Annual Financial Report - 2016-2017 - v
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2017
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2017
TABLE OF CONTENTS
Independent Auditors’ Report ..................................................................................................................... i-iii
Management’s Discussion and Analysis.................................................................................................... iv-xi
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position .......................................................................................................................... 1
Statement of Activities .............................................................................................................................. 2
Fund Financial Statements
Balance Sheet -Governmental Funds ....................................................................................................... 3
Reconciliation of Balance Sheet of Governmental Funds to the
Statement of Revenues, Expenditures, and Changes in Fund
Statement of Net Position....................................................................................................................... 4
Balances -Governmental Funds ............................................................................................................ 5
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ........................................................................................................................... 6
Statement of Net Position -Proprietary Funds ......................................................................................7-8
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds ..............................................................................................................................9-10
Statement of Cash Flows -Proprietary Funds ...................................................................................11-13
Statement of Fiduciary Net Position ....................................................................................................... 14
Statement of Changes in Fiduciary Net Position .................................................................................... 15
Notes to Financial Statements ........................................................................................................ 16-46
Required Supplementary Information
General Employees’ Pension Plan:
Schedule of Changes in Net Pension Liability and Related Ratios ........................................................ 47
Schedule of Contributions ....................................................................................................................... 48
Schedule of Investment Returns .............................................................................................................. 49
Police Officers’ Pension Plan:
Schedule of Changes in Net Pension Liability and Related Ratios ........................................................ 50
Schedule of Contributions ....................................................................................................................... 51
Schedule of Investment Returns .............................................................................................................. 52
Other Postemployment Benefits Plan -Schedule of Funding Progress ...................................................... 53
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Note to Schedule of Revenues, Expenditures, and Changes in Fund
Budget and Actual -General Fund .....................................................................................................54-55
Balances -Budget and Actual -General Fund........................................................................................ 56
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2017
TABLE OF CONTENTS
(Concluded)
Supplementary Information
Combining Balance Sheet -Nonmajor Governmental Funds ................................................................57-58
Combining Statement of Revenues, Expenditures, and Changes
Schedules of Net Revenues in Accordance with Bond
in Fund Balances -Nonmajor Governmental Funds .........................................................................59-60
Combining Statement of Fiduciary Net Position ......................................................................................... 61
Combining Statement of Changes in Fiduciary Net Position ...................................................................... 62
Historical Revenues and Expenses ............................................................................................................... 63
Resolutions -Enterprise Funds (Water and Sewer) ................................................................................ 64
Other Bond Covenant Disclosures ............................................................................................................... 65
Other Statistical Information
Major Utility Customers ............................................................................................................................... 66
Additional Elements of Report Prepared in Accordance With
Government Auditing Standards, Issued by the Comptroller
General of the United States; the Rules of the Auditor General
of the State of Florida; and Other Contract Requirements
Schedule of Source and Expenditure of the City Grant Funds ............................................................... 67
Independent Auditors’ Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Basic F inancial Statements Performed in Accordance
Independent Accountants’ Report on Compliance with
with Government Auditing Standards .......................................................................................... 68-69
Section 218.415, Florida Statutes ....................................................................................................... 70
Management Letter ............................................................................................................................ 71-73
Management Response Letter ........................................................................................................... 74-75
INDEPENDENT AUDITORS’ REPORT
INDEPENDENT AUDITORS’ REPORT
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, 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 City of Atlantic Beach,
Florida, (the City), as of and for the year ended September 30, 2017, and the related notes to the financial
statements, which collectively comprise the City’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 auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the City’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 City’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
i
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS’ REPORT
(Continued)
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 City, as of September 30, 2017, and the respective
changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance
with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and other required information on pages iv–xi and 47–56 be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by GASB, who considers it to be an essential part of financial reporting for placing
the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any assurance
on the information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The supplementary information on pages 57–65, the other
statistical information section on page 66, and the schedule of expenditures of grant funds per the City of
Jacksonville’s Ordinance Code Chapter 118.202(e) on page 67 are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The supplementary information and schedule of expenditures of grant funds per the City of Jacksonville’s
Ordinance Code Chapter 118.202(e) are the responsibility of management and were derived from and relate
directly to the underlying accounting and other records used to prepare the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the supplementary
information and schedule of expenditures of grant funds per the City of Jacksonville’s Ordinance Code
Chapter 118.202(e) are fairly stated, in all material respects, in relation to the basic financial statements as
a whole.
The other statistical information section has not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
ii
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS’ REPORT
(Concluded)
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have issued our report dated June 28, 2018, on our
consideration of the City’s internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of
that report is to describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Report on Summarized Comparative Information
We have previously audited the City’s 2016 financial statements, and our report dated August 8, 2017,
expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized
comparative information presented herein as of and for the year ended September 30, 2016, is consistent,
in all material respects, with the audited financial statements from which it was derived.
June 28, 2018
Gainesville, Florida
iii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
As management of the City of Atlantic Beach, Florida (the City), we offer readers of our financial
statements this narrative overview and analysis for the fiscal year ended September 30, 2017.
Overview of the Financial Statements
This management’s discussion and analysis is intended to serve as an introduction to the City’s basic
financial statements. The City’s basic financial statements are comprised of three components:
1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial
statements themselves. The purpose of each of the three components of the basic financial statements is
described below.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
City’s finances, in a manner similar to a private sector business. They include the Statement of Net Position
and the Statement of Activities.
The Statement of Net Position presents information on all of the City’s assets, deferred outflows of
resources, liabilities, and deferred inflows of resources with the difference between reported as net position.
Net position is reported as one of three categories: invested in capital assets net of related debt; restricted;
or unrestricted. Restricted net position is further classified as either net position restricted by enabling
legislation or net position that is otherwise restricted. Over time, increases or decreases in net position may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City’s net position changed during the
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 cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods.
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues, referred to as “governmental activities,” from other
functions that are intended to recover all or a significant portion of their costs through user fees and charges,
referred to as “business-type activities.” The governmental activities of the City include public safety, road
maintenance and construction, parks and recreation, conservation and resource management, and general
government, which include administration and other support functions. The business-type activities of the
City include the utility, comprised of the water and sewer systems, the stormwater system, the sanitation
service and the building code enforcement enterprise fund. The government-wide financial statements can
be found on pages 1-2 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 City, 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 City can be categorized into either governmental funds, proprietary funds, or 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 available
iv
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
(Continued)
Fund Financial Statements (Concluded)
■ Governmental Funds (Concluded)
resources, as well as on balances of available resources at the end of the fiscal year. Such information
may be useful in evaluating a City’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. Reconciliations are provided
between the Governmental Funds Balance Sheet and the Statement of Net Position and the Governmental
Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and Statement of Activities
to facilitate this comparison between governmental funds and governmental activities.
The City maintains 11 individual governmental funds. Information is presented separately in the
Governmental Funds Balance Sheet and in the Governmental Funds Statement of Revenues, Expenditures,
and Changes in Fund Balances for the General Fund, which is considered to be a major fund. Data from
the other 10 governmental funds are combined into a single, aggregated presentation called Nonmajor
Governmental Funds. Fund data for these nonmajor governmental funds is provided in the form of
combining statements. These combining statements can be found on pages 57-60 of this report.
The City adopts an annual appropriated budget for all funds but is only required to present a budget
comparison for its General Fund. The Schedule of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual -General Fund budgetary comparison schedule and notes on pages 54-55 of this report
has been provided to demonstrate compliance with this budget.
■ Proprietary Funds
The City maintains only one type of proprietary fund and that is enterprise funds. The enterprise funds
are used to account for the activities of the water and sewer (utility), stormwater, building code
enforcement, and sanitation activities.
The proprietary fund financial statements provide the same type of information as the government-wide
financial statements, only in more detail. Separate information of the utility, stormwater, sanitation and
building code enforcement activities can be found in the basic proprietary fund financial statements on
pages 7-13 of this report.
■ Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the City (i.e.,
pension beneficiaries). Fiduciary funds are not reflected in the government-wide financial statements
because the resources of those funds are not available to support the City’s own programs. The
accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary
fund financial statements can be found on pages 14-15 of this report.
Notes to Financial Statements
The notes to financial statements provide additional information that is essential to a full understanding of the
data provided in the government-wide and fund financial statements. The notes begin on page 16 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 City’s progress in funding its obligation to provide
pension benefits to its employees and a budgetary comparison schedule for the General Fund. Required
supplementary information can be found beginning on page 47 of this report.
v
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
(Continued)
Government-wide Financial Analysis
Net position may serve over time as a useful indicator of a City’s financial position. As can be seen in the
summarized table below, the City’s assets exceeded liabilities by $79,316,000 at the close of the fiscal year
ended September 30, 2017.
By far the largest portion of the City’s net position, $67,379,000 (85%), reflects its investment in capital assets
(i.e., land, buildings, equipment, and infrastructure), less any related, outstanding debt used to acquire those
assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not
available for future spending. Although the City’s investment in 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.
A portion of the City’s net position, $3,920,000 (5%), represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net position, $8,017,000
(10%), is used to meet the government’s ongoing obligations to citizens and creditors.
City of Atlantic Beach’s Net Position
September 30, 2017 and 2016
(In Thousands)
Governmental Business-type
Activities Activities Totals
2017 2016 2017 2016 2017 2016
Current and other assets $10,264 $12,272 $12,074 $11,365 $22,338 $23,637
Capital assets 44,797 42,460 40,303 41,084 85,100 83,544
Total Assets 55,061 54,732 52,377 52,449 107,438 107,181
Deferred Outflow 2,654 3,578 1,870 2,136 4,524 5,714
Long-term liabilities
outstanding 7,803 8,860 19,416 20,955 27,219 29,815
Other liabilities 1,549 1,548 3,661 3,208 5,210 4,756
Total Liabilities 9,352 10,408 23,077 24,163 32,429 34,571
Deferred Inflow 189 225 28 49 217 274
Net Position:
Invested in capital assets,
net of related debt 44,797 42,087 22,582 22,190 67,379 64,277
Restricted 1,634 3,823 2,286 1,705 3,920 5,528
Unrestricted 1,743 1,767 6,274 6,478 8,017 8,245
Total Net Position $48,174 $47,677 $31,142 $30,373 $79,316 $78,050
vi
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
(Continued)
As illustrated in the schedule on page vi, the City was 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.
City of Atlantic Beach’s Change in Net Position
For the Years Ended September 30, 2017 and 2016
(In Thousands)
Governmental
Activities
Business-type
Activities Totals
2017 2016 2017 2016 2017 2016
Revenues:
Program Revenues:
Charges for Services
Operating Grants and
Contributions
Capital Grants and
Contributions
General Revenues:
$1,784
628
777
$1,732
667
1,913
$11,717
669
529
$11,538
0
3,828
$13,501
1,297
1,306
$13,270
667
5,741
Property Taxes
Sales Taxes
Business and Utility Taxes
State Revenue Sharing
Discretionary Sales Surtax
Investment Earnings (Loss)
Miscellaneous
4,730
1,362
1,073
345
839
46
40
4,483
1,331
1,123
332
806
168
70
0
0
0
0
0
51
0
0
0
0
0
0
138
0
4,730
1,362
1,073
345
839
97
40
4,483
1,331
1,123
332
806
306
70
Total Revenues 11,624 12,625 12,966 15,504 24,590 28,129
Expenses:
General Government
Public Safety
Road Maintenance and
2,488
5,879
2,330
5,562
0
0
0
0
2,488
5,879
2,330
5,562
Construction
Parks and Recreation
Conservation and Resource
1,893
1,408
1,901
1,385
0
0
0
0
1,893
1,408
1,901
1,385
Management
Interest/Fiscal Charges on
Long-term Debt
Utility
Stormwater
Sanitation
Building Code Enforcement
Total Expenses
19
0
0
0
0
0
11,687
0
0
0
0
0
0
11,178
0
0
7,613
1,298
2,299
427
11,637
0
0
7,130
1,163
1,546
438
10,277
19
0
7,613
1,298
2,299
427
23,324
0
0
7,130
1,163
1,546
438
21,455
Transfers 560 851 (560) (851) 0 0
Change in Net Position 497 2,298 769 4,376 1,266 6,674
Net Position-Beginning 47,677 45,379 30,373 25,997 78,050 71,376
Net Position-Ending $48,174 $47,677 $31,142 $30,373 $79,316 $78,050
vii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
(Continued)
Fund Financial Analysis
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. Following is a summary of fund activity financial information for the fiscal year,
rounded to the nearest thousand dollars:
■ Governmental Funds
At the end of the current fiscal year, the City’s governmental funds reported a combined ending fund
balance of $9,014,000, a decrease of $1,917,000 in comparison with the prior year. The decrease in fund
balance is due to the increase in capital outlay in relation to the renovation of the public safety building.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the
unassigned fund balance was $4,068,000, which equated to 34% of total General Fund expenditures
without transfers. The net result of various revenue and expense items resulted in an increase to the City’s
General Fund of $145,000 or 2% during the current fiscal year. Property tax revenues increased by
$247,000 or 5.5% from the previous year. This was a result of an increase in the taxable values. General
Fund transfers in increased by $285,000, while transfers out decreased by $521,000. Overall, general
fund expenditures increased by $422,000 or 3.6%. A large portion of this increase was due to an increase
in the City’s contribution to the Police pension plan.
Nonmajor governmental funds consisting of special revenue funds and the capital projects fund have a
combined fund balance of $1,691,000. The net decrease in fund balance after transfers in nonmajor
governmental funds was $2,062,000. The decrease in the fund was related to the progress of the Public
Safety Building Project.
■ Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial
statements, but in more detail. During the fiscal year the proprietary funds recorded revenues of
$11,608,000, expenses of $11,035,000, net non-operating revenue of $228,325 and net capital
contributions, grants and transfers of $(31,615). The net position in the proprietary funds increased
$769,000 as a result of the fiscal year’s activities. The unrestricted net position of the enterprise funds
amounted to $6,274,000 at the end of fiscal year 2017.
Stormwater rates stayed constant in fiscal year 2017 as there were no rate changes. The $8.39 per ERU
is approximately 71%, compared to 79% for the prior year, of the total operating expenses of
$1,246,000 needed to fully fund the operation with charges for service.
During fiscal year 2017, the Sanitation Fund netted a decrease in net position of $329,000. This
decrease was due to the significant Hurricane related debris clean-up costs incurred during fiscal year
2017. The City has submitted reimbursement requests to FEMA, and expects that a large amount of
the debris clean-up costs will be reimbursed in a future year.
General Fund Budgetary Highlights
Net Budget
The overall net difference from the final budgeted revenues and adjusted final budgeted expenses was a
deficit of $794,000. The actual increase in fund balance was $145,000. This resulted in a $503,000 excess
variance below what was budgeted.
viii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
(Continued)
Capital Assets and Debt Administration
Capital Assets―The City’s investment in capital assets, net of related depreciation, for its governmental
and business-type activities as of September 30, 2017, amounted to $85,100,000. This investment in capital
assets includes land, land improvements, land easements, buildings and infrastructure improvements,
equipment, and construction in progress.
The total change in the City’s capital assets, net of related depreciation, for the current fiscal year was an
increase of $2,338,000 or 5.51% for governmental activities and a decrease of $(780,820) or 1.9% for
business-type activities.
Capital asset events during the current fiscal year included the following:
Governmental Activities
Buildings, reflected a net increase of $4,736,000. This represents capital asset increase of $4,875,000,
offset by depreciation of $140,000.
Intangible Assets reflected a net increase of $7,000. This represents capital asset increase of $19,000,
offset by depreciation of $12,000. This asset category includes land easements and computer
software.
Improvements Other Than Buildings reflected a net decrease of $683,000 as a result of
deprecation.
Equipment reflected a net increase of $197,000. This represents capital asset increase of $431,000,
offset by depreciation of $234,000.
Construction in progress decreased $1,918,000. This was mostly due to the completion of the
public safety building during fiscal year 2017.
■ Business-type Activities
Buildings reflected a net decrease in asset value of $9,000 from depreciation.
Improvements Other Than Buildings reflected a net decrease of $2,064,000. This represents capital
asset increases of $980,000, offset by depreciation of $2,589,806.
Equipment reflected a net increase of $170,000. This represents capital asset increase of $267,000,
offset by depreciation of $97,000.
Construction in Progress had a net increase of $667,000.
ix
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
(Continued)
City of Atlantic Beach’s Capital Assets
(Net of Depreciation)
(In Thousands)
Governmental
Activities
Business-type
Activities Totals
2017 2016 2017 2016 2017 2016
Land
Intangibles
Buildings
Improvements-Other
Equipment
Construction in Progress
$10,564
62
7,215
25,052
1,265
639
$10,564
56
2,479
25,736
1,068
2,557
$1,656
214
52
36,286
687
1,408
$1,656
214
62
37,895
517
740
$12,220
276
7,267
61,338
1,952
2,047
$12,220
270
2,541
63,631
1,585
3,297
Total $44,797 $42,460 $40,303 $41,084 $85,100 $83,544
Additional information on the City’s capital assets can be found in Note 5 on pages 28-29 of this report.
Long-term Debt
At the end of the 2017 fiscal year, the City had total bonded debt outstanding of $18,358,000. This amount
was comprised of debt secured solely by specified revenue sources. A detailed listing of the City’s debt can
be found in the table below.
City of Atlantic Beach’s Outstanding Debt
September 30, 2017
(In Thousands)
Business-type
Activities
Utilities System Revenue Bond, Series 2014 $11,710
F.D.E.P. State Revolving Funds Loan, 2010 561
F.D.E.P. State Revolving Funds Loan, 2009 6,087
Total $18,358
Debt service coverage calculations can be found on page 64. Additional information on the City’s long-
term debt can be found in Note 6 on pages 29-32 of this report.
x
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT' S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2017
(Concluded)
Revenue Highlights:
• T o tal General Re venu es fo r 201 7 were $35 ,000 hi g he r than 20 16 revenu e (page 2). Increases in
pro perty tax e s o f $247,000 and a d ecre ase in in vestme nt e arnings of$209,0 00 ma de up majori ty ofthi s
mc re a se .
• The 201 7 taxable pro pe rty values w ere a bo ut 4 .7 8% hi g he r than th e 2 01 6 va lu es. The C ity Commi ssion
vote d t o use the s am e mill age ra t e of3.2285 mill s . The purpose f or a d o ptin g t he mill age rate of3.2285
was t o mainta in a lev e l o f ad v a lo rem tax re ve nu e s uffi c ient to m a intain ad equa t e fu nding fo r the
ex isting leve l of services a t t he e stim a te d cost a nd to co nt inu e to ma intain th e c ity's in f rastruc tu re and
a d equa te reserves. The fin a l g ross taxabl e pro pe rty valu e was $ 1,5 0 I ,246,000. A d va lo re m taxes of
$4 ,73 0,000 re present 4 3% o f t he Gene ral Fund revenu es for 2 01 7 .
