FORT MYERS BEACH LIBRARY DISTRICT SEPTEMBER 30, 2015 BASIC FINANCIAL STATEMENTS TOGETHER WITH REPORTS OF INDEPENDENT AUDITORS

Transcription

1 FORT MYERS BEACH LIBRARY DISTRICT SEPTEMBER 30, 2015 BASIC FINANCIAL STATEMENTS TOGETHER WITH REPORTS OF INDEPENDENT AUDITORS

2 TABLE OF CONTENTS Report of Independent Auditors 1-3 Management s Discussion and Analysis 4-8 Basic Financial Statements Balance Sheet Governmental Funds and Statement of Net Position 9 Statement of Revenues, Expenditures and Changes in Fund Balance- Governmental Funds and Statement of Activities 10 Notes to Basic Financial Statements Required Supplementary Information Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Schedule of District Contributions Pension Plan 32 Schedule of the District s Net Proportionate Share of the Net Pension Liability Pension Plan 33 Schedule of District Contributions HIS Plan 34 Schedule of the District s Net Proportionate Share of the Net Pension Liability HIS Plan 35 Independent Auditors Report in 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 Management Letter Response to Management Letter 41 Independent Accountant s Examination Report 42

3 366 East Olympia Avenue Punta Gorda, Florida Phone: Fax: Board of Directors Fort Myers Beach Library District Fort Myers Beach, Florida Independent Auditor's Report Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities of the Fort Myers Beach Library District, (the "District") as of and for the fiscal year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the District'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 1

4 preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities of the District as of September 30, 2015, and the respective changes in financial position for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Change in Accounting Principle As described in Note 5 to the financial statements, effective October 1, 2014, the District adopted the provisions of 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. 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, budgetary comparison information, schedules of the District s net proportionate share of net pension liability- pension plan and health insurance subsidy plan, and schedules of district contributions- pension plan and health insurance subsidy plan on 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 2

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6 FORT MYERS BEACH LIBRARY DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 As management for Fort Myers Beach Library District, this narrative overview and analysis is intended to provide an additional tool for understanding the District s financial activities for the fiscal year ending September 30, We encourage readers to consider these comments along with the financial statements as a whole. Financial Highlights It is now three years since completion of the construction project in planning for many years. Usage of the library continues to be up over 50% pre-construction so we are very convinced that this investment is one highly approved by the community. We had an active year of presentations, seminars and discussions in the Community Rooms, visitors and residents coming to the library for displays on a regular basis and children active in the preschool program and/or using Kid's Place or the Toddler's area. The latter has been received with many children enjoying the atmosphere and offerings. We are also heard from residents and others how much they like the magazines and newspapers in the Living Room. Donations have been up 431% over budget--a sign of satisfaction and affirmation as to what is happening at the Beach Library. The Community Room has been a plus in library service. Many look forward to the events scheduled in this area. While our objective is to have an active program and charge minimal fees, its active usage yielded revenue of $4,351. Salaries and wages came in under budget due in part to having volunteers doing many of the cleaning tasks and to volunteers doing budgeted tasks such as Administrative Assistant. Accumulated benefits can present a case of possible cost to the District--during the year no such benefits were paid. This, of course, also saves in Retirement costs. More people were using the library throughout the year. This increased the operating supplies and janitorial products needed. It would also have increased our cleaning service expenses, though in the current year we were blessed with regular volunteers to assist in that cleaning with substantial reduced cost to the library. When service is expanding, these costs, as needed, seem a wise investment. Though the budget included funds to be added to the respective Reserve Funds, little was added in the past year because of CDs still on schedule for renewal. Upon their renewal date, these funds will be added to the Catastrophe Fund, Equipment and Building Replacement and Total Solar Capital Project Fund. American libraries, as noted via surveys from Pew Research Center, are buffeted by cross currents. Citizens believe that libraries are important community institutions and profess interest in libraries offering a range of new program possibilities. Yet, even as the public expresses interest in additional library services, the number of items being checked out has edged downward. We also note more people are spending time in the library, using reading areas. It is too soon to know whether or not this is a trend. Under capital outlay, there was less spent than budgeted. The reasons include - no building improvement expense in the current year with such being anticipated for next year; audio/video purchases were less than budgeted because donations enabled us to expand the collection and reduce outright purchases. 4

