CEDAR HAMMOCK FIRE CONTROL DISTRICT FINANCIAL … rpts/2016 cedar... · As management of Cedar...

CEDAR HAMMOCK FIRE CONTROL DISTRICT FINANCIAL STATEMENTS SEPTEMBER 30, 2016

TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR’S REPORT 1 - 2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 - 7 BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS: STATEMENT OF NET POSITION 8 STATEMENT OF ACTIVITIES 9 FUND FINANCIAL STATEMENTS: BALANCE SHEET – GOVERNMENTAL FUND 10 RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUND TO THE STATEMENT OF NET POSITION 11 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUND 12 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUND TO THE STATEMENT OF ACTIVITIES 13 STATEMENT OF POSTEMPLOYMENT HEALTHCARE PLAN NET POSITION – FIDUCIARY FUND 14 STATEMENT OF CHANGES IN POSTEMPLOYMENT HEALTHCARE PLAN NET POSITION – FIDUCIARY FUND 15 NOTES TO FINANCIAL STATEMENTS 16 - 37 REQUIRED SUPPLEMENTARY INFORMATION: SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND 38 SCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY – FRS 39

CEDAR HAMMOCK FIRE CONTROL DISTRICT FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

TABLE OF CONTENTS – CONTINUED PAGE SCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY – HIS 40 SCHEDULE OF THE DISTRICT’S CONTRIBUTIONS – FRS 41 SCHEDULE OF THE DISTRICT’S CONTRIBUTIONS – HIS 42 NOTES TO REQUIRED SUPPLEMENTRY INFORMATION 43 SCHEDULE OF FUNDING PROGRESS – OTHER POST-EMPLOYMENT HEALTHCARE PLAN 44 OTHER SUPPLEMENTAL INFORMATION: SCHEDULE OF OPERATING EXPENDITURES - BUDGET AND ACTUAL – GENERAL FUND 45 OTHER AUDITOR’S REPORTS 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 46 - 47 MANAGEMENT LETTER 48 – 49 INDEPENDENT ACCOUNTANT’S REPORT ON INVESTMENT COMPLIANCE 50 IMPACT FEE AFFIDAVIT 51

CEDAR HAMMOCK FIRE CONTROL DISTRICT FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

CEDAR HAMMOCK FIRE RESCUE 5200 26th Street West, Bradenton, Florida 34207-2299

Phone (941) 751-7090, Fax (941) 751-7095, SUNCOM 599-7090

MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of Cedar Hammock Fire Control District (the District), we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended September 30, 2016. Financial Highlights The District’s net position at September 30, 2016 on the government wide basis was $(138,855). The

District’s total net position increased by $177,197. As of the close of the current fiscal year, the District’s governmental fund reported ending fund

balances of $4,455,099, an increase of $740,404 in comparison with the prior year. Of this total amount, $1,608,557 is available for spending at the District’s discretion (unassigned fund balance).

The District’s total long-term obligations, including the fair value of its interest rate swap,

compensated absences, OPEB liability and net pension liability was $14,415,528.

Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Cedar Hammock Fire Control District’s basic financial statements. The District’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. Government-wide financial statements included all non-fiduciary activities of the District. The statement of net position presents information on all of the District’s assets plus deferred outflows of resources and liabilities plus deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the District’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected revenues and earned but unused vacation and sick leave).

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Both of the government-wide financial statements distinguish functions of the District that are principally supported by fire assessments (ad valorem and non-ad valorem taxes), impact fees and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The District is engaged in only governmental activities. The government-wide financial statements can be found on pages 8 and 9 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District utilizes the following fund types: Governmental and Fiduciary. Governmental funds. Governmental funds focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. These funds are reported using the modified accrual method of accounting and the current financial resources focus. As a result, long-term assets and liabilities are not included. The District uses a General fund which is the general operating fund. All general tax revenues are accounted for in this fund. From this fund all general operating expenditures and budgeted debt service and capital expenditures are paid. A reconciliation to facilitate the comparison between the governmental fund financial statements and the government-wide financial statements is presented. The District adopts an annual budget for its governmental funds. A budgetary comparison statement has been provided to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 10 to 13 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The fiduciary fund is not reflected in the government-wide financial statements because the resources of that fund are not available to support the District’s own programs. The District uses a fiduciary fund to account for its Post Employment Health Insurance Subsidy Plan. At year end the fund had $1,686,630 of assets in trust, which increased $104,402 from the previous year. The Fiduciary fund statements are on pages 14 and 15. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found beginning on page 16. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the Cedar Hammock Fire Control District, net position, which is assets and deferred outflows of resources less liabilities and deferred inflows of resources was $(138,855) at the close of the most recent fiscal year. The largest portion of the District’s net position, $3,704,876, reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide fire protection and emergency services to citizens within the boundaries of the District; consequently, these assets are not available for future spending. Although the District’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

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A condensed statement of net position as of September 30, 2016 follows with comparable totals as of September 30, 2015:

Net Position Governmental Governmental Activities Activities 2016 2015 Current and other assets $ 4,695,652 $ 4,007,189 Capital assets 6,019,092 6,333,328

Total assets 10,714,744 10,340,517 Deferred outflow of resources 5,932,542 2,535,089 Accumulated decrease in fair value of hedging derivative 121,084 146,248 Long-term liabilities outstanding 14,415,528 10,007,056 Other liabilities 247,543 267,394 , Total liabilities 14,663,071 10,274,450 Deferred inflow of resources 2,283,245 3,063,456 Net position: Net investment in capital assets 3,704,876 3,763,439 Restricted 227,675 171,811 Unrestricted (4,071,406) (4,251,302) Total net position $ (138,855) $ (316,052) An additional portion of the District’s net position, $227,675, represents resources from impact fees that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position is a deficit of $(4,071,406) due to the adoption of GASB Statement No. 68 in the prior year and the District’s net pension liability of $10,163,228. The District’s net position increased by $177,197 during the current fiscal year. The following is a summary of the information presented in the statement of activities for the year ended September 30, 2016 with comparable totals for the year ended September 30, 2015:

Changes in Net Position

Governmental Governmental Activities Activities 2016 2015 Revenues: Program revenues:

Capital grants $ 362 $ -0- Charges for services 71,795 27,855

General revenues: Fire assessments 9,164,670 8,738,225 Impact Fees 45,310 127,921 Other 237,906 245,534

Total revenues 9,520,043 9,139,535 Expenses: Fire Protection Services 8,763,970 7,932,650

Depreciation 471,324 442,326 Interest on long-term debt 107,552 118,670 Total expenses 9,342,846 8,493,646

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Changes in Net Position - Continued Governmental Governmental Activities Activities 2016 2015 Increase in Net Position 177,197 645,889 Net position – Beginning (316,052) (961,941) Net position – Ending $ (138,855) $ (316,052)

Fire assessment taxes increased by $426,445 during the year.

Other revenue decreased by $46,299, due to a decrease in impact fees. Expenses increased $849,200 due mainly to fire protection services. Financial Analysis of the District’s Funds The District utilizes one governmental fund, which is the General Fund. Governmental funds. The focus of the District’s governmental fund is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the District’s governmental fund (general fund) reported ending fund balances of $4,455,099, an increase of $740,404 in comparison with the prior year. Of this total, $1,228,804 is committed fund balance, which is approved for employee benefits and various capital improvements and repairs, and $1,350,972 is assigned fund balance, which is approved for emergencies and contingencies based on the District’s approved budget. $227,675 is restricted from impact fees. The impact fees are to be spent only on the acquisition, construction or purchase of assets required to provide fire protection and emergency services. $1,608,557 is unassigned, which may be used at the District’s discretion. As a measure of the general fund’s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fund balance represents approximately 18 percent of total general fund expenditures. The fund balance of the District’s general fund increased $740,404 during the current fiscal year. The significant activity is as follows: Expenditures in the general fund decreased by $579,731. Personal service costs increased $401,791.

