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ComprehensiveAnnualFinancialReport

Okaloosa County, Florida

For the year endedSeptember 30, 2016

Prepared byClerk of Circuit CourtJD Peacock II ClerkGary J. StanfordFinance Officer

Page Exhibit

INTRODUCTORY SECTIONTable of ContentsLetter of TransmittalGFOA Certificate of AchievementOrganization ChartsCouty Officials

FINANCIAL SECTIONIndependent Auditors' Report 1Management's Discussion and Analysis 4Basic Financial Statements

Government-wide Financial StatementsStatement of Net Position 17 IStatement of Activities 20 II-A & B

Fund Financial StatementsBalance Sheet - Governmental Funds 22 III-AReconciliation of the Governmental Funds Balance Sheet 23 III-B

24 IV-A

26 IV-B

27 V28 VI29 VII

32 VIII34 IV37 X

Notes to Financial Statements 38Required Supplementary Information

Schedule of Funding Progress - Post Employment Benefits Plan 88

89

9091

Statement of Revenues, Expenses, and Changes in Net Postiton - Proprietary Funds

Statement of Fiduciary Net Position - Fiduciary Funds

OKALOOSA COUNTY, FLORIDA

General Fund

TABLE OF CONTENTS

FISCAL YEAR ENDED SEPTEMBER 30, 2016COMPREHENSIVE ANNUAL FINANCIAL REPORT

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual

Reconcilaiton of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities

Tourist Development Special Revenue FundStatement of Net Position - Proprietary Funds

Schedule of the County's Proportionate Share of the Net Pension Liability-Florida Retirement System (FRS) & Health Insurance Subsidy (HIS)Schedule of the County's Contributions - Florida Retirement System (FRS) & Health Insurance Subsidy (HIS)

Statement of Cash Flows - Proprietary Funds

Notes to Required Supplementary Information

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Combining and Individual Fund Statements and Schedules: PageStatement/Schedule

Combining Balance Sheet - Nonmajor Governmental Funds 92 A-1

95 A-2

98 A-3County Transortation Trust Special Revenue Fund 99 A-4Natural Disaster Special Revenue Fund 100 A-5Local Housing Assistanct Trust Special Revenue Fund 101 A-6E-911 Operations Special Revenue Fund 102 A-7Radio Communications Special Revenue Fund 103 A-8Law Enforcement Trust Special Revenue Fund 104 A-9Police Academy Special Revenue Fund 105 A-10County Public Health Special Revenue Fund 106 A-11Municipal Services Benefit Unit Special Revenue Fund 107 A-12Unincorporated County Parks Special Revenue Fund 108 A-13Prisoner Benefit Special Revenue Fund 109 A-14Additional Court Cost Special Revenue Fund 110 A-15Drug Abuse Trust Special Revenue Fund 111 A-16Domestic Violence Trust Special Revenue Fund 112 A-17Traffic Education Special Revenue Fund 113 A-18Courts Special Revenue Fund 114 A-19Public Records Modernization Trust Special Revenue Fund 115 A-20Public Records Courts Special Revenue Fund 116 A-21Public Records 10% Fine Special Revenue Fund 117 A-22Federal Law Enforcement Trust Fund 118 A-23Teen Driver Challenge Fund 119 A-24Second Dollar Program Fund 120 A-25Okaloosa Debt Service Fund 121 A-26Road and Bridge Construction Capital Projects Fund 122 A-27

123 B-1

125 B-2Combining Statement of Cash Flows - Nonmajor Enterprise Funds 126 B-3Combining Net Position - Internal Service Funds 128 C-1

130 C-2Combining Statement of Cash Flows - Internal Service Funds 131 C-3Combining Statement of Fiduciary Net Position - Agency Funds 133 D-1Combining Statement of Changes in Net Position - Agency Funds 135 D-2

Combining Statement of Net Position - Nonmajor Enterprise Funds

Combining Statement of Revenues, Expenses, and Changes in Net Postion - Internal Service Funds

Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual:

Capital Outlay Construction Trust Capital Projects Fund

Combining Statement of Revenues, Expenses, and Changes in Net Position - Nonmajor Enterprise Funds

Combining Statement of Revenues, Expenditures, and Changes inFund Balances - Nonmajor Governmental Funds

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TABLE OF CONTENTS


STATISTICAL SECTION (UNAUDITED) Page ScheduleNet Position by Category - Last Eight Fiscal Years 139 1Changes in Net Position - Last Eight Fiscal Years 141 2Fund Balances - Governmental Funds - Last Ten Fiscal Years 143 3Changes in Fund Balances - Governmental Funds - Last Ten Fiscal Years 145 4Governmental Tax Revenues by Source - Last Ten Fiscal Years 147 5

149 6151 7153 8

Properly Tax Levies and Collections - Last Ten Fiscal Years 155 9Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 157 10Pledged Revenue Bond Coverage 159 11Computation of Direct and Underlying Debt 161 12Demographic and Economic Statistics - Last Ten Years 162 13Principal Employers - Current Year and Nine Years Ago 164 14

166 15Operating Indicators by Function/Program - Last Ten Fiscal Years 168 16Capital Indicators by Function/Program - Last Ten Fiscal Years 169 17

COMPLIANCE SECTION

170

172

173

174

175

178

Property Tax Millage Rates for Direct and Overlapping Taxable Assessed Value and Estimated Actual Value of Property -

Principal Property Tax Payers - Last Fiscal Year Compared to the

Independent Auditors' Report on the Schedule of Receipts and Expenditures of Funds Related to the Deepwater Horizon Oil SpillSchedule of Receipts and Expenditures of Funds Related to the Deepwater Horizon Oil Spill

Deepwater Horizon Oil Spill:

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

Independent Accountants' Report on Examination of Compliance Requirements in Accordance with Chapter 10.550, Rules of the Auditor General

Full-time Equivalent Government Employees by Function -

Auditor General Management Letter:Management LetterSingle Audit Compliance:

Independent Auditors' Report on Compliance for Each Major Federal Program and State Project and on Internal Control Over Compliance Required by the Uniform Guidance; and Chapter 10.550, Rules of the Auditor General and Compliance with Requirements Applicable to the Passenger Facility Charge Program and Internal Control Over Compliance

Auditor General Compliance:

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TABLE OF CONTENTS


STATISTICAL SECTION (UNAUDITED) Page

Schedule of Expenditures of Passenger Facility Charges 181

182

186187

Notes to Schedule of Expenditures of Federal Awards and State Financial AssistanceSchedule of Findings and Questioned Costs

Schedule of Expenditures of Federal Awardsand State Financial Assistance

Auditor General Compliance - Continued:

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Page

Exhibit/Statement/Schedule

INTRODUCTORY SECTIONTable of Contents i

FINANCIAL SECTIONIndependent Auditors' Report 1Basic Financial Statements

Fund Financial StatementsBalance Sheet - Governmental Funds 4 I

5 II

7 III8 IV9 V

12 VI14 VII

Notes to Financial Statements 17Combining and Individual Fund Statements and Schedules:


58 A-2

60 A-3County Transportation Trust Special Revenue Fund 61 A-4Natural Disaster Special Revenue Fund 62 A-5Local Housing Assistance Trust Special Revenue Fund 63 A-6E-911 Operations Special Revenue Fund 64 A-7Radio Communications Special Revenue Fund 65 A-8Law Enforcement Trust Special Revenue Fund 66 A-9

Combining Statement of Revenues, Expenditures, and Changes inFund Balances - Nonmajor Governmental FundsSchedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual:



OKALOOSA COUNTY, FLORIDABOARD OF COUNTY COMMISSIONERS

FISCAL YEAR ENDED SEPTEMBER 30, 2016

TABLE OF CONTENTS

FINANCIAL STATEMENTS AND AUDIT REPORTS PRESENTED TO DEMONSTRATE COMPLIANCE WITH FLORIDA STATUTES SECTIONS 11.45 and 218.39(8) AND RULES OF THE AUDITOR GENERAL, CHAPTER 10.557

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental FundsStatement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual

General FundTourist Development Special Revenue Fund

Statement of Net Position - Proprietary FundsStatement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds

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OKALOOSA COUNTY, FLORIDABOARD OF COUNTY COMMISSIONERS


TABLE OF CONTENTS

Combining and Individual Fund Statements and Schedules: Page


Police Academy Special Revenue Fund 67 A-10County Public Health Special Revenue Fund 68 A-11Municipal Services Benefit Unit Special Revenue Fund 69 A-12Unincorporated County Parks Special Revenue Fund 70 A-13Prisoner Benefit Special Revenue Fund 71 A-14Additional Court Cost Special Revenue Fund 72 A-15Drug Abuse Trust Special Revenue Fund 73 A-16Domestic Violence Trust Special Revenue Fund 74 A-17Traffic Education Special Revenue Fund 75 A-18Okaloosa Debt Service Fund 76 A-19Road and Bridge Construction Capital Projects Fund 77 A-20

78 B-1


85 C-2Combining Statement of Cash Flows - Internal Service Funds 86 C-3

OTHER REPORTS

88

90

91

92

9396

Auditor General Management Letter:


Management LetterSchedule of Findings and Responses

Auditor General Compliance:Independent Accountants' Report on Examination of Compliance Requirements in Accordance with Chapter 10.550, Rules of the Auditor GeneralDeepwater Horizon Oil Spill:


Combining Statement of Net Position - Nonmajor Enterprise FundsCombining Statement of Revenues, Expenses, and Changes in Net Position - Nonmajor Enterprise Funds

Combining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service Funds

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PageExhibit/

Statement

INTRODUCTORY SECTION

Table of Contents i

FINANCIAL SECTION

Independent Auditors' Report 1

Basic Financial Statements


4 II

5 III6 IV7 V8 VI9 VII

10 VIII11 IX12 X13 XI

Notes to Financial Statements 14

Combining and Individual Fund Statements and Schedules:

27 A-1Combining Statement of Changes in Net Position - Agency Funds 29 A-2

OTHER REPORTS

32

34

Management Letter 35

Combining Statement of Fiduciary Net Position - Agency Funds

Independent Auditors' Report on Internal Control Over Financial Reporting

Independent Accountants' Report on Examination of Compliance Requirements


Governmental FundsStatement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual General FundCourts Special Revenue FundPublic Records Modernization Trust Special Revenue FundPublic Records Courts Special Revenue FundPublic Records 10% Fine Special Revenue Fund

Statement of Net Position - Proprietary FundStatement of Revenues, Expenses, and Changes in Net Position - Statement of Cash Flows - Proprietary Fund