7 Financial Highlights (continued) FORT MYERS BEACH LIBRARY DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 The Library Board and District continues to have a long-term outlook, with long range plans active. When one looks at the actual budget expenses, add also the amounts earmarked for the reserve Funds, e.g. Catastrophe Fund, Building Replacement and Equipment Capital Replacement. Plant & Equipment expenditures were less than budgeted in part due to professional data costs being carried to the upcoming year as we evaluated and made changes in the e-books collection. We also achieved savings in the insurance package negotiated with change of providers. It was a central objective of planning and construction over the past decade to have sustainable design that reduces, or completely avoids, depletion of critical resources such as energy, water and raw materials. Sustainability also seeks to prevent environmental degradation caused by facilities and infrastructure throughout its life cycle and most importantly, create a library environment that is livable, comfortable, safe and productive. Spending $2,717 for utilities less than budgeted gives me pause that we are moving in the right direction, and may achieve more savings as the years progress. While construction made sustainable features a reality, we are still working on our goal of producing all of the electricity we need. In the past year we have looked at various options, had some conversations with artists and engineers to better grasp the full possibilities in the hope that we can during 2017 issue a request for proposal that would elicit how we can achieve the goal of generating 100% of the electricity we need. "Total Solar" will invest in technology that achieves that goal and at the same time offers a tangible artistic dimension to inspire. A separate fund was set up to provide funds to proceed when we are ready to receive and implement received proposals. In earlier years, the Library Board established an Equipment Replacement and a Building Replacement Fund. These funds are listed as separate items to make it easy to follow and recognize there is a long range plan to have funds in hand when equipment needs to be replaced or it's time for building upgrading and/or replacement, particularly for shorter-lived components, such as carpeting or roofing. Required Financial Statements The balance sheet for funds and statement of net position is included on page 9. 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. They are prepared using full accrual basis of accounting. The bulk of the District s net position consists of what we have historically paid for the land, building construction and improvements, and collections of the District. While the land and building actual market values are considerably higher, and even the loaning collections higher than the value assigned with depreciation, assets are reported at what the District has actually paid for them. The Statement of Net Position presents information on all the District s assets and liabilities with the difference between the two reported as net position. The Statements of Activities presents information showing how the District s net position changed during the most recent fiscal year. Depreciation is included at a set schedule. 5

8 Required Financial Statements (continued) FORT MYERS BEACH LIBRARY DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 Fund financial statements tell how District services were paid for as well as what remains for future spending. Fund financial statements report the District s operations in more details than government-wide statements by providing information about the District s funds. Notes to the financial statements provide additional information to more fully understand the information provided in the basis financial statements. Supplementary information consists of more detailed data on the budget to actual revenues and expenditures, schedules related to the District s proportionate share of the net pension liability for the pension plan and health insurance subsidy plan, and schedules that highlight the District s contributions to the pension plan and health insurance subsidy plan. Financial Analysis Net position may serve, over time, as a useful indicator of a government s financial position. In the case of the District, total assets and deferred outflows of resourced exceeded liabilities and deferred inflows of resources by $14,349,102 at the close of the fiscal year; $11,618,731 of the District s net position reflects its investment in capital assets. The District uses these capital assets to provide services and consequently these assets are not available to liquidate liabilities or other spending. Budgetary Highlights The District received less tax revenue during 2015 than the previous year. The District adopted the rollback rate. We see the Catastrophe Fund as a major step to ensuring that taxpayers and library users are provided with the preparation and protection they need before, during and after a natural catastrophe strikes the area. With more than half the U.S. population living along the Gulf and Southeastern coastline, the buildup of communities has exacerbated the impact of hurricanes. Recent storms have prompted insurance providers to reduce their exposure to future catastrophic loss by increasing premiums and/or deductibles. Premiums are expected to increase for wind and flood coverage, and this Fund can allow the Library to carry larger deductibles and yet reduce the short-term and long-term risks to the community. It is easy to be awestruck by the unharnessed power of Mother Nature. Unfortunately, once the storm passes, one can be blindsided by the special and costly hurricane insurance deductible. We are hopeful the Catastrophe Fund will in the long run blunt this somewhat unknown reality. Equally, the Equipment and Building Replacement provides the long term planning and protection so essential in assuring future coverage and anticipated need. We are particularly proud of the fact that we have with energy efficiency measures kept utility bills in line. Positive feeling and momentum regarding the library were widely felt by staff who interact with patrons and residents on a daily basis. As management, we are in awe at the depth with which users continue to express support for the completed construction and services of the Library. 6