Operating costs increased by $69,158 and capital outlay decreased $1,050,574. Revenues increased by $380,508. Tax assessments increased $247,108, advalorem tax revenues

increased $179,337, and impact fees decreased $82,611. General Fund Budgetary Highlights During the year, the General Fund budget was amended. The original and final budgeted revenues were $9,359,943. The final budgeted expenditures were $9,854,943 compared to the original budget of $9,359,943. Amendments to expenditures included additional amounts budgeted for capital outlay expenditures. For the current fiscal year, actual revenues exceeded budgeted revenue by $160,100 due mainly to additional tax assessments and impact fees. Actual expenditures were less than budget by $1,075,304 due mainly to less personal service, operating and capital outlay costs than anticipated.

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Capital Assets The District’s investment in capital assets for the year ended September 30, 2016 amounts to $6,019,092 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, and machinery and equipment. A current year decrease in capital assets of $314,236 was comprised of $163,032 of capital additions, depreciation expense of $471,324, and net disposals of $5,944. Capital Assets Governmental Governmental Activities Activities 2016 2015 Land $ 695,482 $ 680,982 Building and improvements 3,914,137 4,075,014 Machinery and equipment 1,409,473 1,577,332 Total (net of depreciation) $ 6,019,092 $ 6,333,328 See note B of this report for additional information on the District’s capital assets. Long-Term Obligations At the end of the current fiscal year, the District had total long-term obligations outstanding of $14,415,528. The District’s debt represents notes payable secured solely by specified revenue sources (i.e., fire assessments and impact fee revenues), as well as equipment and totaled $2,314,216. The District has also entered into an interest rate swap agreement in order to fix a portion of its variable rate debt. The fair value of the swap agreement at September 30, 2016 was $121,084 and has been included in the statement of net position as a long-term liability, with an offsetting deferred outflow of resources. Also included in long-term obligations are the District’s OPEB liability of $877,000, net pension liability of $10,163,228 and accrued compensated absences of $940,000. The District’s total debt decreased by $255,673 during the current fiscal year due to principal payments. Additional information on the District’s long-term debt can be found in note C of this report. Economic Factors and Next Year’s Budgets and Rates The millage rate is at 1.3 mills for the fiscal year ending September 30, 2017. Contingency funds are being allocated for the purchase of one (1) fire engine and one (1) command vehicle. Tax revenues are contributing to continued savings toward the purchase of one (1) ladder truck, and renovations to the training facility, station alerting systems, and additional maintenance of existing facilities. Three additional firefighter positions are also being considered for the fiscal year 2017-2018. Requests for Information This financial report is designed to provide a general overview of the Cedar Hammock Fire Control District’s finances for all those with an interest in the District’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the District at, Cedar Hammock Fire Control District, 5200 26th Street West, Bradenton, Florida 34207.

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GOVERNMENTAL ACTIVITIES

ASSETS

Cash and cash equivalents 489,571$ Investments 3,856,316Due from other governments 122,090

Temporarily restricted:Cash and cash equivalents 227,675

Deposits on fixed assets 39,091Capital assets (net of accumulated depreciation):

Land 695,482Other capital assets, net of depreciation 5,323,610

Total Assets 10,753,835

Deferred outflows of ResourcesAccumulated decrease in fair value of hedging derivative 121,084Deferred outflows of pension resources 5,932,542

LIABILITIESAccounts payable and other current liabilities 204,644Accrued interest 42,899Noncurrent liabilities:

Due within one year 341,727Due in more than one year 14,073,801

Total Liabilities 14,663,071

Deferred inflows of ResourcesDeferred inflows of pension earnings 2,283,245

NET POSITIONNet Investment in Capital Assets 3,704,876Restricted for:

Impact fees 227,675Unrestricted (4,071,406)

TOTAL NET POSITION (138,855)$

The accompanying notes are an integral part of these financial statements.

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CEDAR HAMMOCK FIRE CONTROL DISTRICTSTATEMENT OF NET POSITION

SEPTEMBER 30, 2016

GOVERNMENTAL ACTIVITIES

Public Safety-Fire ProtectionPersonal services 7,695,193$ Operating expenses 1,068,777Depreciation 471,324Interest expense 107,552

Total Program Expenses 9,342,846

Program Revenues:Capital grants 362Charges for services 71,795

Net Program Expense 9,270,689

General Revenues:Fire assessments 9,164,670Impact fees 45,310Investment earnings 38,332Miscellaneous 199,574

Total General Revenues 9,447,886

Increase in Net Position 177,197

Net Position - Beginning (316,052)

Net Position – Ending (138,855)$


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CEDAR HAMMOCK FIRE CONTROL DISTRICTSTATEMENT OF ACTIVITIES

FOR THE YEAR ENDED SEPTEMBER 30, 2016

GENERALFUND

ASSETSCash and cash equivalents 489,571$ Investments 3,856,316 Due from other governments 122,090 Deposits on fixed assets 39,091 Restricted Assets:

Cash and cash equivalents 227,675 TOTAL ASSETS 4,734,743$

LIABILITIES Accounts payable 34,842$ Accrued wages payable 244,802

Total Liabilities 279,644

Fund Balances:Nonspendable 39,091 Spendable Restricted for:

Impact fees 227,675 Committed 1,228,804 Assigned 1,350,972 Unassigned 1,608,557

Total fund balances 4,455,099

TOTAL LIABILITIES AND FUND BALANCES 4,734,743$


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CEDAR HAMMOCK FIRE CONTROL DISTRICTBALANCE SHEET

GOVERNMENTAL FUNDSEPTEMBER 30, 2016

Amounts reported for governmental activities in the statement of Net Positionare different because:

Fund Balance – Total Governmental Fund 4,455,099$

Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the general fund. 6,019,092

Deferred outflows of resources related to the pension plan do notutilize current financial resources and, therefore are not reportedin the funds. 5,932,542

Deferred inflows of resources related to the pension plan are notavailable current financial resources and, therefore are not reportedin the funds. (2,283,245)

Liabilities, including notes payable, accrued interest, long-term compensated absences and OPEB liability are not due and payablein the current period and therefore are not reported in the general fund. (14,262,343)

Net Position of Governmental Activities (138,855)$


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CEDAR HAMMOCK FIRE CONTROL DISTRICTRECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUND

TO THE STATEMENT OF NET POSITIONSEPTEMBER 30, 2016

GENERALFUND

REVENUESTax assessments 6,365,251$ Ad valorem tax 2,799,419 Capital grants 362 Impact fees 45,310 Interest 38,332 Miscellaneous 247,574 Charges for services 23,795

Total Revenues 9,520,043

EXPENDITURESCurrent:

Personal service 7,185,549 Operating 1,031,027

Debt Service:Principal retirement 255,673 Interest 112,552

Capital outlay 194,838 Total Expenditures 8,779,639

Net Change in Fund Balance 740,404

FUND BALANCES - Beginning 3,714,695

FUND BALANCES - Ending 4,455,099$


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CEDAR HAMMOCK FIRE CONTROL DISTRICTSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2016

Amounts reported for governmental activities in the statement of activitiesare different because:

Net changes in fund balances - total government funds 740,404$

Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of those assets is allocatedover their estimated useful lives and reported as depreciationexpense. This is the amount by which depreciation expense and gainor loss on disposal of assets exceeds capital additions. (314,236)

The repayment of the principal on long-term debt consumes thecurrent financial resources of governmental funds. However,the transaction has no effect on net position. 255,673

Some expenses reported in the statement of activities do not requirethe use of current financial resources and, therefore, are notreported as expenditures in governmental funds. This amountrepresents the change in long-term compensated absences. 43,000

Some expenses reported in the statement of activities do not requirethe use of current financial resources and, therefore, are notreported as expenditures in governmental funds. This amount (92,000) represents the change in the OPEB liability.

