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Documentation_Regular_Tab 01_5/14/2020
Agenda Item #1. Regular Council STAFF MEMO Meeting: Regular Council - May 14 2020 Staff Contact: Hugh Dunkley, Finance Director FY2019 CAFR Presentation by Marcum LLP Department: Finance Presentation of the FY2019 Comprehensive Annual Financial Report (CAFR) by independent CPA firm of Marcum LLP. Motion by Council to approve/accept CAFR as presented. Teguesta 2019 Issued CAFR ada Teguesta 2019 Issued CAFR PAC Report Page 6 of 308 � ,,�,� "� � R � i i � _ �� Agenda Item #1. VILLAGE OF TEQUESTA COUNCIL MEMBERS 2019 From left to right: Council Member Kyle Stone, Vice -Mayor Kristi Johnson, Mayor Abby Brennan, Council Member Laurie Brandon, and Council Member Vince Arena. Page 8 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Prepared By Finance Department The Village of Tequesta, Florida Page 9 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA TABLE OF CONTENTS 1. INTRODUCTORY SECTION Letter of Transmittal i-iv Certificate of Achievement for Excellence in Financial Reporting v Organization Chart vi List of Principal Officials vii 11. FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1-3 MANAGEMENT'S DISCUSSION AND ANALYSIS (Required Supplementary Information) 4-18 BASIC FINANCIAL STATEMENTS Government -Wide Financial Statements Statement of Net Position 19 Statement of Activities 20 Fund Financial Statements Balance Sheet — Governmental Funds 21 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 22 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 23 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 24 Statement of Net Position — Proprietary Funds 25 Statement of Revenues, Expenses and Changes in Net Position — Proprietary Funds 26 Statement of Cash Flows — Proprietary Funds 27 Statement of Fiduciary Net Position — Fiduciary Funds 28 Statement of Changes in Fiduciary Net Position — Fiduciary Funds 29 Notes to Basic Financial Statements 30-94 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule — General Fund 95 Note to the Budgetary Comparison Schedule 96 Firefighters' Pension Trust Fund Schedule of Changes in the Village's Net Pension Liability and Related Ratios 97 Schedule of Village Contributions 98 Schedule of Investment Returns 99 Police Officers' Pension Trust Fund Schedule of Changes in the Village's Net Pension Liability and Related Ratios 100 Schedule of Village Contributions 101 Schedule of Investment Returns 102 General Employees' Pension Trust Fund Schedule of Changes in the Village's Net Pension Liability (Asset) and Related Ratios 103 Schedule of Village Contributions 104 Schedule of Investment Returns 105 Schedule of Changes in Total OPEB Liability and Related Ratios 106 Schedule of Village's Proportionate Share of the Net Pension Liability — Florida Retirement System Pension 107 Schedule of the Village's Proportionate Share of the Net Pension Liability — Retiree Health Insurance Subsidiary Program 108 Schedule of the Village's Contributions — Florida Retirement System Pension Plan 109 Schedule of the Village's Contributions — Retiree Health Insurance Subsidy Program 110 Page 10 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA TABLE OF CONTENTS 11. FINANCIAL SECTION (CONTINUED) SUPPLEMENTARY INFORMATION Combining and Individual Fund Statements and Schedules Combining Balance Sheet — Nonmajor Governmental Funds 111-112 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 113 Budgetary Comparison Schedule — Special Law Enforcement Trust Fund 114 Budgetary Comparison Schedule — Capital Improvement Fund 115 Budgetary Comparison Schedule — Capital Projects Fund 116 Combining Statement of Fiduciary Net Position 117-118 Combining Statement of Changes in Fiduciary Net Position 119 III. STATISTICAL SECTION Net Position by Component 120 Changes in Net Position 121-122 Fund Balances, Governmental Funds 123 Changes in Fund Balances, Governmental Funds 124 Assessed and Estimated Actual Value of Taxable Property 125 Property Tax Rates — All Direct and Overlapping Governments 126 Principal Property Taxpayers 127 Property Tax Levies and Collections 128 Ratios of Outstanding Debt by Type 129 Ratio of Net Outstanding Debt to Assessed Value and Net Bonded Debt Per Capita 130 Computation of Legal Debt Margin 131 Direct and Overlapping Governmental Activities Debt 132 Demographic and Economic Statistics 133 Principal Employers — Palm Beach County 134 Full -time -Equivalent Village Government Employees by Function/Program 135 Operating Indicators by Function/Program 136 Capital Asset Statistics by Function/Program 137 TV. REPORTING SECTION Independent Auditors' Report on Compliance and 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 138-139 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 140-143 Independent Accountants' Report On Compliance Pursuant To Section 218.415 Florida Statutes 144 Page 11 of 308 Agenda Item #1. INTRODUCTORY SECTION Page 12 of 308 Agenda Item #1. Village of Tequesta 345 Tequesta Drive Tequesta, FL 33469 March 31, 2020 To the Honorable Mayor, Members of the Village Council And Citizens of the Village of Tequesta, Florida 561-768-0700 www.tequesta.org We are pleased to submit the Comprehensive Annual Financial Report (CAFR) of the Village of Tequesta, Florida (the Village), for the fiscal year ended September 30, 2019. This report provides the Village's Council, staff, our citizens, and other interested parties with detailed information concerning the financial condition and activities of the Village government. State law requires that all general-purpose local governments annually publish a complete set of financial statements within nine months of the close of each fiscal year. The financial statements are presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards and government auditing standards by an independent auditing firm. We believe that this report complies with these requirements and continues to present the Village's strong tradition of full financial disclosure. This philosophy is reflected by the informative financial analysis, the exhibits and statistical tables included herein. The CAFR's role is to assist in making economic, social and political decisions and to assist in assessing accountability to the citizenry by: • Comparing actual financial results with the legally adopted budget, where appropriate; • Assessing financial condition and results of operations; • Assisting in determining compliance with finance related laws, rules and regulations; and • Assisting in evaluating the efficiency and effectiveness of Village operations. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the management of the Village. We believe the data, as presented, is accurate in all material respects; that it is presented in a manner designed to present fairly the financial position and results of operations of the Village; and that all disclosures necessary to enable the reader to gain an understanding of the Village's financial activity have been included. Marcum LLP, Certified Public Accountants, have issued an unmodified ("clean") opinion on the Village of Tequesta's financial statements for the fiscal year ended September 30, 2019. The independent auditors' report is located at the front of the financial section of this report. Management's discussion and analysis (MD&A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. Page 13 of 308 Agenda Item #1. THE VILLAGE OF TEQUESTA Profile The Village of Tequesta, Florida is a municipal corporation organized on June 4, 1957 pursuant to Special Act 57-1915, Laws of Florida. It is approximately 2 square miles and is located in northern Palm Beach County, Florida. It is almost completely built-out/developed. The Village's growth potential is restricted by the natural boundaries of the Atlantic Ocean to the east, the Loxahatchee River to the west, the Town of Jupiter to the south and Martin County to the north. It is empowered by state statute to extend its corporate limits by annexation, which it has done from time to time. The Village has a Council -Manager form of government. Policy -making and legislative authority are vested in an elected governing body of the Village consisting of a five -member Village Council. Council members are elected at large and select a Mayor at their first organizational meeting each year. Council members serve two-year terms, with three members elected every other year. The Village Council appoints the Village manager, who is responsible for hiring all Village employees. The Village provides a full range of services, including police and fire protection; building inspections; licenses and permits; the construction and maintenance of streets and other infrastructure, recreational and cultural activities, water utility services, storm water operations and contracts for residential refuse and recycling services. The Council is required to adopt an initial budget prior to the beginning of the fiscal year October 1. This annual budget serves as the foundation for the Village of Tequesta's financial planning and control. The budget is prepared by fund, function (e.g., public safety), and department (e.g., police) and is adopted by fund total. Departments may transfer resources within a department with the approval of the budget officer and the Village Manager. Transfers between departments require budget amendments be approved by the Village Council, while changes to the total fund budget requires approval of the Village Council by resolution. Local Economy The Village, located in Palm Beach County, is the third most populous county in the State of Florida (approximately 1.47 million). The latest population estimate prepared by the Bureau of Economic and Business Research, University of Florida indicates that the current population of the Village of Tequesta is 5,850. Tequesta is home to middle to upper -income suburban families; has a small commercial area and no major industries located within its boundaries. It is home to a number of assisted living facilities, private schools and a high -end treatment center. 11 Page 14 of 308 Agenda Item #1. According to the Bureau of Labor Statistics, U.S. Department of Labor, over the past year, 48 states, including Florida, had job growth from a year earlier. The national unemployment rate for September 2019 was 3.5% with the unemployment rate in Florida at 2.9%. The unemployment rate for Palm Beach County at the fiscal year end was 3.2%. According to analysis by Office of Economic and Demographic Research, "The job market in Florida continues to grow at steady rates, with a 2.4% growth rate for nonfarm employment for the first quarter of 2019 compared to the same period last year." According to the U.S. Census Bureau, the median household income for Tequesta was $64,950, which continues to be significantly higher than Florida as a whole ($53,267). Housing market continues to trudge forward, although slowing from the stronger growth over the past few years. Tequesta continues to see a positive increase in property values, which is another indicator of a growing economy. Per the Palm Beach County Property Appraiser's Office, gross taxable value for calculating ad valorem proceeds increased from $1.061 billion during fiscal year 2018 to $1.123 billion used to calculate 2019 revenues. Based upon these indicators, the Village is developing its operating budget with the expectation that the economy will continue to improve and that there will be an increase in property values over the next few years. Long -Term Financial Planning and Major Initiatives The continued goal of the Village is to maintain a consistently high quality of services to the residents, while protecting the assets, the level of service and the quality of life that the residents have come to expect. It is the result of hard work by the Village staff, and fiscally sound, responsible decisions by the Village Council that allows the Village to meet service demands while minimizing the financial burden on its residents. The Village is very fortunate to have a citizenry that is active on many boards and committees, a working staff that has shown its willingness to take on additional responsibilities, an expanded workload and very importantly, a Village Council that is very responsive to the needs of the residents and staff and who donate so much of their time to this community. The Village's primary focus is providing exceptional municipal services to its residents in the most efficient and cost effective manner possible. Continued economic challenges require innovative approaches on both sides of the balance sheet. Efforts to expand contractual services to generate additional revenue should continue to be considered. The Village continues researching ways to control the growing cost of health care and post -retirement benefits and has implemented changes and negotiated concessions with the current bargaining units. MAJOR INITIATIVES • Continue to explore ways to reduce the cost of health care while sustaining sought after benefits. • Implement a 5-year capital improvement /capital replacement plan and sustainable financing plan. • To ensure the Village continues to provide safe, reliable, cost-effective and environmentally responsible potable water, a revenue sufficiency and rate adequacy study was initiated. This study performs an in-depth analysis to ensure that revenues earned, expenses incurred, and net income are adequate for the capital maintenance, infrastructure reinvestment, public policy (level of service, health and safety), management, etc. required to run a utility. • To develop a long-range plan for the replacement of the aging water distribution system. • Develop plans and specifications for the construction of the new Community Center. • Implement automatic meter reading technology for the Village's Water Utility. • Major upgrades are being made to protect municipal data through Information Technology Department. • Continue to explore alternative revenue sources, at both the state and federal level, with the assistance of grant writers and other professional consultant services. PagW 15 of 308 Agenda Item #1. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Village for its comprehensive annual financial report for the fiscal year ended September 30, 2019. This was the thirty-sixth consecutive year that the Village has received this prestigious award. The Village must publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. We believe that our current comprehensive annual Financial report will continue to meet the Certificate of Achievement Program's requirements and we are subnvtting it to the GFOA to determine its eligibility for another certificate, The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Village's finance department as well as the support of the other Village departments. Special appreciation is also extended to Ms. Tatiana Racanati, Assistant Finance Director, whose dedicated service made the completion of this report all the more possible. In closing, we must also acknowledge the Mayor and Council for their unfailing support for maintaining the highest standards of professionalism in the management of the Village's finances. Respectfully submitted, t en, CfM nager Hugh B. DUnkley, CPA, CGFO Finance Director Page' 16 of 308 Agenda Item #1. Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Village of Tequesta Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2018 Executive Director/CEO Pagb 17 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA ORGANIZATION CHART SEPTEMBER 30, 2019 Pag6118 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA Abby Brennan Kristi Johnson Vince Arena Laurie Brandon Kyle Stone LIST OF PRINCIPAL OFFICIALS SEPTEMBER 30, 2019 VILLAGE COUNCIL VILLAGE OFFICIALS Jeremy Allen, CPM Corbett, White, Davis & Ashton, PA Lori McWilliams, MMC Hugh Dunkley, CPA, CGFO Jim Trube Gus Medina Merlene Reid, Ed.D., SPHR NZ Consultants, Inc. Jose Rodriguez Greg Corbett Matthew Hammond, PE Mayor Vice -Mayor Councilmember Councilmember Councilmember Village Manager Village Attorney Village Clerk Finance Director Fire Chief Police Chief Human Resources Director Planning and Zoning Director Building Director Parks and Recreation Director Utilities Director VILLAGE INDEPENDENT AUDITORS Marcum LLP Pao'# 19 of 308 Agenda Item #1. FINANCIAL SECTION Page 20 of 308 Agenda Item #1. INDEPENDENT AUDITORS' REPORT Page 21 of 308 Agenda Item #1. CUM ACCOUNTANTS ADVISORS INDEPENDENT AUDITORS' REPORT To the Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the Village of Tequesta, Florida (the Village), as of and for the fiscal year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the Village's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' 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 Village's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Village'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. © 1 MARCUM GROUP MEMBER Marcum uP 0 525 Okeechobee Boulevard ■ Suite 750 ■ West Palm Beach, Florida 33401 ■ Phone 561.653.7300 ■ Fax 561.653.7301 ■ P�?ffi" 21P&908 Agenda Item #1. 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, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the Village, as of September 30, 2019, and the respective changes in financial position and, where applicable, cash flows thereof for the general fund for the fiscal year then ended in accordance 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 on pages 4 through 18, the Budgetary Comparison schedule, the Schedules of Changes in the Net Pension Liability and Related Ratios, the Schedules of Employer Contributions, the Schedule of Investment returns, and the Schedule of Changes in Total OPEB Liability and Related Ratios on pages 95 through 110 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. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village's basic financial statements. The combining and individual fund statements and schedules, the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. 2 Page 23 of 308 Agenda Item #1. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit and the procedures performed as described above, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 31, 2020 on our consideration of the Village'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 Village'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 Village's internal control over financial reporting and compliance. `ya t'Nll L z-P West Palm Beach, Florida March 31, 2020 3 Page 24 of 308 Agenda Item #1. MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A) Page 25 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Village of Tequesta, Florida Management's Discussion and Analysis As management of the Village of Tequesta, we offer readers of the Village's financial statements this narrative overview and analysis of the financial activities of the Village for the fiscal year ended September 30, 2019. We encourage readers to consider the information presented here in conjunction with the additional information that we have furnished in the letter of transmittal found on pages i to iv of this report. Financial Highlights • The assets and deferred outflows of resources of the Village of Tequesta exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $34,604,432. Of total net position, 26.2% ($9,053,841) is unrestricted and may be used to meet the ongoing obligations to the citizens and creditors. • The Village of Tequesta's total net position increased during the current period. Governmental activities changed net position by $352,599. The business -type activities net position increased by $1,232,775 due mainly to increase in water rates. • At the close of the current fiscal year, the Village of Tequesta's governmental funds reported a change in combined fund balances of $125,001. • At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components offund balance) reported in the general fund was $1,870,219. • Other liabilities increased by $1,139,077 from the previous year due primarily to employer pension contributions payable to the Police Pension Plan at year-end. • The Village did not expend $750,000 or more in federal awards or state financial assistance in the fiscal year ended September 30, 2019 and therefore did not meet the threshold for a single audit according to the Florida Single Audit Act (section 215.97 F.S.) or OMB Uniform Guidance. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Village of Tequesta's basic financial statements. The Village's basic financial statements consist of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. Government -wide Financial Statements: The government -wide financial statements are designed to provide readers with a broad overview of the Village of Tequesta's finances, in a manner similar to a private -sector business. The statement of net position presents financial information on all of the Village of Tequesta's assets, liabilities, and deferred inflows/outflows of resources, with the difference 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 Village of Tequesta is improving or deteriorating. Pagd 26 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 The statement of activities presents information showing how the Village of Tequesta's net position changed during the most recent fiscal 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 cashflows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the Village of Tequesta that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the Village includes general government, public safety, transportation and leisure services. The business -type activities of the Village includes water, stormwater and refuse and recycling. The government -wide financial statements can be found on pages 19-20 of this report. 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 Village of Tequesta, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of the Village of Tequesta can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in assessing 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 government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Village of Tequesta maintains four individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund which is considered a major fund. Data from the other three governmental funds is combined into a single aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report. The Village of Tequesta adopts an annual appropriated budget for its governmental funds. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget. The Village of Tequesta's governmental fund financial statements can be found on pages 21-24 of this report. Proprietary Funds. The Village of Tequesta maintains one type of proprietary fund — enterprise funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The Village of Tequesta uses enterprise funds to account for its water, stormwater, and refuse and recycling funds. Page 27 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water Fund and the Stormwater Fund, major funds, as well as the Refuse and Recycling Fund, a nonmajor fund. The basic proprietary fund financial statements can be found on pages 25-27 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the Village. Fiduciary funds are not reported in the government -wide financial statement because the resources of those funds are not available to support the Village's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The Village of Tequesta maintains one type of fiduciary fund — a Pension trust fund which is used to report resources held in trust for retirees and beneficiaries covered by the Public Safety Pension Plan (which includes the Firefighters' Pension Trust Fund and the Police Officers' Pension Trust Fund) and the General Employees' Pension Plan. The fiduciary fund financial statements can be found on pages 28-29 of this report. Notes to basic financial statements: The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government -wide and fund financial statements. The notes to the basic financial statements can be found on pages 30-94 of this report. Other information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Village of Tequesta's progress in funding its obligation to provide pension benefits and OPEB benefits to its employees, as well as the Village's net pension liability (assets) and related ratios, contributions and pension investment returns. Required supplementary information can be found on pages 95-110 of this report. The combining and individual fund statements and schedules referred to earlier in connection with non -major governmental funds and fiduciary funds are presented immediately following the required supplementary information on pensions and OPEB. Combining and individual fund statements and schedules can be found on pages 111-119 of this report. Government -wide Overall Financial Analysis Net position over time, may serve as a useful indicator of a government's financial position. In the case of the Village of Tequesta, assets and deferred outflows of resources exceeded liabilities and deferred inflows at the close of the most recent fiscal year. This change is discussed below. Village of Tequesta's Total Net Position The Village of Tequesta's total assets and deferred outflows exceeded total liabilities and deferred inflows by $34,604,432 at the close of the 2019 fiscal year. Net Position in governmental activities recorded a change of 2.66%. The Village's business -type activities recorded a 6.24% change in total net position. The majority of this change was due to a change of current and other assets by $1,820,398. Other liabilities also increased by $1,139,077. As noted previously, the increase in Other liabilities was due mainly to employer pension contributions payable to the Police Pension Plan at year-end. Pag(§ 28 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Current and other assets $ 7,310,056 $ 6,342,398 $ 8,580,109 $ 7,727,369 $ 15,890,165 $ 14,069,767 Capital assets, net 11,746,340 12,323,915 16,968,979 16,445,131 28,715,319 28,769,046 Total assets 19,056,396 18,666,313 25,549,088 24,172,500 44,605,484 42,838,813 Total deferred outflows of resources 1,838,104 1,894,631 512,172 574,793 2,350,276 2,469,424 Noncurrent liabilities 3,957,976 4,405,501 3,948,240 4,308,073 7,906,216 8,713,574 Other liabilities 1,602,326 952,125 938,473 449,597 2,540.799 1,401,722 Total liabilities 5,560,302 5,357,626 4,896,713 4,757,670 10,447,015 10,115,296 Total deferred inflows ofresources 1,709,402 1,931,121 194,911 242,762 1,904,313 2,173,883 Net position Net investment in capital assets 10,470,562 10,678,761 13,012,584 12,774,847 23,483,146 23,453,609 Restricted 2,067,445 1,615,279 - - 2,067,445 1,615,279 Unrestricted 1,086,789 978,157 7,967,052 6,972,014 9,053,841 7,950,171 Total net position $ 13.624,796 $ 13,272,197 $ 20,979,636 $ 19,746,861 $ 34,604,432 $ 33,019,058 The largest portion of the Village's total net position (67.9%) represents investments in capital assets (e.g., land, buildings, machinery and equipment), less any related outstanding debt and deferred inflows/outflows used to acquire those assets. The Village uses these capital assets to provide services to citizens; consequently, they are not available for future spending. Although the Village's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the Village of Tequesta's net position (6.0%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $9,053,841 is unrestricted and may be used to meet the government's ongoing obligations to its citizens and creditors. At the end of the current fiscal year, the Village of Tequesta is able to report positive balances in all categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. The same situation held true for the prior fiscal year. Page 29 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Re_tricted T,; nS, =Lri ctt-d N y � Investment in capital assets ViUage of Tequesta Components of etPosition S- 510,000,000 S20,000,000 530,000.000 ■ 2019 ■ 2019 Pag(Y 30 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Revenues: Program Revenues: Charges for Services Operating Grants & Contributions General Revenues: Ad valorem Taxes Other Taxes Franchise fees on gross receipts Unrestricted intergovernmental Unrestricted investment earnings Gain on sale of capital assets Other Miscellaneous Total Revenues Expenses: General government Public safety Transportation Leisure Services Interest expense/other fiscal charges Water utility services Stormwater services Refuse & recycling services Total Expenses Increase in net position Net position - beginning Net position - ending Village of Tequesta's Changes in Net Position $ 2,927,244 $ 2,850,072 $ 7,090,985 $ 6,758,051 $ 10,018,229 $ 9,608,123 33,737 335,986 - - 33,737 335,986 6,800,483 6,420,058 6,800,483 6,420,058 2,222,910 1,556,934 2,222,910 1,556,934 467,670 459,076 467,670 459,076 861,647 848,666 861,647 848,666 133,769 92,520 147,356 96,097 281,125 178,617 24,597 13,375 2,222 4,278 26,819 17,653 27,131 19,414 37,290 29,106 64,421 48,520 13,499.188 12,596,101 7,277,853 6,877.532 20,777,041 19,473,633 2,411,174 2,308,838 2,411,174 2,308,838 8,455,155 7,023,664 8,455,155 7,023,664 1,436,674 1,945,513 1,436,674 1,945,513 771,783 704,448 771,783 704,448 71,803 96,109 179,008 223,311 250,811 319,420 - - 4,900,236 4,648,290 4,900,236 4,648,290 485,566 687,878 485,566 687,878 - 480,268 479,478 480,268 479,478 13,146,589 12,078,572 6,045,078 6,038.957 19,191,667 18,117,529 352,599 517,529 1,232,775 838,575 1,585,374 1,356,104 13,272,197 12,754,668 19,746,861 18,908,286 33,019,058 31,662,954 $ 13,624,796 $ 13,272,197 $ 20,979,636 $ 19,746,861 $ 34,604,432 $ 33,019,058 For fiscal year ended September 30, 2019, the Village of Tequesta's overall net position increased from the prior fiscal year. While revenues increased in both governmental activities and business -type activities revenues exceeded expenses for fiscal year ended September 30, 2019 by $1,585,374. Revenues increased in business -type activities due mainly to an increase in water rates. As mentioned above, the largest changes were due to an increase in public safety expenses due to re -opening of the Police Pension Plan. Governmental Activities - Expenses and Program Revenues Governmental activities. Overall program revenues increased from the prior year due to increases in property values and permit fees as well as increases in insurance premium tax funds received from the State of Florida as a result of re -opening of the Police Pension Plan. These increases allowed for an overall increase in net position of $352,599. Pagel 31 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Eype-nse-s and Program Res'eaue-s - GGvL-rnme-ntal Acthviticm in Thousands 5.000 5 5_000 5�_ D00 C; C5 ERevenueg ■Expenses The Village's programs/functions include General Government, Public Safety, Transportation and Leisure Services. The net cost shows the extent to which the Village's general revenues support each of the Village's programs/functions. The net cost of all governmental activities this year was $10,185,608, a 14.54% increase from the prior period. The largest increase in net cost was from the function of public safety due to an increase in Police pension contributions for on -behalf payments received from the state for insurance premium tax funds. There was also a decrease in transportation expenses as a result of decreases in FEC railroad track maintenance costs as well as decreases in expenses for roadway maintenance. As shown on the Statement of Activities, the functions directly benefiting from the programs generated revenue of $2,960,981 with $10,538,207 financed through general revenues. PacW 32 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 The following is a comparison of revenues by source for governmental activities for fiscal year 2019 and 2018. S6,{}00 SS_ U00 54,000 S3,000 51.000 S 1.000 S0 r� ki 0 Revenues by Sonr+ce - Goverimmeatal Activities 2018 2019 fi asNIZ, d Business -type Activities. The Village of Tequesta's business -type activities reported operating revenues exceeding expenses by $1,045,907. Non -operating revenues were $186,868. This resulted in a change in net position of $1,232,775 from the prior year. Pao 33 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 57,000 5�_i100 53.OD{} S 2_ODO s 1.000 so Iotal RevenuesT_xpenses- Susines.si-Type Activities Ln. Thousands ems, 'Water Milky Refuse &. Recycling ■Revenue ■Expenses Stonn water Utility. As shown in the chart below, revenues from charges for services reported in business -type activities increased $332,934 from the prior year. Increased water rates in the Water Utility resulted in increased revenues of 4.7% or $278,882 from the prior year. The Stormwater Utility reported increases in revenues of 15% and Refuse and Recycling revenues remained fairly constant. Non -operating income includes investment earnings which increased by 71%, as well as miscellaneous revenue from payments for the construction portion of the Tropic Vista water extension. s3.O0o 5 7,000 s6,000 55_000 54.000 53_000 52,000 s 1,000 so Charges for 5eriices Non -operating Page 34 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Financial Analysis of the Village's Funds As noted earlier, the Village of Tequesta uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds: The focus of the Village's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Village's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to be used for a particular purpose by either an external party, the Village of Tequesta itself, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the Village of Tequesta's Council. At September 30, 2019 the Village of Tequesta's governmental funds reported total combined fund balances of $4,350,341. $1,479,005 (34%) of the combined governmental fund balances is unassigned and is available for spending at the Village's discretion. Approximately 13% or $566,381 is assigned or committed, with the largest portion committed to hurricane/disaster emergency. Approximately $2.1 million is restricted for a particular purpose (i.e. debt service, Law Enforcement Trust funds, etc.). $237,510 is in nonspendable form (i.e. inventories, prepaid items, etc.). Total combined fund balances have increased 2.96% from the prior year. 2018 2019 Governmental Funds Components of Fund Balance September 30, 2019 and 2018 50 5 500,000 i_000:000 5 i, 500.000 S,oD0,000 S2: ]00,000 ■ G ommitned N msp endable QRestiicted P Assigned ■ CTnassi2ne d Paccjd 35 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 The General Fund is the chief operating fund of the Village of Tequesta. At the end of the current fiscal year total fund balance was $3,670,429, a decrease of $211,682 from the prior year. Unassigned fund balance of $1,479,005, increased by 29% from the prior year. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents approximately 11% of fiscal year 2019 General Fund expenditures and total fund balance represents approximately 28% of total expenditures. The Village of Tequesta adopted a policy to keep unassigned fund balance at a minimum of two months (17%) of expenditures. General Fund Components of Fund Balance September 30,1019 and 2018 I 2018 ■ C ommitte d cusp endable . - R a stti cte d ■ Assi9ned i ■ Unassigned 2D1 ff _ so 5.500;000 51-000.000 51,500,000 52,000.000 Page 36 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 The amount of General Fund revenue by type, their percent of the total and the amount of change compared to last fiscal year are shown in the following schedule: General Fund Revenues - by Source Ad valorem taxes $ 6,800,483 50.5% $ 380,425 5.9% $ 6,420,058 Other taxes 2,222,910 16.5% 665,976 42.8% 1,556,934 Charges for services 1,276,167 9.5% (24,164) (1.9)% 1,300,331 Intergovernmental 869,592 6.5% (23,963) (2.7)% 893,555 Intragovernmental 696,600 5.2% 119,300 20.7% 577,300 Franchise fees 467,670 3.5% 8,594 1.9% 459,076 Licenses and permits 653,497 4.9% (99,714) (13.2)% 753,211 Rents and Royalties 213,490 1.6% 3,634 1.7% 209,856 Fines and forfeitures 87,490 0.6% 79,249 961.6% 8,241 Misc. grants and contributions 51,757 0.4% (259,887) (83.4)% 311,644 Investment earnings 133,195 1.0% 40,675 44.0% 92,520 Total Revenue $ 13,472,851 100% $ 890,125 7.1% $ 12,582,726 As noted in the table above, total General Fund revenues increased $890,125 (7.1 %). The two largest increases were due to: 1) increased ad valorem tax revenue resulting from increased property values and 2) increased "other taxes" as a result of increased insurance premium tax funds received from the state due to re -opening of the Police Pension Plan. Expenditures in the General Fund are shown in the following schedule: Public Safety $ 8,429,823 63.3% $ 1,461,681 21.0% $ 6,968,142 General government 2,275,900 17.1% 65,695 3.0% 2,210,205 Transportation 1,232,225 9.3% (127,781) (9.4)% 1,360,006 Leisure services 650,649 4.9% 2,819 0.4% 647,830 Debt service 467,659 3.5% (58,064) (11.0)% 525,723 Capital outlay 256,600 1.9% (351,280) (57.8)% 607,880 Total expenditures $ 13,312,856 100% $ 993,070 8.1% $ 12,319,786 Total General fund expenditures increased from the prior year 8.1%. The decrease of $351,280 in capital outlay was mainly due to capital projects funded and reported in the capital projects fund rather than the General Fund. The decreases were offset by increases in expenditures of $1,461,681 in the public safety function due to re -opening of the Police Pension Plan to new members. Below is a graphical presentation of how the Village expends funds and how they compare to the prior period. Pace 37 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 2419 2018 59,000 5 5-000 57_OOO S6,0OO 55,000 54,000 53,000 52_OOO 51.00O So General Fund -Expenditures by Source in Thousands -=gee A Ending fund balances for the Capital Projects Fund is $154,313 and the Capital Improvement Fund is $443,608 at September 30, 2019. Fund balances in both funds are restricted or assigned for capital projects/improvements. The Capital Projects Fund and the Capital Improvement Fund receive revenue from capital grants and transfers -in from other funds. General Fund Budgetary Highlights The General Fund original budget was increased by $1,014,313. Major areas that increased were in public safety and transfers to other funds. The public safety budget increased to accommodate increased pension contributions to the Police Pension Plan as a result of insurance premium tax funds received from the State pursuant to Chapter 185, Florida Statutes. The original budget for Interfund transfers was amended to account for transfers of the Half -Cent Infrastructure sales tax proceeds from the General Fund to the Capital Improvement Fund. Proprietary funds: The Village's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. PacW 38 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 The table below summarizes the operating income (loss) and the change in net position for each of the Village's proprietary funds. At the end of the year, total net position of the proprietary funds was $20,979,636 an increase of $1,232,775 from the prior period as shown below. Other factors concerning the finances of this major fund have already been addressed in the discussion of the Village's business -type activities. Operating Income (Loss) Change in Net Position 2019 2018 2019 2018 Water $ 1,288,042 $ 1,246,106 $ 1,256,234 $ 1,127,114 Stormwater (54,752) (312,344) (31,998) (299,656) Refuse and Recycling 6,625 8,643 8,539 11,117 $ 1,239,915 $ 942,405 $ 1,232,775 $ 838,575 Capital Assets and Debt Administration Capital assets: The Village's capital assets for its governmental and business -type activities total $28,715,319 (net accumulated depreciation) as of September 30, 2019. The Village acquired $1,543,076 in assets during the year and disposed of $157,534 during the year. Additional information on the Village's capital assets can be found in Note 3D, Capital Assets, starting on page 51 of this report. Land S 634,017 S 634,017 $ 83,335 $ 83,335 $ 717,352 $ 717,352 Construction in progress 2,517 2,517 1,212,080 2,517 1,214,597 5,034 Buildings 8,043,526 8,043,526 979,512 979,512 9,023,038 9,023,038 Improvements 2,424,606 2,424,606 58,720 58,720 2,483,326 2,483,326 Infrastructure 4,965,348 4,965,348 34,192,913 34,192,913 39,158,261 39,158,261 Machinery & Equipment 4,730,380 4,607,592 1,935,101 1,881,910 6,665,481 6,489,502 Intangibles 274,455 274,455 129,096 129,096 403,551 403,551 Other - K-9 20,549 20,549 - - 20,549 20,549 Total capital assets 21,095,398 20,972,610 38,590,757 37,328,003 59,686,155 58,300,613 Less accumulated depreciation (9,349,058) (8,648,695) (21,621,778) (20,882,872) (30,970,836) (29,531,567 Total capital assets, net $ 11,746,340 $ 12,323,915 $ 167968,979 $ 16,445,131 $ 28,715,319 $ 28,769,046 PacW 39 of 308 Agenda Item #1. Management's Discussion and Analysis 2019 Noncurrent liabilities noncurrent liabilities. America that are sec position. At the end of the current fiscal year, the Village had a total of $7,906,216 of The largest portion are debt instruments in the form of promissory notes with Bank of ured by general revenue sources. The table below summarizes the Village's debt In accordance with GASB Statements No's. 68 and 75, the Village recognized a net pension liability (NPL) of $1,688,326 and a total OPEB liability of $644,688, respectively. The Village is presenting the NPL and OPEB liability as separate components of the noncurrent liabilities on the face of the financial statements to present more clearly the Village's long-term pension and other post -employment benefit obligations. A more detailed explanation can be found in Note 3.K — Noncurrent Liabilities. Notes payable $ 1,046,986 $ 1,367,204 $ 3,507,580 $ 3,982,783 $ 4,554,566 $ 5,249,987 Capital leases 228,793 277,950 - - 228,793 277,950 Compensated absences 656,329 568,675 133,514 138,634 789,843 707,309 Total OPEB Liability 496,276 481,522 148,412 142,078 644,688 623,600 Noncurrent Liabilities 2,428,384 2,695,351 3,789,506 4,163,495 6,217,890 6,858,846 Net Pension Liability 1,529,592 1,710,149 158,734 144,578 1,688,326 1,854,727 Total Noncurrent Liabilities $ 3,957,976 $ 4,405,500 $ 3,948,240 $ 4,308,073 $ 7,906,216 $ 8,713,573 Economic Factors and Next Year's Budgets and Rates The following economic factors currently affect the Village of Tequesta and were considered in developing the 2019-2020 fiscal year budget: • The Village Council's decision to increase the millage rate to 6.6290. • Increase in gross taxable value of properties of 4.65%. • Projected Cost of Living Adjustment (COLA) increase of 3% for employees • Interest rates have remained low as the Federal Reserve continues to monitor the progress of the economy. • The CPI remains lower than 3% • The U.S. Gross Domestic Product has been growing at 2.3%. • The Village of Tequesta's water rates increased 4% during the year to fund capital needs. Requests for Information This financial report is designed to provide a general overview of the Village of Tequesta's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Village of Tequesta, Finance Department, 345 Tequesta Drive, Tequesta, Florida 33469. PacJ4 40 of 308 Agenda Item #1. BASIC FINANCIAL STATEMENTS Page 41 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2019 Business - Governmental type Activities Activities Total Assets Cash $ 348,182 $ 1,191,136 $ 1,539,318 Investments 4,140,678 6,277,393 10,418,071 Receivables, net 1,226,045 860,103 2,086,148 Inventories 37,999 182,027 220,026 Prepaid items 199,763 69,450 269,213 Net pension asset 1,357,389 - 1,357,399 Capital assets not being depreciated 636,534 1,295,415 1,931,949 Capital assets being depreciated, net 11,109,806 15,673,564 26,783,370 Total Assets 19,056,396 25,549,088 44,605,484 Deferred Outflows of Resources Deferred outflows - pensions 1,811,441 314,166 2,125,607 Deferred outflows - OPEB 26,663 7,973 34,636 Deferred charge on refunding - 190,033 190,033 Total Deferred Outflows of Resources 1,838,104 512,172 2,350,276 Liabilities Accounts payable 291,769 821,688 1,113,457 Accrued liabilities 1,080,899 80,402 1,161,301 Customer deposits - 36,048 36,048 Unearned revenue 224,887 - 224,887 Due to other governments 4,771 335 5,106 Noncurrent liabilities: Due within one year 471,770 403,466 875,236 Due in more than one year 1,460,338 3,237,629 4,697,966 Total OPEB liability 496,276 148,412 644,698 Net pension liability 1,529,592 158,734 1,688,326 Total Liabilities 5,560,302 4,886,713 10,447,015 Deferred Inflows of Resources Deferred inflows - pensions 1,709,402 194,911 1,904,313 Total Deferred Inflows of Resources 1,709,402 194,911 1,904,313 Net Position Net investment in capital assets 10,470,562 13,012,584 23,483,146 Restricted: Infrastructure 422,754 - 422,754 Debt Service 411,570 - 411,570 Building 1,151,130 - 1,151,130 Law Enforcement 81,991 - 81,991 Unrestricted 1,086,789 7,967,052 9,053,841 Total Net Position $ 13,624,796 $ 20,979,636 $ 34,604,432 The accompanying notes are an integral part of these financial statements. PacW 42 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Net (Expense) Revenue and Program Revenucs Changes in Net Position Primary Government Operating Capital Grants Charges for Grants and and Governmental Business -type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Primary Government Governmental Activities General government $ 2,411,174 $ 997,556 $ - $ - $ (1,413,618) $ $ (1,413,618) Public safety 8,455,155 1,845,894 8,145 17,692 (6,583,424) (6,583,424) Transportation 1,436,674 - - - (1,436,674) (1,436,674) Leisure services 771,793 83,794 7,900 (680,089) (680,089) Interest on long-term debt 71,803 - - - (71,803) (71,803) Total governmental activities 13,146,589 2,927,244 16,045 17,692 (10,195,608) (10,185,608) Business -type Activities Water 5,079,244 6,173,278 1,094,034 1,094,034 Stormwater utility 485,566 430,814 (54,752) (54,752) Refuse and Recycling 480.268 486,893 6,625 6,625 Total business -type activities 6,045,078 7,090,985 1,045,907 1,045,907 Total primary government $ 19,191,667 $ 10,018,229 $ 16,045 $ 17,692 (10,185,608) 1,045,907 (9,139,701) General Revenues Ad valorem taxes Utility taxes Communication service tax Insurance premium taxes infrustructure surtax Business taxes Franchise fees based on gross receipts Unrestricted intergovernmental revenues Unrestricted investment earnings Gain on sale of capital assets Miscellaneous revenues Total general revenues Change in net position Net Position - Beginning Net Position - Ending 6,800,483 6,800,483 599,770 599,770 302,410 302,410 805,686 805,686 422,754 422,754 92,290 92,290 467,670 467,670 861,647 861,647 133,769 147,356 281,125 24,597 2,222 26,819 27,131 37,290 64,421 10,538,207 186,868 10,725,075 352,599 1,232,775 1,585,374 13,272,197 19,746,861 33,019,058 $ 13,624,796 $ 20,979,636 $ 34,604,432 The accompanying notes are an integral part of these financial statements. Pa6P 43 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA BALANCESHEET GOVERNMENTAL FUNDS Assets Cash Investments Receivables, net Inventories Prepaid items Total Assets Liabilities Accounts payable Accrued liabilities Unearned revenue Due to other governments Total Liabilities Fund Balances Nonspendable: Inventories Prepaid items Restricted: Infrastructure Debt Service Building Law Enforcement Committed to: Disaster Reserve Assigned to: Capital Projects Unassigned: General Fund Total Fund Balances Total Liabilities and Fund Balances SEPTEMBER 30, 2019 Other Total General Governmental Governmental Fund Funds Funds $ 28,605 $ 319,577 $ 348,182 3,790,678 350,000 4,140,678 1,215,962 10,083 1,226,045 37,999 - 37,999 199,511 252 199,763 $ 5,272,755 $ 679,912 $ 5,952,667 $ 291,769 $ - $ 291,769 1,080,899 - 1,080,899 224,887 - 224,887 4,771 - 4,771 1,602,326 - 1,602,326 37,999 - 37,999 199,511 - 199,511 - 422,754 422,754 411,570 - 411,570 1,151,130 - 1,151,130 - 81,991 81,991 391,214 - 391,214 - 175,167 175,167 1,479,005 - 1,479,005 3,670,429 679,912 4,350,341 $ 5,272,755 $ 679,912 $ 5,952,667 The accompanying notes are an integral part of these financial statements. Padg 44 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2019 Amounts reported for governmental activities in the statement of net position are different because: Total Fund Balances - Governmental Funds $ 4,350,341 Net pension asset is not considered to represent a financial asset in the governmental funds. 1,357,389 Net capital assets used in the governmental activities are not financial resources and, therefore are not reported in the governmental funds. 11,746,340 Deferred outflows of resources related to pensions and OPEB transactions not reported in the governmental funds. 1,838,104 Deferred inflows of resources related to pension transactions not recognized in the governmental funds. (1,709,402) Long-term liabilities, including notes payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds. (1,932,108) Total OPEB liability is not due and payable in the current period and, therefore, not reported in the governmental funds. (496,276) Net pension liability is not due and payable in the current period and, therefore, not reported in the funds. (1,529,592) Net Position of Governmental Activities $ 13,624,796 The accompanying notes are an integral part of these financial statements. Pa64 45 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Revenues Ad valorem taxes Other taxes Charges for services Intergovernmental Tntragovernmental Licenses and permits Franchise fees Rents and royalties Miscellaneous Fines and forfeitures Grants, contributions and donations Investment earnings Total Revenues Expenditures Current: General government Public safety Transportation Leisure services Capital outlay Debt service: Principal Interest Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers in Transfers out Proceeds on sale of capital assets Proceeds from capital lease Total other financing sources (uses) Total other financing sources (uses) Net change in fund balances Fund Balances - Beginning Fund Balances - Ending Other Total General Governmental Governmental Fund Funds Funds $ 6,800,483 $ - $ 6,800,483 2,222,910 - 2,222,910 1,276,167 - 1,276,167 869,592 - 869,592 696,600 - 696,600 653,497 - 653,497 467,670 - 467,670 213,490 - 213,490 25,965 1,166 27,131 87,490 - 87,490 25,792 - 25,792 133,195 574 133,769 13,472,851 1,740 13,474,591 2,275,900 - 2,275,900 8,429,823 22,778 8,452,601 1,232,225 10,837 1,243,062 650,649 50,000 700,649 256,600 4,196 260,796 395,856 - 395,856 59,573 - 59,573 12,230 - 12,230 13,312,856 87,811 13,400,667 159,995 (86,071) 73,924 - 422,754 422,754 (422,754) - (422,754) 24,597 - 24,597 26,480 - 26,480 (371,677) 422,754 51,077 (371,677) 422,754 51,077 (211,682) 336,683 125,001 3,882,111 343,229 4,225,340 $ 3,670,429 $ 679,912 $ 4,350,341 The accompanying notes are an integral part of these financial statements. Pale 46 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Amounts reported for governmental activities in the statement of activities (Page 20) are different because: Net change in fund balances - total governmental funds (Page 23) $ 125,001 Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period. The details of the difference are as follows: Capital outlay 260,796 Depreciation expense (838,371) (577,575) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Proceeds for capital lease (26,480) Payment on notes payable 320,218 Payment on capital lease 75,638 369,376 Some revenues and expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported in governmental funds: The details of the difference are as follows: Compensated absences (87,654) Total OPEB liability (18,755) Net pension liability 542,206 435,797 Change in net position of governmental activities (Page 20) $ 352,599 The accompanying notes are an integral part of these financial statements. Page 47 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30.2019 Business -type Activities Nonmajor Water Refuse & Fund Stormwater Recycling Total Assets Current Assets: Cash $ 1,005,502 $ 132,331 $ 53,303 $ 1,191,136 Investments 5,296,190 911,109 70,094 6,277,393 Receivables, net 853,210 3,652 3,241 860,103 Inventories 181,495 532 - 182,027 Prepaid items 68,110 1,340 - 69,450 Total Current Assets 7,404,507 1,048,964 126,638 8,580,109 Non -current Assets: Capital assets not being depreciated 1,295,415 - - 1,295,415 Capital assets being depreciated, net 14,645,631 1,027,933 - 15,673,564 Total Non -Current Assets 15,941,046 1,027,933 - 16,968,979 Total Assets 23,345,553 2,076,897 126,638 25,549,088 Deferred Outflows of Resources Deferred outflows - pensions 294,830 19,336 - 314,166 Deferred outflows - OPEB 7,360 613 - 7,973 Deferred charge on refunding 190,033 - - 190,033 Total Deferred Outflows of Resources 492,223 19,949 - 512,172 Liabilities Current Liabilities: Accounts payable $ 800,273 $ 21,415 $ - $ 821,688 Accrued liabilities 76,040 4,362 - 80,402 Customer deposits 36,048 - - 36,048 Compensated absences 15,000 - - 15,000 Due to other governments 335 - - 335 Notes payable 388,466 - - 388,466 Net pension liability 468 - - 468 Total Current Liabilities 1,316,630 25,777 - 1,342,407 Noncurrent Liabilities: Compensated absences 116,340 2,174 - 118,514 Notes payable 3,119,114 - - 3,119,114 Net pension liability 158,037 229 - 158,266 Total OPEB liability 136,996 11,416 - 148,412 Total Noncurrent Liabilities 3,530,487 13,819 - 3,544,306 Total Liabilities 4,847,117 39,596 - 4,886,713 Deferred Inflows of Resources Deferred inflows - pensions 185,264 9,647 - 194,911 Total Deferred Inflows of Resources 185,264 9,647 - 194,911 Net Position Net investment in capital assets 11,984,651 1,027,933 - 13,012,584 Unrestricted 6,820,744 1,019,670 126,638 7,967,052 Total Net Position $ 18,805,395 $ 2,047,603 $ 126,638 $ 20,979,636 The accompanying notes are an integral part of these financial statements. Pa64 48 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANCES IN NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Operating Revenues Charges for services: Metered water sale Tap fees Stormwater fees Refuse and recycling fees Total Operating Revenues Operating Expenses Cost of sales and services: Plant production Distribution Stormwater Purchased services Management services Administration Depreciation Total Operating Expenses Operating Income (Loss) Non -Operating Revenues (Expenses) Sale of assets Miscellaneous revenue Investment earnings Interest expense Other fiscal charges Legal settlement Total Non -Operating Revenues (Expenses) Change in Net Position Net Position - Beginning Net Position - Ending Business -type Activities N onmaj or Water Refuse & Fund Stormwater Recycling Total $ 6,138,317 $ - $ - $ 6,138,317 34,961 - - 34,961 - 430,814 - 430,814 - - 486,893 486,893 6,173,278 430,814 486,893 7,090,985 1,947,436 - - 1,947,436 1,005,603 - - 1,005,603 - 368,600 - 368,600 - - 472,168 472,168 572,900 13,700 8,100 594,700 710,971 - - 710,971 648,326 103,266 - 751,592 4,885,236 485,566 480,268 5,851,070 1,288,042 (54,752) 6,625 1,239,915 2,222 - - 2,222 37,290 - - 37,290 122,688 22,754 1,914 147,356 (161,083) - - (161,083) (17,925) - - (17,925) (15,000) - - (15,000) (31,809) 22,754 1,914 (7,140) 1,256,234 (31,998) 8,539 1,232,775 17,549,161 2,079,601 118,099 19,746,861 $ 18,805,395 $ 2,047,603 $ 126,638 $ 20,979,636 The accompanying notes are an integral part of these financial statements. Pao 49 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Cash Flows from Operating Activities Cash received from customers, governments and other funds Cash paid to suppliers Cash paid to employees Net Cash Provided by (Used in) Operating Activities Cash Flows from Capital and Related Financing Activities Acquisition and construction of capital assets Principal payments on long-term debt Interest and fiscal charges paid Business -type Activities Non Major Water Refuse & Fund Storm Water Recycling Totals $ 6,180,119 $ 433,140 $ 487,553 $ 7,100,812 (1,719,451) (175,719) (519,559) (2,414,728) (1,950,065) (194,192) - (2,144,257) 2,510,603 63,229 (32,006) 2,541,827 (1,275,441) - - (1,275,441) (375,203) - - (375,203) (161,083) - - (161,083) Net Cash (Used in) Capital and Related Financing Activities (1,811,727) - - (1,811,727) Cash Flows from Investing Activities Interest and micsellaneous income Sale of investments Purchase of investments Net Cash Provided by (Used in) Investing Activities Net Increase (Decrease) in Cash Cash - Beginning Cash - Ending Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation Changes in operating assets, liabilities and deferred inflows/ outflows of resources: (Increase) decrease in: Accounts receivable Inventories Deferred outflow of resources Prepaid items Increase (decrease) in: Accounts payable Accrued liabilities Customer deposits Compensated absences Deferred inflows of resources Net pension liability Due to other governments Total OPEB liability Net Cash Provided by (Used in) Operating Activities 129,275 22,754 1,914 153,943 - 27,329 48,188 75,517 (1,617,131) - - (1,617,131) (1,487,856) 50,083 50,102 (1,387,671) (788,980) 113,313 18,096 (657,571) 1,794,482 19,018 35,207 1,848,707 $ 1,005,502 $ 132,331 $ 53,303 $ 1,191,136 $ 1,288,042 $ (54,752) $ 6,625 $ 1,239,915 648,326 103,266 - 751,593 9,614 2,326 660 12,600 29,280 (193) - 29,087 60,801 1,820 - 62,621 (10,797) 413 - (10,384) 509,870 8,850 (39,291) 479,429 10,869 1,290 - 12,159 (2,773) - - (2,773) (6,245) 1,125 - (5,120) (46,275) (1,576) - (47,851) 13,984 172 - 14,156 61 - - 61 5,846 488 - 6,334 $ 2,510,603 S 63,229 S (32,006) $ 2,541,827 The accompanying notes are an integral part of'these financial statements. PadEY 50 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2019 Pension Trust Funds Assets Cash and cash equivalents $ 410,539 Investments Equities 14,907,310 Fixed Income 5,320,088 Real Estate Fund 1,892,549 Total investments 22,119,947 Accounts Receivable 25,250 Prepaid items 35,406 Contributions receivable 866,322 Accrued interest 26.674 Total Assets 23,484,138 Liabilities Accounts payable 50,655 Total Liabilities 50,655 Net Position Restricted for Pension Benefits $ 23,433,483 The accompanying notes are an integral part of these financial statement Pa64 51 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Pension Trust r , Additions Contributions: State of Florida $ 805,686 Employer 1,177,267 Employee 454,554 Total Contributions 2,437,507 Investment Earnings Net depreciation in fair value of investments (367,423) Gain on sale of investments 604,330 Interest earnings 590,692 827,599 Less investment expenses (90,378) Net Investment Earnings 737,221 Miscellaneous 14 Total Additions 3,174,742 Deductions Benefits paid 417,571 Refund of contributions 48,114 Administrative expenses 108,317 Total Deductions 574,002 Change in Net Position 2,600,740 Net Position Restricted for Pension Benefits Beginning of year 20,832,743 End of year $ 23,433,483 The accompanying notes are an integral part of these financial statement Padd 52 of 308 Agenda Item #1. NOTES TO BASIC FINANCIAL STATEMENTS Page 53 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Note 1— Summary of Significant Accounting Policies A. Description of Government -Wide Financial Statements The government -wide financial statements (i.e. the statement of net position and the statement of activities) report information on all non -fiduciary activities of the primary government and any component units. All fiduciary funds are presented separately. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other non -exchange transactions, are reported separately from business -type activities, which rely to a significant extent on fees and charges to external customers for support. B. Reporting Entity The Village of Tequesta, Florida (the Village) is a municipal corporation organized in 1957 pursuant to Special Act 57-1915, Laws of Florida. The Village has a Council -Manager form of government governed by a five (5) member Council elected at large. Each year, the Council appoints one of its members Mayor, to serve at the pleasure of Council for one year. The Village's major operations include public safety (police, fire rescue/EMS, building and code enforcement), transportation (streets and roads), leisure services (culture and recreation), water, stormwater, refuse & recycling services and general and administrative. The definition of the financial reporting entity is based upon the concept that elected officials are accountable to their constituents for their actions. One of the objectives of financial reporting is to provide users of financial statements with a basis for assessing the accountability of the elected officials. The financial reporting entity consists of the Village, organizations for which the Village is financially accountable and other organizations for which the nature and significance of their relationship with the Village are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The Village is financially accountable for a component unit if it appoints a voting majority of the organization's governing board and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the Village, or has operational responsibility. The Village has no component units to report. C. Basis of Presentation — Government -Wide Financial Statements While separate government -wide and fund financial statements are presented, they are interrelated. Both sets of statements distinguish between the governmental and business -type activities of the Village. The governmental activities column incorporates data from governmental funds while business -types activities incorporate data from the Village's enterprise funds. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are payments in lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the Village's water and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. PagV 54 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 The Statement of Net Position reports all financial and capital resources of the Village's governmental and business -type activities. Governmental activities are those supported by taxes and intergovernmental revenues. Business -type activities rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges for goods or services that are recovered directly from customers for services rendered and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. D. Basis of Presentation — Fund Financial Statements The fund financial statements provide information about the Village's funds, including its fiduciary funds. Separate statements for each fund category — governmental, proprietary and fiduciary — are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Fiduciary funds are presented apart from major and nonmajor funds. The Village reports the following major governmental fund: The General Fund is the Village's primary operating fund. It accounts for all financial resources of the general government, except those accounted for in another fund. The Village reports the following major enterprise funds: The Water Fund, which accounts for the activities of the water utility, which includes the processing and distribution of potable water to Village residents and some surrounding communities, and the Stormwater Utility Fund, which accounts for the construction and maintenance of the Village's stormwater system. Additionally, the Village reports the following fund type: The pension trust funds account for the activities of the Public Safety Employees' and the General Employees' Pension Trust Funds, which accumulate resources for pension benefit payments to qualified employees. During the course of operations, the Village has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds (short-term) and advances to/from other funds (long-term). While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government -wide financial statements. Balances between the funds included in governmental activities are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in the business -type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business -type activities column. Page 55 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government -wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business -type activities are eliminated so that only the net amount is included as transfers in the business -type activities column. E. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The 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 Village 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. Capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources. Property taxes, sales taxes, franchise taxes, licenses, 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. Entitlements are recorded as revenues when all eligibility requirements are met, including any time requirements, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end). Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end). All other revenue items are considered to be measurable and available only when cash is received by the Village. The proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting for reporting its assets and liabilities and deferred inflows and outflows of resources (as described previously). Pag 2 56 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 The pension trust funds are reported on the accrual basis of accounting. Plan member and state contributions are recognized as revenues in the period that the contributions are due. Employer contributions to each Plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. All plan investments are reported at fair value, except for a money market fund which is reported at amortized cost; securities traded in the over-the-counter market and listed securities for which no sales were reported on that date are valued at the last reported bid price. Securities without an established fair value are reported at estimated fair value. Purchases and sales of securities are recorded on a trade -date basis. F. Budgetary Information 1. Budgetary Basis of Accounting Annual budgets are adopted on a basis consistent with generally accepted accounting principles. The appropriated budget is prepared by fund, function and department. Per established procedures approved by the Village Council, the designated budget officer may approve a department head's request to transfer appropriations between accounts, within a department. Although the Village Council requires all inter -department budget amendments to go before the Village Council, the budget was adopted on a fund basis and the legal level of budgetary control is at that level. What this means is that any amendments that change the total fund's budget requires the Village Council to approve it in the same manner that the original budget was approved — by resolution. Appropriations in all budgeted funds lapse at the end of the fiscal year even if they have related encumbrances. Encumbrances are commitments related to unperformed (executory) contracts for goods or services (i.e., purchase orders, contracts, and commitments). Encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. While all appropriations and encumbrances lapse at year end, valid outstanding encumbrances (those for which performance under the executor contract is expected in the next year) are re -appropriated and become part of the subsequent year's budget pursuant to state regulations. Page 57 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 G. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance 1. Cash The Village's cash is considered to be cash on hand and demand deposits. 2. Investments Investments for the Village are reported at fair value, except for the position in the State Board of Administration Investment Pool (SBA). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The SBA administers Florida PRIME and is governed by Chapter 19-7 of the Florida Administrative Code and Chapters 215 and 218 of the Florida Statutes. These rules provide guidance and establish the policies and general operating procedures for the administration of the Florida PRIME. Florida PRIME invests in a pool of investments whereby the Village owns a share of the respective pool, not the underlying securities. Florida PRIME is reported at amortized cost and is exempt from the GASB No. 72 fair value hierarchy disclosures. 3. Inventories and Prepaid Items Inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories consist of expendable supplies and water distribution repair parts. The cost of such inventories is recorded as expenditures/expenses when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government -wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. 4. Capital Assets Capital assets, which include property, plant, equipment, infrastructure and intangible assets (e.g. roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities column in the government -wide financial statements. Capital assets, except for infrastructure and intangible assets, are defined by the Village as assets with an initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. For infrastructure and intangible assets the same estimated minimum useful life is used (in excess of one year), but only those projects that cost more than $25,000 are reported as capital assets. In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities), the Village chose not to capitalize infrastructure acquired in fiscal years ending prior to September 30, 2004. As the Village constructs or acquires additional capital assets each period they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or increase its estimated useful life. Donated capital assets are recorded at their acquisition value at the date of donation. Page 58 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Land and construction in progress are not depreciated. The other property, plant, equipment, and infrastructure of the primary government are depreciated using the straight line method over the following estimated useful lives: Buildings 20 — 40 years Improvements 20 — 50 years Infrastructure 20 — 50 years Machinery and equipment 5 — 15 years Intangibles 5 — 20 years 5. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. The Village has three items that qualify for reporting in this category. They are; 1) Deferred outflows related to pensions; 2) Deferred outflows related to OPEB; and 3) Deferred charge on refunding resulting from the difference in the carrying value of refunded debt and its reacquisition price, and is amortized over the shorter of the life of the refunded or refunding debt. These items are reported in the government -wide statement of net position and the statement of net position of the proprietary funds. In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The Village has one type of item that qualifies for reporting in this category - Deferred inflows related to pensions. This item is reported in the government -wide statement of net position and the statement of net position of the proprietary funds. 6. Net Position Flow Assumption Sometimes the Village will fund outlays for a particular purpose from both restricted and unrestricted resources (e.g. restricted bond or grant proceeds). In order to calculate the amounts to report as restricted net position and unrestricted net position, in the government -wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Village's policy to consider restricted net position to have been depleted before unrestricted net position is applied. 7. Fund Balance Flow Assumptions Sometimes the Village will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the Village's policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. Page 59 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 8. Fund Balance Policies The Village classifies fund balance in accordance with GASB Statement No.54 Fund Balance Reporting and Governmental Fund Type Definitions. This statement enhances the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. In the fund financial statements, governmental funds report classifications that comprise a hierarchy based primarily on the extent to which the Village is bound to honor constraint of the specific purposes for which amounts in those funds can be spent. The Village reports the following fund classifications: Nonspendable fund balance. Nonspendable fund balances are amounts that can not be spent because they are either not in spendable form such as inventory or legally or contractually required to be maintained intact such as a perpetual trust. Restricted fund balance. Restricted fund balances are amounts that are constrained by the imposition externally by creditors, grantors, or laws or regulations of other governmental agencies or imposed by law through constitutional provisions or enabling legislation. Committed fund balance. Those amounts can only be used for specific purposes determined by a formal action of the government's highest level of decision -making authority. The Village Council is the highest level of decision -making authority for the Village that can, by adoption of an ordinance or resolution equally binding and of equal decision -making authority, prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance or resolution remains in place until a similar action is taken (the adoption of another ordinance or resolution) to remove or revise the limitation. Assigned fund balance. Amounts in the assigned fund balance classification are intended to be used by the Village for specific purposes but do not meet the criteria to be classified as committed. The Village Council (Council) has, by adopting a fund balance policy, authorized the Village Manager and/or the Finance Director to assign fund balance. The Council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. Unassigned fund balance. Unassigned fund balance 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. General Fund is the only fund that reports a positive unassigned fund balance amount. The other governmental funds may report negative unassigned fund balance if that fund's expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes. Pag4 60 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 H. Revenues and Expenditures/Expenses 1. Program Revenues Amounts reported as prograin 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 (including special assessments) that are restricted to meeting the operational or capital requirements of a particular function or segment. All taxes, including those dedicated for specific purposes, and other internally dedicated resources are reported as general revenues rather than as program revenues. 2. Property Taxes Property tax collections are governed by Chapter 197, Florida Statutes. Property taxes are based on assessed property value at January 1st as determined by the Palm Beach County Property Appraiser. The Village sets the property tax millage rate in September. The Palm Beach County Tax Collector bills and collects all property taxes levied within the County. Florida Statutes limit the county -wide millage rate to a maximum of 10 mills, excluding voter -approved debt service millage rates. The millage rate for the Village in fiscal year 2019 was 6.2920 mills. Tax bills are mailed out November 1 st and discounts are available for payments made in the following months; November 4%, December 3%, January 2% and February 1%. Taxes become delinquent on April 1 st. The owner of a tax certificate may at any time after taxes have been delinquent (April 1), for two years, file an application for a tax deed sale. Tax deeds are issued to the highest bidder for the property which is sold at public auction. The Tax Collector remits current taxes collected through four distributions to the Village in the first two months of the tax year and one distribution each month thereafter. The Village recognizes property tax revenue in the period in which they are levied. The Tax Collector pays the Village interest on monies held from day of collection to day of distribution. 3. Compensated Absences Vacation The Village's policy permits employees to accumulate earned but unused vacation benefits, which are eligible for payment upon separation from the Village's service up to the maximum allowable limit. The liability for such leave is reported as incurred in the government -wide and proprietary fund financial statements. A liability for those amounts is recorded in the governmental funds only if the liability has matured as a result of employee resignations or retirements. The liability for compensated absences includes salary -related benefits, where applicable. Sick Leave The Village's policy permits employees to accumulate unused sick leave up to a maximum amount approved by Council. Upon termination, this leave is eligible for payment at percentages determined by years of service. The liability for such leave is reported as incurred in the government -wide and proprietary fund financial statements when the liability has matured. A liability for those amounts is recorded in the governmental funds only if the liability has matured as a result of employee resignations or retirements. PagV 61 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 4. Proprietary Funds Operating and Non -Operating Revenues and Expenses Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water fund, refuse and recycling fund and stormwater fund are charges to customers for sales and services. The water fund also recognizes as operating revenue, the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for the enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses. L Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and deferred outflows of resources and liabilities and deferred inflows of resources and disclosure of contingent assets and liabilities 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 those estimates. 5. Implementation of new GASB Statement The Village of Tequesta implemented GASB Statement No. 88, Certain Disclosures to Debt, Including Borrowing and Direct Placements, during fiscal year 2019. The primary objective of this Statement is to improve the information that is disclosed in the notes related to debt, including direct borrowing and direct placement. The implementation of this pronouncement did not result in a financial impact to the Village. The Village of Tequesta implemented GASB Statement No. 89, Accounting for Interest Cost Incurred before the end of a Construction Period, during fiscal year 2019. GASB Statement No. 89 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. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business -type activity or enterprise fund. This Statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The implementation of this pronouncement did not result in a financial impact to the Village. PagV 62 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Note 2 — Reconciliation of Government -Wide and Fund Financial Statements A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government -wide Statement of Net Position The governmental fund balance sheet includes a reconciliation between fund balance — total governmental funds and net position — governmental activities as reported in the government -wide statement of net position. One element of that reconciliation explains that "capital assets used in governmental activities are not financial resources and, therefore are not reported in the funds." The amount of this reconciling element is $11,746,340 as explained in the following detail (additional details shown in Note 3.D.): Capital assets not being depreciated: Land $ 634,017 Construction in progress 2,517 Capital assets being depreciated: Buildings, net 4,915,074 Improvements other than buildings, net 962,604 Infrastructure, net 3,899,539 Machinery and equipment, net 1,263,329 Intangible, net 53,115 Other K-9, net 16,145 Net Adjustment to Increase Fund Balance - Total Governmental Funds to Arrive at Net Position - Governmental Activities $ 11,746,340 Another element of that reconciliation explains that "long-term liabilities, including bonds/notes payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $1,932,108 difference are as follows: Note payable Capital leases Compensated absences $ 1,046,986 228,793 656,329 Net Adjustment to Reduce Fund Balance - Total Governmental Funds to Arrive at Net Position — Governmental Activities $ 1,932,108 PagV 63 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Note 3 — Detailed Notes on All Activities and Funds A. Cash Deposits with Financial Institution Custodial credit risk -deposits. In the case of deposits, this is the risk that in the event of a bank failure, the government's deposits may not be returned to it. All of the Village's deposits are held in qualified public depositories pursuant to State of Florida Statutes, Chapter 280, Florida Security for Public Deposits Act. Under the Act, every qualified public depository shall deposit with the Treasurer eligible collateral of the depository to be held subject to his or her order. The pledging level may range from 25% to 200% of the average monthly balance of public deposits depending upon the depository's financial condition and establishment period. All collateral must be deposited with an approved financial institution. Any potential losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. At September 30, 2019, none of the Village's primary bank balances were exposed to custodial credit risk. B. Investments The Village has adopted an investment policy in accordance with Florida Statutes and is authorized to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, certificates of deposit, the State Board of Administration Investment Pool, any intergovernmental investment pools authorized pursuant to Chapter 163 of the Florida Statutes, SEC registered money market funds with the highest credit quality rating from a nationally recognized rating agency, and securities of any interest in any open-end or closed -end management type investment company or investment trust registered under the Investment Company Act of 1940, provided that the portfolio is limited to obligations of U.S. government, its agencies and instrumentalities and to repurchase agreements fully collateralized by such U.S. government obligations and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian. The State Board of Administration (SBA) administers the Florida PRIME investment pool which is governed by Chapter 19-7 of the Florida Administrative Code and Chapters 218 and 215 of the Florida Statutes. The Florida PRIME is not a registrant with the Securities and Exchange Commission (SEC). As a participant, the Village invests in a pool of investments owning a share of the pool, not the underlying securities. The value of the Village's participation is the same as the value of the pool shares. The investments in the Florida PRIME are reported at amortized cost and not insured by FDIC or any other governmental agency. GASB Statement No. 79, Certain External Investment Pool and Pool participants establishes criteria for an external investment pool to qualify to report at amortized cost. Florida PRIME is exempt from the GASB No. 72 fair value hierarchy disclosures and reports at amortized cost. Pa� 64 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 As of September 30, 2019, the Village had the following demand deposits and investments: Weighted Credit Average Rating Percent Reported Deposits and Investments Value Maturity (S&P) Distribution SBA -Florida PRIME $ 10,418,071 37 days AAArn 87.13% Demand deposits 1,539,318 Total Deposits and Investments S 11,957,389 12.87% 100% Interest Rate Risk — The Village does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates nor do they have any investments that are subject to interest rate risk. Credit Risk - The Village does not have a written investment policy and, therefore, follows Florida Statue 218.415(17). The Village invests surplus funds in the State Board of Administration Investment Pool. The Florida PRIME is rated by Standard and Poor's. Concentration of Credit Risk — Disclosure is required when the percentage of investments is 5% or more in any one issuer or 5% or more of total investments. At September 30, 2019, the Village only invests in an external investment pool and therefore is not subject to concentration of credit risk. Custodial Credit Risk - The risk that, in the event of the failure of the counter party, the Village will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. At this time, the Village is only invested in the State Board of Administration of Florida (SBA) investment pool. Investment Pools and Pool Participants With regard to SBA - Florida PRIME redemption dates, Chapter 218.409(8) (a), Florida Statutes, states, "The principal, and any part thereof, of each account constituting the trust fund is subject to payment at any time from the moneys in the trust fund. However, the Executive Director may, in good faith, on the occurrence of an event that has a material impact on liquidity or operations of the trust fund, for 48 hours limit contributions to or withdrawals from the trust fund to ensure that the Board can invest moneys entrusted to it in exercising its fiduciary responsibility. Such action must be immediately disclosed to all participants, the Trustees, the Joint Legislative Auditing Committee, the Investment Advisory Council, and the Participant Local Government Advisory Council. The Trustees shall convene an emergency meeting as soon as practicable from the time the Executive Director has instituted such measures and review the necessity of those measures. If the Trustees are unable to convene an emergency meeting before the expiration of the 48-hour moratorium on contributions and withdrawals, the Executive Director may extend the moratorium until the Trustees are able to meet to review the necessity for the moratorium. If the Trustees agree with such measures, the Trustees shall vote to continue the measures for up to an additional 15 days. The Trustees must convene