9 Capital Outlay and Debt Administration FORT MYERS BEACH LIBRARY DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 There was little need to pay for capital expenses. The District has no long term debt and no short-term debt beyond that we expect to have paid within 30 days. Description of Current or Expected Conditions The community has responded with satisfaction and some exuberance with 189,363 people using the library in person and 66,259 virtual visits to the library's networked resources. Attendance was down during some non-season months due to construction on Estero Blvd. Requests for Information This financial report is designed to provide a general overview of the District s finances for all those with an interest in its finances. Questions concerning any of the information provided in this report should be addressed to the District Treasurer, Fort Myers Beach Library District, Fort Myers Beach, Florida. 7

10 FORT MYERS BEACH LIBRARY DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 For the year ended September 30, 2015, the District s net position increased as follows: Net Position September 30, Assets Current and other assets $ 3,128,551 $ 2,420,581 Capital assets 11,618,731 11,901,362 Total Assets 14,747,282 14,321,943 Deferred Outflows of Resources 110,919 92,338 Total Assets and Deferred Outflows of Resources 14,858,201 14,414,281 Liabilities Accounts payable and accrued liabilities 48,059 40,648 Compensated absences 76,635 75,876 Net Pension Liability 328, ,399 Total Liabilities 453, ,923 Deferred Inflows of Resources 55, ,642 Total Liabilities and Deferred Inflows of Resources 509, ,565 Net position Invested in capital assets 11,618,731 11,901,362 Unrestricted 2,730,371 2,024,354 Total Net Position $ 14,349,102 $ 13,925,716 As restated Changes in Net Position Revenues Ad valorem taxes $ 1,363,964 $ 1,368,604 Grants - State aid to libraries 45,192 34,464 Other 56,326 64,132 Total Revenues 1,465,482 1,467,200 Expenses Personal services 469, ,290 Operating expenditures 573, ,630 Total Expenses 1,042,096 1,121,920 Increase in Net Position 423, ,280 Net Position, Beginning of Year, As Restated 13,925,716 13,580,436 Net Position, End of Year $ 14,349,102 $ 13,925,716 As restated 8

