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2005 CAFR I -~ ~ ~ ~ ~ r ~ ~ P~ t T---~~_ - _ _ ...- _ - _ - cif E ~e~cha ~~~h P RAP°RT ~~~p~L ~1[~1A~C ^ P'~EHE~~~~~ ~ te~ber 2fl~5 - ~ CQ'~ S~'~ - n , .~--- -- --- ~- The Village of North Palm Beach, Florida ~Z~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~AL~~ l ~ r COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 30, 2005 Prepared iy: Finance Department Trey Sizemore Director of Finance THE VILLAGE OF NORTH PALM BEACH, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 2a(]5 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal i List of Principal Village Officials vi Organization Chart ------• ...........................................................................•-•---........................... vii GFOA Certificate of Achievement far Excellence in Finanoia[ Reporting viii FINANCIAL SECTION Independent Auditors' Report .....-•-------•--•-----••-•------•------•--------• ..................................................1 Management's Discussion and Analysis ....................................................................................3 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Assets ----•-•-• ...........................................................•----•--•-•-•---•---......-......11 Statement of Activities ........................................................................................................12 Fund Financial Statements: Balance Sheet -- Govarnnienfal Funds ................................................................................13 Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Assets .....................................................................................14 Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds ..........................................................................15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities ....................16 Statement of Net Assets -Proprietary Fund .......................................................................17 Statement of Revenues, Expenses, and Changes in Net Assets -Proprietary Fund .............................................................................................18 Statement of Cash Flaws -Proprietary Fund ...................................•--•-•--•----•---..................19 Statement of Fiduciary Net Assets -Fiduciary Funds 2D Statement of Changes in Fiduciary Net Assets -Employee Retirement Funds ...................21 Notes to Basic Financial Statements ........................................................................................22 REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedule -General Fund 50 Schedule of Funding Progress -General Employees Retirement Fund ..............................55 Schedule of Employer and State Contributions 56 Notes to Required Supplementary Information ...................................................................57 THE VILLAGE OF NORTH PALM BEACH, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 2005 TABLE OF CONTENTS (Continued OTHER SUPPLEMENTARY INFORMATION: Combining Statements: Combining Statement of Net Assets -Fiduciary Funds 59 Combining Statement of Changes in Net Assets ~ Employee Retirement Funds 60 Combining Statement of Changes in Fiduciary Assets and Liabilities -Agency Funds 6~ STATISTICAL SECTION Government-wide Information: Table 1 Government-wide Expenses by Function ..........................................................62 Table II Government-wide Revenues ...................•--......................................................63 Fund Information: Table Ill Genera! Governmental Expenditures by Function .............................................fi4 Tabie lV General Governmental Revenues by Source ....................................................65 Table V ~ Property Tax Levies and Collections .................................................................66 Table VI Assessed Value of Taxable Property raj Table Uii Property Tax Rates -Direct and Overlapping Governments .............................68 Table Vtll Computation of Direct and Overlapping Bonded Debt -General Obligation Bonds .......................................................................................70 Table IX Computation of Legal Debt Margin Table X ?ebt Related Statistics -Schedule of Revenue Bond Coverage - General and Enterprise Funds ...................................................................74 Table Xl Property Value, Construction, and Bank Depasits .............................................72 Table Xll Principal Taxpayers ...........................................................................................73 Tabie Xlll Miscellaneous 5tatistics .....................................................................................74 REQUIRED REPORTS independent Auditors' Report on internal Control Over Financial Reporting And on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with GovernmentAudifing Standards .......................75 Report on Compliance with Requirements Applicable to Each Major Program And On internal Control Over Compliance in Accordance with OMB Circular A-X33..........._77 Schedule of Expenditures of Federal Awards ...................................................._....................79 Schedule of Findings and Questioned Casts .................................................................•----....80 Summary Schedule of Prior Audit Findings and Corrective Action Plan ..................................81 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida ........................................................•--...........................----..............--------...82 INTRODUCTORY SEGT[ON ~-~~ ; s~`r~~ ~ THE VILLAGE OF * North Palm beach LL.. ~°.~~,W Ew*~//~ Depar~nent of Finaiicc C$` y p~~ f kJ , ,i}4 Village Hali • 501 LI.S. Higin~ay 1 NorihPai?~Beacl~, FL 33-08 • (S61} 8~ii-3360 • Fay (561) 881-7~ifa9 March 4, 2006 The Honorable Mayor and Members of the Village Council Village of North Palm Beach North Palm Beach, Florida The Finance Department and Village Manager`s Office are pleased to submit the Comprehensive Annual Financial Report for the Village of North Palm Beach, Florida for the fiscal year ended September 30, 2005. This report is published to provide the Village Council, Village staff, our citizens, our lenders, and other interested parties with detailed information concerning the fnancial condition and activities of the Village government. Responsibility for bath the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Village. To the best of our knowledge and belief, the enclosed data is accurate in all material respects, and is organized in a manner designed to fairly present the financial position and results of operations of the Village as measured by the financial ac#i~ity of its various funds. We also believe that all disclosures necessary to enable the reader to gain the maximum understanding of the Village's financial affairs have been included. THE REPORT This report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes this transmittal letter, a listing of the Village Officials, and an organizational shark of the Village. The financial section includes Management's Discussion and Analysis {MD&A}, basic financial statements, required supplementary information, and combining and individual fund statements and schedules, as well as the independent auditor's report on the basic financial statements. The MD&A is a narrative introduction, overview, and analysis to accompany the basic financial s#atements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Village of North Palm Beach's MD&A can be found immediately following the report of the independent auditors. The statistical section includes financial and demographic information, usually presented on a multi- yearbasis; that is relevant to a fnancial statement reader. The financial section described above is prepared in accordance with generally accepted accounting principles. far governments as prescribed by the Governmental Accounting Standards Board (GASB) and other professional associations, as applicable. i VILLAGE PROFILE The Village The Village of North Palm Beach is primarily a residential community, having been incorporated as a political subdivision of the State of Florida in 1956. The registered population of the Village is approximately 12,000, which increases to approximately 18,000 during the winter months by residents who list their northern homes as their ofi'ICial place of residence. Residents are generally in the middle to upper income brackets. Located in the northeastern quadrant of Palm Beach County, 1=lorida, the Village has an unusual amount of waterfront property created by a number of lakes, canals, and the Atlantic Ocean. The governing body of the Village consists of a five member Village Council, each of whom is elected for two-year overlapping terms. Day to day affairs of the Village are under the leadership of a Village Manager who is appointed by the Council. FINANCIAL DATA Financial Reporting System and Budgetary Controls The Village's financial records for its general governmental operations are maintained on the modified accrual basis, which means that revenues are recorded when available and measurable, and expenditures are reported when goods and services are received and the related 'aiabilities are incurred. The financial records for its Enterprise Fund (i.e., the Country Club operation} are maintained on the full accrual basis of accounting similar to that followed by commercial enterprises. In devei~~ping and evaluating the Village's financial and accounting System, consideration is given tc~''the adequacy of internal accounting controls. fraternal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (a) the safeguarding of assets against loss from unauthorized use or disposition; and (b) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (a} the cost of a control should not exceed the benefits likely #o be derived; and (b) the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur with the above framework. We believe that the Village`s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary control is maintained at the subfunction level by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders, which result in an overrun of subfunction balances, are not released until additional appropriations are made available. Open encumbrances are reported as reservations of fund balance at September 30, 2005. ii ECONOMIC OUTLOOK Property Vatues and Personnel Costs The Village obtains a major portion of its annual general fund financial resources (58%} from ad valorem property taxes. Gross assessed property values have increased substantially aver the past three years (44% between 2001 and 2004} rising $160 million dollars, or 14% in 2004 alone, to a total of $1,297,803,114. The Village anticipates a substantial reduction in planned new growth since most vacant property within municipal limits has been developed. There remains only a single substantial plan far large development on remaining land along the Intracoastal Waterway. The Village, therefore, anticipates much more moderate increases in annual property values resulting from the sale, transfer .and redevelopment of existing properties. It is estimated that future annual property value increases will run in the 4%-6% range due largely to the waterways of the Village's eastern location along Lake Worth and the Atlantic Ocean. At the same time that property values plateau, the Village is facing significant increases in its anntaal employee personnel costs. Over the past few years, several retirement plan changes and pay plan studies were implemented causing significant and continuing annual increases in annual Village pension contributions (rising from 9% in 1999 to 1$% in 2004...with a further increase to 23% in 2005}. The municipality has also experienced significant increases in annual health insurance costs that have been paid for entirely by the Village with no change in employee contributions (costs increased from $752,000 in 2001 to $1,273,000 in 2004}. The Village wi11 need to address the legacy of these significant economic farces during the coming years. Annexation The Village intends to actively pursue annexation of surrounding unincorporated areas that compliment the services and values of our existing community. The focus on annexations will be toward providing exemplary municipal services that are revenue neutral to the annexed areas as well as to the Village. The annexation of unincorporated areas north of the Village could be coupled with a substantial reduction in Village tax rates without compromising high levels of existing municipal service. The Village will be actively pursuing annexation during the next few years. Hurricane Cleanup Reimbursement -FEMA The Village estimates it has incurred between $1.2 million and $1.5 million dollars in hurricane recovery costs. After submitting claims for these costs to three different FEMA representatives over a six-month period, virtually no reimbursements have been received from FEMA. Continued federal delays or denials of these recovery costs could pose serious economic hardships to the Village in coming months and years. iii INITIATIVE AND FUTURE PROJECTS Country Club The last golf course irrigation and play area redevelopment was accomplished in ~ 989. The Village is currently developing conceptual master plans far re-design and redevelopment of the North Palm Beach golf course (irrigation, tees, greens and fairways). The Village administration has recommended developing master plans design alternatives far the entire Country Club (golf, tennis, pool, meeting roams and restaurant). Business plans would be matched to these master plans #a measure the Country Club's debt capacity and related revenue improvements that could allow repayment of needed capi#al improvement loans. Narthlake Boulevard Corridor Task Force The Northlake Boulevard Task Farce is in the process of bidding the construction of Phase (for the 5treetscape. Overlay zoning code is already accomplished. The commitment of the Village in this project is noteworthy because our neighboring community, Lake Park, has withdrawn from the Task Force. public Safety North Substation Annex The Village is actively pursuing acquisition of a permanent site for construction of a public safety sub-station at the northern end of kown, north of the Intracoastal draw bridge. Funding for this project has been diminished by the substantial cost of 2004 hurricane damages and cleanup. The Village is seeking funding assistance from the federal government to allow the construction of this new public safety sub-station to move forward within the next 1-2 years. Prosperity Farrr~s Road Task Force The Village created a Prosperity Farms Road Task Force comprised of citizens that reside in the area. The Task Force assisted in developing plans to help resolve traffic problems affecting residents that live along Prosperity Farms Road. An engineering firm was hired to develop a concept plan. From that concept plan the Council selected an engineering firm to do the construction and design phase and implement the conceptual plan. Palm Beach County is providing the funding for the construction and design phase with an an#icipated cost of approximately $x,000,000_ Once the construction design and project bids have been received in March 2005, the Task )"arcs will make recommendations to the Village Council whether to proceed with the project (subject to available funding), implement parts of the project, seek additional funding for the entire project or halt the project. Canal Dredging One of the noted development signatures of the Village is its intricate network of canals and waterways. The canals and waterways enhance the property values of the Village and give it character as a basting community. The canal's were built in the 9950's as part of the original development of North Palm Beach. However, the canals have not been maintained by the Village in that length of time, and, as a result, have silted up and created navigational problems far boaters. in order to alleviate this problem, the Village has been going through an extensive dredging program to upgrade the quality of the canals and the North Paim Beach waterways. IV The dredging program has been described as a four-phase program with the first and second phase being completed. Phases three and four are anticipated to be completed by June 2006. OTHER INFORMATION Independent Audit Article 11, Section 2.18 of the Village Charter requires an annual audit of the banks of account, financial records, and transactions of all administrative departments of the Village by independent certified public accountants selected by the Village Council. This requirement has been complied with, and the independent auditor's report has been included in this report. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement of Excellence in Financial Reporting to the Village of North Palm Beach for its Comprehensive Annual Fnancia[ Report for the fiscal year ended September 30, 2004. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. Trey zemore Direc ar of Finance Mark Bates Village Manager v THE VILLA+CE ~F NORTH PALM BEAM-t, FL®F~IQA PRINCIPAL VILLAGE OFFICIALS SEPTEMBER 30, 2x05 Title Name Mayor Edward E. Eissey Vice Mayor David B. Norris President Pro Tem Rab Rennebaum Council Member Donald G. Noel Council Member Charles R. O'Meilia Village Manager Mark Bates Director of Finance Trey Sizemore Village Clerk .Melissa Teal VI THE VILLAGE OF NORTH PALM BEACH, FLORIDA Organization Chart September 3D, 2g04 The Residents VILLAGE BOARDS -CODE ENFORCEMENT -LIBRARY ADVISORY -RECREATION ADVISORY -PLANNING COMM1SSlON Village caunciE _ -BOARD OF ADJUSTMENT -CONTRACTORS -PENSION Village Attorney Village Manager Village Clerk EI .~~'f t E f I I -': I E E3 F I I _ i 3 I -:- 1 , I:: Finance Public Services Public Safety Recreation Library Country Club i, r u E 3 t i „f,1 t 7 l ~ f ',I ~ ~0 1 ..-G ,.- {,i .'.I I. 9 VII Certificate of Achievement for Excellence in Financial Reporting Presented to village of forth Palm Beach, Florida For its Comprehensive Annual ~ Financial Report for the Fiscal Year Ended September 30, 2004 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President Executive Director viii FINANCIAL SECTION • ! y INDEPENDENT AUDITORS` REPORT The Honorable Mayor and Members of the Village Council The Village of North Palm Beach, Florida We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida, (the Village) as of and for the year ended September 3D, 2DD5, which collectively comprise the Village's basic financial statements as listed in the fable of contents. These financial statements are the responsibility of the Village of North Palm Beach`s management. 