and vote to continue any such measures before the expiration of the time limit set, but in no case may the time limit set by the Trustees exceed 15 days." Pa� 65 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 With regard to liquidity fees, Florida Statute 218.409(4) provides authority for the SBA to impose penalties for early withdrawal, subject to disclosure in the enrollment materials of the amount and purpose of such fees. At present, no such disclosure has been made. As of September 30, 2019, there were no redemption fees, maximum transaction amounts, or any other requirements that serve to limit a participant's daily access to 100 percent of their account value. Investments — Public Safety Pension Trust Fund Investment Policy Statement The Public Safety Pension Board of Trustees, as fiduciaries, adopts an Investment Policy Statement and directs that it applies to all assets under their control. It is the Board's intention to review the policy at least annually subsequent to the actuarial report and to amend this statement to reflect any changes in philosophy, objectives, or guidelines. When the Investment Manager feels that the specific objectives defined in the statement cannot be met, or the guidelines constrict performance, the Investment Manager will present a formal modified investment policy statement to the Board of Trustees at a meeting for the Board's review. Once the Board has adopted, the new investment policy goes into effect 31 days after it has been filed with the State of Florida. There was change to the Investment Policy Statement for the fiscal year ended September 30, 2019 to reduce actuarial earning assumption to 7% from 7.25% prior year. The investments of the Public Safety Pension Trust Fund were in compliance with the investment policy. Fair Value Hierarchy The Plan categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on valuation input used to measure the fair value of an asset: Level 1 - investments reflect unadjusted quoted prices in active markets for identical assets; Level 2 - investments reflect prices that are based on inputs that are either directly or indirectly observable for an asset (including quoted prices for similar assets), which may include inputs in markets that are not considered to be active; Level 3 - investments reflect prices based upon unobservable inputs for an asset. The investment pricing transparency determines the category within the hierarchy and should not be observed at the investment risk. The custodian bank's (primary external pricing vendors) quoted prices were used to determine level classification based on the fair value hierarchy. Debt and equity securities classified as Level 1 of the fair value hierarchy are valued using quoted prices at September 30, 2019 (or the most recent market close date if the markets are closed on September 30) in active markets. This includes common stock, equity mutual funds and bond mutual funds. Debt securities are valued using pricing inputs that reflect the assumptions market participants would use to price an asset or liability and are developed based on market data obtained from sources independent of the reporting equity (Level 2). This includes U.S. Treasury bonds and notes, U.S. agencies, mortgage backed securities, municipal bonds and corporate obligations, including asset backed securities. Pa� 66 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 The Real Estate Fund - this fund enters into real estate partnerships with various joint venture partners. Fair value represents the Fund's share of the net asset value of the investment. The fund had no outstanding commitments. As of September 30, 2019 the Public Safety Pension Trust Fund has the following recurring fair value instruments: Quoted Prices in Significant Active Markets for Significant Unobservable Identical Assets Observable Inputs Inputs 9/30/2019 (Level 1) (Level 2) (Level 3) Equities Mutual funds equities $ 10,788,969 $ 10,788,969 Total equity 10,788,969 10,788,969 Fixed income Corporate bonds 1,877,450 1,877,450 U.S. Agencies 644,440 644,440 U.S. Government bonds 718,268 718,268 Bond mutual fund 702,850 702,850 Total fixed income 3,943,008 702,850 3,240,158 Total investments at fair value 14,731,977 $ 11,491,819 $ 3,240,158 $ - Investments at net asset value Redemption Redemption Notice (NAV) Frequency Period Real Estate Fund 1,369,188 Quarterly 30 days Total investments $ 16,101,165 Pacj� 67 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 As of September 30, 2019, the Village of Tequesta's Public Safety Pension Trust Fund had the following demand deposits and investments: Weighted Credit Reported Average Rating Percent Percent of Value Maturity (Moody) Distribution Net Position Cash $ 34,488 0.21% -% Short Term Money Market Fund 216,500 1.32% 1.26% Total Cash and Cash Equivalents 250,988 Equities Common Stocks - - - Mutual Funds 10,788,969 65.98% 62.65% Total Equities 10,788,969 Fixed Income Corporate Bonds: 3.78 years Bonds Total Fixed Income Real Estate Fund Total investments Total cash and investments 358,850 767,776 690,288 60,536 718,268 644,440 , 3,943,008 1,369,188 16,101,165 S 16,352,153 12.31 years Al 2.19% 2.08% A2 4.70% 4.46% A3 4.22% 4.01% Aa1 0.37% 0.35% 4.39% 4.17% Aaa 3.94% 3.74% 4.30% 4.08% 8.37% 7.95% 100.00% 94.95% Interest Rate Risk - the risk that changes in interest rates will adversely affect the fair value of an investment in debt securities. Generally, the longer the time to maturity the greater the exposure. The Plan does not have a formal policy relating to interest rate risk, however; • The established performance objectives require investment maturities to provide sufficient liquidity to pay obligations as they become due. • At September 30, 2019, there were no direct investments in debt instruments. However, there were investments in mutual funds that included debt instruments in their portfolio. Credit Risk - the risk that a debt issuer will not fulfill its obligations. The investment policy limits credit risk by requiring that: Fixed income investments must hold a rating in one of the four highest classifications by a major rating service. Equities must be traded on a national exchange. Money market investments must hold a minimum rating of Standard & Poor's Al or Moody's P1. Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Concentration of Credit Risk - the risk of loss attributed to the magnitude of an investment in a single issuer. The investment policy limits exposure to this risk by: • Limiting investments in common stock, capital stock or convertible stock of any one issuing company or aggregate of any one issuing company to 5% of the outstanding capital stock of the company. • Limiting the value of corporate bonds issued by any single corporation to not more than 5% of the total fund. • Limiting investments in corporate common stock and convertible bonds (not to exceed 70% of the fund assets at fair value). Mortgage -backed securities issued by non -government entities are limited to 15% of the fixed income portfolio. • Limiting investments in foreign securities (not to exceed 25% of the value at cost of the fund). Custodial Credit Risk - the risk that, in the event of the failure of the counterparty, the plan will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Plan's investment policy limits exposure to this risk by: • Requiring all securities to be held with a third party custodian. • Requiring security transactions between a broker/dealer and the custodian involving the purchase or sale of securities by transfer of money or securities are made on a "delivery vs. payment" basis to ensure that the custodian will have the security or money, as appropriate, in hand at the conclusion of the transaction. Foreign Currency Risk - is the risk of an investment's value changing due to changes in currency exchange rates. Exposure to foreign currency risk is low as: • Foreign investments are through ADR's (shares listed in the U.S.), mutual funds (registered in the U.S.), or Yankee bonds (denominated in U.S. dollars should not to exceed 5% of total fund). • The investment policy permits a maximum of 25% of the fair value of the fund securities to be invested in foreign securities. • At September 30, 2019, 18.43% of the fair value of the fund was invested in international funds. • All the international securities are denominated in U.S. dollars. There is no foreign currency risk. Money Weighted Rate of Return and Target Allocation For the fiscal years ended September 30, 2019 and 2018, the overall annual money -weighted rate of return (long-term expected real rate of return) on the Public Safety Pension Plan investments (both Police Officers' and Firefighters') was 2.93% and 8.92% respectively. The money -weighted rate of return expresses investment performance, net of investment manager and consultant expenses adjusted for the changing amounts actually invested. The long-term expected rate of return on pension plan investments, shown below by asset class, is developed using best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation). 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. Pa 9 69 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as well as the long-term expected real rate of return as of September 30, 2019 and 2018 are as follows: Long -Term Expected Real Target Rate of Return Asset Class Allocation Range 2019 2018 Domestic Equity 50% 45%-55% 7.5% 7.5% International Equity 15% 10%-20% 8.5% 8.5% Total Equities 65% 60%-70% Domestic Core Fixed Income 20% 15%-25% 2.5% 2.5% Diversified Fixed Income 5% 0%-10% 3.5% 3.5% Total Fixed Income 25% 20%-30% Core Real Estate 10% 5%-15% 4.5% 4.5% Investments — General Employees' Pension Trust Fund Investment Policy Statement The General Employees' Pension Board of Trustees, as fiduciaries, adopts an Investment Policy Statement and directs that it applies to all assets under their control. It is the Board's intention to review the policy at least annually subsequent to the actuarial report and to amend this statement to reflect any changes in philosophy, objectives, or guidelines. When the Investment Manager feels that the specific objectives defined in the statement cannot be met, or the guidelines constrict performance, the Investment Manager will present a formal modified investment policy statement to the Board of Trustees at a meeting for the Board's review. Once the Board has adopted, the new investment policy goes into effect 31 days after it has been filed with the State of Florida. There were no changes to the Investment Policy Statement for the fiscal year ended September 30, 2019 and investments of the General Employees' Pension Trust Fund were in compliance with the investment policy. Fair Value Hierarchy The Plan categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on valuation input used to measure the fair value of an asset: Level 1 - investments reflect unadjusted quoted prices in active markets for identical assets; Level 2 - investments reflect prices that are based on inputs that are either directly or indirectly observable for an asset (including quoted prices for similar assets), which may include inputs in markets that are not considered to be active; Level 3 - investments reflect prices based upon unobservable inputs for an asset. The investment pricing transparency determines the category within the hierarchy and should not be observed as the investment risk. The custodian bank's (primary external pricing vendors) quoted prices were used to determine level classification based on the fair value hierarchy. Debt and equity securities classified as Level 1 of the fair value hierarchy are valued using quoted prices at September 30, 2019 (or the most recent market close date if the markets are closed on September 30) in active markets. This includes common stock, mutual funds and fixed income funds. Pa� 70 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Debt securities are valued using pricing inputs that reflect the assumptions market participants would use to price an asset or liability and are developed based on market data obtained from sources independent of the reporting equity (Level 2). This includes U.S. Treasury bonds and notes, U.S. agencies, mortgage backed securities, municipal bonds and corporate obligations, including asset backed securities. The Real Estate Fund - this fund enters into real estate partnerships with various joint venture partners. Fair value represents the Fund's share of the net asset value of the investment. The fund had no outstanding commitments. As of September 30, 2019 the General Employees' Pension Trust Fund has the following recurring fair value instruments: Quoted Prices in Significant Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs 9/30/19 (Level1) (Level2) (Level3) Equities Common stocks $ 1,651,832 $ 1,651,832 Mutual funds equities 2,466,509 2,466,509 Total equities 4,118,341 4,118,341 Fixed income Corporate bonds 396,802 396,802 U.S. Government bonds 309,732 309,732 U.S. Agences 175,146 175,146 Bond mutual fund 265,262 265,262 Exchange traded funds 230,138 230,138 Total fixed income 1,377,080 495,400 881,680 Total investments at fair value 5,495,421 $ 4,613,741 $ 881,680 $ - Investments at net asset value Redemption Redemption (NAV) Frequency Notice Period Real Estate Fund 523,361 Quarterly 30 days Total investments $ 6,018,782 Pa� 71 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 At September 30, 2019, the Village of Tequesta's General Employees' Pension Trust Fund had the following demand deposits and investments: Cash Short Term Money Market Fund Total Cash and Cash equivalents Equities Common stocks Mutual funds Total Equities Fixed Income Corporate Bonds: Bonds Bonds Bonds Bonds Bonds ETF - Exchange Traded Fund U.S. Government Bonds U.S. Agencies Mutual Fund Total Fixed Income Real Estate Fund Total Investments Total Cash and Investments Weighted Credit Percent Reported Average Rating Percent of Net Value Maturity (Moody) Distribution Position $ 16,051 0.26% 0.26% 143,500 2.32% 2.31 % 159,551 1,651,832 26.74% 26.59% 2,466,509 39.92% 39.71% 4,118,341 4.14 years 53,887 A2 0.87% 0.87% 184,312 A3 2.98% 2.97% 106,568 Baal 1.72% 1.72% 25,942 Baal 0.42% 0.42% 26,093 Baa3 0.42% 0.42% 230,138 3.72% 3.70% 309,732 5.01% 4.99% 175,146 4.59 years Aaa 2.83% 2.82% 265,262 4.29% 4.27% 1,377,080 523,361 8.47% 8.43% 6,018,782 $ 6,178,333 100.00% 99.46% Interest Rate Risk - the risk that changes in interest rates will adversely affect the fair value of an investment in debt securities. Generally, the longer the time to maturity, the greater the exposure. The Plan does not have a formal policy relating to interest rate risk, however: • The established performance objectives require investment maturities to provide sufficient liquidity to pay obligations as they become due. • At September 30, 2019, the weighted average maturity in years for each investment type is included in the preceding table and ranges from 4.14 to 4.59 years. Credit Risk - the risk that a debt issuer will not fulfill its obligations. The Plan limits exposure that a debt issuer will not fulfill its obligations by limiting investments made or held in the fund to: Obligations issued by the U.S. Government or obligations guaranteed as to principal and interest by the U.S. government or by an agency of the U.S. Government; Bonds, stocks, or commingled funds administered by national or state banks, or other evidences or indebtedness, issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or District of Columbia provided that the securities meet the following ranking criteria: o Fixed income investments holding a rating in one of the four highest classifications by a major rating service. o Equities that are traded on a National Exchange. Pa� 72 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Concentration of Credit Risk - the risk of loss attributed to the magnitude of an investment in a single issuer. The Plan's investment policy limits exposure by: • Limiting investments in common stock or capital stock of any one issuing company or aggregate of any one issuing company to 5% of the outstanding capital stock of the company. • Limiting the value of bonds issued by any single corporation not to exceed 10% of the total fund. • Limiting investments in corporate common stock and convertible bonds not to exceed 70% of the fund assets at fair value. • Limiting investments in foreign securities not to exceed 25% of the fair value of the fund. Custodial Credit Risk — the risk that, in the event of the failure of the counterparty, the plan will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Plan's investment policy limits exposure to this risk by: Requiring all securities to be held by a third party custodian in the name of the Plan. As of September 30, 2019, the Plan's investment portfolio was held with a third -party custodian. Requiring securities transactions between a broker -dealer and the custodian involving purchase or sale of securities by the transfer of money or securities to be made on a "delivery vs. payment" basis to ensure that the custodian will have the security or money in hand at the conclusion of the transaction. Foreign Currency Risk - is the risk of an investment's value changing due to changes in currency exchange rates. Exposure to foreign currency risk is low as: • Foreign investments are through ADR's (shares listed in the U.S.), mutual funds (registered in the U.S.), or Yankee bonds (traded in U.S. dollars). • The investment policy permits a maximum of 25% of the fair value of the fund securities (including equities and fixed income securities) to be invested in foreign securities. • At September 30, 2019, 18.10% of the fair value of the fund was invested in international funds. • All the international securities are denominated in U.S. dollars. There is no foreign currency risk. Money Weighted Rate o f Return and Target Allocation For the fiscal years ended September 30, 2019 and 2018, the overall annual money -weighted rate of return (long-term expected real rate of return) on the General Employees' Pension Plan investments was 3.36% and 7.28% respectively. The money -weighted rate of return expresses investment performance, net of investment manager and consultant expenses adjusted for the changing amounts actually invested. The long-term expected rate of return on pension plan investments, shown below by asset class, is developed using best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation). 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. Page 73 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as well as the long-term expected real rate of return as of September 30, 2019 and 2018 are as follows: Long -Term Expected Real Target Rate of Return Asset Class Allocation Range 2019 2018 Domestic Equity 50% 45%-55% 7.5% 7.5% International Equity 15% 10%-20% 8.5% 8.5% Total Equities 65% 60%-70% Domestic Core Fixed Income 20% 15%-25% 2.5% 2.5% Diversified Fixed Income 5% 0%-10% 3.5% 3.5% Total Fixed Income 25% 20%-30% Core Real Estate 10% 5%-15% 4.5% 4.5% C. Receivables Below is the detail of receivables for the general, water, and nonmaj or enterprise fund including the applicable allowances for uncollectible accounts: Storm- Nonmaj or General Water water Funds Total Accounts $ 220,804 $ 855,873 $ - $ 13,324 $ 1,090,001 Intergovernmental 955,820 216 3,652 - 959,688 Other taxes 56,618 - - - 56,618 Gross receivables 1,233,242 856,089 3,652 13,324 2,106,307 Less: allowance for uncollectibles (17,280) (2,879) - - (20,159) Net Total Receivables $ 1,215,962 $ 853,210 $ 3,652 $ 13,324 $ 2,086,148 Page 74 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 D. Capital Assets Capital assets activity for the fiscal year ended September 30, 2019, was as follows: Beginning Ending Balance Additions Deductions Balance Governmental Activities Capital assets not being depreciated: Land $ 634,017 $ $ $ 634,017 Construction -in -progress 2,517 2,517 Total Capital Assets Not Being Depreciated 636,534 636,534 Capital assets being depreciated: Buildings Improvements other than buildings Infrastructure Machinery and equipment Intangibles Other K-9 Total Capital Assets Being Depreciated Less accumulated depreciation for: Buildings Improvements other than buildings infrastructure Machinery and equipment Intangibles Other K-9 Total Accumulated Depreciation Total Capital Assets Being Depreciated, Net Governmental Activities Capital Assets, Net 8,043,526 8,043,526 2,424,606 2,424,606 4,965,348 - 4,965,348 4,607,592 266,284 (143,496) 4,730,380 274,455 - 274,455 20,549 20,549 20,336,076 266,284 (143,496) 20,458,864 (2,927,364) (201,088) (3,128,452) (1,375,597) (86,405) (1,462,002) (948,374) (117,435) (1,065,809) (3,195,795) (414,752) 143,496 (3,467,051) (200,097) (21,243) - (221,340) (1,468) (2,936) - (4,404) (8,648,695) (843,859) 143,496 (9,349,058) 11,687,381 (577,575) - 11,109,806 $ 12,323,915 $ (577,575) $ - $ 11,746,340 Depreciation expense was charged to the functions/programs of the governmental activities of the Village as follows: Governmental Activities General government $ 108,238 Public safety 478,918 Transportation 188,667 Leisure services 62,548 Total Depreciation Expense - Governmental Activities $ 838,371 The difference with total accumulated depreciation additions represents transfer of an asset from the business -type activities that is fully depreciated and not recorded as an expense but rather as an addition (increase) to the accumulated depreciation and machinery and equipment in an amount of $5,488. PagM 75 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Business -type Activities: Capital assets not being depreciated: Land Construction in progress Total Capital Assets Not Being Depreciated Capital assets being depreciated: Buildings Improvements other than buildings Infrastructure Machinery & Equipment Intangible Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Infrastructure Machinery & Equipment Intangible Total Accumulated Depreciation Total Capital Assets Being Depreciated, Net Business -type Activity Capital Assets, Net Beginning Ending Balance Additions Deductions Balance $ 83,335 $ - $ - $ 83,335 2,517 1,209,563 - 1,212,080 85,852 1,209,563 - 1,295,415 979,512 - - 979,512 58,720 - - 58,720 34,192,913 - - 34,192,913 1,881,910 67,229 (14,038) 1,935,101 129,096 - - 129,096 37,242,151 67,229 (14,038) 37,295,342 (707,397) (15,374) - (722,771) (27,012) (2,349) - (29,361) (18,464,319) (590,880) - (19,055,199) (1,635,683) (118,520) 14,038 (1,740,165) (48,461) (25,821) - (74,282) (20,882,872) (752,944) 14,038 (21,621,778) 16,359,279 (685,715) - 15,673,564 $ 16,445,131 $ 523,848 $ - $ 16,968,979 Depreciation expense charged to the water and stormwater funds of the business -type activities was $751,592. The depreciation expense breakdown by activity is as follows: Water utility $ 648,326 Stormwater 103,266 Total depreciation expence $ 751,592 The difference with total accumulated depreciation additions represents transfer of an asset from the governmental activities that is fully depreciated and not recorded as an expense but rather as an addition (increase) to the accumulated depreciation and machinery and equipment in an amount of $1,352. PagW 76 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 E. Accrued Liabilities Accrued liabilities reported by governmental funds at September 30, 2019, were as follows: Salary and employee benefits Employer pension State distribution Other Total Accrued Liabilities F. Pension Obligations Total General Governmental Fund Funds $ 273,467 $ 273,467 805,685 $ 805,685 1,747 1,747 $ 1,080,899 $ 1,080,899 Florida Retirement System (FRS) - a Statewide Local Government Employees' Retirement System (SLGERS) General Information. The FRS was established and administered in accordace with Chapter 121, Florida Statutes, effective December 1, 1970. Full time employees hired before January 1, 1996 are eligible to participate in the Florida Retirement System (FRS), as provided by Chapters 121 and 112, Florida Statutes, a cost -sharing, multiple -employer defined benefit plan administered by the State Board of Administration ("SBA"). The FRS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries. A post -employment health insurance subsidy is also provided to eligible employees. Benefits are established by Chapter 121, Florida Statutes and Chapter 22B, Florida Administrative Code. Amendments to the law can only be made by an act of the Florida Legislature. The State of Florida issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The latest available report may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida 32315-9000 or visiting the website at ww.dms.myflorida.com/workforce operations/retirement/publications. Plan Description: The FRS is a cost -sharing multiple -employer qualified defined benefit pension plan, with a Deferred Retirement Option Program ("DROP") for eligible employees. Benefits Provided — Benefits under the Pension Plan are computed on the basis of age, average final compensation, and service credit. For Pension Plan members enrolled before July 1, 2011: Regular class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Vested members with less than 30 years of service may retire before age 62 and receive reduced retirement benefits. Special Risk Administrative Support class members who retire at or after age 55 with a least six years of credited service or 25 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Special Pag'P 77 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Risk class members (sworn law enforcement officers, firefighters, and correctional officers) who retire at or after age 55 with at least six years of credited service, or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life, equal to 3.0% of their final average compensation based on the five highest years of salary for each year of credited service. Senior Management Service class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation based on the five highest years of salary for each year of credited service. Elected Officers' class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 3.0% (3.33% for judges and justices) of their final average compensation based on the five highest years of salary for each year of credited service. For Plan members enrolled on or after July, 2011, the vesting requirement is extended to eight years of credited service for all these members and increasing normal retirement to age 65 or 33 years of service regardless of age for Regular, Senior Management Service, and Elected Officers' class members, and to age 60 or 30 years of service regardless of age for Special Risk and Special Risk Administrative Support class members. Also, the final average compensation for all these members will be based on the eight highest years of salary. As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the Pension Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost -of -living adjustment is three percent per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost -of -living adjustment. The annual cost -of -living adjustment is a proportion of three percent determined by dividing the sum of the pre -July 2011 service credit by the total service credit at retirement multiplied by three percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost -of -living adjustment after retirement. In addition to the above benefits, the DROP program allows eligible members to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. There are no required contributions by DROP participants. Contributions — Effective July 1, 2011, all enrolled members of the FRS, other than DROP participants, are required to contribute three percent of their salary to the FRS. In addition to member contributions, governmental employers are required to make contributions to the FRS based on state-wide contribution rates established by the Florida Legislature. These rates are updated as of July 1 of each year. Page 78 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Contribution rates during the 2018-2019 fiscal year were as follows: Class Employee Employer (1) Regular 3% 6.54% Special Risk 3% 22.78% Special Risk Administrative Support 3% 33.26% Elected Officers' Judges 3% 39.05% Governor, Lt.Governor, Cabinet, Legistrators, State Attorneys, Public Defenders 3% 55.03% Elected County, City Officers' 3% 46.98% Senior Management Service 3% 22.34% DROP participants - 12.37% Reemployed Retiree (2) (2) Notes: (i) This rates include the normal cost and unfunded actuarial liability contributions but do not include the 1.66 percent contribution for the Retiree Health Insurance Subsidy and the fee of 0.06 percent for administration of the FRS Investment Plan and provision of educational tools for both plans. (2) Contribution rates are dependent upon retirement class in which reemployed. The Village's total contributions to the Pension Plan totaled $52,059 for the fiscal year ended September 30, 2019. This excludes the HIS defined benefit pension plan contributions. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources The total pension liability for the FRS was determined by an actuarial valuation as of the valuation date of July 1, 2019 calculated based on the discount rate and actuarial assumptions below. The total pension liability is calculated using the Individual Entry Age Normal cost allocation method. The net pension liability was measured as of June 30, 2019. At September 30, 2019, the Village reported a liability of $543,212 for its proportionate share of the Pension Plan's net pension liability. The Village's proportionate share of the net pension liability was based on the Village's 2018-2019 fiscal year contributions relative to the 2017-2018 fiscal year contributions of all participating members. At the June 30, 2019 Measurement Date, the Village's proportionate share was 0.001577333%, which was a decrease of 0.000087% from its proportionate share measured as of June 30, 2018. Page 79 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 For the fiscal year ended September 30, 2019, the Village recognized pension expense of $132,990 as follows: Service Cost Interest Cost Effect of Plan Changes Effect of economic/demographic gains or losses (difference between expected and actuarial experience) Effect of assumptions changes or inputs Member contributions Projected investment earnings Net difference between projected and actual investment earnings Administrative expenses Total $ 39,797 208,127 180 10,809 40,730 (11,874) (174,165) 19,077 09 $ 132,990 In addition, the Village reported deferred outflow of resources and dederred inflows of resources related to pensions from the following sources: Deferred Deferred Deferred Inflows/Outflows of Resources Inflows Outflows Effect of economic/demographic gains or losses (differences between expected and actual experience) $ Effect of assumptions changes or inputs Changes in proportion and differences between contributions and proportionate share of contributions Net differences between projected and actual investment earnings Village Pension Plan contributions subsequent to the measurement date Total (337) $ 32,219 - 139,520 (104,452) 2,056 (30,053) - - 12,650 $ (134,842) $ 186,445 The deferred outflows of resources related to the Pension Plan contributions subsequent to the measurement date, totaling $12,650 will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2020. Page 80 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Pension Plan will be recognized in pension expense as follows: Fiscal Year Ending Amount 2020 8,354 2021 (6,931) 2022 19,510 2023 15,376 2024 1,939 Thereafter 705 $ 38,953 Discount Rate The discount rate used to measure the total pension liability was 6.90%. The Pension Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. Discount rate 6.90% Long-term expected rate of return, net of investment expense 6.90% Municipal bond rate N/A Actuarial Assumptions The actuarial assumptions that determined the total pension liability as of June 30, 2019, were based on the results of an actuarial experience study for the period July 1, 2013 — June 30, 2018. Valuation Date July 1, 2019 Measurement date June 30, 2019 Inflation 2.60% Salary increases including inflation 3.25% Mortality PUB2010 base table varies by member category and sex, projected generationally with Scale MP-2018 details in valuation report Actuarial cost method Individual Entry Age Sensitivity Analysis The following presents the Village's portion of the net pension liability of the FRS, calculated using the discount rate of 6.90%, as well as what the FRS's net pension liability would be if it were calculated using a discount rate that is one percentage point lower (5.90%) or one percentage point higher (7.90%) than the current rate. 1 % Current 1 % Decrease Discount Rate Increase 5.90% 6.90% 7.90% Village's proportionate share of net pension liability S 939,032 S 543,212 $ 212,635 Pag'W 81 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Long -Term Expected Rate of Return The long-term expected rate of return assumption of 6.90% on Pension Plan investments is based on a forward -look capital market econmic model. The allocation policy's description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions and includes an adjustment for the inflation assumption. The target allocation and best estimated of arithmetic and geometric real rates of return for each major asset class are summarized in the following table: Compound Annual Annual Target Arithmetic (Geometric) Standard Asset Class Allocation Return Return Deviation Cash 1% 3.3% 3.3% 1.2% Fixed income 18% 4.1% 4.1% 3.5% Global equity 54% 8.0% 6.8% 16.5% Real estate 10% 6.7% 6.1% 11.7% Private equity 11% 11.2% 8.4% 25.8% Strategic investments 6% 5.9% 5.7% 6.7% Assumed Inflation - Mean 2.6% 1.7% Pension Plan Fiduciary Net Position — Detailed information regarding the Pension Plan's fiduciary net position is available in the separately issued FRS Pension Plan and Other State -Administered Systems Comprehensive Annual Financial Report. Payables to the Pension Plan — At September 30, 2019 the Village reported a payable in the amount of $239 employee and $3,431 employer for outstanding contributions to the Pension Plan, both FRS and Retiree Health Insurance Subsidy (HIS). The Retiree Health Insurance Subsidy (HIS) Program Plan Description — HIS Program is a cost -sharing multiple -employer defined benefit pension plan established under Section 112.363, Florida Statutes. The Florida Legislature establishes and amends the contribution requirements and benefit terms of the HIS Program. The benefit is a monthly payment to assist retirees of state -administered retirement systems in paying their health insurance costs and is administered by the Department of Management Services, Division of Retirement. Benefits Provided — For the fiscal year ended June 30, 2019, eligible retirees and beneficiaries received a monthly HIS payment equal to the number of years of creditable service ccredited at retirement multiplied by $5. The minimum payment is $30 and maximum payment is $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS benefit, a retiree under a state -administered retirement system must provide proof of eligible health insurance coverage, which can include Medicare. Page 82 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Contributions — For the fiscal year ended June 30, 2019, the contribution rate was 1.66% of payroll pursuant to section 112.363, Florida Statutes. HIS contributions are deposited in a separate trust fund from which HIS payments are authorized. The Village's total contributions to the HIS Plan totaled $4,348 for the fiscal year ended September 30, 2019. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Actuarial valuations for the HIS Program are conducted biennially. The July 1, 2018, HIS valuation is the most recent valuation and was used to develop the liabilities for June 30, 2019. Liabilities originally calculated as of the actuarial valuation date have been recalculated as of a later GASB Measurement Date using standard actuaria roll forward procedures.The discount rates used at the two liability measurement dates differ due to changes in the applicable municipal bond index between dates. At September 30, 2019, the Village reported a liability of $104,854 for its proportionate share of the Pension Plan's net pension liability, of which $2,005 represents Village's net pension liability due within one year due to the pension's plan fiduciary net position being less than the amount of benefit payments expected to be paid within one year. The Village's proportionate share of the net pension liability was based on the Village's 2018-2019 fiscal year contributions relative to the 2017-2018 fiscal year contributions of all participating members. At June 30, 2019, the Village's proportionate share was 0.000937119%, which was a decrease of 0.000195% from its proportionate share measured as of June 30, 2018. The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on the discount rate and actuarial assumptions below, and was then projected to the measurement date. Any significant changes during this period have been reflected as prescribed by GASB No. 67. For the fiscal year ended September 30, 2019, the Village recognized pension expense of $8,042 as follows: Service Cost $ 2,175 Interest Cost 3,919 Effect of economic/demographic gains or losses (difference between expected and actuarial experience) 205 Effect of assumptions changes or inputs 1,809 Member contributions (2) Projected investment earnings (96) Net difference between projected and actual investment earnings 30 Administrative expenses 2 Total $ 8,042 PagV 83 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 In addition, the Village reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Inflows/Outflows of Resources Effect of economic/demographic gains or losses (differences between expected and actual experience) Effect of assumptions changes or inputs Changes in proportion and differences between contributions and proportionate share of contributions Net differences between projected and actual investment earnings Village Pension Plan contributions subsequent to the measurement date Total Deferred Deferred Inflows Outflows $ (128) $ 1,274 (8,570) 12,140 (66,174) - - 68 - 1,191 $ (74,872) $ 14,673 The deferred outflows of resources related to the HIS Plan, totaling $1,191 resulting from Village contributions to the HIS Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the HIS Plan will be recognized in pension expense as follows: Fiscal Year Ending Amount 2020 $ (17,951) 2021 (15,192) 2022 (10,505) 2023 (10,053) 2024 (4,852) Thereafter (2,837) $ (61,390) Discount Rate The discount rate used to measure the total pension liability was 3.50%. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate. The single equivalent discount rate is equal to the municipal bond rate selected by the FRS Actuarial Assumption Conference. The discount rates used at the two dates differ due to changes in the applicable municipal bond index. Pa� 84 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Discount rate 3.50% Long-term expected rate of return, net of investment expense N/A Bond Buyer General Obligation 20-Bond Municipal Bond Index 3.50% Actuarial Assumptions The actuarial assumptions that determined the total pension liability as of June 30, 2019, were based on certain results of an actuarial experience study of the FRS for the period July 1, 2013 - June 30, 2018. Valuation Date Measurement date Inflation Salary increases including inflation Mortality Actuarial cost method July 1, 2018 June 30, 2019 2.60% 3.25% Generational RP-2000 with Projection Scale BB; details in valuation report Individual Entry Age Sensitivity Analysis The following presents the net pension liability of the HIS, calculated using the discount rate of 3.50%, as well as what the HIS's net pension liability would be if it were calculated using a discount rate that is one percentage point lower (2.50%) or one percentage point higher (4.50%) than the current rate. 1 % Current 1 % Decrease Discount Rate Increase 2.50% 3.50% 4.50% Village's proportionate share of net pension liability $ 119,696 $ 104,854 $ 92,492 Pension Plan Fiduciary Net Position - Detailed information regarding the HIS Plan's fiduciary net position is available in the separately issued FRS Pension Plan and Other State -Administered Systems Comprehensive Annual Financial Report. The Village of Tequesta Single -Employer Defined Benefit Pension Plans Overview: The Village maintains two single -employer defined benefit pension plans, the Public Safety Officers' Pension Trust Fund and the General Employees' Pension Trust Fund. The sole administration of and responsibility for the proper operation of the retirement system is vested in The Board of Trustees. The defined benefit pension plans do not issue stand alone financial statements. All full-time general employees who are not classified as police officers or firefighters are eligible for membership in the General Employees' Pension Plan on the date of employment. The General Employees' Pension Board consists of five Trustees. Two are legal residents of the municipality, appointed by the Village Council, and two are the full time General Employee members. The fifth Trustee is selected by a majority vote of the other Trustees. Public Safety Board consists of five Trustees. Two are legal residents of the municipality, appointed by the Village Council, one is a full time police officer member, and one is full time firefighter member. The fifth Trustee is selected by a majority vote of the other Trustees. Pa%q 85 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 All full-time police officers and all full-time firefighters are eligible for membership in the Public Safety Officers' Pension Plan on the date of employment. The Public Safety Officers' Pension Trust Fund receives contributions that may not be used to pay benefits of all employee classes, therefore, two separate trust funds, the Firefighters' Pension Trust Fund (FPTF) and the Police Officers' Pension Trust Fund (PPTF) are reflected separately in the financial statements, as well as the General Employee's Trust Fund (GPTF). Membership in the Village of Tequesta's defined benefit pension plans as of the actuarial valuation date of October 1, 2018: FPTF PPTF GPTF Number of: Inactive members or beneficiaries currently receiving benefits 6 2 7 Inactive members entitled to but not yet receiving benefits 1 2 7 Active members 16 16 52 Total 23 20 66 Funding Policies are presented below under each of the plans. Actuarial Assumptions and Net Pension Liability (NPL) The actuarial valuation of the liabilities for the FPTF, PPTF and GPTF as of the September 30, 2018 measurement date were determined as of the beginning of the year, October 1, 2017 (based on actuarial valuation results as reported in the October 1, 2017 actuarial valuation). Using a measurement date of September 30, 2018 allows for timelier reporting at the end of the year. The GPTF report was dated January 11, 2018 and the FPTF and PPTF reports were dated January 12, 2018. These liabilities are used for GASB Statement No. 68 reporting for the reporting period ending September 30, 2019. The total pension liability for the Village's defined benefit pension plans was determined using the following actuarial methods and assumptions, applied to all prior periods included in the measurement period. Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. If significant changes occur during the year, such as benefit changes or changes in assumptions or methods, these would be noted in the footnotes. FPTF PPTF GPTF Actuarial Valuation Date Oct. 1, 2017 Oct. 1, 2017 Oct. 1, 2017 Measurement Date of the net pension liability Sep. 30, 2018 Sep. 30, 2018 Sep. 30, 2018 Village's Fiscal Year Ended Date for Reporting Purposes Sep. 30, 2019 Sep. 30, 2019 Sep. 30, 2019 Page 86 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Pension Expense Fiscal Year Ended September 30, 2019 Based on Measurement Period Ended September 30, 2018 FPTF PPTF GPTF Service Cost $ 392,933 $ 98,621 $ 447,305 Interest on the Total Pension Liability 827,256 193,922 373,859 Employee Contributions (made negative for additions here) (90,424) (31,338) (156,434) Projected Earnings on Plan Investments (made negative for additions here) (724,601) (277,559) (357,934) Administrative Expense 31,858 31,858 43,300 Recognition of Outflow (Inflow) of Recourses due to Liabilities (11,863) (165,298) 20,140 Recognition of Outflow (Inflow) of Recourses due to Assets (8,451) (9,882) (3,071) Total Pension Expense $ 416,708 $ (159,676) $ 367,165 Pao 87 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 The deferred outflow of resources, resulting from the Village's contributions to the Plans subsequent to the measurement date of September 30, 2018 will be recognized as a reduction of the Village's net pension liability in the fiscal year ended September 30, 2020. The Village reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Fire: Difference between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan investments Contribution subsequent to measurement date Total Police: Difference between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan investments Contribution subsequent to measurement date Total General: Difference between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan investments Contribution subsequent to measurement date Total Deferred Outflows Deferred Inflows of of Resources Resources $ 112,353 $ 254,876 178,530 97,660 111,235 370,368 332,559 - $ 734,677 $ 722,904 Deferred Outflows Deferred Inflows of of Resources Resources $ 26,779 $ 433,760 35,746 15,691 42,185 150,039 325,234 - $ 429,944 $ 599,490 Deferred Outflows Deferred Inflows of of Resources Resources $ 56,582 $ 175,803 256,082 - 93,420 196,402 353,784 - $ 759,868 $ 372,205 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Net Deferred Inflows and Deferred Outflows of Resources by Year to be Recognized in Future Pension Expenses Net Deferred Inflows and Outflows of Resources Year Ending September 30, FPTF 2020 $ (12,263) 2021 (117,934) 2022 (120,724) 2023 (62,925) 2024 (18,082) Thereafter 11,142 Total $ (320,786) Net Pension Liability (Asset) PPTF GPTF $(173,562) 35,003 (215,748) (24,331) (96,522) (41,376) (8,948) 18,783 - 38,853 - 6,947 $ (494,780) $ 33,879 Below is a summary of components of the net pension liability (asset), by Plan, which was measured as of September 30, 2018 (measurement date in accordance with GASB Statement No. 68). Measurement Date September 30, Total Pension Liability Plan Net Position Net Pension Liability (Asset) Plan Net Position as a % of Total Pension Liability Fire Police General 2018 2018 2018 $ 11,898,913 $ 2,889,074 $ 5,727,627 10,877,527 4,246,463 5,708,753 $ 1,021,386 $ (1,357,3821 18,874 91.42% 146.98% 99.67% Pao 89 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 In accordance with GASB Statement No. 67, information as of September 30, 2019 has been disclosed: Measurement Date September 30, Total Pension Liability Plan Net Position Net Pension Liability (Asset) Plan Net Position as a % of Total Pension Liability Fire Police General 2019 2019 2019 $ 13,253,864 11,572,288 $ 1,681,576 87.31 % $ 4,672,055 5,649,465 $ (977,410) 120.92% Below is a detail of the net changes in pension liability (asset): FIREFIGHTERS' PENSION TRUST CHANGES IN NET PENSION LIABILITY $ 6,249,987 6,211,730 $ 38,257 99.39% Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) Balances at September 30, 2017 $ 11,276,747 $ 10,055,100 $ 1,221,647 Changes for the year: Service cost Interest Differences between expected and actual experience Contributions - employer Contributions - state Contributions - employee Net investment Income 'Benefit payments, including refunds of employee contributions Administrative expense Other (increase in State reserves) Net Changes Balances at September 30, 2018 392,933 - 392,933 827,256 - 827,256 71,910 - 71,910 - 182,198 (182,198) - 307,956 (307,956) - 90,424 (90,424) - 943,640 (943,640) (518,495) (518,495) - - (31,858) 31,858 (151,438) (151,438) - 622,166 $ 822,427 (200,261) $ 11,898,913 10,877,527 $ 1,021,386 Page 90 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 POLICE OFFICERS' PENSION TRUST CHANGES IN NET PENSION LIABILITY (ASSET) Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) Balances at September 30, 2017 $ 2,590,022 $ 3,754,955 $ (1,164,933) Changes for the year: Service cost 98,621 - 98,621 Interest 193,922 - 193,922 Differences between expected and actual experience 34,217 - 34,217 Contributions - employer - 175,116 (175,116) Contributions - members - 31,338 (31,338) Net investment income - 344,620 (344,620) Benefit payments, including refunds of employee contributions (27,708) (27,708) - Administrative expense - (31,858) 31,858 Net changes 299,052 491,508 (192,456) Balances at September 30, 2018 $ 2,889,074 $ 4,246,463 $ (1,357,389) Pa� 91 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 GENERAL EMPLOYEES' PENSION TRUST CHANGES IN NET PENSION LIABILITY Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Balances at September 30, 2017 $ 4,947,123 $ 4,935,148 $ 11,975 Changes for the year: Service cost Interest Differences between expected and actual experience Contributions - employer Contributions - member Net investment income Benefit payments, including refunds of employee contributions Administrative expense Net changes Balances at September 30, 2018 447,305 - 447,305 373,859 - 373,859 66,509 - 66,509 - 350,412 (350,412) - 156,434 (156,434) - 417,228 (417,228) (107,169) (107,169) - - (43,300) 43,300 780,504 773,605 6,899 $ 5,727,627 $ 5,708,753 $ 18,874 Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate A single discount rate of 7.00% as of September 30, 2019 and 7.25% for 2018 was used to measure the total pension liability for the Police Officers' and Firefighters' Pension trusts. A discount rate of 7.00% was used to measure total pension liability for the General Employees' Pension Trust as of September 30, 2019 as well as at September 30, 2018. This single discount rate was based on the expected rate of return on pension plan investments of 7%. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the total actuarially determined contribution rates and the member rate. Based on these 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. Page 92 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Regarding the sensitivity of the net pension liability to changes in the single discount rate, the tables below present the plan's net pension liability, calculated using a single discount rate of 7.25% (for the Police Officers' and Firefighters' Pension trusts) and 7.00% (for the General Employees' Pension Trust) as well as what the plan's net pension liability would be if it were calculated using a single discount rate that is 1-percentage-point lower or 1-percentage-point higher (amounts in parenthesis represent a net pension asset). Fiscal Year Ended September 30, 2018 Firefighters' Police Officers' Fiscal Year Ended September 30, 2018 General Employees' Current Single 1% Discount Rate 1% Decrease Assumption Increase 6.25% 7.25% 8.25% $ 2,552,869 $ 1,021,386 $ (261,814) (1,025,315) (1,357,389) (1,631,392) Current Single Discount Rate 1% Decrease Assumption Increase 6.00% 7.00% 8.00% $ 786,120 $ 18,874 $ (635,351) In accordance with GASB Statement No. 67, information as of September 30, 2019 has been disclosed: Current Single 1% Discount Rate 1 % Decrease Assumption Increase Fiscal Year Ended September 30, 2019 6.00% 7.00% 8.00% Firefighters' $ 3,380,383 $ 1,681,576 $ 260,724 Police Officers' (427,381) (977,410) (1,427,328) General Employees' 874,673 38,257 (660,199) Village of Tequesta Public Safety Employees' Pension Plan (PSEPP) Summary of Plan Provisions A. Ordinances The Plan was established under the Code of Ordinances for the Village of Tequesta, Florida, Chapter 2, Article Ill, Division 1, Section 2-61 (b), and was most recently amended under Ordinance No. 02-19 , passed and adopted on March 14, 2019. The Plan is also governed by certain provisions of Chapters 175 and 185, Florida Statutes, Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. Page 93 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 B. Effective Date Adopted March 14, 2019 C. Plan Year October 1 through September 30 D. Type of Plan Qualified, governmental defined benefit retirement plan; for GASB purposes it is a single employer plan. E. Eligibility Requirements All full-time police officers and all full-time firefighters are eligible for membership on the date of employment. F. Credited Service Service is measured as the total number of years and completed months of a year as a police officer or firefighter with the Village. No service is credited for any periods of employment for which the member received a refund of their contributions. G. Compensation Total cash remuneration for services rendered as a police officer or firefighter. For firefighters and police officers hired before October 1, 2010, overtime hours are limited to 300 hours per year, effective October 1, 2013 for firefighters and October 1, 2014 for police officers. For firefighters and police officers hired before October 1, 2010, payments for unused leave earned after October 1, 2013 for firefighters and October 1, 2014 for police officers are excluded from pensionable salary. For firefighters hired on or after October 1, 2010, fixed monthly remuneration including regular earnings, vacation pay and sick pay but excluding lump sum payments, overtime, bonuses, incentives and longevity. H. Average Final Compensation (AFC) The average of Compensation over the highest 5 years during the last 10 years of Credited Service. I. Normal Retirement Eligibility - A member may retire on the first day of the month coincident with or next following the earlier of. (1) age 55 and 6 years of Credited Service (10 years of Credited Service for firefighters hired on or after August 14, 2015), or (2) age 52 and 25 years of Credited Service. Page 94 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Benefit - For police officers hired before February 1, 2013 and firefighters hired before August 14, 2015 (firefighters: Credited Service onlvprior to September 1, 2015): 3.0% of AFC multiplied by the first 6 years of Credited Service, plus 3.5% of AFC multiplied by the next 4 years of Credited Service, plus 4.0% of AFC multiplied by the next 5 years of Credited Service, plus 3.0% of AFC multiplied by the next 6 years of Credited Service, plus 2.0% of AFC multiplied by the next 4 years of Credited Service, plus 3.0% of AFC multiplied by all years of Credited Service over 25 years I. Normal Retirement For firefighters hired before August 14, 2015, Credited Service on or after September 1, 2015: 3.0% of AFC multiplied by years of Credited Service For police officers hired on or after February 1, 2013 and firefighters hired on or after August 14, 2015: 2.75% of AFC multiplied by all years of Credited Service Normal Form of Benefit - 10 Years Certain and Life thereafter; other options are also available. COLA: None Supplemental Benefit - All retirees and beneficiaries receiving pension benefits will be paid a supplemental benefit equal to $20 for each year of the member's Credited Service up to a maximum of $600. The supplemental benefit ceases upon the later of the death of the retired member or beneficiary. J. Early Retirement Eligibility, - A member may elect to retire earlier than the Normal Retirement Eligibility upon attainment of age 50 and 6 years of Credited Service (10 years of Credited Service for firefighters hired on or after August 14, 2015). Benefit - The Normal Retirement Benefit is reduced by 3.0% for each year by which the Early Retirement date precedes the Normal Retirement date. Normal Form of Benefit - 10 Years Certain and Life thereafter; other options are also available. COLA: None Supplemental Benefit - All retirees and beneficiaries receiving pension benefits will be paid a supplemental benefit equal to $20 for each year of the member's Credited Service up to a maximum of $600. The supplemental benefit ceases upon the later of the death of the retired member or beneficiary. Page 95 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 K. Delayed Retirement Same as Normal Retirement taking into account compensation earned and service credited until the date of actual retirement. L. Service Connected Disability Eligibility - Any member who becomes totally and permanently disabled and unable to render useful and efficient service to the Village as a result from an act occurring in the performance of service for the Village is immediately eligible for a disability benefit. Benefit - The accrued Normal Retirement Benefit taking into account compensation earned and service credited as of the date of disability with a minimum benefit equal to 42% of AFC. Normal Form ofBenefit - 10 Years Certain and Life thereafter. COLA: None Supplemental Benefit - All retirees and beneficiaries supplemental benefit equal to $20 for each year o maximum of $600. The supplemental benefit ceases member or beneficiary. M. Non -Service Connected Disability receiving pension benefits will be paid a the member's Credited Service up to a upon the later of the death of the retired Eligibility - Any member who becomes totally and permanently disabled and unable to render useful and efficient service to the Village is immediately eligible for a disability benefit. Benefit - The accrued Normal Retirement Benefit taking into account compensation earned and service credited as of the date of disability with a minimum benefit equal to 25% of AFC. Normal Form of Benefit - 10 Years Certain and Life thereafter. COLA: None Supplemental Benefit - All retirees and beneficiaries receiving pension benefits will be paid a supplemental benefit equal to $20 for each year of the member's Credited Service up to a maximum of $600. The supplemental benefit ceases upon the later of the death of the retired member or beneficiary. N. Death in the Line of Duty Eligibility - Members are eligible for survivor benefits regardless of Credited Service. Benefit - The member's spouse or dependent child will receive the 50% of the member's AFC as of the date of death. Normal Form of Benefit - Payable for the life of the beneficiary. Page 96 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 COLA: None Supplemental Benefit - All retirees and beneficiaries receiving pension benefits will be paid a supplemental benefit equal to $20 for each year of the member's Credited Service up to a maximum of $600. The supplemental benefit ceases upon the later of the death of the retired member or beneficiary. O. Other Pre -Retirement Death Eligibility - Members are eligible for survivor benefits after the completion of 6 or more years of Credited Service (10 years of Credited Service for firefighters hired on or after August 14, 2015). Benefit - The beneficiary will receive the actuarial equivalent of the member's accrued Normal Retirement Benefit taking into account compensation earned and service credited as of the date of death. Normal Form of Benefit - Payable for the life of the beneficiary. COLA: None Supplemental Benefit - All retirees and beneficiaries receiving pension benefits will be paid a supplemental benefit equal to $20 for each year of the member's Credited Service up to a maximum of $600. The supplemental benefit ceases upon the later of the death of the retired member or beneficiary. The beneficiary of a plan member with less than 6 years of Credited Service (10 years of Credited Service for firefighters hired on or after August 14, 2015) at the time of death will receive a refund of the member's accumulated contributions. P. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. Q. Optional Forms In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are the Life Annuity option or the 50%, 66 2/3%, 75% and 100% Joint and Survivor options. R. Vested Termination Eligibility - A member has earned a non -forfeitable right to Plan benefits after the completion of 6 years of Credited Service (10 years of Credited Service for firefighters hired on or after August 14, 2015). Benefit - The benefit is the member's accrued Normal Retirement Benefit as of the date of termination. Benefit begins on the member's Normal Retirement date. Alternatively, members can elect a reduced Early Retirement benefit any time after age 50. Padd 97 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Normal Form of Benefit - 10 Years Certain and Life thereafter; other options are also available. COLA: None Supplemental Benefit - Once in pay status, all retirees and beneficiaries receiving pension benefits will be paid a supplemental benefit equal to S20 for each year of the member's Credited Service up to a maximum of $600. The supplemental benefit ceases upon the later of the death of the retired member or beneficiary. Members terminating employment with less than 6 years of Credited Service (10 years of Credited Service for firefighters hired on or after August 14, 2015) will receive a refund of their own accumulated contributions. S. Refunds Eligibility - All members terminating employment with less than 6 years of Credited Service (10 years of Credited Service for firefighters on or after August 14, 2015) are eligible. Optionally, vested members (those with 6 or more years of Credited Service — 10 years of Credited Service for firefighters hired on or after August 14, 2015) may elect a refund in lieu of the vested benefits otherwise due. Benefit - Refund of the member's contributions. T. Member Contributions 5% of Compensation for police officers hired before February 1, 2013 and 6% of compensation for police officers hired on or after February 1, 2013. Five (5) percent of compensation for firefighters through the fiscal year ending September 30, 2016; 5.5% of Compensation for firefighters beginning in the fiscal year ending September 30, 2017; thereafter, 6% of Compensation for firefighters. Employee contributions for firefighters would revert back to 5% of Compensation if the Village opts out of participation in Chapter 175. U. State Contributions Chapter 185 Premium Tax Revenue: The Village is permitted to use all annual Chapter 185 revenue as a credit toward the Required Employer Contribution and to apply half of the Chapter 185 reserve of $333,315 to reduce the Required Employer Contribution. The remaining half of the Chapter 185 reserve of $333,315 is allocated to a Share Plan for police officers. Chapter 175 Premium Tax Revenue: The Village is permitted to use all annual Chapter 175 revenue as a credit toward the Required Employer Contribution and to apply the Chapter 175 reserve of $545,142 to reduce the Required Employer Contributions for the fiscal years ending September 30, 2016 through September 30, 2018, as determined by the Village. V. Employer Contributions Any additional amount determined by the actuary needed to fund the plan properly according to State laws. Page 98 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 W. Cost of Living Increases Not Applicable X. 13th Check Not Applicable Y. Deferred Retirement Option Plan Eligibility - Plan members who have met one of the following criteria are eligible for the DROP: (1) age 55 and 6 years of Credited Service (10 years of Credited Service for firefighters hired on or after August 14, 2015), or (2) age 52 and 25 years of Credited Service. Members must make a written election to participate in the DROP before the 27th year of employment. Benefit - The member's Credited Service and AFC are frozen upon entry into the DROP. The monthly retirement benefit as described under Normal Retirement is calculated based upon the frozen Credited Service and AFC. Firefighters have the optional sell back of vacation and sick leave when entering the DROP. Maximum DROP Period - The earlier of 5 years of participation in the DROP or 30 years of employment. There are two DROP plan participants with the assets balance rollforward of $245,043 at fiscal year ending September 30, 2019. Y. Deferred Retirement Option Plan Interest Credited - The member's DROP account is credited on September 30 of each year with investment earnings or losses at the same rate earned by the pension fund less any administrative expenses. The interest rate will not be less than 0% nor greater than 7.5%. Normal Form of Benefit - Lump Sum; other options are also available. COLA: None Z. Other Ancillary Benefits There are no ancillary retirement type benefits not required by statutes but which might be deemed a Village of Tequesta Public Safety Officers' Pension Trust Fund liability if continued beyond the availability of funding by the current funding source. Padre§ 99 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 AA. Changes from Previous Valuation In compliance with newly adopted Florida Statutes, Chapter 112.1816, the following additional provisions are reflected: As provided and subject to the limitations in Section 112.1816, Florida Statutes, effective July 1, 2019, a firefighter who is diagnosed with certain specified cancers is presumed to have contracted those cancers while in the line of duty for purposes of determining the disability or death benefit payable from the Plan. The Firefighters' Pension Trust Fund (part of the PSEPP) does not issue separate stand-alone financial statements. Included below are the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position as of and for the fiscal year ended September 30, 2019. FIREFIGHTERS' PENSION TRUST FUND STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2019 Assets Cash and cash equivalents $ 172,744 Investments Equities 7,512,215 Fixed income 2,745,413 Real Estate Funds 953,379 Total investments 11,211,007 Prepaid items 18,067 Contributions receivable 172,545 Accrued interest receivable 12,691 Total Assets 11,587,054 Liabilities Accounts payable 14,766 Total Liabilities 14,766 Net Position Restricted for Pension Benefits $ 11,572,288 Page7� 00 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 FIREFIGHTERS' PENSION TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Additions Contributions: State of Florida Employer Employee Total Contributions Investment earnings Net depreciation in fair value of investment Gain on sale of investments Interest earnings Total investment earnings Less investment expenses Net investment earnings Miscellaneous Total Additions Deductions Benefits paid Administrative expenses Total Deductions Change in Net Position Net Position Restricted for Pension Benefits Beginning of year End of year S 156,424 332,559 94,343 583326 (344,866) 413,775 322,137 391,046 (32,777) 358,269 7 941,602 216,799 30,042 246,841 694,761 10,877,527 $ 11,572,288 Page7� 01 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 The Police Officers' Pension Trust Fund (part of the PSEPP) does not issue separate stand-alone financial statements. Included below are the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position as of and for the fiscal year ended September 30, 2019. POLICE OFFICERS' PENSION TRUST FUND STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2019 Assets Cash and cash equivalents Investments Equities Fixed income Real Estate Funds Total investments Accounts Receivable Prepaid items Contributions receivable Accrued interest receivable Total Assets Liabilities Accounts payable Total Liabilities Net Position Restricted for Pension Benefits $ 78,244 3,276,754 1,197,595 415,809 4,890,158 25,250 4,091 669,483 5,535 5,672,761 23,296 23,296 $ 5,649,465 Page7� 02 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 POLICE OFFICERS' PENSION TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Additions Contributions: State of Forida $ 649,262 Employer 481,860 Employee 198,658 Total Contributions 1,329,780 Investment earnings Net depreciation in fair value of investments (131,812) Gain on sale of investments 167,121 Interest earnings 129,952 Total investment earnings 165,261 Less investment expenses (21,828) Net investment earnings 143,433 Miscellaneous 7 Total Additions 1,473,220 Deductions Benefits paid 40,184 Administrative expenses 30,034 Total Deductions 70,218 Change in Net Position 1,403,002 Net Position Restricted for Pension Benefits Beginning of year 4,246,463 End of year $ 5,649,465 Page79103 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 General Employees' Pension Plan A. Ordinances The Plan was established under the Code of Ordinances for the Village of Tequesta, Florida, Chapter 2, Article III, Division 1, Section 2-61 (a), and was most recently amended under Ordinance No. 11-11 passed and adopted on June 9, 2011. The Plan is also governed by certain provisions of Part V1I, Chapter 112, Florida Statutes and the Internal Revenue Code. B. Effective Date December 11, 2003 C. Plan Year October 1 through September 30 D. Type of Plan Qualified, governmental defined benefit retirement plan; for GASB purposes it is a single employer plan. E. Eligibility Requirements All full-time general employees who are not classified as police officers or firefighters are eligible for membership on the date of employment. F. Credited Service Service is measured as the total number of years and completed months of a year as a general employee with the Village. No service is credited for any periods of employment for which the member received a refund of their contributions. G. Compensation Base compensation including regular earnings, vacation pay, sick pay, plus all tax -deferred items of income, but excluding any lump sum payments, overtime, bonuses and longevity bonus. H. Average Final Compensation (AFC) The average of Compensation over the highest 5 years during the last 10 years of Credited Service; does not include lump sum payments of unused leave. PagEN 04 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 1. Normal Retirement Eligibiliiy - A member may retire on the first day of the month coincident with or next following the earlier of: (1) age 62, or (2) 30 years of Credited Service regardless of age. Benefit - 2.0% of AFC multiplied by Credited Service with a maximum benefit equal to 100% of AFC. Normal Form ofBenefit - 10 Years Certain and Life thereafter; other options are also available. COLA: None J. Early Retirement Eligibility - A member may elect to retire earlier than the Normal Retirement Eligibility upon attainment of age 50 and 6 years of Credited Service. Benefit - The Normal Retirement Benefit is reduced by 5.0% for each year by which the Early Retirement date precedes the Normal Retirement date. Normal Form of Benefit - 10 Years Certain and Life thereafter; other options are also available. COLA: None K. Delayed Retirement Same as Normal Retirement taking into account compensation earned and service credited until the date of actual retirement. L. Service Connected Disability Eligibility - Any member who becomes totally and permanently disabled and unable to render useful and efficient service to the Village as a result from an act occurring in the performance of service for the Village is immediately eligible for a disability benefit. Benefit -The accrued Normal Retirement Benefit taking into account compensation earned and service credited as of the date of disability with a minimum benefit equal to 42% of AFC. Normal Form of Benefit - 10 Years Certain and Life thereafter. COLA: None PagE§ f 05 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 M. Non -Service Connected Disability Eligibility - Any member who has 6 years of Credited Service and becomes totally and permanently disabled and unable to render useful and efficient service to the Village is immediately eligible for a disability benefit. Benefit -The accrued Normal Retirement Benefit taking into account compensation earned and service credited as of the date of disability with a minimum benefit equal to 25% of AFC. Normal Form of Benefit - 10 Years Certain and Life thereafter. COLA: None N. Death in the Line of Duty Eligibility - Members are eligible for survivor benefits after the completion of 6 or more years of Credited Service. Benefit - The beneficiary will receive the member's accrued Normal Retirement Benefit taking into account compensation earned and service credited as of the date of death. The benefit is payable at the member's Normal Retirement date. Normal Form ofBenefit - 10 Years Certain COLA: None The beneficiary of a plan member with less than 6 years of Credited Service at the time of death will receive a refund of the member's accumulated contributions with interest. 0. Other Pre -Retirement Death Eligibility - Members are eligible for survivor benefits after the completion of 6 or more years of Credited Service. Benefit - The beneficiary will receive the member's accrued Normal Retirement Benefit taking into account compensation earned and service credited as of the date of death. The benefit is payable at the member's Normal Retirement date. Normal Form of Benefit - 10 Years Certain COLA: None The beneficiary of a plan member with less than 6 years of Credited Service at the time of death will receive a refund of the member's accumulated contributions with interest. P. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. PagEP 06 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Q. Optional Forms In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are the Life Annuity option or the 50%, 66 2/3%, 75% and 100% Joint and Survivor options. R. Vested Termination Eligibility - A member has earned a non -forfeitable right to Plan benefits after the completion of 6 years of Credited Service. Benefit - The benefit is the member's accrued Normal Retirement Benefit as of the date of termination. Benefit begins on the member's Normal Retirement date. Alternatively, members can elect a reduced Early Retirement benefit any time after age 50. Normal Form of Benefit - 10 Years Certain and Life thereafter; other options are also available. COLA: None Members terminating employment with less than 6 years of Credited Service will receive a refund of their own accumulated contributions with interest. S. Refunds Eligibility - All members terminating employment with less than 6 years of Credited Service are eligible. Optionally, vested members (those with 6 or more years of Credited Service) may elect a refund in lieu of the vested benefits otherwise due. Benefit - Refund of the member's contributions with interest. Interest is currently credited at a rate of 3%. T. Member Contributions 5% of Compensation U. Employer Contributions Any additional amount determined by the actuary needed to fund the plan properly according to State laws. V. Cost of Living Increases Not Applicable W. 13th Check Not Applicable PagEP 07 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 X. Deferred Retirement Option Plan Not Applicable Y. Other Ancillary Benefits There are no ancillary retirement type benefits not required by statutes but which might be deemed a Village of Tequesta General Employees' Pension Trust Fund liability if continued beyond the availability of funding by the current funding source. Z. Changes from Previous Valuation There have been no changes since the last valuation. The General Employees' Pension Trust Fund does not issue separate stand-alone financial statements. Included below are the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position as of and for the fiscal year ended September 30, 2019. GENERAL EMPLOYEES' PENSION TRUST FUND STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2019 Assets Cash and cash equivalents Investments Equities Fixed income Real Estate Funds Total investments Prepaid items Contributions receivable Accrued interest receivable Total Assets Liabilities Accounts payable Total Liabilities Net Position Restricted for Pension Benefits $ 159,551 4,118,341 1,377,080 523,361 6,018,782 13,248 24,294 8,448 6,224,323 12,593 12,593 $ 6,211,730 PagEH 08 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 GENERAL EMPLOYEES' PENSION TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Additions Contributions: Employer $ 362,848 Employee 161,553 Total Contributions 524,401 Investment earnings Net appreciaton in fair value of investments 109,255 Gain on sale of investments 23,434 Interest earnings 138,603 Total investment earnings 271,292 Less investment expenses (35,773) Net investment earnings 235,519 Total Additions 759.920 Deductions Benefits paid 160,588 Refunds of contributions 48,114 Administrative expenses 48,241 Total Deductions 256,943 Change in Net Position 502,977 Net Position Restricted for Pension Benefits Beginning of year 5,708,753 End of year $ 6,211,730 PagEP 09 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 The following summarizes the pension related amounts for the pension plans as of the indicated measurement date: General Employees' Pension Trust Fund Firefighters Pension Trust Fund Police Pension Trust Fund FRS HIS Total Net Pension Deferred Deferred Pension Measurement Net Pension Liability Outflow of Inflow of Expense Date Asset Resources Resources 9/30/18 9/30/18 9/30/18 1,357,389 6/30/19 $ 18,874 $ 759,868 $ 372,205 $ 367,165 1,021,386 734,677 722,904 416,708 429,944 599,490 (159,676) 543,212 186,445 134,842 132,990 6/30/19 104,854 14,673 74,872 8,042 $ 1,357,389 $ 1,688,326 $ 2,125,607 $ 1,904,313 $ 765,229 Village of Tequesta Defined Contribution Plan The Village Single -Employer Defined Contribution Plan (the Plan) was established on February 1, 2013 with and effective date of March 1, 2013. The Plan is a 401(a) money purchase plan in the form of the Empower Retirement Governmental Money Purchase Plan and Trust (The Plan) with assets of the Plan held in trust for the exclusive benefit of the Plan participants and their beneficiaries. The assets shall be invested in the Plan and shall not be diverted to any other purpose. The employer's beneficial ownership of Plan assets held in the Empower Retirement Trust shall be held for the further exclusive benefit of the Plan participants. The Village Manager is the coordinator for the Plan and is authorized to execute all necessary agreements with the Empower Retirement Trust incidental to the administration of the Plan. The Village serves as Trustee under the Plan. In a defined contribution plan, benefits depend solely on amounts contributed to the Plan plus investment earnings. The Plan covered Police officers hired after February 1, 2013. Employees must designate a mandatory participation contribution between the range of 1 to 12% for the Plan year as a condition of participation in the Plan. The participant shall not have the right to discontinue or vary the rate after becoming a Plan participant. Newly eligible employees have an election window of 30 days from the date of eligibility to make the election to participate in the mandatory contribution portion of the Plan which will begin the first of the month following the end of the election window. This election is irrevocable and remains in force until the employee terminates employment or ceases to be eligible to participate in the Plan. The Village is required to match employee contributions up to a maximum contribution of 5%. Employees are immediately vested in the Plan. Plan provisions are established and may be amended by the Village. The Village does not hold or administer resources of the Plan and consequently, the Plan does not meet the requirements for inclusion in the Village's financial statements. The Plan does not issue a stand-alone financial report. The fair value of the Plan assets at September 30, 2019 was $74,361. Employee contributions to the Plan for fiscal year ended September 30, 2019 were S7,686; the Village's contributions were S24,251. Pag4� 10 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 On June 1, 2018, The Village Council voted to reopen the defined benefit pension plan for full time police officers. The effective date was March 14, 2019. The 401(a) Plan balances for the participating police officers would be transferred to the Police Officers' Pension Trust Fund. This transfer amount would be equal to the Village contributions to the 401(a) Plan for these members plus the contributions these members paid into the Plan, including interest. The transfer of funds in an amount of $283,646 was completed on August 9, 2019. There were no contributions to 401(a) Plan after June 13, 2018 by police officers who elected to join defined benefit pension plan. G. Other Postemployment Benefits (OPEB) Village of Tequesta's Other Postemployment Benefits Plan Plan description. The Village of Tequesta provides health insurance benefits to its retired employees through a single -employer plan administered by the Village. Pursuant to the provisions of Section 112.0801, Florida Statutes, former employees who retire from the Village and eligible dependents may continue to participate in the Village's fully -insured benefit plan for medical insurance coverage. The Village subsidizes the premium rates paid by retirees by allowing them to participate in the plan at reduced or blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the plan on average than those of active employees. The benefits provided under this defined benefit plan are provided until the retiree's attainment of age 65 (or until such time at which retiree discontinues coverage under the Village sponsored plans, if earlier). Funding Policy. The Village's Other Post -Employment Benefits are unfunded. That is, the Village does not have a separate Trust Fund to make contributions to advance -fund the obligation. Current and future retirees are required to pay 100% of the blended premium to continue coverage under the Village's group health insurance program. Summary of Membership Information. The following table provides a summary of the number of participants in the plan at the measurement date of September 30, 2018: Inactive members or beneficiaries currently receiving benefits Inactive members entitled to but not yet receiving benefits Active members Total 3 0 92 95 OPEB Liability, Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources The Village recognizes the OPEB liability and the OPEB expense in the financial statements, along with the related deferred outflows and inflows of resources. The OPEB liability is the difference between the total OPEB liability and the plan's fiduciary net position. Since the plan is currently unfunded, the net OPEB liability is equal to and reported as total OPEB liability. Pag67111 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 At September 30, 2019, the Village reported an OPEB liability of $644,688 that as determined by an actuarial valuation as of the valuation date of September 30, 2017 and "rolled -forward" to the September 30, 2018 measurement date. The total OPEB liability is calculated using the Individual Entry Age Normal cost allocation method and measured as of September 30, 2018. For the fiscal year ended September 30, 2019, the Village recognized pension expense of $21,088. Total OPEB Liability - Beginning (September 30, 2017) $ 623,600 Service cost 51,371 Interest on the Total OPEB Liability 22,929 Changes in assumptions and other inputs (13,500) Benefit payments (39,712) Net change in Total OPEB Liability 21,088 Total OPEB Liability - Ending (September 30, 2018) $ 644,688 In addition, the Village reported an outflow of resources due to the benefits paid after the measurement date in the amount of $34,636. There were no deferred inflows related to OPEB. Actuarial assumptions and other inputs. The total OPEB liability was determined using Alternative Measurement Method (AMM) rolled forward twelve months from the Valuation Date to Measurement Date following actuarial assumptions and other inputs. Valuation Date September 30, 2017 Measurement Date September 30, 2018 Actuarial Cost Method Entry age normal Inflation 2.50 % Discount Rate 3.83% Salaty Increase 6.00% Retirement Age Varies based on several factors including plan -specified retirement eligibility provisions and experiences Mortality PR-2000 Combined Healthy Participant mortality tables Healthcare Cost Trend Rates 7.00% for FY beginning 2018, 6.75% for FY beginning 2019 and then gradually decreasing to an ultimate trend rate of 4.25% Other information Notes Changes in assumptions and other inputs 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. This change reflected in the Schedule of Changes in Total OPEB Liability. Retirees' Share of Benefit Related Costs 100% of projected health insurance premiums Mortality rates were based on the RP-2000 Healthy Annuitant Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale AA. PagO12 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 The actuarial assumptions used in the September 30, 2017 valuation were based on the results of an actuarial experience study for the period October 1, 2016 - September 30, 2017 and "rolled -forward" to the September 30, 2018 measurement date. Discount Rate For plans that do not have formal assets, the discount rate is equal to the tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating as of the measurement date. For the purpose of this AMM roll -forward calculation, the municipal bond rate is 3.83% (based on the daily rate of Fidelity's "20-Year Municipal GO AA Index" closest to but not later than the measurement date). The discount rate was 3.50% as of the beginning of the measurement year. Sensitivity of Total OPEB Liability Regarding the sensitivity of the total OPEB liability to changes in the discount rate, the following presents the plan's total OPEB liability, calculated using a discount rate of 3.83%, as well as what the plan's total OPEB liability would be if it were calculated using a discount rate that is one percent lower or one percent higher. Sensitivity of Total