Loading...
2015 CAFR.pdf The Village of North Palm Beach, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 30, 2015 Prepared by: Finance Department Samia Janjua Director of Finance THE VILLAGE OF NORTH PALM BEACH, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 2015 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................... i Principal Village Officials ........................................................................................................................ vii Organizational Structure ........................................................................................................................... viii GFOA Certificate of Achievement for Excellence in Financial Reporting ................................................. ix FINANCIAL SECTION Independent Auditors' Report ....................................................................................................................... 1 Management's Discussion and Analysis ....................................................................................................... 4 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Position ..................................................................................................................... 14 Statement of Activities ......................................................................................................................... 15 Fund Financial Statements: Balance Sheet - Governmental Funds .................................................................................................. 17 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position ..................................................................................................... 18 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ........................................................................................... 19 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities .................................... 20 Statement of Net Position - Proprietary Fund ...................................................................................... 21 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Fund ............................................................................................................ 22 Statement of Cash Flows - Proprietary Fund ....................................................................................... 23 Statement of Fiduciary Net Position - Fiduciary Funds ....................................................................... 24 Statement of Changes in Fiduciary Net Position – Fiduciary Funds .................................................... 25 Notes to the Basic Financial Statements ..................................................................................................... 26 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Funding Progress – Other Postemployment Benefits ........................................................ 72 Schedule of Changes in Net Pension Liability – General Employees Retirement Fund ....................... 73 Schedule of Changes in Net Pension Liability – Fire and Police Retirement Fund .............................. 74 Schedules Contributions and Investment Returns – Retirement Funds ............................................... 75 Notes to the Schedule of Contributions ................................................................................................ 76 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ................................................................................................. 77 Notes to the Budgetary Required Supplementary Information ............................................................ 78 THE VILLAGE OF NORTH PALM BEACH, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 2015 TABLE OF CONTENTS (Continued) OTHER SUPPLEMENTARY INFORMATION: Schedule of Departmental Expenditures– Budget and Actual – General Fund .................................... 79 Combining Balance Sheet – Nonmajor Governmental Funds .............................................................. 82 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds ........................................................................................................ 83 Combining Statement of Net Position – Pension Trust Funds .............................................................. 84 Combining Statement of Changes in Fiduciary Net Position – Pension Trust Funds ........................... 85 Combining Statement of Agency Net Position .................................................................................... 86 Combining Schedule of Changes in Agency Net Position .................................................................... 87 Schedule of Revenues and Departmental Expenses – Budget and Actual – Country Club Fund – Budgetary Basis ............................................................ 88 STATISTICAL SECTION Net Position by Component ................................................................................................................. 89 Changes in Net Position ....................................................................................................................... 90 Fund Balances, Governmental Funds ................................................................................................... 92 Changes in Fund Balances, Governmental Funds ................................................................................ 93 Net Assessed Value and Estimated Actual Value of Taxable Property ............................................... 95 Property Tax Rates - Direct and Overlapping Governments................................................................. 96 Principal Property Taxpayers ............................................................................................................... 97 Property Tax Levies and Collections ................................................................................................... 98 Ratios of Outstanding Debt by Type ..................................................................................................... 99 Direct and Overlapping Governmental Activities Debt ...................................................................... 100 Pledged-Revenue Coverage ................................................................................................................ 101 Demographic and Economic Statistics ................................................................................................ 102 Principal Employers ........................................................................................................................... 103 Full-Time Equivalent Village Government Employees by Function .................................................. 104 Operating Indicators by Function/Program ........................................................................................ 105 Capital Asset Statistics by Function/Program ..................................................................................... 106 OTHER REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................ 107 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida ............................................................................................................................... 109 Independent Accountant’s Report on Compliance with Section 218.415, Florida Statutes .................................................................................................... 112 INTRODUCTORY SECTION THE VILLAGE OF NORTH PALM BEACH “THE BEST PLACE TO LIVE UNDER THE SUN” 501 U.S. Highway 1, North Palm Beach, FL 33408-4902 * (561) 841-3380 * Fax (561) 848-3344 March 24, 2016 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, 2015. This report is published to provide the Village Council, Village staff, our citizens, our lenders, and other interested parties with detailed information concerning the financial condition and activities of the Village government. Responsibility for both 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 are accurate in all material respects, and are organized in a manner designed to fairly present the financial position and results of operations of the Village as measured by the financial activity 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 Nowlen, Holt & Miner, P.A., Certified Public Accountants, have issued an unmodified (“clean”) opinion on the Village of North Palm Beach’s financial statements for the year ended September 30, 2015. The independent auditor’s report is located at the front of the financial section of this report. Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. The CAFR’s role is to assist in making economic, social, and political decisions and to assist in assessing accountability to the citizenry by: • comparing actual financial results with the legally adopted budget, where appropriate; • assessing financial condition and results of operations; • assisting in determining compliance with finance related laws, rules and regulations; • assisting in evaluating the efficiency and effectiveness of Village operations. ii 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 12,177, which increases to approximately 18,000 during the winter months by residents who list their northern homes as their official place of residence. Residents are generally in the middle to upper income brackets. Located in the northeastern quadrant of Palm Beach County, Florida, the Village has an abundant 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 to two-year overlapping terms. The Mayor is selected by majority vote of the Council and serves for a term of one year. Day to day affairs of the Village are under the leadership of the 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 liabilities are incurred. Financial reporting for its Enterprise Fund (i.e., the Country Club operation) is presented using the full accrual basis of accounting required by GAAP for its annual financial report. The Country Club annual budget is adopted using a modified accrual basis of accounting (identical to the general government operations mentioned above) which is consistent with how general ledger financial records are maintained throughout the year by the Village administration. In developing and evaluating the Village's financial and accounting system, consideration is given to the adequacy of internal accounting controls. Internal 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 to be derived; and (b) the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within 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. The Village of North Palm Beach maintains budgetary controls through the annual budget public hearing and approval process for GAAP-based budgets. The formal budget approval for each fiscal year is accomplished in a manner compliant with Florida State Statute 200.065, commonly referred to as Truth-in-Millage (TRIM). iii Budget amendments require Village Council approval at public meetings. Budgetary control is maintained at the department level within the fund (changed to fund level in 2013) by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders, which result in an overrun of approved departmental appropriations within the fund, are not released until additional appropriations are made available. Encumbered amounts lapse at year-end; however, they are re-appropriated as part of the following year’s budget. ECONOMIC OUTLOOK Property Values The Village obtains a major portion of its annual General Fund financial resources (56%) from ad valorem property taxes. Gross assessed property values increased substantially between the years 2002 through 2006, but slowed significantly in 2007. In years 2008 through 2012, area property values declined in value, in many instances significantly, as a result of the economic downturn. This unprecedented decline in property values was exacerbated by the number of properties in various stages of foreclosure. Both of these real-estate issues have had an adverse impact upon the financial resources of the Village. However, based on market trends in 2013 as well as in early 2014, it appears that there is new growth in our community. Both the State and South Florida, in particular, are enjoying resurgence in real estate activity, which has translated into annual gains in market prices for area homes. We have processed a large number of building permits throughout the Village for both new homes and for remodels of existing homes (1,975 residential permits in FY 2014 and 2,018 residential permits in FY 2015). The Water Club development Phase I was approved in 2013, began construction in 2014, with completion scheduled for late 2017. Phase II, which includes a third tower, was approved in January 2016. The Village is in the process of developing a Master Plan for development and redevelopment over the next ten years. It is believed that a clear vision, master plan and definition of the highest and best use of properties on U.S. 1 and Northlake Boulevard will encourage developers to invest and have a positive effect on Village revenues. The Village continues to pursue annexation of surrounding unincorporated areas that complement and enhance the services and values of our existing community. The focus of Village annexation efforts will be providing exemplary municipal services that are revenue “neutral” to both the annexed areas and to the Village. Investment Revenues The economic downturn and softening of the money market has had a significant impact on Village investment revenues over the past few years. In the short-term, the Village made a conscious decision to modify its investment strategies towards the Treasury market to better protect and ensure the availability of the Village’s investment balances. This move proved successful in safeguarding Village investments during this market free fall but impacted the interest/dividend revenues to the Village. The Village, with the assistance of the Village’s Audit Committee, adopted a “revised” Investment Policy designed to provide safety and liquidity while maximizing investment return(s). The newly adopted policy provided numerous investment strategies, parameters, and safeguards. The policy additionally provided for 1/12 of the annual operating budget to be deposited in a liquid interest bearing account so as not to impede operations should other funds be temporarily unavailable. The Audit Committee and staff, along with the Village’s Investment Advisor, continue to explore other investment opportunities that we believe will improve yields in future years while still ensuring the safety of our investments. iv Personnel Costs The Village will continue to face increased financial challenges in the areas of personnel costs for both salaries and benefits. In past years, several retirement plan amendments were implemented by the Village and then followed by significant salary adjustments that magnified the impact and cost of the retirement changes. The impact of these changes as well as the continuous improvement in the financial markets have had a very positive financial impact on both plans. Due to legislative changes and catastrophic claims losses, the Village has encountered significant increases in annual health insurance costs during the past few years. In an attempt to fight the continual rising cost of healthcare, the Village transitioned to a semi self-insured health program in 2012, which offers the potential for possible savings if claims are minimized. For 2016, the Village will continue its focus on Employee Wellness as a measure to help control health care costs and improve our opportunity for additional savings from our health care provider. The impacts of personnel salaries and benefits in the coming years will have a large and continuing effect on future Village financing and service priorities in the areas of staffing, public services, and public projects. Approximately 3/4ths of the annual budget is for wages and fringe benefits. INITIATIVES AND FUTURE PROJECTS The FY2015/2016 budget reflects a renewed commitment and predictable funding for community infrastructure in areas such as roadways, neighborhood sidewalks, and lighting, public buildings, and park facilities. The Village Council expanded the Capital Improvement Plan (CIP) from a five (5) year plan to a ten (10) year plan. The Community Development Department continues the task of updating our land use code. The Parks and Recreation Department continues to offer programs for all age groups at each of its six facilities. Anchorage Park will host a variety of events in the upcoming year, to include: movies in the park; organized volleyball leagues; the Village’s annual fishing tournament; and Heritage Day. The parks continue to be maintained by an outside service which has been funded under the “contractual services” line. The Public Works Department is tasked with oversight and maintenance of Village sanitation, infrastructure, streets, facilities, equipment, and roadways. This Department will play a major role in maintaining and expanding our focus on community appearance during the coming year. Public Works will continue to emphasize identification and remediation of safety concerns throughout our facilities. We are also conducting extensive analyses of critical infrastructure in our facilities to determine future project priorities and best maintenance practices. Public Works will address currently identified infrastructure projects such as drainage improvements, swale maintenance, and automation of irrigation systems in our ten (10) year Capital Improvement Plan (CIP). Finally, Public Works has been involved in a year-long evaluation of all work processes and systems. The completion of the projects emanating from this assessment will be a prime focus of the organization. The Police Department has focused on improvements in neighborhood outreach, crime suppression, and crime clearances. In 2008, 2011, and again in 2014, the Village’s Police Department was awarded the coveted CALEA National Accreditation for law enforcement agencies. The Police budget includes funding for the purchase/replacement of needed marked patrol vehicles and unmarked detective vehicles. v In 2014, the Police Department achieved a significant decrease in all areas of crime as well as an increase in clearance rates. We expect to build on that success in 2016. The Dispatch function and communications, which were transferred to the North County Dispatch Center in Palm Beach Gardens in October 2014, continues to enhance inter-agency communications and response to criminal activity. This year, the Human Resources Department is focused on implementing a new web-based appraisal system that will include supervisory peer reviews to eliminate the prospect of supervisory bias or a skewed result. Human Resources will begin union negotiations with two of the Village’s collective bargaining units (police and fire) in June 2016. All Policies and Procedures are being reviewed and updated as necessary in the coming year. The Information Technology Department has numerous projects for the upcoming year: preparing the Village for LPR (License Plate Recognition) systems, going from numerous servers to a virtual software system, continued improvement of the Village website, and upgrading the Village’s phone system. The Administration continues its ongoing implementation of an optical records storage system (Laserfiche) for use by all Village operating departments. Optical record storage systems are now widely used by governments and meet all State record storage requirements. This allows the Village to transition – over time – from “paper” records to optically stored records. Optical storage permits digital “look up” of any optical record “at will” through the convenience of a simple computer search. Optical storage systems have become commonly used by many local governments, and the cost is relatively modest when considering the time savings and customer service improvements they offer. The Village created a Facebook page that has been an outlet to release traffic issues, upcoming events and information to residents. The Village Newsletter expanded its advertising options and has increased revenue to offset the costs of printing and postage. The Enterprise Fund is on solid financial footing; however, there are serious infrastructure issues related to the clubhouse that need to be addressed. During the fiscal year, community meetings were held to discuss the future of the Country Club facility and a “wish list” of amenities was created for future consideration. An Architect was retained to help define the scope and sizes for a new clubhouse and pool amenities. For Fiscal Year 2015-2016, the Village Council developed the following goals to guide their budget process: 1. Provide a sustainable financial base for the Village 2. Maintain and improve all recreational facilities of the Village 3. Maintain a high quality of life and improve the overall appearance in the Village 4. Build a new Country Club Clubhouse 5. Develop a Master Plan for economic development in our business districts and community development in our neighborhoods 6. Continuously improve the way the Village operates 7. Implement the Pay for Performance System 8. Establish a long-term (10-year) capital plan The ultimate goal is to sustain the Village as the “Best Place to Live Under the Sun.” vi OTHER INFORMATION Independent Audit Article 11, Section 2.18 of the Village Charter requires an annual audit of the books 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 Financial Report for the fiscal year ended September 30, 2014. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. vii THE VILLAGE OF NORTH PALM BEACH, FLORIDA PRINCIPAL VILLAGE OFFICIALS SEPTEMBER 30, 2015 Title Name Mayor Robert A. Gebbia Vice Mayor David B. Norris President Pro Tem Doug Bush Council Member Darryl C. Aubrey Council Member Mark Mullinix Village Manager James P. Kelly Director of Finance Samia Janjua Village Clerk Melissa Teal VI LLA G E OF NORTH P A L M B E A C H Or g a nizati o n al St r u ctu r e Th e Re s i den ts Villag e Co u n c il Villag e At torne y Fina n c e Co m mun ity De v e l o p m e n t Fire Re s c u e Pa r k s & Re c r e a t i o n Co untry Club VILL A G E B OARDS •Aud i t Co mmi t tee •B u s i n e s s Ad v iso ry •Con s tru c tion Bo a r d of Ad j u s t men t •Go l f Ad v iso ry •Library Ad v isory •Pen s i o n Bo a r d s •Pla n n ing Co m miss i o n •Rec rea t i o n Ad v iso ry •Waterwa y s Boa rd •Zon i n g Boa rd of Ad jus tme n t Vill age Ma n a g e r Villag e Cl e r k Pu b lic Wor k s Librar y Hu m a n Re s o u r c e s La w En f o rce men t In for mation Tec h n o l o g y “••• ix FINANCIAL SECTION 1 INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and Members of the Village Council The Village of North Palm Beach, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the Village of North Palm Beach, Florida’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not 2 for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida as of September 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 18 to the financial statements, the Village implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an Amendment of GASB Statement No. 68, during the year ended September 30, 2015. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 4 through 13, Pension and Other Postemployment Benefit trend information on pages 72 through 76, and budgetary comparison information on pages 77 through 78 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 3 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of North Palm Beach, Florida’s basic financial statements. The introductory section, other supplementary information, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The other supplementary information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplemental information is fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 16, 2016, on our consideration of the Village of North Palm Beach, Florida’s internal control over financial reporting and on our tests of its compliance with 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 on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Village of North Palm Beach, Florida’s internal control over financial reporting and compliance. West Palm Beach, Florida March 16, 2016 4 MANAGEMENT'S DISCUSSION AND ANALYSIS The Village of North Palm Beach, Florida’s (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, 2015. Please read it in conjunction with the accompanying transmittal letter beginning on page i, and the accompanying basic financial statements. TABLE 1 FINANCIAL HIGHLIGHTS (in millions) September 30,Increase/Statement 2015 2014 (Decrease)Page # Total net position $23.43 $24.61 ($1.18)14 Unrestricted net position available for future use $6.71 $7.55 ($0.84)14 Governmental net position $21.05 $22.19 ($1.14)14 Total revenues from all sources $23.96 $23.00 $0.96 15 Governmental revenues $20.16 $19.34 $0.82 15 Total cost of all Village programs $25.13 $24.50 $0.63 15 Governmental revenues over (under) expenses ($1.13)($1.26)$0.13 16 General fund revenues over (under) expenses $0.51 $0.61 ($0.10)19 General fund unassigned fund balance $10.80 $12.39 ($1.59)17 As a percent of general fund expenditures 55.03%66.07%-11.04% Country Club revenues over (under) expenses ($0.04)($0.25)$0.21 22 Change in total long-term debt for the Village ($0.40)($0.38)($0.02) USING THIS 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 Position and the Statement of Activities. These statements provide information about the activities of the Village as a whole. (2) Fund financial 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 ON THE VILLAGE AS A WHOLE Statement of Net Position 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 Position 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 all assets, deferred outflows of resources, liabilities and deferred inflows of resources 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. 5 These two statements report the Village's net position and changes therein. Net position, the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources, is one way to measure the Village's financial health, or financial position. Over time, increases or decreases in net position are an indicator of whether the financial health is improving or deteriorating. The Statement of Net Position 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 activities/Business-type activities - The Village charges a fee to customers to cover all or most of the cost of the services provided. The Village's Country Club is reported in this category. REPORTING THE VILLAGE'S MOST SIGNIFICANT FUNDS Fund Financial Statements The fund financial statements provide detailed information about the most 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 types of funds - governmental, proprietary, and fiduciary - 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 balances available for spending remaining at year- end. These funds are reported using an accounting method called the modified accrual accounting method, which measures cash and all other financial assets that can be converted to cash readily. 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 shows whether there are more or fewer financial resources that can be spent in the near future to finance the Village's programs. The Village maintains six individual governmental funds: the General Fund, one Capital Projects Fund, and four Special Revenue Funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the General Fund, Capital Projects Fund, and the On-Behalf Pension Contributions Fund (one of the four Special Revenue Funds), all of which are considered major funds (generally accepted accounting principles define a fund as major based on that fund’s size relative to the other funds of the government; a fund may also be reported as major if the government's officials believe that fund is particularly important to financial statement users). The remaining funds are considered non-major funds, and data from these governmental funds is combined into a single column for an aggregated presentation. The basic governmental fund financial statements can be found on pages 17-20 of this report. 6 • Proprietary Funds The Village's only proprietary fund is the Country Club Fund, which charges customers for the services it provides. These services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. The basic proprietary fund financial statements can be found on pages 21-23 of this report. • Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The funds in this category are the Village’s Pension Trust Funds and Agency Funds. 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 financial statements can be found on pages 24-25 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS The Village implemented Governmental Accounting Standard Boards (“GASB”) Statement No. 68 “Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27” (“GASB #68”) and GASB Statement No. 71 “Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68” (“GASB #71” and collectively “Statements”) in 2015. These Statements require the Village to recognize a net pension liability, deferred outflows of resources (including pension contributions made after the measurement date) and deferred inflows of resources for its two retirement plans, on financial statements prepared on the economic resources measurement focus and accrual basis of accounting (i.e. the statement of net position) and presents more extensive note disclosures. The adoption of these Statements had no impact on the Village’s governmental fund financial statements, which continue to report expenditures in the amount of the contractually required contributions, and on the Village’s proprietary fund, which had no employees in the plans. However, the adoption has resulted in the restatement of the Village’s net position as of September 30, 2014 for its government-wide financial statements to reflect the reporting of net pension liabilities, deferred outflows of resources, and deferred inflows of resources for each of its qualified pension plans in accordance with the provisions of these Statements. Net position of the Village’s government-wide financial as of September 30, 2014 was decreased by $4,275,019 reflecting the cumulative change in accounting principle related to the adoption of these Statements. See Note 8 in the notes to the basic financial statements for more information regarding the Village’s retirement plans. As noted earlier, net positon may serve over time as a useful indicator of a government's financial position. In the case of the Village, the net position was $23.43 million at the close of the most recent fiscal year. A significant portion of the Village's net position (70.60%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt still outstanding, which was used to acquire those assets. The Village uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. 7 Table 2 Village of North Palm Beach Net Position (In Thousands) Governmental Business-type Activities Activities Total 2015 2014 (1)2015 2014 2015 2014 Assets: Current and other assets 14,995$ 16,849$ 829$ 988$ 15,824$ 17,837$ Capital assets 14,711 14,967 4,787 5,255 19,498 20,222 Total assets 29,706 31,816 5,616 6,243 35,322 38,059 Deferred outflows of resources:1,649 1,506 1,649 1,506 Liabilities: Current liabilities 1,567 2,475 144 339 1,711 2,814 Long-term liabilities 8,087 8,486 3,094 3,482 11,181 11,968 Total liabilities 9,654 10,961 3,238 3,821 12,892 14,782 Deferred inflows of resources:644 175 644 175 Net positon: Net investement in capital assets 14,711 14,967 1,834 1,908 16,545 16,875 Restricted 177 181 177 181 Unrestricted 6,168 7,039 545 514 6,713 7,553 Total net position 21,056$ 22,187$ 2,379$ 2,422$ 23,435$ 24,609$ (1) Restated for GASB 68 Governmental Activities The cost of all governmental activities this year was $21.29 million. As shown on Table 3, Changes in Net Position, those who directly benefited from the programs paid for $3.35 million of this cost and $16.81 million was financed through general revenues. Governmental activities decreased the Village's net position by $1.13 million, thereby accounting for 96% of the total decrease in the net position of the Village. Key elements of this decrease are due to increased personnel related costs for salaries, health insurance and pensions. Additional detail is shown in Table 3, which follows on the subsequent page. 8 Table 3 Village of North Palm Beach Changes in Net Position (In Thousands) Activities Total 2015 2014 2015 2014 2015 2014 Revenues: Program revenues: Charges for services 3,353$ 3,823$ 3,789$ 3,646$ 7,142$ 7,469$ Operating grants and contributions 82 90 82 90 Capital grants and contributions 27 16 27 16 General revenues: Property taxes 11,365 10,155 11,365 10,155 Local option gas taxes 282 266 282 266 Utility service taxes 2,267 2,277 2,267 2,277 Sales and use taxes 1,332 1,261 1,332 1,261 Franchise taxes 1,253 1,233 1,253 1,233 Investment earnings 109 17 11 11 120 28 Miscellaneous 57 146 57 146 Gain on asset disposals 30 56 30 56 Total revenues 20,157 19,340 3,800 3,657 23,957 22,997 Expenses: Program expenses: General Government 3,029 2,696 3,029 2,696 Public Safety 9,013 9,260 9,013 9,260 Public Works 4,964 4,485 4,964 4,485 Community Development & Planning 1,309 1,046 1,309 1,046 Leisure Services 2,973 3,114 2,973 3,114 Country Club 3,843 3,902 3,843 3,902 Total expenses 21,288 20,601 3,843 3,902 25,131 24,503 Increase (decrease) in net position (1,131) (1,261) (43) (245) (1,174) (1,506) Net position - beginning of year (1)22,187 23,448 2,422 2,667 24,609 26,115 Net position - end of year 21,056$ 22,187$ 2,379$ 2,422$ 23,435$ 24,609$ 1) Restated for GASB 68 Governmental Business-type Activities 9 The Village's programs include General Government, Public Safety, Public Works, Community Development & Planning, 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. Table 4 Village of North Palm Beach Cost of services (In Thousands) Total Cost Net Cost Total Cost Net Cost of Services of Services of Services of Services General government 3,029$ (2,894)$ 2,696$ (2,577)$ Public safety 9,013 (8,424)9,260 (8,635) Public works 4,964 (4,424)4,485 (4,052) Community development and planning 1,309 (145)1,046 575 Leisure services 2,973 (1,939)3,114 (1,983) Interest on long-term debt 21,288$ (17,826)$ 20,601$ (16,672)$ 2015 2014 At the end of the current year, as compared to the prior year, the total cost of services increased by $0.69 million. This change in cost can be broken down as follows: • Several departments experienced an overall increase primarily due to the increases in personnel- related costs (for example, General Government increased by $0.33 million, Public Works increased by $0.48 million and Community Development increased by $0.26 million). • Public Safety decreased by $0.25 million due to the implementation of GASB 68 which reduced pension expense. • Leisure Services decreased by $0.14 million due to the Village taking over the tennis and pool operations. Business-Type Activities At the end of the current year, as compared to the prior year, Charges for Services (revenues) for the Business-type activities increased by $0.14 million and expenses decreased by $0.06 million. Net positon of the Proprietary Fund (Country Club) at September 30, 2015, were $2.38 million. Net position decreased by $43,415 in the current year vs. $245,495 in the prior year, resulting in a positive impact of $202,080. The positive impact in the Village’s Business-type activities was largely the result of an increase in revenues from both the Golf and Restaurant operations. The Enterprise Fund is on solid financial footing; however, there are serious infrastructure issues related to the clubhouse that need to be addressed. The Village is in the process of evaluating the construction of a new clubhouse; therefore, no major repairs to the current building are budgeted in the upcoming year. 10 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, unrestricted (unassigned/assigned) fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the combined fund balance for all Governmental Funds was $13.22 million, a $0.98 decrease over the 2014 fund balance of $14.20 million. Approximately 97% of the combined ending fund balance ($12.89 million) constitutes unrestricted (unassigned/assigned) fund balance, which is available for spending at the government's discretion. The remainder of fund balance ($0.33 million) is restricted (non-spendable/restricted) to indicate that it is not available for new spending because it has already been committed for a variety of other restricted purposes. General Fund The General Fund is the chief operating fund of the Village. At the end of the current fiscal year, unassigned fund balance of the General Fund was $10.80 million while the General Fund total fund balance was $11.41 million. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance is 55% of total general fund expenditures, while total fund balance represents 58% of that same amount. The general fund unassigned fund balance ($10.80 million) represents a decrease of $1.58 million over the 2014 unassigned general fund balance of $12.38 million. The decrease is largely due to the Village utilizing $1.64 million from its General Fund unassigned fund balance to fund the FY 2015 portion of the Capital Improvement Plan (CIP) rather than raising its millage rate. General Fund Budgetary Highlights Differences between the original budget and the final amended budget were $1,860,311 and can be briefly summarized as follows: • Small Business Grant Carryover ($66,435) • Prior Year Open Purchase Order Carryover ($150,376) • Use of General Fund Unassigned Fund Balance – CIP Funding ($1,643,500) General Fund Budget Analysis As shown on pages 79-81 of this report, in the Schedule of Departmental Expenditures – Budget and Actual, there was an overall favorable budget to actual cost variance of $2,711 in General Fund Departmental Expenditures. The areas of significant budget to actual variances for the General Fund expenditures are summarized below: • The negative variance in Public Safety ($308,548) is a result of the increase in personnel- related costs associated with the implementation of the Collective Bargaining Agreements for two unions. • During the budgeting process, various assumptions, along with previous year costs, are used in the development of the current year budget for operating costs. To counter the increase in employee compensation costs, the Village Manager directed Department Directors to reduce 11 spending in a manner that would minimize the impact on our residents. The Directors did an admirable job identifying areas to cut operating costs resulting in favorable budget variances (The actual costs came in well under the projected budgeted amount….overall budget to actual savings in operating costs of $368,821). The areas of significant budgetary savings for the General Fund operating costs are summarized below: o Repair and maintenance costs ($66,714) o Property & casualty insurance ($25,248) o Fuel costs for Village vehicles ($80,533) o Materials & Supplies ($81,677) o Utilities ($59,405) o Travel, Training and Conferences ($37,223) Capital Projects Fund The Village’s Capital Projects Fund is project specific and involves multi-year projects. Appropriations in this fund remain open and carry over to succeeding years until planned expenditures are made, or until they are amended or cancelled. At the end of the current fiscal year, the total fund balance was $1.49 million, a $0.61 million increase over the 2014 fund balance of $0.89 million. This is primarily due to the transfer of funds from General Fund Unassigned Fund Balance to finance several capital projects. On-Behalf Pension Contribution Fund The Village’s On-Behalf Pension Contribution Fund accounts for the contributions made by the State to the Police and Fire Pension Plan on behalf of the Village’s employees. 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 has elected to 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 multiyear period. The Village's investment in capital assets for its governmental and business-type activities as of September 30, 2015 and 2014 amounts to $19.50 million and $20.22 million, respectively (net of accumulated depreciation). 12 Table 5 Village of North Palm Beach Capital Assets (In Thousands) Governmental Business-type Activities Activities Total 2015 2014 2015 2014 2015 2014 Land 2,056$ 2,056$ 1,051$ 1,051$ 3,107$ 3,107$ Construction in progress 267 88 267 88 Buildings and improvements 23,136 23,095 1,405 1,405 24,541 24,500 Improvements other than buildings 272 272 272 272 Improvements - golf course 5,824 5,824 5,824 5,824 Furniture, fixtures and equipment 7,503 6,904 783 776 8,286 7,680 Total assets 32,962 32,143 9,335 9,328 42,297 41,471 Less accumulated depreciation (18,251) (17,176) (4,547)(4,073)(22,798) (21,249) Net position 14,711$ 14,967$ 4,788$ 5,255$ 19,499$ 20,222$ Additional information on the Village's capital assets can be found in Note 5 on pages 44 through 45 of this report. Debt Currently, the Village uses debt financing on an as-needed basis each year. At the end of the current fiscal year, the Village had total long-term debt of $2.97 million, all of which is in business-type activities. The last outstanding debt instrument in the General Fund was satisfied in 2010; therefore, there is no long-term debt outstanding in the Village’s governmental activities. None of the Village’s long-term debt comprises debt backed by the full faith and credit of the government. Table 6 Village of North Palm Beach Outstanding Debt (In Thousands) Governmental Business-type Activities Activities Total 2015 2014 2015 2014 2015 2014 Loans payable 2,825$ 3,097$ 2,825$ 3,097$ Capital leases 148 274 148 274 Total $$2,973$ 3,371$ 2,973$ 3,371$ Additional information on the Village's debt can be found in Note 6 on pages 46 through 48 of this report. 13 NEXT YEAR'S BUDGET AND ECONOMIC FACTORS The Village’s Unassigned Fund Balance is viewed by the Administration as a measurement of Village financial stability. Unassigned general fund balance decreased to $10.80 million during the current 2015 fiscal year. The Village is now ready to address the economic challenges anticipated in the next few years. The economic outlook for the primary revenue source for Florida municipalities will be challenging, as cities are facing state mandated reductions of property taxes. In an effort to provide tax relief and spur the slumping housing market, the State legislature focused on property tax reform in the 2007 session. House Bill 1B was enacted to limit the authority of local governments to levy ad valorem taxes for the FY 2008 budget year and beyond. The economic downturn and decline in property values have significantly impacted Village revenues. To address the impact of the legislation, continuing increases in the cost of employee compensation and benefits, and the reduction of revenues, the Village will need to continue to prioritize essential services and desired levels of service to allocate sufficient funding in future budget years. CONTACTING THE VILLAGE'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the Village's finances and to show the Village's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Village's Finance Department, at the Village of North Palm Beach, 501 U.S. Highway 1, North Palm Beach, Florida 33408. BASIC FINANCIAL STATEMENTS THIS PAGE INTENTIONALLY LEFT BLANK Statement of Net Position September 30, 2015 Governmental Business-type Activities Activities Total Assets Cash and cash equivalents 4,809,660$ 659,783$ 5,469,443$ Investments 8,985,759 8,985,759 Accounts receivable 418,001 18,003 436,004 Inventories 144,749 125,271 270,020 Prepaids 10,845 6,441 17,286 Due from other governments 448,592 448,592 Restricted assets: Cash and cash equivalents 177,431 177,431 Intangible assets, net of amortization 18,892 18,892 Capital assets: Nondepreciable 2,322,597 1,051,311 3,373,908 Depreciable (net of depreciation)12,388,419 3,736,526 16,124,945 Total assets 29,706,053 5,616,227 35,322,280 Deferred outflows of resources Pension related items 1,649,135 1,649,135 Total deferred outflows of resources 1,649,135 1,649,135 Liabilities Accounts payable 697,366 39,238 736,604 Accrued liabilities 689,081 689,081 Deposits 8,700 8,700 Unearned revenue 180,193 95,509 275,702 Noncurrent liabilities: Due within one year 888,662 447,389 1,336,051 Due in more than one year 7,199,203 2,646,893 9,846,096 Total liabilities 9,654,505 3,237,729 12,892,234 Deferred inflows of resources Unearned revenue 205,715 205,715 Pension related items 438,155 438,155 Total deferred inflows of resources 643,870 643,870 Net position Net investment in capital assets 14,711,016 1,833,975 16,544,991 Restricted for: Recreation 91,695 91,695 Streets and roads 32,431 32,431 Public safety 5,740 5,740 Library 45,294 45,294 Other purposes 2,271 2,271 Unrestricted 6,168,366 544,523 6,712,889 Total net position 21,056,813$ 2,378,498$ 23,435,311$ See notes to the financial statements. THE VILLAGE OF NORTH PALM BEACH, FLORIDA 14 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Activities For the Year Ended September 30, 2015 Charges for Functions/Programs Expenses Activities Government: Governmental activities General government 3,028,716$ 131,445$ Public safety 9,013,101 537,064 Public works 4,963,704 514,354 Community development and planning 1,308,924 1,163,875 Leisure services 2,973,687 1,006,382 Total governmental activities 21,288,132 3,353,120 Business-type activities - country club 3,842,660 3,788,852 Total business-type activities 3,842,660 3,788,852 Total government 25,130,792$ 7,141,972$ 15 Program Revenues Net Expense (Revenue) and Operating Capital Changes in Net Position Grants and Grants and Governmental Business-type Contributions Contributions Activities Activities Total 3,627$ $ (2,893,644)$ $ (2,893,644)$ 28,233 23,606 (8,424,198) (8,424,198) 25,012 (4,424,338) (4,424,338) (145,049) (145,049) 25,355 2,942 (1,939,008) (1,939,008) 82,227 26,548 (17,826,237)(17,826,237) (53,808)(53,808) (53,808)(53,808) 82,227$ 26,548$ (17,826,237) (53,808) (17,880,045) General Revenues: Taxes: Property taxes 11,364,888 11,364,888 Local option gas taxes 282,549 282,549 Utility service taxes 2,267,118 2,267,118 Franchise taxes 1,253,139 1,253,139 Sales and use taxes 1,332,209 1,332,209 Investment income - unrestricted 108,794 10,393 119,187 Miscellaneous 57,137 57,137 Gain on disposal of equipment 30,457 30,457 Total general revenues 16,696,291 10,393 16,706,684 Change in net position (1,129,946) (43,415) (1,173,361) Net position, beginning of year, as restated 22,186,759 2,421,913 24,608,672 Net position, end of year 21,056,813$ 2,378,498$ 23,435,311$ See notes to the financial statements. 