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 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 fnancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes a55e551ng the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, ahe respective financial position of the governmental activities, the business-type activities, each rE~ajor fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida, as of September 3D, 2DD5, and the respective changes in financial position and cash flows, where applicable, thereof far the year then ended in conformity with accounting principles generally accepted in the United States. 1n accordance with Government Auditing Standards, we have also issued a report dated March 4, ~DD6, an our consideration of the Village of North Palm Beach`s internal control over financial reporting and our tests of its compliance wikh certain provisions of laws, regulations, contracts 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 an the internal control over financial reporting ar on comp{lance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's ?15CU5510n and Analysis, pages 3 through ~ D, and the budgetary comparison schedules and schedules of funding progress and employer contributions, pages 50 through 56, are not required parts of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of North Palm Beach's basic financial statements. The introductory section, other supplementary information, and the statistical section are presented for purposes of additional analysis and are not required parts of the basic fiinancial statements. The information included in the introductory and statistical sections has not been subjected to auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. The other supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements tafcen as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of 5fates, Loco! Governments and Nonprofit Organizations. This schedule is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and in our opinion is fairly stated, in all material respects, in relation to the basic financial statements taken as a whale. West Palm Beach, Florida March 4, 2006 MANAGEMENT'S DISCUSSION AND ANALYSIS The Village of North Palm Beach, Fiorida (Village} Administration offers readers of the Village's financial statements this narrative overview and analysis of the financial activities of the Village for the fiscal year ended September 30, 2005. Please read it in conjunction with the accompanying transmittal letter beginning on page i, and the accompanying basic financial statements. FINANCIAL HIGHLIGHTS September 30, increase) Statement 2005 2004 (Decrease} Page # Total net assets $12.4 million $9.94 million $2.50 million 11 Unrestricted net assets available for future use $6.24 million $3.1 D million $3.14 million 11 Governmental net assets $10.2 million $7.80 million $2.44 million 11 Total revenues from all sources $21.4 million $17.1 million $3.94 million 12 Governmental revenues $18.3 million $14.6 million $3.7D million 12 Total cost of all Village programs $18.5 million $15.9 million $2.60 million 12 Governmental revenues aver (under} expenses $2.42 million $1.0D millian $1.42 million 15 General fund revenues aver (under) expenses $2.87 million $1.10 million $1.77 million 15 General fund unreserved fund balance $5.77 million $2.9? million $2.87 millian 13 As a percent of general fund expenditures 37.11 % 21.4D% 16.11 Country Club revenues aver (under) expenses 63,000 27,DD4 36,ODD 18 Decrease in total long-term debt far the Village ${.65 million} $0.7 million USING THlS ANNUAL REPORT This annual report consists of a series of financial statements. The three components of the financial statements are: {1) Government-wide financial statements that include the Statement of Net Assets and the Statement of Activities. These statements provide information about the activities of the Village as a whole. (2} Fund fnancial statements tell how these services were financed in the short term, as well as what remains for future spending. Fund financial statements also report the Village's operations in more detail than the government wide statements by providing information about the Village's most significant funds. {3} Notes to the basic financial statements expand upon information reported in the government-wide and governmental fund statements. REPORTING THE VILLAGE AS A WHOLE Statement of Net Assets and the Statement of Activities (Government-wide) A frequently asked question regarding the Village's financial health is whether the year's activities contributed positively to the overall financial well being. The Statement of Net Assets and the Statement of Activities report information about the Village as a whole and about its activities in a way that helps answer this question. These statements include al! assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account, regardless of when cash is received or paid. 3 These two statements report the Village's net assets and changes therern. Net assets, the difference between assets and liabilities, are one way to measure the Village's financial health, or financial position. Over time, increases or decreases in net assets are an indicator of whether the financial health is improving or deteriorating. The Statement of Net Assets and the Statement of Activities present information about the following: • Governmental activities -All of the Village's basic services are considered to be governmental activities, including general government, community development, public safety, public services, library, and recreation. Property taxes, sales taxes, utility taxes, and franchise fees finance most of these activities. • Proprietary activities113usiness type activities -The Village charges a fee to customers to cover all or mast of the cast of the services provided. The Village's Country Club is reported in this category. REPORTING THE VILLAGE'S MOST SlGN1FICANT FUNDS Fund Financial Statements The fund financial statements provide detailed information about the mast significant funds -not the Village as a whole. Some funds are required to be established by State law. However, management establishes other funds, which aid in the management of money for particular purposes or meet legal responsibilities associated with the usage of certain taxes, grants, and other money. The Village's three kinds of funds, governmental, proprietary, and fduciary, use different accounting approaches as explained below. • Governmental funds -Most of the Village`s basic services are reported in governmental funds. Governmental funds focus on how resources flow in and out, with the balances remaining at year-end that are available for spending. These funds are reported using an accounting method called the modified accrual accounting method, which measures cash and all other financiaE assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Village's general government operations and the basic services it provides. Governmental fund information shawl whether there are more or fewer financial resources that can be spent in the near future to finance the Village's programs. The basic govemmental fund financial statements can be found on pages ~ 3 -~ 6 of this report. • Proprietary funds -The Village's only proprietary fund is the Country Club fund, which charges customers far the services it provides. These services are generally reported in proprietary funds. Proprietary funds are reported in the same way that ail activities are reported in the Statement of Net Assets and the Statement of Activities. The basic proprietary fund financial statements can be found an pages ~7 - 19 of this report. • Fiduciary funds -Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government- wide financial statement because the resources of those funds are not available to support the Village's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund fnancial statements can be found on pages 20 - 21 of this report. 4 GOVERNMENT-W1DE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. fn the case of the Village, assets exceeded liabilities by $12.4 million at the close of the most recent fiscal year. A significant portion of the Village's net assets (44.0%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipmen#}, less any related debt used to acquire those assets that is still outstanding. The Village uses these capita! assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Village's investment in its capital assets is reported net of related debt, it should be Hated 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. Village of North Palm Beach Net Assets (In Thousands) Governmental Business Activities Activities Total 2005 2D04 2005 2DD4 2005 2DD4 Assets: Current and other assets $ 7,6D8 $ 4,912 $ 453 $ 127 $ 8,061 $ 5,039 Capital assets 1D,467 11,341 2,373 2,543 12,840 13,884 Total assets 1 B,D75 16,253 2,827 2,670 20,902 18,923 Liabilities: Current liabilities 933 914 122 57 1,D56 971 Lang-term debt outstanding 6,932 7,578 515 487 7,446 8,465 Total liabilities 7,865 8,492 637 544 8,5D2 9,D36 Net assets: Invested in capital assets, net of debt 3,536 3,763 1,919 2,131 5,455 5,894 Restricted 706 895 - - 706 895 llnrestricted 5,969 3,1D3 270 (5} 6,239 3,D98 Total net assets $ 14,210 $ 7,761 $ 2,190 $ 2,i2fi $ 12,400 $ 9,887 An additional portion of the Village's ne# assets (5.69%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($6.2mi1[ion) may be used to meet the government's ongoing obligations to citizens and credi#ors. At the end of the fiscal year, the Village is able to report positive balances in a[I categories of net assets for the governmental activities and business-type activities net assets invested in capita] assets, net of related debt. Unrestricted net assets for business-type activities were $270,373 at fiscal year end. 5 There was an increase of $2.5 million in the government's net assets during the current fiscal year. Governmental activities accounted for 97% of the total increase. Governmental Activities Governmental activities increased the Village's net assets by $2.45 million, thereby accounting far 97% of the total increase in the net assets of the Village. Key elements of this decrease are a5 fDIIOWS: Village of North Palm Beach Changes in Net Assets ~In Thousands) Governmental Business Activities Activities Total 2005 2004 2005 2004 2005 2004 Revenues: Program revenues: Charges for services $ 2,020 $ 1,672 $ 2,658 $ 2,548 $ 4,678 $ 4,220 Operating grants and contributions 1,393 89 - - 1,393 89 General revenues: Property taxes 10,071 8,452 - - 10,071 8,452 Utility service taxes 1,955 1,830 - - 1,955 1,830 Sales and use taxes 1,277 1,231 - -- 1,277 1,231 Franchise fees 890 861 - - 890 861 Grants and contributions not restricted to specific programs 421 292 - 421 292 Investment earnings 197 53 13 3 209 5fi Miscellaneous 112 92 - 43 112 135 Gain doss} an asset disposals - - - - - - Total revenues $ 18,336 $ 14,572 $ 2,671 $ 2,594 $ 21,007 $17,166 The Village's programs include General Government, Public Safety, Public Services, and Leisure Services. Each program's net cost (total cost, less revenues generated by the activities) is presented below. The net cost shows the extent to which the Village's general taxes support each of the Village's programs. 6 Village of North Palm Beach Governmental Activities {in Thousands} Governmental Business Activities Activities Total 2005 2004 2005 2004 2005 2004 Expenses: Program expenses: General government $ 2,127 $ 2,133 $ - $ - $ 2,127 $ 2,133 Public safety 6,039 5,294 - - 6,039 5,294 Public services 5,091 3,549 - - 5,091 3,549 Leisure services 1,636 1,280 - - 1,636 1,280 Hurricane expenses - - - - - Reserves and other 843 - ?epreciation expense - 1,041 Interest an long-term debt 151 41 - - 151 41 Gauntry Club - - - 2,568 - 2,568 Total expenses 15,887 13,338 - 2,568 15,044 14,865 Increase (decrease) in net assets 2,449 1,234 2,671 26 5,963 2,301 Net assets -beginning of year 7,761 6,527 2,126 2,10D 9,887 8,627 Net assets -end of year $ 10,210 $ 7,761 $ 4,797 $ 2,126 $ 15,850 $ 10,928 2005 2004 Total Cost Net Cost Total Cost Net Cost Of SeNIGeS of SENIGES of SG'NICeS Of SeNICBS Genera[ government $ 2,127 $ (1,842} $ 3,174 $ (2,819} Public safety 6,039 (5,fi53) 5,294 {4,942) Public seNices 5,091 (2,441) 3,549 (2,653) Leisure seNices 1,636 (1,545) 1,280 {1,121 } ReseNes and other 843 (843) - - lnterest an long-term debt 151 151) 41 (41 } $ 15,887 $ {12,474} $ 13,338 $ {11,57ti} The cost of all governmental activities this year was $15.9 million. As shown on the Statement of Activities, those who directly benefited from the programs paid for $2.0 mipion of this cost and $14.9 million was financed through general revenues. The Village added $2.45 million to fund balance during 2005. Business Type Activities Net assets of the Proprietary Fund (Country Club) at September 30, 2005, were $2.2 million. The cost of providing all Proprietary {Business Type} activities this-year was $2.6 million. As shown in the Statement of Activities, amounts paid by members and non-members of the Country Club were $2.7 million, leaving a surplus of $2.1 million. Investment and miscellaneous 7 income of 2,600 helped generate the surplus. The income from operations was $50,800. Net assets increased by $63,400. FINANCIAL ANALYSIS OF THE VILLAGE'S FUNDS As noted earlier, the Village uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds -The focus of the Village's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Village's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government`s net resources available for spending at the end of the fiscal year_ As of the end of the current fiscal year, the Village's general fund reported an ending fund balance of $5.97 million, a $2.87 million increase aver the 2004 fund balance of $3.10 million. This was a planned event, since the Village planned to increase general fund balance in the current year to support planned future expenditures. Approximately 98% of the combined ending fund balance ($5.77million} constitutes unreserved fund balance, which is available for spending at the government's discretion. The remainder of fund balance {.20 million} is reserved to indicate that it is not available for new spending because it has already been committed far a variety of other restricted purposes. The general fund is the chief operating fund of the Vipage. At the end of the current fiscal year, unreserved fund balance of the general fund was $5.77 million, while total fund balance was $5.97 million. As a measure of the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance is 37% of total general fund expenditures, while total fund balance represents 38% of that same amount. The capital projects fund has a total fund balance of $20,000, all of which is reserved far capital outlay projects. The net decrease in fund balance during the current year in the capital projects fund was $.45 million, and is the result of expenditures far capital outlaylmaintenance {$.49 million} that were greater than revenues and transfers in from the general fund ($39,700)., General Fund Budgefiary Highlights Differences between the original budget and the final amended budget were $918,354 and can be briefly summarized as follows: • Funding for hurricane expenditures. FEMA reimbursement recorded far the year was $1.32 million. Expenditures for the current year were $0.84 million. Expenditures incurred in the prior year ending were $0.48 million. • Revenues from building permits were $0.9 million compared to a budget of $0.5 million. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The capital assets of the Village are those assets that are used in the performance of Village functions. Capital assets include equipment, buildings, land, and park facilities etc. The Village 8 has elected to retroactively apply the capitalization requirements of GASB Statement No 34 to major general infrastructure assets acquired in fisca! years ending after June 3D, 1980, or that: were significantly reconstructed or improved during that multiyear period. The Village's investment in capital assets for its governmental and business-type activities as of September 3D, 2005 and 2004 amounts to $12.84 million and $'13.88 mipion (net of accumulated depreciation}. The total decrease in the Village's investment in capital assets for the current fiscal year was $1.D4 million. Village of North Palm Beach Capital Assets (In Thousands} Governmental Business Activities Activities Total 2005 2004 20D5 2DD4 2005 2004 Land $ 2,D56 $ 2,058 $ 1,051 $ 1,051 $ 3,107 $ 3,107 Buildings and improvements 10,441 14,57D 1,477 1,477 11,918 12,047 Improvements other than buildings - - 574 574 574 574 Improvements -golf course - - 1,604 1,604 1,6D4 1,604 Furniture, fixtures and equipment 5,943 6,108 718 714 5,662 6,822 Total assets 18,440 18,734 5,425 5,424 23,865 24,154 Less accumulated depreciation 7,973) 7,393 3,051} {2,877 11,024 10,270} Net assets $ 10,467 $ 11,341 $ 2,373 $ 2,543 $ 12,840 $ 13,884 Additional information on the Village's capital assets can be found in Note 4 on page 36 of this report. l]ebt Currently, the Village uses debt financing on an as needed basis each year. At the end of the current fscal year, the Village had total debt of $6.5 million. None of this amount comprises debt backed by the full faith and credit of the government. ~f the $6.5 million of loans payable, $S,OOD is unsecured. The remaining loans payable are secured by franchise fees and public services taxes. The capita[ leases are secured by equipment. Village of North Palm Beach Gutstar~ding Debt (In Thousands} Governmental Business Activities Activities Total 2005 2DD4 2045 2044 2005 2DD4 Loans payable $ 5,755 $ 6,376 $ 454 $ 412 $ 6,209 $ 6,788 Capital leases 276 434 - - 276 434 Total $ 6,031 $ 6,81D $ 454 $ 412 $ 6,485 $ 7,222 9 Additional information on the Village`s debt can be found in Note 5 on page 37-42 of this report. NEXT YEAR`S BUDGET AND ECONOMIC FACTORS Unreserved general fund balance increased to $5.77 million during the current 2DD5 fiscal year. As last year, the Village did not appropriate any of this unreserved fund balance for spending in the 2005/2006 fiscal year budget. The Village is now ready to address the economic challenges anticipated in the next few years. This would include a further lowering of the millage rate which was decreased from 7.27 mills in 2004-05 to 6.8 in 2005-06. In considering the Village`s fiscal year 2DD512D06 budgets, the Village Council and management were cautious as to revenue and expenditure growth. The budget for investment income was appropriately increased. Court fine revenues increased by 135% over the prior year. Building permit fees increased by 86% in 2004/2005 but may be expected to decline in coming years due to the lack of new developments. The cost increases identified by Village administration last year are being dealt with appropriately. Health insurance cost containment measures were implemented by the Village abandoning the self insurance pool. In July 1 of 2005, the Village initiated health coverage for its employees through a fully insured program. Continuing increases in cost of employee pension benefits continues to be a major economic challenge that Village Administration is addressing. The most recent actuarial calculations have determined the unfunded portion of the General Pension's actuarial liability to be in excess of $5 million (see page 55}. This year the Village adopted a change in the methodology of calculating lump sum benefits far retirees in the General Pension Plan. It also eliminated the lump sum option for new employees. Federal FEMA reimbursement for 2004's hurricane damages exceeded $1.3 million for hurricanes Jeanne and Francis. Identifiable Village costs related to the two storms exceed $1.6 million incurred in both of khe last two fisca[ years. One seawall bulkhead repair was not complete by year end. Hurricane expenditures could play a growing factor in the Village's future economic considerations. CONTACTING THE V1L.1_AGE'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the Village's finances and to show the Village's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Village's Finance Department, at the Village of North Palm Beach, 501 U.S. Highway 1, North Palm Beach, Florida 33408. 