OPEB Liability to the Discount Rate Assumption Current Discount Rate 1% Decrease 2.83% Assumption 3.83% 1% Increase 4.83% Village's OPEB liability $ 684,236 $ 644,688 $ 602,250 Regarding the sensitivity of the total OPEB liability to changes in the healthcare cost trend rates, the following presents the plan's total OPEB liability, calculated using the assumed trend rates as well as what the plan's total OPEB liability would be if it were calculated using a trend rate (7.0%) that is one percent lower or one percent higher. Sensitivitv of Total OPEB Liabilitv to the Healthcare Cost Trend Rate Assurnntion Current Healthcare Cost 1% Decrease Trend Rate Assumption 1% Increase 6.0% 7.0% 8.0% Village's OPEB liability $ 572,554 $ 644,688 $ 729,505 H. Construction Commitments At year end, The Village had the following significant construction commitments: Remaining Description Spent to Date Commitment Water Treatment Plant upgrades $ 1,209,563 $ 603,181 PagO13 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Inter -Local Agreement On December 20, 1994, the Village entered into an Inter -local agreement with Palm Beach County. Per the agreement, Palm Beach County provided for partial funding, land acquisition and design and construction of a branch library within Tequesta. Upon completion of the project, the library was ]eased to Palm Beach County for 50 years for an annual rent of one dollar. In the event the Village terminates the lease before the end of 50 years, the Village must reimburse Palm Beach County a depreciated value using a useful life of 25 years based on an initial value of $405,000 calculated on a straight-line basis. L Contracted Services —Refuse and Recycling Collection The Village entered into a new agreement with Waste Management, Inc of Florida with the initial term for a period of eight years beginning October 1, 2017 and ending September 30, 2025 with optional renewal for one additional five year period. With this agreement the Village granted Waste Management the exclusive franchise for solid waste collection of residential, commercial, industrial and roll -off refuse, recycling and vegetative waste. The annual change in the collection component is determined using the Water, Sewer, and Trash Collection CPI published monthly by Bureau of Labor Statistics during the most recent previous twelve consecutive months period beginning on April 1 and ending March 31. J. Risk Management The Village is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees and natural disasters. While the Village cannot anticipate the areas in which potential claims may arise, it purchases commercial insurance to protect against areas of possible exposure germane to municipal entities such as property, liability, automobile, workers' compensation, crime, storage tank, inland marine, statutory accidental death and dismemberment, firefighter cancer program coverage, and railroad coverage. Deductibles and limits vary by coverage and are secured based upon the Village's tolerance of risk retention in each area. At the Village Council's direction, the property deductible of $100,000 is applicable for all perils excluding hurricane/windstorm damage. The Florida Municipal Insurance Trust (FMIT) applies a named storm deductible of 5% of the 100% value of real and personal property, personal property of others in our care, custody and control values at the time of loss or damage at the locations where the damage occurred, subject to the policy deductible, whichever is greater. The Village continues to self -insure all property claims up to $100,000 via a policy deductible. FMIT issued members in good standing a return of premium credit. The Village received a total credit of $9,906 related to policy year 2017/2018. The Village remains fully insured with the FMIT for workers' compensation coverage with statutory limits. Premiums are based upon risk class and remuneration of covered employees adjusted by an experience modification factor which includes three prior years of claims history. At the end of each fiscal year, the plan is audited and the Village can either receive a return of premium or be required to pay additional premium base upon actual versus estimated payroll. FMIT's final audit for fiscal year 2018/2019 resulted in the Village being refunded a total of $7,369 in fiscal year 2020. Pagc9q 14 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 In May of 2019, the Florida legislation passed Senate Bill 426, allowing for benefits to firefighters diagnosed with certain forms of cancer. One of the benefits was a $25,000 lump sum payment provided by the employer, upon diagnosis of cancer from a qualified physician. The Village of Tequesta elected to secure an insurance product to assist in its new statutory requirement to fund this benefit. Other then newly purchased firefighter cancer program coverage, there were no significant changes in insurance coverage from prior years. Settled claims have not exceeded the commercial coverage in any of the past three fiscal years. K. Lease Obligations Capital Lease — Police Tasers The Village entered into a 60-month capital lease with Axon Enterprise, Inc. in the amount of $31,100 with funding on September 18, 2018 for the financing of twenty (20) tasers. The interest and principal payments are due annually. The following is the schedule of the future minimum lease payments under this capital lease arrangement at September 30, 2019: Fiscal Year Ending September 30: Amount 2020 $ 6,620 2021 6,620 2022 6,620 Total minimum lease payments 19,860 Present Value of Future Minimum Lease Payments $ 19,860 Capital Lease - Fire Equipment The Village entered into a Master Equipment Lease Purchase agreement with Community First National Bank in the amount of $132,774 with funding on January 5, 2016 for the financing of fire equipment. The applicable interest rate is 2.889% and interest and principal payments are due annually on January 5th. This is a four (4) year lease with five (5) payments. The following is the schedule of the of the future minimum lease payments under this capital lease arrangement at September 30, 2019: Fiscal Year Ending September 30: Amount 2020 $ 28,089 Total minimum lease payments 28,089 Less amount representing interest (789) Present value of Future Minimum Lease Payments $ 27,300 Capital Lease- Fire Pumper The Village entered into a capital lease with SunTrust in the amount of $432,844 with funding on October 29, 2013 for the financing of a fire pumper. The applicable interest rate is 2.423% and interest and principal payments are due annually on November I Ith. This is a nine (9) year lease with ten (10) payments. Pag69 115 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Pursuant to Section 4.4(b) of the Agreement, the interest rate automatically increased from 2.42% to 2.94%, effective as of January 1, 2018, due to a decrease in the maximum federal corporate income tax rate. The following is a new schedule of the future minimum lease payments under this capital lease arrangement at September 30, 2019: Fiscal Year Ending September 30: Amount 2020 $ 48,794 2021 48,794 2022 48,794 2023 48,794 Total minimum lease payments 195,176 Less amount representing interest 13 543 Present Value of Future Minimum Lease Payments $ 181,633 L. Long -Term Liabilities Promissory Notes The Village issues long-term debt to provide funds for the acquisition and construction of major capital facilities. Promissory notes have been signed for both governmental and business -type activities. These notes mature in 4 to 10 years and have interest rates from 3.685% to 4.96% per year. Notes outstanding at September 30, 2019 are as follows: Signed Original Interest Final Outstanding Promissory Notes Payable Date Borrowing Rate Maturity 9/30/2019 Government Activities Public Improvements/P.S. Building Business -type Activities Water Plant Expansion Public Improvement (Refunding) Total Business -type Activities 9/13/2002 $ 5,000,000 6/30/2004 $ 645,170 7/14/2008 6,554,935 4.28% 9/13/2022 $ 1,046,986 4.96% 4/1/2021 $ 77,895 3.69% 3/1/2028 3,429,686 $ 3,507,581 Legal Debt Margin The Village is subject to a bonded debt limitation of 10% of total assessed value. The final gross taxable value at September 30, 2019 was $1,123,534,054. As of September 30, 2019 the Village did not exceed the debt limit of $112,353,405. PagcP 16 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Changes in Long -Term Liabilities Changes in the Village's long-term liabilities for the fiscal year ended September 30, 2019 are as follows: Governmental Activities Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental Activities Note Payable - 2002 S 1,367,204 $ - S 320,218 S 1,046,986 $ 334,196 Capital leases 277,951 26,480 75,638 228,793 77,374 Compensated absences 568,675 166,550 78,896 656,329 60,200 Total Governmental Activities S 2,213,830 $ 193,030 S 474,752 S 1,932,108 $ 471,770 * For governmental activities, the liability for compensated absences, pension and OPEB liabilities are liquidated by the general fund. Business-tyne Activities Beginning Ending Due Within Balance Additions Deletions Balance One Year Business -type Activities Note Payable (2004) $ 116,895 S - $ 39,000 $ 77,895 $ 41,000 Note Payable (2008) 3,765,889 - 336,203 3,429,686 347,466 Compensated absences 138,633 47,204 52,324 133,513 15,000 Total Business -type Activities $ 4,021,417 S 47,204 S 427,527 $ 3,641,094 S 403,466 The debt service requirements for the Village's notes are as follows: Governmental Activities Fiscal Year Ending Promissory Notes September 30: Principal Interest Total 2020 $ 334,196 $ 38,306 $ 372,502 2021 348,783 23,718 372,501 2022 364,007 8,494 372,501 Total $ 1,046,986 $ 70,518 $ 1,117,504 Business -type Activities Promissory Notes Fiscal Year Ending Business -type Activities September 30: Principal Interest Total 2020 $ 388,466 $ 125,366 $ 513,832 2021 397,999 109,757 507,756 2022 376,729 94,117 470,846 2023 391,823 79,732 471,555 2024 406,556 64,977 471,533 2025-2028 1,546,008 100,965 1,646,973 Total $ 3,507,581 $ 574,914 $ 4,082,495 PagcP 17 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Total Primary Government Debt Fiscal Year Ending Total Primary Government Debt September 30: Principal Interest Total 2020 $ 722,662 $ 163,672 $ 886,334 2021 746,782 133,475 880,257 2022 740,736 102,611 843,347 2023 391,823 79,732 471,555 2024 406,556 64,977 471,533 2025-2028 1,546,008 100,965 1,646,973 Total $ 4,554,567 $ 645,432 $ 5,199,999 M. Fund Balance Minimum Fund Balance Policy The Village Council has adopted a financial policy to maintain a minimum level of unassigned fund balance in the general fund. The target level is set at two months of general fund operating expenditures over annual revenues (approximately 17%). This amount is intended to provide fiscal stability when economic downturns and other unexpected events occur. if fund balance falls below the minimum target level because it has been used, essentially as a "revenue" source, as dictated by current circumstances, the policy provides for actions to replenish the amount to the minimum target level. Generally, replenishment is to occur within a three-year period. At September 30, 2019 the unassigned fund balance was below the minimum target level (approximately 10.93%). During the budgeting process for the upcoming fiscal year, Management proposed several measures to address the shortfall in unassigned fund balance. N. Interfund Transfers The composition of interfund transfers for the fiscal year ended September 30, 2019 is as follows: Interfund Transfers Transfers In Capital Improvement Fund Transfers Out (1) Total General Fund $ 422,754 422,754 Total Interfund Transfers $ 422,754 422,754 (1) Transfer is to restrict infrastructure tax to fund capital projects and improvements. O. Joint Ventures The Village, in conjunction with six other municipalities, organized a consortium to provide mutual fire and emergency aid. The consortium is known as the Northern Area Mutual Aid Consortium (NAMAC). During 1999, the consortium purchased equipment and supplies as well as collected contributions. The consortium does not issue separate financial statements. The Village has not been obligated to contribute any funds to the consortium since its inception in 1999. Pagc9118 of 308 Agenda Item #1. REQUIRED SUPPLEMENTARY INFORMATION Page 119 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Revenues Ad valorem taxes Other taxes Charges for services Intergovernmental Intragovernmental Licenses and permits Franchise fees Rents and royalties Miscellaneous Fines and forfeitures Grants, contributions and donations Investment earnings Total Revenues Expenditures Current: General government Public safety Transportation Leisure services Capital outlay Debt service: Principal Interest Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers out Proceeds on sale of capital assets Proceeds from capital lease Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 6,800,600 $ 6,800,600 $ 6,800,483 $ (117) 1,555,900 2,205,162 2,222,910 17,748 1,175,600 1,251,575 1,276,167 24,592 865,000 865,000 869,592 4,592 594,700 696,600 696,600 - 633,000 633,000 653,497 20,497 460,000 460,000 467,670 7,670 214,800 214,800 213,490 (1,310) 950 950 25,965 25,015 16,000 56,000 87,490 31,490 1,500 18,692 25,792 7,100 80,000 80,000 133,195 53,195 12,398,050 13,282,379 13,472,851 190,472 2,530,350 2,365,394 2,275,900 89,494 7,639,500 8,530,579 8,429,823 100,756 1,346,500 1,287,649 1,232,225 55,424 690,350 729,251 650,649 78,602 532,400 360,987 256,600 104,387 389,700 396,320 395,856 464 59,400 59,400 59,573 (173) 17,000 18,500 12,230 6,270 13,205,200 13,748,080 13,312,856 435,224 (807,150) (465,701) 159,995 625,696 - (439,900) (422,754) 17,146 - - 24,597 24,597 31,100 26,480 (4,620) - (408,800) (371,677) 37,123 (807,150) (874,501) (211,682) 662,819 3,508,746 2,992,508 3,882,111 889,603 $ 2,701,596 $ 2,118,007 $ 3,670,429 $ 1,552,422 See note to budgetary comparison schedule. PagdP1120 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA NOTE TO THE BUDGETARY COMPARISON SCHEDULE FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Note 1— Budgets and Budgetary Accounting The Village is required to present a budget to actual comparison for the general fund and any major special revenue fund with a legally adopted annual budget. The Village may not include nonmajor special revenue funds, or funds of other fund types. This fiscal year, the Village presents this schedule for the general fund only. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. For budgeting purposes, current year encumbrances are not treated as expenditures. All budgets are legally enacted through passage of a resolution. Although the Village Council requires all inter -department budget amendments to go before the Village Council for approval, the budget was adopted on a fund basis and the legal level of budgetary control is at that level. What this means is that any amendment that changes the fund's total budget requires the Village Council to approve it in the same manner that the original budget was approved — by resolution. The original budget is the budget in place at the start of the fiscal year, which includes all of the following: The budget passed by the Village Council +Subsequent amendments made prior to the start of the fiscal year +Carryovers from the previous year (encumbrances) =Original budget The rinal budget includes all adjustments to the budget applicable to the fiscal year, even if they take place after the close of the fiscal year. During the year, total supplemental appropriations of $1,014,313 were adopted for the General Fund. Of this amount, $31,533 was allocated to fund balance. Appropriations are legally controlled at the fund level and expenditures may not legally exceed budgeted appropriations at that level. PagdM 21 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS FIREFIGHTERS' PENSION TRUST FUND Measurement Date, September 30, Total Pension Lability Service cost Interest Changes of benefit terms Difference between expected and actual experience Changes of assumptions Benefit payments Refunds Other Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position Contributions - employer Contributions - employer (from State)* Contributions - member Net Investment income Benefit payments Refunds Administrative expense Other (Use of State Contribution Reserve) Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Net Pension Liability - Ending (a) - (b) Plan Fiduciary Net Position as a Percentage of Total Pension Liability Covered Payroll* Net Pension Liability as a Percentage of Covered Payroll 2019 2018 2017 2016 2015 2014 $ 333,395 $ 392,933 $ 366,393 $ 348,504 $ 334,559 $ 312,030 878,984 827,256 788,885 778,642 679,400 582,897 22,243 - - - 318,787 - (41,742) 71,910 (22,327) (401,835) 108,010 450 378,870 - (136,724) 300,255 - (216,799) (518,495) (163,805) (438,149) (61,913) (53,637) - (1,852) - - - (151,438) (151,438) (242,266) 118,555 30,162 1,354,951 622,166 679,t32 345,151 1,497,398 871,902 11,898,913 11,276,747 10,597,615 10,252,464 8,755,066 7,883,164 $ 13,253,864 $ 11,898,913 $ 11,276,747 $ 10,597,615 $ 10,252,464 $ 8,755,066 $ 332,559 $ 182,198 $ 209,615 $ 60,162 $ 335,771 $ 351,652 156,424 307,956 300,401 394,709 189,010 100,617 94,343 90,424 79,564 68,982 64,721 65,803 358,277 943,640 974,383 609,318 77,213 567,786 (216,799) (518,495) (163,805) (438,149) (61,913) (53,637) - - (1,852) - - - (30,043) (31,858) (18,789) (27,450) (27,290) (18,921) - (151,438) (151,438) (242,266) - - 694,761 822,427 1,228,079 425,306 577,512 1,013,300 10,877,527 10,055,100 8,827,021 8,401,715 7,824,203 6,810,903 $ 11,572,288 $ 10,877,527 $ 10,055,100 $ 8,827,021 $ 8,401,715 $ 7,824,203 $ 1,681,576 $ 1,021,386 $ 1,221,647 $ 1,770,594 $ 1,850,749 $ 930,863 97.31% 91.42% 89.17% 83.29% 81.95% 89.37% $ 1,572,385 $ 1,507,072 $ 1,446,616 $ 1,379,650 $ 1,294,416 $ 1,316,060 106,94% 67.77% 84.45% 128.34% 142.98% 70.73% *State Contribution Reserve was used to offset the Village's contribution requirements for the fiscal year ending 2016, 2017 and 2018. This schedule is presented as required, however, until a full 10-year trend is compiled, the Village is only presenting information for those years for which information is available. Page 22 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF VILLAGE CONTRIBUTIONS FIREFIGHTERS' PENSION TRUST FUND Fiscal Year Actuarially Contribution Actual Ended Determined Actual Deficiency Covered Contribution as a % September 30, Contribution Contribution (Excess) Payroll of Covered Payroll 2014 $ 416,665 $ 422,107 $ (5,442) $ 1,316,060 32.07% 2015 403,211 406,226 (3,015) 1,294,416 31.38% 2016 454,871 454,871 - 1,379,650 32.97% 2017 498,504 510,016 (11,512) 1,446,616 35.26% 2018 485,729 490,154 (4,425) 1,507,072 32.52% 2019 474,074 488,983 (14,909) 1,572,385 31.10% Notes to Schedule Valuation Date 10/1/2017 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 determined contribution rates: Actuarial cost method Entry age normal Amortization method Level dollar, closed Remaining amortization period 20 years Asset valuation method 5-year smoothed market Inflation 2.50% Salary increases 6.0%, including inflation Investment rate of return 7.25% Retirement age 100% upon reaching normal retirement age. Probability of early retirement is 5% or each year eligible. Mortality RP-2000 Combined Healthy Participant Mortality Table (for pre -retirement mortality) and the PR-2000 Mortality Table for Annuitants (for post -retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 90% blue collar adjustment and a 10% white collar adjustment. For females, the base mortality rates include a 100% white collar adjustment. Same rates used for a Special Risk Class members of the FRS in the July 1, 2016 Actuarial Valuation Report, as mandated by Chapter 112.63, Florida Statutes. Other information See discussion of valuation results in the October 1, 2017 Actuarial Valuation report, dated January 12, 2018. This schedule is presented as required, however, until a full 10-year trend is compiled, information is presented for those years available. PagdM 23 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS FIREFIGHTERS' PENSION TRUST FUND Fiscal Year Ended September 30, 2019 2018 2017 2016 2015 2014 Annual money -weighted rate of return, net of investment expenses 2.93% 8.92% 10.58% 7.69% 0.38% 7.46% This schedule is presented as required, however, until a full 10-year trend is compiled, the Village is only presenting information for those years for which information is available. PagdN 24 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY (ASSET) AND RELATED RATIOS POLICE OFFICERS' PENSION TRUST FUND Measurement Date, September 30, Total Pension Lability Service cost Interest Benefit changes Difference between expected and actual experience Changes of assumptions Benefit payments Refunds Other (increase in State contribution reserve) Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position Contributions - employer Contributions - employer (from State) Contributions - member Net Investment income Benefit payments Refimds Administrative expense Other - Transfer from 401(a) plan Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Net Pension Asset - Ending (a) - (b) Plan Fiduciary Net Position as a Percentage of Total Pension Liability (Asset) Covered Payroll Net Pension Liability (Asset) as a Percentage of Covered Payroll 2019 2018 2017 2016 2015 2014 $ 100,925 $ 98,621 $ 80,711 $ 110,495 $ 126,703 $ 161,156 215,318 193,922 200,356 201,452 213,603 169,526 821,833 - - - (39,467) - (85,146) 34,217 (329,387) (226,384) (391,613) - 120,973 - (30,633) 75,463 - - (40,184) (27,708) (27,708) (27,708) (30,312) (10,073) - (52,038) (43,331) 649,262 - - - - - 1,782,981 299,052 (106,661) 81,280 (121,086) 277,278 2,889,074 2,590,022 2,696,683 2,615,403 2,736,489 2,459,211 $ 4,672,055 $ 2,889,074 $ 2,590,022 $ 2,696,683 $ 2,615,403 $ 2,736,489 $ 317,338 $ 175,116 $ 40,829 $ 38,638 $ 80,782 $ 111,164 649,262 - - - - - 65,446 31,338 16,998 17,067 20,545 25,888 143,441 344,620 357,477 306,504 20,718 219,219 (40,184) (27,708) (27,708) (27,708) (30,312) (10,073) - - - (52,039) - (43,331) (30,034) (31,858) (18,788) (27,026) (27,967) (18,677) 297,733 - - - - - 1,403,002 491,508 368,808 255,437 63,766 284,190 4,246,463 3,754,955 3,386,147 3,130,710 3,066,944 2,782,754 $ 5,649,465 $ 4,246,463 $ 3,754,955 $ 3,386,147 $ 3,130,710 $ 3,066,944 $ (977,410) $ (1,357,389) $ (1,164,933) $ (689,464) $ (515,307) $ (330,455) 120.92% 146.98% 144.98% 125.57% 119.70% 112.08% $ 1,153,957 $ 582,166 $ 339,957 $ 341,342 $ 410,897 $ 517,760 (84.70)% (233.16)% (342.67)% (201.99)% (125.41)% (63.82)% This schedule is presented as required, however, until a full 10-year trend is compiled, the Village is only presenting information for those years for which information is available. PagWq 25 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF VILLAGE CONTRIBUTIONS POLICE OFFICERS' PENSION TRUST FUND Fiscal Year Actuarially Contribution Actual Ended Determined Actual Deficiency Covered Contribution as a % September 30, Contribution Contribution (Excess) Payroll of Covered Payroll 2014 $ 111,164 S 111,164 $ - $ 517,760 21.47% 2015 80,782 80,782 - 410,897 19.66% 2016 37,377 38,638 (1,261) 341,342 11.32% 2017 40,659 40,829 (170) 339,957 12.01% 2018 175,116 175,116 - 582,166 30.08% 2019 317,338 317,338 - 1,153,957 27.50% Notes to Schedule Valuation Date 10/01/2017 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 determined contribution rates: Actuarial cost method Entry age normal Amortization method Level dollar, closed Remaining amortization period 20 years Asset valuation method 5-year smoothed market Inflation 2.50% Salary increases 6.0%, including inflation Investment rate of return 7.25% Retirement age 100% upon reaching normal retirement age. Probability of early retirement is 5% or each year eligible. Mortality RP-2000 Combined Healthy Participant Mortality Table (for pre -retirement mortality) and the PR-2000 Mortality Table for Annuitants (for post -retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 90% blue collar adjustment and a 10% white collar adjustment. For females, the base mortality rates include a 100% white collar adjustment. Same rates used for a Special Risk Class members of the FRS in the July 1, 2016 Actuarial Valuation Report, as mandated by Chapter 112.63, Florida Statutes. Other Information: See discussion of valuation results in the October 1, 2017 Actuarial Valuation report, dated January 12, 2018 This schedule is presented as required, however, until a full 10-year trend is compiled, information is presented for those years available. PagW 126 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS POLICE OFFICERS' PENSION TRUST FUND Fiscal Year Ended September 30, Annual money -weighted rate of return, net of investment expenses 2019 2018 2017 2016 2015 2014 2.93% 8.92% 10.58% 7.69% 0.38% 7.46% This schedule is presented as required, however, until a full 10-year trend is compiled, the Village is only presenting information for those years for which information is available. PagW� 27 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOS GENERAL EMPLOYEES' PENSION TRUST FUND Measurement Date, September 30, Total Pension Lability Service cost Interest Benefit changes Difference between actual & expected experience Assumption changes Benefit payments Refunds Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position Contributions - employer and State Contributions - member Net investment income Benefit payments Refunds Administrative expense Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Net Pension Asset - Ending (a) - (b) 2019 2018 2017 2016 2015 2014 $ 461,164 $ 447,305 $ 380,051 $ 359,231 $ 300,325 S 278,029 425,911 373,859 329,590 285,954 253,701 216,124 (156,013) 66,509 (112,103) (40,094) (157,539) - - - 362,784 - - - (160,588) (79,332) (41,859) (16,657) (11,918) (8,534) (48,114) (27,837) (13,511) (16,161) (5,959) (4,454) 522,360 780,504 904,952 572,273 378,610 481,165 5,727,627 4,947,123 4,042,171 3,469,898 3,091,288 2,610,123 $ 6,249,987 $ 5,727,627 $ 4,947,123 $ 4,042,171 $ 3,469,898 $ 3,091,288 $ 362,848 $ 350,412 $ 305,931 $ 201,704 $ 194,376 $ 184,627 161,553 156,434 143,361 134,829 115,288 100,560 235,519 417,228 562,828 191,848 (36,136) 308,314 (160,588) (79,332) (41,859) (16,657) (11,918) (8,534) (48,114) (27,837) (13,511) (16,161) (5,959) (4,454) (48,241) (43,300) (37,296) (44,359) (38,098) (25,678) 502,977 773,605 919,454 451,204 217,553 554,835 5,708,753 4,935,148 4,015,694 3,564,490 3,346,937 2,792,102 $ 6,211,730 $ 5,708,753 $ 4,935,148 $ 4,015,694 $ 3,564,490 $ 3,346,937 $ 38,257 $ 18,874 $ 11,975 $ 26,477 $ (94,592) $ (255,649) Plan Fiduciary Net Position as a Percentage of Total Pension Liability 99.39% 99.67% 99.76% 99.34% 102.73% 108.27% Covered Payroll $ 3,231,060 $ 3,128,680 $ 2,867,220 $ 2,696,572 $ 2,305,760 $ 2,011,191 Net Pension Liability as a Percentage of Covered Payroll 1.18% 0.60% 0.42% 0.98% (4.10)% (12.71)% This schedule is presented as required, however, until a full 10-year trend is compiled, the Village is only presenting information for those years for which information is available. PagW 128 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF VILLAGE CONTRIBUTIONS GENERAL EMPLOYEES' PENSION TRUST FUND Fiscal Year Actuarially Contribution Actual Ended Determined Actual Deficiency Covered Contribution as a % September 30, Contribution Contribution (Excess) Payroll of Covered Payroll 2014 $ 184,627 S 184,627 $ - $ 2,011,191 9.18% 2015 194,376 194,376 - 2,305,760 8.43% 2016 201,704 201,704 - 2,696,572 7.48% 2017 235,972 305,931 (69,959) 2,867,220 10.67% 2018 350,412 350,412 - 3,128,680 11.20% 2019 362,848 362,848 - 3,231,060 11.23% Notes to Schedule Valuation Date 10/01 /2017 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 determined contribution rates: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Aggregate method N/A N/A 5-year smoothed market 2.50% 6.0%, including inflation 7.00% Rate of retirement 100% when first eligible for normal retirement; 5% for each year eligible for early retirement. Mortality RP-2000 Combined Healthy Participant Mortality Table (for pre -retirement mortality) and the PR-2000 Mortality Table for Annuitants (for post -retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 50% blue collar adjustment and a 50% white collar adjustment. For females, the base mortality rates include a 100% white collar adjustment. Same rates used for a Regular Class members of the FRS in the July 1, 2016 Actuarial Valuation Report, as mandated by Chapter 112.63, Florida Statutes. Other