16 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Balance Sheet Governmental Funds September 30, 2015 Capital On-Behalf Nonmajor Total Projects Pension Governmental Governmental General Fund Contributions Funds Funds Assets Cash and cash equivalents 3,020,678$ 1,420,298$ $ 368,684$ 4,809,660$ Investments 8,985,759 8,985,759 Accounts receivable 418,001 418,001 Inventories 144,749 144,749 Prepaids 10,845 10,845 Due from other funds 44,028 44,028 Due from other governments 150,252 298,340 448,592 Restricted cash and cash equivalents 131,931 45,500 177,431 Total assets 12,862,215$ 1,509,826$ 298,340$ 368,684$ 15,039,065$ Liabilities, deferred inflows of resources, and fund balances Liabilities Accounts payable 377,190$ 15,706$ 298,340$ 6,130$ 697,366$ Accrued liabilities 689,081 689,081 Due to other funds 44,028 44,028 Unearned revenue 180,193 180,193 Total liabilities 1,246,464 15,706 298,340 50,158 1,610,668 Deferred inflows of resources Unearned revenue 205,715 205,715 Total deferred inflows of resources 205,715 205,715 Fund balances Nonspendable: Inventories and prepaids 155,594 155,594 Restricted for: Recreation 46,195 45,500 91,695 Streets and roads 32,431 32,431 Police 5,740 5,740 Library 45,294 45,294 Other purposes 2,271 2,271 Assigned for: Small business grants 6,435 6,435 Subsequent year's expenditures 313,453 313,453 Special revenue funds 318,526 318,526 Capital project funds 1,448,620 1,448,620 Unassigned 10,802,623 10,802,623 Total fund balances 11,410,036 1,494,120 318,526 13,222,682 Total liabilities, deferred inflows of 12,862,215$ 1,509,826$ 298,340$ 368,684$ 15,039,065$ resources, and fund balances See notes to the financial statements. 17 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position Governmental Funds September 30, 2015 Fund balances - total governmental funds 13,222,682$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds: Governmental capital assets 32,962,661$ Less: accumulated depreciation (18,251,645) 14,711,016 Claims and settlements (50,000) Net pension liability (4,561,092) Other postemployement benefits (2,210,054) Accrued compensated absences (1,266,719) (8,087,865) Pension related deferred outflows 1,649,135 Pension related deferred inflows (438,155) 1,210,980 Net position of governmental activities 21,056,813$ See notes to the financial statements. Long-term liabilities, including notes and bonds payable, are not due and payable in the current period and therefore are not reported in the governmental funds. Long term liabilities at year-end consist of: Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the govenmental funds: 18 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2015 Capital On-Behalf Nonmajor Total Projects Pension Governmental Governmental General Fund Contributions Funds Funds Revenues Taxes 15,167,694$ $ $ $ 15,167,694$ Licenses and permits 947,158 947,158 Intergovernmental 1,437,218 298,340 22,688 1,758,246 Charges for services 2,231,673 2,231,673 Fines and forfeitures 128,235 128,235 Investment 108,794 108,794 Miscellaneous 122,107 122,107 Total revenues 20,142,879 298,340 22,688 20,463,907 Expenditures Current General government 2,904,553 2,904,553 Public safety 8,667,737 298,340 8,966,077 Public works 4,255,636 4,255,636 Community development and planning 1,270,399 1,270,399 Leisure services - recreation 2,514,495 2,514,495 Capital outlay 16,640 1,484,476 29,314 1,530,430 Total expenditures 19,629,460 1,484,476 298,340 29,314 21,441,590 Excess (deficiency) of revenues over (under) expenditures 513,419 (1,484,476) (6,626) (977,683) Other financing sources (uses) Transfers in 2,091,246 2,091,246 Transfers out (2,091,246) (2,091,246) Total other financing sources (uses)(2,091,246) 2,091,246 Net change in fund balances (1,577,827) 606,770 (6,626) (977,683) Fund balances Beginning of year 12,987,863 887,350 325,152 14,200,365 End of year 11,410,036$ 1,494,120$ $ 318,526$ 13,222,682$ See notes to the financial statements. 19 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 For the Year Ended September 30, 2015 Net change in fund balances - total governmental funds (977,683)$ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense: Expenditures for capital assets 1,380,016$ Less: current year depreciation (1,628,546) (248,530) Gains and losses on disposal of capital assets are reported in the statement of activities, whereas in the governmental funds the proceeds from the sale increases financial resources. The difference is the net book value of the assets retired: Net book value for retired assets (7,381) 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 long-term compensated absences (57,353) Change in net pension liability and related deferred amounts 415,178 Change in other postemployement benefits (254,177) 103,648 Change in net position (1,129,946)$ See notes to the financial statements. 20 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Net Position Proprietary Fund September 30, 2015 Enterprise Assets Current assets Cash and cash equivalents 659,783$ Accounts receivable 18,003 Inventories 125,271 Prepaids 6,441 Total current assets 809,498 Non-current assets Intangible asset, net 18,892 Capital assets, net 4,787,837 Total non-current assets 4,806,729 Total assets 5,616,227 Liabilities Current liabilities Accounts payable 39,238 Deposits 8,700 Unearned revenue 95,509 Compensated absences - current portion 16,582 Capital leases - current portion 147,767 Loans payable - current portion 283,040 Total current liabilities 590,836 Non-current liabilities Other postemployement benefits 96,753 Compensated absences 8,193 Loans payable 2,541,947 Total non-current liabilities 2,646,893 Total liabilities 3,237,729 Net position Net investment in capital assets 1,833,975 Unrestricted 544,523 Total net position 2,378,498$ See notes to the financial statements. 21 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Revenues, Expenses, and Changes in Net Position Proprietary Fund For the Year Ended September 30, 2015 Enterprise Operating revenue Greens fee/cart rentals/membership fees 2,332,066$ Golf shop revenues 407,269 Driving range revenues 313,882 Restaurant revenues 726,229 Miscellaneous 9,406 Total operating revenues 3,788,852 Operating expenses Golf course maintenance expenses 1,178,337 Clubhouse grounds expenses 93,330 Golf shop expenses 901,511 Food and beverage expenses 887,533 Administrative and general 102,537 Insurance 63,659 Depreciation and amortization 480,574 Total operating expenses 3,707,481 Operating income 81,371 Nonoperating revenues (expenses) Interest revenue 10,393 Interest expense (135,179) Total nonoperating revenues (expenses)(124,786) Change in net position (43,415) Net position - beginning 2,421,913 Net position - ending 2,378,498$ See notes to the financial statements. 22 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Cash Flows Proprietary Fund For the Year Ended September 30, 2015 Enterprise Cash flows from operating activities: Receipts from customers 3,639,513$ Payments to suppliers for goods or services (2,293,411) Payments to employees for services (986,947) Net cash provided by operating activities 359,155 Cash flows from capital and related financing activities: Principal paid on long term debt (398,642) Interest paid on debt (135,179) Acquisition of capital assets (8,161) Net cash provided (used) by capital and related financing activities (541,982) Cash flows from investing activities: Interest and dividends on investments 10,393 Net increase (decrease) in cash and cash equivalents (172,434) Cash and cash equivalents at beginning of year 832,217 Cash and cash equivalents at end of year 659,783$ Reconciliation of operating income to net cash provided by operating activities: Operating income 81,371$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 480,574 Change in assets and liabilities Decrease in accounts receivable 1,684 Increase in inventory (32,046) Decrease in prepaids 12,466 (Decrease) in accounts payable (44,961) Increase in deposits 2,000 (Decrease) in compensated absences payable (663) (Decrease) in deferred revenue (153,023) Increase in other postemployment benefits 11,753 Total adjustments 277,784 Net cash provided by operating activities 359,155$ See notes to the financial statements. 23 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Fiduciary Net Position Fiduciary Funds September 30, 2015 Employee Retirement Agency Funds Funds Assets Cash and cash equivalents 950,744$ 359,663$ Investments: Common equity securities 9,033,530 International common equity securities 1,148,713 U.S. Government agencies 980,088 Municipal bonds 208,536 Corporate bonds 3,363,819 Equity mutual funds 9,484,526 Fixed income mutual funds 2,452,812 Real estate investment fund 1,717,667 Accrued interest and dividends 47,972 Accounts receivable 389,562 Accounts receivable, broker-dealers 85,015 Prepaids 1,526 Total assets 29,864,510 359,663 Liabilities Accounts payable 38,701 Due to others 359,663 Total liabilities 38,701 359,663 Net Position Held in trust for pension benefits and other purposes 29,825,809$ $ See notes to the financial statements. 24 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Year Ended September 30, 2015 Employee Retirement Funds Additions Contributions Employer 1,439,922$ Plan members 342,634 State on-behalf payments 298,340 Total contributions 2,080,896 Investment earnings Dividends and interest 747,076 Net (decrease) in fair value of investments (572,219) Total investment earnings 174,857 Less: investment expenses 158,687 Total net investment earnings 16,170 Total additions 2,097,066 Deductions Administrative expense 97,512 Benefits 873,586 Refund of contributions 31,984 Total deductions 1,003,082 Change in net position 1,093,984 Net position - beginning 28,731,825 Net position - ending 29,825,809$ See notes to the financial statements. 25 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 26 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. 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. Its municipal area comprises approximately 1,900 acres of land and 1,200 acres of lakes, canals and lagoons. The Village’s nonseasonal population consists of approximately 13,000 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 generally accepted accounting principles, these financial statements include the Village (the primary government) and its component units. Component units are legally separate entities for which the Village is financially accountable. The Village is financially accountable if: • it appoints a voting majority of the organization’s governing board and (1) it is able to impose its will on the organization, or (2) there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on the Village, or • the organization is fiscally dependent on the Village and (1) there is a potential for the organization to provide specific financial benefits to the Village or (2) impose specific financial burdens on the Village. Organizations for which the Village is not financially accountable are also included when doing so is necessary in order to prevent the Town’s financial statements from being misleading. Based upon application of the above criteria, the Village of North Palm Beach has determined that there are two legally separate entities to consider as potential component units. The Village of North Palm Beach General Employees’ Retirement Fund and the Village of North Palm Beach Fire and Police Retirement Fund are component units as they are fiscally dependent on and impose a specific financial burden on the Village. They are reported in the Village’s financial statements as pension trust funds in the fiduciary funds financial statements. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all non-fiduciary activities of the Village. For 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. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 27 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. 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 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function 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 fiduciary 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. C. 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 within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, licenses, intergovernmental revenue, investment income, and charges for services are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenues are considered to be measurable and available only when received in cash by the Village. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 28 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) The Village reports the following major governmental funds: General Fund The general 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. Capital Projects Fund The capital projects fund is used to account for the cost of acquiring, constructing, and placing into service those capital improvements, which are associated with activities in the General Fund. The Village reports the following major (and only) proprietary fund: Country Club Enterprise Fund The fund accounts for the activities related to the Country Club. Additionally, the Village reports the following fund types: Special Revenue Funds The Village has four special revenue funds to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific sources. The funds are the Public Safety Fund, Northlake Boulevard Fund, Recreation, and On-Behalf Pension Contributions. Employee Retirement Funds The pension trust funds account for the activities of the General Employees Retirement Fund and the Fire and Police Officers Retirement Fund, which accumulate resources for pension benefits to qualified employees. Agency Funds The Agency Funds account for assets that are held for other parties and cannot be used to finance the Village’s own programs. The two agency funds are the Northlake Boulevard Task Force, which is for the streetscape improvement of Northlake Boulevard, and the Manatee Protection Fund, in which the assets are held in trust for the protection of manatees through the enforcement of boat speed zones on the intracoastal and inland waterways. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 29 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. 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 financial 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 sales 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. 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 needed. D. Assets, Liabilities, and Net Position 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. Accounts Receivable Accounts receivable of the General Fund consists of billed and unbilled receivables. Concentration of Credit Risk The Village performs ongoing credit evaluations of its customers and does not require collateral. The Village maintains an allowance for uncollectible accounts at a level which management believes is sufficient to cover potential credit losses. Investments Investments are reported at fair value, which is determined by using various third-party pricing sources. The Local Government Surplus Funds Trust Fund, administered by the Florida State Board of Administration, is a “2a-7 like” pool and these investments are valued using the pooled share price. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 30 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to” or “due from other funds”. Any residual balance 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 financial statements. Inventories and Prepaid Items Inventories are valued at cost determined on a last-in, first-out basis (LIFO). The costs of governmental fund type inventory are recorded as expenditures when consumed rather than when purchased. Inventories in the Enterprise Fund consist of goods for sale to the public. 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. Payments made to vendors for services that will benefit future periods are reported as prepaid items using the consumption method by recording an asset for the prepaid amount and reflecting an expenditure in the year in which the services are consumed. Capital Assets and Depreciation Capital assets, which include property, plant, infrastructure, and equipment, are reported in the applicable governmental or business-type activities column in the government-wide financial statements. The Village capitalizes all land purchases. The capitalization policy for other assets are items with an estimated life in excess of one year and an initial individual cost of $250,000 for infrastructure, $25,000 for land improvements, $50,000 for buildings and building improvements, and $5,000 for equipment and vehicles. The Village has elected to 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. Infrastructure is reported in buildings and improvements. The accounting and reporting treatment applied to the capital assets associated with a fund is determined by the fund’s 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 position. General capital assets are carried at historical cost. Where cost 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. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 31 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) Capital Assets and Depreciation (Continued) 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 on Enterprise Fund projects during the construction period. Additions, improvements, and other capital outlay that significantly 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 lives using the straight-line method of depreciation. The estimated lives for each major class of depreciable capital assets are as follows: Buildings, improvements and infrastructure 5-30 years Golf course improvements 5-30 years Machinery and Equipment 3-15 years Vehicles 3-20 years Deferred Outflows and Inflows of Resources The statement of net position includes a separate section for deferred outflows of resources. This represents the usage of net position applicable to future periods and will not be recognized as expenditures until the future period to which it applies. The Village reports deferred pension items in connection with its two Retirement Systems. These deferred pension charges are either (a) recognized in the subsequent period as a reduction of the net pension liability (which includes pension contributions made after the measurement date) or (b) amortized in a systematic and rational method as pension expense in future periods. The statement of net position also includes a separate section, listed below total liabilities, for deferred inflows of resources. This represents the acquisition of net position applicable to future periods and will not be recognized as revenue until the future period to which it applies. The Village currently has two types of deferred inflows. The first is local business tax revenues received prior to the period for which the taxes are levied, these are recognized as income in the period for which they are levied. The second is deferred pension items in connection with its two Retirement Systems. These items are amortized in a systemic and rational method and recognized as a reduction of pension expense in future periods. Unearned Revenue The Village reports unearned revenue on its statements of net position and governmental funds balance sheet. Unearned revenue arises when resources are obtained prior to revenue recognition. In subsequent periods, when revenue recognition criteria are met the unearned revenue is removed and revenue is recognized. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 32 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) Compensated Absences The Village’s employees are granted compensated absence pay for vacation and sick leave in varying amounts based on 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 some manner, e.g., in cash or paid time-off, now or upon termination or 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. Compensated absences are accrued when incurred in the government-wide and proprietary financial statements. A liability for these amounts is reported in the governmental funds only if the amounts 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 financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. 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 Position Equity in the government-wide statement of net position and the proprietary fund is displayed in three categories: 1) net investment in capital assets, 2) restricted, and 3) unrestricted. Invested in capital assets, net of related debt consists of capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct, or improve those assets. Restricted net position is reported when there are legal limitations imposed on their use by Village legislation or external restrictions by other governments, creditors, or grantors. Unrestricted net position consists of all net position that does not meet the definition of either of the other three components. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 33 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) Fund Equity In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the Village is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balance is reported under the following categories: • Nonspendable fund balance represents amounts that are not in spendable form or are legally or contractually required to be maintained intact. • Restricted fund balance represents amounts that can be spent only for specific purposes stipulated by external providers (e.g. creditors, grantors, contributor, or laws or regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. • Committed fund balance represents amounts that can be used only for the specific purposes pursuant to constraints imposed by Village Commission by the adoption of an ordinance, the Village’s highest level of decision making authority. Those committed amounts cannot be used for any other purpose unless the Village removes or changes the specified use by the adoption of an ordinance. • Assigned fund balance includes spendable fund balance amounts that are intended to be used for specific purposes, as expressed by the Village Commission or Village Manager, in accordance with the Villages fund balance policy, that are neither considered restricted nor committed. The Small Business Grants is a program the Village Council approved in the prior fiscal year to provide matching grants of up to $7,500 for improvements to small business properties. • Unassigned fund balance is the residual fund balance classification for the general fund. 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. The Village will first use committed fund balance, then assigned fund balance, and then unassigned fund balance when expenditures are incurred for purposes for which any of the unrestricted fund balance classifications could be used. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 34 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 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, deferred inflows and outflows, 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 collectability of accounts receivable, the use and recoverability of inventory, the useful lives and impairment of 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. Statement of Cash Flows For purposes of the statement of cash flows, the Village considers all short-term investments that are highly liquid 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. NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary Data Formal budgetary integration is employed as a management control device during the year for the General Fund and the Enterprise Fund. The only governmental fund with a legally adopted annual budget is the General Fund. This budget is adopted on a basis consistent with generally accepted accounting principles. Except for budgeting capital expenditures and not budgeting for depreciation, the annual appropriated budgets for the Enterprise Funds are adopted on a basis consistent with generally accepted accounting principles. For budgeting purposes, current year encumbrances are not treated as expenditures. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 35 NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) A. Budgetary Data (Continued) 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 1st. The proposed budget includes expenditures and the means of financing them. • During the months of July, August and September, the Council holds public meetings to obtain taxpayer comments. • Upon completion of the public hearings and prior to October 1st, a final operating budget is legally enacted through the passage of an ordinance. Estimated beginning fund balances are considered in the budgetary process. • The Village Manager is authorized to transfer budgeted amounts up to $10,000. Any change to the total fund expenses must be approved by the Village Council. • Appropriations along with encumbrances lapse on September 30th. Budgeted amounts are as originally adopted, or as amended by appropriate action. During the year, several supplementary appropriations were necessary. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g. purchase orders or contracts) outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. The General Fund had $313,454 and the Capital Projects Fund had $399,588 in outstanding encumbrances at year-end. B. Property Taxes Under Florida law, the assessment of all properties and the collection of all county, municipal, and school board property taxes are consolidated in the offices of the County Property Appraiser and the County Tax Collector. All property is reassessed according to its fair market value on January 1 of each year and each assessment roll is submitted to the State Department of Revenue for review to determine if the assessment rolls meet all of the appropriate requirements of State law. The laws of the State regulating tax assessment are also designed to assure a consistent property valuation method statewide. State Statutes permit municipalities to levy property taxes at a rate of up to 10 mills. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 36 NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) B. Property Taxes (Continued) The tax levy of the Village is established by the Council prior to October 1st 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, 2015, was 7.3300 ($7.3300 for each $1,000 of assessed valuation). Taxes may be paid less a 4% discount in November or at declining discounts each month through the month of February. All 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 1st following the tax year, certificates are offered for sale 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 on 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, 2015, unpaid delinquent taxes are not material and have not been recorded by the Village. NOTE 3 – DEPOSITS AND INVESTMENTS Deposits As of September 30, 2015, the carrying amount of the Village’s deposits (including fiduciary funds) was $4,533,356 and the bank balances totaled $4,529,334. In addition to insurance provided by the Federal Depository Insurance Corporation, deposits are held in banking institutions approved by the State Treasurer of the State of Florida to hold public funds. Under Florida Statutes Chapter 280, Florida Security for Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or other banking institution eligible collateral. In the event of failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. The Village’s deposits at year end are considered insured for custodial credit risk purposes. The Village pools idle cash from all funds for the purpose of increasing income through investment activities. Investment income from the pool is allocated back to the respective funds based on each fund’s equity in the pool with the exception of the Capital Projects Fund and the special revenue funds. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 37 NOTE 3 – DEPOSITS AND INVESTMENTS (Continued) Investments The State Board of Administration (SBA) administers the Florida PRIME, which is governed by Chapter 19-7 of the Florida Administrative Code and Chapters 218 and 215 of the Florida Statutes. These rules provide guidance and establish the policies and general operating procedures for the administration of the Florida PRIME. The Florida PRIME is not a registrant with the Securities and Exchange Commission (SEC); however, the Board has adopted operating procedures consistent with the requirements for a 2a-7 fund, which permits money market funds to use amortized cost to maintain a constant net asset value (NAV) of $1 per share. The fair value of the position in the Florida PRIME is equal to the value of the pool shares. The investment in the Florida PRIME is not insured by FDIC or any other governmental agency. At September 30, 2015, Florida PRIME was assigned a "AAA(m)" principal stability fund rating by the Standard and Poor's Ratings. Florida PRIME is considered a SEC 2a7-like fund, thus, the account balance should also be considered its fair value. The weighted average days to maturity (WAM) of Florida PRIME at September 30, 2015, was 29 days. A portfolio’s WAM reflects the average maturity in days based on final maturity or reset date, in the case of floating rate instruments. WAM measures the sensitivity of Florida PRIME to interest rate changes. As of September 30, 2015, the Village had $511,595 invested in Florida PRIME. Additional information regarding the Local Government Surplus Funds Trust Fund may be obtained from the State Board of Administration. The American Core Realty Fund, LLC is an alternative investment vehicle valued using the net asset value (NAV) provided by the investment manager of this fund. The NAV is based on the value of the underlying assets owned by the fund minus its liabilities and then divided by the number of shares or percentage of ownership outstanding. The NAV’s unit price is quoted on a private market that is not active; however, the unit price is based on underlying investments which are traded on an active market. The values of this alternative investment is not necessarily indicative of the amount that could be realized in a current transaction. The fair value may differ significantly from the value that would have been used had a ready market for the underlying fund existed, and the differences could be material. Future confirming events will also affect the estimates of fair value and the effect of such events on the estimated fair value could be material. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 38 NOTE 3 – DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) As of September 30, 2015, the Village held the following investments: Moody’s Credit Rating Fair Value Weighted Average Maturity Governmental Funds: Wells Fargo municipal money market fund N/R $ 150,945 N/A State Board of Administration Florida PRIME AAA(m) 511,595 29 days (1) Money Market Funds N/R 1,121,192 N/A Commercial Paper P-1 199,100 154 days U.S. Government and Agency Obligations Aaa 933,311 1.55 yrs. U.S. Treasury Notes Aaa 5,655,611 1.69 yrs. Municipal Bonds Aa3 120,493 1.09 yrs. Corporate Bonds Aa3 to A2 1,861,772 1.83 yrs. Supra-National Agency Bonds Aaa 120,038 2.71 Fiduciary Funds: Money Market Funds N/R 729,277 N/A GNMA, FNMA, FHLMC Pools N/R 230,559 18.15 yrs. U.S. Government Agencies Aaa 729,862 9.44 yrs. Collateralized Mortgages Aaa 19,667 23.17 yrs. Corporate Bonds Aaa to Baa2 3,363,819 7.67 yrs. Municipal Bonds Aa3 to Aa2 208,536 16.45 yrs. Domestic Common Equity Securities N/R 9,033,530 N/A International Common Equity Securities N/R 1,148,713 N/A Equity Mutual Funds N/R 4,542,687 N/A Fixed Income Mutual Funds N/R 7,394,651 N/A Real Estate Investment Fund N/R 1,717,667 N/A Total investments $39,793,025 (1) Credit rating by Standard & Poor’s Investments are held in the governmental and fiduciary funds. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 39 NOTE 3 – DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) Interest rate risk – Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the time to maturity, the greater the exposure to interest rate risks. The Village limits its exposure to fair value losses resulting from rising interest rates by structuring the investment portfolio so that the securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and investing operating funds primarily in short-term securities, money market mutual funds, or similar investment pools unless it is anticipated that long-term securities can be held to maturity without jeopardizing the liquidity requirements. The Retirement Funds do not have a formal investment policy that limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates. The Village’s investment in asset backed securities consist of mortgage pass-through securities based on pools of residential home mortgage loans which are subject to prepayments and therefore highly sensitive to changes in interest rates. Custodial credit risk – For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Village will not be able to recover the value of its investments that are in the possession of an outside party. At September 30, 2015, all investments were insured or collateralized, except the Village’s two pension funds, in which the underlying securities are held by counterparty, or by its trust department or agent but not in the Village’s name and is uninsured and unregistered. However, all securities are registered in the funds’ names. The investment in mutual funds and investment partnerships are considered unclassified pursuant to the custodial credit risk categories of GASB Statement No. 3, because they are not evidenced by securities that exist in physical or book-entry form. Concentrations of credit risk – Concentration of credit risk is defined as the risk of loss attributed to the magnitude of an investment in a single user. The Village places no limit on the amount it may invest in any one issuer, except those in the Fire and Police Retirement Fund. Not more than five (5) percent of the Fund’s assets shall be invested in the common stock or capital stock of any one issuing company. Investing in Foreign Markets – Investing in foreign markets may involve special risks and considerations not typically associated with investing in companies in the United States of America. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and future adverse political, social, and economic developments. Moreover, securities of foreign governments may be less liquid, subject to delayed settlements, taxation on realized or unrealized gains, and their prices are more volatile than those of comparable securities in U.S. companies. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 40 NOTE 3 – DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) Investing in Real Estate. – The Village is subject to the risks inherent in the ownership and operation of real estate. These risks include, among others, those normally associated with changes in the general economic climate, trends in the industry including creditworthiness of tenants, competition for tenants, changes in tax laws, interest rate levels, the availability of financing and potential liability under environmental and other laws. Authorized Investments –The Village has adopted an investment policy that applies to all the investment activity except the Employees’ Pension Funds, which are organized and administered separately, as listed below, or for funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds. The Village is authorized to invest its funds as follows: 1. Banks, Qualified Public Depositories with a collateral pledge level of twenty-five percent or fifty percent; 2. U.S Treasury obligations and obligations the principal and interest of which are backed or guaranteed by the full faith and credit of the U.S Government; 3. Debt obligations, participations or other instruments issued or fully guaranteed by any U.S. Federal agency, instrumentality or government sponsored enterprise, 4. Supra-Nationals, U.S. dollar denominated debt obligations of a multilateral organization of governments where the U.S. is a shareholder and voting member with a minimum credit quality rating of A-1/P-1, AA-/Aa3 or equivalent, 5. U.S. dollar denominated corporate notes, bonds or other debt obligations issued or guaranteed by a domestic or foreign corporation, financial institution, non-profit or other entity with a minimum credit quality rating of A-1/P-1, A-/A3 or equivalent, 6. Obligations, including both taxable and tax - exempt, issued or guaranteed by any State, territory or possession of the United States, political subdivision, public corporation, authority, agency board, instrumentality or other unit of local government of any State or territory with a minimum credit quality rating of SP-1/MIG 1, A-/A3 or equivalent, 7. Mortgage- backed securities (MBS), backed by residential, multi-family or commercial mortgages, that are issued or fully guaranteed as to principal and interest by a U.S. Federal agency or government sponsored enterprise, including but not limited to pass- throughs, collateralized mortgage obligations (CMOs) and REMICs, 8. Asset-backed securities ( ABS ) whose underlying collateral consists of loans, leases or receivables, including but not limited to auto loans /leases, credit card receivables, student loans, equipment loans /leases, or home-equity loans with a minimum credit quality rating of A-1/P-1, AAA/Aaa or equivalent, THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 41 NOTE 3 – DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) 9. U.S. dollar denominated commercial paper issued or guaranteed by a domestic or foreign corporation, company, financial institution, trust or other entity, including both unsecured debt and asset-backed programs with a minimum credit quality rating of A-1/P-1 or equivalent, 10. Shares in open-end and no-load money market mutual funds, provided such funds are registered under the Investment Company Act of 1940 and operate in accordance with Rule 2a-7 with a minimum credit quality rating of AAAm/Aaa-mf or equivalent, 11. State, local government or privately- sponsored investment pools that are authorized pursuant to state law with a minimum credit quality rating of AAAm/Aaa-mf or equivalent. The Village General Employees’ Retirement Fund is authorized to invest its funds as follows: 1. Interest-bearing time deposits in qualified public depositories, as defined in Chapter 280, Florida Statutes; 2. The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Chapter 163, Florida Statutes; 3. Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency minimum credit quality rating of A-1 from S&P or P-1 from Moody’s; 4. Obligations issued by the U.S. Government or obligations guaranteed by agencies or instrumentalities of the U.S. Government; 5. Foreign Securities, including convertible bonds, convertible preferred issues and preferred stock; 6. Equities, including publically traded REITS, commodities, convertible bonds, convertible preferred issues and preferred stock. Foreign security convertibles are limited to those that settle in U.S. dollars and are traded on one or more of the nationally recognized national exchanges. 7. Bonds or any other evidence of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided the issues are traded on any one (1) or more of the recognized national stock exchanges or over the counter and holds a minimum credit rating of BBB from S&P or Baa from Moody’s, except that up to 20% of the fixed income portfolio may be held in securities that do not meet this criteria. The weighted average quality rating of the portfolio will be A or better and the effective duration of the portfolio shall be kept within 20% of Barclays Aggregate Index; 8. Comingled stock, bond or money market funds. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 42 NOTE 3 – DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) Authorized Investments (Continued) 9. Securities of, or interest in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. sections 80a-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; 10. Other investments authorized by law or by ordinance by the Village. Investments of the Fire and Police Retirement Fund can consist of the following: 1. Time or savings accounts of a national bank, a state bank insured by the Federal Deposit Insurance Corporation, or a savings, building and loan association insured by the Federal Deposit Insurance Corporation; 2. Obligations issued by the U.S. Government, or an agency or instrumentality of the U.S. Government, as well as obligations guaranteed by agencies or instrumentalities of the U.S. Government, including mortgage-related or asset-backed securities; 3. Bonds, stocks, or any other evidence of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided: a. The corporation is listed on any one (1) or more of the recognized national stock exchanges and holds a rating in one of the three (3) highest classifications by a major rating service; and b. The Board shall not invest more than five (5) percent of its assets in the common stock, capital stock, bonds or indebtedness of any one (1) issuing company, nor shall the aggregate investment of in any one (1) issuing company exceed five (5) percent of the outstanding capital stock of that company, nor shall the aggregate of its investments in equities at cost exceed sixty (60) percent of the pension funds’ assets; 4. Notwithstanding any provision of this section to the contrary, the Board is specifically authorized to invest in foreign securities to the extent authorized by Sections 175.071(1) and 185.06(1)(b), Florida Statutes; 5. Fixed income investments defined as preferred issues and fixed income securities provided all issues shall meet or exceed S&P’s A or Moody’s A credit rating; 6. Money market funds, defined as fixed income securities having a maturity of less than one year provided all issues shall meet or exceed S&P’s A1 or Moody’s P1 credit rating; 7. Bonds issued by the State of Israel; 8. Purchase in commingled real estate funds. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 43 NOTE 3 – DEPOSITS AND INVESTMENTS (Continued) A reconciliation of deposit and investments as shown on the statement of net position and statement of fiduciary net position for the Village is as follows: By Category: Deposits $ 4,533,356 Petty cash 6,350 Investments 39,793,025 Total deposits and investments $44,332,731 Presented in the statement of net position Governmental activities Cash and cash equivalents $ 4,809,660 Restricted cash and cash equivalents 177,431 Investments 8,985,759 Business-type activities Cash and cash equivalents 659,783 Total statements of net position 14,632,633 Presented in the statement of fiduciary net position Pension trust funds Cash and cash equivalents 950,744 Investments 28,389,691 Agency funds Cash and cash equivalents 359,663 Total fiduciary funds 29,700,098 Total deposits and investments $44,332,731 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 44 NOTE 4 – RECEIVABLES Receivables at September 30, 2015, were as follows: General Fund Country Club Total Utility franchise fees & taxes $ 372,462 $ $ 372,462 Conroy Drive assessment 10,553 10,553 Other accounts receivable 34,986 18,003 52,989 Total accounts receivable $ 418,001 $ 18,003 $ 436,004 NOTE 5 – CAPITAL ASSETS Capital Assets activity for the year ended September 30, 2015, was as follows: Primary Government Governmental Activities: Beginning Balance Additions Deletions Transfers Ending Balance Capital assets not being depreciated: Land $ 2,055,889 $ $ $ $ 2,055,889 Construction in progress 88,182 178,526 266,708 Capital assets being depreciated: Buildings 9,267,120 (25,185) 9,241,935 Improvements 13,827,981 71,500 (5,061) 13,894,420 Machinery and equipment 3,035,292 250,319 (195,351) 3,090,260 Vehicles 3,868,228 879,671 (334,450) 4,413,449 Total at historical cost: 32,142,692 1,380,016 (560,047) 32,962,661 Less accumulated depreciation for: Buildings (5,232,005) (259,032) 24,013 (5,467,024) Improvements (6,968,512) (902,778) 2,067 (7,869,223) Machinery and equipment (1,964,872) (216,342) 195,351 (1,985,863) Vehicles (3,010,376) (250,394) 331,235 (2,929,535) Total accumulated depreciation (17,175,765) (1,628,546) 552,666 (18,251,645) Governmental activities capital assets, net $ 14,966,927 $ (248,530) $ (7,381) $ $ 14,711,016 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 45 NOTE 5 – CAPITAL ASSETS (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 97,964 Public safety 401,212 Public works 670,952 Community development 23,242 Leisure services 435,176 Total depreciation expense, governmental activities $1,628,546 Business-type activities: Beginning Balance Additions Deletions Transfers Ending Balance Capital assets not being depreciated: Land $ 1,051,311 $ $ $ $ 1,051,311 Construction in progress Capital assets being depreciated: Buildings 1,405,035 1,405,035 Improvements 6,095,930 6,095,930 Machinery and equipment 370,546 (1,454) 369,092 Vehicles 405,466 8,161 413,627 Total at historical cost: 9,328,288 8,161 (1,454) 9,334,995 Less accumulated depreciation for: Buildings (1,037,458) (25,828) (1,063,286) Improvements (2,560,005) (307,685) (2,867,690) Machinery and equipment (273,625) (45,820) 1,454 (317,991) Vehicles (201,987) (96,204) (298,191) Total accumulated depreciation (4,073,075) (475,537) 1,454 (4,547,158) Business-type activities capital assets, net $ 5,255,213 $ (467,376) $ $ $ 4,787,837 Construction Commitments The business-type activities have a commitment of $264,000 for design services for the country club. Intangible Assets The intangible asset consists of the right to the availability and use of reclaimed water resulting from an agreement with Seacoast Utility Authority. The asset had an original value of $50,377 and is being amortized on a straight line basis over the period of the expected benefit of ten years. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 46 NOTE 6 – LONG TERM LIABILITIES Change in Long-Term Liabilities Long-term liability activity for the year ended September 30, 2015, was as follows: Beginning Balance (1) Additions Reductions Ending Balance Amount Due Within One Year Governmental activities: Claims and settlements $ 50,000 $ $ $ 50,000 $ OPEB (see Note 13) 1,955,877 254,177 2,210,054 Net pension liability (see Note 8) 5,271,877 (710,785) 4,561,092 Compensated absences payable 1,209,366 1,010,009 (952,656) 1,266,719 888,662 Total $ 8,487,120 $ 1,264,186 $ (1,663,441) $ 8,087,865 $ 888,662 Business-type activities: Loans payable $ 3,096,925 $ $ (271,938) $ 2,824,987 $ 283,040 Capital leases 274,471 (126,704) 147,767 147,767 OPEB (see Note 13) 85,000 11,753 96,753 Compensated absences payable 25,438 8,408 (9,071) 24,775 16,582 Total $ 3,481,834 $ 20,161 $ (407,713) $ 3,094,282 $ 447,389 (1) As restated, see Note 18 Governmental activities other post-employment benefit obligations, compensated absences and net pension liabilities are expected to be paid out of the general fund. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 47 NOTE 6 – LONG TERM LIABILITIES (Continued) Loans Payable $4,893,673 Promissory Notes The Village Council adopted Resolution No. 23-2006 authorizing the issuance of a note in the amount of $4,893,673 to finance certain capital expenditures relating to the municipal golf course and country club. The revenues of the Country Club are pledged to secure the loan. Principal and interest payments are due semi-annually in the amount of $199,079, with a final maturity date of April 1, 2024. The interest rate on the loan is 4.11% and is subject to adjustment in the event of taxability of the interest on this note. As of September 30, 2015, the principal amount outstanding was $2,824,987 and was for the purpose of business-type activities. Annual debt service requirements to maturity are as follows: Business-type activities: Year Ending Principal Interest Total 2016 $ 283,040 $ 115,119 $ 398,159 2017 295,287 102,872 398,159 2018 307,719 90,440 398,159 2019 320,677 77,482 398,159 2020 333,990 64,169 398,159 2021 - 2024 1,284,274 109,221 1,393,495 $ 2,824,987 $ 559,303 $ 3,384,290 $485,847 Capital Lease The Village entered into a three year capital lease agreement for the purpose of financing the lease-purchase of $485,847 of equipment for the Country Club in November 2012. Principal and interest payments are due monthly, with a final maturity date in January 2016. The final payment includes a balloon payment of $115,900. As of September 30, 2015, the principal amount outstanding was $147,766 and the net book value of the equipment was $138,888. The rate used to impute interest was 4%. Annual debt service requirements to maturity are as follows: Year Ending Principal Interest Total 2016 $ 147,766 $ 1,799 $ 149,565 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 48 NOTE 6 – LONG TERM LIABILITIES (Continued) Claims and Settlements Effective October 1, 2006, the Village discontinued its participation in the Southeast Risk Management Association (SERMA) and joined the Florida Municipal Insurance Trust (FMIT). However, as a former participant in SERMA, the Village is liable for claims incurred through September 30, 2006. In the fiscal year ending September 30, 2014, SERMA was dissolved and the outstanding claims were transferred to the Village’s current workman’s compensation administrator. As part of the dissolution, the Village received $33,846 from SERMA as its portion of the claims reserve balance, this was recorded as an accrued liability in the General Fund. At this time, the Village believes that the $33,846 recorded in the General Fund along with the $50,000 recorded as a long-term liability is adequate to cover the outstanding claims. NOTE 7 – RISK MANAGEMENT The Village is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The Village currently reports all 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. The Village is covered by Florida Statutes under the Doctrine of Sovereign Immunity which effectively limits the amount of liability of municipalities to individual claims of $200,000/$300,000 for all claims relating to the same incident. However, under certain circumstances, a plaintiff can seek to recover damages in excess of statutory limits by introducing a claims bill to the Florida Legislature. The limits addressed in Florida Statutes do not apply to claims filed in federal courts. There have been no significant reductions in insurance coverage in the prior year. No settlements exceeded insurance coverage for the past three years. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 49 NOTE 8 – EMPLOYEE RETIREMENT PLANS The Village maintains the following two separate single employer defined benefit plans: Village of North Palm Beach Fire and Police Retirement Fund (F&P), covering firefighters and police officers, and Village of North Palm Beach General Employees Retirement Fund (GERF), 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 Fire Fund issued separate stand-alone financial statements for the year ended September 30, 2015, the report may be obtained from the Village Clerk, at the Village of North Palm Beach, 501 U.S. Highway 1, North Palm Beach, Florida 33408. The General Employees Plan does not issue separate financial statements. Each plan has its own board that acts as plan administrator and trustee: The Fire and Police Retirement Fund Board of Trustees consists of five members (5); four (4) of whom were elected by a majority of the members of the plan. Two (2) of the elected members are certified firefighters of the Village and two (2) are certified police officers of the Village. The fifth member of the board is a legal resident of the Village and is appointed by the Village council. The General Employees Retirement Board consists of five members (5); two (2) of whom were employees elected by a majority of the members of the plan, two (2) of the members is a legal resident of the Village and appointed by the Village council, the two (2) council appointed members of the Board shall appoint a member of the general public who has never been employed by the Village to serve as the fifth member of the 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. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES All Retirement Plans Basis of Accounting. The retirement plans are reported on the accrual basis of accounting. The plans’ fiduciary net position have been determined on the same basis used by the pension plans. Plan member and state contributions are recognized as revenues in the period that the contributions are due. Employer contributions to each plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Method Used to Value Investments. Investments 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. Investments Concentrations. There were no investments representing concentrations of 5% or more of net plan assets in investments that are not issued or guaranteed by the U.S. government. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 50 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) PLAN DESCRIPTION, INVESTMENT AND CONTRIBUTION INFORMATION The following schedule is provided for general information purposes only and is derived from the respective actuarial reports and Village information for the two retirement plans. Plan participants should refer to the appropriate source documents for more complete information on the plans. General Employees’ Fire and Police Plan Description: Authority Village Ordinance Village Ordinance/State Asset Valuation: Reporting Fair Value Fair Value Legal Reserves None None Long-Term Receivable None None Internal/Participant Loans None None Membership of each plan consisted of the following at October 1, 2014: GERF F&P Inactive Plan Members or Beneficiaries currently receiving benefits 22 22 Inactive Plan Members entitled to but not yet receiving benefits 49 9 Active Plan Members 39 52 Total 110 83 General Employees' Retirement System Plan Description. The plan is established under Code of Ordinances for the Village of North Palm Beach, Florida, Part II, Chapter 2, and was most recently amended under Ordinance No. 2010-07. The Plan is also governed by certain provisions of Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. The Plan provides retirement benefits as well as death benefits. All full time general employees who are not sworn police officers or firefighters shall become members of the system on October 1st following completion of 12 months of employment as a condition of employment. For those employees retired before February 1, 1982, those employees hired after September 30, 2000, or those employees hired before October 1, 2000, who elect to contribute an extra 2%, a 3% Cost of Living increase is paid annually from the Plan. Authority to establish and amend the benefit provisions of the plan rests with the Village Council. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 51 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) General Employees' Retirement System (Continued) All benefits vest based on the following years of credited service: Years of Credited Service Vested % Under 5 0% 5 or 6 50% 7 or 8 75% 9 or more 100% Employees become eligible for normal retirement benefits after attaining the age of 60 and completing nine years of credited service, or attaining the age of 65 (depending on employee contribution rate). The normal retirement benefit consists of a life annuity, options available, (subject to cost of living increases not to exceed 3% a year), of either 2%, 2.25%, or 2.5% (depending on employee contribution rate) of Average Monthly Earnings (AME) times credited service up to 20 years plus 1% of AME times credited service over 20 years. Early retirement benefits can be received at age 55. The benefit is determined as for normal retirement and payable at normal retirement date or payable immediately after reduction by 5% for each year by which the benefit commencement date precedes the normal retirement date. If an active member dies, his beneficiary receives a refund of member contributions without interest. For a member who is age 55 and has at least five years of service but who dies before commencement of retirement benefits, a monthly benefit is payable to the designated beneficiary; the benefit is calculated as though the member had retired on his date of death and payable according to the option elected by the employee. For an active member who has at least five years of credited service and dies prior to reaching normal retirement date, a benefit equal to his vested accrued benefit will be paid to his beneficiary for ten years. If an employee terminates his employment, he is entitled to the following: - With less than five years of credited service, a refund of member contributions without interest and no other benefit. - With five or more years of credited service, a refund of member contributions, the vested accrued benefit payable at normal retirement date or at any time after age 55 is attained, with the benefit being subject to the same reduction as for early retirement benefits. The vesting schedule is listed above. "Average Monthly Earnings" is the average during the 5 years within the last 10 years of employment which produces the highest average. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 52 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) General Employees' Retirement System (Continued) "Credited Service" consists of the total number of years and fractional parts of years of actual service with the Village and shall apply to an employee whose employment is terminated with the Village and who recommences fulltime employment within two years from the date of termination. Asset Allocation. The plan’s adopted asset allocation policy as of September 30, 2015, is as follows: Asset Class Target Allocation Domestic equity 45% International equity 15 Domestic bonds 40 Total 100% Rate of Return. For the year ended September 30, 2015, the annual money-weighted rate of return on Pension Plan investments, net of pension plan investment expense, was -0.39 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Contributions. General employees may contribute 6%, 4%, 2% or 0% of earnings as elected by the employee, with the retirement benefit received being based on the amount contributed. The Village is required to contribute the amount necessary to fund the Plan properly according to the Plan’s actuary. Contribution requirements of plan members and the Village are established and may be amended by the Village Council. Fire and Police Retirement System Plan Description. The plan is established under Code of Ordinances for the Village of North Palm Beach, Florida, Part II, Chapter 2, and was most recently amended under Ordinance No. 2015-05. The Plan is also governed by certain provisions of Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. The plan provides retirement benefits as well as death and disability benefits. All benefits vest after ten years of credited service. All fulltime police officers or firefighters are eligible for membership immediately upon hire. Previously, members were not eligible until October 1st following completion of 12 months of employment. Cost of living adjustments (COLA) are provided annually each October 1, to reflect changes in CPI (subject to maximum increases or decreases of 3% per year). Authority to establish and amend the benefit provisions of the plan rests with the Village Council. Employees become eligible for normal retirement benefits after attaining the age of 55, or the date on which the member attains age 52 and 25 credited years of service. Previously, employees became eligible for normal retirement benefits after attaining the age of 55, only. The normal retirement benefit consists of ten years certain and life thereafter, with other options available, (subject to cost of living adjustments not to exceed 3% a year), of 2.5% of AME times the years of credited services, with THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 53 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) Fire and Police Retirement System (Continued) Plan Description. (Continued) a maximum benefit of 60% of AME. Members are eligible for non-service connected disability, after ten years of credited service and a total and permanent disability. For service connected disability, a total and permanent disability with no service requirement, the disability benefit consists of a ten year certain and life annuity that can be provided by the single-sum value of the member’s accrued pension benefit, but is at least 42% of AME for service connected disability and at least 25% of AME for non-service connected disability. See the description of the General Employees’ Retirement System for the remainder of the benefits, except that early retirement and termination benefits for vested members can be received at age 50. Asset Allocation. The plan’s adopted asset allocation policy as of September 30, 2015, is as follows: Asset Class Target Allocation Domestic equity 50% International equity 10 Domestic bonds 30 Real estate 10 Total 100% Rate of Return. For the year ended September 30, 2015, the annual money-weighted rate of return on Pension Plan investments, net of pension plan investment expense, was 0.660 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Contributions. Firefighter members are required to contribute 2% thru April 1, 2015, contribute 3.50% from April 1, 2015 to March 31, 2016 and 5.00% thereafter of their basic compensation to the plan. Non-collectively bargained Police Officer are required to contribute 2% their basic compensation . Collectively bargained Police Officer members are required to contribute; 3.33% for the fiscal year ended September 30, 2015 and 4.00% thereafter of their basic compensation to the plan. The Village is required to contribute the remaining amount to fund the plan using the Entry Age Actuarial Cost Method. Contribution requirements of plan members and the Village are established and may be amended by the Village Council. The Florida Constitution requires local governments to make the actuarially determined contribution. The Florida Division of Retirement reviews and approves each local government’s actuarial report prior to its being approved for use for funding purposes. Additionally, the State collects locally authorized insurance premium surcharges 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. Contributions to the Plan from the State of Florida totaled $298,340 during the fiscal year ended September 30, 2015. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 54 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) All Retirement Plans Net Pension Liability. The components of net pension liability of the Village on September 30, 2015 were as follows: General Employees Fire and Police Total pension liability $ 14,556,047 $ 21,852,818 Plan fiduciary net position (12,109,145) (17,716,664) Village's net pension liability $ 2,446,902 $ 4,136,154 Plan fiduciary net position as a percentage of total pension liability 83.19% 81.07% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2014 updated to September 30, 2015 using the following actuarial assumptions applied to the September 30, 2015 measurement period. General Employees Fire and Police Inflation 4.00% 3.00% Salary increases 5.50% 6.00% Investment rate of return 7.50% 7.90% Mortality RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale AA RP-2000 Table with no projection - Based on a study of over 650 public safety funds, this table reflects a 10% margin for future mortality improvements. (Disabled lives set forward 5 years) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included the pension plan’s target asset allocation as of September 30, 2015, are summarized in the following table: THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 55 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) All Retirement Plans Asset Class Long-Term Expected Real Rate of Return General Employees Fire and Police Domestic equity 6.97% 7.95% International equity 5.6% 8.00% Domestic bonds 4.44% 2.70% Real estate N/A 6.00% Discount Rate. The discount rate used to measure the total pension liability was 7.5 percent for the General Employees Retirement Fund and 7.90 percent for the Fire and Police Retirement Fund. The projection of cash flows used to determine the discount rates assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liabilities of the Village, calculated using the discount rates above, as well as what the Village’s net pension liabilities would be if it were calculated using a discount rate that is one percentage-point lower or one percentage-point higher than the current rate. General Employees' Retirement System Current Discount 1% Decrease Rate 1% Increase 6.50% 7.50% 8.50% Village's net pension liability $ 4,428,759 $ 2,446,902 $ 793,236 Fire and Police Retirement System Current Discount 1% Decrease Rate 1% Increase 6.90% 7.90% 8.90% Village's net pension liability $ 7,202,336 $ 4,136,154 $ 1,605,361 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 56 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) All Retirement Plans The Village’s total pension liability, plan fiduciary net position, net pension liability, pension related deferred outflows and inflows, and pension expense for the fiscal year ended September 30, 2015, are reported using a measurement date of September 30, 2014. Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2013 updated to September 30, 2014 using the following actuarial assumptions applied to the September 30, 2014, measurement period. General Employees Fire and Police Inflation 4.00% 4.00% Salary increases 5.50% 6.00% Investment rate of return 7.50% 7.90% Mortality RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale AA RP-2000 Table with no projection - Based on a study of over 650 public safety funds, this table reflects a 10% margin for future mortality improvements. (Disabled lives set forward 5 years) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included the pension plan’s target asset allocation as of September 30, 2014, are summarized in the following table: THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 57 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) All Retirement Plans Actuarial Assumptions (Continued) Asset Class Target Allocation Long-Term Expected Real Rate of Return General Employees Fire and Police General Employees Fire and Police Domestic equity 45% 50% 7.00% 8.25% International equity 15 10 7.00% 8.25% Domestic bonds 40 30 2.50% 3.00% Real estate N/A 10 N/A 6.25% Total 100% 100% Discount Rate. The discount rate used to measure the total pension liability was 7.5 percent for the General Employees Retirement Fund and 7.90 percent for the Fire and Police Retirement Fund. The projection of cash flows used to determine the discount rates assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 58 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) General Employees' Retirement System Changes in Net Pension Liability Using a measurement date of September 30, 2014, the components of the net pension liability reported by the Village at September 30, 2015, were as follows: Total Fiduciary Net Pension Net Pension Description Liability (a) Position (b) Liability (a)-(b) Balances at September 30, 2013 $ 12,728,438 $ 10,433,153 $ 2,295,285 Changes due to: Service cost 374,926 374,926 Interest 972,865 972,865 Employer contributions 562,953 (562,953) Employee contributions 142,609 (142,609) Benefit payments and refunds (263,674) (263,674) Net investment income 1,072,009 (1,072,009) Administrative expenses (17,171) 17,171 Total changes 1,084,117 1,496,726 (412,609) Balances at September 30, 2014 $ 13,812,555 $ 11,929,879 $ 1,882,676 Sensitivity of the Net Pension Liability to Changes in the Discount Rate Current Discount 1% Decrease Rate 1% Increase 6.50% 7.50% 8.50% Village's net pension liability $ 3,851,148 $ 1,882,676 $ 241,095 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 59 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) General Employees' Retirement System (Continued) Pension expense and deferred outflows and inflows of resources For the fiscal year ended September 30, 2015, the Village recognized pension expense of $369,221. In addition, the Village reported deferred outflows of resources and deferred inflows of resources related to the Plan from the following sources: Deferred Deferred Outflows Inflows Description of Resources of Resources Net difference between projected and actual earnings on plan investments $ $ 218,877 Village plan contributions subsequent to the measurement date 462,420 Total $ 462,420 $ 218,877 The deferred outflows of resources totaling $462,420 resulting from Village contributions to the plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the plan will be recognized in pension expense as follows: Year ended September 30: Amount 2016 $ (54,719) 2017 (54,719) 2018 (54,719) 2019 (54,720) 2020 Thereafter $ (218,877) THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 60 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) Fire and Police Retirement System Changes in Net Pension Liability Using a measurement date of September 30, 2014, the components of the net pension liability reported by the Village at September 30, 2015, were as follows:: Total Fiduciary Net Pension Net Pension Description Liability (a) Position (b) Liability (a)-(b) Balances at September 30, 2013 $ 17,476,586 $ 14,499,921 $ 2,976,665 Changes due to: Service cost 699,244 699,244 Interest 1,419,425 1,419,425 Change in excess state money 90,535 90,535 Change in assumptions 246,146 246,146 Employer contributions 943,634 (943,634) Employer contributions-state 321,230 (321,230) Employee contributions 87,010 (87,010) Benefit payments and refunds (451,574) (451,574) Net investment income 1,468,473 (1,468,473) Administrative expenses (66,748) 66,748 Total changes 2,003,776 2,302,025 (298,249) Balances at September 30, 2014 $ 19,480,362 $ 16,801,946 $ 2,678,416 Sensitivity of the Net Pension Liability to Changes in the Discount Rate Current Discount 1% Decrease Rate 1% Increase 6.90% 7.90% 8.90% Village's net pension liability $ 5,425,053 $ 2,678,416 $ 412,612 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 61 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) Fire and Police Retirement System (Continued) Pension expense and deferred outflows and inflows of resources For the fiscal year ended September 30, 2015, the Village recognized pension expense of $653,754. In addition, the Village reported deferred outflows of resources and deferred inflows of resources related to the Plan from the following sources: Deferred Deferred Outflows Inflows Description of Resources of Resources Net difference between projected and actual earnings on plan investments $ $ 219,278 Change of assumptions 210,982 Village plan contributions subsequent to the measurement date 975,733 Total $ 1,186,715 $ 219,278 The amounts reported as a change of assumptions resulted from lowering the investment rate of return form 8% to 7.9% The deferred outflows of resources totaling $975,733 resulting from Village contributions to the plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the plan will be recognized in pension expense as follows: Year ended September 30: Amount 2016 $ (19,656) 2017 (19,656) 2018 (19,656) 2019 (19,656) 2020 35,164 Thereafter 35,164 $ (8,296) THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 62 NOTE 8 – EMPLOYEE RETIREMENT PLANS (Continued) All Retirement Plans Summarized information The Village’s total pension liability, plan fiduciary net position, net pension liability, pension related deferred outflows and inflows, and pension expense for the fiscal year ended September 30, 2015, using a measurement date of September 30, 2014, are as follows: General Employees Fire and Police Total Total pension liability $ 13,812,555 $ 19,480,362 $ 33,292,917 Plan fiduciary net position 11,929,879 16,801,946 28,731,825 Net pension liability 1,882,676 2,678,416 4,561,092 Deferred outflows of resources 462,420 1,186,715 1,649,135 Deferred inflows of resources 218,877 219,278 438,155 Pension expense 369,221 653,754 1,022,975 At September 30, 2015, the Village reported payables in the amounts of $23,612 to the General Employees and $46,688 to the Fire and Police plans for outstanding contributions. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 63 NOTE 9 – ON-BEHALF PAYMENTS The state makes a contribution to the Fire and Police Officers’ Retirement System from the firefighters’ and police officers’ Insurance Premium Tax. For the fiscal year ended September 30, 2015, $298,340 was recorded as revenues and expenditures in the On-Behalf Pension Contribution Special Revenue Fund relating to on-behalf payments received from the state. NOTE 10 – PENSION PLAN FINANCIAL INFORMATION Generally accepted accounting principles (GAAP) requires that financial statements for individual pension plans be presented in the notes to the financial statements of the primary government if separate GAAP financial reports have not been issued. The General Employees’ pension fund does not have a separate GAAP report issued, and the financial information September 30, 2015, is presented below. STATEMENT OF FIDUCIARY NET POSITION General Employees’ Pension Assets Cash and cash equivalents $ 169,994 Investments: Equity mutual funds 9,457,646 Fixed income mutual funds 2,452,812 Accounts receivable/accrued interest and dividends 28,693 Total assets 12,109,145 Net position Held in trust for pension benefits and other purposes $12,109,145 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 64 NOTE 10 – PENSION PLAN FINANCIAL INFORMATION (Continued) STATEMENT OF CHANGES IN FIDUCIARY NET POSITION General Employees’ Pension Additions Contributions Employer $ 464,189 Plan members 125,738 Total contributions 589,927 Investment earnings Dividends and interest 343,450 Net (decrease) in the fair value of investments (410,026) Less investment expense (29,540) Total investment earnings (96,116) Total additions 493,811 Deductions Administration 20,655 Benefits 267,777 Refund of contributions 26,113 Total deductions 314,545 Change in net position 179,266 Net position - beginning 11,929,879 Net position - ending $ 12,109,145 NOTE 11 – DEFINED CONTRIBUTION PLAN Effective October 1, 2006, all employees of the Village may participate in one of three Money Purchase Plans that are qualified Defined Contribution Plans adopted under the provisions of Internal Revenue Code Section 401(a). The three pension plans include Directors, General Employees, and Municipal Employees. The defined contribution plans are administered by International City/County Management Association and Retirement Corporation (ICMA-RC). The ICMA-RC is a nonprofit corporation organized and existing under the laws of the State of Delaware. Contribution requirements of employees’ and the Village are established and may be amended by the Village Council. The vesting period for each defined contribution plan is five years, with a vesting of zero percent in the first year, and a vesting of twenty-five percent for each year thereafter. While the plans will not provide for retroactive funding, the vesting period shall run from each employee’s original date of hire. If an employee terminates before becoming fully vested, forfeited amounts will be used to reduce future Village contributions. No loans are permitted by the plan. The normal retirement age for the plan shall be age sixty. There is no waiting period for participation in the plan. The minimum age for participation is eighteen. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 65 NOTE 11 – DEFINED CONTRIBUTION PLAN (Continued) The Village contributes 15% of participant earnings for the plan year. Earnings include regular and bonus compensation, but do not include overtime or commissions. Employee contributions are voluntary, after-tax contributions that are not matched by the Village. Employees may contribute 3%, 5%, 10%, or 15% of earnings to the plan. Contributions are remitted to the trusts every payroll period. Because the Village has little administrative involvement and does not perform the investing function for funds in the plans, the Village’s activities do not meet the criteria for inclusion in the fiduciary funds of a government. Consequently, the plans are not included in the Village’s financial statements. Plan detail for participating employees at September 30, 2015, is listed below: Directors General Employees Municipal Employees Total Employee contributions $ 35,755 $ 36,186 $ 48,663 $ 120,604 Village pension expense 87,106 128,004 137,067 352,177 Forfeitures 2,847 7,282 10,129 Payable as of fiscal year end 4,163 6,431 6,802 17,396 NOTE 12 – DEFERRED COMPENSATION PLAN ASSETS Employees of the Village may participate in a deferred compensation plan adopted under the provisions of Internal Revenue Code Section 457 (Deferred Compensation Plans with Respect to Service for State and Local Governments). The deferred compensation plan is available to all employees of the Village. Under the plan, employees may elect to defer a portion of their salaries and avoid paying taxes on the deferred portion until the withdrawal date. The deferred compensation amount is not available for withdrawal by employees until termination, retirement, death, or unforeseeable emergency. A third party administers the deferred compensation plan. In 1998, the Village Adopted GASB-32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The Village modified its Deferred Compensation Plan to conform with the changes in the Internal Revenue Code brought about by the Small Business Job Protection Act of 1996 (the “Act”). The Act requires that eligible deferred compensation plans established and maintained by governmental employers be amended to provide that all assets of the plan be held in trust, or under one or more appropriate annuity contracts or custodial accounts, for the exclusive benefit of plan participants and their beneficiaries. As a result of this change, these plan assets are not property of the Village and are not subject to the claims of the Village’s general creditors. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 66 NOTE 12 – DEFERRED COMPENSATION PLAN ASSETS (Continued) Because the Village has little administrative involvement and does not perform the investing function for funds in the Plan, the Village’s activities do not meet the criteria for inclusion in the fiduciary funds of a government. NOTE 13 – OTHER POSTEMPLOYMENT BENEFITS The Village implemented Governmental Accounting Standards Board Statement 45 (GASB 45), Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, effective October 1, 2008. The Village elected to implement prospectively, and the change in accounting principle had no effect on changes in net position/fund equity for prior periods. Retirees of the Village pay an amount equal to the actual premium for health insurance charged by the carrier, but there is an implied subsidy in the healthcare insurance premium for retirees because the premium charged for these retirees is the same as the premium charged for active employees, who are younger than retirees on average. This implied subsidy constitutes other postemployment benefits (OPEB) under GASB 45. Plan Description The Village provides a single employer defined benefit health care plan to all of its employees. The plan allows its employees and their beneficiaries, to continue to obtain health and dental benefits upon retirement. The normal retirement age for police and firefighters is 55; the normal retirement age for all other Village employees is either age 60 or 65, depending on the option selected by the employee. The benefits of the plan are in accordance with Florida Statutes, which are the legal authority for the plan. The plan has no assets and does not issue a separate financial report. Funding Policy The Village does not directly make a contribution to the plan on behalf of retirees. Retirees and their beneficiaries pay the same group rates as are charged to the Village for active employees by its healthcare provider. However, the Village’s actuaries, in their actuarial valuation, calculate an offset to the cost of these benefits as an Employer Contribution, based upon an implicit rate subsidy. This offset equals the total age-adjusted costs paid by the Village or its active employees for coverage of the retirees and their dependents for the year net of the retiree’s own payments for the year. Annual OPEB Cost and Net OPEB Obligation The annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The annual required contribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed 30 years. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 67 NOTE 13 – OTHER POST EMPLOYMENT BENEFITS (Continued) Annual OPEB Cost and Net OPEB Obligation (Continued) The annual OPEB cost and the net OPEB obligation for the Village for the current year and the related information is as follows: Required contribution rates: Employer Pay-as-you-go Plan members N/A Normal cost $ 214,716 Interest on normal cost 8,589 Amortization 137,039 Interest on amortization 5,481 Annual required contribution (ARC) 365,825 Interest on net unfunded OPEB obligation 81,635 Adjustment to ARC (118,024) Annual OPEB cost 329,436 Contributions made (63,506) Increase in net OPEB obligation 265,930 Net OPEB obligation October 1, 2014 2,040,877 Net OPEB obligation September 30, 2015 $ 2,306,807 Trend Information Three-Year Trend Information Percentage of Fiscal Annual Annual Net Year OPEB OPEB Cost OPEB End Cost Contributed Obligation 09/30/13 $520,693 21.1% $1,617,152 09/30/14 $547,229 22.6% $2,040,877 09/30/15 $329,436 19.3% $2,306,807 Funded Status The funded status of the plan as of most recent actuarial valuation date was as follows: Actuarial valuation date 10/01/2014 Actuarial accrued liability $2,464,468 Actuarial value of plan assets $ Unfunded actuarial accrued liability (UAAL) $2,464,468 Funded ratio 0.0% Covered payroll $8,675,270 UAAL as a percentage of covered payroll 28.4% THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 68 NOTE 13 – OTHER POST EMPLOYMENT BENEFITS (Continued) Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are comparable with past expectations and new estimates are made about the future. The schedule of funding progress presented as required supplementary information following the notes to the financial statements, will present multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The Village has not contributed assets to the plan at this time. Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and includes the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the Village and the plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Actuarial valuation date 10/01/2014 Actuarial cost method Projected Unit Credit Amortization method Level dollar, 30 Years, open Remaining amortization period 30 years Asset valuation method Unfunded Actual assumptions: Investment rate of return 4% Inflation rate 3% Healthcare cost trend 9% for 2016 decreasing to 5% in 2024 NOTE 14 – 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 water and sewer service to the citizens of each of the participating municipalities and a portion of Palm Beach County. Seacoast’s governing board consists of one member from each participating entity. Seacoast is an Independent Authority organized under the laws of the State of Florida, and the Village has no participating equity ownership in Seacoast. The Village paid $162,205 to Seacoast during the fiscal year for water and sewer service. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 69 NOTE 15 –TRANSFERS Interfund transfers during the year ended September 30, 2015, are as follows: Transfer Out: General Fund Transfer in: Capital Projects Fund $ 2,091,246 The transfers from the General Fund to the other governmental funds were to move restricted and unrestricted General Fund revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations, including amounts provided as subsidies or matching funds for various grant programs. NOTE 16 – CONTRACTS, COMMITMENTS AND CONTINGENCIES Commitments On September 17, 2014, the Village entered into an agreement with the City of Palm Beach Gardens whereby the City of Palm Beach Gardens will provide the Village public safety dispatch services. The term of the agreement was for two years beginning on October 1, 2014, and extending through September 30, 2016. The fee for each year under the contract will be based upon the budget of the North County Dispatch (NCDC) center prorated to each contracting municipality based on that municipalities cost share. If at the end any contract year a budget shortfall exists, each contracting municipality shall pay its share of the shortfall. Conversely, if at the end of any contract year a budget surplus exists, such surplus shall represent a committed fund balance to be utilized specifically for NCDC budgetary purposes. The Village’s estimated cost for fiscal year ending September 30, 2016 is $351,700. Contingencies The Village is involved in various litigations and claims arising in the course of operations. It is the opinion of legal counsel that the likelihood of unfavorable outcome and the amounts of potential losses cannot be reasonably determined for all claims at this time. NOTE 17 – SUBSEQUENT EVENTS Subsequent to September 30, 2015, the Village approved purchasing three police vehicles at a cost of $143,800, an ambulance at a cost of $249,500 and the lease/purchase of eighty-two golf carts for $356,000 including a trade in allowance of $145,000 for the existing golf carts. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 70 NOTE 18 – ACCOUNTING CHANGE The Village implemented the following Governmental Accounting Standards Board Statements during the fiscal year ended September 30, 2015. In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement 27. GASB 68 improves financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision- useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. The implementation of this statement resulted in a restatement of beginning net positon, as well as related deferred outflows of resources and deferred inflows of resources due to recording the Village’s net pension liability on the statement of net position. In November 2013, the GASB issued Statement No. 71, Pension Transition Contributions Made Subsequent to the Measurement Date – an amendment to GASB Statement No. 68. This Statement amends paragraph 137 of GASB 68 to require that, at transition, a government recognize the beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. The Village sponsors the Village of North Palm Beach Fire and Police Retirement Plan, covering firefighters and police officers, and the Village of North Palm Beach General Employees Retirement Plan, single employer defined benefit pension plans. These standards require employers participating in single employer defined benefit pension plans to report their net pension liabilities and related pension amounts. The cumulative effect of applying GASB 68 has been reported as a restatement of the beginning net position of the governmental activities on the entity-wide financial statements. A reconciliation of the prior period ending net position to the current period beginning net positions is as follows. Governmental Activities Balance at September 30, 2014, as reported $ 26,461,778 Adjustment for adoption of GASB 68 – Fire and Police Retirement Plan (2,259,770) Adjustment for adoption of GASB 68 – General Employees Retirement Plan (2,015,249) Balance at September 30, 2014, as restated $ 22,186,759 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2015 71 NOTE 19 – NEW ACCOUNTING STANDARDS Below is a brief description and effective date of new accounting standards that could have a significant impact on the Village. In February 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement provides guidance for determining a fair value measurement for financial reporting purposes and also provides guidance for applying fair value of certain investments and disclosures related to all fair value measurements. This Statement is effective for the fiscal year ending September 30, 2016. In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. This Statement improves the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. Certain sections of this Statement are effective for the fiscal year ending September 30, 2016 and the remaining sections are effective for the fiscal year ending September 30, 2017. In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This Statement improves the usefulness of information about postemployment benefits other than pensions included in the general purpose external financial reports of state and local government OPEB plans for making decisions and assessing accountability. This Statement is effective for the fiscal year ending September 30, 2017. In June 2015 the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This Statement improves accounting and financial reporting by state and local governments for postemployment benefits other than pensions. It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement is effective for the fiscal year ending September 30, 2018. Management is currently evaluating the impact of the adoption of these statements on the Village’s financial statements. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability AAL Funded Covered of Covered Valuation Assets (AAL) (1)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)((b-a)/c) 10/01/08 $ 2,741,387$ 2,741,387$ 0.0%6,231,104$ 44.0% 10/01/11 $ 3,432,815$ 3,432,815$ 0.0%7,103,304$ 48.3% 10/01/14 $ 2,464,468$ 2,464,468$ 0.0%8,675,270$ 28.4% (1) Projected unit credit The schedule of funding progress presented above presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The Village has not contributed assets to the plan at this time. THE VILLAGE OF NORTH PALM BEACH, FLORIDA Required Supplemental Information September 30, 2015 Schedule of Funding Progress Other Postemployment Benefits (OPEB) 72 FIDUCIARY FUNDS Pension Trust Funds General Employees Pension Trust Fund Fire and Police Officers Pension Trust Fund 2014 2015 Total pension liability: Service cost 374,926$ 317,676$ Interest 972,865 1,048,746 Differences between Expected and Actual Experience (329,040) Benefit payments, including refunds of employee contributions (263,674) (293,890) Net change in total pension liability 1,084,117 743,492 Total pension liability - beginning 12,728,438 13,812,555 Total pension liability - ending (a)13,812,555$ 14,556,047$ Plan fiduciary net position Contributions - employer 562,953$ 464,189$ Contributions - Eemployees 142,609 125,738 Net investment income 1,072,009 (96,116) Benefit payments, including refunds of employee contributions (263,674) (293,890) Administrative expenses (17,171) (20,655) Net change in plan fiduciary net position 1,496,726 179,266 Plan fiduciary net position - beginning 10,433,153 11,929,879 Plan fiduciary net position - ending (b)11,929,879$ 12,109,145$ Net pension liability (a) - (b)1,882,676$ 2,446,902$ Plan fiduciary net position as a percentage of the total pension liability 86.37%83.19% Covered employee payroll 2,701,771$ 2,424,320$ Net pension liability as a percentage of covered payroll 69.68%100.93% NOTE: The Village implemented GASB Statement 67 in 2014; information is presented for those years in which information is available. Schedule of Changes in Net Pension Liability and Related Ratios Last Two Fiscal Years THE VILLAGE OF NORTH PALM BEACH, FLORIDA Required Supplemental Information September 30, 2015 General Employees Retirement Fund 73 2014 2015 Total pension liability: Service cost 699,244$ 810,654$ Interest 1,419,425 1,555,518 Changes in excess state money 90,535 67,645 Changes of benefit terms 1,682 Differences between Expected and Actual Experience 483,189 Changes of assumptions 246,146 Contributions - Buy Back 65,446 Benefit payments, including refunds of employee contributions (451,574) (611,678) Net change in total pension liability 2,003,776 2,372,456 Total pension liability - beginning 17,476,586 19,480,362 Total pension liability - ending (a)19,480,362$ 21,852,818$ Plan fiduciary net position Contributions - employer 943,634$ 975,733$ Contributions - State 321,230 298,340 Contributions - Eemployees 87,010 151,450 Contributions - Buy Back 65,446 Net investment income 1,468,473 111,884 Benefit payments, including refunds of employee contributions (451,574) (611,678) Administrative expenses (66,748) (76,457) Net change in plan fiduciary net position 2,302,025 914,718 Plan fiduciary net position - beginning 14,499,921 16,801,946 Plan fiduciary net position - ending (b)16,801,946$ 17,716,664$ Net pension liability (a) - (b)2,678,416$ 4,136,154$ Plan fiduciary net position as a percentage of the total pension liability 86.25%81.07% Covered employee payroll 4,312,746$ 4,518,020$ Net pension liability as a percentage of covered payroll 62.10%91.55% Changes of Assumptions For the 2014 fiscal year the investment rate of return was lowered from 8.0% to 7.9% NOTE: The Village implemented GASB Statement 67 in 2014; information is presented for those years in which information is available. Schedule of Changes in Net Pension Liability and Related Ratios Last Two Fiscal Years THE VILLAGE OF NORTH PALM BEACH, FLORIDA Required Supplemental Information September 30, 2015 Fire and Police Retirement Fund 74 Schedule of Contributions Fiscal Year Acturially Contribution Actual Contribution Ending Determined Actual Deficiency Covered as a Percentage of September 30 Contribution Conribution (Excess)Payroll Covered Paryoll General Employees Retirement Fund 2014 562,509$ 562,953$ (444)$ 2,838,421$ 19.83% 2015 464,189$ 464,189$ $ 2,424,320$ 19.15% Fire and Police Retirement Fund 2014 1,173,930$ 1,174,329$ (399)$ 4,312,746$ 27.23% 2015 1,205,408$ 1,206,428$ (1,020)$ 4,518,020$ 26.70% Schedule of Investment Returns Fiscal Year Ending General Fire and Police September 30 Employees Employees 2014 10.50%10.00% 2015 -0.39%0.66% NOTE: The Village implemented GASB Statement 67 in 2014; information is presented for those years in which information is available. Annual money weighted rate of return net of investment expenes THE VILLAGE OF NORTH PALM BEACH, FLORIDA Required Supplemental Information September 30, 2015 Last Two Fiscal Years 75 Methods and assumptions used in calculations of determined contribtuions. The acturialy determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contibutions are reported. General Employees Police and Fire Retirement Fund Retirement Fund Actuarial Cost Method Frozen entry age Aggregate Amortization Method Level percent of closed N/A Remaining Amortization Period 27 years N/A Asset Valuation Method Five year smoothed market Five year smoothed market Inflation 4.00%4.00% Salary increases 5.50%6.00% Cost of living adjustments 3% for those retired before 3.00% 2/1/82 or who contribute an extra 2%. Investment Rate of Return 7.50%7.90% Mortality RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale AA - Based on a study of over 650 public safety funds, this table reflects a 10% margin for future mortality improvements. (Disabled lives set forward 5 years THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Schedule of Contributions September 30, 2015 76 GENERAL FUND THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual General Fund For the Year Ended September 30, 2015 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenues Taxes 14,825,948$ 14,825,948$ 15,167,694$ 341,746$ Licenses and permits 1,054,600 1,054,600 947,158 (107,442) Intergovernmental 1,376,282 1,376,282 1,437,218 60,936 Charges for services 2,360,691 2,360,691 2,231,673 (129,018) Fines and forfeitures 87,835 87,835 128,235 40,400 Investment 40,250 40,250 108,794 68,544 Miscellaneous 15,500 15,500 122,107 106,607 Total revenues 19,761,106 19,761,106 20,142,879 381,773 Expenditures Current General government 2,905,239 2,905,239 2,904,553 686 Public safety 8,351,629 8,359,189 