11 Fort Myers Beach Library District Balance Sheet - Governmental Funds and Statement of Net Position as of September 30, 2015 General Fund Adjustments Note 9 Statement of Net Position ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Cash $ 3,128,551 $ - $ 3,128,551 Capital Assets - 11,618,731 11,618,731 Total Assets 3,128,551 11,618,731 14,747,282 Deferred Outflows of Resources - 110, ,919 Total Assets and Deferred Outflows of Resources $ 3,128,551 11,729,650 14,858,201 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Current: Accounts Payable $ 38,788-38,788 Deposits Accrued Payroll Liabilities 8,881-8,881 Long-Term : Compensated Absences - 76,635 76,635 Net Pension Liability - 328, ,486 Total Liabilities 48, , ,180 Deferred Inflows of Resources - 55,919 55,919 Fund Balances/Net Position Fund balance - Assigned Catastrophe Fund 342,000 (342,000) - Equipment and Building Replacement 155,000 (155,000) - Total Solar Capital Project Fund 519,000 (519,000) - Fund balance - Unassigned 2,064,492 (2,064,492) - Total Fund Balance 3,080,492 (3,080,492) - Total Liabilities and Fund Balance $ 3,128,551 Net Position Net investment in Capital Assets 11,618,731 Unrestricted 2,730,371 Total Net Position $ 14,349,102 9

12 Fort Myers Beach Library District Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds and Statement of Activities For the Fiscal Year Ended September 30, 2015 General Fund Adjustments Note 9 Statement of Activities Revenues Ad valorem taxes $ 1,363,964 $ - $ 1,363,964 Grants - State aid to libraries 45,192-45,192 Fines and fees 2,611-2,611 Visitor cards 8,920-8,920 Interest 7,480-7,480 Copy and fax machine revenue 7,412-7,412 Donations and gifts 21,563-21,563 Books and magazines reimbursed Rental revenue 4,351-4,351 Miscellaneous 3,319-3,319 Total Revenues 1,465,482-1,465,482 Expenditures Personal services 474,540 (5,459) 469,081 Operating expenditures Library operating 39,797 39,797 Plant and equipment 124, , ,475 Administrative 56,743-56,743 Capital outlay 69,533 (69,533) - Total Expenditures/Expenses 764, ,173 1,042,096 Net Change in Fund Balances and Net Position 700,559 (277,173) 423,386 Fund Balance/Net Position - October 1, 2014, As Restated 2,379,933 11,545,783 13,925,716 Fund Balance/Net Position - September 30, 2015 $ 3,080,492 $ 11,268,610 $ 14,349,102 10

13 Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 NOTE 1 - ORGANIZATION The Fort Myers Beach Library District (the "District") is an independent special taxing district located on Fort Myers Beach, Florida. The District was established in The District provides library services to the residents located within the District's geographic boundaries and via agreement with Lee County to the residents of Lee County. The District operates out of its facility located at 2755 Estero Blvd. The District charter was codified by Chapter , Florida Statutes. The District is governed by an independently elected seven member operating board. The financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to Governmental Units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the District's more significant accounting principles and policies: Reporting Entity The activities of the District are conducted within the general geographic area of Fort Myers Beach, Florida. The District participates in reciprocal borrowing with the Lee County Library System The District adopts the millage rate and budget annually. 3. Lee County does not have any obligation to fund deficits or any right to receive surpluses of the District. 4. The management of the District is employed and governed by independently elected officials. 5. The District is predominately funded by ad valorem taxes charged to taxpayers within its physical boundaries. Services of the District are available to permanent residents and/or owners of real estate in the Library District, and/or Lee County. Use of the Library is extended to both sexes and people of all ages, races, religions, national origins, social and political views, and disabilities. The District has developed criteria to determine whether outside agencies should be included within its financial reporting entity. The criteria include, but are not limited to, whether the District (1) selects the governing authority or management, (2) has the ability to significantly influence operations, (3) has accountability for fiscal matters (e.g., final budget approval, responsibility for funding deficits, management of assets, etc.). Using these criteria, the District has not included in its financial statements the activities of any other entity. 11