Statement of Revenues, Expenditures, and Changes in Fund Balances -

OKALOOSA COUNTY, FLORIDACLERK OF THE CIRCUIT COURT


TABLE OF CONTENTS


vii

PageExhibit/

Statement


Table of Contents i

FINANCIAL SECTION




4 II

5 III

6 IV

7 V

8 VI9 VII

10 VIII11 IX12 X



27 A-1

28 A-229 A-330 B-131 B-2

OTHER REPORTS

32

34


OKALOOSA COUNTY, FLORIDASHERIFF


TABLE OF CONTENTS

Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Combining Statement of Fiduciary Net Position - Agency FundsCombining Statement of Changes in Net Position - Agency Funds

Independent Accountants' Report on Examination of Compliance Requirements Performed in Accordance with Chapter 10.550, Rules of the Auditor General

Statement of Net Position - Proprietary Funds


Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Law Enforcement Trust Fund

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Teen Driver Challenge Fund

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Second Dollar Program Fund


Combining Balance Sheet - Internal Service FundsCombining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service FundsCombining Statement of Cash Flows - Internal Service Funds

Statement of Revenues, Expenses, and Changes in Net Position - Proprietary FundsStatement of Cash Flows - Proprietary Funds

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PageExhibit/

Statement


Table of Contents i

FINANCIAL SECTION



Fund Financial StatementsBalance Sheet - Governmental Fund 3 I

4 II



Individual Fund Statements and Schedules

22 A-1

OTHER REPORTS

23

25


Governmental FundStatement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - General FundStatement of Net Position- Proprietary FundStatement of Revenues, Expenses, and Changes in Net Position - Statement of Cash Flows - Proprietary FundStatement of Fiduciary Net Position - Fiduciary Fund

Statement of Changes in Net Position - Agency Fund

Independent Auditors' Report on Internal Control over Financial Reporting

Independent Accountants' Report on Examination of Compliance Requirements

Statement of Revenues, Expenditures, and Changes in Fund Balance -


OKALOOSA COUNTY, FLORIDATAX COLLECTOR


TABLE OF CONTENTS

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Page Exhibit


Table of Contents i

FINANCIAL SECTION




Governmental Fund 4 II

Budget and Actual - General Fund 5 III


OTHER REPORTS

15

17





OKALOOSA COUNTY, FLORIDAPROPERTY APPRAISER


TABLE OF CONTENTS



x

Page Exhibit


Table of Contents i

FINANCIAL SECTION







OTHER REPORTS

17

19



Independent Auditors' Report on Internal Control Over Financial

Independent Accountants' Report on Examination of Compliance


OKALOOSA COUNTY, FLORIDASUPERVISOR OF ELECTIONS


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JD PEACOCK IICLERK OF THE CIRCUIT COURT AND COMPTROLLER, OKALOOSA COUNTY, FLORIDA

101 E. JAMES LEE BLVD. CRESTVIEW, FLORIDA 32536 (850) 689-5000

REPLY TO: ANNEX EXTENSION 1940 LEWIS TURNER BLVD, SUITE 1-300 FT WALTON BEACH, FL 32547 • (850) 651-7200

BRACKIN BUILDING 302 NORTH WILSON ST., SUITE 203 CRESTVIEW, FLORIDA 32536 (850) 689-5000

March 31, 2017 To the Citizens of Okaloosa County: The Comprehensive Annual Financial Report of Okaloosa County, Florida for the fiscal year ended September 30, 2016, is respectfully submitted. This report was prepared by the Finance Department under the supervision of the Clerk of Court & Comptroller. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Finance Department. This report contains four major sections: the Introductory, the Financial, the Statistical and the Compliance Sections. The County prepares the basic financial statements to meet the requirements of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments (GASB 34) reporting model requiring the County to report in five parts, including, Management’s Discussion and Analysis, Government-wide Financial Statements, major Fund Financial Statements, Budgetary Comparisons for certain funds and the Notes to the Financial Statements. The report consists of management’s representations concerning the finances of the County. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the County has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the County’s financial statements in conformity with GAAP. Because the costs of internal controls should not outweigh their benefits, the County’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The County’s financial statements have been audited by the certified public accountants of the firm of Warren Averett CPAs and Advisors. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended September 30, 2016, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the County’s financial statements for the fiscal year ended September 30, 2016, are fairly presented in conformity with GAAP. The report of independent accountants is presented as the first component of the financial section of this report.

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Okaloosa County is a non-charter county established under the Constitution and the Laws of the State of Florida. This Comprehensive Annual Financial Report (CAFR) includes the funds of the primary government (the Board of County Commissioners, the Clerk of Court & Comptroller, the Property Appraiser, the Sheriff, and the Supervisor of Elections and the Tax Collector). Generally accepted accounting principles require that organizations for which the County is financially accountable be reported with the primary government (the County) as the reporting entity, however no organizations met this criteria. This CAFR does not include the Okaloosa County School District or any other independent agency of Okaloosa County.

ECONOMIC CONDITION AND OUTLOOK Okaloosa County is one of Florida's youngest counties, created in 1915 by an act of the state legislature. Okaloosa County is located in the Northwest Florida Panhandle and the City of Crestview, near its geographical center, is the County seat. The April 2016 population was 192,925, concentrated most heavily near its southern boundary on the Gulf of Mexico. Occupying a large portion of Okaloosa County is one of the world's largest military reservations. Established in 1935, Eglin Air Force Base covers over 724 square miles in Okaloosa and two neighboring counties and contains the 919th Special Operations Wing, Duke Field. Eglin Air Force Base, the

Air Armament Center, is responsible for development, acquisition, testing, deployment and sustainment of all United States Air Force air-delivered weapons. Based upon Eglin's wide range of activities, Eglin will continue its major role in the defense of the United States and in the economy of Okaloosa County. Hurlburt Field, the headquarters of the Air Force Special

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Operations Command, is also located in Okaloosa County. Hurlburt Field occupies about 6,000 acres in the County. The military presence is the major income producing source for the County.

The Tourism Industry is the leading private income producing source for Okaloosa County. The effect of the industry on the local spending economy is well above $2.5 billion income produced annually with the employment of over 32,000 in tourism related businesses. The Business Sales for Okaloosa County from Tourism totals over $4.5 billion dollars. The Tourism industry generates over $500 million in tax revenues per-year. The Tourist

Development Council Convention Visitor’s Bureau (TDC / CVB) registered hundreds of thousands of inquiries throughout the year. Tourists may visit Okaloosa County’s Visitor Welcome Center for information on all local activities, area information, sightseeing and all other things to do during their visit. More than 4.5 million visitors come to the Emerald Coast in 2015/2016. Residents and tourists in Okaloosa County have a full range of natural attractions and recreational opportunities. Mile after mile of beautiful snow-white beaches and emerald-green waters attract boating enthusiasts, swimmers, skiers, surfers, skin-divers, and scuba divers. Some of the largest concentrations of fighting game fish congregate off Destin’s coast. Party and charter boats make daily runs to favorite fishing reefs. Piers and bridges on the Gulf of Mexico, inland bays and fresh water in lakes and streams provide excellent fishing opportunities. Golfing, at numerous magnificent courses around the area, sailing, and camping are other year-round activities. The hunter may try for deer, turkey, quail, dove, duck, and wild hog in the game management areas of the northern part of the county. The state Division of Economic Development placed the total labor force in Okaloosa County at 117,021 in 2016 and the 2016 unemployment rate at 4.2 percent. This compares favorably to the state's annual average rate of 4.9 percent and the national average of 4.7 percent. Okaloosa

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County's cost of living is consistently below the national average and the county has, along with its sister counties in Florida, no state income tax. Seven industrial parks have been developed with a total of over 1,100 acres available. An industrial park near Crestview has an 8,000-foot reinforced runway, capable of handling the largest aircraft, and it has complete utilities and services. A municipal industrial park at Fort Walton Beach offers complete facilities and utility services to companies supplying space-age components to the United States Air Force. Property valuation continued to increase this year, building upon the slight increase last year, after declining for several years prior to that. The increase continues to provide the County the opportunity to maintain one of the state’s lowest millage rates while also continuing to maintain a relatively high level of service to County residents. Property tax values increased 4.3 percent. New construction activity in 2016 decreased slightly from the prior year but increased this current year by $174 million.

MAJOR FUNCTIONAL INITIATIVES General Government Initiatives The County finished a new Administrative Facility and number of renovations at the very end of last year and beginning of this year in order to more effectively and efficiently utilize the limited governmental space available. The County Administration Building was occupied and began being utilized for BCC meetings and many primary governmental functions like collection of taxes, voter registration maintenance of property records and Commission office space. About $58,770,000 was spent on General Government initiatives, or approximately 25% of total expenditures, throughout the year. Public Safety Initiatives The County dedicates a great deal of financial and personnel resources for public safety initiatives. The County Corrections Department and County Jail continues to deal with population increases, while trying to mitigate those increases. Corrections expenditures escalate for meals, medical and other services during times of increasing populations. The Jail facility continues studying expansion and future growth planning. The public safety function of

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the Emergency Medical activity stays busy and replaced several aging vehicles in their fleet during the year. The Sheriff’s operations were active and involved in many of these public safety initiatives throughout the year. The Sheriff fleet of vehicles was enhanced this year with funds budgeted from BP settlement dollars. The County funded approximately $69,000,000 of Public Safety initiatives, or approximately 29% of total expenditures, in 2016. Physical Environment Initiatives Physical environment initiatives are concentrated in the areas of water/wastewater improvements, solid waste and stormwater. County Water & Sewer were busy with a number of projects this year, including meter replacements, expansion of Arbennie Wastewater Facility and diverting flow to this newly expanded facility. Another significant project

in the water area was beginning construction on Bob Sikes Industrial Park Tank. Solid Waste continues to place a high priority on new ideas as the County monitors and remediates all of its closed landfill facilities along with the focus on providing reasonably priced solid waste services and enhanced recycling services throughout the County. About $45,750,000 was spent in the area

of Physical Environment initiatives, or approximately 19% of total expenditures, for 2016. Transportation Initiatives Transportation needs continue to be an area of vital importance to the citizens of the County. Maintenance and enhancement of existing roadways and bridges continues to be an extremely important priority, but the limitation for further improvement generally is hampered by limited resources. A major renovation and repair project for the Martin Luther King Boulevard in the south part of the County was completed in 2016. The Local Option Gas Tax and the Constitutional State Shared Gas Tax continue to be utilized to begin or set aside for future construction on many major projects and other maintenance, like PJ Adams and Fairchild Road, to name a few. The area of mass transit operations and capital acquisitions continues to be

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addressed with significant amounts of grant-funded projects. The Northwest Florida Regional Airport, along with the General Aviation Airports in Destin and in Crestview at Bob Sikes, continued to enhance all facets of the aviation activity, including security and taxiway enhancements throughout the year. The US Department of Transportation and FL Department of Transportation funded projects at Fort Walton/Destin Regional Airport and Destin Airport related to checked baggage improvements, Aircraft Rescue and Fire Fighting Facility and the Destin Control Tower. About $41,800,000, or approximately 17% of total spent, was spent on transportation expenditures in 2016. Economic Environment Initiatives The tourism economy continues to be a dominant factor in the economic activity of the County, both on its south end beautiful beaches and its other economic activities throughout the County. The Tourist Development Council continues to emphasize tourism marketing in order to attract record visitors traveling to Okaloosa County. The Tourist Development Council has focused their marketing efforts throughout seasonal campaigns during

2016. Financial assistance to countywide citizens in the form of housing assistance through the Community Development Corporation and assistance related to the many veterans located in the area also are included in Economic Environmental initiatives. Community Redevelopment agencies in several cities within the County utilize portions of Ad Valorem Tax dollars to enhance economic development in those designated areas. About $10,000,000 or approximately 4% was spent in the area of economic environment in 2016.