8,667,737 (308,548) Public works 4,293,066 4,349,366 4,255,636 93,730 Community development and planning 1,192,772 1,336,285 1,270,399 65,886 Leisure services - recreation 2,804,654 2,666,551 2,514,495 152,056 Other government Capital outlay 10,000 15,541 16,640 (1,099) Total expenditures 19,557,360 19,632,171 19,629,460 2,711 Excess of revenues over expenditures 203,746 128,935 513,419 384,484 Other financing sources (uses) Appropriated fund balance 102,000 1,962,311 (1,962,311) Transfer out (305,746) (2,091,246) (2,091,246) Total other financing uses (203,746) (128,935) (2,091,246) (1,962,311) Net change in fund balances $ $ (1,577,827) (1,577,827)$ Fund Balances Beginning of year 12,987,863 End of year 11,410,036$ 77 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Budgetary Required Supplementary Information (RSI) General Fund Note 1 - Basis of Accounting Generally accepted accounting principles (GAAP) serve as the budgetary basis of accounting. September 30, 2015 78 OTHER SUPPLEMENTARY INFORMATION GENERAL FUND THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Departmental Expenditures - Budget and Actual General Fund For the Year Ended September 30, 2015 Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative)Variance Village Council Personnel services 50,468$ 50,468$ 50,464$ 4$ 0.01 Operating expenses 79,615 79,615 70,470 9,145 11.49 Total Village Council 130,083 130,083 120,934 9,149 7.03 Village Manager Personnel services 286,333 286,333 287,785 (1,452) -0.51 Operating expenses 30,700 30,700 19,609 11,091 36.13 Total Village Manager 317,033 317,033 307,394 9,639 3.04 Village Finance Personnel services 679,248 679,248 697,064 (17,816) -2.62 Operating expenses 52,400 52,400 43,129 9,271 17.69 Total Village Finance 731,648 731,648 740,193 (8,545) -1.17 Village Attorney Operating expenses 140,000 140,000 138,923 1,077 0.77 Village Clerk Personnel services 289,892 289,892 293,213 (3,321) -1.15 Operating expenses 32,160 32,160 55,946 (23,786) -73.96 Total Village Clerk 322,052 322,052 349,159 (27,107) -8.42 Information Technology Personnel services 302,600 302,600 260,282 42,318 13.98 Operating expenses 128,200 128,200 160,644 (32,444) -25.31 Total Information Technology 430,800 430,800 420,926 9,874 2.29 Human Resources Personnel services 255,136 255,136 223,123 32,013 12.55 Operating expenses 86,307 86,307 100,454 (14,147) -16.39 Total Human Resources 341,443 341,443 323,577 17,866 5.23 Police Personnel services 4,357,043 4,357,043 4,606,275 (249,232) -5.72 Operating expenses 716,825 720,025 719,761 264 0.04 Total Police 5,073,868 5,077,068 5,326,036 (248,968) -4.90 Fire Rescue Personnel services 2,958,001 2,958,001 3,044,254 (86,253) -2.92 Operating expenses 213,210 213,210 183,868 29,342 13.76 Total Fire Rescue 3,171,211 3,171,211 3,228,122 (56,911) -1.79 Public Works Administration Personnel services 207,565 207,565 204,555 3,010 1.45 Operating expenses 45,640 83,346 99,542 (16,196) -19.43 Total Public Works 253,205 290,911 304,097 (13,186) -4.53 (Continued) 79 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Departmental Expenditures - Budget and Actual General Fund For the Year Ended September 30, 2015 Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative)Variance (Continued) Sanitation Personnel services 1,319,148$ 1,319,148$ 1,419,726$ (100,578)$ -7.62 Operating expenses 176,500 176,500 220,459 (43,959) -24.91 Total Sanitation 1,495,648 1,495,648 1,640,185 (144,537) -9.66 Facility Services Personnel services 296,578 296,578 307,850 (11,272) -3.80 Operating expenses 346,400 349,050 303,668 45,382 13.00 Total Facility Services 642,978 645,628 611,518 34,110 5.28 Street Maintenance Personnel services 511,443 511,443 440,646 70,797 13.84 Operating expenses 960,865 976,809 880,575 96,234 9.85 Total Street Maintenance 1,472,308 1,488,252 1,321,221 167,031 11.22 Vehicle Maintenance Personnel services 212,827 212,827 198,070 14,757 6.93 Operating expenses 216,100 216,100 180,545 35,555 16.45 Total Vehicle Maintenance 428,927 428,927 378,615 50,312 11.73 Planning and Engineering Personnel services 257,184 257,184 263,430 (6,246) -2.43 Operating expenses 107,850 251,363 126,709 124,654 49.59 Total Planning and Engineering 365,034 508,547 390,139 118,408 23.28 Building Personnel services 583,008 583,008 664,606 (81,598) -14.00 Operating expenses 92,508 92,508 86,569 5,939 6.42 Total Building 675,516 675,516 751,175 (75,659) -11.20 Code Enforcement Personnel services 132,952 132,952 111,006 21,946 16.51 Operating expenses 19,270 19,270 18,079 1,191 6.18 Total Code Enforcement 152,222 152,222 129,085 23,137 15.20 Leisure Services-Recreation Personnel services 638,919 638,919 640,698 (1,779) -0.28 Operating expenses 376,392 380,289 334,321 45,968 12.09 Total Leisure Services-Recreation 1,015,311 1,019,208 975,019 44,189 4.34 Library Personnel services 622,336 622,336 614,303 8,033 1.29 Operating expenses 168,625 168,625 151,618 17,007 10.09 Total Library 790,961 790,961 765,921 25,040 3.17 (Continued) 80 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Departmental Expenditures - Budget and Actual General Fund For the Year Ended September 30, 2015 Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative)Variance (Continued) Tennis Personnel services 140,214$ 140,214$ 136,488$ 3,726$ 2.66 Operating expenses 421,344 369,344 318,477 50,867 13.77 Total Tennis 561,558 509,558 454,965 54,593 10.71 Pool Personnel services 96,057 96,057 98,122 (2,065) -2.15 Operating expenses 240,267 150,267 132,168 18,099 12.04 Total Pool 336,324 246,324 230,290 16,034 6.51 Special Events Operating expenses 100,500 100,500 88,300 12,200 12.14 Total Special Events 100,500 100,500 88,300 12,200 12.14 Non-Departmental Operating expenses 598,730 603,090 617,026 (13,936) -2.31 598,730 603,090 617,026 (13,936) -2.31 Capital Outlay Police Forfeiture Trust Fund 16,640 (16,640) Facility Services 10,000 10,000 10,000 Planning and Engineering 5,541 5,541 100.00 Total Capital Outlay 10,000 15,541 16,640 (1,099) (7.07) Total expenditures 19,557,360$ 19,632,171$ 19,629,460$ 2,711$ 0.01% 81 COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Public Safety Fund Northlake Boulevard Fund Recreation Fund THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Balance Sheet Nonmajor Governmental Funds Special Revenue Funds Public Northlake Total Nonmajor Safety Boulevard Governmental Fund Fund Recreation Funds Assets Cash and cash equivalents 1,520$ 1,986$ 365,178$ 368,684$ Total assets 1,520$ 1,986$ 365,178$ 368,684$ Liabilities Accounts payable $ $ 6,130$ 6,130$ Due to other funds 44,028 44,028 Total liabilities 50,158 50,158 Fund balances Assigned 1,520 1,986 315,020 318,526 Total fund balances 1,520 1,986 315,020 318,526 Total liabilities and fund balances 1,520$ 1,986$ 365,178$ 368,684$ September 30, 2015 82 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2015 Special Revenue Funds Public Northlake Total Nonmajor Safety Boulevard Governmental Fund Fund Recreation Funds Revenues Intergovernmental 22,688$ $ $ 22,688$ Total revenues 22,688 22,688 Expenditures Capital outlay 22,688 6,626 29,314 Total expenditures 22,688 6,626 29,314 Net changes in fund balances (6,626) (6,626) Fund balances - Beginning of year 1,520 1,986 321,646 325,152 Fund balances - End of year 1,520$ 1,986$ 315,020$ 318,526$ 83 FIDUCIARY FUNDS Pension Trust Funds General Employees Pension Trust Fund Fire and Police Officers Pension Trust Fund THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Statement of Net Position - Pension Trust Funds Fire and Total General Police Employee Employees Officers Retirement Pension Pension Funds ASSETS Cash and cash equivalents 169,994$ 780,750$ 950,744$ Investments: Domestic common equity securities 9,033,530 9,033,530 International common equity securities 1,148,713 1,148,713 U.S. Government agencies 980,088 980,088 Municipal bonds 208,536 208,536 Corporate bonds 3,363,819 3,363,819 Equity mutual funds 9,457,646 26,880 9,484,526 Fixed income mutual funds 2,452,812 2,452,812 Real estate investment fund 1,717,667 1,717,667 Accrued interest and dividends 5,079 42,893 47,972 Accounts receivable 23,614 365,948 389,562 Accounts receivable, broker-dealers 85,015 85,015 Prepaids 1,526 1,526 Total assets 12,109,145 17,755,365 29,864,510 LIABILITIES Accounts payable 38,701 38,701 Total liabilities 38,701 38,701 Net Position Held in trust for pension benefits and other purposes 12,109,145$ 17,716,664$ 29,825,809$ 9/30/2015 84 Fire and Total General Police Employee Employees Officers Retirement Pension Pension Funds Additions Contributions Employer 464,189$ 975,733$ 1,439,922$ Plan members 125,738 216,896 342,634 State on-behalf payments 298,340 298,340 Total contributions 589,927 1,490,969 2,080,896 Investment earnings Dividends and interest 343,450 403,626 747,076 Net (decrease) in fair value of investments (410,026) (162,193) (572,219) Total investment earnings (66,576) 241,433 174,857 Less: investment expenses 29,540 129,147 158,687 Total investment earnings (96,116) 112,286 16,170 Total additions 493,811 1,603,255 2,097,066 Deductions Administration 20,655 76,857 97,512 Benefits 267,777 605,809 873,586 Refund of contributions 26,113 5,871 31,984 Total deductions 314,545 688,537 1,003,082 Change in net position 179,266 914,718 1,093,984 Net position - beginning 11,929,879 16,801,946 28,731,825 Net position - ending 12,109,145$ 17,716,664$ 29,825,809$ THE VILLAGE OF NORTH PALM BEACH, FLORIDA Pension Trust Funds Combining Statement of Changes in Fiduciary Net Position For the Year Ended September 30, 2015 85 AGENCY FUNDS Manatee Protection Agency Northlake Boulevard Task Force THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Statement of Agency Net Position Manatee Northlake Total Protection Boulevard Agency Agency Task Force Funds Assets Cash and cash equivalents 296,604$ 63,059$ 359,663$ Liabilities Due to others 296,604$ 63,059$ 359,663$ September 30, 2015 86 Combining Schedule of Changes in Agency Net Position September 30, 2014 Additions Deductions September 30, 2015 Manatee Protection Agency Assets Cash and cash equivalents 293,632$ 2,972$ $ 296,604$ Liabilities Due to others 293,632$ 2,972$ $ 296,604$ Northlake Boulevard Task Force Assets Cash and cash equivalents 62,428$ 631$ $ 63,059$ Liabilities Due to others 62,428$ 631$ $ 63,059$ Total All Agency Funds Assets Cash and cash equivalents 356,060$ 3,603$ $ 359,663$ Liabilities Due to others 356,060$ 3,603$ $ 359,663$ THE VILLAGE OF NORTH PALM BEACH, FLORIDA For the Year Ended September 30, 2015 87 PROPRIETARY FUND (ENTERPRISE FUND) Country Club Fund THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Revenues and Departmental Expenses - Budget and Actual Country Club Fund - Budgetary Basis For the Year Ended September 30, 2015 Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative)Variance Revenue Greens fee/cart rentals/membership fees 2,419,733$ 2,419,733$ 2,332,066$ (87,667)$ -3.62 Golf shop revenues 383,350 383,350 407,269 23,919 6.24 Driving range revenues 304,548 304,548 313,882 9,334 3.06 Restaurant revenues 800,000 800,000 726,229 (73,771) -9.22 Interest revenues 8,410 8,410 10,393 1,983 23.58 Miscellaneous 9,406 9,406 Appropriated net position (1) 264,000 (264,000) Total revenues 3,916,041 4,180,041 3,799,245 (380,796)-9.11 Golf Maintenance Operating expenses 1,146,385 1,146,385 1,178,337 (31,952) -2.79 Total Golf Maintenance 1,146,385 1,146,385 1,178,337 (31,952) -2.79 Golf Pro Shop and Range Personnel services 618,540 618,540 560,596 57,944 9.37 Operating expenses 374,329 374,329 340,915 33,414 8.93 Total Golf Pro Shop and Range 992,869 992,869 901,511 91,358 9.20 Food and Beverage Personnel services 513,437 513,437 463,058 50,379 9.81 Operating expenses 432,345 432,345 424,475 7,870 1.82 Total Food and Beverage 945,782 945,782 887,533 58,249 6.16 Administration Personnel services 62,121 62,121 66,849 (4,728) -7.61 Operating expenses (1)24,603 288,603 24,918 263,685 91.37 Total Administration 86,724 350,724 91,767 258,957 73.83 Clubhouse and Grounds Operating expenses 106,607 106,607 93,330 13,277 12.45 Capital outlay 8,161 (8,161) Total Clubhouse and Grounds 106,607 106,607 101,491 5,116 4.80 Insurance and General Liability Operating expenses 55,809 55,809 63,659 (7,850) (14.07) Reserves Operating 10,000 10,000 10,770 (770) (7.70) Contingency 33,714 33,714 33,714 100.00 Total Reserves 43,714 43,714 10,770 32,944 75.36 Debt service Debt service 538,151 538,151 533,821 4,330 0.80 Total expenses on the budgetary basis 3,916,041 4,180,041 3,768,889 411,152 9.84 Revenues over expenses $ $ 30,356$ 30,356$ Adjustments to reconcile to the GAAP Basis Total expenses on the budgetary basis 3,768,889 Less: capital outlay costs capitalized (8,161) Less: debt service (533,821) Add: depreciation expense 480,574 Total operating expenses 3,707,481$ (1)$264,000 was budgeted for design services relating to the country club, that were carried forward to the 2016 budget. 88 STATISTICAL SECTION This part of the Village of North Palm Beach's comprehensive annual financial report presents detailed unaudited information as a context for understanding what the information in the financial statement, note disclosures, and required supplementary information says about the Village's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the Village's financial performance and well-being have changed over time. These schedules include: Net Position by Component 89 Changes in Net Position 90 Fund Balances, Governmental Funds 92 Changes in Fund Balances, Governmental Fund 93 Revenue Capacity These schedules contain information to help the reader assess the Village's most significant local revenue source, the property tax. Net Assessed Value and Estimated Actual Value of Taxable Property 95 Property Tax Rates - Direct and Overlapping Governments 96 Principal Property Taxpayers 97 Property Tax Levies and Collections 98 Debt Capacity These schedules present information to help the reader assess the affordability of the Village's current levels of outstanding debt and the Village's ability to issue additional debt in the future. Ratios of Outstanding Debt by Type 99 Direct and Overlapping Governmental Activities Debt 100 Pledged-Revenue Coverage 101 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Village's financial activities take place. Demographic and Economic Statistics 102 Principal Employers 103 Operating Information These schedules contain service and infrastructure data to help understand how the information in the Village's financial report relates to the services the Village provides and the activities it performs. Full-Time Equivalent Village Government Employees by Function 104 Operating Indicators by Function/Program 105 Capital Asset Statistics by Function/Program 106 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. STATISTICAL SECTION THIS PAGE INTENTIONALLY LEFT BLANK 2006 2007 2008 2009 2010 Governmental Activities: Net investment in capital assets 8,118,773$ 10,543,788$ 12,845,093$ 16,643,241$ 18,184,508$ Restricted 154,073 113,269 979,182 251,088 390,081 Unrestricted 7,143,452 9,281,170 9,836,912 11,016,626 10,568,594 Total governmental activities net position 15,416,298 19,938,227 23,661,187 27,910,955 29,143,183 Business-Type Activities: Net investment in capital assets 1,999,123 2,195,630 2,492,524 2,364,814 2,295,125 Unrestricted 415,865 151,005 202,802 434,212 403,261 Total business-type activities net position 2,414,988 2,346,635 2,695,326 2,799,026 2,698,386 Primary government: Net investment in capital assets 10,117,896 12,739,418 15,337,617 19,008,055 20,479,633 Restricted 154,073 113,269 979,182 251,088 390,081 Unrestricted 7,559,317 9,432,175 10,039,714 11,450,838 10,971,855 Total primary government net position 17,831,286$ 22,284,862$ 26,356,513$ 30,709,981$ 31,841,569$ 2011 2012 2013 2014 2015 (1) Governmental Activities: Net investment in capital assets 17,237,355$ 16,109,707$ 15,431,966$ 14,966,927$ 14,711,016$ Restricted 548,489 658,194 317,190 180,755 177,431 Unrestricted 11,775,621 11,846,141 11,973,715 11,314,096 6,168,366 Total governmental activities net position 29,561,465 28,614,042 27,722,871 26,461,778 21,056,813 Business-Type Activities: Net investment in capital assets 2,200,927 2,082,668 1,998,974 1,907,746 1,833,975 Unrestricted 385,623 557,954 668,434 514,167 544,523 Total business-type activities net position 2,586,550 2,640,622 2,667,408 2,421,913 2,378,498 Primary government: Net investment in capital assets 19,438,282 18,192,375 17,430,940 16,874,673 16,544,991 Restricted 548,489 658,194 317,190 180,755 177,431 Unrestricted 12,161,244 12,404,095 12,642,149 11,828,263 6,712,889 Total primary government net position 32,148,015$ 31,254,664$ 30,390,279$ 28,883,691$ 23,435,311$ (1)The Village implemented GASB 68 in 2015 related to pension accounting which significantly reduced unrestricted net position. Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. Fiscal Year VILLAGE OF NORTH PALM BEACH NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Unaudited 89 VILLAGE OF NORTH PALM BEACH CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Unaudited Fiscal Year 2006 2007 2008 2009 2010 Expenses Governmental activities: General government 1,784,528$ 2,698,187$ 1,839,228$ 2,239,511$ 2,679,192$ Public safety 7,036,117 6,671,490 7,154,578 7,095,043 7,304,233 Public works 4,131,500 3,733,815 3,996,711 4,083,441 4,594,738 Community development and planning 657,112 737,165 860,448 826,149 806,536 Leisure services 2,562,627 2,781,658 3,244,045 3,174,623 2,830,292 Other government 2,049 Interest on long-term debt 241,995 204,666 120,549 26,702 4,384 Total governmental activities expenses 16,415,928 16,826,981 17,215,559 17,445,469 18,219,375 Business-type activities: Country club 2,124,927 3,570,683 3,268,562 3,308,535 3,398,206 Total business-type activities 2,124,927 3,570,683 3,268,562 3,308,535 3,398,206 Total primary government expenses 18,540,855$ 20,397,664$ 20,484,121$ 20,754,004$ 21,617,581$ Program Revenues Governmental activities: Charges for services: General government 158,160$ 122,455$ 123,334$ 122,569$ 126,968$ Public safety 388,671 345,731 383,325 378,591 465,263 Public works 140,923 217,975 288,994 394,082 411,722 Community development and planning 1,175,252 938,188 888,015 699,130 734,718 Leisure services 528,983 496,679 595,558 912,862 1,063,748 Other government Operating grants and contributions 998,573 170,389 88,224 105,080 96,670 Capital grants and contributions 462,394 1,454,526 1,602,465 2,017,158 75,845 Total governmental activities program revenues 3,852,956 3,745,943 3,969,915 4,629,472 2,974,934 Business-type activities: Charges for services: Country club 2,167,089 3,463,524 3,616,509 3,404,859 3,227,580 Operating grants and contributions 68,883 13,609 Capital grants and contributions Total business-type activities program revenues 2,235,972 3,463,524 3,630,118 3,404,859 3,227,580 Total primary government program revenues 6,088,928$ 7,209,467$ 7,600,033$ 8,034,331$ 6,202,514$ Net (Expense)/Revenue Governmental activities (12,562,972)$ (13,081,041)$ (13,245,644)$ (12,815,997)$ (15,244,441)$ Business-type activities 111,045 (107,159) 361,556 96,324 (170,626) Total primary government net expense (12,451,927)$ (13,188,200)$ (12,884,088)$ (12,719,673)$ (15,415,067)$ General revenues and other changes in net position: Governmental activities: Taxes: Property taxes 10,881,501$ 12,076,184$ 11,915,355$ 11,917,359$ 11,053,128$ Local option gas taxes 307,043 292,332 278,649 267,557 266,077 Utility service taxes 2,001,164 2,001,443 2,018,071 2,239,002 2,261,375 Franchise taxes 1,150,974 1,207,552 1,212,562 1,256,831 1,204,328 Sales and use taxes 1,415,917 1,339,893 1,227,341 1,116,107 1,114,945 Unrestricted grants and contributions Investment earnings 477,420 650,022 194,652 (1,346) 280,217 Miscellaneous 53,264 8,836 55,719 263,459 213,425 Contributions for Support Our Troops 15,502 16,959 6,796 Gain on disposl of equipment Transfers 36,445 5,111 49,296 Total governmental activities 16,323,728 17,596,875 16,968,604 17,065,765 16,393,495 Business-type activities: Investment income 112,841 43,917 36,431 7,376 14,686 Miscellaneous 55,300 Transfers (36,445) (5,111) (49,296) Total business-type activities 76,396 38,806 (12,865) 7,376 69,986 Total primary government 16,400,124$ 17,635,681$ 16,955,739$ 17,073,141$ 16,463,481$ Change in net position Governmental activities 3,760,756$ 4,515,834$ 3,722,960$ 4,249,768$ 1,149,054$ Business-type activities 187,441 (68,353) 348,691 103,700 (100,640) Total primary government 3,948,197$ 4,447,481$ 4,071,651$ 4,353,468$ 1,048,414$ Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. 