• The 2 01 7 In tergovernm e nt a l reve nu es of $ 1,83 4 ,000 ma ke up 16.72% of gene ra l fund revenu es. T hi s
is a n in c rea se of $ 14 ,000 over 2 016 .
• The C ity's in vestmen .t po rt fo li o is va lued at a pproxim a te ly $ 16 ,22 1,000 as o f Septembe r 3 0,201 7. T he
investm e nts s ho we d a gain o f $9 7 ,000 fo r th e year.
Expenditure Highlights:
• To ta l G o vernm e nta l Fund Ex pendi t ures in c reased in c urre nt year by $ 1,4 03,000 when comp a red to pr io r
year. Ca pita l ex pe nditures in c reased from $2,765,000 in 201 6 to $3,470,000 in 2 01 7. This increase was a
resul t of th e Public Safe ty Building Proj ect a s well a s oth e r Capital Projects.
Requests for Information
The fin a nc ial re p o rt is desig ne d to prov id e a ge n e ra l overv iew of t he C ity's fin a nces fo r a ll th ose w ith an
interest in t he C ity ' s fin a nces. Q uestio ns concernin g a ny o f th e in fo rm atio n prov ided in thi s report or
requests fo r additiona l fin a nc ia l info rm a ti o n s hou ld be a ddressed to the C ity of Atla nti c Beach, Fina nce
Director, 800 Semin o le R oad , Atl a ntic Beach, F lo rid a 3 2 233.
Director of F in a nce
X I
BASIC FINANCIAL STATEMENTS
These basic financial statements contain Government-wide Financial Statements, Fund Financial
Statements, and Notes to Financial Statements.
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2016
2017
Governmental Business-type 2016
Activities Activities Totals Totals
Assets Equity in Pooled Cash and Investments 9,173,017 $ 8,361,375 $ 17,534,392 $ 19,788,039 $
Receivables - Net 651 664,886 665,537 611,121
Due from Other Governments 1,061,705 350,842 1,412,547 1,083,173
Inventories 23,098 12,827 35,925 21,813
Notes Receivable - Current 760 15,759 16,519 16,519
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents 0 2,548,752 2,548,752 1,984,814
Capital Assets:
Land 10,563,572 1,656,018 12,219,590 12,219,590 Buildings 9,450,124 4,356,384 13,806,508 8,931,030 Improvements Other Than Buildings 41,339,136 84,055,919 125,395,055 124,414,609 Equipment 4,773,879 2,667,929 7,441,808 6,744,115 Intangibles - Easements and Computer Software 428,352 244,709 673,061 654,506 (Accumulated Depreciation and Amortization) (22,397,170) (54,085,819) (76,482,989) (72,717,793) Construction in Progress 638,681 1,407,887 2,046,568 3,297,456 Prepaid Items 4,141 0 4,141 6,686 Notes Receivable - Noncurrent 1,520 119,321 120,841 124,866
Total Assets 55,061,466 52,376,789 107,438,255 107,180,544
Deferred Outflows of Resources
Unamortized Refunding Loss 0 863,546 863,546 971,489 Pension Related 2,653,701 1,006,865 3,660,566 4,743,286
Total Deferred Outflows of Resources 2,653,701 1,870,411 4,524,112 5,714,775
Liabilities Accounts Payable and Other Current Liabilities 1,145,490 711,653 1,857,143 1,640,907
Construction Retainages Payable 4,340 17,638 21,978 148,197
Due to Other Governments 8,500 14,881 23,381 10,934
Unearned Revenue 22,990 195,285 218,275 183,682 Deposits 5,034 0 5,034 4,172 Compensated Absences - Current 362,514 146,514 509,028 414,727 Payable from Restricted Assets:
Current Portion of Bonds Payable 0 1,185,000 1,185,000 1,160,000 Current Portion of Loan Payable 0 358,258 358,258 347,412 Accrued Interest Payable 0 227,364 227,364 235,654 Customer Deposits 0 653,012 653,012 609,753 Noncurrent Liabilities:
Due in More Than One Year 0 16,814,450 16,814,450 18,357,709 Compensated Absences - Noncurrent 322,944 100,148 423,092 497,048 Other Postemployment Benefits Obligation 222,196 77,361 299,557 271,678 Net Pension Liability 7,258,426 2,575,159 9,833,585 10,689,297
Total Liabilities 9,352,434 23,076,723 32,429,157 34,571,170
Deferred Inflow of Resources Pension Related 188,855 28,451 217,306 274,178
Net Position Net Investment in Capital Assets 44,796,574 22,581,501 67,378,075 64,277,296 Restricted for:
Renewal and Replacement 0 250,000 250,000 250,000 Debt Service 0 401,046 401,046 390,038 Public Safety 137,287 0 137,287 161,166 Road Maintenance and Construction 1,078,005 0 1,078,005 1,067,154 System Development Fees 0 1,244,694 1,244,694 735,023 Other Capital Projects 141,328 0 141,328 2,433,056 Other Purposes 277,248 0 277,248 161,958 Building Code Enforcement 0 390,605 390,605 329,553 Unrestricted 1,743,436 6,274,180 8,017,616 8,244,727
Total Net Position $ 48,173,878 $ 31,142,026 $ 79,315,904 $ 78,049,971
See accompanying notes.
1
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
2017
Program Revenues Net (Expense) Revenue and Changes in Net Position
Operating Capital Primary Government
Charges for Grants and Grants and Governmental Business-type 2016
Functions/Programs Expenses Services Contributions Contributions Activities Activities Totals Totals
Primary Government
Governmental Activities:
General Government $ 2,487,688 855,815 $ 64,939 $ 0$ (1,566,934) $ 0$ (1,566,934) $ $ (1,279,905)
Public Safety 5,878,849 719,427 63,100 0 (5,096,322) 0 (5,096,322) (4,834,099)
Road Maintenance and
Construction 1,893,907 124,838 467,062 422,767 (879,240) 0 (879,240) 433,237
Parks and Recreation 1,408,110 84,265 0 354,080 (969,765) 0 (969,765) (1,184,263)
Conservation and Resource
Management 18,765 0 32,586 0 13,821 0 13,821 0
Total Governmental Activities 11,687,319 1,784,345 627,687 776,847 (8,498,440) 0 (8,498,440) (6,865,030)
Business-type Activities:
Utility 7,612,606 8,439,455 353,245 528,830 0 1,708,924 1,708,924 3,152,322
Stormwater 1,297,356 883,473 0 0 0 (413,883) (413,883) 1,541,558
Sanitation 2,299,021 1,888,827 315,598 0 0 (94,596) (94,596) 308,050
Building Code Enforcement 426,966 505,246 0 0 0 78,280 78,280 87,431
Total Business-type Activities 11,635,949 11,717,001 668,843 528,830 0 1,278,725 1,278,725 5,089,361
Total Primary Government $ 23,323,268 13,501,346 $ 1,296,530 $ 1,305,677 $ (8,498,440) 1,278,725 (7,219,715) (1,775,669)
General Revenues
Property Taxes 4,730,476 0 4,730,476 4,482,739
Sales Taxes 1,361,838 0 1,361,838 1,330,946
Business and Utility Taxes 1,072,553 0 1,072,553 1,123,011
State Revenue Sharing 344,460 0 344,460 331,606
Discretionary Sales Surtax 839,014 0 839,014 806,405
Investment Earnings (Loss) 46,057 51,012 97,069 305,631
Miscellaneous 40,238 0 40,238 70,435
Transfers 560,445 (560,445) 0 0
Total General Revenues and Transfers 8,995,081 (509,433) 8,485,648 8,450,773
Change in Net Position 496,641 769,292 1,265,933 6,675,104
Net Position, Beginning of Year 47,677,237 30,372,734 78,049,971 71,374,867
Net Position, End of Year 48,173,878 $ 31,142,026 $ 79,315,904 $ $ 78,049,971
See accompanying notes.
2
CITY OF ATLANTIC BEACH, FLORIDA
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2016
2017
Nonmajor
Governmental
Totals
Governmental 2016
General Funds Funds Totals
Assets
Equity in Pooled Cash and Investments
Receivables - Net
$ 7,180,310
651
1,992,707 $
0
9,173,017 $
651
11,206,230 $
50
Due from Other Funds
Due from Other Governments
Inventories
Notes Receivable - Current
170,515
679,309
23,098
760
0
382,396
0
0
170,515
1,061,705
23,098
760
75,035
1,047,929
8,986
760
Prepaid Items
Notes Receivable - Noncurrent
Total Assets
4,141
1,520
8,060,304
0
0
2,375,103
4,141
1,520
10,435,407
6,686
1,520
12,347,196
Liabilities and Fund Balances
Liabilities
Accounts Payable and Accrued Liabilities
Construction Retainages Payable
Due to Other Funds
Due to Pension Trust Funds
Deposits
Unearned Revenue
Total Liabilities
636,742
1,206
0
8,500
4,108
22,990
673,546
508,748
3,134
170,515
0
926
0
683,323
1,145,490
4,340
170,515
8,500
5,034
22,990
1,356,869
1,091,004
141,942
75,035
0
4,172
1,689
1,313,842
Deferred Inflows of Resources 64,939 0 64,939 102,723
Fund Balances
Nonspendable:
Inventories
Prepaids
Restricted for:
23,098
4,141
0
0
23,098
4,141
8,986
6,686
Public Safety
Road Maintenance and Construction
Other Capital Projects
Other Purposes
Committed to:
0
0
0
0
137,287
1,078,005
141,328
277,248
137,287
1,078,005
141,328
277,248
161,166
1,067,154
2,433,056
161,958
Conservation and Resource Management
Assigned to:
Community Redevelopment Fund
Operating Reserves
Unassigned
Total Fund Balances
0
50,000
3,176,334
4,068,246
7,321,819
58,732
0
0
(820)
1,691,780
58,732
50,000
3,176,334
4,067,426
9,013,599
34,911
0
2,944,071
4,112,643
10,930,631
Total Liabilities and Fund Balances $ 8,060,304 2,375,103 $ 10,435,407 $ $ 12,347,196
See accompanying notes.
3
CITY OF ATLANTIC BEACH, FLORIDA
RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2016
2017 2016
Total Fund Balances of Governmental Funds 9,013,599 $ $ 10,930,631
Amounts Reported for Governmental
Activities in the Statement of Net Position
are Different Because:
Capital assets used in governmental
activities are not financial resources
and, therefore, are not reported in
the funds:
Total Capital Assets
(Accumulated Depreciation)
67,193,744 $
(22,397,170)
44,796,574
$ 63,787,229
(21,327,563)
42,459,666
Nonexchange receivables that do not
provide current financial resources
and are not reported revenues
in the funds. 64,939 102,723
Certain pension related amounts are being
deferred and amortized over a period of
years or are being deferred as contributions
to the pension plan made after the
measurement date:
Deferred Outflows Related to Pensions
Deferred Inflows Related to Pensions
2,653,701
(188,855)
2,464,846
3,578,578
(224,998)
3,353,580
Long-term liabilities are not due and payable
in the current period and, therefore, are
not reported in the governmental funds:
Compensated Absences
Other Postemployment Benefits Obligation
Net Pension Liability
(685,458)
(222,196)
(7,258,426)
(8,166,080)
(677,465)
(203,704)
(8,288,194)
(9,169,363)
Total Net Position of Governmental Activities $ 48,173,878 $ 47,677,237
See accompanying notes.
4
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
2017
Nonmajor Totals
Governmental Governmental 2016
General Funds Funds Totals
Revenues
Property Taxes 4,730,476 $ 0$ 4,730,476 $ 4,482,739 $
Nonproperty Taxes 1,072,553 1,414,994 2,487,547 2,521,240
Permits, Fees, and Special Assessments 811,871 0 811,871 848,308
Intergovernmental Revenues 1,834,425 725,124 2,559,549 2,387,469
Fines and Forfeitures 111,427 28,529 139,956 75,922
Charges for Services 774,764 0 774,764 786,053
Investment Earnings (Loss) 31,436 14,621 46,057 167,994
Miscellaneous Revenues 78,493 32,586 111,079 69,629
Interfund Charges 1,522,863 0 1,522,863 1,550,320
Total Revenues 10,968,308 2,215,854 13,184,162 12,889,674
Expenditures
Current:
General Government 3,363,862 0 3,363,862 3,221,836
Public Safety 5,669,663 168,426 5,838,089 5,434,522
Road Maintenance and Construction 1,399,598 400,000 1,799,598 1,727,849
Parks and Recreation 1,170,861 0 1,170,861 1,109,060
Conservation and Resource
Management 0 18,765 18,765 0
Capital Outlay 495,782 2,974,682 3,470,464 2,765,065
(Total Expenditures) (12,099,766) (3,561,873) (15,661,639) (14,258,332)
(Deficiency) of Revenues (Under)
Expenditures (1,131,458) (1,346,019) (2,477,477) (1,368,658)
Other Financing Sources (Uses)
Transfers in 1,330,445 349,225 1,679,670 2,186,174
Transfers (out) (54,225) (1,065,000) (1,119,225) (1,335,350)
Total Other Financing Sources (Uses) 1,276,220 (715,775) 560,445 850,824
Net Change in Fund Balances 144,762 (2,061,794) (1,917,032) (517,834)
Fund Balances, Beginning of Year 7,177,057 3,753,574 10,930,631 11,448,465
Fund Balances, End of Year 7,321,819 $ 1,691,780 $ 9,013,599 $ 10,930,631 $
See accompanying notes.
5
CITY OF ATLANTIC BEACH, FLORIDA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
2017 2016
Net Change in Fund Balances - Total Governmental Funds $ (1,917,032) $ (517,834)
Amounts Reported for Governmental Activities in the
Statement of Activities are Different Because:
Governmental funds report capital purchases as
expenditures. However, in the statement of
activities, the cost of those assets is depreciated
over their estimated useful lives and reported as
depreciation expense:
Expenditures for Capital Assets
Donated Infrastructure
(Current Year Depreciation)
3,470,464 $ 2,765,065 $
0 1,178,893
(1,133,555) (1,026,427)
2,336,909 2,917,531
Certain nonexchange revenues reported in the
statement of activities are not considered current
financial resources and, therefore, are not
reported as revenue in the governmental funds. (37,784) 102,723
The changes in net pension liability and pension
related deferred outflows and inflows of
resources result in an adjustment to pension
expense in the statement of activities, but
not in the governmental fund statements. 141,034 (74,055)
Some expenses/revenues reported in the statement
of activities do not require the use of or provide
current financial resources and, therefore, are not
reported as expenditures in governmental funds:
Compensated Absences
Other Postemployment Benefits Obligation
(7,992)
(18,494)
(26,486)
(104,233)
(25,203)
(129,436)
Change in Net Position - Governmental Activities 496,641 $ $ 2,298,929
See accompanying notes.
6
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2016
2017
Business-type Activities - Enterprise Funds
Building Code 2016
Utility Stormwater Sanitation Enforcement Totals Totals
Assets
Current Assets:
Equity in Pooled Cash and Investments $ 5,565,389 2,087,483 $ 158,924 $ 549,579 $ $ 8,361,375 $ 8,581,809
Accounts Receivable - Net 532,407 54,682 77,797 0 664,886 611,071
Due from Other Governments 35,244 0 315,598 0 350,842 35,244
Inventories 12,827 0 0 0 12,827 12,827
Notes Receivable - Current 15,759 0 0 0 15,759 15,759
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents 2,548,752 0 0 0 2,548,752 1,984,814
Capital Assets:
Land 749,499 906,519 0 0 1,656,018 1,656,018
Buildings 4,356,384 0 0 0 4,356,384 4,356,384
Improvements Other Than Buildings 65,493,352 18,562,567 0 0 84,055,919 83,075,473
Equipment 2,055,780 339,003 189,877 83,269 2,667,929 2,401,082
Intangibles - Easements and Computer Software 226,394 0 0 18,315 244,709 244,709
(Accumulated Depreciation and Amortization) (44,148,098) (9,688,741) (184,446) (64,534) (54,085,819) (51,390,230)
Construction in Progress 1,129,063 278,824 0 0 1,407,887 740,411
Notes Receivable - Noncurrent 119,321 0 0 0 119,321 123,346
Total Assets 38,692,073 12,540,337 557,750 586,629 52,376,789 52,448,717
Deferred Outflows of Resources
Unamortized Refunding Loss 751,285 112,261 0 0 863,546 971,489
Pension Related 815,362 75,165 48,718 67,620 1,006,865 1,164,708
Total Deferred Outflows of Resources 1,566,647 187,426 48,718 67,620 1,870,411 2,136,197
See accompanying notes.
7
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2016
(Concluded)
2017
Business-type Activities - Enterprise Funds
Building Code 2016
Utility Stormwater Sanitation Enforcement Totals Totals
Liabilities
Current Liabilities Payable from Current Assets:
Accounts Payable and Other Current Liabilities 198,719 $ 131,205 $ 375,160 $ 6,569 $ $ 711,653 $ 549,903
Construction Retainages Payable 6,255 11,383 0 0 17,638 6,255
Due to Other Governments 6,844 0 0 8,037 14,881 10,934
Unearned Revenue 103,897 29,898 61,490 0 195,285 181,993
Compensated Absences - Current 127,624 3,525 0 15,365 146,514 106,084
Current Liabilities Payable from Restricted Assets:
Current Portion of Bonds Payable 1,030,950 154,050 0 0 1,185,000 1,160,000
Current Portion of Loans Payable 358,258 0 0 0 358,258 347,412
Accrued Interest Payable 207,872 19,492 0 0 227,364 235,654
Customer Deposits 653,012 0 0 0 653,012 609,753
Noncurrent Liabilities:
Due in More Than One Year 15,446,200 1,368,250 0 0 16,814,450 18,357,709
Compensated Absences - Noncurrent 87,235 2,410 0 10,503 100,148 128,226
Other Postemployment Benefits Obligation 53,934 12,162 0 11,265 77,361 67,974
Net Pension Liability 2,085,372 192,242 124,601 172,944 2,575,159 2,401,103
Total Liabilities 20,366,172 1,924,617 561,251 224,683 23,076,723 24,163,000
Deferred Inflows of Resources
Pension Related 23,039 2,124 1,377 1,911 28,451 49,180
Net Position
Net Investment in Capital Assets 13,570,379 8,968,641 5,431 37,050 22,581,501 22,190,215
Restricted for:
Renewal and Replacement 250,000 0 0 0 250,000 250,000
Debt Service 401,046 0 0 0 401,046 390,038
System Development Fees 1,244,694 0 0 0 1,244,694 735,023
Building Code Enforcement 0 0 0 390,605 390,605 329,553
Unrestricted 4,403,390 1,832,381 38,409 0 6,274,180 6,477,905
Total Net Position 19,869,509 $ 10,801,022 $ 43,840 $ 427,655 $ $ 31,142,026 $ 30,372,734
See accompanying notes.