Human Service Initiatives The ongoing funding for human service activities by the County included mosquito control, animal welfare, health care, Medicaid, elder services, day care service, mental health services and court-related child protection services expenditures. These activities, particularly state aid for Medicare and Medicaid, account for well over half of the dollars spent in this particular functional category. A portion of the operation of the Okaloosa County Health Department is another human service initiative in the County. Over $4,750,000 or approximately 2% was spent in the area of Human Service activity in 2016. Culture/Recreation Initiatives Culture/Recreation initiatives are an important element of funding in this diverse County ranging from the beautiful beaches to parks throughout the County, especially in the rural areas of north county. Park improvements, like Marler Park in the south end of the County to north end neighborhood and other parks, like Laurel Hill/Dorcas Park continue

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to utilize these resources. Maintenance on all parks is an increasing and ongoing expenditure every year and the rotation of funding and priority throughout the County for all parks is a focus each year. Tourist Development continues utilizing bed tax to study beach renourishment to review and analyze the beach areas needing possible renourishment for the future. The Council has set aside budgeted reserves for potential future needs and significant beach and restoration projects. A penny of each dollar of Tourist Development Tax continues to be collected to provide funding. Many national magazines proclaim the Okaloosa Island/Destin beaches as the #1 Beach in America, the #1 Beach in the South, as well as, one of the Favorite Family Vacation spots as they have for the past several years consecutively. The Countywide Library Cooperative continued to provide countywide service during this year. About $9,230,000 or approximately 4% was spent for culture/recreational activities throughout the year. Future Initiatives Maintaining a high level of service the citizens expect will continue to be a major challenge for the County, due to somewhat limited resources in a number of areas. Facility and space needs continue to be a high priority for the immediate future.

The County began the major Courthouse demolition and construction project during the current year and anticipates completing this construction project in a relatively short timeframe since court operations have been displaced during this period. The primary focus of some of these projects is to plan for their future needs and to construct more efficient space for their occupants and citizenry.

The County will continue to monitor road and stormwater needs consistent with the availability of funds. One tax increment area was established around Interstate 10 in order to alleviate congestion in the countywide transportation system and enhance the flow of traffic throughout the County. Quality of life issues will continue to be reviewed in the area of culture and recreation. Receipts from the tourist development tax will continue to provide funding for area beautification and beach maintenance and to promote tourism in the area.

FINANCIAL INFORMATION Readers of this report are encouraged to read Management’s Discussion and Analysis (MD&A). The MD&A provides basic financial information about the County and an overview of the

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County’s activities. The government-wide financial statements, consisting of a statement of net position and a statement of activities, provide a comprehensive financial picture of the County, split between governmental activities and business-type activities. These statements are prepared using the economic resources measurement focus and the accrual basis of accounting, where all assets, liabilities, revenues, and expenses of the County are reported. The fund financial statements provide information concerning the County’s funds and are prepared from the County’s accounting records. The County’s accounting records for general governmental operations are maintained on a modified accrual basis, with revenues being recorded when available and measurable and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the County’s proprietary funds are maintained on the accrual basis. The County’s fiscal year is October 1 to September 30. Section 11.45, Florida Statutes, requires an annual audit of all County agencies. The County has directed that the annual audit be more extensive than that required by Florida Statutes by requiring that the annual audit be a single audit covering all the funds and account groups of the County. This requirement has been complied with, and the unmodified opinion of the auditors has been included in this report.

AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2015. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for presentation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the County must publish an easily readable and efficiently organized comprehensive annual financial report whose contents conform to program standards, GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current Comprehensive Annual Financial Report conforms to the Certificate of Achievement Program requirements, and it will be submitted to the GFOA to determine its eligibility for another certificate. A comprehensive annual financial report of this nature could not have been prepared without the dedicated efforts of a considerable number of individuals. I want to especially thank the Clerk and the entire staff of the Finance Department for their invaluable assistance in the preparation of this report. I would also like to thank the members of the County’s independent external auditors. I would also like to thank the Board of County Commissioners and their staff, and the other Constitutional Officers for their personal interest and dedicated support in planning and conducting the financial operations of the County in a responsible manner. Gary J. Stanford, CPFO, CGFO Finance Officer/Deputy Clerk Okaloosa County Clerk

OKALOOSA CONUTY, FLORIDAREPORTING ORGANIZATION

CITIZENSOF

OKALOOSACOUNTY

STATEOF

FLORIDA

OKALOOSA COUNTY

SUPERVISOR OFELECTIONS

TAXCOLLECTOR

PROPERTYAPPRAISER

SHERIFFCLERK OF THE

CIRCUIT COURTBOARD OF COUNTYCOMMISSIONERS

Okaloosa CountyComprehensive Annual Financial Report

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ORGANIZATION CHARTOKALOOSA COUNTY, FLORIDA

OKALOOSA CONUTY COMMISSIONERS

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Citizensof

OkaloosaCounty

BOARD OFCOUNTY

COMMISSIONERS

COUNTYADMINISTRATOR

PUBLICWORKS

ENGINEERING

ROADDEPARTMENT

STORMWATER

FLEETOPERATIONS

FACILITYMAINTENANCE

PARKS

WATER &SEWER

AIRPORTSPUBLICSAFETY

EMERGENCYMANAGEMENT

9 1 1

BEACH SAFETY

EMERGENCYMEDICALSERVICES

TOURISTDEVELOPMENT

INFORMATIONSYSTEMS

GROWTHMANAGEMENT

LIBRARYCOOPERATIVE DEPUTY COUNTY

ADMINISTRATOR

HUMANRESOURCES

PURCHASING

VETERANS'SERVICES

RISKMANAGEMENT

COUNTYEXTENSION CORRECTIONS

COURT SERVICES LAW LIBRARY

LEGAL SERVICES

PROPERTYAPPRAISER

TAXCOLLECTOR

CLERK OF COURTS SHERIFF SUPERVISOR OFELECTIONS

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Wayne Harris District I

Carolyn Ketchel District II

Nathaniel Boyles District III

Trey Goodwin District IV

Kelly Windes District V

JD Peacock II Clerk of Court

Larry R Ashley Sheriff

Ben Anderson Tax Collector

Timothy "Pete" Smith Property Appraiser

Paul Lux Supervisor of Elections

John Hofstad County Administrator

COUNTY COMMISSIONERS

OTHER OFFICIALS

OTHER ELECTED OFFICIALS

OKALOOSA COUNTY, FLORIDACOUNTY OFFICIALS

AS OF SEPTEMBER 30, 2016

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FINANCIAL SECTION

1

INDEPENDENT AUDITORS’ REPORT

To the Honorable Chairman and Members of the Board of County Commissioners and Other Elected Officials Okaloosa County, Florida

Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Okaloosa County, Florida, (hereinafter referred to as “County”) as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements, as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the County’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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OpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the County, as of September 30, 2016, and the respective changes in financial position, and cash flows, where applicable, and the respective budgetary comparison for the General Fund and Tourist Development Special Revenue Fund thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of funding progress, schedule of the County’s Proportionate Share of net pension liability, and schedule of County contributions, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards and state financial assistance is presented for purposes of additional analysis as required by U.S. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and Chapter 10.550, Rules of the Auditor General, Local Governmental Entity Audits,and is also not a required part of the basic financial statements of the County. The accompanying schedule of expenditures of passenger facility charges is presented for purposes of additional analysis as specified in the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal Aviation Administration, and is not a required part of the basic financial statements of the County.

The combining and individual nonmajor fund financial statements and schedules, the Schedule of Expenditures of Federal Awards and State Financial Assistance, the Schedule of Expenditures of Passenger Facility Charges are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures

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applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules, the schedule of expenditures of federal awards and state financial assistance, the schedule of expenditures of passenger facility charges, are fairly stated in all material respects in relation to the financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 31, 2017, on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance.

Fort Walton Beach, Florida March 31, 2017

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Okaloosa County, Florida Management Discussion and Analysis

This discussion and analysis of Okaloosa County’s (the County) financial statements is designed to introduce the basic financial statements and provide an analytical overview of the County’s financial activities for the fiscal year ended September 30, 2016. This analysis, in conjunction with additional information provided in our letter of transmittal, should assist readers in identifying significant financial issues and changes in the County’s financial position. In this Management Discussion and Analysis (MD&A), all amounts, unless otherwise indicated, are expressed in thousands of dollars.

Financial Highlights

At the close of fiscal year 2016 the County’s assets and deferred outflows exceeded its liabilities and deferred inflows, resulting in net position of $449,937. Governmental and business-type assets exceeded its liabilities by $170,954 and $278,983, respectively.

The County’s total net position increased $22,645, or 5.3 percent, in comparison to the prior year.

The County had ($6,772) of unrestricted net deficit at the close of this year compared to ($10,617) last year.

Total revenues increased $12,210, or 5.9 percent, from $206,026 to $218,236.

Total expenses increased $16,329, or 9.1 percent, from $179,262 to $195,591.

The County’s governmental activities reported total net position of $170,954, which is an increase of $3,287, or 2.0 percent, in comparison to the prior year. An unrestricted net deficit of ($43,267) exists in the governmental activities.