Accrued interest on long-term debt reported in the statement ofactivities does not require the use of current financial resourcesand, therefore, is not reported as an expenditure in the governmentalfund. This is the amount of change in accrued interest. 5,000

The effects of long term accounts and pension resources do notprovide current financial resources and as such are not recordedin the funds. (460,644)

Change in Net Position of Governmental Activities 177,197$

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CEDAR HAMMOCK FIRE CONTROL DISTRICTRECONCILIATION OF THE STATEMENT OF REVENUES

EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDTO THE STATEMENT OF ACTIVITIES


Assets

Investments 1,686,630$

Liabilities

Liabilities -

Net Position held in trust for postemploymenthealth care benefits 1,686,630$

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CEDAR HAMMOCK FIRE CONTROL DISTRICTSTATEMENT OF POSTEMPLOYMENT HEALTHCARE PLAN NET POSITION

SEPTEMBER 30, 2016FIDUCIARY FUND

Additions

Contributions:Employer 100,000$

Investment income (Loss)Net appreciation (depreciation) in fair value of investments 126,825

Total Additions 226,825

Deductions

Benefits 115,060 Administrative expenses 7,363

Total Deductions 122,423

Net Increase (decrease) 104,402

Net Position held in trust for postemployment healthcare benefits

Beginning of Year 1,582,228

End of Year 1,686,630$

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CEDAR HAMMOCK FIRE CONTROL DISTRICTSTATEMENT OF CHANGES IN POSTEMPLOYMENT HEALTHCARE PLAN NET POSITION



FIDUCIARY FUND

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant accounting policies followed by the

Cedar Hammock Fire Control District, Manatee County, Florida:

(a) Reporting Entity - Cedar Hammock Fire Control District is a public municipal corporation in the State of Florida created by House Bill Number 729 of the Legislature of the State of Florida in May, 1957. During the year 2000, the original bill as amended was codified in Chapter 2000-391 Laws of Florida. Effective October 1, 2007, House Bill Number 983 amended ch. 2000-391, and merged the Whitfield Fire Control District into the Cedar Hammock Fire Control District. The District is governed by a five-member board elected by the electors of the District. Effective June 10, 2015, House Bill Number 1203 amended Chapter 2000-391. There are no known component units. Revenue is provided for in the Bill by fire assessments against taxable real estate lying within the territorial bounds of the District as defined by the State of Florida. Disbursements are made for maintenance and upkeep of the fire stations, purchase of fire fighting and rescue equipment, payment of wages, employee benefits, and administrative expenses. The District has been determined to be an independent Special District by the Florida Department of Community Affairs. The State of Florida passed Legislation, which took effect January 1, 1982, and provides for the District to collect impact fees to defray the cost of improvements required to provide fire and emergency service to the new users of the District. The impact fees collected are to be used exclusively for the acquisition, purchase, or construction of new facilities and equipment required to provide these services to the new users in the District.

(b) Basis of Presentation –The District’s basic financial statements include Government-wide (which report information on all of the non-fiduciary activities of the District) and Fund financial statements (which report on the General Fund as well as the Fiduciary Fund). The Basic Financial Statements present only governmental activities, as the District conducts no business type activities.

Basis of Accounting: Basic Financial Statements – Government Wide Statements- The Government-Wide Financial Statements (Statement of Net Position and Statement of Activities) are prepared using the economic resources measurement focus and the accrual basis of accounting. For the most part, interfund activity has been removed from these statements. Government-wide financial statements include a Statement of Net Position and a Statement of Activities. The Statement of Net Position reports all financial and capital resources of the

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CEDAR HAMMOCK FIRE CONTROL DISTRICT NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

District’s governmental activities. It is presented in a net position format (assets plus deferred outflows less liabilities plus deferred inflows equal net position) and shown with three components: net investment in capital assets, restricted net position and unrestricted net position. The statement of activities reports direct program expenses offset by program revenues. The amounts reported as program revenues include charges for services and capital and operating grants, as applicable. General revenues include taxes and other items properly not included as program revenue. Basic Financial Statements – Fund Financial Statements – The District’s accounts are organized on the basis of funds, which are a self-balancing set of accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures. The District utilizes Governmental funds, which follow the modified accrual basis of accounting. Under this method, revenues are recorded when they become 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. The District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are generally recorded when a fund liability is incurred. The District reports one governmental fund type, which is considered a major fund:

Governmental Funds (1) General Fund - The general fund is the general operating fund of the District.

All general tax revenues and impact fees received are accounted for in this fund. From the fund are paid the general operating expenditures and budgeted debt service and capital expenditures. Impact fees are restricted for the acquisition, construction or purchase of assets required to provide fire protection and emergency services.

The district utilizes fiduciary funds to account for resources held for the benefit of others:

Fiduciary Fund

(1) Other Employee Benefit Trust Fund – This fund is used to account for assets

held by the District in a trustee capacity. The fiduciary fund accounts for the activities of the District’s Health Insurance Subsidy Plan, which is a postemployment healthcare plan administered through a defined benefit pension plan. Consequently, net position in the fiduciary fund are reserved. The fiduciary fund is accounted for on the accrual basis. Contributions are recognized in the period in which contributions are due. Postemployment healthcare benefits and refunds are recognized when due and payable in accordance with the Plan.

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SEPTEMBER 30, 2016

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED (c) Estimates - The preparation of financial statements in conformity with U.S.

generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(d) Budgets and Budgetary Accounting - The District prepares an annual

operating budget for the fiscal year commencing October 1. Prior to September 1 of each year, the Secretary/Treasurer of the District's Board of Commissioners prepares a proposed budget for the upcoming fiscal year. The budget is based on an analysis of prior year actual revenues and expenditures along with anticipated spending and revenue sources. Once the proposed budget is compiled, it is brought before the Board of Commissioners for approval. Budget amendments are approved by the Board of Commissioners.

Expenditures should not exceed the total appropriations. Appropriations lapse at the end of the year.

(e) Interfund Receivables/Payables - Interfund receivables/payables arise from

temporary interfund transfers. When a fund has an interfund receivable and an interfund payable to the same fund, the amounts are recorded in separate accounts. Internal activity and balances between governmental funds have been eliminated in the government-wide statement of net position.

(f) Property Taxes - Property taxes become due and payable on November 1 of

each year. The county tax collector remits the District's portion as such revenues are received. The District collects nearly all of its tax revenues during the period November 1 through April 1, at which time the taxes become delinquent. The maximum rates of tax are set by the Legislature of the State of Florida. The District received tax revenues based on millage and also assessments which vary based on a sliding scale of property values and type of property involved and is determined by the Board of Commissioners of the District.

The key dates in the property tax cycle are as follows: Proposed assessment rate established June 1 Assessment roll validated July 1 Beginning of fiscal year for which taxes have been levied October 1 Tax bills rendered and due November 1

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SEPTEMBER 30, 2016

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Property taxes payable: Maximum discount November 30 Delinquent April 1 Tax certificates sold May 31 Fiscal year begins October 1 Fiscal year ends September 30 Property taxes are recognized as revenue in the fiscal year for which the taxes

have been levied to the extent they result in current receivables. Under the system outlined above, no material amount of taxes is receivable after the end of the fiscal year.

(g) Cash and Investments

The District maintains three cash accounts and has investments in an external investment pool. The investment pool contains unrestricted funds and is available for use as determined by the annual budget. One of the Districts’ cash accounts contains restricted funds for impact fees. Cash restricted for impact fee revenue can only be used for the acquisition, construction or purchase of assets required to provide fire protection and emergency services to new construction.

Deposits and Investments

Demand Deposits At September 30, 2016, the District had demand deposits held in a qualified public depository. Deposits whose values exceeded federal depository insurance limits were entirely insured or collateralized pursuant to Chapter 280 of the Florida Statutes. At September 30, 2016, the carrying amount of the District’s deposits was $716,896 and the bank balance was $884,822.