90 2011 2012 2013 2014 2015 2,403,681$ 2,520,815$ 2,489,488$ 2,696,298$ 3,028,716$ 7,232,748 7,892,561 8,282,062 9,259,442 9,013,101 4,733,913 4,652,620 4,482,973 4,485,246 4,963,704 811,177 884,773 966,245 1,046,299 1,308,924 2,749,065 2,873,496 2,974,290 3,114,213 2,973,687 17,930,584 18,824,265 19,195,058 20,601,498 21,288,132 3,691,528 3,536,139 3,629,120 3,902,131 3,842,660 3,691,528 3,536,139 3,629,120 3,902,131 3,842,660 21,622,112$ 22,360,404$ 22,824,178$ 24,503,629$ 25,130,792$ 130,886$ 135,372$ 107,976$ 110,694$ 131,445$ 420,653 440,568 522,121 592,644 537,064 400,662 386,974 403,447 402,814 514,354 861,394 816,673 993,059 1,621,471 1,163,875 1,043,459 1,018,883 1,087,182 1,096,021 1,006,382 126,568 149,573 91,901 90,520 82,227 5,169 5,686 233,949 16,098 26,548 2,988,791 2,953,729 3,439,635 3,930,262 3,461,895 3,571,199 3,582,760 3,577,446 3,645,706 3,788,852 3,571,199 3,582,760 3,577,446 3,645,706 3,788,852 6,559,990$ 6,536,489$ 7,017,081$ 7,575,968$ 7,250,747$ (14,941,793)$ (15,870,536)$ (15,755,423)$ (16,671,236)$ (17,826,237)$ (120,329) 46,621 (51,674) (256,425) (53,808) (15,062,122)$ (15,823,915)$ (15,807,097)$ (16,927,661)$ (17,880,045)$ 10,441,869$ 10,011,748$ 9,981,391$ 10,154,695$ 11,364,888$ 259,794 263,369 261,852 266,147 282,549 2,198,148 2,164,920 2,197,760 2,277,366 2,267,118 1,191,155 1,178,598 1,160,780 1,232,669 1,253,139 1,140,744 1,138,097 1,187,221 1,260,617 1,332,209 97,743 90,968 37,029 16,653 108,794 30,622 75,413 38,219 146,360 57,137 55,636 30,457 15,360,075 14,923,113 14,864,252 15,410,143 16,696,291 8,493 7,451 8,555 10,930 10,393 69,905 8,493 7,451 78,460 10,930 10,393 15,368,568$ 14,930,564$ 14,942,712$ 15,421,073$ 16,706,684$ 418,282$ (947,423)$ (891,171)$ (1,261,093)$ (1,129,946)$ (111,836) 54,072 26,786 (245,495) (43,415) 306,446$ (893,351)$ (864,385)$ (1,506,588)$ (1,173,361)$ 91 2006 2007 2008 2009 2010 Pre GASB 54 General Fund Reserved 308,836$ 945,891$ 775,339$ 563,115$ 563,115$ Unreserved 7,022,606 8,179,659 8,265,513 10,058,216 Total general fund Post GASB 54 General Fund Nonspendable Restricted 167,108 Committed 338,457 Assigned Unassigned 104,245 10,443,099 Total general fund 7,331,442$ 9,125,550$ 9,040,852$ 10,621,331$ 11,052,909$ Pre GASB 54 All other Governmental Funds Reserved $ $ 239,979$ $ $ Unreserved, reported in: Special revenue funds 400,000 224,937 594,399 (152,861) Capital projects funds 397,233 673,232 713,373 825,778 Total all other governmental funds Post GASB 54 All other Governmental Funds Restricted Assigned Special revenue funds 47,379 Capital projects funds 844,742 Total all other governmental funds 797,233$ 898,169$ 1,547,751$ 672,917$ 892,121$ Post GASB 54 2011 2012 2013 2014 2015 General Fund Nonspendable 276,924$ 166,839$ 293,674$ 244,438$ 155,594$ Restricted 548,489 658,194 317,190 135,255 131,931 Committed 442,833 Assigned 186,594 127,574 200,016 216,808 319,888 Unassigned 10,688,660 11,244,977 11,451,668 12,391,362 10,802,623 Total general fund 11,700,667$ 12,197,584$ 12,705,381$ 12,987,863$ 11,410,036$ All other Governmental Funds Restricted $ $ $ 45,500$ 45,500$ Assigned Special revenue funds 47,107 47,652 47,652 325,152 318,526 Capital projects funds 1,491,574 2,129,831 1,799,617 841,850 1,448,620 Total all other governmental funds 1,538,681$ 2,177,483$ 1,847,269$ 1,212,502$ 1,812,646$ Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. The Village implemented GASB 54, Fund Balance Reporting and Government Fund Definitions, in 2011 and restated the 2010 amounts. VILLAGE OF NORTH PALM BEACH FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Unaudited 92 THIS PAGE INTENTIONALLY LEFT BLANK VILLAGE OF NORTH PALM BEACH CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Unaudited Fiscal Year 2006 2007 2008 2009 2010 Revenues: Taxes 14,340,682$ 15,577,511$ 15,424,638$ 15,680,749$ 14,784,906$ Licenses and Permits 1,128,658 880,266 1,047,144 880,016 910,997 Intergovernmental 2,914,057 2,750,021 2,459,211 3,315,908 1,768,388 Charges for services 1,003,660 1,082,569 1,268,774 1,684,718 1,944,245 Fines and forfeitures 165,496 132,158 235,965 145,340 142,048 Investment earnings 477,421 650,022 194,652 (1,345) 280,218 Miscellaneous 130,515 194,716 137,447 300,455 278,062 Total revenues 20,160,489 21,267,263 20,767,831 22,005,841 20,108,864 Expenditures: General government 1,648,131 2,304,654 2,246,461 1,970,257 2,496,342 Public safety 6,494,578 6,609,801 7,056,833 6,835,730 7,021,231 Public works 4,708,196 3,558,264 3,725,450 3,432,556 3,887,034 Community development and planning 651,331 735,155 840,366 784,486 774,121 Leisure services - recreation 1,682,030 2,430,403 2,876,840 2,898,252 2,361,388 Other government 2,049 Capital outlay 1,917,377 2,737,805 2,597,065 3,939,455 663,582 Debt service Principal payments 879,527 789,048 716,206 1,395,735 2,250,000 Interest paid on debt 199,373 207,088 143,726 43,725 4,384 Total expenditures 18,182,592 19,372,218 20,202,947 21,300,196 19,458,082 Excess of revenues over (under) expenditures 1,977,897 1,895,045 564,884 705,645 650,782 Other financing sources (uses) Transfers in 1,471,529 593,884 1,254,952 454,111 163,490 Transfers out (1,471,529) (593,884) (1,254,952) (454,111) (163,490) Capital lease Proceeds from debt issuance Miscellaneous Total other financing sources (uses) Net change in fund balances 1,977,897$ 1,895,045$ 564,884$ 705,645$ 650,782$ Debt service as a percentage of noncapital expenditures 7.29%6.41%4.91%8.07%11.99% 93 2011 2012 2013 2014 2015 14,090,966$ 13,618,635$ 13,601,783$ 13,930,877$ 15,167,694$ 959,098 810,390 803,337 1,344,653 947,158 1,557,377 1,591,678 1,817,603 1,688,608 1,758,246 1,934,424 1,966,179 2,141,437 2,320,305 2,231,673 164,366 140,610 131,524 117,869 128,235 97,743 90,968 37,029 16,653 108,794 59,462 130,293 207,076 258,086 122,107 18,863,436 18,348,753 18,739,789 19,677,051 20,463,907 2,402,241 2,328,568 2,346,281 2,541,546 2,904,553 7,053,282 7,583,018 7,947,221 8,947,627 8,966,077 4,044,642 3,886,698 3,733,977 3,773,689 4,255,636 790,937 844,748 933,117 1,004,642 1,270,399 2,295,959 2,374,748 2,491,559 2,644,598 2,514,495 682,057 495,254 1,110,051 1,117,234 1,530,430 17,269,118 17,513,034 18,562,206 20,029,336 21,441,590 1,594,318 835,719 177,583 (352,285) (977,683) 1,334,934 500,000 265,000 323,000 323,000 (1,334,934) (500,000) (265,000) (323,000) (323,000) 1,594,318$ 835,719$ 177,583$ (352,285)$ (977,683)$ ----- 94 Unaudited Fiscal Year Ended Sept 30, Tax Roll Year Residential Property Commercial Property Personal Property Total Net Market - Assessed Value Total Direct Tax Rate 2006 2005 1,441,249,707$ 179,827,665$ 44,422,817$ 1,665,500,189$ 6.8000 2007 2006 1,700,678,282 235,776,768 45,084,335 1,981,539,385 6.3000 2008 2007 1,744,202,888 229,300,592 43,735,861 2,017,239,341 6.1000 2009 2008 1,575,367,916 230,599,951 41,471,282 1,847,439,149 6.6977 2010 2009 1,394,954,867 221,443,121 40,552,276 1,656,950,264 6.9000 2011 2010 1,295,097,223 210,844,220 38,261,607 1,544,203,050 6.9723 2012 2011 1,265,549,795 189,284,601 33,303,512 1,488,137,908 6.9723 2013 2012 1,254,302,880 195,770,816 30,033,151 1,480,106,847 6.9723 2014 2013 1,287,481,785 203,512,929 33,792,851 1,524,787,565 6.8731 2015 2014 1,355,969,888 214,484,701 34,077,944 1,604,532,533 7.3300 Note: Assessed values are established by the Palm Beach Property Appraiser's office as of January 1, each year. Assessments were increased to 100% of market value as of 1980. Property in the Village is reassessed each year. Property is assessed at actual value, therefore the assessed values are equal to actual value. Tax rates are per $1,000 of assessed value. Source:Palm Beach County Property Appraiser Real Property VILLAGE OF NORTH PALM BEACH NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS 95 Unaudited Palm Beach Total County Palm Direct and Fiscal Tax Roll Village of School Beach Special Overlapping Year Year N. Palm Beach District County Districts Rates 2006 2005 6.8000 8.1060 4.7192 2.5042 22.1294 2007 2006 6.3000 7.8700 4.4800 2.3250 20.9750 2008 2007 6.1000 7.3560 3.9813 2.1308 19.5681 2009 2008 6.6977 7.2500 3.9660 2.2570 20.1707 2010 2009 6.9000 7.9830 4.5614 2.4934 21.9378 2011 2010 6.9723 8.1540 4.9960 2.5549 22.6772 2012 2011 6.9723 8.1800 4.9925 2.3433 22.4881 2013 2012 6.9723 7.7780 4.9902 2.3154 22.0559 2014 2013 6.8731 7.5860 4.9852 2.2280 21.6723 2015 2014 7.3300 7.5940 4.9729 2.1732 22.0701 Note:All millage rates are based on $1 for every $1,000 of assessed value. Source:North Palm Beach: Notice of Ad Valorem Taxes and Non-Ad Valorem Assessments (1)Overlapping rates are those of local and county governments that apply to property owners within the Village of North Palm Beach. Not all overlapping rates apply to all Village of North Palm Beach property owners (i.e. The rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district.) VILLAGE OF NORTH PALM BEACH PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Overlapping Rates (1) 96 Unaudited Percentage Percentage of Total of Total Village Net Village Net Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayers Value Rank Value Value Rank Value Old Port Cove Equities, Inc 29,886,172 1 1.86% Greater Fla Inv CO 25,530,387 1 1.53% Olen Residential Realty 23,629,696 2 1.47%16,800,000 3 1.01% Florida Power & Light 18,677,604 3 1.16% Wolfchase Associates, LLC 10,000,000 6 0.60% Sanctuary Bay Trust Corporation 18,581,936 4 1.16%13,200,300 5 0.79% New Country Motor Cars 13,020,939 5 0.81% CFO2 Palm Beach III LP 12,501,222 6 0.78% Domani Devolopment, LLC 11,690,020 7 0.73%22,867,125 2 1.37% Old Port Cove Holdings, Inc 9,987,421 8 0.62%11,242,451 7 0.68% Crystal Tree Property Owners 9,500,000 9 0.59%16,465,781 4 0.99% Chouest, Gary 8,217,716 10 0.51% Riverside National Bank of Florida 6,153,244 8 0.37% Village Shoppes at US 1, LLC 5,500,000 9 0.33% 701 US One Inc 5,160,153 10 0.31% Total 155,692,726$ 9.69%132,919,441$ 7.98% Source: Palm Beach Country Appraiser Note: Assessed values are established by the Palm Beach Property Appraiser's offices as of January 1, each year. VILLAGE OF NORTH PALM BEACH PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND 2006 2015 2006 97 Unaudited Fiscal Year Total Taxes Collections in Ending Tax Roll Levied for Percent Subsequent Percent Sept 30,Year Fiscal Year Amount of Levy Years Amount of Levy 2006 2005 11,329,648$ 10,690,869$ 94.36%172,744$ 10,863,613$ 95.89% 2007 2006 12,624,307 11,802,457 93.49%228,352 12,030,809 95.30% 2008 2007 12,360,135 11,546,732 93.42%333,756 11,880,488 96.12% 2009 2008 12,401,519 11,530,384 92.98%349,642 11,880,026 95.79% 2010 2009 11,564,281 10,683,829 92.39%284,004 10,967,833 94.84% 2011 2010 10,793,319 10,097,289 93.55%298,514 10,395,803 96.32% 2012 2011 10,424,715 9,992,145 95.85%15,616 10,007,761 96.00% 2013 2012 10,358,172 9,948,550 96.05%36,366 9,984,916 96.40% 2014 2013 10,503,598 10,097,763 96.14%57,493 10,155,256 96.68% 2015 2014 11,761,226 11,350,738 96.51%14,777 11,365,515 96.64% Source:Palm Beach Country Property Appraiser of the Levy to Date Total Collections Collected within VILLAGE OF NORTH PALM BEACH PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN CALENDAR YEARS the Fiscal Year 98 VILLAGE OF NORTH PALM BEACH RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Unaudited Business-type Activities Fiscal Year Percent of Ended Loans Capital Loans Capital Median Personal Per Sept 30,Payable Leases Payable Leases Total Income (1)Capita 2006 4,941,765$ 209,224$ 5,185,978$ 10,336,967$ 17.20%786.20$ 2007 4,280,842 81,100 5,026,895 9,388,837 14.67%715.61 2008 3,605,639 40,097 4,662,833 192,892 8,501,461 12.92%692.64 2009 2,250,000 - 4,383,033 97,049 6,730,082 10.14%583.15 2010 - - 4,090,284 235,176 4,325,460 6.74%371.64 2011 - - 3,844,928 173,084 4,018,012 *6.26%**345.22 2012 - - 3,608,294 106,933 3,715,227 5.98%303.51 2013 - - 3,357,875 396,055 3,753,930 6.28%305.37 2014 - - 3,096,925 274,471 3,371,396 5.32%266.62 2015 - - 2,824,987 147,767 2,972,754 4.87%234.94 Note:Details regarding the Village's outstanding debt may be found in the notes to the financial statements. *2010 Median Household Income was used for calculation - 2011 Income was not available due to agency software upgrades **2010 Population was used for calculation - 2011's Population was not available due to agency software upgrades (1)See the Schedule of Demographic and Economic Statistics on page 102 for personal income and population data. N/A Data not available. Governmental Activities 99 Percentage Amount Net Applicable to Applicable to Debt the Village of the Village of Outstanding North Palm Beach (1) North Palm Beach Debt repaid with property taxes: Palm Beach County 151,736,000$ 1.15%1,744,964$ Palm Beach County School Board 17,430,000 1.07%186,501$ Other debt: Palm Beach County 803,014,000 1.15%9,234,661 Palm Beach County School Board 1.07% Subtotal, overlapping debt 11,166,126 Village of North Palm Beach Direct Debt 0.00 Total direct and overlapping debt 11,166,126$ Sources:Palm Beach County Tax Appraiser's Office Palm Beach County School Board Palm Beach County Clerk & Comptroller Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Village. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Village of North Palm Beach. This process recognizes that, when considering the Village's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1)For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Value that is within the Village's boundaries and dividing it by the County's and School Board's total taxable assessed value. This approach was also used for the other debt. VILLAGE OF NORTH PALM BEACH DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT SEPTEMBER 30, 2015 Unaudited Government Unit 100 VILLAGE OF NORTH PALM BEACH Pledged - Revenue Coverage Country Club Bonds Last Ten Fiscal Years Unaudited Required Fiscal Gross Operating Debt Year Revenues (1) Expenses (2)Net Revenue Service Coverage (3) 2006 2,348,813$ 1,910,640$ 438,173$ 106,936$ 4.10 2007 3,507,441 2,991,621 515,820 392,505 1.31 2008 3,652,940 2,558,591 1,094,349 394,900 2.77 2009 3,412,235 2,587,171 825,064 394,900 2.09 2010 3,242,266 2,728,470 513,796 394,900 1.30 2011 3,579,692 3,049,301 530,391 394,900 1.34 2012 3,590,211 2,932,743 657,468 394,900 1.66 2013 3,586,001 2,986,080 599,921 394,900 1.52 2014 3,656,636 3,248,284 408,352 394,900 1.03 2015 3,799,245 3,226,907 572,338 394,900 1.45 (1)Gross revenue includes interest revenue. (2)Operating expenses excludes non-cash expenses (3)Coverage should be not less than 1.00. 2006 was the first year the debt was outstanding, and was not a complete year. 101 Per Palm Beach Median Capita County Calendar Personal Personal Unemployment Year Population (1)Income (1)Income (1)Rate (2) 2006 (estimate)13,148 60,101$ 46,726$ 3.3 2007 (estimate)13,120 63,984 42,224 4.1 2008 (estimate)12,274 65,815 45,563 6.3 2009 (estimate)11,541 66,401 49,350 10.8 2010 (estimate)11,639 64,156 49,130 12.0 2011 (estimate)***10.7 2012 (estimate)12,241 ***62,121 49,117 **5.29 2013 (estimate)12,293 ***59,778 42,830 **4.66 2014 (estimate)12,645 ***63,349 43,120 **3.92 2015 (estimate)12,653 ***61,057 43,120 **3.15 Sources:Business Development Board US Census Bureau *2011 Demographic data is not available due to Agency Software upgrade that is not complete **Village of North Palm Beach Unemployment Rate for 2012-2015 presented ***North Palm Beach Median Personal Income for 2012 - 2015 presented Note: (1)All information available at the current time is presented. (2)North Palm Beach is not large enough to track unemployment rates. Palm Beach County rates are presented. VILLAGE OF NORTH PALM BEACH DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS Unaudited 102 Percentage Percentage of Total of Total Employer Employees Employment Employees Employment Palm Beach Country School Board 22,000 3.20%21,618 3.57% Tenet Health Care Corp 6,100 0.89%5,000 0.83% Palm Beach County Government 5,507 0.80%6,379 1.05% NextEra Energy (Florida Power & Light) 3,854 0.56%2,924 0.48% Hospital Corporation of America (HCA) (1)2,714 0.39%3,750 0.62% Florida Alantic University 2,655 0.39%1,400 0.23% Bethesda Memorial Hospital 2,600 0.38%1,280 0.21% Boca Raton Regional Hospital (2)2,500 0.36%1,700 0.28% Veterans Health Administration 2,500 0.36%1,400 0.23% Jupiter Medical Center 2,000 0.29%1,400 0.23% Boca Raton Resort & Club 1,292 0.19%2,200 0.36% Office Depot 2,000 0.29%2,680 0.44% The Breakers Hotel 2,000 0.29%1,800 0.30% U.S. Sugar Corp 900 0.13%2,100 0.35% Florida Crystals 1,700 0.25%2,000 0.33% City of Boca Raton 1,228 0.18%1,991 0.33% City of West Palm Beach 1,326 0.19%1,700 0.28% 62,876 9.14%61,322 10.12% Source:Business Development Board of Palm Beach County *Employer: Palm Beach County Information is not available for the Village of North Palm Beach. **Percentage of total employment is calculated using Palm Beach County's available labor force in each of the respective years presented. ***FY 2015 data was not available - FY 2005 & 2014 data presented Notes: (1)Formerly Columbia Palm Beach Health Care Systems, Inc (2)Intracoastal Health Systems, Inc - now part of Tenet Healthcare Corp Unaudited VILLAGE OF NORTH PALM BEACH PRINCIPAL EMPLOYERS*** 2014**2005 103 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Number of Employees: General Government Village Manager - Full-Time 1 1 1 1 1 1 1 1 1 1 Assistant Village Manager - Full-Time 0 0 0 0 0 0 0 0 0 0 Systems Specialist Full-Time 2 2 2 2 2 2 3 3 3 3 Part-Time 0 0 0 1 1 1 0 0 0 0 Executive Secretary - Full-Time 1 1 1 1 1 1 1 1 1 1 Human Resources Full-Time 2 2 2 2 2 2 2 2 2 2 Part-Time 0 0 0 0 0 0 0 0 0 1 Village Clerk - Full-Time 3 3 3 3 3 3 3 3 3 3 Finance Full-time 5 5 5 5 5 5 5 5 5 7 Part-Time 0 0 1 1 1 1 1 1 1 0 Public Works Full-time 54 47 48 38 37 37 37 37 37 35 Part-Time 3 0 0 0 0 0 0 0 0 0 Public Safety Full-time 66 68 68 67 67 67 0 0 0 0 Part-Time 14 13 12 11 12 12 0 0 0 0 Law Enforcement Full-time 0 0 0 0 0 0 43 43 43 36 Part-Time 0 0 0 0 0 0 12 13 13 13 Fire Rescue Full-time 0 0 0 0 0 0 24 24 24 24 Part-Time 0 0 0 0 0 0 0 0 0 0 Community Development and Planning Full-time 0 9 10 9 9 9 8 8 10 11 Part-Time 0 1 1 2 2 2 2 2 1 0 Leisure Services Library Full-time 7 7 7 6 6 6 6 6 6 7 Part-Time 8 8 8 10 10 10 10 10 10 9 Recreation Full-time 15 15 17 9 7 6 6 6 6 6 Part-Time 31 39 42 42 42 43 43 43 43 43 Other Government - Country Club Full-time 18 19 18 5 5 7 5 6 8 8 Part-Time 24 25 22 21 21 64 56 54 65 65 254 265 268 236 234 279 268 268 282 275 Source:Village of North Palm Beach Budget Report VILLAGE OF NORTH PALM BEACH Unaudited LAST TEN FISCAL YEARS (*) Full-Time Equivalent Village Government Employees by Function Total Number of Employees Budgeted FY Ending 104 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FUNCTION/PROGRAM GENERAL GOVERNMENT Number of Parcels - 7,411 7,422 7,472 7,466 7,466 7,473 7,470 7,471 7,630 PUBLIC WORKS Sanitation (Tons of Refuse Collected)13,203 12,085 11,974 10,667 10,165 9,962 10,065 10,720 10,720 11,167 No. of collection units for solid waste (residential) 7,558 7,152 7,163 7,214 7,070 7,071 7,076 7,471 7,616 7,238 Number of vehicles maintained 95 104 104 110 110 98 98 111 98 102 Number of repair overlays completed (miles)2.935 2 3 2.5 2.71 - - - - - PUBLIC SAFETY Number of arrests by police officers 410 545 549 448 402 260 211 216 238 295 Number of traffic citations issued 4,272 4,269 5,520 6,305 4,951 2,564 2,566 1,254 2,799 3,871 EMS average response times (minutes)4.69 4.73 5.17 5.01 5.12 5.19 5.26 5.11 5.10 5.11 Number of EMS calls 1,056 1,034 1,114 1,214 1,146 1,179 1,326 1,296 1,110 1,499 COMMUNITY DEVELOPMENT & PLANNING Building Department - Number of Permits (1)1,875 1,619 1,548 1,744 1,616 1,835 2,480 2,103 2,515 Number of code enforcement violations 1,767 1,617 729 613 391 575 817 790 887 886 Number of code violations brought to board/magistrate (Calendar Yr End)144 126 115 73 38 72 100 62 28 33 RECREATION Number of community events presented 21 24 23 28 28 38 49 37 53 55 Number of registrants in athletic programs 1,520 1,600 1,400 1,125 1,005 1,260 1,311 2,074 1,439 1,444 LIBRARY Library - Number of Volumes 47,371 42,372 33,122 35,681 39,277 40,658 43,340 44,966 46,546 47,339 OTHER GOVERNMENT Country Club Number of Golf Members 365 579 389 297 354 298 283 262 250 256 Number of Tennis Members 136 171 171 180 184 173 162 190 194 193 (1)An accurate number of building permits issued for 2006 is not available - computer systems crash. Source: Village of North Palm Beach U.S. Census Bureau VILLAGE OF NORTH PALM BEACH OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Unaudited 105 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function/Program: General Government No. of General Government Buildings 11 11 11 23 23 23 23 23 23 23 Public Works Square Miles 5.18 5.18 5.18 5.18 5.18 5.18 5.18 5.18 5.18 5.18 Miles of Streets 32.318 32.318 32.318 32.318 32.318 32.318 32.318 32.318 32.318 32.318 Number of Street Lights (within corp surroundings)425 425 513 513 513 513 513 513 513 513 Public Safety Fire: Number of Stations 1 1 1 1 1 1 1 1 1 1 Number of Firemen/Paramedics/EMTs 23 23 23 23 23 23 22 22 22 22 Number of Fire Captains 0 0 0 0 0 0 1 1 1 1 Police/EMS Protection: Number of Stations 1 1 1 1 1 1 1 1 1 1 Number of Policemen & Officers 33 32 32 31 31 31 28 28 28 28 Number of Police Captains 0 0 0 0 0 0 2 2 2 2 EMS Protection 0 0 0 0 0 0 0 0 1 1 Leisure Services Recreation Number of Parks 4 4 4 4 4 4 4 4 4 4 Public Tennis Courts 2 2 2 2 2 2 2 2 2 2 Swimming Pool 1 1 1 1 1 1 1 1 1 1 Number of Marinas 1 1 1 1 1 1 1 1 1 1 Library Number of Libraries 1 1 1 1 1 1 1 1 1 1 Number of Volumes 47,371 42,372 33,122 35,681 39,277 40,658 43,340 44,966 46,546 47,339 Other Government Country Club Golf Course 1 1 1 1 1 1 1 1 1 1 Driving Range 1 1 1 1 1 1 1 1 1 1 Tennis Courts 10 10 10 10 10 10 10 10 10 10 Restaurant 0 0 0 0 1 1 1 1 1 1 Snack Bar 0 0 0 0 1 1 1 1 1 1 VILLAGE OF NORTH PALM BEACH LAST TEN FISCAL YEARS Unaudited CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM 106 OTHER REPORTS 107 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor and Members of the Village Council The Village of North Palm Beach, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida, as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the Village of North Palm Beach, Florida’s basic financial statements and have issued our report thereon dated March 16, 2016. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Village of North Palm Beach, Florida’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village of North Palm Beach, Florida’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Village of North Palm Beach, Florida’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 108 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village of North Palm Beach, Florida’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. West Palm Beach, Florida March 16, 2016 109 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 Report on the Financial Statements We have audited the financial statements of the Village of North Palm Beach, Florida, as of and for the fiscal year ended September 30, 2015, and have issued our report thereon dated March 16, 2016. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and Chapter 10.550, Rules of the Florida Auditor General. Other Reports We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and Independent Accountant’s Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated March 16, 2016, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the prior year that required corrective actions. 110 Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this Management Letter, unless disclosed in the notes to the financial statements. This information is disclosed in Note 1 to the financial statements. Financial Condition Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we report the results of our determination as to whether or not the Village of North Palm Beach, Florida has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the Village of North Palm Beach, Florida did not meet any of the conditions described in Section 218.503(1), Florida Statutes, during the fiscal year ended September 30, 2015. Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management’s responsibility to monitor the Village of North Palm Beach, Florida’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Our assessment was done as of the fiscal year end. The results of our procedures did not disclose any matters that are required to be reported. Annual Financial Report Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, require that we report the results of our determination as to whether the annual financial report for the Village of North Palm Beach, Florida for the fiscal year ended September 30, 2015, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2015. In connection with our audit, we determined that these two reports were in agreement. Special District Component Units Section 10.554(1)(i)5.d., Rules of the Auditor General, requires that we determine whether or not a special district that is a component unit of a county, municipality, or special district, provided the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. Based on the application of criteria in publications cited in Section 10.553, Rules of the Auditor General, there are no special district component units of the Village of North Palm Beach, Florida. Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the Management Letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. 111 Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Single Audits The Village expended less than $500,000 of federal awards and less than $500,000 of state financial assistance for the year ended September 30, 2015, and was not required to have a federal single audit or a state single audit. Response to Management Letter There were no items that required a response by management. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, management, the audit committee, Village Council, and federal and state awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. March 16, 2016 West Palm Beach, Florida 112 INDEPENDENT ACCOUNTANT’S REPORT ON COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES The Honorable Mayor and Members of the Village Council The Village of North Palm Beach, Florida We have examined the Village of North Palm Beach, Florida’s compliance with Section 218.415, Florida Statutes during the year ended September 30, 2015. Management is responsible for the Village of North Palm Beach, Florida’s compliance with those requirements. Our responsibility is to express an opinion on the Village of North Palm Beach, Florida’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Village of North Palm Beach, Florida’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Village of North Palm Beach, Florida’s compliance with specified requirements. In our opinion, the Village of North Palm Beach, Florida complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2015. This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representative, the Florida Auditor General, applicable management, and the Village Council, and is not intended to be and should not be used by anyone other than these specified parties. West Palm Beach, Florida March 16, 2016