The County’s business-type activities reported total net position of $278,983, which is an increase of $19,358, or 7.5 percent, in comparison to prior year. Approximately 13.1 percent of the total, or $36,495, is unrestricted, and thus available for spending at the County’s discretion.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the Okaloosa County’s basic financial statements. The County basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements, as illustrated on the following page. This report also contains other supplementary information in addition to the basic financial statements themselves.

Okaloosa County, Florida Management’s Discussion and Analysis

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Government-wide financial statements

The government-wide financial statements are designed to provide readers with a broad overview of Okaloosa County’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the County’s assets and liabilities, 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 County is improving or deteriorating.

The statement of activities presents information showing how the government’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 result in cash flows in future fiscal periods.

Both of the government-wide financial statements distinguish functions of the County that are principally supported by taxes 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 governmental activities of the County include general government, public safety, physical environment, transportation, economic environment, human services, culture/recreation and court-related activity.

The business-type activities of the County include water/sewer services, airport services, solid waste collection/disposal, building inspection services and emergency medical service.

The government-wide financial statements can be found on Exhibit I, II-A and II-B of this report.

Fund Financial Statements

The accounts of the County are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, net position, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted

Management’s discussionand analysis

Government wide financial statements Fund financial statements________________________________________________________

Notes to the financial statements

Supplementary information


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for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled.

The County’s funds are presented in separate fund financial statements. These funds are presented on governmental fund financial statements, proprietary fund financial statements and a fiduciary fund financial statement. The County’s major funds are presented in separate columns on the fund financial statements. The definition of a major fund is one that meets certain criteria set-forth in GASB 34. The funds that do not meet the criteria of a major fund are considered non-major funds and are combined into a single column on the fund financial statements.

Governmental Fund Financial Statements

Governmental fund financial statements are prepared on the modified accrual basis using current financial resources measurement focus. Under the modified accrual basis, revenues are recognized when they become measurable and available as net current assets. Although the activity of the internal service funds is reported with the governmental activities on the government-wide financial statements they are not combined on the government fund financial statements.

Three of the County’s governmental funds, the General Fund, Tourist Development Trust Fund and Capital Outlay Construction Fund are classified as major funds. All other governmental funds are combined into a single column on the governmental fund financial statements. Individual fund data for the non-major funds is found in combining statements presented as supplemental financial data.

The County adopts an annual budget for all governmental funds. A budgetary comparison has been presented for all the governmental funds, which compares not only actual results to budget but also the original adopted budget to final budget. These budgetary comparisons for the major governmental funds are presented as part of the basic financial statements. Non-major governmental fund budget comparisons are presented as supplemental financial data.

Proprietary Fund Financial Statements

Proprietary fund financial statements, like government-wide financial statements, are prepared on the full accrual basis. Proprietary funds record both operating and non-operating revenues and expenses. Operating revenues are those that are obtained from the operations of the proprietary fund.

The County reports the Water and Sewer, Airport and Emergency Medical Services as major funds in the proprietary fund financial statements. These enterprise funds are used to present the same functions that are presented in the government-wide financial statements. The other enterprise funds are grouped together and reported in a separate column entitled, “Other Enterprise Funds”. The internal service funds are combined into a single column on the proprietary fund financial statements. Individual fund data is presented in combining statements as supplemental financial data.


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The internal service funds are used to account for risk management, health, including other post-employment benefits for retirees, dental and liability insurance, fleet management services and funding of short-term compensated absence liability on a cost reimbursement basis.

Fiduciary Fund Financial Statement

Data shown on the fiduciary fund financial statement is not included in the government-wide financial statements because the resources of those funds are not available to support the County’s programs. The only type of fiduciary funds the County maintains, agency funds, are used to account for assets held by the County as an agent for individuals or other governments.

Notes to the financial statements

The notes to the financial statements provide additional information that is useful for a more complete understanding of the data provided in the government-wide and fund financial statements.

Other information

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning Okaloosa County’s funding progress related to post-employment benefits.

This report also presents combining statements for the non-major governmental and proprietary funds and agency funds, as well as individual fund budget and actual comparison schedules for non-major governmental funds.

Government-wide Financial Analysis

Over time, net position may serve as the most useful indicator of a government’s financial position, although a number of significant estimates or long-term projections now impact that net position. At September 30, 2016, the County’s total net position or total assets less liabilities, was $449,937. A significant portion of the County’s net position, 84.6 percent, is identified as an investment in capital assets (such as land, buildings, equipment, infrastructure), less related debt outstanding that was used to acquire those assets. Since the County uses capital assets to provide services to its residents, the net position represented by “investment in capital assets, net of related debt” are not available for future spending. In fact, the payment of maintenance and debt service costs on those capital assets will themselves require governmental resources. The net investment in capital assets, net of related debt balance of $380,719 increased $17,781 or 4.9 percent, in comparison to the prior year.

Another portion of the County’s net position is restricted net position which represent assets that are subject to constraints such as by debt covenants, grantors, laws or regulations. The restricted net position balance of $75,989 (16.9 percent of total net position) increased $1,018 or 1.4 percent, in comparison to prior year, due to increased Economic Environment revenue related to bed taxes.


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Unrestricted net position is net position that is available to meet the County’s ongoing obligations to residents, creditors, and enterprise fund customers. The County has an overall net unrestricted deficit of $6,772 primarily as a result of recording its proportionate share of the pension liability of the State of Florida’s retirement system. These liabilities are actuarially determined and provided by the State of Florida Retirement System (FRS). The Governmental Activities overall net position increased by $3,287 however the majority of the increase related to an increase in bed tax revenue which is by law restricted for certain purposes. The unrestricted net deficit in the governmental activities increased by $6,331 over the prior year due to an increase in pension liabilities and planned use reserves in its governmental activities. Net position in the County’s business type activities increased $19,358 due to increased charges for services and capital contributions. Unrestricted net position of $36,495 is available in the County’s business type activities to meet ongoing obligations to its customers.

The following is a condensed summary of net position for the primary government for fiscal years 2016 and 2015.

2016 2015* 2016 2015 2016 2015Current and Other Assets 109,628$ 99,955$ 94,630$ 85,603$ 204,258$ 185,558$Captial Assets 197,621 193,984 315,634 304,718 513,255 498,702

Total Assets 307,249$ 293,939$ 410,264$ 390,321$ 717,513$ 684,260$Total Deferred Outflows 28,320$ 7,769$ 12,186$ 6,575$ 40,506$ 14,344$

Current and Other Liabilities 14,353 19,362 17,253 16,643 31,606 36,005 Noncurrent Liabilities 148,886 106,478 124,696 117,141 273,582 223,620

Total Liabilities 163,239$ 125,840$ 141,949$ 133,784$ 305,188$ 259,625$Total Deferred Inflows 1,375$ 8,200$ 1,517$ 3,486$ 2,892$ 11,686$

Net Position:Investment in Capital

Assets, Net of Related Debt 156,262 149,244 224,457 213,694 380,719 362,938Restricted for

Debt Service - 1,039 5,837 8,643 5,837 9,682 Capital Projects 610 3,306 - - 610 3,306 Public Safety 3,329 3,111 - - 3,329 3,111 Transportation 10,396 11,783 12,194 10,969 22,590 22,752 Eco Environment 38,306 29,920 - - 38,306 29,920 Culture Recreation 3,909 4,110 - - 3,909 4,110 Court-Related 1,408 2,090 - - 1,408 2,090

Unrestricted (43,267) (36,936) 36,495 26,319 (6,772) (10,617) Total Net Position 170,954$ 167,667$ 278,983$ 259,625$ 449,937$ 427,292$

Okaloosa County, FloridaSummary of Net Assets

September 30, 2016 and 2015

Governmental Business-type Total

In Thousands of Dollars

*Reclassified to confirm with current year presentation.


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The following schedule compares the revenues and expenses for the primary government for the current and previous fiscal years:

2016 2015 2016 2015 2016 2015Revenues:Program Revenues:

Charges for Services 25,462$ 25,961$ 62,439$ 53,494$ 87,901$ 79,455$ Operating Grants and Contributions 8,959 6,738 455 272 9,414 7,010 Capital Grants and Contributions 984 1,393 11,697 10,860 12,681 12,253

General Revenues: - - Taxes 77,192 73,101 1,122 1,504 78,314 74,605 State Shared Revenue 24,644 23,228 - - 24,644 23,228 Grant and Contributions not Restricted Specific Programs 3 3 - - 3 3

Other 3,516 5,547 1,764 3,925 5,280 9,472 Total Revenues 140,759 135,971 77,477 70,055 218,236 206,026 Expenses:Program Activities:

General Government 33,975 30,449 - - 33,975 30,449 Public Safety 52,621 49,096 - - 52,621 49,096 Physical Environment 1,376 1,139 - - 1,376 1,139 Transportation 17,224 14,349 - - 17,224 14,349 Economic Environment 8,502 6,432 - - 8,502 6,432 Human Services 4,931 4,535 - - 4,931 4,535 Culture and Recreation 8,238 7,317 - - 8,238 7,317 Court-Related 8,147 8,154 - - 8,147 8,154 Interest and Fiscal Charges 2,470 2,659 - - 2,470 2,659

Business-type Activities:Water and Sewer - - 26,004 26,444 26,004 26,444 Airport - - 13,966 12,415 13,966 12,415 Solid Waste - - 7,913 7,155 7,913 7,155 Inspections - - 1,671 1,678 1,671 1,678 Emergency Medical - - 8,553 7,440 8,553 7,440

Total Expenses 137,484 124,130 58,107 55,132 195,591 179,262

3,275 11,841 19,370 14,923 22,645 26,764 Special Item - - - - - - Transfers 12 284 (12) (284) - -

3,287 12,125 19,358 14,639 22,645 26,764 Net Position October 1 167,667 155,542 259,625 244,986 427,292 400,528 Net Position September 30 170,954$ 167,667$ 278,983$ 259,625$ 449,937$ 427,292$

Increase in Net Position Before Transfers

Increase/(Decrease) in Net Position


GovernmentalActivities

Business-typeActivities Total

As September 30, 2016 and 2015Summary of Revenues and Expenses

Revenues increased by $4,788 or 3.5 percent in Governmental activities, due to increases in several different sources of revenue, but particularly in the County’s Tourist Development Tax revenue collection. Revenues in business-type activity increased by $7,422 or 10.6 percent from the prior year, mainly due to increases in Charges for Services in the Water & Sewer and Airport


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fees. Expenses increased by $13,354 or 10.8 percent in Governmental activities, due primarily to increased expenditure activity related to Public Safety for the Sheriff and transit services for the County transportation system. Expenses increased $2,975 or 5.4 percent in business-type activities due mainly to increases in Airport activity related to additional enplanements and new service offerings. Revenues in 2016 increased from 2015 but expenses also increased incrementally. Net position is significantly impacted by the recent implementation of the pension standard however overall net position increased by 5.3 percent, from $427,293 in 2015 to $449,937 in 2016.