Investments

In accordance with Florida Statute 218.415, the District adopted an investment policy limiting District investments to the following:

(a) The Local Government Surplus Funds Trust Fund or any intergovernmental

investment pool authorized pursuant to the Florida Interlocal Cooperation Act as provided in Section 163.01, Florida Statutes. (Includes the Manatee County Investment Pool).

(b) Securities and Exchange Commission registered Money Market funds with the

highest credit quality rating from a nationally recognized rating agency. (c) Interest bearing time deposits or savings accounts in state-certified qualified

public depositories as defined in Section 280.02, Florida Statutes. (d) Direct obligations of the U.S. Treasury.

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SEPTEMBER 30, 2016


Credit and Concentration of Credit Risk The District invests in the Manatee County Investment Pool (the Pool), which is considered an external investment pool. The district’s investment in the Pool is as shares held, not the underlying investments held by the Pool. The investments in the Pool are subject to overnight withdrawal, and are recorded at fair value. The Pool is not registered with the Securities and Exchange Commission and has not been rated at September 30, 2016. Total investments at fair value of the pool as of September 30, 2016 were approximately $759,164,000. The District’s investments included in the Pool were $3,856,316.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. However, the Pool is limited to having investments with a maturity of three years or less from the date of purchase with a weighted average to maturity of less than two years. At September 30, 2016, the Pool had no investments with a maturity exceeding three years, and its weighted average to maturity was .56 years. For further information regarding the Manatee County Investment pool, readers should refer to the financial statements and disclosures of Manatee County, Florida. The District’s OPEB Plan invests in the Florida Municipal Pension Trust Fund (FMPTF). Those investments are recorded at fair value, (See Note F).

Fair Value Measurements – The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation of inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs for similar assets; and Level 3 inputs are significant unobservable inputs.

(h) Compensated Absences – It is the District’s policy to permit employees to

accumulate earned but unused vacation and sick pay benefits. All benefits are accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in the general fund only if they have matured or are payable from current financial resources. These liabilities are typically liquidated out of the general fund.

(i) Capital Assets – Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $500 and an estimated useful life of longer than one year. Capital assets are recorded at historical cost if purchased or constructed. Donated capital assets

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SEPTEMBER 30, 2016


are recorded at estimated fair market value at the date of donation. The costs of normal repair and maintenance that do not add to the value of the asset or extend the useful life of the asset are expensed as incurred. The District does not have infrastructure assets.

Property, plant and equipment of the District are depreciated on a straight-line basis over the following estimated useful lives: Asset Years Building and improvements 40 Vehicles and fire engines 3-20 Furniture, fixtures and equipment 5-10

(j) Long-Term Obligations – In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities. In the fund financial statements, no long-term obligations are reported as they are not due to be paid from current financial resources.

(k) Deferred Outflows/Inflows of Resources - In addition to assets, the statement

of net position includes a separate section for deferred outflows of resources. This represents a consumption of net position that applies to a future period, which will not be recognized as an outflow of resources (expense-expenditure) until then. Two items qualify for reporting in this category. The accumulated decrease in fair value of hedging derivative agrees to the amount of the interest rate swap included within the liabilities section. In addition, a deferred outflow of pension resources is reflected in the government-wide statement of net position.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item that qualifies for reporting in this category. A deferred inflow of pension earnings is reported in the government-wide statement of net position.

(l) Net Position – Net position is reported in three parts as applicable: Net

Investment in Capital Assets; restricted and unrestricted. When both restricted and unrestricted resources are available, restricted resources are used first, and then unrestricted resources, as they are needed.

(m) Fund Balance – Government Accounting Standards Board Statement (GASB) 54

establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Fund Balance classifications under GASB 54 are Nonspendable and Spendable.

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SEPTEMBER 30, 2016


(m) Fund Balance – Continued

Spendable is then further classified as Restricted, Committed, Assigned and Unassigned. These classifications reflect not only the nature of funds, but also provide clarity to the level of restriction placed upon fund balance. Fund Balance can have different levels of restraint, such as external versus internal compliance requirements. Unassigned fund balance is a residual classification within the General Fund. The General Fund should be the only fund that reports a positive unassigned balance.

In accordance with GASB Statement 54, the District classified governmental fund balance as follows: Nonspendable – includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual requirements.

Spendable Fund Balance: Restricted – includes amounts that can be spent only for specific purposes

because of State or Federal laws or enabling legislation, or which are externally restricted by providers such as creditors or grantors.

Committed – includes amounts that can be spent only for specific purposes

that are approved by a formal action of the Board of Commissioners through a resolution or the budget process.

Assigned – includes amounts designated for a specific purpose by the Board

of Commissioners through a resolution or the budget process, which are neither restricted or committed.

Unassigned – includes residual positive fund balance within the General Fund

which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes.

The District uses restricted amounts first when both restricted and unrestricted fund balance is available, unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the District would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The District does not have a formal minimum fund balance policy.

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SEPTEMBER 30, 2016


General Fund Non-spendable – Deposits $ 39,091 Spendable: Restricted $ 227,675 Committed Employee Benefits 260,000 Station Renovations/Repairs 195,000 Vehicle/Engine Replacements 652,216 Communications Equipment 81,588 Major Repair – Vehicle 35,000 Refunds 5,000 1,228,804 Assigned Planned contingency funds 1,350,972 Unassigned 1,608,557 Total Fund Balances $ 4,455,099

(n) Interest Rate Swap – The District applies the provisions of Statement No. 53 of

the Governmental Accounting Standards Board, “Accounting and Financial Reporting for Derivative Instruments.” The interest rate swap agreement meets the criteria of an effective hedge and as a result the District follows hedge accounting. A liability in the Statement of Net Position has been recorded for the fair value of the interest rate swap in the amount of $121,084. In addition, a like amount has been recorded in the line “Deferred Outflows of Resources.”

NOTE B - CAPITAL ASSETS Capital asset activity for the year ended September 30, 2016 was: Beginning Ending Governmental Activities: Balance Increases Decreases Balance Capital assets, not being depreciated: Land $ 680,982 $ 14,500 $ -0- $ 695,482 Total capital assets, not being fully depreciated 680,982 14,500 -0- 695,482 Capital assets being depreciated: Buildings and improvements 5,899,241 -0- -0- 5,899,241 Machinery and equipment 3,850,312 148,532 (48,756) 3,950,088 Total capital assets being depreciated 9,749,553 148,532 (48,756) 9,849,329 Less accumulated depreciation for: Buildings and improvements (1,832,266) (152,838) -0- (1,985,104) Machinery and equipment (2,264,941) (318,486) 42,812 (2,540,615) Total accumulated depreciation (4,097,207) (471,324) 42,812 (4,525,719) Total capital assets, being depreciated, net 5,652,346 (322,792) (5,944) 5,323,610 Governmental activities capital assets, net $ 6,333,328 $ (308,292) $ (5,944) $ 6,019,092 Depreciation in the amount of $471,324 was reported as a separate line item in the statement of activities.