8
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
2017
Business-type Activities - Enterprise Funds
Building Code 2016
Utility Stormwater Sanitation Enforcement Totals Totals
Operating Revenues
Charges for Services:
Customer Charges $ 8,324,682 883,473 $ 1,824,594 $ 505,246 $ $ 11,537,995 $ 11,361,102
Franchise Permits 0 0 4,500 0 4,500 8,500
Miscellaneous Revenues 65,608 0 0 0 65,608 63,299
Total Operating Revenues 8,390,290 883,473 1,829,094 505,246 11,608,103 11,432,901
Operating Expenses
Personal Services 2,102,206 321,057 113,408 344,688 2,881,359 2,668,433
Contractual Services 551,554 139,057 2,042,524 21,317 2,754,452 2,097,172
Supplies 292,616 48,183 0 4,273 345,072 351,357
Repairs and Maintenance 133,608 22,283 5,595 5,475 166,961 155,160
Utilities 353,574 0 0 0 353,574 360,485
Depreciation 2,171,727 518,117 1,543 4,202 2,695,589 2,338,587
Intergovernmental Charges 1,093,219 150,033 135,897 37,498 1,416,647 1,447,424
Other Expenses 364,933 47,367 54 9,513 421,867 229,513
(Total Operating Expenses) (7,063,437) (1,246,097) (2,299,021) (426,966) (11,035,521) (9,648,131)
Operating Income (Loss) 1,326,853 (362,624) (469,927) 78,280 572,582 1,784,770
Nonoperating Revenues (Expenses)
Connection Charges 49,165 0 0 0 49,165 38,663
Intergovernmental 353,245 0 315,598 0 668,843 0
Franchise Fees 0 0 59,733 0 59,733 66,114
Investment Earnings (Loss) 38,736 8,753 2,035 1,488 51,012 137,638
Interest Expense (455,259) (37,226) 0 0 (492,485) (520,676)
Amortization of Refunding Loss (93,910) (14,033) 0 0 (107,943) (107,943)
Total Nonoperating Revenues (Expenses) (108,023) (42,506) 377,366 1,488 228,325 (386,204)
See accompanying notes.
9
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
(Concluded)
2017
Income (Loss) Before Contributions
and Transfers $
Utility
1,218,830
Building Code
Stormwater Sanitation Enforcement
(405,130) $ (92,561) $ 79,768 $
Business-type Activities - Enterprise Funds
$
Totals
800,907 $
2016
Totals
1,398,566
Capital Contributions and Grants
and Transfers
Capital Contributions and Grants
Transfers in
Transfers (out)
Total Capital Contributions and Grants
and Transfers
528,830
0
(623,819)
(94,989)
0
300,000
0
300,000
0
0
(236,626)
(236,626)
0
0
0
0
528,830
300,000
(860,445)
(31,615)
3,828,433
0
(850,824)
2,977,609
Change in Net Position 1,123,841 (105,130) (329,187) 79,768 769,292 4,376,175
Net Position, Beginning of Year 18,745,668 10,906,152 373,027 347,887 30,372,734 25,996,559
Net Position, End of Year $ 19,869,509 10,801,022 $ 43,840 $ 427,655 $ $ 31,142,026 $ 30,372,734
See accompanying notes.
10
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
2017
Business-type Activities - Enterprise Funds
Building Code 2016
Utility Stormwater Sanitation Enforcement Totals Totals
Cash Flows from Operating Activities
Cash Received from Customers $ 8,417,208 878,425 $ 1,821,272 $ 505,246 $ $ 11,622,151 $ 11,397,858
Cash Paid to Suppliers (1,752,089) (164,431) (1,904,785) (47,487) (3,868,792) (3,022,235)
Cash Paid to Employees (1,891,185) (249,532) (49,198) (358,535) (2,548,450) (2,515,156)
Cash Paid for Interfund Services (1,093,219) (150,033) (135,897) (37,498) (1,416,647) (1,447,424)
Net Cash Provided by (Used in) Operating
Activities 3,680,715 314,429 (268,608) 61,726 3,788,262 4,413,043
Cash Flows from Noncapital Financing
Activities
Connection Charges 31,265 0 59,733 0 90,998 104,777
Transfers in 0 300,000 0 0 300,000 0
Transfers (out) (623,819) 0 (236,626) 0 (860,445) (850,824)
Net Cash Provided by (Used in) Noncapital
Financing Activities (592,554) 300,000 (176,893) 0 (469,447) (746,047)
Capital and Related Financing Activities
Capital Grants 899,975 0 0 0 899,975 454,198
Fixed Asset Additions (1,669,806) (222,045) 0 (22,917) (1,914,768) (441,189)
Principal Payments on Long-term Debt (1,356,613) (150,800) 0 0 (1,507,413) (1,426,896)
Interest Paid (471,172) (37,226) 0 0 (508,398) (537,506)
Net Cash Provided by (Used in) Capital
and Related Financing Activities (2,597,616) (410,071) 0 (22,917) (3,030,604) (1,951,393)
See accompanying notes.
11
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
(Continued)
2017
Business-type Activities - Enterprise Funds
Building Code 2016
Utility Stormwater Sanitation Enforcement Totals Totals
Cash Flows from Investing Activities
Sale (Purchase) of Investments (435,587) $ (173,663) $ 354,804 $ (36,491) $ $ (290,937) $ (1,514,070)
Interest Received 38,736 8,752 2,035 5,769 55,292 137,412
Net Cash Provided by (Used in)
Investing Activities (396,851) (164,911) 356,839 (30,722) (235,645) (1,376,658)
Net Increase (Decrease) in Cash and
Cash Equivalents 93,694 39,447 (88,662) 8,087 52,566 338,945
Cash and Cash Equivalents, Beginning of Year 1,512,477 373,764 120,121 100,701 2,107,063 1,768,118
Cash and Cash Equivalents, End of Year 1,606,171 $ 413,211 $ 31,459 $ 108,788 $ $ 2,159,629 $ 2,107,063
Reconciliation of Operating Income (Loss) to Net
Cash Provided by (Used in) Operating Activities
Operating Income (Loss) 1,326,853 $ (362,624) $ (469,927) $ 78,280 $ $ 572,582 $ 1,784,770
Adjustments to Reconcile Operating
Income (Loss) to Net Cash Provided by
(Used in) Operating Activities:
Depreciation 2,171,727 518,118 1,543 4,202 2,695,590 2,338,587
Change in Assets and Liabilities:
Accounts Receivable (36,920) (5,048) (7,822) 0 (49,790) (61,605)
Due from/to other Governments (335) 0 0 0 (335) 0
Prepaids 0 0 0 0 0 16,105
Compensated Absences (541) 5,463 0 0 4,922 26,488
OPEB Obligation 5,690 1,421 0 2,276 9,387 8,176
Accounts Payable and Accrued Liabilities (55,804) 92,458 143,388 (6,909) 173,133 155,347
Customer Deposits 50,881 0 0 7,430 58,311 22,859
Unearned Revenue 13,292 0 0 0 13,292 3,703
Change in Deferred Outflow 171,684 (26,095) (36,876) 49,130 157,843 (161,507)
Change in Deferred Inflow (20,272) 334 863 (1,654) (20,729) 49,180
Change in Net Pension Liability 54,460 90,402 100,223 (71,029) 174,056 230,940 Net Cash Provided by (Used in) Operating Activities 3,680,715 $ 314,429 $ (268,608) $ 61,726 $ $ 3,788,262 $ 4,413,043
See accompanying notes.
12
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
(Concluded)
2017
Reconciliation of Cash and Cash Equivalents
to Balance Sheet
Utility
Building Code
Stormwater Sanitation Enforcement
Business-type Activities - Enterprise Funds
Totals
2016
Totals
Equity in Pooled Cash and Cash
Equivalents in Current Assets
Restricted Equity in Pooled Cash
and Cash Equivalents
Equity in Pooled Investments
Total Cash and Cash Equivalents
$
$
5,565,389
2,548,752
(6,507,970)
1,606,171
2,087,483 $ 158,924 $ 549,579 $
0 0 0
(1,674,272) (127,465) (440,791)
413,211 $ 31,459 $ 108,788 $
$
$
8,361,375
2,548,752
(8,750,498)
2,159,629
$
$
8,581,809
1,984,814
(8,459,560)
2,107,063
Supplemental Disclosure of Noncash Activities
Amortization of Refunding Loss $ 93,910 14,033 $ $ 0 0$ $ 107,943 $ 107,943
Contributed Assets $ 0 $ 0 $ 0 $ 0 $ 0 $ 3,374,332
See accompanying notes.
13
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF FIDUCIARY
NET POSITION
SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2016
Pension Trust Funds
2017 2016
Assets
Cash and Cash Equivalents 566,377 $ $ 358,042
Money Markets 2,167,967 1,975,324
Due from Other Governments 0 112,972
Due from City 8,500 0
Interest Receivable 31,813 17,821
Investments at Fair Value 26,318,283 23,535,349
Total Assets 29,092,940 25,999,508
Liabilities
Accounts Payable and Accrued Liabilities 37,343 0
Total Liabilities 37,343 0
Net Position
Net Position Restricted for Pensions 29,055,597 $ $ 25,999,508
See accompanying notes.
14
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY
NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
Pension Trust Funds
2017 2016
Additions
Contributions:
Employer 2,121,100 $ 1,841,817 $
Employees 253,576 245,218
State of Florida 0 112,972
Total Contributions 2,374,676 2,200,007
Net Increase in Fair
Value of Investments 2,334,700 2,032,332
Interest and Dividends 509,548 390,564
Miscellaneous Revenues 8,500 0
Total Additions 5,227,424 4,622,903
Deductions
Refunds of Contributions 35,562 55,569
Benefits 1,927,417 1,906,700
Investment Expenses 101,608 100,158
Administrative Expenses 106,748 62,428
Total Deductions 2,171,335 2,124,855
Change in Net Position 3,056,089 2,498,048
Net Position, Beginning of Year 25,999,508 23,501,460
Net Position, End of Year 29,055,597 $ 25,999,508 $
See accompanying notes.
15
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 1 -Summary of Significant Accounting Policies
The accounting policies of the City of Atlantic Beach, Florida, (the City), conform to accounting
principles generally accepted in the United States of America as applicable to governments. The
following is a summary of the more significant policies used in the preparation of these financial
statements:
Reporting Entity
The City was incorporated in 1957, under a charter in accordance with the laws of the State of
Florida, Florida Statutes Section 57-1126. The City operates under a form of government, which
comprises an elected City Commission (four Commissioners and a Mayor-Commissioner) and
provides, under the administration of an appointed City Manager, the following services: public
safety, public works (streets and infrastructure), recreation, conservation and resource
management, sanitation, stormwater, reuse, planning, zoning, water and sewer, and general
government services.
In accordance with the Codification of Governmental and Financial Reporting Standards, the
financial reporting entity consists of the primary government, organizations for which the
primary government is financially accountable, and other organizations whose exclusions would
cause the reporting entity’s financial statements to be misleading or incomplete. The
Governmental Accounting Standards Board (GASB) has set forth criteria for consideration in
determining financial accountability. These criteria include appointing a majority of an
organization’s governing body and: (1) the ability of the City to impose its will on that
organization; or (2) the potential for that organization to provide specific benefits to or impose
specific financial burdens on the City. Other considerations are whether the organization is
legally separate, whether the City holds the corporate powers of the organization, and whether
there is fiscal dependency by the organization on the City. Based upon the application of these
criteria, the City has no component units.
Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement
of activities) report information on all of the nonfiduciary activities of the City. For the most
part, the effect of interfund activity has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which 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 is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or activity. Indirect costs are included in the program
expense reported for individual functions and activities. Program revenues include: (1) charges
to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or activity; and (2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or activity.
Taxes and other items not properly included among program revenues are reported instead as
general revenues.
16
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 1 -Summary of Significant Accounting Policies (Continued)
Government-wide and Fund Financial Statements (Concluded)
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. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements
The government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues
in the year for which they are levied. Grants and similar items are recognized as revenue as soon
as all eligibility requirements imposed by the provider have been met.
As a general rule, the effect of interfund activity has been eliminated from the government-wide
financial statements. The major exception to this general rule is charges between the City’s water
and sewer function and various other functions of the City. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.
Amounts reported as program revenues include: (1) charges to customers or applicants for goods,
services, or privileges provided; (2) operating grants and contributions; and (3) capital grants and
contributions, including special assessments. General revenues include all taxes.
Net position is reported as one of three categories: (1) Net Investment in Capital Assets;
(2) Restricted; or (3) Unrestricted.
Fund Financial Statements
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon
as they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period or soon enough thereafter to pay liabilities of the current period.
For this purpose, the government considers revenues to be available if they are collected within
sixty 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, other postemployment benefits, pension expense,
and claims and judgments, are recorded only when payment is due.
Taxes, intergovernmental revenue, licenses and permits, charges for services, and interest
associated with the current fiscal period are all considered to be susceptible to accrual and so have
been recognized as revenues of the current fiscal period. All other revenue items are considered
to be measurable and available only when cash is received by the City.
17
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 1 -Summary of Significant Accounting Policies (Continued)
Fund Financial Statements (Concluded)
The City reports the following major governmental fund:
■ The General Fund is the City’s primary operating fund. It accounts for all financial resources
of the general government, except those required to be accounted for in another fund.
The City reports the following major proprietary funds:
■ The Utility Fund accounts for the activities of the City’s water distribution, sewer collection
and treatment systems, and reuse system.
■ The Sanitation Fund accounts for the activities of the City’s sanitation system.
■ The Stormwater Fund accounts for the activities of the City’s stormwater system.
■ The Building Code Enforcement Fund accounts for the activities of the City’s Building
Department.
Additionally, the City reports the following fund types:
■ Special Revenue Funds—The special revenue funds are used to account for the proceeds of
specific revenue sources (other than major capital projects) that are legally restricted to
expenditures for specified purposes.
■ Capital Projects Funds—The capital projects funds are used to account for the financial
resources to be used for the acquisition or construction of major capital facilities and
improvement projects (other than those financed by proprietary funds or special revenue funds).
■ Pension Trust Funds—These funds account for the activities of the Employees’ Retirement
System, which accumulates resources for pension benefit payments to qualified police
officers and general employees.
Fund Balance Classification
Fund Balance is reported in five components – nonspendable, restricted, committed, assigned,
and unassigned:
■ Nonspendable Fund Balance—amounts that are not in spendable form (such as inventory)
or are required to be maintained intact.
■ Restricted Fund Balance—amounts constrained to specific purposes by their providers
(such as grantors, bondholders, and higher levels of government), through constitutional
provisions, or by enabling legislation.
18
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 1 -Summary of Significant Accounting Policies (Continued)
Fund Balance Classification (Concluded)
■ Committed Fund Balance—amounts constrained to specific purposes by the City itself,
using its highest level of decision-making authority (i.e., ordinance passed by City
Commission). To be reported as committed, amounts cannot be used for any other purpose
unless the City takes the same highest level action to remove or change the constraint.
■ Assigned Fund Balance—amounts the City intends to use for a specific purpose. Intent can
be expressed by the City Commission or by an official or body to which the City Commission
delegates the authority.
■ Unassigned Fund Balance—amounts that are available for any purpose. Positive amounts
are reported only in the General Fund.
When both restricted and unrestricted resources are available for use, it is the City’s practice to
use restricted resources first, then unrestricted resources as they are needed. When unrestricted
resources (committed, assigned, and unassigned) are available for use in any governmental fund,
it is the City’s practice to use committed resources first, then assigned, and then unassigned as
needed.
The City Commission establishes (and modifies or rescinds) fund balance commitments by
passage of an ordinance. This is typically done through adoption and amendment of the budget.
A fund balance commitment is further indicated in the budget document as a designation or
commitment of the fund. Assigned fund balance is established by City Commission through
adoption or amendment of the budget as intended for specific purpose (such as the purchase of
fixed assets, construction, debt service, or for other purposes).
In the General Fund, the City strives to maintain a fund balance operating reserve of
approximately 25% of the subsequent year’s budgeted General Fund payroll and operating
expenditures.
Proprietary Funds
Proprietary funds distinguish operating revenues and expenses from nonoperating 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 City’s enterprise funds are charges to customers for sales and
services. Operating expenses for 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 nonoperating revenues and expenses.
Budgets
General governmental revenue and expenditures accounted for in budgetary funds are controlled
by a budgetary accounting system in accordance with various legal requirements which govern the
City’s operations. Budgets are monitored at varying levels of classification detail; however,
expenditures cannot legally exceed total appropriations at the individual fund level.
19
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 1 -Summary of Significant Accounting Policies (Continued)
Budgets (Concluded)
Budgets are adopted for all governmental funds (general, special revenue, and capital projects).
The City Manager is authorized to transfer budgeted amounts within departments within any
fund; however, any revisions that increase the total expenditures of any department or fund must
be approved by the City Commission. All necessary supplemental appropriations are adopted by
the City Commission and are included in the reported budgetary data. The budget presented in
the accompanying required supplemental information is prepared in conformity with accounting
principles generally accepted in the United States of America.
Cash and Investments
Except where prohibited, cash resources of the individual funds are combined to form a pool of
cash and investments. Investment earnings and losses on the pooled cash and investments are
distributed to the appropriate funds based on the average monthly balance of investments in each
fund.
Investments are valued at fair market value (see Note 2).
For the purposes of the statement of cash flows, the City’s proprietary funds consider cash and cash
equivalents to include cash and investments with an original maturity of three months or less.
Receivables
Receivables are recorded at their net realizable value.
Interfund Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at
the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current
portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of
interfund loans).
Inventories
Inventories consisting principally of expendable materials, supplies, and fuel are determined by
physical count at the City’s year-end on an annual basis and are valued at the lower of cost (first
in, first-out) or market. On the balance sheet -governmental funds, the inventory balance
reported is considered nonspendable fund balance, which indicates that it does not constitute
“available spendable resources” even though it is a component of net current assets. The cost of
governmental fund-type inventories is recorded as expenditure when consumed.
Restricted Assets
Certain enterprise fund assets are required to be segregated from other current assets due to
various bond indenture agreements and City ordinances. These assets are legally restricted for
specific purposes, such as debt service, new construction, and renewals and replacements.
Use of Restricted Funds
When both restricted and unrestricted resources are available for use in the City’s funds, it is the
City’s policy to use restricted resources first, then unrestricted resources as they are needed.
20
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 1 -Summary of Significant Accounting Policies (Continued)
Capital Assets
Capital assets, which include property, plant and equipment, and infrastructure assets (e.g., roads,
drainage improvements, sidewalks, and similar items), are reported in the applicable
governmental or business-type activities columns in the government-wide financial statements.