Governmental activities The focus of Okaloosa County governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at fiscal year-end.

As of September 30, 2016, the County governmental funds reported combined fund balances of $95,384, an increase of $12,235 over the prior year balances, due mainly to continued increases in the Tourist Development Special Revenue Fund and the increased tourism industry resurgence along with increasing Capital Projects activity related to governmental building activity.

The General Fund is the chief operating fund of the County. At September 30, 2016, total fund balance in the general fund was $8,615 of which $4,405 was unassigned. The general fund expenditures for the fiscal year exceeded revenues by $5,893, although revenue increased, the public safety and transportation expenditure activity increased more. The Net change in Fund Balance for the General Fund for fiscal year 2016 amounted to a decrease of ($1,377), while the prior year showed an increase of $1,976. The decrease in fiscal year 2016 was mainly due to additional funding for much needed public safety activity and increased transit services related to a change in providers for the countywide service.

The Tourist Development Trust Fund is a special revenue fund that is used to account for the revenues and expenditures collected on short-term rentals in Okaloosa County. The Tourist Development Trust Fund balance increased over the prior year by $7,158. The increase in fund balance is primarily due to increased revenue from taxes, as well as, reduced expenditures while evaluating long-term strategies for marketing and promotion.

The Capital Outlay Construction Fund is the construction fund that is used to account for the major governmental capital improvements. The Capital Outlay fund balance increased over the prior year by $11,928 due to issuance of debt for another governmental building capital project to replace the County Courthouse.

The following is a chart of all Governmental Fund Balances for the fiscal years 2016 and 2015.

$0$5,000

$10,000$15,000$20,000$25,000$30,000$35,000$40,000

General Tourist Dev Capital Outlay Other

$8,615

$40,577

$25,479$20,713

$9,993

$33,419

$13,551

$26,186

Governmental Fund Balance Comparison

2016 2015


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Proprietary Activities Okaloosa County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail, and on a fund basis for the enterprise funds and internal service funds.

Enterprise Funds at September 30, 2016, total net position amounted to $278,983 for enterprise funds as compared to $259,625 at September 30, 2015. Net Position balances are primarily the result of operations and capital contributions in the Water & Sewer and Airport Enterprise funds.

Business-type activities increased the County’s total net position by $19,358. Major components of this increase are as follows:

The Water and Sewer Fund increased its net position by $9,084. Operating income was $10,895 during the year which was greater than last year. Operating revenues increased during the year, mainly related to the increased operating revenue related to partnerships developed with the military and other governmental agencies, while operating expenses maintained the status quo.

$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000

Taxes L&P Intgovt Chgs Fines Misc

$77,192

$865

$33,791$23,863

$1,432 $3,616

$73,101

$848

$32,159$23,046

$1,385$6,847

Governmental Revenues By Source Comparison

2016 2015

$0$5,000

$10,000$15,000$20,000$25,000$30,000$35,000$40,000$45,000$50,000

Gen Govt Pub Saf Phys Env Trans Econ Env Hum Svc Cult Rec Crt Relat Cap Outlay Debt

$30,551

$48,955

$1,212

$13,847

$8,467$4,639

$6,914 $7,808

$13,706

$8,220

$29,331

$47,209

$1,066

$11,611

$6,409$4,213

$6,312$8,112

$23,603

$5,340

Governmental Expenditures By Function Comparison

2016 2015


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The Airport Fund increased its net position by $7,428. The Airport had increased capital contributions from grant and financing capital activities and operating and non-operating income increased due to an increase in operations at the Airport.

The Emergency Medical Services Fund increased its net position by $1,448. The most significant factor in this increase was due to the increased billings, the percentage collection of those billings and the increased activity in this area of service.

The net operating income of the enterprise funds for fiscal years 2016 and 2015, is as follows:

2016 2015Water and Sewer $10,895 $9,778Airport (2,774) (3,666)Emergency Medical Services 293 (964)Nonmajor Enterprise Funds 1,223 989

$9,637 $6,138

Enterprise Net Operating Income (Loss)

$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000

Lic&P Chgs Fines Misc

$1,791

$81,541

$0 $1,733$1,592

$75,103

$0 $1,842

Proprietary Fund Operating Revenue by Source Comparison

2016 2015


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Budgetary Highlights

A Budget to actual statement is provided for the General Fund, along with each of the other major special revenue funds as part of the basic financial statements. A budget column for both the original budget adopted for fiscal year 2016 as well as the final budget is presented.

Differences between the original budget and final amended budget are as follows: The County added budgeted revenue of approximately $15,424 of which $12,983 related to intergovernmental revenue as a result of anticipated state and federal grants related to public safety, housing assistance and mass transit funds. The County added budget expenditures of approximately $14,087 most significantly in the areas of transportation and capital outlay related to the anticipated grant activity. The County reduced budgeted financing sources by approximately $1,336 related to transfers out to funds and constitutional officers.

Actual results, when compared to the final budget, are as follows: A variance of $7,065 of actual revenues under anticipated budget amounts as the grant revenue anticipated was both not earned and unavailable in the current year based on the timing of both qualifying expenditures and the availability of funds received.A variance of $15,451 of actual expenditures under anticipated budget amounts due to the timing of grant related expenditures and various capital projects that were not complete as of the end of the fiscal year. A variance of $167 of actual other financing sources due to transfers and a capital lease used to secure voting equipment.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Gen Govt Pub Saf Phys Env Trans Econ Env

$21,969

$10,464

$30,580

$12,664

$0

$22,469

$9,117

$29,768

$11,890

$0

Proprietary Fund Operating Expense by Program Comparison

2016 2015


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Capital Asset and Debt Administration

Capital Assets. Okaloosa County’s investment in capital assets for its governmental and business-type activities as of September 30, 2016 amounts to $513,255 (net of accumulated depreciation). This investment in capital assets includes land, buildings, roads, bridges and other improvements, machinery and equipment and park facilities. The increase in Okaloosa County’s governmental activities investment in capital assets for the current fiscal year amounted to $3,639 or 1.9 percent increase, which was mainly due to ongoing building activity and expansion for governmental facilities and road improvements completed. The business-type activities capital assets increased amounting to $10,916 or 3.6 percent, mainly due to major Water & Sewer and Airport capital project activities currently underway.

The following schedule compares capital assets for the primary government for the current and previous fiscal years:

2016 2015 2016 2015 2016 2015Land 11,804$ 11,558$ 14,765$ 13,126$ 26,569$ 24,684$ Buildings 109,449 95,816 73,475 73,360 182,924 169,176Improvements other than buildings 36,798 35,748 277 277 37,075 36,025Intangibles 3,354 3,163 933 896 4,287 4,059Mach/Equipment 54,485 52,039 20,964 20,754 75,449 72,793Const in Progress 4,748 15,701 21,259 9,917 26,007 25,618Infrastructure 154,473 151,000 346,415 339,318 500,888 490,318Art 29 29 70 70 99 99

Total Capital Assets 375,140 365,054 478,158 457,718 853,298 822,772Accum Deprec (177,519) (171,072) (162,524) (153,000) (340,043) (324,071)

Total 197,621$ 193,982$ 315,634$ 304,718$ 513,255$ 498,701$




September 30, 2016 and 2015Capital Assets

Additional information on Okaloosa County’s capital assets can be found in notes to the financial statements (Note 6).

Long-term debt. At the end of the current fiscal year, the primary government, Okaloosa County, had bonded, revolving loans, and capital lease long-term debt outstanding of $155,202. Of this amount, $65,529 comprises governmental activities bonds, note and leases payable while the remaining $89,673 in revenue bonds, revolving loans and a revenue note is secured solely by specified revenue sources in business-type activities.


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2016 2015 2016 2015 2016 2015Capital Lease 416$ -$ -$ -$ 416$ -$ Revenue Bonds 60,622 49,861 81,275 83,840 141,897 133,701Revolv & Comm Loan 4,491 6,022 8,398 8,013 12,889 14,035

Total 65,529$ 55,883$ 89,673$ 91,853$ 155,202$ 147,736$


GovenmentalActivities

Busines-typeActivities Total

September 30, 2016 and 2015Outstanding Debt

Additional information on Okaloosa County’s long-term debt can be found in notes to the financial statements (Note 11).

Okaloosa County, Florida, Debt Ratings at September 30, 2016

Type of Debt Issue: 2009 Sales Tax Rev Bonds

Cap Imprv Rev Bonds, Ser 2011

2014 Sales Tax Rev Bonds

2016 Sale Tax Rev Bonds

W&S Rev Bonds 2015

Taxable Airport Rev Bond 2007

Taxabl Airport Ref Bonds 2014

S & P AA

Not rated

AA

AA

Not Rated

AA

Not Rated

Fitch/Moody’s AA-

Not rated

AA-

AA-

AA-/Aa3

Not Rated

Not Rated

Highest rating: AAA/Aaa Investment grade ratings: AAA/Aaa through BBB-/Baa- Lowest rating: C

Economic Factors

Local, national, and international economic factors influence the County’s revenues in a variety of ways. Positive economic growth is correlated with increased revenues from property taxes, state sales taxes, fuel taxes, charges for services, state revenue sharing as well as state and federal grants, while negative economic growth generally has the opposite reaction. Economic growth may be measured by a variety of indicators such as employment growth, unemployment, new construction and assessed values, diversification of the property tax base, and Enterprise Fund revenue and net asset growth.


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The Florida Research and Economic Database reported that the number of employed Okaloosa County civilian residents increased from 87,508 in 2015 to 90,060 in 2016, an increase of 2.9 percent. Stable labor force coupled with somewhat improving economic times led to the County’s unemployment rate falling to 4.2 percent in 2016 compared to 4.5 percent for 2015. The County’s unemployment rate still remains extremely favorable compared to the state and national rates of 4.9 and 4.7 percent respectively, for 2016.

The assessed value of real property located in the County after exemptions increased from $14.250 billion in 2015 to $14.894billion, while the total assessed value of the County increased from $15.035 billion to $15.685 billion in 2016. This represented an increase of $.65 billion or 4 percent in property valuation.

Okaloosa County has a diversified property tax base. The ten largest property tax payers in the County represent approximately only 3.1 percent of the total ad valorem property tax levy.