14 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Basis of Presentation Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 The government-wide and fund financial statements are combined, with a reconciliation between them. The Governmental Funds Balance Sheet and Statement of Net Position and Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and Statement of Activities combines information about the reporting government as a whole and finds statements to report its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain District functions or activities. Major individual governmental funds are reported as separate columns in the fund financial statements. Following is a description of the fund utilized by the District: General Fund - The General Fund is the operating find of the District. It is used to account for all financial resources except those required to be accounted for in another fund. Basis of Accounting The government-wide statements (Statement of Net Position and the Statement of Activities) are prepared using the economic resources measurement focus and the accrual basis of accounting. Fund financial statements (the Governmental Funds Balance Sheet and Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances) are prepared using the current financial measurement focus and are accounted for using the modified accrual basis of accounting. Under this basis, revenues are recognized in the accounting period in which they become measurable and available. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable. GASB Statement 34 The District adopted the provisions of GASB Statement No. 34, "Basic Financial Statements and Management's Discussion and Analysis - for State and Local Governments", during the year ended September 30, Statement 34 establishes standards for external financial reporting for all state and local governmental entities. Budgets The District adopts its budgets on a basis consistent with accounting principles generally accepted in the United States of America. An annual appropriated budget is established for the Funds. All annual appropriations lapse at year-end. Estimated beginning cash balances are considered in the budgetary process and are not included in the financial statements as budgeted revenue. The annual budget serves as the legal authorization for expenditures. Expenditures of the general fund cannot legally exceed the total expenditure amount budgeted for the general fund. The Board, at public meetings, approves all budget amendments, which change the legally adopted total appropriation for the general fund. 12

15 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and Investments Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 Cash consists of interest bearing cash accounts and certificates of deposit carried at cost, which approximates market, and a petty cash drawer. All District deposits are held in qualified public depositories pursuant to Florida Statutes, Chapter 280. In addition to insurance provided by the Federal Deposit Insurance Corporation (FDIC), demand deposits are held in banking institutions approved by the State Treasurer of the State of Florida to hold public funds. Under Chapter 280, all qualified public depositories are required to pledge eligible collateral having a fair market value equal or greater than the average daily of monthly balances of all public deposits, times the depository's collateral pledging level. Any losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral, and if necessary, assessments against other qualified public depositories of the same type as the depository in default. When public deposits are made in accordance with Chapter 280, no public depositor shall be liable for any loss thereof. As of September 30, 2015, the District had cash on hand of $898. The District cash balance is comprised of a checking account with carrying/book balances and bank balances of $2,113,112 and $2,111,654, respectively. Additionally, the District held four Certificates of Deposit with a financial institution with carrying/book balances and bank balances of values of $1,016,000 and $1,030,687, respectively. Capital Assets The accounting treatment over property, plant, and equipment (capital assets) depends on whether the assets are reported in the government-wide financial statements. Government Wide Statements In the government-wide financial statements, capital assets are valued at historical cost or estimated historical cost if actual cost is unavailable. Donated assets are recorded at fair value at the date of donation. General infrastructure assets are reported at historical cost as they are acquired. The cost of normal maintenance and repair that do not add to the value of the asset or materially extend the life of the asset is not capitalized Depreciation of all exhaustive capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets' useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings Improvements Furniture and Equipment 40 years 15 years 5-20 years The minimum capitalization threshold is any item with a total cost greater than $1,

16 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Capital Assets (continued) Fund Financial Statements In the fund financial statements, capital assets used in government fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Fund Equity Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 In the governmental fund financial statements, assignment of fund balance indicates amounts that are limited for a specific purpose and are segregated for an intended specific future use. Fund balance is assigned through Board of Commissioners meetings or a policy established by the Board of Commissioners. Designations of fund balance as assigned represent intended management plans. The amount of and timing of funds transferred to CDs that hold assigned fund balance is determined by the Board of Commissioners during the budget process. Undesignated fund balance indicates funds that are available for current expenditure. Compensated Absences It is the District's policy to permit employees to accumulate annual leave, based upon the length of continuous service. Accumulated annual that is expected to be liquidated with expendable available financial resources in the next fiscal year is reported as an expenditure and liability on the fund statements with the long-term portion being reflected on the statements of net position and activities. Encumbrances The District does not utilize an encumbrance system in accounting for expenditures. 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 for which the District purchases commercial insurance policies on the open market with respect to workman's compensation, general liability, property and vehicle insurance. Settled claims resulting from these risks have historically not exceeded insurance coverage in the past three years and there have been no significant reductions in insurance coverage from the prior year. Income Taxes The District is exempt from all state and federal income taxes. 14