Property, plant and equipment with initial, individual costs that equal or exceed $1,000 and
estimated useful lives of over one year are recorded as capital assets. Capital assets are recorded
at historical cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets’ lives are not capitalized.
Property, plant and equipment are depreciated using the straight-line method over the following
estimated useful lives:
Assets Years
Buildings and Improvements 10 – 40
Improvements Other Than Buildings 10 – 50
Infrastructure 25 – 100
Machinery and Equipment 3 – 40
Long-term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type statement of
net position. Bond premiums, discounts, and refunding losses are deferred and amortized over
the life of the bonds using the effective interest method. Bond issuance costs are expensed when
incurred with the exception of bond insurance, which is amortized over the term of the related
debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are reported
as other financing sources while discounts on debt issuances are reported as other financing uses.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as
debt service expenditures.
Compensated Absences
Accumulated unpaid vacation and sick pay are accrued when incurred in the government-wide
and proprietary fund financial statements.
21
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 1 -Summary of Significant Accounting Policies (Continued)
Deferred Inflows/Outflows of Resources
Deferred inflows of resources reported on applicable governmental fund types represent
revenues, which are measureable but not available in accordance with the modified accrual basis
of accounting. The deferred inflows will be recognized as revenue in the fiscal year they are
earned or become available. Deferred outflows of resources represent consumption of net
position that is applicable to a future reporting period. Deferred outflows have a positive effect
on net position, similar to assets. Deferred inflows of resources represent the acquisition of net
position that is applicable to a future reporting period. Deferred inflows have a negative effect
on net position, similar to liabilities.
Unamortized Refunding Loss—the difference between the net reacquisition cost of new debt and
the net carrying amount of the old debt is recorded as a deferred outflow of resources. The
unamortized refunding loss is recognized as expense over the remaining term of the new debt
using the straight-line method.
Pension Related—Pension Related Deferred Inflows and Outflows represent the difference
between expected and actual experience with regard to economic or demographic factors and
changes to assumptions in the measurement of total pension liability, and the differences between
expected and actual earnings on pension plan investments. These amounts are reported as
deferred inflows or outflows of resources, to be recognized in expense over time. Also included
in deferred outflows are amounts contributed to the pension plans subsequent to the measurement
date. See Note 7 for information on Pension Related Deferred Inflows and Outflows.
Revenue Recognition
Utility revenues are reported on the accrual basis in the accompanying financial statements.
Grant revenues are recorded using the modified accrual basis in governmental funds and the
accrual basis in the proprietary funds. Restricted grant revenues, which are received but not
expended, are recorded as unearned revenues.
Property Taxes
The assessment of all properties and the collection of all property taxes are made through the
Property Appraiser and Tax Collector of the City of Jacksonville, Florida. General property taxes
are recorded as received, in cash, which approximates taxes levied less discounts for the current
fiscal year.
Taxes are levied on November 1 of each year. All taxes become delinquent on April 1 of the
following year. Discounts are allowed for early payment. On or prior to June 1, interest-bearing
certificates are sold for all uncollected real property taxes. Unsold certificates are held by the
City of Jacksonville, Florida.
Interfund Transactions
During the course of normal operations, the City has various transactions between funds to
construct assets and comply with local ordinances and other legal restrictions. These transactions
are reflected as transfers. In addition, certain transfers have been made between systems and
accounts of the utility enterprise fund as required by bond covenants.
22
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 1 -Summary of Significant Accounting Policies (Concluded)
Prior Period Information
The financial statements include certain prior year summarized comparative information in total.
Such information does not include sufficient detail to constitute a presentation in conformity with
generally accepted accounting principles. Accordingly, such information should be read in
conjunction with the City’s financial statements for the year ended September 30, 2016, from
which the summarized information was derived.
Future GASB Pronouncement Implementations
GASB Statement No. 75 (GASB 75), Accounting and Financial Reporting for Postemployment
Benefits Other Than Pensions, replaces the requirements of Statement No. 45, Accounting and
Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as
amended, and Statement No. 57, OPEB Measurements by Agent Employers and Agent Multi-
Employer Plans, for Other Postemployment Benefits (OPEB). GASB 75 establishes new
accounting and financial reporting requirements for governments whose employees are provided
with OPEB, including the recognition and measurement of liabilities, deferred outflows of
resources, deferred inflows of resources, and expenses. For each qualifying plan providing
postemployment benefits other than pensions, employers are required to report the difference
between the actuarial OPEB liability and the related plan’s fiduciary net position as the net OPEB
liability on the statement of net position. Previously, a liability was recognized only to the extent
that contributions made to each plan were exceeded by the actuarially calculated contributions for
those plans. Additionally, GASB 75 sets forth note disclosure and required supplementary
disclosure requirements for defined contribution OPEB. The City is currently evaluating the
impact that adoption of this Statement will have on its financial statements. GASB 75 is effective
for fiscal years beginning after June 15, 2017.
Note 2 -Cash and Investments
The City maintains a cash and investment pool that is designed for use by all funds, except for
those monies which are periodically transferred for pension investment purposes. In addition,
investments are separately held and individually accounted for where contractual arrangements
and bond covenants provide for and require such arrangements.
At September 30, 2017, the carrying amount of cash on hand and on deposit with banks, including
interest-bearing deposits was $4,405,204, and the related bank balance was $4,865,546. Monies
which are placed on deposit with financial institutions in the form of demand deposit accounts, time
deposit accounts, and certificates of deposit are defined as public deposits. All of the City’s public
deposits are held in qualified public depositories pursuant to Florida Statutes Chapter 280, Florida
Security for Public Deposits Act (the Act). Under the Act, all qualified public depositories are
required to pledge eligible collateral having a market value equal to or greater than the average daily
or monthly balance of all public deposits, times the depository’s collateral pledged level. The
pledging level may range from 25% to 125% depending upon the depository’s financial condition
and establishment period. All collateral must be deposited with an approved financial institution.
Any 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.
The City elected to adopt a written investment policy as authorized under Florida Statutes.
23
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 2 -Cash and Investments (Continued)
Under the City’s investment policies, general investments’ activities are authorized to invest in
obligations of the U.S. Treasury, demand deposits, U.S. government agency securities,
certificates of deposit, U.S. government sponsored enterprises, government and corporate fixed
income mutual funds, corporate notes and bonds, and local government investment pools.
Pension trust funds can invest in the aforementioned and, additionally, authorized investments
include domestic and foreign equity securities, domestic and foreign fixed income securities, and
cash equivalent securities.
Following are the investments, credit ratings, and maturities of the City’s governmental and
business-type activities at September 30, 2017:
Investment Maturities
Less More
Investment Fair Than 1-5 6-10 Than
Type Value 1 Year Years Years 10 Years Total
Money Market Funds/Cash $ 82,734 $ 82,734 $ 0 $ 0 $ 0 $ 82,734
Corporate Bonds 4,928,188 1,089,315 3,640,861 198,012 0 4,928,188
U.S. Government Securities 10,106,174 1,045,606 9,060,568 0 0 10,106,174
Federal Agency Securities 1,103,947 0 560,718 543,229 0 1,103,947
Florida PRIME 23,183 23,183 0 0 0 23,183
Total $ 16,244,226 $ 2,240,838 $ 13,262,147 $ 741,241 $ 0 $ 16,244,226
Moody’s Percent
Investment Credit of
Type Rating Total
U.S. Government Securities Aaa 54.57%
Corporate Bonds Aaa 0.32%
Corporate Bonds Aa1 0.37%
Corporate Bonds Aa2 1.09%
Corporate Bonds Aa3 2.23%
Corporate Bonds A1 3.48%
Corporate Bonds A2 3.22%
Corporate Bonds A3 5.88%
Corporate Bonds Baa1 7.09%
Corporate Bonds Baa2 2.21%
Corporate Bonds Baa3 0.19%
Corporate Bonds NR 4.31%
U.S. Government Securities NR 7.73%
Federal Agencies NR 6.81%
Cash and Money Market NR 0.50%
24
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 2 -Cash and Investments (Continued)
Listed below are the investments and maturities in the City’s pension trust funds at September 30,
2017:
Investment Maturities
Investment Fair Less Than 1-5 6-10 More Than
Type Value* 1 Year Years Years 10 Years Total
Cash Deposits and
Money Markets $ 2,167,967 $ 2,167,967 $ 0 $ 0 $ 0 $ 2,167,967
Common Stocks 15,655,372 15,655,372 0 0 0 15,655,372
Corporate Bonds 4,006,091 251,459 2,711,912 1,042,720 0 4,006,091
Mutual Funds 3,884,291 3,884,291 0 0 0 3,884,291
Government and
GSE Bonds 2,261,319 0 1,611,430 368,106 281,783 2,261,319
ICMA Self Directed 543,023 543,023 0 0 0 543,023
Total $ 28,518,063 $ 22,502,112 $ 4,323,342 $ 1,410,826 $ 281,783 $ 28,518,063
* Fair value balances reported include interest receivable.
The total pension investment balances of the City at September 30, 2017, are comprised of the
following items:
Moody’s Percent
Investment Credit of
Type Rating Total
Corporate Bonds Aaa 1.48%
Corporate Bonds Aa1 0.45%
Corporate Bonds Aa3 0.44%
Corporate Bonds A1 1.34%
Corporate Bonds A2 0.45%
Corporate Bonds A3 1.78%
Corporate Bonds Baa1 3.58%
Corporate Bonds Baa2 1.78%
Corporate Bonds Baa3 2.75%
Government and GSE Bonds Aaa 6.63%
Federal MBS Pool NR 1.30%
Mutual Funds NR 13.62%
Stocks NR 54.90%
Cash and Money Market NR 7.60%
ICMA Self Directed NR 1.90%
Credit Risk—It is the City’s Police Officers’ Retirement System Trust Fund’s and the City’s
General Employees’ Retirement System Trust Fund’s investment policies to, at a minimum, limit
80% of the total fixed income portfolio to those that are rated investment grade of higher. The
Police Officers’ Retirement System Trust Fund’s investment policy defines investment grade as
“BBB”, Baa”, or their equivalent.
Also, no more than 10% (at cost) of the fixed income portfolio total value can be invested in the
securities of any single corporate issuer. The maximum allocation to International Equities is
25%.
25
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 2 -Cash and Investments (Continued)
Custodial Credit Risk—For an investment, custodial credit risk is the risk that, in the event of
the failure of the counterparty, the City will not be able to recover the value of its investments or
collateral securities that are in the possession of an outside party.
The City’s investment policy does not contain legal or policy requirements that would limit the
exposure to custodial credit risk for deposits or investments, other than the following provision
for deposits: The Finance Director may execute a third party Custodial Safekeeping Agreement
with a commercial bank having trust powers or a trust company which is chartered by the United
States government or the State of Florida. All securities purchased and/or collateral obtained by
the City shall be properly designated as an asset of the City and held in safekeeping by the trust
department or trust company, and no withdrawal of such securities, in whole or in part, shall be
made from safekeeping, except by an authorized City staff member. The third party Custodial
Safekeeping Agreement shall include letters of authority from the City with details as to
responsibilities of parties, notification of security purchases, sales, deliver, repurchase
agreements, wire transfers, safekeeping and transaction costs, procedures in case of wire failure
or other unforeseen mishaps, including liability of each party.
Fair Value Measurements
The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value
into three levels:
Level 1 Inputs―are quoted prices (unadjusted) for identical assets or liabilities in active
markets that a government can access at the measurement date.
Level 2 Inputs―are inputs other than quoted prices included within Level 1 that are
observable for an asset or liability, either directly or indirectly.
Level 3 Inputs―are unobservable inputs for an asset or liability.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to
Level 3 inputs. If a price for an identical asset or liability is not observable, a government should
measure fair value using another valuation technique that maximizes the use of relevant
observable inputs and minimizes the use of unobservable inputs.
The City’s investments are measured at fair value on a recurring basis. Fair value measurements
are categorized based on the valuation inputs used to measure an asset’s fair value in the hierarchy
described above. The fair value measurements for the City’s operating investments are as follows
at September 30, 2017:
26
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 2 -Cash and Investments (Concluded)
Fair Value Measurements (Concluded)
Fai r Val ue Measurements Usi ng
Quoted Pri ces i n Si gni fi cant Other Si gni fi cant
Acti ve Markets for Oberservabl e Unobservabl e
Identi cal Assets Inputs Inputs
Investments by Fai r Val ue Level Amount (Level 1) (Level 2) (Level 3)
Ci ty Investments:
Corporate Bonds $ 4,928,188 $ 0 $ 4,928,188 $ 0
U.S. Government Securities 10,106,174 10,106,174 0 0
Federal Agency Securities 1,103,947 0 1,103,947 0
Subtotal - City Investments 16,138,309 10,106,174 6,032,135 0
G eneral Empl oyees' Pensi on Pl an:
U.S. Treasury Obligations and
Federal Agency Securities 1,562,662 1,279,438 283,224 0
Corporate Bonds 2,760,186 0 2,760,186 0
Mutual Funds 2,131,975 2,131,975 0 0
Equities 10,289,648 10,289,648 0 0
ICMA Self Directed 55,232 55,232 0 0
Subtotal - General Employees' Pension Plan 16,799,703 13,756,293 3,043,410 0
Pol i ce Offi cers' Pensi on Pl an:
U.S. Treasury Obligations and
Federal Agency Securities 698,658 572,433 126,225 0
Corporate Bonds 1,245,905 0 1,245,905 0
Mutual Funds 1,752,315 1,752,315 0 0
Equities 5,365,724 5,365,724 0 0
ICMA Self Directed 487,791 487,791 0 0
Subtotal - Police Officers' Pension Plan 9,550,393 8,178,263 1,372,130 0
Total Investments Measured at Fai r Val ue $ 42,488,405 $ 32,040,730 $ 10,447,675 $ 0
Weighted
Inves tments Meas ured at the Net As s et Average Credit
Value (NAV) Amount Maturity Ris k
Governmental Funds:
State Board of Administration (SBA):
Florida Prime $ 23,183 50 Days AAAm (S&P)
Restricted cash and investments at September 30, 2017, in the enterprise funds follows:
Renewal System
Enterprise Customer and Debt Development
Funds Deposits Replacement Service Fees Totals
Utility Fund $ 653,012 $ 250,000 $ 401,046 $ 1,244,694 $ 2,548,752
Note 3 -Receivables
Receivables, net of the allowance for doubtful accounts at September 30, 2017, consist of the
following:
27
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 3 -Receivables (Concluded)
Less
Total Allowance Accounts
Accounts for Doubtful Receivable
Fund Receivable Accounts Net
General $ 651 $ 0 $ 651
Utility 552,339 (19,932) 532,407
Stormwater 54,682 0 54,682
Sanitation 88,504 (10,707) 77,797
Total $ 696,176 $ (30,639) $ 665,537
Included in accounts receivable are $221,283 of water and sewer revenues earned, but not billed
as of September 30, 2017.
Note 4 -Notes Receivable
It is the City’s policy to allow its water and sewer customers to pay connection fees over an
extended period.
Following is a summary of the outstanding balance at September 30, 2017:
Notes Receivable $ 135,080
(Current Portion) (15,759)
Total Notes Receivable -Noncurrent $ 119,321
Note 5 -Capital Assets
Capital asset activity for the fiscal year ended September 30, 2017, is as follows:
Beginning Ending
Balance Increases (Decreases) Balance
Governmental Activities
Capital Assets Not Being Depreciated:
Land $ 10,563,572 $ 0 $ 0 $ 10,563,572
Construction in Progress 2,557,045 2,957,114 (4,875,478) 638,681
Total Capital Assets Not
Being Depreciated 13,120,617 2,957,114 (4,875,478) 11,202,253
Capital Assets Being Depreciated:
Buildings 4,574,646 4,875,478 0 9,450,124
Intangible Assets 409,797 18,555 0 428,352
Improvements Other Than Buildings 41,339,136 0 0 41,339,136
Machinery and Equipment 4,343,033 494,794 (63,948) 4,773,879
Total Capital Assets Being Depreciated 50,666,612 5,388,827 (63,948) 55,991,491
Less Accumulated Depreciation for:
Buildings (2,095,496) (140,448) 0 (2,235,944)
Intangible Assets (354,245) (12,127) 0 (366,372)
Improvements Other Than Buildings (15,602,903) (683,140) 0 (16,286,043)
Machinery and Equipment (3,274,919) (297,840) 63,948 (3,508,811)
Total Accumulated Depreciation (21,327,563) (1,133,555) 63,948 (22,397,170)
Total Capital Assets Being
Depreciated, Net 29,339,049 4,255,272 0 33,594,321
Governmental Activities Capital
Assets, Net $ 42,459,666 $ 7,212,386 $ (4,875,478) $ 44,796,574
28
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 5 -Capital Assets (Concluded)
Beginning Ending
Balance Increases (Decreases) Balance
Business-type Activities
Capital Assets Not Being Depreciated:
Land $ 1,656,018 $ 0 $ 0 $ 1,656,018
Construction in Progress 740,411 1,301,344 (633,868) 1,407,887
Total Capital Assets Not Being Depreciated 2,396,429 1,301,344 (633,868) 3,063,905
Capital Assets Being Depreciated:
Buildings 4,356,384 0 0 4,356,384
Intangible Assets 244,709 0 0 244,709
Improvements Other Than Buildings 83,075,472 980,447 0 84,055,919
Machinery and Equipment 2,401,083 266,846 0 2,667,929
Total Capital Assets Being Depreciated 90,077,648 1,247,293 0 91,324,941
Less Accumulated Depreciation for:
Buildings (4,294,702) (8,812) 0 (4,303,514)
Intangible Assets (30,663) (190) 0 (30,853)
Improvements Other Than Buildings (45,180,927) (2,589,806) 0 (47,770,733)
Machinery and Equipment (1,883,938) (96,781) 0 (1,980,719)
Total Accumulated Depreciation (51,390,230) (2,695,589) 0 (54,085,819)
Total Capital Assets Being Depreciated,
Net 38,687,418 (1,448,296) 0 37,239,122
Business-type Activities Capital Assets,
Net $ 41,083,847 $ (146,952) $ (633,868) $ 40,303,027
Depreciation expense was charged to functions/programs as follows:
Governmental Activities
General Governmental $ 170,629
Public Safety 177,406
Road Maintenance and Construction 555,827
Parks and Recreation 229,693
Total Depreciation Expense -Governmental Activities $ 1,133,555
Business-type Activities
Utility $ 2,171,727
Stormwater 518,117
Sanitation 1,543
Building Code Enforcement 4,202
Total Depreciation Expense -Business-type Activities $ 2,695,589
Note 6 -Long-term Debt
Revenue Bonds and Loans payable are comprised of the following:
Revenue Bond Payable
Utilities System Revenue Refunding Bond, Series 2014, Payable in Annual
Installments of Principal and Semiannual Installments of Interest Through
October 1, 2025, Bearing Coupon Rates of 2.330%, Secured Solely by a
Pledge of and Lien on Net Water and Sewer System Revenues and Certain
Other Revenues as Defined in the Bond Ordinance $ 11,710,000
29
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 6 -Long-term Debt (Continued)
Loans Payable
Florida Department of Environmental Protection, Disbursements and
Capitalized Interest for a $773,030 State of Florida Revolving Loan
#DW160710, Issued to Finance the Construction Costs to Replace a
Well at Water Treatment Plant No. 1 and a Transmission Main on
Ocean Boulevard, Payable in Semiannual Installments of Principal
and Interest Through November 15, 2030, with Financing Rates of
2.71%, Secured Solely by a Pledge of Net Water and Sewer System
Revenues, After Payment of all Yearly Payment Obligations on Account
of the Senior Revenue Obligations, as Defined in the Loan Agreement $ 560,790
Florida Department of Environmental Protection, Disbursements, Service
Fee, and Capitalized Interest for a Combined $9,368,576 State of Florida
Revolving Loan #WW160700, Issued to Finance the Construction of
Treatment and Transmission Facilities for the Buccaneer WWTP
Phase-out Improvements and TMDL Compliance Program WWTP #1,
Payable in Semiannual Installments of Principal and Interest Through
May 15, 2032, with Financing Rates of 3.14% and 2.88%, Secured Solely
by a Pledge of Net Water and Sewer System Revenues, After Payment
of all Yearly Payment Obligations on Account of the Senior Revenue
Obligations, as Defined in the Loan Agreement 6,086,918
Total Revenue Bond and Loans Payable $ 18,357,708
The annual requirements to amortize all revenue bonds and loans payable outstanding at
September 30, 2017, are as follows:
Business-type Activities
Year Ending Long-term Debt
September 30 Principal Interest Total
2018 $ 1,543,259 $ 462,611 $ 2,005,870
2019 1,584,443 423,466 2,007,909
2020 1,620,979 383,330 2,004,309
2021 1,657,875 342,251 2,000,126
2022 1,705,143 300,101 2,005,244
2023-2027 7,728,593 845,769 8,574,362
2028-2032 2,517,416 216,923 2,734,339
Total $ 18,357,708 $ 2,974,451 $ 21,332,159
Interest and amortization incurred during the year ended September 30, 2017, amounted to
$492,485. Of the amount incurred, no interest was capitalized.