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SEPTEMBER 30, 2016

NOTE C - LONG-TERM DEBT

General long-term debt consisted of the following at September 30, 2016:

Note payable to Bank of America, due in annual payments of $80,239 to $183,127 plus interest. The note has a variable rate effectively fixed at 4.455% through an interest rate swap. The maturity date is February 1, 2023. The Note is collateralized by special assessments and available non-ad valorem revenues. (See Swap below). $ 1,129,297 Note payable to Bank of America, due in annual payments of $40,727 including interest at a fixed rate of 4.9%. The maturity date is February 1, 2023. The note is collateralized by lawfully available non-ad valorem revenues. 235,891 Note payable to Bank of America, due in monthly payments of $11,284 including interest at a fixed rate of 4.25%. The Maturity date is January 18, 2025. The note is collateralized by lawfully available non-ad valorem revenues. 949,028 $ 2,314,216 Total annual debt service requirements for all long-term debt in the governmental activities as of September 30, 2016 are as follows:

September 30,: Principal Interest Total 2017 $ 266,727 $ 100,574 $ 367,301 2018 278,770 88,716 367,486 2019 291,214 74,258 365,472 2020 304,214 63,244 367,458 2021 317,738 49,667 367,405 2022-2025 855,553 61,105 916,658 TOTAL $ 2,314,216 $ 437,564 $ 2,751,780

Interest Rate Swap (Swap) In order to protect against the possibility of rising interest rates, the District entered into an interest rate swap agreement with Bank of America. The objective of the swap was to hedge changes in cash flow and effectively fix the rate on its variable rate debt. The interest rate swap is a derivative financial instrument, which qualified as a hedging derivative instrument. The notional amount of the swap is equal to the outstanding balance on the note. The details of the swap follow:

Notional Effective Maturity Variable Amount Date Date Fixed Rate Rate

$ 1,129,297 2/2/2004 2/1/2023 4.455% *

* Index is 64% of 3 month LIBOR plus 1.18%. At September 30, 2016, the 3

month LIBOR rate was .8497%.

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SEPTEMBER 30, 2016

NOTE C – GENERAL LONG-TERM DEBT - CONTINUED

Fair Value – The swap had a negative fair value as of September 30, 2016. The negative fair value may be offset by reductions in total interest payments required under the variable-rate-debt, creating lower synthetic interest rates. The fair value estimate is provided to the District by a financial institution known to be a high value participant in this market, and is based on the Counterparty’s internal valuation models and assumptions, as well as available market data. The District has no intention of selling the agreement and has the ability to hold and meet the swap obligation. The swap and change in fair value are recorded in the statement of net position as a Deferred Outflow of Resources. Credit Risk – Since the Swap has a negative fair value at September 30, 2016, the District was not exposed to any credit risk on the swap. However, should interest rates change and the fair value of the swap becomes positive, the District would be exposed to credit risk in the amount of the derivative’s fair value. The swap agreement matures February 1, 2023. Basis Risk – The District is exposed to basis risk on its pay-fixed interest rate swap used to hedge the variable rate debt as the variable rates may differ between the swap and debt. Termination Risk – The District or the counter party may terminate the swap if the other party fails to perform under the terms of the contract. If the swap is terminated, the associated variable-rate note would no longer carry a synthetic fixed interest rate. Also, if at the time of the termination the swap has a negative fair value, the District would be liable to the counter party for a payment equal to the swap’s fair value. The following table represents debt service payments on the variable rate note, net of swap payments associated with the note at year end. The variable interest at September 30, 2016 is assumed to be constant over the life of the note. Variable Swap

September 30,: Principal Interest Interest Total 2017 $ 140,972 $ 11,716 $ 38,538 $ 191,226 2018 147,370 9,969 34,011 191,350 2019 153,914 8,144 29,278 191,336 2020 160,749 6,239 24,334 191,322 2021 167,830 4,249 19,171 191,250 2022-2025 358,462 2,171 21,936 382,569 TOTAL $ 1,129,297 $ 42,488 $ 167,268 $ 1,339,053

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SEPTEMBER 30, 2016

NOTE C – GENERAL LONG-TERM DEBT - CONTINUED

Changes in Long-Term Liabilities Long-term liability activity for the year ended September 30, 2016 was as follows:

Due Beginning Ending Within Balance Additions Reductions Balance One Year Governmental activities: Notes payable Bank of America $ 1,264,406 $ -0- $ (135,109) $ 1,129,297 $ 140,972 Bank of America 263,526 -0- (27,635) 235,891 28,799 Bank of America 1,041,957 -0- (92,929) 949,028 96,956 Total notes payable 2,569,889 -0- (255,673) 2,314,216 266,727 Interest rate swap 151,555 -0- (30,471) 121,084 -0- OPEB liability 785,000 92,000 -0- 877,000 -0- Net pension liability 5,524,919 5,789,120 (1,150,811) 10,163,228 -0- Compensated absences 981,000 332,000 (373,000) 940,000 75,000 Governmental activity Long-term liabilities $ 10,012,363 $ 6,213,120 $ (1,809,955) $ 14,415,528 $ 341,727 NOTE D - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of certain differences between the governmental fund balance sheet and

government-wide statement of net position.

The reconciliation between the fund balance – total governmental funds as reported in the governmental fund balance sheet and net position – governmental activities as reported in the statement of net position, is included on page 11 of the basic financial statements. One line of that reconciliation explains “liabilities, including notes payable, accrued interest, long-term compensated absences and OPEB liability are not due and payable in the current period and therefore are not reported in the general fund.” The details of the difference are shown below: Notes payable $ 2,314,216 OPEB liability 877,000 Net pension liability 10,163,228 Long-term compensated absences 865,000 Accrued interest 42,899 $ 14,262,343

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SEPTEMBER 30, 2016


SEPTEMBER 30, 2016

NOTE D - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS -

CONTINUED

Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities. The reconciliation between the net changes in fund balances – total governmental funds as reported in the statement of revenues, expenditures and changes in fund balances, and the changes in net position as reported in the statement of activities is included on page 13 of the basic financial statements. One line in that reconciliation explains that “Governmental Funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of the difference are shown below: Capital additions $ 163,032 Depreciation (471,324) Gain on disposal of assets (excluding proceeds) (5,944) $ (314,236)

NOTE E - PENSION PLAN

1. Plan Description All part-time and full-time permanent employees of the District are provided with pensions through the Florida Retirement System which is administered by the Florida Department of Management Services, Division of Retirement. The State of Florida issues a publicly available comprehensive annual financial report that can be obtained at hhtp://www.myfloridacfo.com/Division/AA/ Reports/default.htm. Under this system, there are two defined benefit pension plans: The Florida Retirement System Pension Plan and the Retiree Health Insurance Subsidy Program:

The Florida Retirement System (FRS) Pension Plan is a cost-sharing, multiple-employer qualified defined benefit pension plan with Deferred Retirement Option Program (DROP) available for eligible employees. The FRS was established and is administered in accordance with Chapter 121, Florida Statutes.

The Retiree Health Insurance Subsidy Program (HIS) is a cost-sharing,

multiple-employer defined benefit pension plan established and administered in accordance with Section 112.363, Florida Statutes.

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SEPTEMBER 30, 2016

NOTE E - PENSION PLAN - CONTINUED

2. Benefits Provided The FRS provides retirees a lifetime pension benefit with joint and survivor payment options. Benefits under FRS are computed on the basis of age and/or years of service, average final compensation and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. If first employed prior to July 1, 2011: Normal retirement age for “regular employees is 62 or 30 years of service and vesting occurs after 6 years of creditable service. Normal retirement age for “special risk” employees is 55 or 25 years of service and vesting occurs after 6 years of creditable service. The average final compensation is the average of the five highest fiscal year’s earnings. If first employed on or after July 1, 2011: Normal retirement age for “regular employees is 65 or 33 years of service and vesting occurs after 8 years of creditable service. Normal retirement age for “special risk” employees is 60 or 30 years of service and vesting occurs after 8 years of creditable service. The average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement plan and/or class to which the member belonged when the service credit was earned. Under the HIS Plan, the benefit is a monthly payment to assist retirees in paying their health insurance costs. Eligible retirees and beneficiaries receive a monthly HIS payment equal to the number of years of service credited at retirement multiplied by $5. The minimum payment is $30 and the maximum payment is $150 per month, pursuant to section 112.363, Florida Statutes. To be eligible to receive a HIS benefit, a retiree must provide proof of eligible health insurance coverage, which can include Medicare.