17 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Outflows/Inflows of Resources Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 Deferred outflows of resources represent a consumption of net position that applies to a future period and therefore will not be recognized as expended until then. The District presents deferred outflows associated with pensions to be expensed over future periods. Deferred inflows of resources is defined as an acquisition of position by the government that is applicable to a future reporting period. The District presents deferred inflows of resources related to pensions. NOTE 3 - CHANGES IN CAPITAL ASSETS A summary of changes in general fixed assets follows: Balances Balances October 1, September 30, 2014 Additions Deletions 2015 Capital assets not being depreciated: Land $ 1,273,270 $ - $ - $ 1,273,270 Books, audio visual and artwork 586,779 59,187 (78,428) 567,538 Total capital assets not being depreciated 1,860,049 59,187 (78,428) 1,840,808 Capital assets being depreciated: Furniture, fixtures and equipment 1,325,177 10,347-1,335,524 Improvements 72, ,016 Buildings 10,178, ,178,043 Total capital assets being depreciated 11,575,236 10,347-11,585,583 Less: Accumulated depreciation (1,533,923) (352,165) 78,428 (1,807,660) Capital assets, net $ 11,901,362 $ (282,631) $ - $ 11,618,731 15

18 Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 NOTE 4 - LONG TERM LIABILITIES A summary of the changes in long term liabilities of the District for the year ended September 30, 2015 is as follows: Balance, 10/1/14, restated Additions Reductions Balance, 9/30/15 Compensated Absences $ 75,876 $ 759 $ - $ 76,635 Net Pension Liability- Pension Plan 89, , ,425 Net Pension Liability- HIS Plan 126,400 5, ,061 Total Long Term Liabilities $ 292,275 $ 112,846 $ - $ 405,121 This space intentionally left blank. 16

19 Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 NOTE 5 - RETIREMENT PLANS Florida Retirement System: General Information - All of the employees of the primary government participate in the Florida Retirement System (FRS). As provided by Chapters 121 and 112, Florida Statutes, the FRS provides two cost sharing, multiple employer defined benefit plans administered by the Florida Department of Management Services, Division of Retirement, including the FRS Pension Plan ( Pension Plan ) and the Retiree Health Insurance Subsidy ( HIS Plan ). Under Section , Florida Statutes, the FRS also provides a defined contribution plan ( Investment Plan ) alternative to the FRS Pension Plan, which is administered by the State Board of Administration ( SBA ). As a general rule, membership in the FRS is compulsory for all employees working in a regularly established position for a state agency, District government, district school board, state university, community college, or a participating city or special district within the State of Florida. The FRS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefits are established by Chapter 121, Florida Statutes, and Chapter 60S, Florida Administrative Code. Amendments to the law can be made only by an act of the Florida State Legislature. The State of Florida annually issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The latest available report may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida , or from the Web site: Pension Plan Plan Description The Pension Plan is a cost-sharing multiple-employer defined benefit pension plan, with a Deferred Retirement Option Program ( DROP ) for eligible employees. Benefits Provided - Benefits under the Pension Plan are computed on the basis of age, average final compensation, and service credit. For Pension Plan members enrolled before July 1, 2011, Regular class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Vested members with less than 30 years of service may retire before age 62 and receive reduced retirement benefits. Special Risk Administrative Support class members who retire at or after age 55 with at least six years of credited service or 25 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Special Risk class members (sworn law enforcement officers, firefighters, and correctional officers) who retire at or after age 55 with at least six years of credited service, or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life, equal to 3.0% of their final average compensation based on the five highest years of salary for each year of credited service. Senior Management Service class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation based on the five highest years of salary for each year of credited service. Elected Officers class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 3.0% (3.33% for judges and justices) of their final average compensation based on the five highest years of salary for each year of credited service. 17