10 THE VILLAGE OF NORTH PALM BEACH, FLORIDA STATEMENT OF NET ASSETS September 30, 2005 Governmental Business-type Activities Activities Total Assets Cash and cash equivalents $ 5,866,155 $ 396,656 $ 6,262,811 Accounts receivable, net 827,574 36,365 863,939 Inventories 26,556 20,267 46,823 Other assets 33,642 - 33,642 Restricted assets: Cash and cash equivalents 167,936 - 157,936 Net pension assets 686,142 - 686,142 Capital assets: Nondepreciable 2,055,891 1,051,311 3,107,202 Depreciable: Buildings and improvements 10,441,029 1,478,711 11,917,740 improvements other than buildings - 574,318 574,318 lmprovements -golf course - 1,603,94D 1,603,940 Furniture, fixtures and equipment 5,943,376 718,251 6,661,627 Less: accumulated depreciation (7,973,16 (3,051,207 11,024,375 Total assets 18,075,133 2,826,612 20,901,745 Liabilities Accounts payable and other current liabilities 772,577 115,390 887,967 Other liabilities 160,611 7,000 167,611 Noncurrent liabilities: Due within one year 1,459,807 110,981 1,57Q788 Due in more than one year 5,471,725 403,fi73 5,875,398 Total liabilities 7,864,720 637,044 8,501,764 Net Assets Invested in capital assets, net of related debt 3,535,596 1,919,194 5,454,790 Net pension assets 686,142 - 686,42 Restricted for: Capital Projects 19,828 - 19,828 Unrestricted 5,968,847 270,374 6,239,221 Total net assets $ 10,210,413 $ 2,189,568 $ 12,399,981 See accompanying notes to basic financial statements. 11 THE VILLAGE OF NORTH PALM BEACH, FLORIDA STATEMENT OF ACTIVITIES Year Ended September 3Q, 2Q05 Program Revenues Net Expense (Revenue} and Operating Changes in Net Assets Charges for Grants and Governmental Business-type FunctionslPrograms Expenses Activities Contributions Activities Activities Total Government: Governmental activities General government $ 2,127,009 $ 285,386 $ - $ (1,841,623} $ - $ (1,841,6231 Public safety 6,038,846 329,081 57,149 (5,652,616} - (5,652,618) Put)lic services 5,091,305 1,326,820 1,323,121 (2,441,364) - {2,441,364) Leisure services 1,635,784 78,475 12,459 (1,544,850) - {1,544,850} Reserves and other 842,561 - - {842,561) - {842,561) Interest an long-term debt 151,233 - - (151,233) - {151,233} Total governmental activities 15,886,738 2,019,762 1,392,729 (12,474,247) - {12,474,247] Business-type activities -country club 2,607,712 2,658,468 - - 50,758 50,756 658 468 50,756 50,756 Total business-.type activities 2,607.712 2, - - Total government $ 18,494,450 $ 4,678,230 $ 1,392,729 (12,474,247) 50,756 (12,423,491) General Revenues: Taxes: Property taxes 10,070,977 - 10,070,977 Utility service taxes 1,955,403 - 1,955,403 Sales and use taxes 1,277,124 - 1,277,124 Franchise #ees 890,297 - 890,297 Grants and contributions not restricted to specific purposes 421,254 - 421,254 Investment income 196,699 12,640 209,339 Miscellaneous 111,927 - 111,927 Totai general revenues 14,923,681 12,640 14,936,321 Change in net assets 2,449,434 63,396 2,512,830 Net assets, beginning of year 7,760,979 2,126,172 9,887,151 Net assets, end of year $ 10,210,413 $ 2,189,588 $ 12,399,981 See accompanying notes to the basic ttnancial statements. 12 THE V[LLAGE OF NORTH PALM BEACH, FLORIDA BALANCE SHEET Governmental Funds September 30, 20~~ Total Capital Governmental General Projects Funds Assefis Cash and cash equivalents $ 6,043,743 $ - $ 6,043,743 Accounts receivable, net 827,574 - 827,574 Inventories 26,556 - 26,556 Other assets 3,642 30,000 33,642 Total assets $ 6,901,515 $ 30,000 $ 6,931,515 Liabilities and Fund Balances Liabilities: Accounts payable and other current liabilities $ 772,057 $ 10,172 $ 782,229 Deferred revenues 160,611 - 160,611 Tota! liabilities 932,668 10,172 942,840 Fund balances Reserved for: Reserved far inventories 26,556 - 2fi,556 Reserved for prepaid items and deposits 2,672 - 2,672 Reserved for restricted assets 167,935 - 167,935 Reserved far capital outlay - 19,828 19,828 L3nreserved, undesignated 5,77'1,684 - 5,771,684 Total fund balances 5,968,847 19,828 5,988,675 Total liabilities and fund balances $ 6,901,515 $ 30,000 $ 6,931,515 See accompanying notes to basic financial statements. 13 THE VILLAGE OF NORTH PALM BEACH, FLORIDA RECONC1LlATION OF THE GOVERNMENTAL FUNQS BALANCE SHEETTO THE STATEMENT OF NET ASSETS September 30, 201}5 Amounts reported for governmental activities in the siatement of nei assets are different because: Ending fund balance - governmental funds $ 5,988,675 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds: Cost of assess $ 18,440,296 Accumulated t7epreciation ;7,973,168) 10,467,128 Nek pension assets related to defined benefit pension plans are not available to pay for current-period expenditures and, Therefore, are not reported as assess in the governmental funds. 686'142 Long-term liabilities, including notes and bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Long-term liabilities at year end consist of: Notes payable (5,754,677} Capital leases payable ;275,840} Accrued compensated absences (901,015} (6,931,532 Net assets of governmental activities $ 10,210,413 See accompanying notes to basic financial statements. THE VILLAGE OF NORTH PALM BEACH, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES 1N FUND BALANCES GOVERNMENTAL FUNDS Year Ended September 3D, 2005 Total Capita! Governmental General Projects Funds Revenues: Taxes $ 13,236,952 $ - $ 13,236,952 Licenses and permits 1,131,903 - 1,131,9Q3 intergovernmental ~ 2,804,985 - 2,804,985 Charges for services 647,915 - 647,915 Fines and forfeitures 234,513 - 234,513 Investment income 187,161 9,538 196,699 Miscellaneous 83,025 180 83,205 TataE revenues 18,326,454 9,718 18,336,172 Expenditures: Current: General government 1,571,5fl0 490,045 2,flfi1,545 Public safeky 5,713,904 - 5,713,904 Public services 5,019,739 - 5,019,739 Leisure services 1,376,950 - 1,376,95Q Other government 817,293 - 817,293 Debt service Principal payments 903,225 - 903,225 Inkerest paid on debt 151,233 - 151,233 Total expenditures 15,553,844 49fl,fl45 16,043,889 Excess of revenues over) sunder) expenditures 2,772,610 (480,327} 2,292,283 Other financing svurcesl (uses}: Proceeds from debt issuance 123,500 - 123,500 Transfers to other funds (30,000) 30,QQQ Total other financing sources (uses) 93,5Q0 30,000 123,500 Het change in fund balances 2,866,110 (450,327) 2,415,783 Fund balances, beginning of year 3,102,737 470,155 3,572,892 Fund balances, end of year $ 5,968,847 $ 19,828 $ 5,988,675 See accompanying notes to basic financial statements. 15 THE VILLAGE OF NORTH PALM BEACH, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Year Ended September 31a, 20x5 Amounts reported far governmental activities in the statement of activities are different because: Net change in fund Balances -total governmental funds $ 2,415,783 Governments! funds report capital outlays as expenditures. However, in the statement of activities the cast of those assets is allocated over their estimated useful lives and reported as depreciation expense_ Expenditures for capital assets $ 273,449 Less: current year depreciation (994,255) Less: asset dispositions (153,196) (874,082) Repayment of long-term deBt is reported as an expenditure on the Governmental Funds, but a reduction of long-term liabilities in the Statement of Net Assets. 903,225 Proceeds from issuance of debt are reported as other financing sources and uses in the governmental funds. However, these transactions sre not reported in the statement or activities. Instead, they are recognized in the statement of net assets as changes to liabilities. Proceeds from debt issuance (123,500) Change in long-term compensated absences (133,086) (25fi,586) Expenses that do not use current financial resources are not reported on the Governmental Funds but are included in the Statement of Activities. Change in net pension asset of defined benefit pension plans 261,414 Total 2131,014 $ 2,449,434 See accompanying notes to Basic financial statements. 16 7HE VILLAGE OF NORTH PALM BEACH, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUND September 30, 2005 Country Club Assets Current assets Cash and cash equivalents $ 396,656 Accounts receivable, net 36,365 Inventories 20,267 Total current assets 453,288 Capital assets: Land, buildings and equipment, net 2.373,324 Total assets 2,826,612 Liabilities Current liabilities: Accaunts payable and other current liabilities 115,390 Compensated absences payable 35,000 Deposits 7,000 Laans payable -current portion 75,981 Total current liabilities 233,371 Noncurrent liabilities: Compensated absences payable 25,524 Loans payable 378,149 Total liabilities 637,044 Nek assets Investment in capital assets, net of related debt 1,919,194 Unrestricted 270,374 Total net assets $ 2,189,568 See accompanying notes to basic financial statements. 17 THE VILLAGE DF NORTH PALM BEACH, FLORtI]A STATEMENT OF REVENUES, EXPENSES, AND ChIANGES IN NET ASSETS PROPRIETARY FUND Year Ended September 30, 205 Food and Administra- Country Operating revenues: Golf Tennis Paal Bevem a Tian Ciub Greons feeslcart rentalslmembershlp fees 5 1,953,389 5 - 5 - S - 5 - 5 1,953,369 Tunnis revenues - 82,659 - - - 82,659 Pool revenues - - 109,158 - - 109,158 Golf shop rovenues 127,343 - - - - 127,343 I]riving range revenues 265,782 - - - - 265,782 Miscellaneous - - - - 49,777 0.9,777 Restauranirevenues - - 70,360 - 70,360 Total operating revenues 2,346,510. 02,659 109,158 70,360 49,777 2,658,488 Operating expenses: Golf course maintenance expenses 1,080,961 - - - - 1,080,967 Clubhouse grounds expenses 139,226 - - - - 139,228 Tennis expenses - 163,881 - - - 163,881 Pool expenses - - 214,637 - - 214.637 Golf shop expenses 570,423 - - - - 570,423 Food & beverage expenses - - 38,730 - 36,730 Adminislralive and general expenses - - - - 167,917 167,817 Insurance - - - - 29,254 29,254 Depreciation - - - - 176,244 176,244 Talal operating expanses 1,790,810 163,881 214,637 38,730 373,415 2,581,273 income from operat[ons 555,904 81,222 105,479 31,630 323,638 77,195 Nanoperating revenues {expenses): Interest Income - - - - 12,840 12,640 Interest uxpensa - - - 26,0.39 26,439 Total nr}noperaiing revenues (expense - - (13,789} (13,799 Change in eat assets 555,904 81.222} t05,479f 31,630 {337,437) 63,396 Ne! assets, hegtnning of year 2,126.172 Net assets, end of year $ 2,189,568 See acr-ampanying notes to basic financial statements. 18 THE VILLAGE OF NORTH PALM BEACH, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUND Year Ended September 30, 2005 Country Club Cash flows from operating activities Cash received from customers $ 2,653,017 Cash payments to suppliers for goods and services (1,042,703) Cash payments to employees for services (973,828) Cash payments for payroll taxes (75,193) Cash payments for employee benefits (252,178) Net cash provided by operating activities 309,116 Cash flows from capital and related financing activities Principal payments (57,442) Proceeds from debt issuance 100,000 interest paid on debt (26,439) Acquisition of capital assets (6,633) Net cash provided by capital and related financing activities 9,486 Cash flows from investing activities interest on investments 12,640 Net decrease in cash and cash equivalents 331,242 Cash and cash equivalents, beginning of year 65,414 Gash and cash equivalents, end of year $ 396,656 Reconciliation of income from operations to net cash provided by operating activities: Operating income $ 77,195 Adjustments to reconcile operating incnme to net cash provided by operating activities: Depreciation expense 176,244 Decrease in accounts receivable (5,438) Decrease in inventory 10,209 Decrease in accounts payable and other current liabilities 65,366 Decrease in compensated absences payable (14,463) Total adjustments 231,918 Net cash provided by operating activities $ 309,113 Noncash capital and financing activities: Book value of assets disposed ~ See accompanying notes to basic financial statements. 19 THE VILLAGE OF NORTH PALM BEAGH, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS September 30, 2005 Employee Retirement Agency Funds Funds ASSETS Cash and cash equivalents $ 2,886,09$ $ 265,476 Investments: Common stock 6,744,394 - U.S. Government securities 1,060,477 - Corporate bonds 1,713,555 - Fixed funds 58,538 Equity funds 7,514 Interest receivable 18,033 - Accounts receivable 49,262 638 Total assets 12,537,872 $ 266,114 L-IASILITIES Accounts payable and other liabilities - - ?ue to others - 266,114. Totalliakailities - $ 266,114 NET ASSETS Held in trust for pension benefits 12,537,872 Total net assets $ 12,537,872 See accompanying notes to basic financial statements. 20 THE VILLAGE OF NORTH PALM BEACH, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET A55ETS - EMP~OYEE RETIREMENT FUNDS Year Ended September 30, 2005 Employee Retirement Funds Additions: Contributions: Employer $ 1,244,500 State of Florida 209,222 Plan members 245,664 Total contributions 1,699,386 Investment income: Interest 218,783 Net appreciation in fair value of investments 871,970 Investment expense (68,789) Total investment income '1,021,964 Total additions 2,721,350 Deductions: Benefits 4,034,521 Administration 77,189 Total deductions 4,111,710 Net decrease {1,390,360) Net assets held in trust for pension benefits, beginning of year 13,928,232 Net assets held intrust for pension benefits, end of year $ 12,537,872 See accompanying notes to basic financial statements. 21 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity The Village of North Palm Beach, Florida {"the Village"}was incorporated in 1956 pursuant to Chapter 31481, Laws of Florida, Extraordinary Session 1956. The Village is located in the northeast portion of Palm Beach County, Florida. Ifs municipal area comprises approximately 1,90D acres of land and 1,200 acres of lakes, canals and lagoons. The Village`s nonseasonal population consists of approximately 12,000 residents, which increases during the winter months to approximately 18,000 people. The Village operates under the Council-Manager form of government and provides the following services to its residents: public safety, planning and zoning, sanitation, library, parks, marinas, and a country club. The Village Council {the "Council") is responsible for legislative and fiscal control of the Village. As required by accounting principles generally accepted in the United States of America, the basic 1=lnancial statements present the government and its component units. Component units are IegalCy separate entities far which the primary govemment is considered to be financially accountable and for which the nature and significance of kheir relationship with the primary government are such that exclusion would cause the Village's combined financial statements to be misleading or incomplete. The primary government is considered financially accountable if it appoints a voting majority of an organization's governing body and imposes its will on that organization. The primary government may also be financially accountable if an organization is fiscally dependent on the primary government, regardless of the authority of the organization's governing board. Blended component units, although legally separate entities, are, in substance, part of the primary government's operations and are included as part of the primary government. Based on the application of the criteria set forth by the Governments[ Accounting Standards Board {"GASB"), management has determined that no component units exist which would require inclusion in this report. Further, the Village is not aware of any entity that would consider the Village to be a component unit. Government~Wide and Fund Financial Statements The government-wide financial statements {i_e., the statement of net assets and the statement of activities) report information on all of the non-fiduciary activities of the Village. f=or the most part, the effect of interFund activities has been removed from these statements. Governmental activities, which are normally 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. 22 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial 5#atements Year Ended September 30, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES riContinued} Government-Wide and Fund Financial Statements Continued} The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include ~ ) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2} grants and contributions that are restricted to meeting the operational or capita{ requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements and proprietary fund financial statements are reported using the accrual basis of accounting and the economic resources measurement focus. Fiduciary funds use the accrual basis of accounting and, except for agency funds, the economic resources measurement focus. Agency funds do not have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are collected wi#hin fiD days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, interest associated with the current fiscal period and all other revenue items are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. 23 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 'l. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued} Measurement Focus, Basis of Accpunting and Financial Statement Presentation (Continued) The Village reports the following major governmental funds: General Fund The genera! fund is the primary operating fund and is used to account for all financial resources applicable to the general operations of the Village except those required to be accounted for in another fund. Ca ital Pro'ects Fund The capital projects fund is used to account far the cost of acquiring, constructing, and placing into service those capital improvements which are associated with activities in the General Fund and are financed by long-term debt issues which are repaid by the recurring operating revenues in the General Fund. The Village reports the following major (and only) proprietary fund: Country Club Enterprise Fund This fund accounts for the activities related to the Country Club. Additionally, the Village reports the following fiduciary funds: Em to ee Retirement Funds The pension trust funds account for the activities of the General Employees Retirement Fund, the Fire and Police Officers Retirement Fund and the Volunteer Firemen's Length of Service Award Pension Fund, which accumulate resources for pension benefits to qualified employees. A enc Funds The. agency funds account far assets that are held far other parties and cannot be used to finance the Village's own programs. Private sector standards of accounting and financial reporting issued prior to December 1, 1989, are followed in bath the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of GASB. Governments also have the option of following subsequent private sector guidance far their business-type activities and enterprise funds, subject to this same limitation. The Village has elected not to follow subsequent private sector guidance. 24 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 'I, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {Continued} Measurement Focus, Basis of Accounting and Financial Statement Presentation Continued} As a general rule, the effect of interfund activity has been eliminated from the government- wide fnancial statements. Exceptions to this general rule are charges between the government's country club and various other functions of the Village, Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund`s principal ongoing operations. The principal operating revenues of the Village's country club enterprise fund are charges to customers for safes and services. Operating expenses for the enterprise fund include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Assets, Liabilities, and Net Assets or Equity Cash and Cash Equivalents All short-term investments that are highly liquid are considered to be cash equivalents. Cash equivalents are readily convertible to a known amount of cash, and at the day of purchase, have a maturity date no longer than three months. Investments investments are reported at fair value, which is determined fry using various third party pricing sources_ The Local Government Surplus Funds Trust is a "2a-7 like" pool and, thus, these investments are valued using the pooled share price. Investments in the Local Government Surplus Funds Trust are reported as cash and cash equivalents. 25 THE VILLAGE GF N®RTH PALM BEACH, FLORIDA Notes Ta Basic Financial Statements Year Ended September 3r), 20fl5 NDTE 'I . SUMMARY OF 51GN11*ICANT ACCOUNTING POLICIES {Continued} Assets, Liabilities, and Net Assets or Equity {Continued} Restricted Assets Cash and cash equivalents are restricted for the following purposes: zoos Law enforcement education $ 18,408 Dag park 1,199 Village historian 112 Public safety 16,593 Library 103,124 Recreations facilities 28,50D Total restricted assets $ 1 B7,936 When both restricted and unrestricted resources are available for use, it is the Village's policy to use restricted resources first, then unrestricted resources as they are needed. Interfund Transactions Activity between funds that is representative of lendinglborrowing arrangements outstanding at the end of the fiscal year are referred to as either "due tolfrorn other funds" {i.e., the current portion of interfund loans) or "advances tolfram other funds" {i.e., the noncurrent portion of interfund loans}. All other outstanding balances between funds are reported as "due tolfram other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Transfers and interfund balances totally within governmental activities and those that are totally within business-type activities are eliminated and not presented in the government wide financial statements. Transfers and balances between governmental and business- type activities are presented in the government-wide fnancial statements. Inventories Inventories are valued at cost determined on a first-in, first-out basis. Inventories in the general fund consist of expendable supplies held for consumption. The initial cost is recorded as an asset at the time the individual inventory items are purchased and are charged against operations in the period when used. Capital Assets and Depreciation Capital assets, which include property, plant, and equipment, are reported in the applicable governmental or business-type activities column in the government-wide financial statements. The Village defines capital assets as assets with an initial individual cost of 26 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 34, 2005 NOTE'!. SUMMARY OF 51GN1FICANT ACCOUNT[NG POE.1CiE5 (Continued) Assets, liabilities, and Net Assets ar Eduity (Continued) $1,000 or mare and an estimated fife in excess of one year. The Village has elected fo retroactively apply the capitalization requirements of GASB Statement No. 34 to major general infrastructure assets acquired in fiscal years ending after June 30, 1980, or that were significantly reconstructed or improved during that multi-year period. The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. General capital assets are assets of:the Village as a whole. When purchased, such assets are recorded as expenditures in the governmental funds and capitalized as assets in the government-wide statement of net assets. General capital assets are carried at historical cost. Where cast cannot be determined from the available records, estimated historical cost has been used to record the estimated value of the assets. Assets acquired by gifts or bequests are recorded at their fair value at the date of acquisition. Capital assets of the enterprise fund are capitalized in the fund. The valuation basis for enterprise fund capital assets is the same as those used for. general capital assets. Additionally, net interest cost is capitalized an enterprise fund projects during the construction period. Additions, improvements, and other capital outlay that signifcantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation has been provided over the estimated useful fives using the straight-line method of depreciation. The estimated lives for each major class of depreciable fixed assets are as follows: Buildings and improvements 30 years Improvements other than buildings 10 years Golf course improvements 15 years Furniture, fixtures and equipment 3-10 years Compensated Absences The Village`s employees are granted compensated absence pay for vacation and sick leave in varying amounts based an length of service. Unused compensated absences are payable upon separation from service. Vacation is accrued as a liability when the employee earns benefits. This means that the employee has rendered services that give rise to a vacation liability and it is probable that the Village will compensate the employee in same manner, e.g., in cash or paid time-off, now ar upon termination ?r'retirement. The Village uses the vesting method in accruing sick leave liability. Under the vesting method, the liability for sick leave is accrued for employees who are eligible to receive termination payments upon separation. 27 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 20Q5 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences Continued) Compensated absences are accrued when incurred in the government-wide and proprietary financial sta#ements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations or retirements. For the governmental funds, compensated absences are liquidated by the general fund. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund fnancial 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 assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized aver the life of the bands using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and 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. Net Assets Equity in the government-wide statement of net assets and the proprietary fund is displayed in three categories: invested in capital assets net of related debt, 2) net pension asset, 3) restricted, and 4) unrestricted. Net assets invested in capital assets net of related debt consist of capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct, or improve those assets. Net pension asset represent pension contributions above the actuarially required amount. Net assets are reported as restricted when there are legal limitations imposed on #heir use by Village legislation or external restrictions by other governments, creditors, or grantors. Unrestricted net assets consist of ali net assets that do not meet the definition of either of the other three components. 28 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2QQ5 NOTE 'I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {Continued) Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Unreserved fund balance amounts that are reported as designations of fiend balances represent tentative plans for financial resource utilization in a future period. The following is a description of the reserves and designations used by the Village. Reserved for capital outlay -Restricted for expenditures related to capital projects. ? Reserved for inventories, prepaid items and deposits -Indicates that a portion of fund balance is segregated since these items do not represent "available spendable resources." ? Reserved for restricted assets -Restricted far expenditures related solely to law enforcement, library, recreation facilities, and a memorial fund. Budgetary Accounting State of Florida Statutes require that all municipal governments establish budgetary systems and approve balanced annual operating budgets- The Council annually adopts an operating budget and appropriates funds for the general fund. The procedures for establishing budgetary data are as follows: In July of each year, the Village Manager submits a proposed operating budget to the Council for the next fiscal year commencing the following October ~ st. The proposed budget includes expenditures and the means of financing them. During the third week of July, the Council holds public meetings to obtain taxpayer comments. Upon completion of the public hearings and prior to October 1, a final operating budget is legally enacted through the passage of an ordinance. Estimated beginning fund balances are considered in the budgetary process. 29 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 1. SUMMARY OF 51GN1FICANT ACCOUNTING POLICIES (Continued} Budgetary Accounting (Continued) The ordinance approved by the Council, which adapted the budget for the fiscal year ended September 30, 2005, allows budget transfers based on the fallowing regulations: Appropriations shall not be transferred in amounts aver $5,000 without the approval of the Village Council. Appropriations of $5,000 or less shall not be transferred without the approval of the Village Manager; however, the Village Manager is not permitted to violate the intent of the approved budget. Property Taxes Under Florida law, the assessment of ail properties and the collection of all county, municipal and school board property taxes are consolidated in the offices of the County Property Appraiser and County Tax Collector, respectively. All property is reassessed according to its fair market value on January 1 of each year and each assessment roll is submitted to the Sl=ate Department of Revenue far review to determine if the assessment rolls meet al! of the appropriate requirements of State taw. The assessed value of property within the corporate limits of the Village at January 1, 2004, upon which the 2004-05 levy -.was based, was approximately $1.98 billion. State Statutes permit municipalities #o levy property taxes at a ra#e of up #0 10 mills. The tax levy of the Village is established by the Council prior to October 1 of each year during the budget process. The Palm Beach County Property Appraiser incorporates the Village's millage into the total tax levy, which includes the County, County School Board, and special district tax requirements. The millage rate assessed by the Village for the year ended September 30, 2005, was 6.8000 ($6.80 far each $1,000 of assessed valuation). Taxes may be paid Tessa 4% discount in November ar at declining discounts each month through the month of February. Ali unpaid taxes become delinquent on April 1 following the year in which they are assessed. Delinquent taxes on real property bear interest at 18% per year. On or prior to June 1 fallowing the tax year, certificates are offered far safe for all delinquent taxes on real property. After sale, tax certificates bear interest at 18% per year or at any lower rate bid by the buyer. The certificate holder may make application for a tax deed an any unredeemed tax certificate after a period of two years. The County holds unsold certificates. Delinquent taxes on personal property bear interest at 18% per year until the tax is satisfied either by seizure and sale of the property or by the five-year statute of limitations. At September 30, 2005, unpaid delinquent taxes are not material and have not been recorded by the Village. 30 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 3D, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {Continued} Concentration of Credit Risk The Village performs angang credit evaluations of its customers and does not require collateral. The Viilage maintains an allowance far uncallectible accounts at a level which management believes is sufficient to cover potential credit lasses. Use of Estimates The financial statements and related disclosures are prepared in conformity with accounting principles generally accepted in the United States. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the period reported. These estimates include the collectibility of accounts receivable, the use and recoverability of inventory, the useful lives and impairment ofi tangible assets, and the realization of net pension assets, among others. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results could differ from those estimates. NOTE 2. DEPOSITS AND INVESTMENTS Deposits As of September 30, 2005, the carrying amount of deposits (including fiduciary funds} is as follows: Fiduciary funds $ 3,151,576 Restricted 167,936 Unrestricted 6 262 809 9 582 21 Deposits consist of the following: Demand deposits $ 9,580,616 Petty cash 1,705, $ 9,582.321 ' In addition to insurance provided by the Federal Depository insurance Corporation, deposits are held in banking institutions approved by the Chief Financial Officer ("CFO") of the State of Florida to hold public funds. Under Florida Statutes Chapter 280, Florida Security far Public Deposits Act, the CFO requires all Florida qualified public depositories to deposit eligible collateral with the CFO ar another banking institution. In the event of a failure of a qualified public depositary, the remaining public depositories would be responsible for covering any resulting losses. Demand deposits above include amounts on deposit with the Florida State Board of Administration. 31 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 2. DEPOSITS AND INVESTMENTS (continued) Investments As of September 30, 2005, the Village held the following investments in fiduciary funds: Weighted Average Credit Maturity Rating Fair Value (In Years) U.5 Governrrtent debt securities AAA $1,1}61),477 13 Corporate debt securities AAA ~ ,713,555 17 Qamestic corporate stocks NIA 6,744,394 NIA Fixed annuity funds 58,539 NIA Equity funds 7,514 Total fiduciary funds $ 9,584,479 * Not available Interest rate risk - As a means of limiting its exposure to fair value losses resulting from rising interest rates, the Village's employee retirement funds' investment policy establishes benchmarks based on credit quality and duration. The benchmarks are monitored and changed when warranted by investment market environment. Debt portfolios are structured and managed to produce returns based an risks inherent in the selected benchmarks. Gustodial credit risk: The Village's employee retirement funds' securities are held in the name of the fund and are held by the funds' custodial bank or third party custodial institution, chartered by the United States or the State of Florida. All securities are registered in the funds' names. Credit risk and concentrations of credit risk: The Village is authorized to invest its funds as follows: 1. Interest-bearing checking ar savings accounts in qualifed public depositaries, as defined in Chapter 280, Florida Statutes; 2. interest-bearing time deposits in qualifsed public depositaries, as defined in Chapter 280, Florida Statutes; 3. The Local Government Surplus Funds Trust Fund ar any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Chapter 163, Florida Statutes; 32 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE Z. DEPOSITS AND INVESTMENTS (Continued) investments (Continued) A-. Securities and Exchange Commission registered money market funds with the highest credit quality rating from a natiana[ly recognized rating agency; 5. Direct obligations of the United States Treasury; 6. Federal agencies and instrumentalities; 7. Securities of, ar interest in, any open-end or closed-end management-type investment company or investment trust registered under the investment Company Act of 19~4g, 15 U.S.C. sections SOa-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; 8. Other investments authorized by law or by ordinance by the Village. Investments of the General Employees' Retirement Fund can consist of every kind of investment except: options, futures, municipal bonds, non-investment grade bonds, foreign securities, precious metals, private placements, short sales, purchases on margin, real estate, and partnerships. investments of the Fire and Police Retirement Fund can consist of the following: 'I . Time, savings, and money market deposit accounts of a national bank, a state bank insured by the Federal Deposit Insurance Corporation or its successor, or a Savings and Loan institution insured by the Federal Savings and Loan Insurance Corporation or its successor, provided the amount deposited does not exceed the insured amount. 