The City is also required to maintain certain debt service coverage ratios in accordance with bond
resolutions. As of September 30, 2017, and during the year then ended, the City was in
compliance with those ratios.
30
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 6 -Long-term Debt (Continued)
The following is a summary of the changes in long-term debt of the City for the year ended
September 30, 2017:
Balance Balance Due
October 1,
2016 Additions Reductions
September 30,
2017
Within
One Year
Governmental Activities
Compensated Absences
OPEB Obligation
Net Pension Liability
Total Governmental Activities
Long-term Liabilities
$
$
677,465 $
203,704
8,288,194
9,169,363 $
383,082 $
18,492
0
401,574 $
(375,089) $
0
(1,029,768)
(1,404,857) $
685,458 $
222,196
7,258,426
8,166,080 $
362,514
0
0
362,514
Business-type Activities
State Revolving Fund Loans
Revenue Bonds Payable
Total Bonds/Loans Payable
Compensated Absences
OPEB Obligation
Net Pension Liability
Total Business-type Activities
Long-term Liabilities
$
$
6,995,121 $
12,870,000
19,865,121
234,310
67,974
2,401,103
22,568,508 $
0 $
0
0
139,987
9,387
174,056
323,430 $
(347,413) $
(1,160,000)
(1,507,413)
(127,635)
0
0
(1,635,048) $
6,647,708 $
11,710,000
18,357,708
246,662
77,361
2,575,159
21,256,890 $
358,258
1,185,000
1,543,258
146,514
0
0
1,689,772
Conduit Debt
The City has issued Health Facility Revenue and Refunding Bonds to provide financial assistance
to private sector entities for the acquisition and construction of health care facilities deemed to
be in the public interest. These bonds are secured by the financed property and are payable solely
from the payments received on the underlying mortgage loans.
There is no obligation on the part of the City or any political subdivision for repayment of the
bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial
statements. As of September 30, 2017, there are two series of Health Facility Revenue and
Refunding Bonds outstanding, with an aggregate principal amount payable of $54,060,000.
Pledged Revenue
The City has pledged certain revenues to repay certain bonds and notes outstanding as of
September 30, 2017. The following table reports the revenues, sometimes net of related operating
expenses, pledged for each debt issue, the amounts of such revenues received in the current year,
the current year principal and interest paid on the debt, the approximate percentage of each
revenue which is pledged to meet the debt obligation, and the date through which the revenue is
pledged under the debt agreement, and the total pledged future revenues for each debt, which is
the amount of the remaining principal and interest on the bonds and notes at September 30, 2017:
31
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 6 -Long-term Debt (Concluded)
Pledged Revenue (Concluded)
Outstanding
Net Principal Estimated Principal
Pledged Revenue and Interest Percentage and Pledged
Description Revenue Received Paid Pledged Interest Through
2014 – Utility System Utility
Refunding Bonds Revenues $ 3,586,481 $ 1,446,357 40.33% $ 12,979,499 2026
Florida Department of
Environmental Utility
Protection, SRF Loan Revenues 3,586,481 49,879 1.39% 673,364 2031
Florida Department of
Environmental Utility
Protection, SRF Loan Revenues 3,586,481 511,935 14.27% 7,679,297 2032
Note 7 -Defined Benefit Pension Plans
Plan Descriptions
The City maintains two separate single-employer defined benefit pension plans, one for police
officers and one for general employees, which cover substantially all full-time City employees
hired before September 1, 2008. The general employees’ defined benefit plan is closed to new
entrants. Full-time general employees hired on or after September 1, 2008, are covered by the
defined contribution plan disclosed in Note 8. The pension plans do not issue separate stand
alone financial statements. Combining statements are included in the supplementary information
to the basic financial statements.
General Employees’ Retirement Plan
Plan Description
The General Employees’ Retirement Plan (Plan) provides retirement, disability, and death
benefits to Plan members and their beneficiaries. The City Commission has the authority to
establish and amend the benefit provisions of the Plan. The Plan is governed by a Retirement
Plan Board appointed by the City Commission and comprised of five members, two of which
will be eligible legal residents of the City, two of which will be general employees elected by the
majority of general employees who are members of the Plan, and one of which will be elected
by the other four members. Plan membership in the General Employees’ Retirement Plan as of
September 30, 2017 and 2016, is as follows:
September 30, September 30,
Retirees and Beneficiaries 2017 2016
Inactive Plan Members or Beneficiaries
Currently Receiving Benefits 69
67
Inactive Plan Members Entitled to but Not
Yet Receiving Benefits 10 11
Active Plan Members 37 39
Total 116 117
32
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
General Employees’ Retirement Plan (Continued)
Plan Benefits
Normal retirement is available upon the attainment of age sixty and the completion of five years
of credited service. Early retirement is available with a reduced benefit upon the attainment of
age fifty-five and the completion of five years of credited service. For members hired before
April 24, 2005, the normal retirement benefit shall equal 2.85% of average final compensation
for each year of credited service. For members hired on or after April 24, 2005, the normal
retirement benefit shall equal 2.50% of average final compensation for each year of credited
service. The Plan includes a deferred retirement option program (DROP) under which members
eligible for normal retirement may have their monthly pension benefit credited to an account
while continuing to be actively employed for up to five years. As of September 30, 2017, Plan
net position included $55,232 of DROP account balances.
Contributions
The City is required to contribute at an actuarially determined rate (56.87%) of valuation payroll
for the year ended September 30, 2017. City contributions to the Plan were $1,175,572 for the
year ended September 30, 2017. Plan members are required to contribute 6.0% of their annual
covered salary. Contribution requirements are established by City code, which may be amended
by the City Commission.
Measurement Date
The City elected to use a measurement date to value the net pension liability and related deferred
inflows and outflows as of September 30, 2016, one year prior to the reporting date. The City’s
Pension Plans do not issue separate financial statements. Therefore, the disclosures required for
the Plan as of September 30, 2017, are also included below:
Total Pens ion Plan Fiduciary Net Pens ion
Liability Net Pos ition Liability
Balances at S eptember 30, 2015 20,788,102 $ 15,008,338 $ 5,779,764 $
Changes for the Year:
Service Cos t 348,604 0 348,604
Interes t 1,437,296 0 1,437,296
Change of As s umptions 501,656 0 501,656
Difference Between Expected and Actual
Experience of the Total Pens ion Liability 164,601 0 164,601
Contributions - Employer 0 1,112,344 (1,112,344)
Contributions - State 0 0 0
Contributions - Employee 0 128,204 (128,204)
Net Inves tment Income 0 1,515,746 (1,515,746)
Benefit Payments , Including
Refunds of Contributions (1,207,804) (1,207,804) 0
Adminis trative Expens es 0 (32,495) 32,495
Net Changes 1,244,353 1,515,995 (271,642)
Balances at S eptember 30, 2016 22,032,455 $ 16,524,333 $ 5,508,122 $
33
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
General Employees’ Retirement Plan (Continued)
Measurement Date (Concluded)
General Employee’s Plan (Concluded)
September 30, 2017
Total Pension Liability $ 22,894,177
Plan Net Position (18,243,134)
Net Pension Liability $ 4,651,043
*Note: Plan Net Position per Fiduciary Statement of Net Position on page 61 is different than the Plan Net
Position noted above primarily due to the booking of a $4,250 receivable from the City for a
reimbursement.
General Employees’ Retirement Plan Net Position as a Percentage
of Total Pension Liability 79.68%
For the year ended September 30, 2017, the City recognized total pension expense of $1,495,605.
The City reported deferred outflows of resources and deferred inflows of resources related to the
General Employees’ Pension Plan from the following sources:
Deferred Outflows of Resources
Changes in Assumptions $ 581,702
Difference Between Expected and Actual Experience 105,815
Net Difference Between Projected and Actual Earnings 290,538
Contributions Made Subsequent to Measurement Date 1,175,572
Total Deferred Outflows of Resources $ 2,153,627
Deferred Inflows of Resources
Difference Between Expected and Actual Experience $ 60,854
Total Deferred Inflows of Resources $ 60,854
Contributions made after the measurement date (shown above) will be recognized as a reduction of
net pension liability in the fiscal year ended September 30, 2018. Other amounts reported as
deferred outflows of resources related to pensions will be recognized in pension expense as follows:
Year Ending
September 30
2018
2019
2020
2021
Total
Amount
$ 596,798
330,572
82,861
(93,030)
$ 917,201
Plan Investments
The Retirement Plan Board is responsible for establishing and amending the Plan’s investment
policies. The Plan’s current investment policy gives the Board discretion to allocate assets with
assistance of the Plan’s investment consultant. No formal targets are stated in the investment
policy although the maximum allocation to international equities is 25%. The money-weighted
rate of return on Plan investments, net of investment related expenses, was 10.92% and 10.18%
for the years ended September 30, 2017 and 2016, respectively.
34
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
General Employees’ Retirement Plan (Continued)
Actuarial Assumptions
The total pension liability was determined by actuarial valuations for the Plan as of September 30,
2016, rolled forward to September 30, 2017, using the following actuarial assumptions, applied
to all periods included in the measurement:
Inflation: 2.50%
Salary Increases: Age based ranging from 5.00% - 13.50%
Investment Rate of Return: 7.00%, net of investment expenses, including
inflation
Mortality: RP2000 Combined Health Participant Mortality
Table (for preretirement mortality) and the RP
2000 Mortality Table for Annuitants (for
postretirement mortality), with mortality
improvements projects to all future years after
2000 using Scale BB.
Date of Experience Study: Other significant actuarial assumptions used in
the September 30, 2016 valuation were based on
the results of an actuarial experience study (dated
February 15, 2011) for the period October 1, 2001
- September 30, 2010
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best-estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense of 0.50% and inflation of 2.50%) are
developed for each major asset class. These ranges are combined to produce the long-term
expected rate of return by weighting the expected future real rates of return by the target asset
allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of
return for each major asset class included in the pension plan's target asset allocation (see the
discussion of the pension plans’ investment policy) are summarized in the following table:
Target Long-term Expected
Asset Class Allocation Real Net Rate of Return
US Large-Cap Growth Stocks 13% 7.4%
US Large-Cap Value Stocks 12% 7.0%
US Mid-Cap Growth Stocks 3% 8.6%
US Mid-Cap Value Stocks 4% 7.8%
US Mid-Cap Core Stocks 3% 6.9%
US Small-Cap Growth Stocks 5% 9.6%
US Small-Cap Value Stocks 5% 8.6%
International Equities 5% 7.2%
US Investment Grade Bonds 40% 1.8%
Cash (US 90-day T-bill) 10% 0.2%
35
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
General Employees’ Retirement Plan (Concluded)
Actuarial Assumptions (Concluded)
Discount rate. A single discount rate was used to measure the total pension liability. The single
discount rate was based on the expected rate of return on Plan investments of 7.00%. The
projection of cash flows used to determine the single discount rate assumed that plan member
contributions will be made at the current contribution rate and that City contributions will be
made at rates equal to the difference between actuarially determined contribution rates and the
member rate. Based on those assumptions, the 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 Plan investments (7.00%) was applied to all periods of
projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate. The following presents the
net pension liability of the City, calculated using the discount rate of 7.00%, as well as what the
City's net pension liability would be if it were calculated using a discount rate that is
1-percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate:
As of September 30, 2017:
Net Pension
Liability
General Employees’
Pension Plan
1% Decrease
(6.00%)
$ 7,144,341
Current Discount
Rate (7.00%)
$ 4,651,043
1% Increase
(8.00%)
$ 2,517,190
As of September 30, 2016:
Net Pension
Liability
General Employees’
Pension Plan
1% Decrease
(6.00%)
$ 7,969,619
Current Discount
Rate (7.00%)
$ 5,508,122
1% Increase
(8.00%)
$ 3,407,262
Police Officers’ Retirement Plan
Plan Description
The Police Officers’ Retirement Plan (Police Plan) provides retirement, disability, and death
benefits to Police Plan members and their beneficiaries. The Police Plan is governed by the
Policemen’s Pension Board of Trustees, although the City Commission retains the authority to
establish and amend the benefit provisions of the Police Plan. The Policemen’s Pension Board of
Trustees is appointed by the City Commission and comprised of five members, two of which will
be eligible legal residents of the City, two of which will be police officers elected by the majority
of police officers who are members of the Police Plan, and one of which will be elected by the other
four trustees. Membership in the Police Officers’ Retirement Plan as of September 30, 2017 and
2016, is as follows:
36
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
Police Officers’ Retirement Plan (Continued)
Plan Description (Concluded)
Retirees and Beneficiaries
Inactive Plan Members or Beneficiaries
Currently Receiving Benefits
Inactive Plan Members Entitled to but Not
Yet Receiving Benefits
Active Plan Members
Total
September 30,
2017
22
4
23
49
September 30,
2016
21
5
23
49
Plan Benefits
For members hired before January 1, 2013, normal retirement is available upon the attainment of
age fifty and the completion of twenty years of credited service, the attainment of age fifty-five
and the completion of ten years of credited service, the completion of twenty-five years of
credited service regardless of age, or the attainment of age sixty and the completion of five years
of credited service. For members hired on or after January 1, 2013, normal retirement is available
upon the attainment of age fifty-five and the completion of ten years of credited service or the
attainment of age fifty-two and the completion of twenty-five years of credited service. Early
retirement is available with a reduced benefit upon the attainment of age fifty and the completion
of ten years of credited service.
For members hired before January 1, 2013, the normal retirement benefit shall equal 3.00% of
average final compensation for each year of credited service. For members hired on or after
January 1, 2013, the normal retirement benefit shall equal 2.00% of average final compensation
for each year of credited service. The Police Plan includes a DROP under which members
eligible for normal retirement may have their monthly pension benefit credited to an account
while continuing to be actively employed for up to five years. As of September 30, 2017, Police
Plan net position included $487,791 of DROP account balances.
Contributions
The City is required to contribute, at actuarially determined rates, if State of Florida contributions
are not sufficient (combined City and State contributions were 58.39% of valuation payroll for
the year ended September 30, 2017). City and State contributions to the Police Plan were
$945,540 for the year ended September 30, 2017. Police Plan members are required to contribute
8.0% of their annual covered salary. Per City Code, the City Commission may amend established
contribution requirements.
Measurement Date
The City elected to use a measurement date to value the net pension liability and related deferred
inflows and outflows as of September 30, 2016, one year prior to the reporting date. The City’s
Pension Plans do no issue separate financial statements. Therefore, the disclosures required for
the Plan as of September 30, 2017, are also included below:
37
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
Police Officers’ Retirement Plan (Continued)
Measurement Date (Continued)
Total Pens ion Plan Fiduciary Net Pens ion
Liability Net Pos ition Liability
Balances at S eptember 30, 2015 13,402,655 $ 8,493,122 $ 4,909,533 $
Changes for the Year:
Service Cos t 279,863 0 279,863
Interes t 931,370 0 931,370
Change of As s umptions (57,608) 0 (57,608)
Difference Between Expected and Actual
Experience of the Total Pens ion Liability (2,998) 0 (2,998)
Contributions - Employer 0 729,483 (729,483)
Contributions - State 0 112,972 (112,972)
Contributions - Employee 0 117,274 (117,274)
Net Inves tment Income 0 804,901 (804,901)
Benefit Payments , including
Refunds of Contributions (754,465) (754,465) 0
Pens ion Plan Adminis trative Expens e 0 (29,933) 29,933
Net Changes 396,162 980,232 (584,070)
Balances at S eptember 30, 2016 13,798,817 $ 9,473,354 $ 4,325,463 $
September 30, 2017
Total Pension Liability $ 14,664,876
Plan Net Position (10,803,540)
Net Pension Liability $ 3,861,336
Police Officers’ Retirement Plan Net Position as a Percentage of
Total Pension Liability 73.67%
*Note: Plan Net Position per Fiduciary Statement of Net Position on page 61 is different than the Plan Net
Position noted above primarily due to the booking of a $4,250 receivable from the City for a
reimbursement.
For the year ended September 30, 2017, the City recognized total pension expense of $795,643.