20 NOTE 5 - RETIREMENT PLANS (continued) Pension Plan (continued) Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 For Plan members enrolled on or after July 1, 2011, the vesting requirement is extended to eight years of credited service for all these members and increasing normal retirement to age 65 or 33 years of service regardless of age for Regular, Senior Management Service, and Elected Officers class members, and to age 60 or 30 years of service regardless of age for Special Risk and Special Risk Administrative Support class members. Also, the final average compensation for all these members will be based on the eight highest years of salary. As provided in Section , Florida Statutes, if the member is initially enrolled in the Pension Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of- living adjustment is three percent per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of three percent determined by dividing the sum of the prejuly 2011 service credit by the total service credit at retirement multiplied by three percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement. In addition to the above benefits, the DROP program allows eligible members to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. There are no required contributions by DROP participants. Contributions Effective July 1, 2011, all enrolled members of the FRS, other than DROP participants, are required to contribute three percent of their salary to the FRS. In addition to member contributions, governmental employers are required to make contributions to the FRS based on state-wide contribution rates established by the Florida Legislature. These rates are updated as of July 1 of each year. The employer contribution rates by job class for the periods from October 1, 2014 through June 30, 2015 and from July 1, 2015 through September 30, 2015, respectively, were as follows: Regular--7.37% and 7.26%; Special Risk Administrative Support % and 32.95%; Special Risk % and 22.04%; Senior Management Service % and 21.43%; Elected Officers % and 42.27%; and DROP participants % and 12.88%. These employer contribution rates include 1.26% and 1.66% HIS Plan subsidy for the periods October 1, 2014 through June 30, 2015 and from July 1, 2015 through September 30, 2015, respectively. The District s contributions to the Pension Plan totaled $36,204 for the fiscal year ended September 30, 2015, excluding HIS plan contributions. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At September 30, 2015, the District reported a liability of $196,425 for its proportionate share of the Pension Plan s net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, The District s proportionate share of the net pension liability was based on the District s fiscal year contributions relative to the fiscal year contributions of all participating members. At June 30, 2015, the District's proportionate share was %, which was an increase of % from its proportionate share measured as of June 30,

21 NOTE 5 - RETIREMENT PLANS (continued) Pension Plan (continued) Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 For the fiscal year ended September 30, 2015, the District recognized pension expense of $22,715. In addition the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Description Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ 20,737 $ (4,659) Change of assumptions 13,037 - Net difference between projected and actual earnings on Pension Plan investments - (46,903) Changes in proportion and differences between District Pension Plan contributions and proportionate share of contributions 51,687 - District Pension Plan contributions subsequent to the measurement date 8,157 - Total $ 93,618 $ (51,562) The deferred outflows of resources related to the Pension Plan, totaling $8,157 resulting from District 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, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Pension Plan will be recognized in pension expense as follows: Fiscal Year Ending September 30: Thereafter $ Amount 1,132 1,132 1,132 1,132 1,

22 NOTE 5 - RETIREMENT PLANS (continued) Pension Plan (continued) Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 Actuarial Assumptions The total pension liability in the July 1, 2015 actuarial valuation was determined using the following actuarial assumption, applied to all periods included in the measurement: Inflation 2.60% Salary increases 3.25%, average, including inflation Investment rate of return 7.65%, net of pension plan investment expense, including inflation Mortality rates were based on the Generational RP-2000 with Projection Scale BB tables. The actuarial assumptions used in the July 1, 2015, valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, The long-term expected rate of return on Pension Plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions and includes an adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table: Asset Class Target Allocation (1) Cash 1.0% 3.2% 3.1% 1.7% Fixed income 18.0% 4.8% 4.7% 4.7% Global equity 53.0% 8.5% 7.2% 17.7% Real estate (property) 10.0% 6.8% 6.2% 12.0% Private equity 6.0% 11.9% 8.2% 30.0% Strategic investments 12.0% 6.7% 6.1% 11.4% Total 100.0% Assumed Inflation - Mean 2.6% 1.9% (1) As outlined in the Pension Plan's investment policy 20 Annual Arithmetic Return Compound Annual (Geometric) Return Standard Deviation Discount Rate - The discount rate used to measure the total pension liability was 7.65%. The Pension Plan s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculation of the total pension liability is equal to the longterm expected rate of return.