During 2016, total value of new residential construction in the County was valued at $148 million and total value of new non-residential construction was valued at $37 million for a total of just $185 million in new construction. The total construction figure for 2016 represented a $44 million increase from the 2015 total.

More information on economic factors is provided in the Statistical Section.

Request for information This financial report is designed to provide the reader an overview of the County. Questions regarding any information provided in this report should be directed to:

Finance Department 302 N Wilson Street, Suite 203 Crestview, Florida, 32536.

Exhibit I

GovernmentActivities

Business-type Activities Total

Current AssetsCash and Cash Equivalents 49,443,982$ 32,833,306$ 82,277,288$Investments 22,056,670 14,654,504 36,711,174

4,019,678 10,059,874 14,079,552Internal Balances 335 (335) -Due from (to) Fiduciary Funds 168,311 - 168,311Due from Other Governments 8,021,754 3,038,548 11,060,302Inventories 254,015 1,858,516 2,112,531Prepaid Expenses 597,665 100,300 697,965Restricted AssetsCash and Cash Equivalents 25,065,355 23,326,034 48,391,389

Customer Deposits - 1,381,354 1,381,354Other Deposits - 1,517,811 1,517,811

Investments - 5,860,182 5,860,182

Total Current Assets 109,627,765 94,630,094 204,257,859

Capital AssetsLand 11,803,905 14,765,161 26,569,066Buildings 109,449,162 73,475,227 182,924,389

36,797,863 276,776 37,074,639Intangibles 3,353,660 932,505 4,286,165Machinery and Equipment 54,485,226 20,964,450 75,449,676Construction in Progress 4,748,405 21,258,933 26,007,338Infrastructure 154,472,778 346,414,997 500,887,775Works of Art 29,195 69,865 99,060

(177,519,233) (162,524,027) (340,043,260)

Total Noncurrent Assets 197,620,961 315,633,887 513,254,848

Total Assets 307,248,726$ 410,263,981$ 717,512,707$

DEFERRED OUTFLOWS OF RESOURCESDeferred Charges Related to Pensions 28,319,567$ 9,218,761$ 37,538,328$Deferred Charges on Refunding - 2,967,552 2,967,552

Total Deferred Outflows of Resources 28,319,567$ 12,186,313$ 40,505,880$Continued…

Primary Government

Receivables, Net of Allowance for Uncollectibles

Okaloosa County, FloridaSTATEMENT OF NET POSITION

September 30, 2016

ASSETS

Improvements Other Than Buildings

Accumulated Depreciation

17

Exhibit I



Primary Government


September 30, 2016

LIABILITIESCurrent Liabilities

6,183,305$ 7,063,124$ 13,246,429$Due to Other Governments 609,905 230,549 840,454Unearned Revenue 2,497,168 2,064,232 4,561,400Due to Depositors 111,969 - 111,969

Costumer Deposits - 1,381,354 1,381,354Interest Payable 203,138 1,221,092 1,424,230

- 473,763 473,763

Compensated Absences 2,900,167 916,367 3,816,534Closure Costs Payable - 357,905 357,905Claims and Judgments 1,364,384 - 1,364,384Leases Payable 208,146 - 208,146Notes Payable 120,708 - 120,708Revenue Bonds Payable 154,000 3,545,000 3,699,000Total Current Liabilities 14,352,890 17,253,386 31,606,276

Noncurrent Liabilities

Compensated Absences 3,113,949 749,136 3,863,085Closure Costs Payable - 3,668,375 3,668,375Claims and Judgments 2,609,598 - 2,609,598Leases Payable 208,146 - 208,146Notes Payable 4,370,271 7,924,334 12,294,605Loans and Bonds Payable, Net of Unamortized Loan Costs 63,745,514 86,666,360 150,411,874Other Post Employment Benefits 5,480,214 435,110 5,915,324Net Pension Liability 69,358,388 25,252,952 94,611,340

Total Noncurrent Liabilities 148,886,080 124,696,267 273,582,347Total Liabilities 163,238,970$ 141,949,653$ 305,188,623$

Continued…18

Noncurrent Portion of Long-term Obligations

Accounts Payable and Other Accrued Liabilities

Liabilities Payable from Restricted Assets

Loans and Revenue Bonds Payable

Current Portion of Long-term Obligations

Exhibit I



Primary Government


September 30, 2016

DEFERRED INFLOWS OF RESOURCESDeferred Charges Related to Pensions 1,375,497$ 1,517,012$ 2,892,509$

Total Deferred Inflows of Resources 1,375,497$ 1,517,012$ 2,892,509$

NET POSITION156,262,133 224,456,873 380,719,006

Restricted forDebt Service - 5,837,272 5,837,272Capital Projects 610,416 - 610,416Public Safety 3,329,367 - 3,329,367Transporation 10,396,166 12,194,458 22,590,624Economic Environment 38,306,137 - 38,306,137Culture and Recreation 3,908,904 - 3,908,904Court-Related 1,407,783 - 1,407,783

Unrestricted (Deficit) (43,267,080) 36,495,026 (6,772,054)

Total Net Position (Deficit) 170,953,826$ 278,983,629$ 449,937,455$

19

Net Investment in Capital Assets

The notes to the financial statements are an intergral part of this statement.

Exhibit II-A

ExpensesCharges for

Services

OperatingGrants and

Contributions

CapitalGrants and

Contributions

Net(Expense)Revenue

(To Ex II-b)Primary GovernmentGovernmental ActivitiesGeneral Government 33,975,282$ 12,123,850$ 1,409,326$ -$ (20,442,106)$ Public Safety 52,620,473 5,366,159 1,142,133 17,360 (46,094,821) Physical Environment 1,375,524 10,672 - 205,136 (1,159,716) Transportation 17,224,089 1,171,139 4,033,229 240,565 (11,779,156) Economic Environment 8,501,479 6,969 1,943,301 - (6,551,209) Human Services 4,931,451 - 12,625 - (4,918,826) Culture and Recreation 8,238,329 1,037,881 64,598 521,275 (6,614,575) Court-Related 8,147,036 5,745,432 353,915 - (2,047,689)

2,470,772 - - - (2,470,772)

Total Governmental Activities 137,484,435 25,462,102 8,959,127 984,336 (102,078,870)

Business-type ActivitiesWater & Sewer 26,004,185 33,037,831 85,557 583,167 7,702,370 Airport 13,966,144 9,865,161 175,688 11,092,531 7,167,236 Emergency Medical Services 8,552,995 8,771,417 51,034 21,563 291,019 Other Programs 9,584,120 10,764,495 143,060 - 1,323,435

Total Business- type Activities 58,107,444 62,438,904 455,339 11,697,261 16,484,060

195,591,879$ 87,901,006$ 9,414,466$ 12,681,597$ (85,594,810)$

Okaloosa County, FloridaSTATEMENT OF ACTIVITIES

For the Fiscal Year Ended September 30, 2016

Total Primary Government

20

Program Revenues

Interest and Fiscal Charges

The notes to the financial statements are an integral part of this statement.

Exhibit II-B



Changes in Net PositionNet (Expenses) Revenue(From Exhibit II-A) (102,078,870)$ 16,484,060$ (85,594,810)$

Unrestricted General RevenuesTaxesAd Valorem Tax 50,717,606 1,122,191 51,839,797Tourist Development Tax 18,078,186 - 18,078,186Local Option Fuel Tax 5,380,205 - 5,380,205Communication Services Tax 1,692,888 - 1,692,888Ninth-Cent Voted Fuel Tax 1,039,247 - 1,039,247Local Business Tax 283,877 - 283,877

State Revenue SharingMiscellaneous Revenue 6,260,619 - 6,260,619Local Government Sales Tax 14,813,605 - 14,813,605Gas Tax 3,569,406 - 3,569,406

Contributions Not Restrictedto Specific ProgramsContributions fromOther Governments 2,671 - 2,671Other Donations 212,702 380,787 593,489

Investment Earnings 794,316 641,193 1,435,509Miscellaneous 2,508,587 741,585 3,250,172

Transfers - Internal Activities 11,676 (11,676) -

105,365,591 2,874,080 108,239,671

Change in Net Position 3,286,721 19,358,140 22,644,861

Net Position - Beginning 167,667,105 259,625,489 427,292,594

Net Position - Ending 170,953,826$ 278,983,629$ 449,937,455$

Okaloosa County, FloridaSTATEMENT OF ACTIVITIES (CONTINUED)



21

Primary Government

Total Unrestricted-General Revenues and Transfers


Cash and Cash Equivalents 5,602,549$ 30,290,954$Investments 1,178,638 8,042,130Accounts Receivable 257,311 3,363,682Due from Other Funds 22,453 646,676Due from Other Elected Officials 1,108,010 52Due from Other Governments 5,090,684 73,710Prepaids 439,248 17,342

Total Assets 13,698,893$ 42,434,546$

LiabilitiesAccounts Payable 617,643$ 77,810$Contracts Payable 930,549 1,651,433Other Accrued Liabilities 1,215,999 45,499Due to Other Funds 172,728 -Due to Other Elected Officials 1,208,259 441Due to Other Governments 467,821 34,306Due to Depositors 9,407 -Unearned Revenue 461,052 48,060

Total Liabilities 5,083,458 1,857,549

Fund Balances Nonspendable 439,248 17,342Restricted - 40,576,997Committed 32,229 -Assigned 3,739,233 -Unassigned 4,404,725 (17,342)

Total Fund Balances 8,615,435 40,576,997

13,698,893$ 42,434,546$

Okaloosa County, FloridaBALANCE SHEET

GOVERNMENTAL FUNDSSeptember 30, 2016

ASSETS

LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES

Total Liabilities, Deferred Inflow of Resources, and Fund Balances

Exhibit III-A

Capital Outlay Construction Trust

Capital Projects Fund

OtherGovernmental

Funds

TotalGovernmental

Funds

21,984,077$ 11,910,943$ 69,788,523$378,412 12,418,980 22,018,160

323 2,030 3,623,3463,023,324 186,738 3,879,191

124,244 121,442 1,353,748- 2,325,093 7,489,487- 133,647 590,237

25,510,380$ 27,098,873$ 108,742,692$

31,007$ 179,208$ 905,668$- 1,074,704 3,656,686- 190,634 1,452,132- 2,759,354 2,932,08219 228 1,208,947

- 99,074 601,201- 102,562 111,969- 1,979,981 2,489,093

31,026 6,385,745 13,357,778

- 133,647 590,23725,472,633 19,357,360 85,406,990

6,721 577,781 616,731- 3,421,017 7,160,250- (2,776,677) 1,610,706

25,479,354 20,713,128 95,384,914

25,510,380$ 27,098,873$ 108,742,692$


22

Exhibit III-B

Fund balances - total governmental funds (Exhibit III-A) 95,384,914$

Those assets consist of:Governmental nondepreciable/amortizable asset 17,728,410 Governmental depreciable/amortizable assets 353,430,252 Less accumulated depreciation/amortization (174,243,575)

196,915,087

(5,499,000)

Deferred outflows of resources - Pensions 27,659,498 Deferred inflows of resources - Pensions (1,263,723)

26,395,775

Balances changed at September 30, 2016 are:Accrued interest on bonds (203,138) Revenue bonds payable (63,899,514) Notes payable (4,907,271) Compensated absences (4,656,732) Other Post Employment Benefits (1,033,883) Net Pension Liability, proportionate share (67,542,412)

Total long-term liabilities (142,242,950)

Net position of governmental activities (Exhibit I) 170,953,826$

The notes to the financial statements are an integral part of this statement.23

Deferred outflows and inflows of resources related to pensions are applicable to future perios and not reported in govenmental funds. The difference does not include the internal service fund which is included above.