3. Contributions

Per Chapter 121, Florida Statutes, contribution requirements of the active employees and the participating employers are established and may be amended by the Florida Department of Management Services, Division of Retirement. Effective July 1, 2011, both employee and employers of the FRS are required to make contributions to establish service credit for work performed in a regularly established position. The Florida Legislature established a uniform contribution rate system for the FRS. The uniform rates are based on the class an employee is placed into which requires employees to contribute 3% and employers to contribute a specified percentage based on class. The District’s contractually required contribution rate for the year ended September 30, 2016, ranged from 22.04% - 22.57% for special risk employees, 7.26% - 7.52% for regular

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SEPTEMBER 30, 2016


3. Contributions - Continued

employees, and 12.88% - 12.99% for DROP, of annual payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the pension plan from the District were $915,302 for the year ended September 30, 2016. The HIS Program is funded by required contributions ranging from 1.11% to 1.2% and is included in the contribution rates noted above.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At September 30, 2016, the District reported a liability of $10,163,302 for its proportionate share of the net pension liability which includes both FRS and HIS. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016. The District’s proportion of the net pension liability was based on a projection of the District’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2016, the measurement date, the District’s proportion was .033791307% for FRS and .013993601% for HIS. For the year ended September 30, 2016, the District recognized pension expense of $460,644. At September 30, 2016, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

FRS HIS Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Difference between expected and actual experience $ 653,301 $ (79,442) $ -0- $ (3,715) Changes in assumptions 516,181 -0- 255,929 -0- Net difference between projected and actual earnings on pension plan investments 3,925,188 (1,719,684) 825 -0- Changes in proportion and differences between contributions and proportionate share of contributions 336,010 (425,621) 33,995 (54,783) District contributions subsequent to the June 30, 2016 measurement date 194,410 -0- 16,703 -0- $ 5,625,090 $ (2,224,747) $ 307,452 $ (58,498)

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SEPTEMBER 30, 2016


Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – Continued Total deferred outflows were $5,932,542 and total deferred inflows were $2,283,245. $194,410 (FRS) and $16,703 (HIS) were reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended September 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ending September 30: FRS HIS

2017 $ 597,417 $ 32,308 2018 597,417 32,308 2019 597,417 32,308 2020 597,417 32,308 2021 597,417 32,308 Thereafter 218,848 70,711 $ 3,205,933 $ 232,251

Actuarial Assumptions The total pension liability in the July 1, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.6 percent Salary increases 3.25 percent, including inflation Investment rate of return 7.60 percent, including inflation at 2.60% Mortality rates were based on the generational RP-2000 with Projection Scale BB tables. The actuarial assumptions used in the July 1, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2008 – June 30, 2013. Because the HIS is funded on a pay-as-you-go basis, no experience study has been completed for that Plan, but were based on certain results of the most recent experience study for the FRS Plan. The long-term expected rate of return on pension plan investments was determined in October 2016 at the FRS Actuarial Assumptions conference based on a review of long-term assumptions, developed both by Milliman’s capital market assumptions team and by a capital market assumptions team from Aon Hewitt Investment Consulting, which consults with the Florida State Board of Administration. The table below shows Milliman’s assumptions for each of the asset classes in which the

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SEPTEMBER 30, 2016


Actuarial Assumptions - Continued plan was invested at that time based on the long-term target asset allocation. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions, and includes an adjustment for the inflation assumption, (2.60%). These assumptions are not based on historical returns, but instead are based on a forward-looking capital market economic model. Annual Target Arithmetic Asset Class Allocation Return Cash 1.00% 3.0% Fixed Income 18.00% 4.7% Global Equity 53.00% 8.1% Real Estate (property) 10.00% 6.4% Private equity 6.00% 11.5% Strategic Investments 12.00% 6.1% Discount Rate The discount rate used to measure the total FRS pension liability was 7.60%, and the HIS pension liability was 2.85%. The HIS rate decreased from 3.80% in the prior year, based on the most recent actuarial study. The HIS rate is based on the Bond Buyer General Obligation 20-Bond Municipal Bond Index. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contributions from employers will be made at contractually required rates, actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. 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 District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the District’s proportionate share of the FRS net pension liability calculated using the discount rate of 7.60%, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.60 percent) or 1-percentage-point higher (8.60 percent) than the current rate: 1% Decrease Discount Rate 1% Increase (6.60%) (7.60%) (8.60%) District’s proportionate share of the FRS net pension liability $ 15,708,600 $ 8,532,332 $ 2,559,036

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SEPTEMBER 30, 2016


Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - Continued The following presents the District’s proportionate share of the HIS net pension liability calculated using the discount rate of 2.85%, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percent-point lower (1.85%) or 1-percentage-point higher (3.85%) than the current rate:

1% Decrease Discount Rate 1% Increase (1.85%) (2.85%) (3.85%) District’s proportionate share of the HIS net pension liability $ 1,871,009 $ 1,630,896 $ 1,431,616 Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued State of Florida comprehensive annual financial report.

NOTE F - OTHER POST-EMPLOYMENT HEALTHCARE BENEFIT PLAN

1. Plan Description

The District offers post employment healthcare benefits through a single employer plan, the Cedar Hammock Fire Control District Health Insurance Subsidy Plan (the Plan) (OPEB). The Plan provides a monthly healthcare premium subsidy for all eligible participants. All employees are eligible to participate in the Plan after becoming disabled, or reaching normal retirement age and receiving retirement benefits from the Florida Retirement System (Note E). Employees retiring prior to October 1, 2003 receive a monthly health insurance subsidy of $10 multiplied by the participant’s years of service with a maximum of 30 years. The amount is fixed and not subject to increases. Employees retiring after October 1, 2003 receive a monthly health insurance subsidy of $15, which will increase 3% each year thereafter, multiplied by the participant’s years of service with a maximum of 30 years. The District follows GASB Standard No. 45, Accounting and Reporting by Employers for Post-employment Benefits Other than Pensions, for certain post employment health-care provided by the District. At September 30, 2016, the unfunded actuarially accrued liability is $2,569,000 based on the actuarial study and is being amortized over a 10 year open period. For financial reporting purposes, no liability was reported for the post-employment health care and dental benefits liability at the date of transition.

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SEPTEMBER 30, 2016

NOTE F - OTHER POST-EMPLOYMENT HEALTHCARE BENEFIT PLAN - CONTINUED

1. Plan Description - Continued

Membership in the Plan consisted of the following pursuant to the most recent actuarial valuation:

Retirees 20 Active fully eligible for benefits 6 Active not yet fully eligible for benefits 48 Total 74

The District, under the authority established within the Plan document, may amend or terminate the Plan in whole or in part. The District’s board of commissioners provides oversight of the OPEB Plan. The Plan is construed and governed by the laws of Florida, except as preempted by Federal law. A stand-alone financial report is not issued for the Plan.

2. Summary of Significant Accounting Policies

Basis of Accounting – The OPEB uses the accrual basis of accounting. District contributions are recognized in the period due and when a formal commitment has been approved by the Board of Commissioners. Healthcare premium subsidies are recognized when due and payable.

Asset Valuation – Investments are reported at fair value based on quoted prices at month end. Investment income is recognized when earned. Gains and losses on sales and exchanges of securities are recognized on the transaction date.

3. Plan Investments

During 2016, the District’s OPEB was affiliated with the Florida Municipal Pension Trust Fund (FMPTF) an agent multiple employer pension plan administered by the FMPTF Board of Trustees. The FMPTF issues a publicly available report that includes the combined financial statements of all plan members. Separate accounts are maintained for each employer group. The District’s plan does not issue separate financial reports. Plan administrative costs are paid by the plan.

All OPEB assets with the FMPTF are included in the trust’s master Trust Fund. OPEB assets of the defined benefit type are invested by the FMPTF through the Florida Municipal Investment Trust (FMIvT) for the benefit of the Participating Employers, Participating Employees and Beneficiaries.