2. Obligations of the United States Government or obligations guaranteed as to principal and interest by the United States Government or any agency thereof. 3. Stocks, bonds or other evidence of indebtedness issued or guaranteed by a corporation organized under the laws of the United States or any state of the United States or the District of Columbia and domiciled therein, provided: a. Equities will be kraded on one or more of the recognized national exchanges. b. The security meets any one of the following rating criteria: 33 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2x05 NOTE 2. DEPOSITS AND INVESTMENTS (Continued) Investments (Continued} i.} Fixed income: Standard & Poor's AAA, AA, or Moody's Aaa, Aa, A. ii.) Equities: Value Line ]nvestment Survey Rank for Safety, 1, 2, 3, or Standard & Poor's A+-, A, A-. iii.} Money Market Instruments: Standard & Poor's AI or Moody's P1. c. Not more than ten {10} percent of the Fund's assets shall be invested in the common stock or capital stack of any one issuing company. d. Not more than five (5} percent of the Fund's assets shall be invested in preferred stock. 4. Commingled stock, band, money market or mutual funds are permitted, provided their inves#ments are restricted to securities meeting the above criteria. A reconciliation of deposits and investments as shown on the statement of net assets and statement of fiduciary net assets for the Village is as follows: By category: Cash and cash equivalents $ 9,582,321 Investments 9,584,479 Total deposits and investments $ 19,166,609 Presented in the statement of net assets Governmental activities Cash and cash egivalents $ 5,866,155 Restricted cash 167,936 Business-type activities Cash and cash egivalents 396,656 Total statement of net assets fi,430,747 Presented in the statement of fiduciary net assets Pension trust funds Cash and cash egivalents 2,886,998 Investments 9,584,479 Agency funds Cash and cash egivalents 265,476 Total fiduciary funds 12,736,053 Total deposits and investments $ 19,166,890 34 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 3. RECEIVABLES Receival,les at September 30, 2005, were as follows: General Country Fund Club Total FEMA reimbursements $ 446,927 $ - $446,927 Fines 11,693 - 11,693 State shared revenues 164,731 - 164,731 Utility taxes 134,251 - 134,251 Other accounts receviable 16,425 36,365 52,790 Total accounts receivable 77A-,027 36,385 81 D,392 Wabash Drive assessment 40D 404 Conroy Drive assessment 53,147 53,147 Tota] accounts receivable 827,574 36,365 863,939 Allowance for doubtful accounts - - - Net accounts receivable $ 827,574 $ 36,365 $ 863,939 NOTE 4. CAPITAL ASSETS Capital assets activity for the year ended September 3D, 2005, was as follows: Octaberl, Rec[ass- September 3D, 2D04 ifications Additions Deletions 2D05 Governmental activities Capital assets not being depreciated: .Land $ 2,055,891 $ - $ - $ - $ 2,055,891 Capital assets toeing depreciated: Buildings and improvements 1D,57D,191 - 25,249 (154,411} 10,441,029 Furniture, fixtures, and equipment 6,108,299 248,200 (413,123} 5,943,376 Capital assets being depreciated 16,678,490 - 273,449 (567,534} 16,384,405 Less accumulated depreciation for: Buildings and improvements (3,444,084) (433,112} 2,586 (3,874,61D} Furniture, fixtures, and equipment {3,949,167) (561,143) 411,752 {4,D98,558) Total accumulated depreciation (7,393,251} - (994,255) 414,338 (7,973,168} Governmental activities capital assets, net $11,341,13D $ - $ (72Q,8D6) $(153,196) $ 1D,467,128 35 THE VILLAGE ~F NORTH PALM BEACH, FLQRIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 4. CAPITAL ASSETS Continued} October 1, Reclass- 5eptember30, 2004 ifications Additions Deletions 2005 Business-type activities Capital assets not being depreciated: Land $ 1,051,311 $ - $ - $ - $ 1,051,311 Capital assets being depreciated: Buildings and improvements 1,476,711 1,476,711 Improvements other than buildings 574,318 574,318 lmprovements -golf course 1,603,940 1,603,940 Furniture, fixtures, and equipment 713,743 6,633 (2,125) 718,251 Capita! assets being depreciated $ 4,368,712 $ - $ 6,633 $ (2,125) $ 4,373,220 Less accumulated depreciation for: 1uildings and improvements $ {1,953,322) $1,241,591 $ (59,671) $ (771,402) lmprovements other than buildings (412,859} {34,059) (446,918} Improvements-golf course (17,256) (1,241,591} {21,325) (1,280,172} Furniture, fixtures, and equipment (493,652) (61,188} 2,125 (552,715) Tota! accumulated depreciation (2,877,089) - (176,243} 2,125 (3,051,207) Business-type activities capita! assets, net $ 2,542,935 $ - $ 5169,610} $ - $ 2,373,325 NOTE 5. LONG-TERM DEBT Changes in Long-Term Liabilities Long-term iiah[I[ty_ activity for the year ended September 30, 2.005 was as follows: Balance Balance ~ Amount Due . ~ ~ ...i --- - 5e tember 30, W~th~n October 1, P 2004 Additions i Reductions 2005 € One Year - Governmental activities _ i _ - ~ _ _ -- Loans payable $ 6,376,387. $ 123,500' $ 745,210 $ 5,754,677 704,481 _ ~ , . ....----......_T~_ _._- .._..-326'',. Capital leases 433,855 - 158,015; 275,840, 155, Compensated absences payable: 767,929` 743,799; 610,713' 901,015I 600,000; Total $ 7,578,171; $ 867,299; $ 1,513,938; $ 6,931,532; $ 1,459,807: _ - € Business type acti~nties . -__. !-__.~~.__-__ Loans payable $ 411,573; $ 100,000, $ 57,442 $ 454,131` $ 75,981; - Compensated absences payable 74,986: 20,038' 34,501; 60,5231 35,000. Total ` $ 486,559E $ 120,038; $ 91,943 $ 514,654! $ 110,981 3 36 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 5. LONG-TERM DEBT (continued) Loans Payable $$60,OQQ~ Prorr~issory Note The Village Council adopted Resolution No. 71-2000 authorizing the execution of a loan agreement in the amount of $860,000 for the purpose of refinancing an existing loan incurred for the renovation of the Village's Country Club restaurant and for capital expenditures in the general fund. Franchise fees and public service taxes of the Village secure the loan. Principal and interest payments are due quarterly, with a final maturity date of November 15, 2010. The interest rate on the loan is 5.22%. Amounts currently outstanding on the note are as follows: Purpose _Amount Governments[ activities $ 13,951 Business-type activities 354,132 $ 368.083 Annual debt service requirements to maturity are as follows: Governmental activities: Year Endin Princi al Interest Total 2006 $ 13,951 $ 792 $ 14,743 37 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 5. E_ONG-TERM DEBT (continued) Loans Payable (continued) BUSine55-type aCtlVltleS: Year Ending Princi al Interest Total 2006 $ 57,076 $ 21,428 $ 78,504 2007 60,114 18,448 78,562 2008 63,314 15,310 78,624 2009 69,684 12,005 81,689 2010 70,234 7,165 77,399 2011 33,709 6,675 40,384 $ 354,132 $ 81,031 $ 435,163 $2,Sflfl,flfl0 Promissory Note The Village Council adapted Resolution No. 46-2001 authorizing the execution of a note in the principal amount of $2,800,000 to finance the construction of various capital projects. Franchise fees and public service taxes secure the promissory note. Principal and interest payments are due semi-annually, with a final maturity date of May 31, 2011. The interest rate on the note is 3.29%. Annual ~ debt service requirements to maturity, which are payable by the general fund, are as follows: Governmental activities: Year Ending Principal Interest Total 2006 $ 265,133 $ 66,467 $ 331,600 2007 274,117 57,537 331,654 2048 283,404 48,306 331,710 2009 293,007 38,860 331,867 2010 302,934 28,892 331,826 2011 374,084 26,829 400,913 $ 1,792,679 $ 266,891 $ 2,059,570 $6,56fl,pflfl Promissory Note The Village Council adopted Resolution No. 8-97 authorizing the issuance of a note in the principal amount of $6,560,000 to fnance the acquisition, construction, equipping, and improving of a public safety building, a community center, and a recreation building. A portion of the proceeds was also used to refinance an existing loan incurred to make improvements to the Country Club. Franchise fees and public service taxes of the Village secure the promissory note. Principal payments of $190,000 are due semi-annually on January 1 and August 1, with a final maturity date of February 1, 2017. The interest rate is at the London InterBank Offered Rate ("LIBOR") that is 38 THE VILLAGE OF NORTH PALIUI BEACH, FLORIDA Notes To Basic l=financial S#atements Year Ended September 30, 2005 Notes 5 - LGNG-TERM DEBT ~Contir~ued~ Loans Payal,le (continued} defined as 75% of the rate of interest published as one-month LIBOR on the fiirst day of each month. The interest rate will be adjusted by either of the fallowing events: a change in the maximum corporate tax rate, ar the event of taxability of the interest on this note. The effective rate at September 30, 2005, was 1.12% and this approximates the rate that was used to calculate the debt service requirements to maturity. Amounts currently outstanding on the note are as follows: Pur ose Amount Government activities ~ 3.450.000 Annual debt service requirements to maturity are as follows: Year Endin Principal lnterest Total _ 2006 $ 300,000 $ 41,211 $ 341,211 2007 300,000 37,847 337,847 2008 300,000 34,483 334,483 2009 300, 000 31,119 331,119 20010 300,000 21,028 321,026 2011-2013 1,950,000 160,344 2,110,344 $ 3,450,000 $ 326,030 $ 3,776,030 $234,675 Note Payai,le The Village Council adopted Resolution No. 03-2005 authorizing the execution of a loan agreement for the purpose of financing the lease-purchase of $129,675 of equipment for the General Fund and $105,000 of equipment for the Country Club. The loan is secured by the equipment purchased. Principal and interest payments are due monthly, with a fnal maturity date of February 15, 2010. The interest rate on the loan is 3.55%. Amounts currently outstanding on the note are as follows: Purpose Amount Governmental activities $123,997 Business-type activities 100,000 223 997 39 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2445 Note 5 -LONG-TERM DEBT (Continued} Leans Payable tContinued} Annua! debt service requirements to maturity are as follows: Governmental activities: Year Ending Princi al interest Total 20D6 $ 23,442 $ 3,735 $ 27,177 2007 24,282 2,895 27,177 2008 25,153 2,024 27,177 2009 25,055 1,122 27,177 2010 25,065 2,112 27,177 $ 123,997 $ 11,888 $ 135,885 Business-type activities: Year Ending Principal [n#erest Total 2DD6 $ 18,905 $ 3,1D1 $ 22,406 2407 19,583 2,423 22,006 2048 20,285 1,721 22,406 20D9 21,012 994 22,446 2410 24,215 1,791 22,006 $ 10D,ODD $ 10,030 $ 110,430 $271,DD0 and $132,DDD Promissory Notes In January 2003, the Village Council adopted Resolution No. 8-2043 authorizing the issuance of promissory notes to finance various capital expenditures. The notes are payable from the Village's non-ad valorem tax revenues. The $132,D40 note bears interest at 2.93°/fl and is payable in six semiannual payments of $23,158, beginning July 2043 and with final maturity in January 2006. Annua! debt service requirements to maturity for this note, which are payable by the general fund, are as follows: Governmental Activities: Year Ending _ Princi al Interest Total 20D6 $ 22,796 $ 361 $ 23,158 40 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 5. LONG-TERM BEBT ~Cantinued} Loans Payable (Continued) The $271,000 note bears interest at 3.82% and is payable in fourteen semiannual payments of $22,286, beginning July 2003 and with final maturity in January 2010. Annual debt service requirements to maturity for this note, which are payable by the general fund, are as follows: Governmental Activities: Year Endinc,~ Princi al Interest Total 2006 $ 42,718 $ 2,856 $ 45,574 2007 43,502 2,072 45,574 2008 44,300 1,274 45,574 20pg 38,323 333 38,656 $ 168,842 $ 6,536 $ 175,378 $230,000 Promissory Note In January 2005, the Village Council adopted Resolution No. 7-2004 authorizing the issuance of a promissory note to finance various capi#al expenditures. The note is payable from the Village's non-ad valorem tax revenues and franchise fees. The note bears interest at 1.83% and is payable in five semiannual payments of $22,787, beginning August 2004 and with final maturity in January 2009. Annual debt service requirements to maturity for this note, which are payable by the genera! fund, are as follows: Year Endin Principal Interest Total 2006 $ 36,441 $ 8,132 $ 44,573 2007 37,866 5,707 44,573 2008 39,347 5,226 44,573 2009 40,876 3,697 44,573 2010 27,882 2,089 29,971 $ 182,412 $ 25,851 $ 208,263 Capital Leases The Village entered into various lease agreements as lessee for financing the acquisition of equipment. The lease agreements qualify as capital leases for accounting purposes and therefore have been recorded at the present value of the future minimum lease payments as of the date of inception. I-.ease payments will be made from the general fund. 41 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes Ta Basic Financial Statements Year Ended September 30, 2005 NOTE 5. LONG-TERM DEBT (Continued) Loans Payable (Continued) The assets acquired through capital leases are as follows: Governmental Activities Assets Vehicles $ 1,086,567 Less: Accumulated depreciation (676,981 } Total $ 409,586 The future minimum lease obligations and the net present value ofi these minimum lease payments as of September 30, 2005, were as follows: Year finding Principal Interest Total 2006 $ 155,325 $ 12,607 $ 167,932 2007 103,886 7,615 111,701 2008 16,629 1,251 17,880 Total $ 275,840 $ 21,673 $ 297,513 NOTE 6. RISK MANAGEMENT The Village is exposed to various risks of loss related to torts: theft af, damage to, and destruction of assets; errors and omissions; and natural disasters. The Village currently reports ail of its risk management activities in the general fund. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. Employee Benefits Group The Village is self insured to provide group medical coverage. A third parry administers the group medical coverage far the Village. The Village funds its fosses based an actual claims. A stop loss insurance contract executed with an insurance carrier cavern individual claims in excess of $35,000 per plan year. There were no signifcant changes in insurance coverage from the prior year and the amount of settlements did not exceed insurance coverage for the last three years. The liability for unpaid claims, if any, is estimated using an industry average that is based an actual claims paid. As of September 30, 2005, the Village had no claims liability for its employee benefit plan because Village contributions exceeded claims for the year. Changes in the claims liability since September 30, 2005, are as follows: 42 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 6. RISK MANAGEMENT (Continued} Claims and Year Ended Claims Liability Changes in Claim Claims Liability September 30, Be~inninq of Year Estimates Payments End of Year 2001 $ 128,29fi $ 484,762 $ (579,958} $ 33,100 2002 33,100 1,210,299 (1,097,504} 145,895 2003 145,895 1,632,265 (1,585,596} 192,564 2004 192,564 1,397,715 (1,248,279} 342,000 2005 342,000 - (261,SO5} 80,195 Property and Casualty Group The Village also participates in Southeast Risk Management Association (SERMA}, a quasigovernmental agency created by an interlocal agreement, as authorized by Chapter 163, Florida Statutes. SERMA administers the property and casualty coverage for the Viilage. The Village and other participating members pool fiheir resources sa as to provide a comprehensive risk management program, including insurance coverage, whose cost is less than the cost of each municipality obtaining insurance separately. The members are subject to supplemental assessments in the event of deficiencies, except that to the extent that deficiencies result from a specific claim against a member in excess of the reinsurance available, such deficiency is solely the responsibility of that member. SERMA reinsures for workers compensation and property claims in excess of $250,000. The Village is also covered by Florida Statutes under the Doctrine of Sovereign Immunity which effectively limits the amount of liability of municipalities to individual claims of $100,000!$200,000 for aU claims relating to the same incident. There were no changes in insurance coverage from the prior year and the amount of settlements did not exceed insurance coverage far the last three years. At September 30, 2005, there were na liabilities recorded for property and casualty, based on a recent actuarial valuation, which indicated that the reserve for incurred but not yet reported losses was adequately funded, and no additional contributions are required. NOTE 7. PENSION PLANS The Village maintains the fallowing two separate single employer defined benefit plans: Village of North Palm Beach l=ire and Police Retirement 1=und, covering fire fghters and police officers, and Village of North Palm Beach General Employees Retirement Fund, covering substantially all other full-time Village employees. Both plans are reported as pension trust funds and included as part of the Village's reporting entity. The Police and 1=ire Fund will issue separate financial statemen#s for the year ended September 30, 2005; the General Employees Plan will not issue separate financial statements. Additional information on these plans can be found beginning on page 55. Each plan's financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. 