Internal service funds (see Exhibit VIII) are used by management to charge the costs of certain activities, such as insurance, compensated absences and fleet maintenance, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. Internal service fund net position are:

Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the governmental funds. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. The difference does not include the compensated absences or OPEB liabilites of the Internal Service funds accountend for separately. All liabilites, both current and long-term are reported in the statement of net position.

Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. The difference does not include the net capital assets of the Internal Service fund accounted for separately.

Okaloosa County, FloridaRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITIONSeptember 30, 2016

Amounts reported for governmental activities in the statement of net position are different because:


RevenuesTaxes 50,054,190$ 18,078,187$ Licenses and Permits 14,000 361,552 Intergovernmental 21,480,536 330,140 Charges for Services 16,667,080 838,077 Fines 11,846 6,969 Miscellaneous 2,034,707 470,023

Total Revenues 90,262,359 20,084,948

ExpendituresCurrentGeneral Government 30,100,146 - Public Safety 47,081,500 - Physical Environment 341,746 - Transportation 3,731,893 210,000 Economic Environment 1,613,772 5,908,305 Human Services 4,037,515 - Culture and Recreation 1,629,556 4,250,758 Court-Related 2,419,557 -

Capital Outlay 4,593,054 506,279 Debt ServicePrincipal 513,378 - Interest 93,236 - Other Debt Service Costs - -

Total Expenditures 96,155,353 10,875,342

Excess (Deficiency) of RevenuesOver (Under) Expenditures (5,892,994) 9,209,606

Okaloosa County, FloridaSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDSFor the Fiscal Year Ended September 30, 2016

Exhibit IV-A



OtherGovernmental

Funds

TotalGovernmental

Funds

264$ 9,059,362$ 77,192,003$ - 489,933 865,485

124,244 11,856,448 33,791,368 289,326 6,068,323 23,862,806

- 1,412,704 1,431,519 149,318 962,243 3,616,291

563,152 29,849,013 140,759,472

- 451,116 30,551,262 - 1,873,945 48,955,445 - 870,175 1,211,921 - 9,905,501 13,847,394 - 944,816 8,466,893 - 601,661 4,639,176

76,836 957,068 6,914,218 - 5,388,571 7,808,128

1,917,075 6,689,197 13,705,605

- 3,425,000 3,938,378 - 4,038,562 4,131,798 - 150,124 150,124

1,993,911 35,295,736 144,320,342

(1,430,759) (5,446,723) (3,560,870)

Continued…

24


Okaloosa County, FloridaSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDSFor the Fiscal Year Ended September 30, 2016

Other Financing Sources (Uses)Transfers In 4,300,228 - Transfers Out (408,720) (2,052,113) Transfers Among Constitutional Officers (388) 52 Issuance of Debt 624,438 - Original Issue Premium - -

Total Other Financing Sources (Uses) 4,515,558 (2,052,061)

Net Change in Fund Balances (1,377,436) 7,157,545

Fund Balances - Beginning 9,992,871 33,419,452

Fund Balances - Ending 8,615,435$ 40,576,997$

Exhibit IV-A



OtherGovernmental

Funds

TotalGovernmental

Funds

11,111 4,529,812 8,841,151 (652,454) (4,716,188) (7,829,475)

- 336 - 12,960,000 - 13,584,438 1,040,000 160,121 1,200,121

13,358,657 (25,919) 15,796,235

11,927,898 (5,472,642) 12,235,365

13,551,456 26,185,770 83,149,549

25,479,354$ 20,713,128$ 95,384,914$

25


Exhibit IV-B

Net change in fund balances - total governmental funds (Exhibit IV-A) 12,235,365$

Expenditures for capital assets 13,705,605 Less current year depreciation/amortization (9,883,301)

3,822,304

(238,845)

Debt proceeds (12,960,000) Debt premium (1,200,121) Capital lease proceeds (624,438) Debt principal payments 3,938,378 Amortization of discounts 781,477 Changed in accrued interest on long-term debt 1,029,676

(9,035,028)

Compensated Absences 331,812 Other Post Employment Benefits (159,137)

172,675

Difference between pension contribution and net pension expense (3,422,797)

(246,953) Change in net position of governmental activities (Exhibit II-B) 3,286,721$


26

Governmental funds do not report capital assets on the Balance Sheet; however, they are reported in the government-wide financial statements. Governmental funds report capital outlays as expenditures; however, in the Statement of Activities, the cost of those assets is depreciated or amortized over the estimated useful lives of the assets.

The issuance of long-term debt provides current financial resources to the governmental fund, whilethe repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on the net position. Also, governmental funds report the effect of premiums or discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. In addition, long-term debt reassignments are reported as transfers on the Statement of Activities.

Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds:

Internal service funds (See Exhibit IX) are used by the County to charge the costs of certain activities, such as insurance, compensated absences and fleet maintenance to individual funds. The net revenue or expense of the internal service funds is reported with governmental activities.

Governmental funds do not report capital assets on the Balance Sheet; however, they are reported inthe government-wide financial statements. Accordingly, proceeds received from disposals of capital asset are shown as income in the governmental financial statements and a gain or loss is reported in the Statement of Activities. In addition, capital asset reassignments are reported as transfers in the Statement of Activities.

Governmental funds report County pension contributions as expenditures. In the statement of activities, the cost of the pension benefits earned net of contributions is reported as pension expense.

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

Okaloosa County, FloridaRECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIES


Exhibit V

Original Final Actual AmountsRevenuesTaxes 50,019,742$ 50,019,742$ 50,054,190$ 34,448$ Licenses and Permits 13,500 13,500 14,000 500Intergovernmental 15,254,570 28,237,895 21,480,536 (6,757,359)Charges for Services 14,786,674 16,215,027 16,667,080 452,053Fines 4,500 4,663 11,846 7,183Miscellaneous 1,825,083 2,836,848 2,034,707 (802,141)

Total Revenues 81,904,069 97,327,675 90,262,359 (7,065,316)ExpendituresCurrentGeneral Government 30,447,419 31,930,452 30,100,146 1,830,306Public Safety 53,747,537 54,459,596 47,081,500 7,378,096Physical Environment 369,180 361,734 341,746 19,988Transportation 224,612 7,180,241 3,731,893 3,448,348Economic Environment 1,635,523 1,620,631 1,613,772 6,859Human Services 4,042,668 4,063,914 4,037,515 26,399Culture and Recreation 1,629,739 2,008,424 1,629,556 378,868Court-Related 2,451,770 2,642,941 2,419,557 223,384

Capital Outlay 2,970,376 7,129,920 4,593,054 2,536,866Debt ServicePrincipal - 208,147 513,378 (305,231)Interest - - 93,236 (93,236)

Total Expenditures 97,518,824 111,606,000 96,155,353 15,450,647Excess (Deficiency) of Revenues Over (Under) Expenditures (15,614,755) (14,278,325) (5,892,994) 8,385,331

Other Financing Sources (Uses)Transfers In 4,065,485 4,429,490 4,300,228 (129,262)Transfers Out - (408,720) (408,720) -

704,693 (587,022) (388) 586,634Issuance of Debt - - 624,438 (624,438)

4,770,178 3,433,748 4,515,558 (167,066)

Net Change in Fund Balance (10,844,577) (10,844,577) (1,377,436) 8,218,26510,844,577 10,844,577 9,992,871 (851,706)

Fund Balance - Ending -$ -$ 8,615,435$ 7,366,559$

Okaloosa County, FloridaGENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

Total Other Financing Sources (Uses)

Transfers Among Constitutional Officers

27

IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended September 30, 2016

Budgeted Amounts

Variance WithFinal Budget

Positive(Negative)


Fund Balance - Beginning

Exhibit VI

Original Final Actual AmountsRevenuesTaxes 15,000,000$ 15,000,000$ 18,078,187$ 3,078,187$ Licenses and Permits 360,000 360,000 361,552 1,552 Intergovernmental - 2,185,150 330,140 (1,855,010) Charges for Services 810,750 810,750 838,077 27,327 Fines - - 6,969 6,969 Miscellaneous 136,225 175,806 470,023 294,217

Total Revenues 16,306,975 18,531,706 20,084,948 1,553,242

ExpendituresCurrentTransportation - 210,000 210,000 - Economic Environment 9,235,689 11,293,113 5,908,305 5,384,808 Culture and Recreation 29,764,485 31,903,808 4,250,758 27,653,050

Capital Outlay 4,322,840 6,399,713 506,279 5,893,434

Total Expenditures 43,323,014 49,806,634 10,875,342 38,931,292

Excess (Deficiency) of Revenues Over (Under) Expenditures (27,016,039) (31,274,928) 9,209,606 40,484,534

Other Financing Sources (Uses)Transfers Out (2,136,800) (2,145,422) (2,052,113) 93,309

900 900 52 (848)

(2,135,900) (2,144,522) (2,052,061) 92,461

Net Change in Fund Balance (29,151,939) (33,419,450) 7,157,545 40,576,995

Fund Balance - Beginning 29,151,939 33,419,450 33,419,452 2


Okaloosa County, FloridaTOURIST DEVELOPMENT SPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES




28


Budgeted Amounts


Positive(Negative)

Water and SewerEnterprise Fund

AirportEnterprise Fund

Emergency Medical Services Enterprise

Fund

Current AssetsCash and Cash Equivalents 20,162,760$ 7,556,361$ 1,862,312$ Investments 11,695,677 2,257,113 7,358 Receivables, Net of Allowancefor Uncollectible