information See discussion of valuation results from the October 1, 2017 Actuarial Valuation report. This schedule is presented as required, however, until a full 10-year trend is compiled, the Village is only presenting information for those years for which information is available. PagWl29 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS GENERAL EMPLOYEES' PENSION TRUST FUND Fiscal Year Ended September 30, 2019 2018 2017 2016 2015 2014 Annual money -weighted rate of return, net of investment expenses 3.36% 7.28% 12.52% 3.97% (2.11)% 9.73% This schedule is presented as required, however, until a full 10-year trend is compiled, information is presented for those years available, the Village is only representing information for those years for wich information is available. PagWl30 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY AND RELATED RATIOUS OTHER POST -EMPLOYMENT BENEFITS Measurement Date, September 30, Total OPEB Lability Service cost Interest Changes of assumptions and other inputs Benefit payments Net Change in Total OPEB Liability Total OPEB Liability - Beginning Total OPEB Liability - Ending Covered - Employee Payroll Total OPEB Liability as a percentage of Covered Payroll Notes to Schedule 2018 2017 $ 51,371 $ 53,040 22,929 19,739 (13,500) (14,020) (39,712) (37,725) 21,088 21,034 623,600 602,566 $ 644,688 $ 623,600 $ 6,694,984 $ 5,708,842 9.63% 10.92% Changes of benefit terms. Amounts precented reflect a 100 percent increase in the retirees' share of health insurance premiuns in 2017-2019. Changes of assmptions. Changes of assumptions and other inputs reflect the effect of changes in the discount rate each period. The following are the discount rates used in each period: FY Beginning 2019 6.75% 2020 6.50% 2021 6.25% 2022 6.00% 2023 5.75% 2024 5.50% 2025 5.25% 2026 5.00% 2027 4.75% Ultimate health cost trend 4.25% Salary Scale 6.00% The Village of Tequesta implemented GASB No.75 in fiscal year ending 9/30/218. This schedule is presented as required, however, until a full 10-year trend is compiled, the Village is only presenting information for those years for which information is available. PagW 131 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION FLORIDA RETIREMENT SYSTEM (FRS) SCHEDULE OF PROPORTIONATE CHANGES IN THE NET PENSION LIABILITY Fiscal Year Ended June 30, 2019 2018 2017 2016 2015 2014 2013 Proportion of the net pension liability 0.00158% 0.00166% 0.00189% 0.00227% 0.00223% 0.00291% 0.00397% Proportionate share of the net pension liability $ 543,212 $ 501,303 $ 561,097 $ 572,594 $ 287,876 $ 177,517 $ 683,841 Covered payroll 285,622 369,696 391,643 492,907 508,785 635,666 716,621 Proportionate share of the net pension liability as a percentage of its covered payroll 190.19% 135.60% 143.27% 116.17% 56.58% 27.93% 95.43% Plan fiduciary net position as a percentage of the total pension liability 82.61 % 84.26% 83.89% 84.88% 92.00% 96.09% 88.54% * The amounts presented for each fiscal year were determined as of 6/30 (1) This schedule is presented as required, however, until a full 10-year trend is compiled, information is presented for only those years for which information is available. PagW� 32 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION HEALTH INSURANCE SUBSIDY PROGRAM (HIS) SCHEDULE OF PROPORTIONATE CHANGES IN THE NET PENSION LIABILITY Fiscal Year Ended June 30, 2019 2018 2017 2016 2015 2014 2013 Proportion of the net pension liability 0.00094% 0.00113% 0.00121% 0.00160% 0.00168% 0.00214% 0.00247% Proportionate share of the net pension liability $ 104,854 $ 119,802 $ 129,440 $ 186,087 $ 171,031 $ 200,044 $ 214,766 Covered payroll 285,622 369,696 391,643 492,907 508,785 635,666 716,621 Proportionate share of the net pension liability as apercentage of its covered payroll 36.71% 32.41% 33.05% 37.75% 33.62% 31.47% 29.97% Plan fiduciary net position as a percentage of the total pension liability 2.63% 2.15% 1.64% 0.97% 0.50% 0.99% 178.00% The amounts presented for each fiscal year were detennined as of 6/30. (1) This schedule is presented as required, however, until a full 10-year trend is compiled, information is presented for only those years for which information is available. PagW� 33 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION FLORIDA RETIREMENT SYSTEM (FRS) SCHEDULE OF VILLAGE CONTRIBUTIONS Fiscal Year Ended September 30, 2019 2018 2017 2016 2015 2014 2013 Contractually required contribution $ 52,059 $ 48,540 $ 47,988 $ 62,966 $ 43,642 $ 58,404 $ 72,698 Contributions in relation to the contractually required contribution (52,0590) (48,540) (47,988) (62,966) (43,642) (58,404) (72,698) Contribution deficiency (excess) $ - $ - $ - $ - S - $ - $ - Covered payroll $ 261,899 $ 362,908 $ 382,869 $ 451,085 $ 484,772 $ 569,299 $ 651,093 Contributions as a percentage of covered payroll 19.88% 13.38% 12.53% 13.96% 9.00% 10.26% 11.17% (1) This schedule is presented as required, however, until a full 10-year trend is compiled, information is presented for only those years for which information is available. (2) Refer to GASB No. 68, § 81b - the information in this schedule determined as of the Village's most recent fiscal year. PagW9 34 of 308 Agenda Item #1. VILLAGE OF TEQUESTA REQUIRED SUPPLEMENTARY INFORMATION HEALTH INSURANCE SUBSIDY PROGRAM (HIS) SCHEDULE OF VILLAGE CONTRIBUTIONS Fiscal Year Ended September 30, 2019 2018 2017 2016 2015 2014 2013 Contractually required contribution $ 4,348 $ 6,024 $ 6,356 $ 7,488 $ 5,381 $ 6,832 $ 8,204 Contributions in relation to the contractually required contribution (4,348) (6,024) (6,356) (7,488) (5,381) (6,832) (8,204) Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - Covered payroll $ 261,899 $ 362,908 $ 382,869 $ 451,085 $ 484,772 $ 569,299 $ 651,093 Contributions as a percentage of covered payroll 1.66% 1.66% 1.66% 1.66% 1.11% 1.20% 1.26% (1) This schedule is presented as required, however, until a full 10-year trend is compiled, information is presented for only those years for which information is available. (2) Refer to GASB No. 68, § 8lb - the information in this schedule determined as of the Village's most recent fiscal year. PacW q 35 of 308 Agenda Item #1. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Page 136 of 308 Agenda Item #1. NONMAJOR GOVERNMENTAL FUNDS Page 137 of 308 Agenda Item #1. NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds are used to account for specific revenue sources that are restricted, committed, or assigned to expenditures for particular purposes. Special Law Enforcement Trust Fund — This fund accounts for forfeitures received by the Police Department. Forfeitures obtained locally are expended as prescribed by Florida Statute Chapter 932.704. Forfeitures obtained through federal programs are expended according to the Department of Justice Asset Forfeiture Program. Capital Projects Funds Capital Projects Funds are used to account for and report financial resources that are restricted, committed or assigned to expenditures for capital outlays including the acquisition or construction of capital facilities and other capital assets. The use of the capital projects fund type is permitted rather than mandated for financial reporting purposes. Capital projects funds can be a valuable management tool for multi -year projects. Capital Improvement Fund — This fund is used to account for the maintenance and upkeep of the Village's general infrastructure (such as roads, bridges, sidewalks and storm water drainage systems) and streetscape beautification projects. Capital Projects Fund — This fund accounts for the acquisition or construction of major capital projects, other than those financed by proprietary fund types. PacW 138 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2019 Assets Cash Investments Receivables, net Prepaid items Total Assets Liabilities and Fund Balances Fund Balances Restricted for: Infrastructure Law Enforcement Assigned to: Capital Projects Total Fund Balances Total Liabilities and Fund Balances Special Revenue Capital Projects Total Special Law Capital Capital Nonmajor Enforcement Improvement Projects Governmental $ 80,539 $ 84,725 $ 154,313 $ 319,577 - 350,000 - 350,000 1,200 8,881 - 10,083 252 - - 252 $ 81,991 $ 443,608 $ 154,313 $ 679,912 - 422,754 - 422,754 81,991 - - 81,991 - 20,854 154,313 175,167 $ 81,991 $ 443,608 $ 154,313 $ 679,912 PacW� 39 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Special Revenue Capital Projects Total Special Law Capital Capital Nonmajor Enforcement Improvement Projects Governmental Fund Fund Fund Funds Miscellaneous $ - $ 1,166 $ - $ 1,166 Investment earnings 574 - - 574 Revenues $ 574 $ 1,166 $ - $ 1,740 Expenditures Current: Public safety 22,778 - - 22,778 Transportation - 10,837 - 10,837 Leisure services - - 50,000 50,000 Capital outlay 4,196 - - 4,196 Total Expenditures 26,974 10,837 50,000 87,811 (Deficiency) of Revenues Over Expenditures (26,400) (9,671) (50,000) (86,071) Other Financing Sources Transfers in - 422,754 - 422,754 Net Change in Fund Balances (26,400) 413,083 (50,000) 336,683 Fund Balances - Beginning of Year 108,391 30,525 204,313 343,229 Fund Balances - End of Year $ 81,991 $ 443,608 $ 154,313 $ 679,912 PacW � 40 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA BUDGETARY COMPARISON SCHEDULE SPECIAL LAW ENFORCEMENT TRUST FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Revenues Investment earnings Total Revenues Expenditures Public safety Capital outlay Total Expenditures Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) 574 $ 574 574 574 - 28,452 22,778 5,674 - 4,200 4,196 4 - 32,652 26,974 5,678 - (32,652) (26,400) 6,252 348,031 119,686 108,391 (11,295) $ 348,031 $ 87,034 $ 81,991 $ (5,043) PacW 141 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA BUDGETARY COMPARISON SCHEDULE CAPITAL IMPROVEMENT FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenues Miscellaneous $ - $ - $ 1,166 $ 1,166 Total Revenues - - 1,166 1,166 Expenditures Transportation - - 10,837 (10,937) Capital outlay - 20,000 - 20,000 Total Expenditures - 20,000 10,837 9,163 (Deficiency) of Revenues Over Expenditures - (20,000) (9,671) 10,329 Other Financing Sources Transfers in - 439,900 422,754 (17,146) Net Change in Fund Balance - 419,900 413,083 (6,817) Fund Balance - Beginning 56,019 56,019 30,525 (25,494) Fund Balance - Ending $ 56,019 $ 475,919 $ 443,608 $ (32,311) PacW1 42 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA BUDGETARY COMPARISON SCHEDULE CAPITAL PROJECTS FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Revenues Loan proceeds Total Revenues Expenditures Leisure services Capital outlay Total Expenditures Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 3,000,000 $ 3,000,000 $ - $ (3,000,000) 3,000,000 3,000,000 - (3,000,000) - 50,000 50,000 - 3,000,000 3,000,000 - 3,000,000 3,000,000 3,050,000 50,000 3,000,000 - (50,000) (50,000) - 4,314 4,314 204,313 199,999 $ 4,314 $ (45,686) $ 154,313 $ 199,999 PacW � 43 of 308 Agenda Item #1. FIDUCIARY FUNDS Page 144 of 308 Agenda Item #1. FIDUCIARY FUNDS Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government's own programs. Pension trust funds are fiduciary funds that are used to report resources required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, other post -employment benefit plans, or other employee benefit plans. The Village accounts for two defined benefit plans (Public Safety reports separate trust funds for Police Officers and Firefighters) and a separate fund is reported for each individual trust fund. The three trust funds are as follows: Firefighters' Pension Trust Fund — This fund accounts for the accumulation of resources and for contributions and benefits of the firefighter employees. Police Officers' Pension Trust Fund — This fund accounts for the accumulation of resources and for contributions and benefits of the police employees. General Employees' Pension Trust Fund — This fund accounts for the accumulation of resources and for contributions and benefits for the general employees of the Village. PacW � 45 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2019 Police General Firefighters' Officers' Employees' Pension Pension Pension Trust Fund Trust Fund Trust Fund Total Assets Cash and cash equivalents $ 172,744 $ 78,244 $ 159,551 $ 410,539 Investments Equities 7,512,215 3,276,754 4,118,341 14,907,310 Fixed Income 2,745,413 1,197,595 1,377,080 5,320,088 Real Estate Fund 953,379 415,809 523,361 1,892,549 Total investments 11,211,007 4,890,158 6,018,782 22,119,947 Accounts Receivable - 25,250 - 25,250 Prepaid items 18,067 4,091 13,248 35,406 Contributions receivable 172,545 669,483 24,294 866,322 Accrued interest 12,691 5,535 8,448 26,674 Total Assets 11,587,054 5,672,761 6,224,323 23,484,138 Liabilities Accounts payable 14,766 23,296 12,593 50,655 Total Liabilities 14,766 23,296 12,593 50,655 Net Position Restricted for Pension Benefits $ 11,572,288 $ 5,649,465 $ 6,211,730 $ 23,433,483 PacW � 46 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Additions Contributions: State of Florida Employer Employee Total Contributions Investment Earnings Net (appreciation) depreciaton in fair value of investments Gain on sale of investments Interest earnings Total investment earnings Less investment expenses Net Investment earnings Miscellaneous Total Additions Deductions Benefits paid Refund of contributions Administrative expenses Total Deductions Change in Net Position Net Position Restricted for Pension Benefits Beginning of year End of year Police General Firefighters' Officers' Employees' Pension Pension Pension Trust Fund Trust Fund Trust Fund Total $ 156,424 $ 649,262 $ - $ 805,686 332,559 481,860 362,848 1,177,267 94,343 198,658 161,553 454,554 583,326 1,329,780 524,401 2,437,507 (344,866) (131,812) 109,255 (367,423) 413,775 167,121 23,434 604,330 322,137 129,952 138,603 590,692 391,046 165,261 271,292 827,599 (32,777) (21,828) (35,773) (90,378) 358,269 143,433 235,519 737,221 7 7 - 14 941,602 1,473,220 759,920 3,174,742 216,799 40,184 160,588 417,571 - - 48,114 48,114 30,042 30,034 48,241 108,317 246,841 70,218 256,943 574,002 694,761 1,403,002 502,977 2,600,740 10,877,527 4,246,463 5,708,753 20,832,743 $ 11,572,288 $ 5,649,465 $ 6,211,730 $ 23,433,483 PacW 9 47 of 308 Agenda Item #1. STATISTICAL SECTION Page 148 of 308 Agenda Item #1. STATISTICAL SECTION This part of the Village of Tequesta's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Village's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the Village's financial performance and well-being have changed over time. 120-124 Revenue Capacity These schedules contain information to help the reader assess the Village's most significant local revenue source, the property tax. 125-128 Debt Capacity These schedules present information to help the reader assess the affordability of the Village's current levels of outstanding debt and the Town's ability to issue additional debt in the future. 129-132 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Village's financial activities take place. 133-134 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Village's financial report relates to the services the Village provides and the activities it performs. 135-137 Sources: Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. 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O C� lr O 01 N O O� M O� CT N l N M OC r- L` Oc Oc M O N Oc h h t` 00 DD CT O O � L1 CT �C N 01 �c vCT C', � O M v') Ln ll: ll llc llc llc� 'R t` O� cl V') Vl V') V'1 V) V ; Vr V) V) V) O_ — N_ M_ O O O O O O O O O O N N N N N N N N N N N 0 M Page 160 of 308 Agenda Item #1 M N �- N N N cs� ss ai f3 a v� N r O N 0 �p O 41 41 V N N O N N O O O N N M O M T 69 .Vly O N O r M 01 M W 7 V� �t M O M .O N V O O N r- � � y N_ O N r O vl R r 'O y 69 � C � bA �' `+� a C O N GO •R .R c R" M .� 'd � p O u y N O N O cl) W a R O CC d F, d A R a a Q d A a � R A F 0 0 0 0 0 O O 0 O 0 O M o � O O � M N N O � O C � O O � O O N q z Y U � F- t Page 161 of 308 Agenda Item #1. A -I N M C1 C� O N � K1 C M O l-- r- y � C a 'a 12 bo O O O .�. � y boo E�F•��•I� y E l �o�� �o � bO o O �> o N � m � �., N U b-0 • to bo Q" C > N � ,2, O O 'O 7� U) bb b r \ O ci V 4.1 O S- 4-4 C C° 7� O El v UOa 6' CC y '2 2, O w y � 10A V t Page 162 of 308 Agenda Item #1. 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VILLAGE OF TEQUESTA, FLORIDA PRINCIPAL EMPLOYERS - PALM BEACH COUNTY CURRENT YEAR AND NINE YEARS AGO 2019 2010 Percentage of Percentage of Total County Total County Employer Employees Rank Employment Employees Rank Employment Palm Beach County School Board 22,049 1 N/A 21,719 1 N/A Tenet Coastal Division Palm Beach County 6,505 2 N/A 5,127 3 N/A Palm Beach County Government 5,438 3 N/A 11,381 2 N/A NextEra Energy / Florida Power & Light 4,807 4 N/A 3,658 5 N/A Florida Atlantic University 2,898 5 N/A 2,776 7 N/A Hospital Corporation of America (HCA) 2,806 * 6 N/A 4,150 4 N/A Boca Raton Regional Hospital 2,800 * 7 N/A Veterans Health Administration 2,535 * 8 N/A 2,205 9 N/A The Breakers 2,300 9 Bethesda Health, Inc 2,282 * 10 N/A 2,300 8 Wackenhut Corporation 3,000 6 N/A Boca Raton Resort and Club 2,200 10 N/A 54,420 N/A 58,515 N/A Source: Business Development Board of Palm Beach County Employment information for the Town is not available N/A = not available * Updated figures unavailable at date of publication PacjWl64 of 308 Agenda Item #1. a rn to rn o N 7 r o0 0 � M M 00 M OC M N N 00 O -� Cl C� •--� N O •--� � � N N al N OO O •--� O d`•. V l� O � O M oo M O ^i N l— ^S — Vl r- N N d1 N M O 01 O N \D N 00 O N M O 41 O N �D N 00 O N y 0 0 0 M .O-i vl oc j M --� M In M rq l- O N ; oc aq O � N N O O V M l� V •--� Vl M ^Jj oc cq y s. T O v) M N O O OO 'O 0 Cl 0 0 O O V M •--� OO � � .Nu N c5 U 4�cj °' w U T �i Cl E U O U .�i y CC ii 7J Q) H U y O ..U, ❑ � U � y d bA �c3 a�'+ •h c5 4= a�7aHa o 3� o o a o C7 H cc H F- cr z w Page 165 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Governmental Activities General government Registered voters 4,505 4,543 4,676 4,854 4,702 4,634 4,813 4,017 4,951 5,056 Public safety: No. of full-time certified police officers 17 19 l l * 18 20 19 18 19 19 19 No. of calls received 3,178 3,266 3,272 3,571 3,548 3,853 3,109 3,442 3,443 3,614 No. of arrests 296 204 129 136 168 174 94 108 69 61 No. of parking violations 124 82 149 328 120 207 61 39 20 48 No. of incident numbers issued 881 595 622 691 725 552 345 312 254 259 Fire department: No. of full-time certified firefighters 21 22 21 21 18 22 22 22 22 21 No. of emergency responses 1,043 1,096 1,155 1,372 1,197 1,291 1,409 1,286 1,227 1,168 No. of transports 562 622 695 675 693 1,006 817 722 724 721 No. of fires extinguished/alarms 481 474 460 697 504 285 254 309 267 206 No. of inspections 480 462 495 539 713 499 654 742 608 767 Building, zoning: No. of building permits issued 812 800 883 914 929 1,034 1,583 1,755 1,356 1,226 No. of building inspections conducted 1,579 1,728 1,931 2,176 2,201 1,705 2,472 3,017 2,634 2,649 Leisure services: No. of Spring Classes 10 10 10 10 8 8 12 10 10 10 No. of Summer Classes 4 4 4 4 4 4 4 4 4 4 No. of Movies 3 3 3 3 4 3 3 3 3 2 Business -type Activities Water: No. of customers 4,982 5,019 4,996 5,037 5,039 5,038 5,055 5,042 5,087 5,084 Average daily consumption 2.175 mg 2.698 mg 2.550 mg 2.454 mg 2.422 mg 2.500 mg 2.600 mg 2.700 mg 2.781 mg 2.642 mg Sources: Various Village departments * The number is much lower than the year before due to increased number of reserve officers to cover for the full-time officers that left the department during the FY 2012. PacjW� 66 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function/Program 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Governmental Activities General government: Municipal center 1 1 1 1 1 1 1 1 1 1 Public safety Police: No. of stations 1 1 1 1 1 1 1 1 1 1 No. of patrol units 15 15 11 10 11 10 12 10 12 11 Fire: No. of stations 1 1 1 1 1 1 1 1 1 1 No. of ambulances 3 3 3 3 3 2 2 2 2 2 No. of pumpers 3 3 3 3 3 3 3 2 2 2 Transportation: Miles of street lane miles 24 24 24 24 24 24 24 24 24 24 No. of bridges 1 1 1 1 1 1 1 1 1 1 Leisure services No. of parks 4 5 5 5 6* 6 6 7 7 7 No. of park acreage 53 54 54 54 62 * 62 62 62 62 62 No. of playgrounds 2 2 2 2 2 2 2 2 2 2 No. of baseball/softball diamonds 3 3 3 3 3 3 3 3 3 3 No. of skate -parks 1 1 1 1 1 1 1 1 1 1 Business -type activities: Water: Miles of water mains 73 72 72 73 73 73 77 77 77 77 No. of fire hydrants 430 430 430 433 409 430 456 435 435 435 3,250 3,250 3,250 2,750 2,750 2,750 2,750 2,750 2,750 2,750 Storage capacity (thousands of gallons) Sources: Various Village departments * The green area has been identified as a park (Linear/Green Mile park) PacjW � 67 of 308 Agenda Item #1. REPORTING SECTION Page 168 of 308 Agenda Item #1. CUM ACCOUNTANTS A ADVISORS 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 To the Honorable Mayor, Village Council and Village Manager Village of Tequesta, 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, the business -type activities, each major fund and the aggregate remaining fund information of the Village of Tequesta, Florida (the Village), as of and for the fiscal year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the Village's basic financial statements, and have issued our report thereon dated March 31, 2020. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Village'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 Village's internal control. Accordingly, we do not express an opinion on the effectiveness of the Village'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 Village'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. 138 MARCUM GROUP MEMBER Marcum uP 0 525 Okeechobee Boulevard ■ Suite 750 ■ West Palm Beach, Florida 33401 ■ Phone 561.653.7300 ■ Fax 561.653.7301 P'9bF9"B1P&T08 Agenda Item #1. 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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village'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 Village'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 Village's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. West Palm Beach, Florida March 31, 2020 139 Page 170 of 308 Agenda Item #1. CUM ACCOUNTANTS A ADVISORS MANAGEMENT LETTER IN ACCORDANCE WITH THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA To the Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida Report on the Financial Statements We have audited the financial statements of the Village of Tequesta, Florida (the Village), as of and for the fiscal year ended September 30, 2019, and have issued our report thereon dated March 31, 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 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 Auditor General. Disclosures in those reports, which are dated March 31, 2020, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)l., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations 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 Village was incorporated in 1957 by laws of Florida 57-1915. There are no component units related to the Village. © 140 MARCUM GROUP MEMBER Marcum uP 0 525 Okeechobee Boulevard ■ Suite 750 ■ West Palm Beach, Florida 33401 ■ Phone 561.653.7300 ■ Fax 561.653.7301 P'9bF99MP&T08 Agenda Item #1. Financial Condition and Management Section 10.554(1)(1)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 Village has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the Village 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 Village. It is management's responsibility to monitor the Village'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. Our assessment was performed as of the fiscal year end. 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(l)(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, please see the accompanying Appendix A — current year recommendations to improve financial management. 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 Mayor and the Village Council, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. West Palm Beach, FL March 31, 2020 141 Page 172 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA APPENDIX A — CURRENT YEAR RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT FOR THE YEAR ENDED SEPTEMBER 30, 2019 MLC 2019-001—UTILITY BILLING RATES Observation During our utility billings and collections testing, Marcum noted discrepancies between the authorized/approved utility rates being charged/billed to customers. The exception related to the "W2C-3/4" and "Cond-Condos" (represents approximately codings still being charged the rates that were effective October 1, 2017 versus that rates that were approved to be effective October 1, 2018. These two account codes represent approximately 4.6% of total accounts as of September 30, 2019. All utility bills should be processed with the authorized rates listed in the appropriate Ordinance approved by Village Council. Improper billing rates could create "over- billing(s)" and "under-billing(s)"; in this case, an under billing. Recommendation Marcum recommends that an internal control be developed to ensure that accurate data is input into the utility billing system. Authorized rates used by the Utility Billing Division, should be reviewed and compared against the corresponding Ordinance(s). This should reduce the incidence of discrepancies between the authorized rates and the rates charged/billed on the Village customer's utility bills. Additionally, if feasible and allowed by law, the Village should consider trying to recover any under billing. Management's Response The Village has since reviewed the authorized rate for all customers and has put procedures in place to periodically review changes that are made by the Customer Service Division. The Utilities Director will be responsible for reviewing changes that are made by subordinate staff. MLC 2019-002 —MINIMUM FUND BALANCE POLICY Observation The Village Council adopted a fund balance policy in order to maintain a minimum level of unassigned fund balance in the general fund. The target level is set a two months of general fund operating expenditures. If the minimum fund balance falls below that required of the policy, the Village has three (3) fiscal years in order to replenish the unassigned fund balance. Since September 3, 2017, the unassigned fund balance has been below the minimum target level. Recommendation Essentially, by September 30, 2020, the unassigned fund balance should be replenished to comply with the minimum fund balance policy. However, given the current pandemic, the Village may fall short of its policy and should revisit its policy and/or the upcoming budget so to not fall too far below its policy. 142 Page 173 of 308 Agenda Item #1. VILLAGE OF TEQUESTA, FLORIDA APPENDIX A — CURRENT YEAR RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT FOR THE YEAR ENDED SEPTEMBER 30, 2019 MLC 2019-002 —MINIMUM FUND BALANCE POLICY (CONTINUED) Management's Response During the budgeting process for the upcoming fiscal year, Management proposed several measures to address the shortfall in the unassigned fund balance. 143 Page 174 of 308 Agenda Item #1. CUM ACCOUNTANTS ADVISORS INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE PURSUANT TO SECTION 218.415 FLORIDA STATUTES To The Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida We have examined the Village of Tequesta's (the Village) compliance with Section 218.415 Florida Statutes for the fiscal year ended September 30, 2019. Management is responsible for the Village's compliance with the specified requirements. Our responsibility is to express an opinion on the Village's compliance 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 Village complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Village complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the Village's compliance with specified requirements. In our opinion, the Village complied, in all material respects, with Section 218.415 Florida Statutes for the fiscal year ended September 30, 2019. This report is intended to describe our testing of compliance with Section 218.415 Florida Statutes and it is not suitable for any other propose. West Palm Beach, FL March 31, 2020 MARCUM GROUP MEMBER 144 Marcum uP 0 525 Okeechobee Boulevard ■ Suite 750 ■ West Palm Beach, Florida 33401 ■ Phone 561.653.7300 ■ Fax 561.653.7301 P'9bF9°f &T08 Agenda Item #1. PAC Test Report Check 2020-04-08 13:10 3.0.7.0 is zugang for alle UP Accbs pour tous Accesw per tuttl Access for all PDF/UA PDF Document Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 20 Filename Tequesta 2019 Issued CAFR_.pdf Result en 11165 169 7 MB The PDF/UA requirements checked by PAC are fulfilled. Checkpoint-. -. 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