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SEPTEMBER 30, 2016


3. Plan Investments - Continued

The FMIvT is a Local Government Investment Pool (LGIP) and, therefore, considered an external investment pool. The plan has a beneficial interest in shares in the FMIvT portfolios listed below. The plan’s investment is the beneficial interest in the FMIvT portfolio, not the individual securities held within each portfolio.

As of September 30, 2016, the asset allocations for the OPEB plan were as follows: OPEB 60/40

Cash and Money Market 1.5% FMIvT Broad Market High Quality Bond 15.3% FMIvT Core Plus 23.3% FMIvT High Quality Growth 7.6% FMIvT Large Cap Diversified Value 8.2% FMIvT Russell 1000 Enhanced Index 22.4% FMIvT Diversified Small to Mid Cap Equity 11.4% FMIvT International Equity 10.3% Total 100.0%

Credit Risk

Credit risk exists when there is a possibility that the issuer or other counterparty to an investment may be unable to fulfill its obligations. The FMIvT Broad Market High Quality Bond fund has a Fitch Rating of AAf/S4. The remaining equity portfolios are not rated. Interest Rate Risk Interest rate risk exists when there is a possibility that changes in interest rates could adversely affect an investment’s fair value. Interest rate risk is presented below by effective duration and weighted average maturity (WAM).

Modified Duration WAM FMIvT Broad Market High Quality Bond 4.45 5.90 FMIvT Core Plus Fixed Income Fund 2.04 6.84 Foreign Currency Risk Participating employers’ investments in the FMIvT are not subject to foreign

currency risk.

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SEPTEMBER 30, 2016


4. Contributions and Funding Policy The Plan provides for periodic contributions by the District based on the

District’s budget. The District contributed $100,000 during the year ended September 30, 2016, which equaled the budgeted contribution amount.

Contributions for the years ended September 30, 2015 and 2014 were $100,000, respectively.

Administrative costs of the Plan are financed through investment earnings.

5. Annual OPEB Cost and Net OPEB Obligation

The District’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employee (ARC), an amount which was actuarially determined. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the actuarially determined components of the District’s annual OPEB cost for the year and the net OPEB obligation:

9/30/16 Annual Required Contribution (ARC) $ 437,000 Interest on Net OPEB Obligation 55,000 Adjustment to the ARC (104,000) Total Annual OPEB Cost 388,000 Employer Contributions (286,000)* Interest on Employer Contributions (10,000) Increase (Decrease) in Net OPEB Obligation 92,000 Net OPEB Obligation – beginning of year 785,000 Net OPEB Obligation – end of year $ 877,000

* Estimated; reflects the implied subsidy as well as employer contributions of $100,000.

The District’s OPEB cost, the percentage of annual OPEB cost contributed and the Net OPEB obligation follows:

Fiscal Annual % of Annual OPEB Net OPEB

Year OPEB Cost Cost Contributed Obligation 9/30/16 $ 388,000 76% $ 877,000 9/30/15 $ 369,000 80% $ 785,000 9/30/14 $ 315,000 105% $ 712,000

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SEPTEMBER 30, 2016


6. Schedule of Funding Progress (b)

(a) ACTUARIAL (c) UAAL AS A ACTUARIAL ACCRUED UNFUNDED PERCENTAGE

ACTUARIAL VALUE OF LIABILITY AAL FUNDED COVERED OF COVERED VALUATION ASSETS (AAL) (UAAL) RATIO PAYROLL PAYROLL DATE (a) (b) (b)-(a) (a)(b) (c) ((b-a)/c)

10/01/15 $ 1,582,000 $ 3,984,000 $ 2,402,000 39.7% $ 4,170,000 57.6%

Actual 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. Examples include assumptions about future employment, mortality, and the healthcare cost trend. 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 compared with past expectations and new estimates are made about the future. The schedule of funding progress presented as required supplementary information following the notes to the financial statements, presents multiyear trend information (when available) about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Projections of benefits for financial reporting purposes are based on the substantive plan provisions (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. Projections of benefits for financial purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the District and Plan members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

7. Actuarial Methods and Assumptions

Valuation Date October 1, 2015 Actuarial cost method Projected unit credit Amortization method 10 year open period; level-dollar payment Investment return 7% per annum (includes inflation at 3%) Healthcare cost trend rate 5% per annum

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SEPTEMBER 30, 2016

NOTE G - RISK MANAGEMENT

The District 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 District has obtained commercial insurance from independent third parties to mitigate the costs of these risks; coverage may not extend to all situations. Settled claims from these risks have not exceeded commercial insurance coverage over the past three years.

NOTE H - FAIR VALUE HIERARCHY

The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles, measured on a recurring basis. The District and OPEB Plan have the following recurring fair value measurements as of September 30, 2016:

Quoted Prices In Active Significant Markets for Other Significant Identical Observable Unobservable September 30, Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Investments by fair value level: District Investments Manatee County Investment Pool $ 3,856,316 $ -0- $ 3,856,316 $ -0- OPEB Plan Mutual Funds and Short-Term Investments $ 25,299 $ 25,299 $ -0- $ -0- FMIvT Broad Market High Quality Bond 258,054 -0- 258,054 -0- FMIvT Core Plus Fixed Income 392,985 -0- -0- 392,985 FMIvT High Quality Growth 128,184 -0- 128,184 -0- FMIvT Large Cap Diversified Value 138,304 -0- 138,304 -0- FMIvT Russell 100 Enhanced Index 377,805 -0- 377,805 -0- FMIvT Diversified Small to Mid-Cap Equity 192,276 -0- 192,276 -0- FMIvT International Equity 173,723 -0- 173,723 -0- Total OPEB Plan Investments $ 1,686,630 $ 25,299 $ 1,268,346 $ 392,985 Investment derivative instruments: Interest rate swap for loan $ 121,084 $ -0- $ 121,084 $ -0-

Mutual funds and short-term investments classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Investments held with Florida Municipal Investment Trust (FMIvT) are held in a Local Government Investment Pool (LGIP) which are classified as either Level 2 or Level 3. Level 2 investments are invested in funds or portfolios in which the underlying asset value are based on quoted prices or market-corroborated inputs, however, the net asset value of the portfolio is not publicly quoted. FMIvT Core Plus Fixed Income is a fund classified as Level 3 since the shares of the funds are not publicly quoted and the underlying funds invest in a variety of financial instruments. Derivative instruments classified as Level 2 are valued using a market approach that considers benchmark interest rates and were established to offset the interest expense on a bank-qualified loan.

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REQUIRED SUPPLEMENTARY INFORMATION

VARIANCE WITHFINAL BUDGET

ORIGINAL FINAL FAVORABLEBUDGET BUDGET ACTUAL (UNFAVORABLE)

REVENUESTax assessments 9,079,748$ 9,079,748$ 9,164,670$ 84,922$ Capital grants - - 362 362 Impact fees 12,000 12,000 45,310 33,310 Interest 22,000 22,000 38,332 16,332 Miscellaneous 230,195 230,195 247,574 17,379 Charges for services 16,000 16,000 23,795 7,795

Total Revenues 9,359,943 9,359,943 9,520,043 160,100

EXPENDITURESCurrent:

Personal service 7,649,776 7,769,776 7,185,549 584,227 Operating 1,224,007 1,229,007 1,031,027 197,980

Debt service 368,812 368,812 368,225 587 Capital outlay 117,348 487,348 194,838 292,510

Total Expenditures 9,359,943 9,854,943 8,779,639 1,075,304

Net Change in Fund Balance - (495,000) 740,404 1,235,404

FUND BALANCES - Beginning 3,714,695 3,714,695 3,714,695 -

FUND BALANCES - Ending 3,714,695$ 3,219,695$ 4,455,099$ 1,235,404$

Note 1 - Budgetary Basis

The general fund budget is presented on a basis consistent with U.S. generally accepted accounting principles.