The City reported deferred outflows of resources and deferred inflows of resources related to the
Police Plan from the following sources:
Deferred Outflows of Resources
Net Difference Between Projected and Actual Earnings
on Pension Plan Investments $ 136,175
Assumption Changes 425,223
Contributions Made Subsequent to Measurement Date 945,540
Total Deferred Outflows of Resources $ 1,506,938
Deferred Inflows of Resources
Differences Between Project and Actual Experience $ 114,003
Assumption Changes 42,448
Total Deferred Inflows of Resources $ 156,451
38
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
Police Officers’ Retirement Plan (Continued)
Measurement Date (Concluded)
Contributions made after the measurement date (shown above) will be recognized as a reduction
of net pension liability in the fiscal year ending September 30, 2018. Other amounts reported as
deferred outflows and inflows of resources related to pensions will be recognized in pension
expense as follows:
Year Ending
September 30
2018
2019
2020
2021
Total
Amount
$ 272,406
130,666
42,725
(40,850)
$ 404,947
Plan Investments
The Policemen’s Pension Board of Trustees is responsible for establishing and amending the
Police Plan’s investment policies. The Police Plan’s current investment policy gives the Board
discretion to allocate assets with assistance of the Police Plan’s investment consultant. No formal
targets are stated in the investment policy although the maximum allocation to international
equities is 25%. The money-weighted rate of return on Plan investments, net of investment
related expenses, was 10.80% and 9.93% for the years ended September 30, 2017 and 2016,
respectively.
Actuarial Assumptions
The total pension liability was determined by actuarial valuations for the Plan as of September 30,
2016, rolled forward to September 30, 2017, using the following actuarial assumptions, applied
to all periods included in the measurement:
Inflation: 2.50%
Salary Increases: Age based ranging from 4.50% - 22.50% (including
2.5% price inflation)
Investment Rate of Return: 7.00% per year compounded annually, net of
investment expenses
Mortality: RP-2000 Combined Health Participant Mortality
Table for males and females with generational
projections from the Year 2000 Projection Scale BB
Date of Experience Study: Other significant actuarial assumptions used in the
September 30, 2016, valuation were based on the
results of an actuarial experience study (dated
February 15, 2011) for the period October 1, 2001
September 30, 2010.
39
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Continued)
Police Officers’ Retirement Plan (Continued)
Actuarial Assumptions (Continued)
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best-estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense of 0.50% and inflation of 2.50%) are
developed for each major asset class. These ranges are combined to produce the long-term
expected rate of return by weighting the expected future real rates of return by the target asset
allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of
return for each major asset class included in the pension plan's target asset allocation (see the
discussion of the pension plans’ investment policy) are summarized in the following table:
Long-term Expected
Asset Class Target Allocation Real Net Rate of Return
US Large-Cap Growth Stocks 13% 7.4%
US Large-Cap Value Stocks 12% 7.0%
US Mid-Cap Growth Stocks 3% 8.6%
US Mid-Cap Value Stocks 4% 7.8%
US Mid-Cap Core Stocks 3% 6.9%
US Small-Cap Growth Stocks 5% 9.6%
US Small-Cap Value Stocks 5% 8.6%
International Equities 5% 7.2%
US Investment Grade Bonds 40% 1.8%
Cash (US 90-day T-bill) 10% 0.2%
Discount rate. A single discount rate was used to measure the total pension liability. The single
discount rate was based on the expected rate of return on Police Plan investments of 7.00%. The
projection of cash flows used to determine the single discount rate assumed that plan member
contributions will be made at the current contribution rate and that City contributions will be
made at rates equal to the difference between actuarially determined contribution rates and the
member rate. Based on those assumptions, the Police Plan’s fiduciary net position was projected
to be available to make all projected future benefit payments of current Police Plan members.
Therefore, the long-term expected rate of return on Police Plan investments (7.00%) was applied
to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate. The following presents the
net pension liability of the City, calculated using the discount rate of 7.00%, as well as what the
City's net pension liability would be if it were calculated using a discount rate that is
1-percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate:
September 30, 2017
Net Pension 1% Decrease Current Discount 1% Increase
Liability (6.00%) Rate (7.00%) (8.00%)
Police Officers’
Pension Plan $ 5,625,875 $ 3,861,336 $ 2,387,826
40
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 7 -Defined Benefit Pension Plans (Concluded)
Police Officers’ Retirement Plan (Concluded)
Actuarial Assumptions (Concluded)
September 30, 2016
Net Pension 1% Decrease Current Discount 1% Increase
Liability (6.00%) Rate (7.00%) (8.00%)
Police Officers’
Pension Plan $ 5,991,394 $ 4,325,463 $ 2,936,220
Note 8 -Defined Contribution Plan
The City passed an ordinance in 2013 closing the General Employees’ defined benefit plan to
new entrants and creating the City of Atlantic Beach Defined Contribution Plan. The City’s 457
defined contribution plan is administered through ICMA, which covers all eligible employees
employed with the City on or after September 1, 2008, who are not covered by the City’s Police
Officers’ defined benefit plan. Under the 457 Plan, the City contributes an employer matching
contribution of up to 6% of earnings during the first ten years of service. Following ten years of
service, the City contributes a fixed contribution of 4% of earnings. Employees have the option
to voluntarily contribute to the 457 Plan. Employer matching contributions from the City were
$60,944 and $64,723 for the years ended September 30, 2017 and 2016, respectively. Under the
457 Plan, an employee is considered fully vested after 5 years of completed service.
Note 9 -Postemployment Benefits Other Than Pensions
Plan Description
The City of Atlantic Beach administers a single-employer defined benefit health care plan (Plan)
that provides medical insurance benefits to its employees and their eligible dependents. In
accordance with Section 112.0801 of the Florida Statutes, because the City provides a medical
plan to active employees of the City and their eligible dependents, the City is also required to
provide retirees with the opportunity to participate in this Plan. Benefit provisions for the Plan
are established by the City Commission and may be amended by the City Commission. The City
does not issue stand-alone financial statements for the Plan.
Membership in the Plan consisted of the following, as of October 1, 2015, the date of the latest
actuarial valuation:
Retirees and Beneficiaries Receiving Benefits 2
Active Plan Members 108
Total 110
Funding Policy
Contribution rates for the Plan are established on an annual basis by the City Commission.
Eligible retirees and their covered dependents receiving benefits contribute 100% of the blended
(active and retiree combined) equivalent premium rates. While the City does not directly
41
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 9 -Postemployment Benefits Other Than Pensions (Continued)
Funding Policy (Concluded)
contribute towards the costs of retiree premiums via an explicit subsidy, the ability of retirees to
obtain health insurance coverage at a blended, group rate constitutes a significant economic
benefit to retirees, or an “implicit” subsidy. This implicit subsidy is considered to be another
postemployment benefit (OPEB) obligation of the City. The City is currently funding this OPEB
obligation on a pay-as-you -go basis. Annual Required Contribution (ARC) amounted to $51,765
for the current fiscal year. The ARC is based on a rate of 0.9% of projected payroll of $5,459,992
or an average $456 per active participant. For the year ended September 30, 2017, the City
estimated it contributed $22,404 towards the implicitly subsidy of health care costs for its retirees
and covered dependents. This implied subsidy reduced the annual OPEB cost to a net expense of
$50,283 after interest on the Net OPEB Obligation and adjustments to ARC.
Annual OPEB Cost and Net OPEB Obligation
The City’s annual OPEB cost (expense) is calculated based on the ARC of the employer, an
amount actuarially determined in accordance with the parameters of GASB Statement No. 45.
The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal cost each year to amortize any unfunded actuarial liabilities (or funding excess) over a
period not to exceed 30 years. The following table shows the components of the City’s annual
OPEB cost for the year, the amount actually contributed to the Plan, and changes in the City’s net
OPEB obligation to the retiree health plan:
Annual Required Contribution $ 51,765
Interest on Net OPEB Obligation 10,867
Adjustment to Annual Required Contribution (12,349)
Annual OPEB Cost (Expense) 50,283
Employer Contribution (22,404)
Increase in Net OPEB Obligation 27,879
Net OPEB Obligation -Beginning of Year 271,677
Net OPEB Obligation -End of Year $ 299,556
The City reflected the $27,879 increase in net OPEB obligation at September 30, 2017, by
recording an obligation of $222,196 for governmental activities and $77,361 for business-type
activities in its government-wide statement of net position. The utility fund reported a net OPEB
obligation of $53,934, while the stormwater fund and building code enforcement fund reported
$12,162 and $11,265, respectively. The OPEB obligation is a function of ARCs, interest,
adjustments to the ARC, annual pension costs, and actual employers’ contributions made to the
Plan.
No trust or agency fund has been established for the Plan.
The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and
the net OPEB obligation as of September 30, 2017, are presented below.
42
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 9 -Postemployment Benefits Other Than Pensions (Concluded)
Annual OPEB Cost and Net OPEB Obligation (Concluded)
Percentage
Fiscal Annual of Annual Net
Year OPEB OPEB Cost OPEB
Ended Cost Contributed Obligation
September 30, 2015 $ 49,357 39.99% $ 238,298
September 30, 2016 48,421 31.07% 271,677
September 30, 2017 50,283 44.56% 299,556
Funded Status and Funding Progress
As of October 1, 2015, the date of the latest actuarial valuation, the actuarial accrued liability for
benefits was $406,200, all of which was unfunded. The covered payroll (annual payroll of active
employees covered by the Plan) was $5,459,992, and the ratio of the unfunded actuarial accrued
liability to the covered payroll was 7.44%. The projection of future benefit payments for an
ongoing plan involves estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the health care cost trend. Amounts determined regarding the funded
status of the Plan and the ARCs of the employer are subject to continual revision as actual results
are compared with past expectations and new estimates are made about the future. The schedule
of funding progress, presented as required supplementary information following the notes to the
financial statements, presents multiyear trend information about whether the actuarial value of
Plan assets is increasing or decreasing over time, relative to the actuarial accrued liabilities for
benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan
as understood by the employer and plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The methods and assumptions used include techniques
that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities,
consistent with the long-term perspective of the calculations.
In the actuarial valuation as of October 1, 2015, the date of the latest actuarial valuation, the Entry-
Age Normal Actuarial Cost Method was used, which spreads the costs evenly as a percent of pay
throughout the collective careers of those in the covered workforce. The unfunded actuarial
accrued liability is being amortized using a level (principal and interest combined) percent of
payroll over a 23-year period.
Other significant actuarial assumptions include a 4% discount rate, an annual health care cost trend
rate of 9%, followed by 8% for the next year, followed by 6.25% for the next year, reduced by
decrements of 0.45% each year to the ultimate value of 4.45%, and projected salary increases of
4% annually (including general price inflation of 2.5%).
43
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 10 -Interfund Accounts
Individual fund interfund receivables and payables at September 30, 2017, consist of the following:
Due Due
from Other to Other
Funds Funds
General $ 170,515 $ 0
Nonmajor Governmental 0 170,515
Interfund receivable/payables are due to timing differences associated with grant reimbursements.
The receivable/payables are expected to be received/paid within one year.
Note 11 -Interfund Transfers
Transfers of resources from a fund receiving revenue to the fund through which the resources are
to be expended are recorded as transfers and are reported as other financing sources (uses) in the
governmental funds and as transfers in (out) in the proprietary funds. Following is a summary of
interfund transfers for the year ended September 30, 2017:
Transfers In
Nonmajor
General Governmental
Transfers (Out) Fund Funds Stormwater
General Fund $ 0 $ 54,225 $ 0
Nonmajor Governmental Funds 470,000 295,000 300,000
Utility Fund 623,819 0 0
Sanitation Fund 236,626 0 0
Total Transfers $ 1,330,445 $ 349,225 $ 300,000
Transfers are used to move revenues from the fund that ordinance or budget requires to collect
them to the fund that ordinance or budget requires to expend them.
Note 12 -Commitments
As of September 30, 2017, the City had outstanding commitments on contracts in progress as
follows:
Unexpended
Project Type Contract Amounts
Utility System Improvements $ 911,064
Stormwater System Improvements 21,684
Building Department 8,854
General Government Improvements 880,245
44
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Continued)
Note 12 -Commitments (Concluded)
On June 2, 1999, the City entered into an agreement with the City of Jacksonville, Florida, whereas
the City of Jacksonville will provide advanced life support and fire services to the residents and
businesses located in the City. The term of the agreement shall be from the effective date and
continuing for a period of 25 years unless terminated earlier by the parties (such parties must
provide a one-year notice). For the year ended September 30, 2017, the City incurred $1,132,123
in services under this agreement. The amount will be adjusted annually by an amount equal to
103% of the previous year’s amount for all services provided by the City of Jacksonville.
Note 13 -Contingencies
The City is a defendant in several lawsuits which arose in the ordinary course of the City’s
business. To the extent the outcome of such litigation has been determined to result in probable
loss to the City, an estimated loss has been accrued in the accompanying financial statements. The
outcome of the remaining claims cannot be determined at this time.
Hurricanes
In September 2017, most of the State of Florida was affected by Hurricane Irma, including the
City. The President of the United States and the Governor of Florida declared most of the State a
designated disaster area and issued relief to the State through public assistance grants, coordinated
by Federal Emergency Management Agency (FEMA). Expenses were incurred by the City for
hurricane preparedness, debris removal, repairs, and other hurricane-related costs; most of which
occurred in fiscal year 2018. The City is working with state and federal liaisons to recover these
costs. The City has submitted a total of $795,698 FEMA reimbursement requests related to
Hurricane Irma. As of the date of the financial statements, it has not been determined the exact
amounts that will be reimbursed by FEMA.
The City has accrued $343,986 of Federal and $34,585 of State FEMA receivables in relation to
Hurricane Matthew. FEMA has obligated these funds and has reimbursed the City as of the date
of the financial statements in the amount of $292,052.
Note 14 -Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; and natural disasters for which the City carries commercial insurance.
Insurance against losses are provided through the Public Risk Insurance Agency and LB Bryan
and Company for the following types of risk:
■ Workers’ Compensation and Employer’s Liability ■ General Liability
■ Automobile Liability ■ Public Officials’ Liability
■ Automobile Physical Damage ■ Property Coverage
■ Accidental Death and Dismemberment
The City’s coverage for workers’ compensation is under a retrospectively rated policy. Premiums
are accrued based on the ultimate cost to-date of the City’s experience for this type of risk.
45
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(Concluded)
Note 15 -Other Disclosures
Deficit Fund Balance
CDBG Fund
The City has an accumulated negative fund balance of $820 at September 30, 2017, in the CDBG
fund. This is due to a timing difference between when the expenditures occurred and when the
related reimbursements were received. This negative fund balance will be recovered in fiscal
year 2018.
46
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
GENERAL EMPLOYEES' PENSION PLAN
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
September 30, September 30, September 30, September 30,
2017 2016 2015 2014
Total Pension Liability
Service Cost $ 346,460 $ 348,604 $ 402,093 $ 399,576
Interest 1,485,239 1,437,296 1,404,316 1,386,245
Difference Between Actual and
Expected Experience 291,669 164,601 (162,280) 0
Changes in Assumptions 559,117 0 0 1,814,460
Benefit Payments (1,296,640) (1,175,906) (1,031,191) (697,702)
Refunds (22,467) (31,898) 0 (9,516)
Net Change in Total Pension Liability 1,363,378 742,697 612,938 2,893,063
Total Pension Liability - Beginning 21,530,799 20,788,102 20,175,164 17,282,101
Total Pension Liability - Ending (a) 22,894,177 21,530,799 (1) 20,788,102 20,175,164
Plan Fiduciary Net Position
Contributions - Employer 1,175,572 1,112,344 863,613 950,980
Contributions - Employee 124,024 128,204 136,191 157,383
Net Investment Income 1,792,192 1,515,746 162,326 778,981
Benefit Payments (1,296,640) (1,175,906) (1,031,191) (697,702)
Refunds (22,467) (31,898) 0 (9,516)
Administrative Expenses (55,702) (32,495) (41,909) (31,529)
Other 1,822 0 0 0
Net Change in Plan Fiduciary
Net Position 1,718,801 1,515,995 89,030 1,148,597
Plan Fiduciary Net Position -
Beginning 16,524,333 15,008,338 14,919,308 13,770,711
Plan Fiduciary Net Position
Ending (b) 18,243,134 16,524,333 15,008,338 14,919,308
Net Pension Liability
Ending (a) - (b) $ 4,651,043 $ 5,006,466 $ 5,779,764 $ 5,255,856
(1) The total pension liability noted above does not agree with the amount reported in the City's financial statements and
disclosed in Note 7 due to a timing difference in the recognition of assumption changes. An updated mortality table
was recognized in 2016 for employer reporting (GASB 68), but 2017 for Plan (GASB 67) reporting.
Plan Fiduciary Net Position
as a Percentage of the Total
Pension Liability 79.68% 76.75% 72.20% 73.95%
Covered Employee Payroll $ 2,067,067 $ 2,136,733 $ 2,269,850 $ 2,623,050
Net Pension Liability as a Percentage
of Covered Employee Payroll 225.01% 234.30% 254.63% 200.37%
The data presented above was measured using actuarial methods prescribed by GASB 67/68.
Additional years will be added to this schedule annually, until 10 years of data is presented.
47
CITY OF ATLANTIC BEACH, FLORIDA
GENERAL EMPLOYEES' PENSION PLAN
SCHEDULE OF CONTRIBUTIONS
September 30, September 30, September 30, September 30,
2017 2016 2015 2014
Actuarially Determined Contribution 1,175,572 $ 1,112,344 $ 863,613 $ 950,980 $
Contributions in Relation to the Actuarially
Determined Contribution 1,175,572 1,112,344 863,613 950,980
Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0
Covered Employee Payroll 2,067,067 $ 2,136,733 $ 2,269,850 $ 2,623,050 $
Contributions as a Percentage of Covered
Employee Payroll 56.87% 52.06% 38.05% 36.25%
Additional years will be added to this schedule annually until 10 years of data is presented.
NOTES TO SCHEDULE OF CONTRIBUTIONS
Valuation Date: September 30, 2015
Actuarially determined contribution rates are calculated as of September 30, two years prior to the end of the fiscal year in which
contributions are reported.
Methods and assumptions used to determine contribution rates:
Funding Method: Entry Age Normal Cost Method
Amortization Method: Closed, Level Dollar Method
Remaining Amortization Period: 10 years
Asset Valuation Method: 4-year Smoothed Market Value: Difference between the expected and actual return on
market value of assets phased in over a period of four (4) years (at the rate of 25% per
year), adjusted to be no greater than 120% and no less than 80% of the fair market value.
Inflation: 2.5% per year
Salary Increases: Age Based Ranging from 5.0% to 13.5% (including 2.5% price inflation)
Interest Rate: 7.0% per year compounded annually, net of investment related expenses.
Retirement Age: Experience-based table of rates that vary by age.
Post Retirement COLA: None
Mortality: RP2000 Combined Healthy Participant Mortality Table for males and females with
generational projections from the year 2000 Projection Scale AA.
Date of the Most Recent
Experience Study: Other significant actuarial assumptions used in the September 30, 2015 valuation were
based on the results of an actuarial experience study for the period October 1, 2001
September 30, 2010.
