631 (295,742) $ 12,174,950 The accompanying notes to required supplementary information are an integral part of this schedule. -63- THIS PAGE IS INTENTIONALLY LEFT BLANK. -65- City of Okeechobee, Florida Required Pension Supplementary Information Police Officers' 2019* 2018* 2017 2016 2015 2014 $ 254,066 $ 258,622 $ 235,345 $ 264,445 $ 247,353 $ 251,499 607,391 580,995 573,285 543,946 506,147 479,146 (153,927) (276,621) (270,100) 126,875 (219,850) (784) 330,227 727,699 22,143 - 94,065 - (502,852) (281,028) (255,731) (468,694) (203,855) (201,397) (12,836) 72,669 - (25,003) (321) (26,953) 191,842 354,637 304,942 441,569 423,539 501,511 8,859,560 8,504,923 8,199,981 7,758,412 7,334,873 6,833,362 9,051,402 8,859,560 8,504,923 8,199,981 7,758,412 7,334,873 130,886 151,492 169,789 147,312 192,581 200,210 90,153 81,690 78,659 73,960 70,807 67,639 50,359 46,212 45,863 45,554 47,740 43,135 330,227 727,699 903,712 607,763 (95,964) 694,790 (502,852) (281,028) (255,731) (468,694) (203,855) (201,397) (12,836) (25,003) (321) (26,953) (47,116) (45,827) (41,855) (32,120) (30,198) (18,097) - - (3,284) (6) 3,886 - 38,821 680,238 897,153 348,766 (15,324) 759,327 9,617,497 8,937,259 8,040,106 7,691,340 7,706,664 6,947,337 9,656,318 9,617,497 8,937,259 8,040,106 7,691,340 7,706,664 $ (604,916) $ (757,937) $ (432,336) $ 159,875 $ 67,072 $ (371,791) 106.68% 108.56% $ 1,007,180 $ 924,250 $ 105.08% 917,260 $ 98.05% 99.14% 105.07% 970,646 $ 911,189 $ 862,700 -60.06% -82.01% -47.13% 16.47% -67- 7.36% -43.10% City of Okeechobee, Florida Required Pension Supplementary Information Firefighters' 2019* 2018* 2017 2016 2015 2014 $ 145,856 $ 136,825 $ 156,989 $ 156,107 $ 144,773 $ 130,539 271,341 257,407 255,218 235,684 213,154 196,106 (132,896) (162,443) (91,659) 56,393 (19,771) (741) (141,381) (107,105) (13,449) - 49,797 - (141,381) (107,105) (106,572) (102,590) (96,939) (142,060) (9,052) (16,027) (20,437) - - (16,233) - 19,828 - 3,256 - - 133,868 128,485 180,090 348,850 291,014 183,844 3,939,558 3,811,073 3,630,983 3,282,133 2,991,119 2,807,275 4,073,426 3,939,558 3,811,073 3,630,983 3,282,133 2,991,119 83,988 115,253 107,123 97,709 92,863 82,058 52,810 52,793 50,589 49,889 52,662 53,235 23,945 23,446 25,409 27,433 26,324 23,854 140,894 308,920 404,267 246,381 (44,021) 318,708 (141,381) (107,105) (106,572) (102,590) (96,939) (142,060) (9,052) (16,027) (20,437) (43,675) (59,878) (34,933) (31,639) (27,132) (16,233) - - (6,375) (1,766) - - 107,529 317,402 419,071 285,417 3,757 319,562 4,279,305 3,961,903 3,542,832 3,257,415 3,253,658 2,934,096 4,386,834 4,279,305 3,961,903 3,542,832 3,257,415 3,253,658 $ (313,408) $ (339,747) $ (150,830) $ 88,151 $ 24,718 $ (262,539) 107.69% 108.62% 103.96% 97.57% 99.25% 108.78% 478,900 $ 468,920 $ 508,180 $ 563,285 $ 523,119 $ 477,080 -65.44% -72.45% -29.68% 15.65% 4.73% -55.03% City of Okeechobee, Florida Required Pension Supplementary Information General Employees' 2020* 2019* 2018* 2017 2016 $ 184,223 $ 152,255 $ 154,529 $ 136,373 $ 421,387 315,828 295,453 284,633 91,058 763,785 90,157 (259,463) (164,189) - - 2,277 (141,938) 20,956 - (524,849) (47,772) - - 133,790 - (201,373) (259,463) (164,189) (336,740) (331,215) - (346) (16,592) (17,378) (18,267) - - - 2,641,019 - 343,340 45,961 279,337 2,648,122 310,841 4,383,118 4,337,157 4,057,820 1,409,698 11,400,112 - - - - (10,301,255) 4,726,458 4,383,118 4,337,157 4,057,820 1,409,698 118,781 115,324 75,793 94,009 446,184 76,693 66,020 60,312 56,405 183,145 603,919 155,830 394,042 477,649 825,935 (178,547) (259,463) (164,189) (336,740) (331,215) (22,826) (346) (16,592) (17,378) (18,267) (40,906) (53,249) (46,328) (48,490) (57,186) (652) - - 3,117,018 (2,208) 556,462 24,116 303,038 3,342,473 1,046,388 5,028,097 5,003,981 4,700,943 1,358,470 10,238,992 - - - - (9,926,910) 5,584,559 5,028,097 5,003,981 4,700,943 1,358,470 $ (858,101) $ (644,979) $ (666,824) $ (643,123) $ 51,228 118.16% 114.72% 115.37% 115.85% 96.37% $ 1,278,231 $ 1,100,333 $ 1,005,204 $ 940,083 $ 911,233 -67.13% -58.62% -66.34% -68.41% 5.62% -71- THIS PAGE IS INTENTIONALLY LEFT BLANK. - 73 - City of Okeechobee, Florida Required Pension Supplementary Information Police Officers' 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 $ 204,611 $ 212,571 $ 251,591 $ 219,093 $ 263,240 $ 267,849 221,039 233,182 248,448 221,272 263,388 267,849 $ (16,428) $ (20,611) $ 3,143 $ (2,179) $ (148) $ - $ 1,007,180 $ 21.95% 924,250 $ 25.23% 917,260 $ 27.09% 970,646 $ 22.80% 911,189 $ 862,700 28.91% 31.05% Firefighters' 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 $ 139,143 $ 167,871 $ 170,269 $ 143,632 $ 138,914 $ 122,212 -75- 136,798 168,046 157,712 147,598 145,525 135,293 $ 2,345 $ (175) $ 12,557 $ (3,966) $ (6,611) $ (13,081) $ 478,900 28.57% $ 468,920 35.84% $ 508,180 $ 563,285 31.03% 26.20% General Employees' $ 523,119 27.82% $ 477,080 28.36% 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 $ 114,875 115,324 $ 75,793 75,793 $ 42,774 94,009 $ 49,115 110,448 $ 379,111 379,111 $ 379,099 379,099 $ (449) $ - $ (51,235) $ (61,333) $ - $ - $ 1,100,333 10.48% $ 1,005,204 7.54% $ 940,083 10.00% $ 911,233 12.12% $ 3,135,961 12.09% $ 2,945,717 12.87% -75- City of Okeechobee, Florida Required Pension Supplementary Information Police Officers' 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 3.10% 8.73% 10.68% 7.59% -1.65% 9.96% Fire Fighters' 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 2.39% 6.11% 10.76% 6.83% -2.19% 10.43% General Employees' 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 2.23% 7.55% 9.78% 7.78% -1.38% -77- 10.60% City of Okeechobee, Florida Schedule of Changes in Total OPEB Liability and Related Ratios 2020 2019 2018 $ 12,015 $ 12,580 $ 13,441 6,320 5,640 4,977 6,792 - - 14,710 (4,290) (3,808) (9,915) (9,081) (17,198) 29,922 4,849 (2,588) 157,959 153,110 155,698 $ 187,881 $ 157,959 $ 153,110 $ 3,041,518 $ 2,984,722 $ 2,809,503 6.18% 5.29% 5.45 -79- Mortality (Continued) City of Okeechobee, Florida Notes to Required Supplementary Information Police Officers' Firefighters' Pension Plan Pension Plan For healthy participants postemployment, PUB - 2010 Headcount Weighted Safety Healthy Retiree Female Mortality Table and Safety Below Median Healthy Retiree Male Mortality Table, both set forward 1 year, with fully generational mortality improvements projected to each future decrement date with Scale MP -2018. For disabled participants, 80% PUB -2010 Headcount Weighted General Disabled Retiree Mortality Table/20% PUB - 2010 Headcount Weighted Safety Disabled Retiree Mortality Table, separate rates for males and females, without projected mortality improvements. For healthy participants postemployment, PUB - 2010 Headcount Weighted Safety Healthy Retiree Female Mortality Table and Safety Below Median Healthy Retiree Male Mortality Table, both set forwa rd 1 yea r, with fully generational mortality improvements projected to each future decrement date with Scale MP -2018. For disabled participants, 80% PUB -2010 Headcount Weighted General Disabled Retiree Mortality Table/20% PUB - 2010 Headcount Weighted Safety Disabled Retiree Mortality Table, separate rates for males and females, without projected mortality improvements. -81- General Employees' Pension Plan For healthy participants post employment, PUB - 2010 Headcount Weighted General Below Median Healthy Retiree Mortality Table, separate rates for males and females, set back 1 year for males, with fully generational mortality improvements projected to each future decrement date with Scale MP -2018. For disabled participants, PUB -2010 Headcount Weighted General Disabled Retiree Mortality Table, separate rates for males and females, both set forward 3 years, without projected mortality improvements. / C A R R RIGGS & CRIINGRAM CPAs and Advisors Carr, Riggs & Ingram, LLC 215 Baytree Drive Melbourne, Florida 32940 321.255.0088 386.336.4189 (fax) CRlcpa.com