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CEDAR HAMMOCK FIRE CONTROL DISTRICTSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES -BUDGET AND ACTUAL-GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2016

2016 2015 2014District's proportion of the net pension liability 0.033791307% 0.031347394% 0.030919626%

District's proportionate share of the net pension liability 8,532,331$ 4,048,936$ 1,886,552$

District's covered-employee payroll 4,536,601$ 4,248,188$ 4,179,729$

District's proportionate share of the net pension liability as a percentage of its covered-employee payroll 188% 95% 45%

Plan fiduciary net position as a percentage of total pension liability 84.88% 92.00% 96.09%

* - GASB No. 68 was adopted in fiscal year 2015. Ultimately, this schedule will contain information for the last ten years.

FLORIDA RETIREMENT SYSTEM (FRS)Available Fiscal Years *

CEDAR HAMMCOK FIRE CONTROL DISTRICTSCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE

NET PENSION LIABILITYSEPTEMBER 30, 2016

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2016 2015 2014District's proportion of the net pension liability 0.013993601% 0.014472656% 0.013950412%

District's proportionate share of the net pension liability 1,630,896$ 1,475,983$ 1,304,398$


District's proportionate share of the net pension liability as a percentage of its covered-employee payroll 36% 35% 31%

Plan fiduciary net position as a percentage of total pension liability 0.97% 0.50% 0.99%


RETIREE HEALTH INSURANCE SUBSIDY PROGRAM (HIS)Available Fiscal Years *

CEDAR HAMMCOK FIRE CONTROL DISTRICTSCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE

NET PENSION LIABILITYSEPTEMBER 30, 2016

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2016 2015 2014Contractually required contribution** 824,055$ 764,276$ 677,271$

Contributions in relation to the contractually required contribution 824,055 764,276 677,271

Contribution deficiency (excess) -$ -$ -$


Contributions as a percentage of covered- 18.16% 17.99% 16.20% employee payroll


** - contributions noted per this schedule are pursuant to the measurement date of the actuarialreport.

CEDAR HAMMCOK FIRE CONTROL DISTRICTSCHEDULE OF THE DISTRICT'S CONTRIBUTIONS

SEPTEMBER 30, 2016

FLORIDA RETIREMENT SYSTEM (FRS)Available Fiscal Years *

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2016 2015 2014Contractually required contribution** 71,726$ 55,324$ 47,789$

Contributions in relation to the contractually required contribution 71,726 55,324 47,789

Contribution deficiency (excess) -$ -$ -$


Contributions as a percentage of covered- employee payroll 1.58% 1.30% 1.14%

* - GASB No. 68 was adopted in fiscal year 2015. Ultimately, this schedule will contain informationfor the last ten years.

** - contributions noted per this schedule are pursuant to the measurement date of the actuarialreport.

CEDAR HAMMCOK FIRE CONTROL DISTRICTSCHEDULE OF THE DISTRICT'S CONTRIBUTIONS

SEPTEMBER 30, 2016

RETIREE HEALTH INSURANCE SUBSIDY PROGRAM (HIS)Available Fiscal Years *

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CEDAR HAMMOCK FIRE CONTROL DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

SEPTEMBER 30, 2016

ACTUARIAL METHODS AND ASSUMPTIONS Actuarial assumptions for both defined benefit plans (FRS and HIS) are reviewed annually by the Florida Retirement System Actuarial Assumptions Conference. The FRS Pension Plan has a valuation performed annually. This HIS Program has a valuation performed biennially that is updated for GASB reporting in the year a valuation is not performed. The most recent experience study for the FRS Pension Plan was completed in 2014 for the period July 1, 2008, through June 30, 2013. Because the HIS Program is funded on a pay-as-you-go basis, no experience study has been completed for this program. The total pension liability for each of the defined benefit plans was determined by an actuarial valuation as of July 1, 2016, using the entry age normal actuarial cost method. Inflation increases for both plans is assumed at 2.60%. Payroll growth for both plans is assumed at 3.25%. Both the discount rate and the long-term expected rate of return used for FRS Pension Plan investments is 7.60%. The plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. Because the HIS Program uses a pay-as-you-go funding structure, a municipal bond rate of 2.85% was used to determine the total pension liability for the program. Mortality assumptions for both plans were based on the Generational RP-2000 with Projection Scale BB tables. The following changes in actuarial assumptions occurred in 2016:

FRS: The long-term expected rate of return decreased from 7.65% to 7.60% and the active member mortality assumptions were updated.

HIS: The municipal rate used to determine total pension liability decreased from 3.80%

to 2.85%.

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The information presented in the required supplementary schedules was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation follows:

Valuation date 10/01/15 Actuarial cost method Projected Unit Credit Amortization method 10 year open period; level – dollar payment Actuarial assumptions: Investment rate of return 7.00% (including inflation at 3.00%) Healthcare cost trend rate 5% per annum

SCHEDULE OF FUNDING PROGRESS:

ACTUARIAL ACCRUED UAAL AS A

ACTUARIAL LIABILITY UNFUNDED PERCENTAGE ACTUARIAL VALUE OF (AAL) AAL FUNDED COVERED OF COVERED VALUATION ASSETS ENTRY AGE (UAAL) RATIO PAYROLL PAYROLL DATE (a) (b) (b-a) (a/b) (c) ((b-a)/c)

10/01/11 $ 848,000 $ 3,430,000 $ 2,582,000 24.7% $ 3,781,000 68.3% 10/01/13 $ 1,447,000 $ 3,201,000 $ 1,754,000 45.2% $ 3,468,000 50.6% 10/01/15 $ 1,582,000 $ 3,984,000 $ 2,402,000 39.7% $ 4,170,000 57.6%

SCHEDULE OF EMPLOYER CONTRIBUTIONS:

FISCAL ANNUAL YEAR REQUIRED PERCENTAGE ENDED CONTRIBUTION CONTRIBUTED 9/30/16 $ 437,000 68% 9/30/15 $ 414,000 71% 9/30/14 $ 361,000 92%

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CEDAR HAMMOCK FIRE CONTROL DISTRICT SCHEDULE OF FUNDING PROGRESS

OTHER POST-EMPLOYMENT HEALTHCARE PLAN

OTHER SUPPLEMENTAL INFORMATION

FINAL FAVORABLE BUDGET ACTUAL (UNFAVORABLE)

Personal Services ExpendituresWages 4,906,338$ 4,536,601 369,737$ Insurance - health, disability, and workers' compensation 1,459,680 1,278,924 180,756 Retirement and OPEB 1,012,680 1,016,657 (3,977) Payroll taxes 372,378 336,397 35,981 Uniforms and protective gear 18,700 16,970 1,730

Total Personal Service Expenditures 7,769,776$ 7,185,549$ 584,227$

Operating ExpendituresFire prevention division 13,600$ 9,457$ 4,143$ Training division 27,200 14,525 12,675 Repairs and maintenance 249,534 248,230 1,304 Training facility 6,000 1,968 4,032 Professional fees 85,000 100,600 (15,600) Miscellaneous 54,750 11,941 42,809 Fuel 78,000 40,086 37,914 General dues, education, travel and publications 21,463 11,177 10,286 Supplies 79,375 68,100 11,275 Office expense 64,500 61,351 3,149 Fees, collector and appraiser 320,714 276,933 43,781 Utilities 91,504 79,778 11,726 General insurance 137,367 106,881 30,486

Total Operating Expenditures 1,229,007$ 1,031,027$ 197,980$

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CEDAR HAMMOCK FIRE CONTROL DISTRICTSCHEDULE OF OPERATING EXPENDITURES -

BUDGET TO ACTUAL - GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2016

OTHER AUDITOR’S REPORTS

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