48
CITY OF ATLANTIC BEACH, FLORIDA
GENERAL EMPLOYEES' PENSION PLAN
SCHEDULE OF INVESTMENT RETURNS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
September 30, September 30, September 30,
2017 2016 2015
Annual Money - Weighted Rate of Return
Net of Investment Expense 10.92% 10.18% 1.10%
Additional years will be added to this schedule annually until 10 years of data is presented.
49
CITY OF ATLANTIC BEACH, FLORIDA
POLICE OFFICERS' PENSION PLAN
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
September 30, September 30, September 30, September 30,
2017 2016 2015 2014
Total Pension Liability
Service Cost $ 335,185 $ 279,863 $ 291,761 $ 269,182
Interest on the Total Pension Liability 970,877 931,370 900,982 879,486
Difference Between Actual and
Expected Experience 187,216 (2,998) (213,426) 0
Changes in Assumptions (40,955) 0 0 1,275,669
Benefit Payments (630,777) (730,794) (524,537) (524,537)
Refunds (13,095) (23,671) (28,505) (61,079)
Other (Excess Premium Tax Liability) 0 0 120,454 0
Net Change in Total Pension Liability 808,451 453,770 546,729 1,838,721
Total Pension Liability - Beginning 13,856,425 13,402,655 12,855,926 11,017,205
Total Pension Liability - Ending (a) 14,664,876 13,856,425 (1) 13,402,655 12,855,926
Plan Fiduciary Net Position
Contributions - Employer 945,540 729,483 574,014 563,203
Contributions - State 0 112,972 103,528 96,217
Contributions - Member 129,552 117,274 112,354 103,095
Net Investment Income 950,447 804,901 43,534 642,480
Benefit Payments (630,777) (730,794) (524,537) (524,537)
Refunds (13,095) (23,671) (28,505) (61,079)
Administrative Expenses (51,481) (29,933) (35,984) (22,742)
Other (Excess Premium Tax Liability) 0 0 120,454 0
Net Change in Plan Fiduciary Net Position 1,330,186 980,232 364,858 796,637
Plan Fiduciary Net Position - Beginning 9,473,354 8,493,122 8,128,264 7,331,627
Plan Fiduciary Net Position - Ending (b) 10,803,540 9,473,354 8,493,122 8,128,264
Net Pension Liability - Ending (a) - (b) $ 3,861,336 $ 4,383,071 $ 4,909,533 $ 4,727,662
(1) The total pension liability noted above does not agree with the amount reported in the City's financial statements and
disclosed in Note 7 due to a timing difference in the recognition of assumption changes. An updated mortality table
was recognized in 2016 for employer reporting (GASB 68), but 2017 for Plan (GASB 67) reporting.
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 73.67% 68.37% 63.37% 63.23%
Covered Employee Payroll $ 1,619,400 $ 1,465,925 $ 1,404,425 $ 1,472,786
Net Pension Liability as a Percentage of
Covered Employee Payroll 238.44% 299.00% 349.58% 321.00%
The data presented above was measured using actuarial methods prescribed by GASB 67/68.
Additional years will be added to this schedule annually until 10 years of data is presented.
50
CITY OF ATLANTIC BEACH, FLORIDA
POLICE OFFICERS' PENSION PLAN
SCHEDULE OF CONTRIBUTIONS
September 30, September 30, September 30, September 30,
2017 2016 2015 2014
Actuarially Determined Contribution* 849,061 $ 825,700 $ 665,091 $ 654,280 $
Contributions in Relation to the
Actuarially Determined Contribution* 945,540 842,455 677,542 659,420
Contribution Deficiency (Excess) $ (96,479) $ (16,755) $ (12,451) $ (5,140)
Covered Employee Payroll 1,619,400 $ 1,465,925 $ 1,404,425 $ 1,472,786 $
Contributions as a Percentage of
Covered Employee Payroll 58.39% 57.47% 48.24% 44.77%
*Amounts include the contribution from the State of Florida.
Additional years will be added to this schedule annually until 10 years of data is presented.
NOTES TO SCHEDULE
Valuation Date: September 30, 2015
Actuarially determined contribution rates are calculated as of September 30, two years prior to the end of the fiscal year in which
contributions are reported.
Methods and assumptions used to determine contribution rates:
Funding Method: Entry Age Normal Cost Method
Amortization Method: Closed, Level % of Pay Method
Remaining Amortization Period: 30 years
Asset Valuation Method: Smoothed market value over a period of four (4) years, as prescribed under
Internal Revenue Procedure 2000-40, adjusted to be no greater than 120% and
no less than 80% of the fair market value.
Inflation: 2.5% per year
Salary Increases: Age Based Ranging from 4.5% to 22.5% (including 2.5% price inflation)
Payroll Growth: 3.50%
Interest Rate: 7.0% per year compounded annually, net of investment related expenses.
Retirement Age: Experience-based table of rates that vary by age
Post Retirement COLA: None
Mortality: RP2000 Combined Healthy Participant Mortality Table for males and females
with generational projections from the year 2000 Projection Scale AA.
Date of the Most Recent
Experience Study: Significant assumptions used in the September 30, 2015 valuation were based on the
results of an actuarial experience study (dated 2/15/2011) for the period of October 1, 2001
September 30, 2010.
51
CITY OF ATLANTIC BEACH, FLORIDA
POLICE OFFICERS' PENSION PLAN
SCHEDULE OF INVESTMENT RETURNS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
September 30, September 30, September 30,
2017 2016 2015
Annual Money - Weighted Rate of Return
Net of Investment Expense 10.80% 9.93% 0.53%
Additional years will be added to this schedule annually until 10 years of data is presented.
52
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
OTHER POSTEMPLOYMENT BENEFITS PLAN
SCHEDULE OF FUNDING PROGRESS
SEPTEMBER 30, 2017
Actuarial UAAL as
Actuarial Accrued Unfunded Annual Percentage
Valuation Value of Liability AAL Funded Covered of Covered
Date Assets (AAL) (UAAL) Ratio Payroll Payroll
10/1/09 $ 0 $ 497,883 $ 497,883 0.0% $ 5,828,339 8.54%
10/1/12 0 360,584 360,584 0.0% 4,204,177 8.58%
10/1/15 0 406,200 406,200 0.0% 5,459,992 7.44%
Analysis of the dollar amounts of actuarial value of assets, actuarial accrued liability, or unfunded actuarial
accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of
the actuarial accrued liability provides one indication of the system’s funded status on a going concern
basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger
or weaker. Generally, the greater this percentage, the stronger the plan. The unfunded actuarial accrued
liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial
accrued liability as a percentage of covered payroll approximately adjusts for the effects of inflation and
aids analysis of the progress being made in accumulating sufficient assets to pay benefits when due.
Generally, the smaller this percentage, the stronger the plan. The actuarial accrued liability (AAL)
decreased significantly from the last valuation due to a decrease in the number of retirees receiving post-
employment health benefits, as well as a change in the medical trend assumption.
53
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Variance With
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Revenues
Property Taxes 4,625,962 $ 4,625,962 $ 4,730,476 $ 104,514 $
Nonproperty Taxes 1,094,844 1,094,844 1,072,553 (22,291)
Permits, Fees, and Special Assessments 883,630 883,630 811,871 (71,759)
Intergovernmental Revenues 1,844,120 1,844,120 1,834,425 (9,695)
Fines and Forfeitures 70,304 70,304 111,427 41,123
Charges for Services 798,258 798,258 774,764 (23,494)
Interest Income 56,302 56,302 31,436 (24,866)
Miscellaneous Revenues 50,432 50,432 78,493 28,061
Interfund Charges 1,522,588 1,522,588 1,522,863 275
Total Revenues 10,946,440 10,946,440 10,968,308 21,868
Expenditures
City Administration:
City Commission 48,079 48,079 38,722 9,357
City Clerk 317,215 317,308 279,176 38,132
City Attorney 155,000 281,368 281,368 0
City Manager 253,905 351,753 353,961 (2,208)
Human Resources 217,935 217,935 220,351 (2,416)
Information Technology 769,019 775,225 699,121 76,104
Finance 942,557 944,918 901,040 43,878
Total City Administration 2,703,710 2,936,586 2,773,739 162,847
Planning and Zoning 186,210 193,917 154,168 39,749
General Government 580,178 585,582 496,923 88,659
Public Safety:
Police 4,300,695 4,452,131 4,321,232 130,899
School Crossing Guards 10,138 10,138 10,122 16
Animal Control 119,816 119,875 108,380 11,495
Fire 1,411,167 1,412,131 1,388,562 23,569
Code Enforcement 72,275 72,420 70,478 1,942
Total Public Safety 5,914,091 6,066,695 5,898,774 167,921
54
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
(Concluded)
Variance With
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Expenditures (Concluded)
Public Works:
Administration and Streets 1,393,899 $ 1,429,375 $ 1,246,127 $ 183,248 $
Fleet Maintenance 281,290 281,290 244,742 36,548
Total Public Works 1,675,189 1,710,665 1,490,869 219,796
Parks and Recreation:
Recreation and Special Events 473,990 478,618 406,128 72,490
Parks Maintenance 823,416 848,520 879,165 (30,645)
Total Parks and Recreation 1,297,406 1,327,138 1,285,293 41,845
(Total Expenditures) (12,356,784) (12,820,583) (12,099,766) 720,817
(Deficiency) of Revenues (Under)
Expenditures (1,410,344) (1,874,143) (1,131,458) 742,685
Other Financing Sources (Uses)
Transfers in 1,330,445 1,330,445 1,330,445 0
Transfers (out) (50,000) (250,000) (54,225) 195,775
Total Other Financing Sources (Uses) 1,280,445 1,080,445 1,276,220 195,775
Excess of Revenues and Other
Financing Sources Over Expenditures
and Other Financing Uses (129,899) (793,698) 144,762 938,460
Fund Balances, Beginning of Year 6,414,266 6,414,266 7,177,057 762,791
Fund Balances, End of Year 6,284,367 $ 5,620,568 $ 7,321,819 $ 1,701,251 $
55
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
NOTE TO SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Budgets and Budgetary Accounting
General governmental revenues and expenditures accounted for in budgetary funds are controlled by a
budgetary accounting system in accordance with various legal requirements which govern the City’s
operations. Budgets are monitored at varying levels of classification detail; however, expenditures cannot
legally exceed total appropriations at the individual fund level. Encumbrances are recorded. Unexpended
items which are unencumbered at year-end must be re-appropriated in the subsequent year.
Budgets are adopted for all governmental funds (general, special revenue, and capital projects funds). The
City Manager is authorized to transfer budgeted amounts within departments within any fund; however,
any revisions that increase the total expenditures of any department or fund must be approved by the City
Commission. All necessary supplemental appropriations are adopted by the City Commission and are
included in the reported budgetary data. The budget presented in the accompanying required supplemental
information is prepared in conformity with accounting principles generally accepted in the United States of
America.
56
SUPPLEMENTARY INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
2017
Special Revenue Funds
Assets
Equity in Pooled Cash
and Investments
Due from Other
Governments
Total Assets
Tree
Replacement
58,732 $
0
58,732
$
Local Convention
Option Development Half-cent
Gas Tax Tax Sales Tax
451,270 243,653 $ 833,807 $
80,071 33,595 142,216
531,341 277,248 976,023
Court Cost
Training
76,037 $
485
76,522
Liabilities, Deferred
Inflows of Resources,
and Fund Balances
Liabilities
Accounts Payable and
Accrued Liabilities
Construction Retainages Payable
Due to Other Funds
Deposits
Total Liabilities
0
0
0
0
0
314,860
0
0
0
314,860
0
0
0
0
0
114,499
0
0
0
114,499
0
0
0
0
0
Deferred Inflows of Resources 0 0 0 0 0
Fund Balances
Restricted for:
Public Safety
Road Maintenance and
Construction
Other Capital Projects
Other Purposes
Committed:
Conservation and Resource
Management
Assigned:
Community Redevelopment Fund
Unassigned
Total Fund Balances
0
0
0
0
58,732
0
0
58,732
0
216,481
0
0
0
0
0
216,481
0
0
0
277,248
0
0
0
277,248
0
861,524
0
0
0
0
0
861,524
76,522
0
0
0
0
0
0
76,522
Total Liabilities, Deferred
Inflows of Resources, and
Fund Balances 58,732 $ $ 531,341 277,248 $ 976,023 $ 76,522 $
57
2017
Radio
Communication
Community
Contraband Development
Forfeiture Block Grants
Special Revenue Funds
Police
Grants
Totals
Special
Revenues
Funds
Capital
Projects
Totals
Nonmajor
Governmental
Funds
2016
Totals
35,553 $ $ 25,340 0$ 9,126 $ $ 1,733,518 259,189 $ 1,992,707 $ $ 4,100,757
2,335
37,888
0
25,340
118,860
118,860
4,834
13,960
382,396
2,115,914
0
259,189
382,396
2,375,103
411,657
4,512,414
989
0
0
0
989
2,741
0
0
926
3,667
0
3,134
116,546
0
119,680
1,865
0
9,902
0
11,767
434,954
3,134
126,448
926
565,462
73,794
0
44,067
0
117,861
508,748
3,134
170,515
926
683,323
437,714
141,942
75,035
1,426
656,117
0 0 0 0 0 0 0 102,723
36,899 21,673 0 2,193 137,287 0 137,287 161,166
0
0
0
0
0
0
0
0
0
0
0
0
1,078,005
0
277,248
0
141,328
0
1,078,005
141,328
277,248
1,067,154
2,433,056
161,958
0 0 0 0 58,732 0 58,732 34,911
0
0
36,899
0
0
21,673
0
(820)
(820)
0
0
2,193
0
(820)
1,550,452
0
0
141,328
0
(820)
1,691,780
0
(104,671)
3,753,574
37,888 $ 25,340 $ 118,860 $ 13,960 $ $ 2,115,914 259,189 $ 2,375,103 $ $ 4,512,414
58
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
2017
Special Revenue Funds
Revenues
Taxes
Other Intergovernmental
Revenues
Fines and Forfeitures
Investment Earnings
Miscellaneous Revenues
Total Revenues
Tree
Replacement
0$
10,000
0
0
32,586
42,586
$
Local
Option
Gas Tax
461,457
0
0
538
0
461,995
Convention
Development
Tax
114,523 $
0
0
767
0
115,290
Half-cent
Sales Tax
839,014 $
0
0
2,062
0
841,076
Court Cost
Training
0$
0
4,427
311
0
4,738
Expenditures
Current:
Public Safety
Road Maintenance and
Construction
Conservation and Resource
Management
Capital Outlay
(Total Expenditures)
0
0
18,765
0
(18,765)
0
314,860
0
0
(314,860)
0
0
0
0
0
0
85,140
0
67,220
(152,360)
15,882
0
0
0
(15,882)
Excess (Deficiency) of Revenues
Over (Under) Expenditures 23,821 147,135 115,290 688,716 (11,144)
Other Financing Sources (Uses)
Transfers in
Transfers (out)
Total Other Financing
Sources (Uses)
0
0
0
0
(230,000)
(230,000)
0
0
0
0
(595,000)
(595,000)
0
0
0
Net Change in Fund Balances 23,821 (82,865) 115,290 93,716 (11,144)
Fund Balances, Beginning of Year 34,911 299,346 161,958 767,808 87,666
Fund Balances, End of Year 58,732 $ $ 216,481 277,248 $ 861,524 $ 76,522 $
59
2017
Radio
Communication
0$
0
17,829
64
0
17,893
Special Revenue Funds
Community
Contraband Development
Forfeiture Block Grants
0$ 0$
0 422,767
6,273 0
184 0
0 0
6,457 422,767
Police
Grants
0$
62,800
0
0
0
62,800
Totals
Special
Revenue
Funds
1,414,994 $
495,567
28,529
3,926
32,586
1,975,602
Capital
Projects
0$
229,557
0
10,695
0
240,252
Totals
Nonmajor
Governmental
Funds
1,414,994 $
725,124
28,529
14,621
32,586
2,215,854
$
2016
Totals
1,398,230
567,734
21,589
60,534
15,955
2,064,042
5,440 3,459 0 62,800 87,581 80,845 168,426 84,547
0 0 0 0 400,000 0 400,000 308,532
0 0 0 0 18,765 0 18,765 0
0 23,186 318,916 0 409,322 2,565,360 2,974,682 2,187,647
(5,440) (26,645) (318,916) (62,800) (915,668) (2,646,205) (3,561,873) 2,580,726
12,453 (20,188) 103,851 0 1,059,934 (2,405,953) (1,346,019) (516,684)
0 0 0 0 0 349,225 349,225 1,140,300
0 (5,000) 0 0 (830,000) (235,000) (1,065,000) (760,050)
0 (5,000) 0 0 (830,000) 114,225 (715,775) 380,250
12,453 (25,188) 103,851 0 229,934 (2,291,728) (2,061,794) (136,434)
24,446 46,861 (104,671) 2,193 1,320,518 2,433,056 3,753,574 3,890,008
$ 36,899 $ 21,673 $ (820) $ 2,193 $ 1,550,452 $ 141,328 $ 1,691,780 $ 3,753,574
60
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF FIDUCIARY
NET POSITION
SEPTEMBER 30, 2017,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2016
Pension Trust Funds
Police General
Officers' Employees'
Retirement Retirement 2017 2016
Plan Plan Totals Totals
Assets
Cash and Cash Equivalents 468,175 $ 98,202 $ $ 566,377 358,042 $
Money Markets 804,121 1,363,846 2,167,967 1,975,324
Due from Other Governments 0 0 0 112,972
Due from City 4,250 4,250 8,500 0
Interest Receivable 9,830 21,983 31,813 17,821
Investments at Fair Value 9,540,563 16,777,720 26,318,283 23,535,349
Total Assets 10,826,939 18,266,001 29,092,940 25,999,508
Liabilities
Accounts Payable and Accrued
Liabilities 18,714 18,629 37,343 0
Total Liabilities 18,714 18,629 37,343 0
Total Net Position
Held in Trust for Pension
Benefits 10,808,225 $ 18,247,372 $ $ 29,055,597 $ 25,999,508
61
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY
NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2017
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2016
Pension Trust Funds
Additions
Contributions:
Employer
Employees
State of Florida
Total Contributions
Net Increase in Fair Value
of Investments
Interest and Dividends
Miscellaneous Revenues
Total Additions
Police
Officers'
Retirement
Plan
945,540 $
129,552
0
1,075,092
804,503
180,852
4,250
2,064,697
General
Employees'
Retirement
Plan
1,175,560 $
124,024
0
1,299,584
1,530,197
328,696
4,250
3,162,727
$
2017
Totals
2,121,100
253,576
0
2,374,676
2,334,700
509,548
8,500
5,227,424
$
2016
Totals
1,841,817
245,218
112,972
2,200,007
2,032,332
390,564
0
4,622,903
Deductions
Refunds of Contributions
Benefits
Investment Expenses
Administrative Expenses
Total Deductions
13,095
630,777
34,907
51,047
729,826
22,467
1,296,640
66,701
55,701
1,441,509
35,562
1,927,417
101,608
106,748
2,171,335
55,569
1,906,700
100,158
62,428
2,124,855
Change in Net Position 1,334,871 1,721,218 3,056,089 2,498,048
Net Position, Beginning of Year 9,473,354 16,526,154 25,999,508 23,501,460
Net Position, End of Year 10,808,225 $ 18,247,372 $ $ 29,055,597 $ 25,999,508
62
CITY OF ATLANTIC BEACH, FLORIDA
HISTORICAL REVENUES AND EXPENSES
FOR THE YEARS ENDED SEPTEMBER 30, 2012 THROUGH SEPTEMBER 30, 2017
2012 2013 2014 2015 2016 2017
Revenues
Operating Revenues:
Water:
Customer Charges
Miscellaneous Charges
Total Water
Sewer:
$ 3,069,998
48,815
3,118,813
$ 3,006,787
52,996
3,059,783
$ 2,955,863
54,852
3,010,715
$ 2,992,677
62,286
3,054,963
$ 3,177,331
62,477
3,239,808
$ 3,262,314
65,198
3,327,512
Customer Charges
Miscellaneous Charges
Total Sewer
Total Operating Revenues
5,015,358
3,303
5,018,661
8,137,474
5,109,868
1,651
5,111,519
8,171,302
4,938,510
1,237
4,939,747
7,950,462
4,934,151
107
4,934,258
7,989,221
5,045,673
0
5,045,673
8,285,481
5,111,353
590
5,111,943
8,439,455
Nonoperating Revenues:
Investment Income (Loss):
Water
Sewer
Total Nonoperating Revenues
Total Revenues
197,492
(21,010)
176,482
8,313,956
(115,023)
18,426
(96,597)
8,074,705
186,681
(43,954)
142,727
8,093,189
(7,718)
(4,257)
(11,975)
7,977,246
58,092
38,929
97,021
8,382,502
21,455
17,281
38,736
8,478,191
Expenses
Operating Expenses:
Water
Sewer
Total Operating Expenses
1,303,708
2,493,500
3,797,208
1,228,763
2,005,653
3,234,416
1,287,783
2,170,495
3,458,278
1,442,578
2,055,780
3,498,358
1,379,495
2,064,614
3,444,109
1,488,854
2,309,637
3,798,491
Administrative, Nondivisional
and Other:
Water
Sewer
Total Administrative, Non-
divisional and Other
(Total Expenses)
518,506
696,922
1,215,428
(5,012,636)
521,600
674,514
1,196,114
(4,430,530)
530,715
677,464
1,208,179
(4,666,457)
563,356
734,839
1,298,195
(4,796,553)
561,069
725,248
1,286,317
(4,730,426)
502,058
591,161
1,093,219
(4,891,710)
Net Revenues Available for
Debt Service 3,301,320 3,644,175 3,426,732 3,180,693 3,652,076 3,586,481
Nonoperating Income (Expense)
Interest Expense
Loan Amortization