INDEPENDENT AUDITOR'S 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 City of Okeechobee, Florida We have audited, in accordance with the 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 City of Okeechobee, Florida, (the "City'), as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated April 8, 2024. Other auditors audited 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, 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. ' Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing 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's internal control. Accordingly, we do not express an opinion on the effectiveness of the City'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. -83- INDEPENDENT AUDITOR'S MANAGEMENT LETTER The Honorable Mayor and Members of the City Council City of Okeechobee, Florida Report on the Financial Statements We have audited the financial statements of the City of Okeechobee, Florida, (the "City") as of and for the fiscal year ended September 30, 2023, and have issued our report thereon dated April 8, 2024. Auditor's 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 Auditor's 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 Accountant's 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 Auditor General. Disclosures in those reports and schedule, which are dated April 8, 2024, 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 financial audit report. No findings and recommendations were made in the preceding annual financial audit report. 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 and its component units are disclosed in the footnotes. -85- Can, Riggs & Ingram, LLC 215 Baytree Drive CARR Melbourne, Florida 32940 R I G G S& C R IINGRAM 321.255.0088 CPAs and Advisors 3B6.336.4189 (fax) CRlcpa.com INDEPENDENT AUDITOR'S MANAGEMENT LETTER The Honorable Mayor and Members of the City Council City of Okeechobee, Florida Report on the Financial Statements We have audited the financial statements of the City of Okeechobee, Florida, (the "City") as of and for the fiscal year ended September 30, 2023, and have issued our report thereon dated April 8, 2024. Auditor's 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 Auditor's 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 Accountant's 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 Auditor General. Disclosures in those reports and schedule, which are dated April 8, 2024, 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 financial audit report. No findings and recommendations were made in the preceding annual financial audit report. 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 and its component units are disclosed in the footnotes. -85- t. CARR ,`. RIGGS & IINGRAM CPAs and Advisors Carr, Riggs & Ingram, LLC 215 Baytree Dnve Melbourne, Florida 32940 321.255.0088 386.336.4189 (fax) CRlcpa.com INDEPENDENT ACCOUNTANT'S 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 (the "City") compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2023. Management is responsible for the City's compliance with the specified requirements. Our responsibility is to express an opinion on the City'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 complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the City 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. We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the examination engagement. Our examination does not provide a legal determination on the City's compliance with specified requirements. In our opinion, the City complied, in all material respects, with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, for the year ended September 30, 2023. This report is intended solely for the information and use of management, City Council, and the State of Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties. ; i'&q7 �,, L.I..C. 3A",WJ0r 7-- Melbourne, Florida April 8, 2024 9*21