43 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 7. PENSION PLANS (Continued) Each plan has its awn board that acts as plan administrator and trustee: Board of Trustees (for the Fire and Police Retirement Fund) and General Employees Retirement Board. Each plan's assets may only be used for the payment of benefits to the members and beneficiaries of the plan in accordance with the terms of each plan document. The costs of administering each plan are financed in the appropriate pension trust fund. The Florida Constitution requires local governments to make the ac#uarially determined contribution. The Florida Division of Retirement reviews and approves each focal government's actuarial report prior to its being appropriated for use far funding purposes. Additionally, the State collects two locally authorized insurance premium surcharges (one for the Police Pension Plan on casualty insurance policies and one for the Fire Pension Plan on certain real and personal property insurance policies within the corporate limits} which can only be distributed after the State has ascertained that the local government has met its actuarial funding requirement for the then most recently completed fiscal year. lnvestments are reported at fair value and are managed by third party money managers. The Village's independent custodians and individual money managers price each instrument using various third party pricing sources. The following investments represent concentrations of 5% or more of net plan assets in investments that are not issued or guaranteed by the IJ.S. government. Genera! Employees Retirement Fund No nongovernmental investments exceed 5% of net plan assets. Fire and Police Retirement Fund No nongovernmental investments exceed 5% of net plan assets. The following schedule is derived from the respective actuarial reports and Village information fear the two pension plans as of October ~ , 2004: General Employees Fire and Police Plan Description: Authority Village Ordinance Village Ordinancel5tate Asset Valuation: Reporting Fair Value Fair Value Actuarial Valuation 5~year smoothed market 5-year smoothed market Legal Reserves None None Long-Term Receivable Nane None lnternallParticipant Loans None None 44 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2DD5 NOTE 7. PENSION PLANS (CONTINUED) Membership and Plan Provisions: Members: Active Participants 94 38 Retirees and Beneficiaries 13 3 Terminated Vested 35 12 Normal Retirement Benefits: Option 1 Option 2 Retirement Age 65 60 55 Years of Service (minimum) 5 5 9 Accrual - (years 1-20) 2.DD% 2.25% 2.50% (over 2D) 1 % 1 % - Maximum None None 60% Years to Vest 10 Under 5 years 0% 0% 5 or 6 years 50% 50°/fl 7 or 8 years 75% 75% 9 or more years 100% 100% Contributions: Actuarial Rate: Village 22.66% 3.5D% State nla 5.D9% Participants fi.00%* 2.OD% Annual Pension Cost $ 669,011 $387,647 Contributions Made $ 79D,858 $652,959 *Except for certain members who have elected not to contribute and for other members who have elected to contribute only 2.00% or 4.00%_ General Employees Fire and Police Actuarial Valuation: Frequency Annual Annual Latest Valuation 1011104 1011104 Basis for Contribution 1011!04 10111D4 Cast Method 1=cozen Entry Age Aggregate Amortization: Method Level percent nla Period 29 years nla OpenlClosed Closed nla 45 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 7. PENSION PLANS (Continued} Note: The aggregate actuarial cost method does not identify ar separately amortize unfunded actuarial liabilities. Assumptions: investment Earning (including inflation) 8.5% 1 year up to retirement, 5.25% thereafter 8.0% 1 year Salary increases (including inflation) 5.5% 1 year 6.0% 1 year Inflation 4.0% 1 year 4.0% 1 year Mortality Rates '1983 Group Annuity 1983 Group Annuity Mortality Table Mortality Table Retirement Age: Eligible for early retirement 5% 5% Normal retirement date attained 60% 60% Four years after normal retirement date 40% 40% Fifth year after normal retirement date 100% 100% Turnover: Age 25 18.8% 8.6% Age 30 11.2% 7.5% Age 35 6.3% 5.7% Age 40 4.8% 3.9% Age 45 3.4% 2.4% Age 50 2.4% 1.2% Age 55 0.5% Past Retirement Benefits 3% far those who retired 3% 1 year before 211182 or who contribute an extra 2% 46 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 7. PENSION PLANS (Continued) There have been no changes in actuarial assumptions and methods for either plan since the last actuarial valuation (October 1, 2D03}. Annual Pension Cost and Net Pension Obligation (Asset}: The Village's annual pension cost and net pension obligation (asset) for both plans for the current year were as follows: Genera{ Fire and Em la ees Police Totals Annual required contribution $ 662,237 $ 509,800 $ 1,172,fl37 Interest on net pension asset (15,458} {8,578} (24,036) Adjustment to annual required contribution 22,232 12,570 34,802 Annual pension cast 669,011 513,792 1,182,SD3 Contributions made 790,858 652,959 (1,443,817)_ Decrease (increase) in net pension asset (121,847} {139,167} (261,014) Net pension asset, beginning of year (181,411 } _ (243,717)_ (425,128) Net pension asset, end of year $ {303,258} $ (382,884) $ (686,142 Three-Year Trend Information Annual Percentage Net Pension Year Pension Annual of APC Obligation Ended Cost (APC Contribution Contributed Asset General Employees 9130102 $ 435,473 $ 467,750 107.40% $ (193,873) 9130103 509,583 503,220 98.75% (187,510} 9130104 53D,D99 524,DD0 98.85% {181,411 } 9130105 Fire and Police 9130102 133,722 146,277 109.39% (109,993) 9130103 372,967 369,642 99.11 % (106,668} 9130104 3$7,647 388,200 100.14% (107,221 } 9130105 To be determined >}y actuary NOTE 8. CONTRACTS AND COMMITMENTS Operating Leases The Village is committed under a lease agreement for golf carts in the enterprise fund. The lease is considered for accounting purposes to be an operating lease. Lease payments for the year ended September 3D, 2005 were $47,760. Future minimum lease payments are $47,760 far the year ending September 30, 2006. 47 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes To Basic Financial Statements Year Ended September 30, 2005 NOTE 8. CONTRACTS AND COMiVIITMENTS (CONTINUED} Operating Leases (contin[aed} The Village is also committed under a lease agreement far two police motorcycles in the general fund. The lease is considered for accounting purposes to be an operating lease. Lease payments for the year ended September 30, 2005 were $8,000. Future minimum lease payments are $6,000 for the year ended September 30, 2008. The Village is committed under a lease agreement as lessor of the food and beverage operations at the North Palm Beach Country Club. The lease is considered far accounting purposes to be an operating lease. As part of the lease agreement, the Village receives a percentage of sales of the lessee and reimbursements for utilities and financed assets. The Village received $'106,749 for the year ended September 30, 2005 under the terms of this lease agreement. Future minimum lease payments far the year ending September 30, 200r? are contingent upon sales and expenses of the operations of the lessee. NOTE 9. JOINTLY GOVERNED ORGANIZATION The Village, through an interlocal agreement with certain other municipalities and Palm Beach County, created the Seacoast Utility Authority {"Seacoast"} which provides wafer and sewer service to the citizens of each of the participating municipalities and a portion of Palm Beach County. Seacoast's governing board is comprised of one member from each participating entity. Seacoast is an independent Authority organized under the laws of the State of Florida, and the Tl~e Village has no participating equity ownership in Seacoast. The Village paid $73,088 to 5eacoas# during the fiscal year for water and sewer service. NOTE 1D. POST EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS In addition to the pension benefits described in Note 7, the Village provides postretirement health care and life insurance benefits, in accordance with State Sta#utes, to aI1 employees who retire from the Village. The normal retirement age for police and firefighters is age 55; the normal retirement age for all other Village employees is either age 6a or age 65, depending on the option selected by the employee. The employee's required contribution is the full amount of the annual premium. Expenditures for post-retirement health care and life insurance benefits are recognized as expenditures as claims are paid. NOTE 'I'I . VOLUNTEER FIREFIGHTERS PENSION The Village maintains a Length of Service Award Pension Plan that cavern substantially all volunteer firefighters in the Village of North Palm Beach. The plan is reported as a pension trust fund and is included as park of the Village's reporting entity. The plan does not issue astand-alone financial report. The plan's financial statemenks are prepared using the accrual basis of accoun#ing. The plan is noncontributory far members. Employer contributions to the plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. ~48 THE VILLAGE OF NORTH PALM BEAGH, FLORIDA Nofies To Basic Financial Statements Year Ended September 30, 2005 NOTE '{1. VDLUNTEER FIREFIGHTERS PENSION CONTINUED} Members are eligible to participate in the plan after one year of completed service and are entitled to receive benefits at age fi5. One hundred percent vesting is achieved after ten years of service, with A-0 percent vesting after four years. The monthly retirement benefit is $10 times each year of completed service, with a maximum monthly benefit of $300 and a minimum of $5D. The plan contains a death beneft that is the greater of $30,000 or the accrued benefit due at date of death. Flan assets are held by Hartford Life. 49 THE VILLAGE OF NORTH PALM BEACH, 1=LORlDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND Year Ended September 30, 2005 Budgeted Amounts Actual on Variance with Budgetary Final Budget Original f=inal Basis Favorable Budget Budget {see Note 1) (Unfavorable) Budgetary fund balance, October 1. 2444 $ - $ - $ 1,531,'191 ~ 1,531,191 Resources (inflows) Taxes 12,767,797 12,767,797 13,23fi,952 469,155 Licenses and permits 69D,020 69D,020 1,131,903 441,883 Intergovernmental 1,191,795 1,221,575 1,481,864 260.289 Charges for services 675,964 645,890 647,915 2,025 Fines and forfeitures 84,300 108,890 234,513 125,623 FEMA reimbursements - 863,000 1,323,121 440,121 Investment income 25,040 25,OD0 187,161 162,161 Miscellaneous 7,OD0 12,500 83,025 7D,525 Bank loan 123,5D0 123,500 123,500 - []ue from Recreation Fee Reserve 26,100 26,100 - (26,104} 15,591,492 16,504,272 18,449,954 1,945,682 Amounts avallabla forapproprlation 15,591,492 16,504,272 19,981,145 3,476,673 Charges to approprlattons louEflowsl Village council expenses 5alariesandwages 31,200 31,200 32,454 (1,254) Benefts 4,727 4,727 4,623 {96) pperatingcosts 32,435 32,435 3D,175 2,264 Advisory Board Dinner 5,50D 5,500 3,564 1,936 Accounting and audit 59,OD0 59,OD0 35,389 23,611 .Repairs and maintenance 500 500 465 35 Total Village Council Expenses 133,362 133,362 106,870 26,492 Village manager expenses Salaries and wages 266,738 268,738 272,873 (4,135) Benefits 109,257 109,257 115,OBD (5,823} Operating costs 44,105 44,105 12,fi73 31,432 Materials and supplies 6,050 6,050 3,4D5 2,645 Utilities B,iDO 8,1D0 8,339 (239} 3alat Village Manager Expenses 436,250 436,25D 412,37D 23,880 Village clerk expenses Salaries and wages 170,253 170,253 130,938 39,315 9enefits 64,84D 64,$40 62,143 2,697 Operatingcosts 1D,456 10,456 5,$16 4,644 Materials and supplies 3,070 3,070 2,982 88 Repairs and maintenance 1,495 1,095 926 169 utilities 2,4D0 2,4DD 1,802 596 Capitatouilay 4,050 4,05D 1,735 2,315 Tole! Village Clerk Expenses 256,164 256,164 206,342 49,822 Fnance expenses Salaries and wages 346,417 308,417 279,796 28,621 Benefits 124,938 124,93E 115,781 9,177 pperatirtg casts 39,35D 39,350 30,714 8,636 Materials and supplies 7,000 7,000 10,740 {3,740) Repairs and maintenance 1,5D0 1,500 2,621 (1,121 } Utilities 4,30D 4,30D 3,586 714 Capital outlay 6,6D0 6,6DD 9,914 {3,314) Total Finance Expenses 492,105 492,145 453,132 38,973 50 See notes to required supplementary information. THE VILLAGE OF NORTH PALM BEACH, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND Year Ended 5epternber 30, 2005 Budgeted Amounts Actual on Variance with 13udgetary f=inal Budget Original Final Basis 1=a~orab[e Budget Budget _ See mote 1) {Unfavorable) Village attorney expenses Legaliees 85,000 85,000 73,934 11,066 special legalservicas 20,OD0 2D,000 21,525 (1,525} Labor services 15,000 45,000 42,128 2,872 Total Village Att4mey Expenses 120,DD0 150,OD0 137,587 12,413 Planning & comm. bevel. Exp Operating casts 43,5DD 53,500 27,478 26,022 Total Planning & Camrn. bevel. Exp 43,500 53,500 27,478 26,022 Gen. Serv. Exp.-Vlg hall Operaiingcosis 257,6D0 257,fi00 176,443 81,157 Materials and supplies 3D,750 30,750 21,773 8,977 Repairs and maintenance 2,50D 2,500 5,041 (2,541 } utilities 17,300 17,3DD 24,464 (7,164} Capital outlay 1,300 1,30D - 1,300 Tote! Gen. Senn. Exp.-Vlg Hall 309,450 3D9,45D 227,721 81,729 Gen. Serv. Exp: P. Saf. Bldg Operating costs 11,10D 11,100 11,121 (21) Materials and suppties 14,14D 14,140 10,501 3,639 Repairs and maintenance 17,5170 17,500 11,207 fi,293 utilities 86,134 86,134 11D,566 (24,432} Capitatoutlay 2,OOD 3,129 3,126 1 Total Gen. Serv. Exp.- P. Saf. Bldg 130,874 132,003 148,523 (14,524} Facilities Maini. Expenses safaris and wages 293,139 293,139 291,SOD 1,639 Benefits 125,170 145,170 130,168 15, 002 Operating casts 3,750 3,750 2,623 1,127 Materiats and supplies 9,780 14,780 11,183 3,597 Repairs andmalntenance 1,500 1,500 1,65D (150} Total Facilities Malnt. Expenses 433,339 458,339 437,124 21,215 Vehicle maim. Expenses Salaries and wages 104,199 108,199 1 D7, 915 284 Benefits 43,995 45,995 47,595 (1,600) Operating casts 4,ODD 4,000 3,972 28 Materials and suppties 12,375 12,375 13,336 (961) Repairs and maintenance 5,BOD 5,800 4,379 1,421 uiitilies 6,60D 6,600 8,012 (1,412} capital outlay 17,ODD 17,000 - 17,000 Tafal Vehicle Maint Expenses 189,969 199,969 185,209 14,760 Reserves expenses Salaries and wages -performance raise 320,000 526,35D 161),489 365,861 Benefits 286,350 22,D00 756 21,244 Group health 650,000 65D,000 646,048 3,952 Reserve for gas tanks 50,000 5D,000 - 50,000 Council Contingency 72,131 {2,869} 10,000 {12,869) T2nsfer to Capital Proj - 3D,OD0 30,000 - Village Manager Gontingency 10,OD0 14,000 - 10,D00 Other 22,000 883,OD0 84D,007 42,993 Total Reserves Expenses 1,410,481 2,168,481 1,687,300 481,181 51 See notes to required supplementary information. THE VILLAGE OF f~ORTH PALM BEACH, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND Year Ended September 30, 2045 Budgeted Amounts Actual on Variance with Budgetary Final Budget Original final Basis Favorable Budget Budget (See Note 1} {Unfavorable)_ Police expenses salaries and wages 2,243,795 2,283,795 2,340,550 (56,755) Benefits 651,939 861,939 863,874 (1,935} Operating costs 153,672 153,872 97,082 56,79D Materials and supplies 96,196 96,196 95,252 944 Repairs and maintenance 57,44D 57,440 47,123 1D,317 utilities 8,DD0 8,000 6,088 1,912 capital outlay 204,6D0 203,471 126,680 76,791 Total Police Expenses 3,615,842 3,864,713 3,576,649 88,064 Fire preventien expenses salaries and wages 545,367 545,387 553,221 (7,634) Benefits 211,220 211,22D 216,550 (5,330) Operating casts 49,564 49,564 34,86D 14,7D4 Materials and supplies 21,390 21,38D 13,591 7,799 Repairs and maintenance 12,1DD 12,100 13,172 (1,072} utilities 720 720 (418) 1,138 Capital outlay 86,50D 86,5DD - 86,5D0 Tafa1 t=ire Preveniian Expenses 926,$81 926,881 830,976 95,905 pevelopmeni, licensing & code admin satariesandwages 38D,013 38D,013 358,34D 21,673 Benefits 143,343 143,343 135,694 7,649 Operating costs 33,35D 33,3SD 76,404 (43,054} Materials and supplies 14,5DD 14,5DD 13,607 893 Repairs and maintenance 2,ODD 2,000 - 2,000 utilities 16,D00 16,OD0 15,937 63 Capital outlay - - Total Puhlicserv. Admin. Expenses 589,206 589,206 599,962 (1D,77fi) Emer. Mod. Sure. Expenses salaries and wages 726,939 728,939 743,309 (14,370) Benefits 274,147 274,147 282,251 {8,104) Operating casts fi2,328 62,328 48,027 14,301 Materials and supplies 43,714 43,714 33,493 10,221 Repairs and Maintenance 11,25D 11,25D 9,249 2,001 utiliites 9,892 9,892 7,967 1,925 Capttal auttay 5,8DD 35,580 35,460 120 Total Emer. Med. serv. Expenses 1,136,070 1,165,650 1,159,756 6,D94 Sanitation expenses Salaries and wages 678,873 678,873 665,946 12,927 Benefits 3D2,73D 302,73D 311,020 {8,294} Operating costs 153,300 153,30D 131,847 21,453 Materials and Supplies $9,700 89,7DD 1 i2,52D (22,820} Repairs and Maintenance 10,200 10,20D 8,915 1,285 Capital outlay 120,000 12D,D00 - 12D,OD0 Total Sanitation Expanses 1,354,803 1,354,803 1,230,248 124,555 52 See notes to required supplementary information. THE VILLAGE DF NORTH PALM BEACH, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND Year Ended September 30, 20D5 Budgeted Amounts Actual an Variance with Budgetary Fina[ Budget Original Fina! Saris Favarab[e Budget Budget (see Nate 1} Unfavorable} Street maim. Expenses Salaries and wages 399,182 399,182 381,770 17,412 Benefits 176,945 176,945 188,552 {11,607) 4peraling costs 26,300 2fi,300 16,955 9,345 Materials and Supplies 78,700 78,700 78,090 610 Repairs and Maintenance 247,000 247,OOD 445,384 {198,384) Utilities 77,000 77,000 88,201 (11,201) Capital outlay 62,D00 62,OOD fi1,822 178 Total StreetMaint.Expenses 1,067,127 i,0fi7,127 1,260,774 (193,647} Library expenses Salaries and wages 402,056 402,056 345,660 56,396 i3enetits 147,002 14T,002 139,784 7,218 operating costs 10,218 10,218 46,610 (36,592) Materials and Supplies 11,525 11,525 9,064 2,461 Repairs and Maintenance 9,075 9,075 5,083 3,992 utilities 27,700 27,700 30,494 {2,794} capital outlay 88,807 88,807 85,813 2,994 Tola€ L'sbrary Expenses 696,383 696,383 662,708 33,875 Park maim. Expenses Salaries and wages 227,643 227,643 231,566 (3,923) 9enefits 109,821 149,821 117,582 (7,761) operating costs 14,050 14,050 11,114 2,936 Materials and Supplies 65,700 65,7D0 59,407 6,293 Repairs and Maintenance 5,500 5,500 4,883 617 Utilities 3,500 3,500 4,246 {746) Capita! outlay 38,37fi 38,376 37,597 779 Tale! Park Maint. Expenses 464,590 464,590 46$,395 (1,805) Recreation expenses Salaries and wages 347,164 347,689 344,595 3,094 Benefits 116,352 115,827 117,154 (1,327} Operating costs 27,160 27,160 31,516 (4,356} Materials and Supplies 35,000 35,000 24,000 11,000 Repairs and Maintenance 34,000 34,000 17,909 16,091 utilities 92,000 92,000 92,709 (709) capital outlay 40,920 40,920 18,466 22,454 Total Recreation Expenses 692,596 692,596 846,349 46,247 Special events expense operating casts 60,000 60,000 57,783 2,217 Materials and5upplios 3,100 3,100 2,092 1,008 Capital outlay 10,200 10,20D 7,882 2,318 Total SpeclaE Events Expense 73,300 73,300 67,757 5,543 Village Paol Salaries and wages - - 1{70 (100} _ ~ E3enefits _ 28 (2$} Utilities " 7o1a1 Village Pool Expense - - 136 {13fi) ?eht service expenses oehtservlcepayments 1,019,200 1,019,200 1,054,458 {35,258) TotaloehtServ'sceExpenses 1,019,200 1,019,200 1,054,458 {35,256) 53 See Hates to required supplementary information. THE VILLAGE OF NORTH PALM BEACH, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND Year Ended September 30, 2QQ5 Budgeted Amounts Actual on Variance with Budgetary Final Budget Original Final Basis Favorable Budget Budget (See Nate ~ (Unfavorahle~ Total oxpenditureslcharges to appropdations 15,581,492 16,504,272 15,583,844 920,428 Nnn-Revenue Bank loan Que from Rncrealion fee Reserve - ' Total Non-Revenue ' Total expenditureslcharges to appropriations 15,591,492 16,504,272 15,583,844 920,428 Budgetary fund balance, September 30, 2005 $ - $ - $ 4,397,301 $ 4,397,301 54 See notes to required supplementary in#ormatian. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Fundin Pro ress -Genera! Em b ees Refinement Fund Actuarial UAAL as Actuarial Accrued % of Actuarial Value of liability {AAL} Unfunded AAl Funded Covered Covered Valuation Assets -Entry Age {UAAI) Ratio Payroll Payroll Date {a) {b) {b-a} {aIb) {c) {b-a}Ic 10/1/1999 5,179,781 5,943,849 764,D68 87.1% 2,543,984 30.0% 101112000 5,732,329 7,508,961 1,776,632 76.3% 2,761,773 64.3% 10/1/2001 6,312,447 8,150,125 1,837,67$ 77.5% 3,127,313 58.8% 1011!2002 $,193,676 8,594,442 2,400,766 72.1 % 3,076,493 78.0% 10/1/2003 6,759,012 10,404-,349 3,645,337 65.0% 3,443,843 105.9% 10/112004 6,578,832 12,08/4,785 5,505,953 54.4% 4,275,9$1 12$.$% See notes to required supplementary information. 55 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Em fo er and State Confribufions Annual Year Ended Required Employer State Percentage September 30, Contribution Contribution Contribution Contributed General Employees Retirement Fund 2000 292,866 372,744 nla 127.3% 2001 415,152 447,128 nla 107.7% 2002 430,411 467,750 nla 108.7% 2003 502,855 503,220 nla 100.1 2004 523,127 524,000 nla 100.2% 2005 662,237 790,858 nla 119.5% Fire and Police Retirement Fund* 2000 97,135 53,067 73,123 129.9% 2001 85,866 25,607 77,227 119.8% 2002 130,305 57,825 $$,452 112.3% 2003 369,089 235,339 159,943 107.1 2004 383,891 250,000 203,317 118.1 2005 509,800 443,737 159,961 118.4°/a Annual required contributions for the Fire and Police Retirement Fund include contributions from the State of Florida. 56 See notes to required supplementary information. The Village of North Palm Beach, Florida Notes to Required Supplementary information Year Ended September 30, 20Q5 NOTE 1. BUDGETARY DATA As required by GASB Statement No. 34, a budgetary comparison schedule is presented for the general fund. Budgetary comparison schedules are not required, and have not been presented for capital projects funds or enterprise funds. The budget for the general fund is adopted on an accounting basis that differs from generally accepted accounting principles (GAAP) because it includes open encumbrances as expenditures. ©ifferences between budgetary inflows and outflows and GAAP revenues and expenditures are as foliows: Genera! Fund Sourcesl[nflows of resources: Actual amounts (budgetary basis) "availabie for appropriations" from the Budgetary comparison schedule $19,981,145 Differences -budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not acurrent-year revenue for financial reporting purposes (1,531,191) Total revenues as reported on the statements of revenue, expenditures and changes in fund balances -governmental funds $18,449,954 UseslOufiflows of resources: Actuai amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule $15,583,844 TotaC expenditures, as reported on the statement of revenues, expenditures, and changes in #und balances -governmental funds $15,583,844 Budgefiary fund balance: Actual fund balance (budgetary basis) from the budgetary comparison schedule $4,397,3eJ1 Differences -budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not acurrent-year revenue far financial reporting purposes (1,531,191) Net change in fund balances, as reported on the statement of revenues, expenditures and changes in fund balances -governmental funds $ 2,866,110 57 The Village of Nori€h Palm Beach, Florida Notes to Required 5uppiementary Information Year Ended Sep#ember 30, 2DD5 NOTE 2. 5TEWARDSHIP, COMPLIANCE AND ACCOUNTA6ILITY Unencumbered appropriations lapse at fiscal year end. Encumbrances at year-end are carried forward to the next year. During the year, several supplementary appropriations were necessary. Far the year ended September 30, 2004, several expenditures exceeded appropriations in the general fund. They are as follows: Expenditures far Capital Outlay -Computer Hardware and Software in Village Manager and in Finance; and Automotive in Fire Prevention and in Park Maintenance were not budgeted because They were funded through issuance of bank loans. Expenditures for Outside SeNICBS Pay and Donations in Law Enforcement exceeded appropriations because these are not budgeted items. Expenditures for Library Contribution Usage exceeded appropriations because this is not a budgeted i#em. Expenditures for Health Insurance in all departments exceeded appropriations due to increases in health care casts. NOTE 3. PENSION PLANS The aggregate actuarial cost method does not identity ar separately amortize unfunded actuarial liabilities. The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the .dates indicated. Additional information as of the latest actuarial valuation follows: General Fire Employees and Police Valuation date ~ 011104 10!1104 Actuarial cost method Frozen Entry Age Aggregate Asset valuation method 5-year smooth market. 5-year smoothed market Actuarial assump#ions: investment rate of return (including 8.5%lyear up fa retirement, 8%lyear inflation) 5.25% thereafter Salary increase {including inflation) 5.5%Iyear 6%lyear inflation 4%lyear 4%lyear Past retirement benefit increases 3%1 ear for those who rekired 3%l ear 58 THE VII-CAGE OF NORTH PALM BEACH, FLORIDA COMBINING STATEMENT OF NET ASSET5 - FIDIJC[ARY FUNDS SEPTEMBER 30, 2QQ5 Employee Retirement Funds Agency Funds Fire and Total Volunteer General Paiice Empioyee Manatee Northiake Total Fire Employees Officers Retirement Protection Boulevard Agency Pension Pension Pension Funds Agency Task Force Funds ASSETS Cash and cash equivalents $ - $ 520,861 $ 2,365,237 $ 2,886,098 $ 238,341 $ 27,135 $ 265,476 Investments: Common stack - 2,293,122 4,451,272 6,744,394 - - - U.S. Gavemment securities - - 1,060,477 1,060,477 - - - Corparata bonds - 1,172,375 541,180 1,713,555 - Fixed funds 58,539 - - 58,539 - Equity funds 7,514 - - 7,514 - - Interest receivable - - 18,{133 18,033 - - - Accounts Receivable - - 49,262 49,262 - 638 638 Tata[ assets 66,053 3,986,358 8,485,461 12,537,872 $ 238,341 $ 27,773 $ 266,114 LIABILITIES pue to Others - - - 238,341 27,773 266,114 Totalliabilitles - _ - - $ 238,341 $ 27,773 $ 266,114 Net Assets Held in trust far pension benefits $ 66,053 $ 3,986,358 $ 8,485,461 $ 12,537,872 59 THE VILLAGE OF NORTH PALM BEACH, FLORIDA COMBINING STATEMENT OF CHANGES fN NET ASSETS EMPLOYEE RETIREMENT FUNDS Year Ended September 3Q, 2Q05 Employee Retirement Funds Fire and Total Volunteer General Police Errtployee Fire Employees Officers Retirement Pension Pension Pension Funds Additions: Contributions: Employer $ 9,905 $ 79(},858 $ 443,737 $ 1,244,500 State of Florida - - 209,222 209,222 Plan members - 168,101 77,563 245,664 Total contributions 9,945 958,959 730,522 1,699,386 Investment income: Interest and dividends 2,199 6,761 209,823 218,783 Net appreciation in fair value of investments 4fi 473,016 398,906 871,970 ]nvestmentexpense - (31,024) (37,765) (68,789) Total investment income 2,245 448,753 570,966 1,021,964 Total additions 12,150 1,407,712 1,301,488 2,721,350 Deductions: Administration - 23,814 53,375 77,189 Benefits - 4,002,794 31,727 4,034,521 Total deductions - 4,026,608 85,102 4,111,710 Net increase (decrease) 12,150 (2,618,896) 1,216,386 (1,390,360) Net assets held in trust for pension benefits, beginning of year 53,903 6,605,254 7,269,075 13,928,232 Net assets held intrust for pension her~efts, end of year $ 66,053 $ 3,986,358 $ 8,485,461 $ 12,537,872 60 THE VILLAGE DF NORTH PALM BEAGH, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES Agency Funds September 30, 2~Q5 October 1, 2004 Additions Deductions September 3D, 2005 Manatee Protection Agenc Assets Cash and Cash Equivalents ~ 232,010 $ 6,330 $ - $ 238,340 Total assets $ 232,010 $ fi,330 $ - $ 238,340 Liabilities Due to Others $ 232,010 $ 6,330_ $ - $ 238,340 Total liabilities $ 232,010 $ 6,330 $ - $ 238,340 Northiake Boulevard Task Force Assets Cash and Cash Equivalents $ 40,074 $ ZO,i82 $ 33,120 $ 27,136 Accounts receivable - 638 - 638 Total assets $ 40,074 $ 20,820 $ 33,1,20 $ 27,774 Liabilities Accounts Payable $ - $ - Due to Others 40,074 12,300 27,774 Totai liabilities $ 40,074 $ - $ 12,300 $ 27,774 Total AEI Agency Funds Assets Cash and Cash Equivalents $ 272,084 $ 26,512 $ 33,120 $ 265,476 Accounts receivable - 638 - 638 Total assets $ 272,084 5 27,150 $ 33,120 $ 2fi6,114 Liabilities Accounts Payable $ - $ - $ - $ - Due to Others 272,084 6,330 12,3110_ 266,114 Total liabilities $ 272,084 $ 6,330 $ 12,300 $ 266,114 61 STATISTICAL 5ECT14N pypRlflA In'~erest Qn Countr)? ~E~Gti1= yong-term Ctub p~G~ OF ~OR~s P ~Y ~ fiction peb~ _ yeisure pfiher _ $ V1LL Wide Expen public gervice$ _ ent- public se~iees _ GeWert~m ~isoer sears ~ ~enerai $ - - ~,est Ten r Sa~etY _ $ - - - FiscaiYea Totai Government - $ - - - ~nded ~xPenses _ $ - - - $eptember $ _ $ - _ ~ ~ 002~~60 .19g6 ~ ~ - ~- 2,076=383 '1g97 _ - _ ~ ~ci6~,p72 _ ~ S0~0 2,587 ,69 ~ g 7g 27~ ~ 240=5q~3 ~ 539 77~ - 233 2,607,E '199 645 3 482.`75 .1' 280,83 g42,56~ 5,'195,338 8 , 200 '15,'134186 1,47$~~ 333 ~'S49,'17 1 635,78' 2 7 ~ r2~4,~99 ~,Og~ 305 ' 2002 '15,804°$07 2,832,460 6,p3~'1846 2003 '15,5~'4,7~0 2,~127,50g 2004 '1$ 4~q.'450 2p05 got availeble prior to 2002 Informeit~ort 62 Table it THE VILLAGE OF NORTH PALM BEACH, FLORIDA Government-wide Revenues Last Ten Fiscal Years 1 Program Revenues Genera! Revenues Fiscal Year Charges Operating Capital Unrestricted Unrestricted Ended Total for Grants and Grants and Grants and Investment September 3U, Revenue Services Contributions Contributions Taxes Contributions Earnings Miscellaneous 1996 $ - $ - $ - $ - $ - $ - $ - $ - 1997 - ~ - - - - - 1998 - ~ - - - - - - 1999 - - ~ - - - - - 2000 - - - - - - - - 2ao1 - - - - - - - - 2002 13,548,953 3,820,786 94,252 92,461 9,054,515 - 145,313 341,626 2x03 14,877,203 4,013,522 82,134 112,560 10,158,648 276,302 79,609 154,428 2004 17,167,407 4,219,832 89,362 _ 12,374,633 291,710 57,050 134,820 2005 21,007,280 4,678,230 1,392,729 - 14,193,801 421,254 209,339 111,927 (1 }Information not available Prior to 2002. 63 Table lil THE VILLAGE OF {NORTH PALM BEACH, FLORIDA Genera! Governmenfa! Expendlfures by Function Last Ten Fiscal Years Fiscal General Public Public Leisure Capital debt Year Government Safety Services Services Outlay Services Other Total 1996 948,997 $ 2,705,393 $ 2,412,502 $ 690,046 $ 527,fi99 $ 41,696 $ 138,020 $ 7,464,353 1997 928,801 2,759,664 2,439,231 712,690 856,302 109,778 253,000 8,059,4fi6 1998 947,839 2,865,117 2,425,110 791,373 332,324 79,930 194,306 7,635,999 1999 1,172,478 2,944,489 2,491,317 856,945 739,316 146,317 569,D38 8,919,9DD 2000 1,211,4-03 3,191,976 2,806,141 991,603 727,258 765,297 442,494 1D,136,172 2001 1,220,944 3,701,807 2,918,996 1,038,304 433,970 782,190 303,178 10,399,389 2002 1,344,492 4,263,883 3,265,242 1,081,833 1,085,684 1,025,047 434,199 12,500,380 2003 1,3fi0,072 4,758,982 3,285,603 1,218,158 1,054,207 1,076,072 1,298,492 14,049,584 2D04 1,532,561 5,019,361 3,280,274 1,256,066 430,113 995,764 844,730 13,358,869 2005 1,571,500 5,713,904 5,019,739 1,376,950 - 1,054,458 817,293 15,553,844 Note: The above expenditures are fior the general fund. 64 Table lV THE VILLAGE OF NDRTH PALM BEACH, FLORIDA Genera! Governmentai Revenues by Source Last Ten Fiscal Years Licenses Charges Fines ln~es#- Fiscal and Inter- for and ment Year Taxes Permits governmental Services Forfeitures Income Miscellaneous Total 1996 $ 5,429,150 $ 453,912 $ 1,352,609 $ 219,447 $ 97,886 $ 248,700 $ 93,635 $ 7,895,339 1997 5,627,038 366,031 1,172,716 275,100 156,281 201,759 129,890 7,928,815 1998 6,116,651 509,055 1,379,295 342,863 128,140 213,637 96,113 8,785,754 1999 6,528,207 543,650 1,144,583 357,336 119,185 239,372 95,893 9,028,226 2DD0 6,794•,249 756,419 1,273,110 437,811 149,690 29D,413 139,419 9,841,111 2001 7,686,039 917,166 1,336,664 492,830 244,921 247,931 108,551 11,034,102 2002 $,197,886 648,873 1,267,331 521,66D 168,995 85,239 123,574 11,013,558 2003 9,292,822 686,548 1,280,228 665,496 113,391 54,554 138,945 12,231,984 2004 11,439,823 712,184 1,350,104 719,589 122,407 45,080 175,431 14,564,618 2005 13,236,952 1,131,903 2,804,985 647,915 234,513 187,161 83,025 18,326,454 Note: The above revenues are for the general fund, 65 Table V THE VILLAGE OF NORTH PALM BEACH, FLORIDA Property Tax Levies and Collections Last Ten Fisca! Years Percent Delinquent Total Percent Fiscal Total Current Tax of Levy Tax Tax Collected Year Tax Levy Collectians Collected Collections Collections To Tax Levy 1996 $ 3,7D4,613 $ 3,577,517 96.46% $ 6,187 $ 3,583,704 96.46% 1997 3,701,075 3,574,562 96.57% 4,379 3,578,941 96.74°l° 1998 4,105,193 3,961,574 96.50% 5,861 3,967,435 96.64% 1999 4,327,943 4,166,035 96.26% 6,721 4,172,756 96.41% 200D 4,5'12,027 4,335,66$ 96.09% 23,074 4,358,742 96.60% 2001 5,196,021 5,013,269 96.48% 4,6$7 5,017,956 96.57°/n 2002 5,562,239 5,357,206 96.31% 12,175 5,369,381 96.53°/n 2003 6,597,909 6,359,478 96.39% 5,522 6,365,OOD 96.47°/n 2004 8,825,061 8,441,383 95.65°/n 10,401 8,451,784 95.77°/a 2005 10,463,873 10,059,478 96.14% 9,476 1D,D70,969 96.25% Source: Palm Beach County Property Appraiser. 66 Taf,le VI THE VILLAGE OF NORTH PALM BEACH, FLORICA Assessed Value of Taxable Property Last Ten Fisca! Years Assessed Value Fiscal Real Personal Year Property Property Tatal 1996 $ 694,725,948 $ 31,668,828 $ 726,394,776 1997 7D0,039,002 31,398,755 731,437,757 1998 724,341,193 35,879,717 76D,220,91 D 1999 736,890,024 35,742,548 772,632,572 2000 767,696,404 36,071,964 803,768,368 2001 861,214,093 40,169,760 901,383,853 2002 950,465,573 42,791,419 993,256,992 2003 1,093,294,027 44,276,499 1,137,570,526 2D04 1,252,888,990 44,914,124 1,297,803,114 2005 1,388,268,923 49,767,286 1,438,036,2D9 Note: The basis of assessed value is approximately one hundred percent (100°/fl) of actual value. For each fiscal year ending September 30, property is valued as of January 1st of the preceding calendar year. Source: Palm Beach County Property Appraiser. 67 Table VII THE VILLAGE OF NORTH PALM BEACH, FLORIDA Property Tax Rafes -Direct and Overlapping Governrnenfs Lasf Ten Fisca! Years (Per $1,OQ0 of the Assessed Value) _ Village Palm Beach of North County Fiscal Palm Special School Palm Beach Year Beach Districts District County Total 1996 5.10 2.485 9.797 4.519 21.901 1997 5.06 2.286 9.788 4.519 21.653 1998 5.40 2.360 9.557 4.867 22.184 1999 5.60 2.234 9.682 4.858 22.374 2000 5.60 2.262 8.918 4.936 21.716 2001 5.75 2.263 8.918 4.936 21.867 2002 5.60 2.456 8.948 4.935 21.939 2003 5.80 2.488 8.779 4.808 21.875 2004 6.80 2.556 8.571 4.791 22.718 2045 7.27 2.526 8.432 4.768 22.996 Source: Palm BeacE~ County Property Appraiser. 68 Table VI[1 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Computation of Direct and Overlapping Bonded Debt Genera! Obligations Bonds 5e tember 30, 2805 Percentage Amount Net Genera! Applicable to Applicable to Name of Bonded Debt The Village of The Village of Governmental Unit Outstanding North Palm Beach (1} North Palm Beach Direct Village of North Palm Beach $ - 100.00% $ - Overlapping: Palm Beach County NIA NIA NIA Palm Beach County School District NIA NIA NIA Total ~ - ~ - (1 }Estimated based on 2003 Ratio of Assessed Taxable Values. Source: Palm Beach County Property Appraiser School Baard of Palm Beach County, Finance Department Village of North Palm Beach. NlA = No# Avai{able E9 Table IX THE VILLAGE OF NORTH PALM BEAChI, FLORIDA Computation of Legs! Debt Margin 5e tem~aer 30, 2005 The Village Charter and the Constitution of the State of Florida, Florida State Statute 2d0.18t , do not provide for a legal debt limit. ~a Table X TiiE ViLLAC3E OFr IV042Tti PALM BEACH, FLORIDA 1]ebt Related Sfatlsilcs Schedule of Revenue Bond Coverage Genera! and Enierpirse Funds Last Ten Flsca! Years Debt Service F2eauirements Net Revenue Available Fiscal Gross Expenditures! For Debt Year Revenue Expenses (1} Service Principal Interest Total Coverage 1996 * + + 1997 * * 1998 * * 1999 * * + zoao + + zaaz * + 20073 200- + * + 2005 a + I. + Source: Village of North Palm Beach. S1 }Represents total General Fund and Country Club expenditureslexpenses, exclusive of depreciation,debt service, and loss on disposal of fixed assets. * Revenue bonds were paid in full in 1995. 71 Table XI THE VILLAGE OF NORTH PALM BEACH, FLORIDA Property Value, Construction, and Bank Depaslts Last Ten Fisca! Years Commercial Residential Property Value ('f) Construction Construction Bank riscai ?epo5lts (2) Year Commercial Residential Value Value (in thousands) 1997 92,371,112 603,600,525 3,759,496 2,194,016 9,911,930 1998 97,758,1 D5 62D,048,032 3,769,950 10,893,857 10,715,610 1999 109,456,299 625,385,715 11,698,194 5,337,681 13,2$3,$98 2000 113,851,156 653,605,D11 4,394,857 28,219,296 12,711,003 2001 122,793,250 745,237,484 8,942,094 36,60D,946 12,927,182 2002 124,216,2D2 823,286,154 2,218,598 11,234,443 13,841,347 2003 128,216,552 963,D91,5D6 225,DOD 9,355,2D4 14,484,675 2004 147,927,933 1,092,433,722 565,215 11,417,004 15,855,918 20D5 155,572,238 1,730,289,367 11,D04,970 {1 }Estimated {2} Data as of September 30 of the preceding year. * unavailabe Sources: Village al North Palrn Beach. Palm Beach County Property Appraiser Office. Florida Bankers Association (all of Palm Beach County} 72 Talbie XII THE VILLAGE OF NORTH PALM BEACH, FLORIDA Principal Taxpayers Janua 9, 205 Percentage 2005 of Total Assessed Assessed Taxpayer Valuation Valuation Olen Residential Realty $ 12,9DD,DOD 1.53% Sanctuary Bay Trust Corporation 11,DDD,30D 1.15% Crystal Tree NPB 1 D,254,1 S4 0.87% Wolfchase Associates, L.L.C. 1D,5DD,DDO D.76% Greater Florida Investment Co. 5,84D,D0D 0.51 % 631 Atrium LLC 4,5DD,0D0 0.40% Village Shappes at VS 1 LLC 6,316,477 0.36% Riverside National Bank of Florida 4,639,339 0.35% Old Port Cove Dev. 3,724,667 0.28% Developers of Northlake, Inc. 4,245,662 0.27% Wikell Joel & 4,356,074 0.25% $ 78,276,703 fi.73% Source: Palm Beach County Property Appraiser. 73 Table Xlll THE VILLAGE OF NORTH PALM BEACH, FLORIDA Miscellaneous Statistics 5e tember 30, 2005 Date of Incorporation: August 13, 1956 Form of Government Council -Manager Area {land and waterways) 5.18 square miles Miles of streets 36.D0 Number of street lights 4-25 Population 12,198 Fire Protection Number of stations 1 Number of firemen and officers 8 PoficelEMS Protection Number of stations 2 Number of policemen and officers 35 Number of EMS officers 13 Building Permits Building permits -new 36 Building permits -additions 165 RecreationlCulture Number of parks 4 Public tennis courts 4 Number of marinas 1 Number of libraries 1 Number of volumes 47,531 Country Club Gaff course 1 Driving range 1 Swimming pool ~ Tennis courts 1 ~ Em to ees 264 Source: Village of North Palm Beach 74 REQU[RE® REPORTS • ~ n ependent Auditors' Report on Internal Control Over Financia! Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Mayor and Members of the Vil{age Council The Village of North Palm Beach, Florida We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and fihe aggregate remaining fund information of the Village of North Palm Beach, Florida {"Village"}, as of and for the year ended September 30, 2005, which collectively comprise the Village's basic financial statements and have issued our report thereon dated March 4, 2006. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Village of North Palm Beach, Florida's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose al[ matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts caused by error or fraud that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the intemaE control over ~nancia! reporting and its operation that we considered to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reporked to management of the Village of North Palm Beach, Florida in a separate letter dated March 4, 2006. Compliiance and Other Matters As part of obtaining reasonable assurance about whether the Vigage of North Palm Beach, Florida's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of Paws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effeck on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an abjec#ive of our audit and, accordingly, we do not express such an opinion. The results of our test disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. 75 This report is intended for the information and use of the audit committee, management, members of the Village Council, the State of l=lorida Office of the Auditor General, and applicable federal and state agencies, and is not intended to be and should nat be used by anyone other than these specified parties. West Palm Beach; Florida March 4, 2x06 76 • ~ •~-~ Report on Compliance with Requirements Applicable to Each Mayor Program and on Internal Control Over Compliance In Accordance with OMB Circular A-133 The Honorable Mayor and Members of the Village Council The Village of North Palm Beach, Florida Compliance We have audited the compliance of the Village of North Palm Beach, Florida ("Village") with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A- 133 Compliance Supplement that are applicable to each of its major federal programs for the year ended September 30, 2005. The Village's major federal programs are identified in the summary of audit results section of the schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of The Village's management. Our responsibility is to express an opinion an The Village's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller Genera! of the United States; and OMB Circular A-133, Audits of Stales, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about The Village's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion_ Our audit does not provide a legal determination on The Village's compliance with those requirements. [n our opinion, The Village complied, in aEl material respects, with the requirements referred to above that are applicable to each of its major federal programs far the year ended September 30, 2005. Internal Control Over Compliance The management of The Village is responsible far establishing and maintaining effective internal control aver compliance with requiremen#s of laws, regulations, contracts and grants applicable to federal state programs. In planning and performing our audit, we considered The Village's interns! contra[ over compliance with requirements that could have a direct and material effect an a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133 77 Our consideration of the internal control over compliance would not necessarily disclose a[I matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of khe internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by emp[ayees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operations that we consider to be material weaknesses. This report is intended far the information and use of the audit committee, management, members of the Village Council, the State of Florida OfE•ice of the Auditor General, and applicable federal awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. West Palm Beach, Florida March 4, 2006 78 The Village of North Palm Beach, Florida Schedule of Expenditures of Federal Awards Year Ended September 30, 2005 FederaUState Agency, Pass-through entity CFDA Contract Federal Federal ProgramlState Prbiect Number Number Expenditures Federal Agency Name Department of Homeland Security Federal Emergency Management Agency, Passed through Florida Department of Community Affairs: Disaster Grants -Public Assistance: Presidentially Declared Disasters ~J7.056 NIA $ 834,008 Total Department of Homeland Security 834,008 Department of ,3ustice Passed through Florida Department of Law Enforcement: Law Enforcement Block Grants 15.b92 4,49fi Total federal awards ~ 838.504 Basis of presentation The schedule of expenditures of federal awards and state financial assistance includes the federal and state grant activity of the Village and is presented on the accrual basis of accounting. 79 The Village of North Palm Beach, Florida Schedule of Findings and Questioned Casts Year Ended September 30, 2005 Summary of audit results The auditors report expresses an unqualified opinion on the financial statements of The Village of North Palm Beach, Florida {"Vi[lage°). 2. Na reportable conditions were reported as a result of the audit of the financial statements. 3. No instances of noncompliance material to the financial statements of The Village were disclosed during the audit. 4. Na reportable conditions were reported during the audit of the major federal award programs. 5. The auditors report an compliance far the major federal award programs for The Village expresses an unqualified opinion an all major federal programs. 6. No audit findings relative to the major federal award programs for The Village are reported in this schedule. 7. The program tested as a major program included Fedeaa! Emergency Management Agency, Disaster Grants -Public Assistance (Presidentially Declared Disasters), CFDA #97.D56. 8_ The threshold far distinguishing Type A and B programs was $30D,DDD. 9. The Village was determined to be a low-risk auditee. 8D The Village of Noah Palm Beach, Florida SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS AND CORRECTIVE ACT10N PLAN FOR THE YEAR ENDED SEPTEMBER 3D, 2DD5 Prior Audit Findings. There were no prior audit findings for the year ended September 30, 2DD5, relative to federal awards requiring action on the part of the auditee far that fiscal year. Corrective Action Plan: There was no corrective action plan necessary for the year ended September 3D, 2DD5, since there were no audit findings in the auditor`s report for that fiscal year. The Village of North Palm Beach, Florida By s~ / Mark Bates, Village Manager Date: March 4, 2DD6 81 ~ A ` • 1 r Management Letter in Accordance with the Rules of the Auditor General of the State of Florida The Honorable Mayor and Members of the Village Council The Village of North Palm Beach, Florida We have audited the basic financial statements of the Village of North Palm Beach, Florida, (the Village) as of and far the year ended September 30, 2005, and have issued our report thereon dated March 4, 2006. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Audrtir~g Standards, issued by the Comptroller General of the United States. We have issued our Report of independent Certified Public Accountants on Compliance and Internal Control Over Financial Reporting and on Compliance and Other Matters, Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards date March 4, 2006 and it should be considered in conjunction with this management letter. In connection with our audit of the basic financial statements of the Village for the year ended September 30, 2005, we report the fallowing in accordance with Chapter 10.550, Rules of the Auditor General, focal Governmental Entity Audits which requires that this report specifically address, but not be limited to, the matters outlined in Rule 10.554 (1)(h): 1. No inaccuracies, shortages, defalcations, fraud, and violations of laws, rules, regulations and contractual provisions were reported in the preceding annual financial audit 2. The Vil{age, during fiscal year 2005, was not in a state of financial emergency as defined by Florida Statute, Section 218,503(1 The Village had no deficit fund balances. 3. The Village has complied with Section 218.415, Florida Statutes regarding the investment of public funds. 4. Recommendations to improve the Village's present financial management and accounting procedures are presented below. 5. Recommendations made in the preceding financial audit have been implemented, except as Hated below. 6. During the course of our audit, nothing came to our attention that caused us to believe that the Village: a. Was in violation of any laws, rules, regulations or contractual provisions. b. Made any illegal or improper expenditures that may or may not materially affect the financial statements. c. Had improper or inadequate accounting procedures, other than those recommendations noted below to improve the Village`s administrative and accounting controls. d. Failed to properly record financial transactions, which could have a material effect on the Village's basic financial statements. e. Had other inaccuracies, shortages, defalcations or instances of fraud and fraud related matters. 82 7. The annual financial report far the year ended September 30; 2305, has been filed with the State of Florida Department of Financial Services pursuant to Section 218.32(1}(a}, Florida Statutes, and was in agreement with the audited financial statements of the same period. 8. The Village of North Paim Beach, Florida was incorporated by Chapter 1E5, Florida Statutes. 9. During the course of our audit, we applied financial condition assessment procedures pursuant to Rule 10.556{8). It is management's responsibility to monitor the Village's financia[ condition, and our financial condition assessment, which was performed as of the Village's fiscal year end, was based on representations made by management and the review of financial information provided by the Village. Based on procedures performed in connection with our audit, we noted no findings regarding deteriorating financial conditions. FINANCIAL REPORTING FINDING 05-1 Criteria An effective system of internal controls includes procedures that require financial reports be made available to oversight bodies on a regular basis, taking into account technology and the costlbenefit of personnel limitations. Condition We noted that internal financial statements are provided to the Village Council quarterly. In the past financial reports were distributed monthly reflecting the Village's cash transactions without regard to review ar analysis to prepare accurate and meaningful financial reports. PerspectivelEffect infrequent fiinancial reporting can lessen the effectiveness of oversight bodies with respect to monitoring financial operations and making recommends#ions to management. Recommendation We recommend that the Village streamline reporting procedures and supply internal financia[ statements monthly. Additionally, a classified balance sheet on internal statements might help oversight bodies track the Village's current position on a timelier basis. Management's response During the past fiscal year the Village's financial accounting process has been repaired and improved to enable preparation of accurate and meaningful fnancia! reports on a recurring basis. The Village's past "cash basis" monthly printouts did not reflect account analysis, accounting period transaction or meaningful financial information far management's review or Council oversight. While the Village's budget schedules are monitored by the Administration and department directors on a monthly basis, the 5-member Finance Department staff has primarily focused itself toward preparing accurate and meaningful financial reports for the Council each quarter during the .past year. The Administration will continue to work toward expanding the preparation of quarterly financial reports toward creation of on-going monthly financial reports by September 30, 2006. This effort will be affected by the many impacts of Village financia! operations including expanding grant reporting, capital projects, annual budget preparation, union negotiations and other special projects that may require consideration of an added Financial Accounting position in the coming year's budget. 83 FINANCIAL REP~RT[NG FINDING 05-2 Criteria An effective system of internal controls includes procedures that reguire that records afi cash receipts far services be reconciled to the revenue source for the cash received. Condition During our inspection of building permits issued during the year ended September 3D, 2005, we Hated in several instances that, whereas cash received for building permits could be reconciled to cash register tapes, there was no cash receipts log book. Tapes of checks received in payment for building permits were attached to the deposit slips but were Hat individually fisted on bank account deposit slips. PerspectivelEfFect The lack of the above considerations relative to cash and checks received makes it difficult to directly relate permits issued to revenue received. Recommendation We recommend that the Viilage institute a contemporaneous cash receipts log ar journal to be completed at the time cash is received far building permits. The lag should be prepared by the person who received the cash and should be reviewed by a supervisor and transferred, along with the cash, to the Finance Department. At Finance, the cash and the log should be reconciled again and a deposit slip prepared. Checks received should be individually listed on the deposit slip or an an accompanying attachment. Management`s response The Administration discussed this improvement with the village Council several times during the past year and also shared this with our external auditors during the course of the fiscal year audit. The Administration will develop and implement written internal control procedures for the handling, contra[, recording and deposits ofi Public Services Building Division receipts by July 3t, 2006. STATUS OF PRIOR YEARS' COMMENTS FINDING 0'I-0'I Gauntry Club Operation Criteria Proprietary funds are used to account far governmental activities that are similar to activities that may he performed by a commercial enterprise. The basic objective of a proprietary fund is to provide a service or product to the public at a reasonable cost. Condition -current year During the course of our audit, we use a variety of methods to identify the financial condition of the organization. Financial condition, for the purpose of this comment, refers to the Village's ability to provide services at the level and quality desired by its citizens. As part of our 2005, audit, we updated financia[ indicators that had been calculated in the prior year. At September 30, 2005, the financial indicators seem to indicate some positive direction in the financia! condition for the country club operation. Our observations on this condition are as fopows: 1. There has been a two year increase in net assets for the past two years, whereas the five years prior to that experienced a five year decline. Net assets are the cumulative amount by which revenues and operating transfers from other funds have exceeded expenses: For the year 2005, the Country Club experienced an increase of 2.84%_ 2. There had been a continuous decline in the current ratio (as measured by cash and investment to current liabilities} for the three years prior to 2004. For the year 2005, there was an increase in the current to 1.70:1.00. 3. There were operating losses for three of the past six years. This may result in a reduction of the Village's ability to withstand financial emergencies andlor the ability to fund major expenses or capital purchases without having to borrow. 4. There has been a negative working capital position for the four years ended September 30, 2004, As of September 30, 2005, the County Club's liquid assets were $453,288, of which $100,000 represents bank loan proceeds that had not been disbursed as of year end. The average monthly cash requirement for operations is $213,000. 2005 2004 2003 2002 Financial ]ndicator #1 Net Assets $2,189,568 $2,126,172 $2,099,593 $1,974,296 Percentage Increase (Decrease} 2.84% 1.27% (3.14)% (3.41}% Financial Indicator #2 Cash and Investments $396,65fi $65,413 $128,924 $156,020 Current Liabilities 233,371 149,679 324,499 390, 171 85 2005 2004 2DD3 2002 1.70:1.00 .44:1.00 .40:1.00 .40:1.00 Financial Indicator #3 Operating Income (Loss} $63,396 $40,131 $(22,146} $1,973 Operating Revenues 2,658,468 2,590,819 2,631,509 2,570,649 2.4% 1.5% (0.84)% D.08% Financial Indicator #4 Net assets $2,189,568 $2,126,172 $2,099,593 $1,974,286 Total Operating Revenues 2,658,468 2,590,819 2,631,509 2,570,649 82°/n 82% 79% 77% Financial indicator #5 Net Working Capital (Deficiency) $219,917 $(22,86D) $(122,487) $(140,018) Percentage Increasel(Decrease) 1,062% 81 % 12% 32% Perspective The financial condition of the enterprise fund may require the general fund to subsidize operations and may prevent the ability to finance needed improvements. We noted during the course of our audit that a significant redesign of the golf course is slated to begin in the spring of 2006, and that a new accounting system was instituted that is specifically designed for country club operations. Recommendation We recommend that management: 1. Continue to review the revenue structures to determine stability, equity, efficiency and capacity to finance operations. 2. Use long-term financial plans that include revenue and expenditure krend studies, capital, and debt management plans. Management Response The Administration has reviewed and prudently adjusted the Country Club's revenue structure during the past year. Anew Club financial accounting system has been implemented to better control club ackivities and revenues. This new system also assists the Administration by providing accurate, detailed information regarding Club operations. The Administration has developed and is closely monitoring the Club's annual financial and operational plans as well as its needs for capital renovation and financing. The financial improvement of the Club this year, despite an extended hurricane closure, reflects the Administration's successfui and continuing effort in oversight and management of the Club's operation. Future capital renovation loan financing will be planned to provide that Club user fees are used for loan repayment. 86 This management letter is intended solely for the information and use of the Village of North Palm Beach, Florida's management, and the State of Florida Offce of the Auditor General, and is not intended to be and should be used by anyone other than these specified parties. West Palm Beach, Florida March 2005 87