Total Nonoperating Income
(Expense)
(726,058)
(25,712)
(751,770)
(766,111)
(12,787)
(778,898)
(896,571)
(162,552)
(1,059,123)
(556,635)
(98,507)
(655,142)
(481,693)
(93,910)
(575,603)
(455,259)
(93,910)
(549,169)
Net Income Before Depreciation
and Operating Transfers $ 2,549,550 $ 2,865,277 $ 2,367,609 $ 2,525,551 $ 3,076,473 $ 3,037,312
63
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULES OF NET REVENUES IN ACCORDANCE
WITH BOND RESOLUTIONS
ENTERPRISE FUNDS (WATER AND SEWER)
FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016
2017 2016
Gross Revenues
Utility 8,390,290 $ $ 8,246,818
Connection Charges 49,165 38,664
Interest 38,736 97,020
Total Gross Revenues 8,478,191 8,382,502
Operating Expenses
Personal Services 2,102,206 2,074,762
Contractual Services 551,554 552,627
Supplies 292,616 307,175
Repairs and Maintenance 133,608 121,248
Utilities 353,574 360,845
Intergovernmental Charges 1,093,219 1,113,777
Other Expenses 364,933 199,992
(Total Operating Expenses) (4,891,710) (4,730,426)
Total Net Revenues in Accordance with Bond Resolutions 3,586,481 $ $ 3,652,076
Total Debt Service 2,015,811 $ $ 2,104,658
Debt Service Coverage Ratio 177.92% 173.52%
Required Debt Service Coverage Ratio 110.00% 110.00%
64
CITY OF ATLANTIC BEACH, FLORIDA
OTHER BOND COVENANT DISCLOSURES
FOR THE YEARS ENDED SEPTEMBER 30, 2012 THROUGH SEPTEMBER 30, 2016
Utility Service Tax Collections
(Last Five Years)
Year Electricity Communications Gas Fuel Oil Total
2012 $ 452,183 $ 567,909 $ 23,187 $ 14 $ 1,043,293
2013 459,672 576,839 20,849 17 1,057,377
2014 473,097 522,654 16,911 29 1,012,691
2015 476,997 526,996 15,555 7 1,019,555
2016 483,516 500,295 17,881 6 1,001,698
2017 475,895 479,551 15,229 0 970,675
Ad Valorem Tax Collections
(Last Five Years)
Year Total
2012 $ 3,961,395
2013 3,843,755
2014 3,908,365
2015 4,113,476
2016 4,482,739
2017 4,730,476
65
OTHER STATISTICAL INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
MAJOR UTILITY CUSTOMERS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
(UNAUDITED)
Annual
Billings
Fleet Landing (Retirement Community) $ 380,411
Navy (Federal Government) 313,102
City of Atlantic Beach, Florida 153,791
John Creek Estate (Mobile Home Park) 128,049
Oaks of Atlantic Beach (Mobile Home Park) 125,399
Hanna Park (Regional Park) 114,256
Arium Atlantic Beach (Apartment Complex) 110,244
PBH Mayport LLC 109,291
Sea Turtle Inn 103,666
Avesta Homes (Apartment Complex) 69,252
Total $ 1,607,461
66
ADDITIONAL ELEMENTS OF REPORT PREPARED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS,
ISSUED BY THE COMPTROLLER GENERAL OF
THE UNITED STATES; THE RULES OF THE AUDITOR GENERAL OF
THE STATE OF FLORIDA; AND OTHER CONTRACT REQUIREMENTS
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULE OF SOURCE AND EXPENDITURE OF THE CITY GRANT FUNDS
PER ORDINANCE CODE CHAPTER 118.301(e)
FOR FISCAL YEAR 2016-2017
City of Jacksonville Public Service Grants Received as a
Subgrant Recipient Per Interlocal Agreement
Source of City Funds
Fiscal Year Fiscal Year
2016-2017 2016-2017
Grant No. 5629-57 Grant No. 5629-61
Amount of Award (Per City of Jacksonville
Budget Ordinance) $ 676,549 (A) $ 118,760
Actual Funds Received from City of
Jacksonville in Last Audit Period (335,318) 0
Actual Funds Received this Period (303,907) 0
Amount Earned but Not Received this Period 0 (118,760)
Unspent Award Amount $ 37,324 (B) $ 0
Expenditure of City Funds
(A) City Fiscal Year 2015-16 Grant #5629-57, Includes Total Award Amount Including Amendments
(B) Project Complete, Amount Spent Less Than Total Award
Actual
10/1/2016 Remaining
Project/Federal Grant Number Budgeted 9/30/2017 Balance
Donner Park/Jordan Park Improvements
#005546 B1516UC120017 $ 118,760 $ 118,760 $
67
0
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, 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
City of Atlantic Beach, Florida, (the City), as of and for the year ended September 30, 2017, and the related
notes to the financial statements, which collectively comprise the City’s basic financial statements, and
have issued our report thereon dated June 28, 2018.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose
of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express
an opinion on the effectiveness of City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those charged with governance.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control that might
be material weaknesses or, significant deficiencies. We consider the following deficiencies in internal
control to be material weaknesses:
15-1 – Financial Close and Reporting
Condition―At the commencement of final fieldwork it was noted that the preliminary working trial
balance did not reflect all of the required closing entries. As a result, several adjustments were required
after we began the audit process, including entries to adjust beginning fund balance, accrue unrecorded
receivables and liabilities, and reverse prior year accruals.
68
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
(Concluded)
Internal Control Over Financial Reporting (Concluded)
15-1 – Financial Close and Reporting (Concluded)
Effect―The lack of an effective financial close and reporting process increases the risk that material
misstatements will not be detected in a timely manner. It also results in delays in performing and
completing the audit.
Recommendation―We recommend that the City’s finance department evaluates their monthly and yearly
financial close and reporting process. In addition, the finance department should perform variance analysis
throughout the year over major balance sheet and income statement accounts in order to identify and correct
any errors in a timely manner.
17-1 – Timeliness and Accuracy of Bank Reconciliations
Condition―The timely reconciliation of bank accounts is one of the key components of a sound system of
internal controls. During the audit we noted that bank reconciliations for September 2017 had not been
completed as of December 2017. The bank reconciliation was provided during final fieldwork in February
2018, but we noted errors in the reconciling items. Management made corrections to the September 2017
bank reconciliation, however, there remains a $10,000 unreconciled difference.
Effect―Inaccurate or delayed bank reconciliations result in an increased risk that errors or irregularities
will go undetected for extended periods of time.
Recommendation―We recommend that the City implement procedures to ensure that all bank accounts
are reconciled within 20 days of month-end.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’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 results of that testing, and not to provide an opinion on the effectiveness of the City’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 City’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
June 28, 2018
Gainesville, Florida
69
INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCE
WITH SECTION 218.415, FLORIDA STATUTES
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have examined the City of Atlantic Beach, Florida’s (the City) compliance with Section 218.415,
Florida Statutes during the period ended September 30, 2017, as required by Section 10.556(10)(a), Rules
of the Auditor General. Management is responsible for the City’s compliance with those requirements.
Our responsibility is to express an opinion on the City’s compliance based on our examination.
Our examination was conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants (AICPA) and, accordingly, included examining, on a test basis,
evidence about the City’s compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal determination of the City’s compliance with
specified requirements.
In our opinion, the City complied, in all material respects, with the aforementioned requirements for the
year ended September 30, 2017.
This report 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, the City, its
management, and is not intended to be, and should not be, used by anyone other than these specified parties.
June 28, 2018
Gainesville, Florida
70
MANAGEMENT LETTER
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
Report on the Financial Statements
We have audited the financial statements of the City of Atlantic Beach, Florida (the City) as of and for the
year ended September 30, 2017, and have issued our report thereon dated June 28, 2018.
Auditors’ Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States; and Chapter 10.550, Rules of the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditors’ Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with
Government Auditing Standards, and Independent Accountants’ Report on an examination conducted in
accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in
accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedule,
which are dated June 28, 2018, should be considered in conjunction with this management letter.
Prior Audit Findings
Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective
actions have been taken to address findings and recommendations made in the preceding annual financial
report. Corrective actions have not been taken to address the prior year audit finding 15-01, which has not
been corrected in the two preceding audit periods. Corrective actions have been taken to address prior audit
findings 16-01, 16-02, and 16-03.
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. This information is included in Note 1 to the
financial statements.
Financial Condition and Management
Sections 10.554(1)(i)5.(a) and 10.556(7), Rules of the Auditor General, require that we apply appropriate
procedures and report the results of our determination as to whether or not the City has met one or more of
the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s)
met. In connection with our audit, we determined that the City did not meet any of the conditions described
in Section 218.503(1), Florida Statutes.
71
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
MANAGEMENT LETTER
(Continued)
Financial Condition and Management (Concluded)
Pursuant to Sections 10.554(1)(i)5(c) and 10.556(8), Rules of the Auditor General, we applied financial
condition assessment procedures. It is management’s responsibility to monitor the City’s financial condition,
and our financial condition assessment was based in part on representations made by management and the
review of financial information provided by same.
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 have the following recommendations:
17-2 – Police Officers’ and General Employees’ Retirement Plans Expenses
Condition―During review of the Police Officers’ and General Employees’ Retirement Plans (Pension Plans),
we noted that the Pension Plans paid for the City’s other postretirement employee benefits (OPEB) actuarial
valuation. Florida Statutes 112.0801 requires municipalities and other governmental entities to allow retirees
to participate in City’s health insurance plan, and governmental accounting standards require that an actuarial
valuation be performed to determine the cost of providing that benefit. However, the cost of obtaining the
actuarial valuation is the responsibility of the City, not the Pension Plans.
Recommendation―We recommend that all OPEB actuarial valuation be paid by the City, not the Pension
Plans. Prior to finalizing the audit, management recorded a receivable in the Pension Plans to recover the cost
of the actuarial valuation for OPEB. We also recommend that the City perform a look back analysis to
determine if further reimbursements need to be made to the Pension Plans for prior years.
17-3 – Insurance Premium Tax Revenues
Condition―During review of the Police Officers’ Retirement Plan, we noted that the fiscal year 2017
insurance premium tax revenues were withheld by the State of Florida for several months due to reporting
issues identified by the State of Florida that were not corrected timely. The City contributed additional funds
to the Plan during 2017 to cover the contribution shortfall. The reporting issues were corrected during fiscal
year 2018 and the City ultimately received the withheld funds.
Recommendation―The timely correction of any reporting errors is important to avoid monies being withheld
by the State of Florida and minimize the loss of potential investment earnings.
17-4 – Police Officers’ Retirement Plan Pooled Cash Balances
Condition―During the review of the Police Officers’ Retirement Plan (the Plan) it was noted that the fund
has accumulated a large equity in pooled cash balance. Typically, the pooled cash is used to pay current
benefit payments and earns modest interest until funds are paid out. Any excess funds should be transferred
to the Plan’s investment bank and invested in accordance with the Plan’s policy.
Recommendation―We recommend that the City transfer any excess cash into the Plan’s investment portfolio
to maximize the potential investment earnings of the Plan.
72
Honorable Mayor, City Commissioners, and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
MANAGEMENT LETTER
(Concluded)
Annual Financial Report
Sections 10.554(1)(i)5.(b.) and 10.556(7), Rules of the Auditor General, require that we apply appropriate
procedures and report the results of our determination as to whether the annual financial report for the City
for the fiscal year ended September 30, 2017, filed with the Florida Department of Financial Services pursuant
to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal
year ended September 30, 2017. In connection with our audit, we determined that these two reports were in
agreement.
Special District Component Units
Section 10.554(1)(i)5.(d), Rules of the Auditor General, requires that we determine whether or not a special
district that is a component unit of a county, municipality, or special district, provided the financial
information necessary for proper reporting of the component unit, within the audited financial statements of
the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In
connection with our audit, we determined that there were no special district component units that were
required to be reported in accordance with Section 218.39(3)(b), Florida Statutes.
Other Matters
Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions
of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an
effect on the financial statements that is less than material but which warrants the attention of those charged
with governance. In connection with our audit, we did not have any such findings.
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, and applicable management, and is not intended to be and should not be used by
anyone other than these specified parties.
June 28, 2018
Gainesville, Florida
73
June 28,2018
Purvis, Gray and Company, LLP
P.O. Box 141270
Gainesville, FL 32614
RE: Management Letter dated June 28,2018
Internal Control Over Financial Reporting
15-1-Financial Close and Reporting
City of Atlantic Beach
800 Seminole Road
Atlantic Beach, Florida 32233-5445
Telephone (904) 247-5800
Fax (904) 247-5819
http://www.coab.us
Condition-At the commencement of final fieldwork it was noted that the preliminary working trial balance did
not reflect all of the required closing entries. As a result, several adjustments were required after we began the audit
process, including entries to adjust beginning fund balance, accrue unrecorded receivables and liabilities, and
reverse prior year accruals.
Recommendation-We recommend that the City's finance department evaluates their monthly and yearly financial
close and reporting process. In addition, the finance department should perform variance analysis throughout the
year over major balance sheet and income statement accounts in order to identify and correct any errors in a timely
manner.
Management Response to Comment 15-1-Financial Close and Reporting
The City has delegated year-end closeout responsibilities to additional staff members to speed up the closeout
process. Additionally, as needed, the City will engage a third-party vendor who specializes in year-end closeout
process.
Other Matters
17-2-Police Officers' and General Employees' Retirement Plans Expenses
Condition-During review of the Police Officers' and General Employees' Retirement Plans (Pension Plans), we
noted that the Pension Plans paid for the City's other postretirement employee benefits (OPEB) actuarial valuation.
Florida Statutes 112.0801 requires municipalities and other governmental entities to allow retirees to participate in
City's health insurance plan, and governmental accounting standards require that an actuarial valuation be performed
to determine the cost of providing that benefit. However, the cost of obtaining the actuarial valuation is the
responsibility of the City, not the Pension Plans.
Recommendation-We recommend that all OPEB actuarial valuation be paid by the City, not the Pension Plans. Prior
to finalizing the audit, management recorded a receivable in the Pension Plans to recover the cost of the actuarial
valuation for OPEB. We also recommend that the City perform a look back analysis to determine if further
reimbursements need to be made to the Pension Plans for prior years.
74
Management Response to Comment 17-2 – Police Officers’ and General Employees’ Retirement Plans
Expenses
The City will analyze prior years and identify any other similar payments. If additional similar payments have
been made, a transfer from the general fund will be made in those amounts.
17-3 – Premium Tax Revenues
Condition―During the review of the Police pension plan it was noted that the fiscal year 2017 premium tax revenues
were held by the State of Florida. This was due to reporting issues noted by the State of Florida. It was noted in fiscal
year 2018 that these reporting issues were corrected and the City has since received the withheld premium tax monies.
Recommendation―The timely correction of any reporting errors is important to avoid monies being withheld by the
State of Florida. In addition, due to monies being withheld this potentially results in loss investment earnings.
Management Response to Comment 17-3 – Premium Tax Revenues
The City has taken steps to ensure the state report will be filed earlier than prior years.
17-4 – Police Officers’ Retirement Plan Pooled Cash Balances
Condition―During the review of the Police Officers’ Retirement Plan (the Plan) it was noted that the fund has
accumulated a large equity in pooled cash balance. Typically, the pooled cash is used to pay current benefit payments
and earns modest interest until funds are paid out. Any excess funds should be transferred to the Plan’s investment
bank and invested in accordance with the Plan’s policy.
Recommendation―We recommend that the City transfer any excess cash into the Plan’s investment portfolio to
maximize the potential investment earnings of the Plan.
Management Response to Comment 17-4 – Police Officers’ Retirement Plan Pooled Cash Balances
The City will make the necessary adjustment and set metrics that will trigger when future transfers are needed.
75