23 NOTE 5 - RETIREMENT PLANS (continued) Pension Plan (continued) Sensitivity of the District s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following represents the District s proportionate share of the net pension liability calculated using the discount rate of 7.65%, 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 one percentage point lower (6.65%) or one percentage point higher (8.65%) than the current rate: District's proportionate share of the net pension liability/(asset) $ 508,982 $ 196,425 $ (63,673) Pension Plan Fiduciary Net Position - Detailed information regarding the Pension Plan s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report. Payables to the Pension Plan - At September 30, 2015, the District reported no amounts payable for outstanding contributions to the Pension Plan. HIS Plan Fort Myers Beach Library District Notes to the Financial Statements September 30, %, Decrease (6.65%) Discount Rate (7.65%) 1% Increase (8.65%) Plan Description The HIS Plan is a cost-sharing multiple-employer defined benefit pension plan established under Section , Florida Statutes, and may be amended by the Florida legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Florida Department of Management Services, Division of Retirement. Benefits Provided For the fiscal year ended September 30, 2015, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month. To be eligible to receive these benefits, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which may include Medicare. Contributions The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended September 30, 2015, the HIS contribution for the period October 1, 2014 through June 30, 2015 and from July 1, 2015 through September 30, 2015 was 1.26% and 1.66%, respectively. The District contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or cancelled. 21

24 NOTE 5 - RETIREMENT PLANS (continued) HIS Plan (continued) Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 The District s contributions to the HIS Plan totaled $5,260 for the fiscal year ended September 30, Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At September 30, 2015, the District reported a liability of $132,061 for its proportionate share of the HIS Plan s net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, The District s proportionate share of the net pension liability was based on the District s fiscal year contributions relative to the fiscal year contributions of all participating members. At June 30, 2015, the District's proportionate share was %, which was an decrease of % from its proportionate share measured as of June 30, For the fiscal year ended September 30, 2015, the District recognized HIS expense of $10,178. In addition the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Description Deferred Outflows of Resources Deferred Inflows of Resources Change of assumptions $ 10,390 $ - Net difference between projected and actual earnings on HIS Plan investments 71 - Changes in proportion and differences between District HIS Plan contributions and proportionate share of contributions 5,466 (4,418) District HIS Plan contributions subsequent to the measurement date 1,435 - Total $ 17,362 $ (4,418) 22

25 NOTE 5 - RETIREMENT PLANS (continued) HIS Plan (continued) Fort Myers Beach Library District Notes to the Financial Statements September 30, 2015 The deferred outflows of resources related to the HIS Plan, totaling $1,435 resulting from District contributions to the HIS Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the HIS Plan will be recognized in pension expense as follows: Fiscal Year Ending September 30: Thereafter $ Amount (713) (713) (713) (713) (713) (855) Actuarial Assumptions The total pension liability in the July 1, 2015 actuarial valuation was determined using the following actuarial assumption, applied to all periods included in the measurement: Inflation 2.60% Salary increases 3.25%, average, including inflation Municipal bond rate 3.80% Mortality rates were based on the Generational RP-2000 with Projection Scale BB tables. The actuarial assumptions used in the July 1, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, Discount Rate - The discount rate used to measure the total pension liability was 3.80%. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the HIS Plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index. 23