Due from Other Funds - - - Due from Other Elected Officials - - - Due from Other Governments 91,812 2,945,560 - Inventory 1,763,793 94,723 - Prepaids 90,688 2,847 6,470 Restricted AssetsCash and Cash Equivalents 13,731,036 9,594,998 -

Customer Deposits 1,355,846 - - Other Deposits 1,517,811 - -

Investments - 5,860,182 - Total Restricted Assets 16,604,693 15,455,180 - Total Current Assets 53,251,268 30,097,874 6,621,858

Capital AssetsLand 8,180,379 6,451,481 - Buildings 6,163,100 67,196,764 -

- - - Intangibles 765,530 94,400 30,150 Machinery and Equipment 10,900,009 1,971,743 4,304,036 Construction in Progress 10,648,214 10,610,719 - Infrastructure 260,432,524 85,982,473 - Works of Art - 69,865 -

(115,619,898) (41,697,358) (2,353,105) Total Capital Assets (Net of Accumulated Depreciation/Amortization) 181,469,858 130,680,087 1,981,081

Total Noncurrent Assets 181,469,858 130,680,087 1,981,081 Total Assets 234,721,126$ 160,777,961$ 8,602,939$

PROPRIETARY FUNDS


September 30, 2016

Business-type


Less Accumulated Depreciation/Amortization

ASSETS

2,841,845 1,786,090 4,745,718

Exhibit VII

OtherEnterprise Funds

TotalEnterprise Funds

3,251,873$ 32,833,306$ 4,720,814$ 694,356 14,654,504 38,510

- - 96,358 - - 480

1,176 3,038,548 532,267 - 1,858,516 254,015 295 100,300 7,428

- - 23,326,034 -

25,508 1,381,354 - - 1,517,811 - - 5,860,182 -

25,508 32,085,381 - 4,659,429 94,630,429 6,046,204

133,301 14,765,161 316,861 115,363 73,475,227 900,466

276,776 276,776 257,345 42,425 932,505 -

3,788,662 20,964,450 2,506,860 - 21,258,933 - - 346,414,997 - - 69,865 -

(2,853,666) (162,524,027) (3,275,658)

1,502,861 315,633,887 705,874 1,502,861 315,633,887 705,874 6,162,290$ 410,264,316$ 6,752,078$

Continued…

Activities GovernmentalActivities --

InternalService Funds

686,221 10,059,874 396,332

29




Fund

PROPRIETARY FUNDS


September 30, 2016

Business-type

Deferred Charges Related to Pensions 3,480,588$ 1,447,706$ 3,575,389$ Deferred Charges on Refunding 2,967,552 - -

Total Deferred Outflows of Resources 6,448,140$ 1,447,706$ 3,575,389$

Current LiabilitiesAccounts Payable 520,205$ 106,889$ 24,178$ Contracts Payable 2,797,604 2,074,538 77,684 Accrued Liabilities

Compensated Absences 469,213 122,179 174,966 Closure Costs Payable - - - Claims and Judgments - - - Other Accrued Liabilities 147,816 62,577 165,535

Due to Other Funds - - - Due to Other Elected Officials 140 44 151 Due to Other Governments 27,851 134,122 46,546 Notes Payable - - - Unearned Revenue 1,920,041 130,394 -

Current Liabilities Payable fromRestricted AssetsCustomer Deposits Payable 1,355,846 - - Interest Payable 825,366 395,726 - Loan - State of Florida 473,763 - - Revenue Bonds Payable 2,705,000 840,000 -

Total Current Liabilities Payable from Restricted Assets

Total Current Liabilities 11,242,845 3,866,469 489,060

DEFERRED OUTFLOWS OF RESOURCES

LIABILITIES

5,359,975 1,235,726 -

Exhibit VII





715,078$ 9,218,761$ 660,069$ - 2,967,552 -

715,078$ 12,186,313$ 660,069$

58,935$ 710,207$ 97,929$ 990,047 5,939,873 37,435

150,009 916,367 1,277,897 357,905 357,905 -

- - 1,364,384 37,116 413,044 33,454

- - 1,020,000 - 335 102

22,030 230,549 8,704 - - -

13,797 2,064,232 8,075

25,508 1,381,354 - - 1,221,092 - - 473,763 - - 3,545,000 -

1,655,347 17,253,721 3,847,980

Continued…

-

30

25,508 6,621,209




Fund

PROPRIETARY FUNDS


September 30, 2016

Business-type

Noncurrent LiabilitiesCompensated Absences 435,221 96,406 85,002 Closure Costs Payable - - - Claims and Judgments - - - Notes Payable

(Net of Unamortized Discounts)Loan- State of Florida

(Net of Unamortized Discounts)Revenue Bonds Payable

(Net of Unamortized Discounts

Other Post Employment Benefits 179,943 49,572 167,224 Net Pension Liability 9,488,091 3,961,003 9,836,548

Total Noncurrent Liabilities 86,018,806 22,782,124 10,088,774 Total Liabilities 97,261,651$ 26,648,593$ 10,577,834$

Deferred Charges Related to Pensions 554,136$ 236,336$ 605,450$

Total Deferred Inflows of Resources 554,136$ 236,336$ 605,450$

Net Investment in Capital Assets 108,737,885$ 112,235,046$ 1,981,081$ Restricted for Debt Service 4,882,378 954,894 - Restricted for Other Purposes - 12,194,458 - Unrestricted (Deficit) 29,733,216 9,956,340 (986,037)

Total Net Postion (Deficit) 143,353,479$ 135,340,738$ 995,044$

- 3,500,000 -

4,424,334 - -

and Premiums)

DEFERRED INFLOWS OF RESOURCES

NET POSITION

71,491,217 15,175,143 -

Exhibit VII





132,507 749,136 79,488 3,668,375 3,668,375 -

- - 2,609,598

38,371 435,110 4,446,331 1,967,310 25,252,952 1,815,976

5,806,563 124,696,267 8,951,393 7,461,910$ 141,949,988$ 12,799,373$

121,090$ 1,517,012$ 111,774$

121,090$ 1,517,012$ 111,774$

1,502,861$ 224,456,873$ 705,874$ - 5,837,272 - - 12,194,458 -

(2,208,493) 36,495,026 (6,204,874)

(705,632)$ 278,983,629$ (5,499,000)$

-

-

-

- 3,500,000

- 4,424,334


31

- 86,666,360




FundOperating RevenuesLicenses and Permits -$ -$ -$ Charges for Services 33,037,831 9,865,161 8,771,416Miscellaneous 524,337 25,605 21,036

Total Operating Revenues 33,562,168 9,890,766 8,792,452

Operating ExpensesPersonal services 6,534,635 2,623,038 6,275,608Contractual Services 3,323,966 2,629,914 463,762Supplies 713,842 490,648 683,309Insurance Premiums and Claims - - -Utilities 1,786,612 862,304 33,825Other Operating Expenses 3,485,386 1,948,371 595,371Depreciation/Amortization 6,823,005 4,110,123 447,262

Total Operating Expenses 22,667,446 12,664,398 8,499,137

Operating Income (Loss) 10,894,722 (2,773,632) 293,315

Nonoperating Revenues (Expenses)Taxes - - 1,122,191Intergovernmental 85,557 175,688 51,034Investment Income (Loss) 408,944 182,784 25,125Other Non-Operating Revenue 440,865 52,492 -Interest Expenses (3,301,015) (1,222,520) -Other Debt Services Costs (1,125) (79,491) -

(26,931) 265 (53,858)

- 3,585,726 -

(2,393,705) 2,694,944 1,144,492

Income (Loss) BeforeContributions and Transfers

Passenger and Customer Facility Charges

Okaloosa County, FloridaSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

PROPRIETARY FUNDSFor the Fiscal Year Ended September 30, 2016

8,501,017 (78,688)

Business-type

Gain/(Loss) on Disposal of Capital Assets

Total nonoperating Revenues (Expenses)

1,437,807

Exhibit VIII



1,790,600$ 1,790,600$ -$ 8,973,897 60,648,305 20,893,101

43,342 614,320 1,119,045

10,807,839 63,053,225 22,012,146

1,921,834 17,355,115 1,931,7366,850,913 13,268,555 450,927

105,295 1,993,094 2,776,411- - 16,393,368

12,836 2,695,577 4,572430,392 6,459,520 337,099262,851 11,643,241 74,771

9,584,121 53,415,102 21,968,884

1,223,718 9,638,123 43,262

- 1,122,191 -143,060 455,339 -

24,340 641,193 26,299- 493,357 607,210- (4,523,535) -- (80,616) -

7,027 (73,497) 50,108

- 3,585,726 -

174,427 1,620,158 683,617

Continued…

32



726,8791,398,145 11,258,281




Fund

Okaloosa County, FloridaSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION


Business-type

Capital Contributions 583,167 7,506,805 21,563Transfers In - - 33,000Transfers Out - - (44,676)

Change in Net Position 9,084,184 7,428,117 1,447,694134,269,295 127,912,621 (452,650)

Total Net Position (Deficit) - Ending 143,353,479$ 135,340,738$ 995,044$

Total Net Position (Deficit)

Exhibit VIII





- 8,111,535 26,168- 33,000 400,000- (44,676) (1,400,000)

1,398,145 19,358,140 (246,953)(2,103,777) 259,625,489 (5,252,047)

(705,632)$ 278,983,629$ (5,499,000)$

33


Water and Sewer

Enterprise FundAirport

Enterprise Fund

EmergencyMedicalServices

Enterprise Fund

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Customers 33,657,246$ 8,642,991$ 7,396,557$ Payments to Suppliers (7,125,012) (7,031,030) (1,751,003) Payments to Employees (3,336,183) (2,474,444) (5,996,001) Payments for Other Revenues 440,865 52,492 -

Net Cash Provided (Used) by Operating Activities 23,636,916 (809,991) (350,447)

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESOperating Subsidy - Taxes - - 1,122,191 Operating Subsidy - Intergovernmental Revenue 85,557 175,688 51,034 Transfers In - - 33,000 Transfers Out - - - Net Interfund Activity - - (44,676) Net Cash Provided (Used) by Non-capital Financing Activities 85,557 175,688 1,161,549

CASH FLOWS FROM CAPITAL AND RELATED FINANCINGACTIVITIESPurchase of Capital Assets (11,997,639) (9,189,716) (1,257,356) Passenger and Customer Facility Charges - 3,585,726 - Proceeds from Disposal of Capital Assets 7,673 26,184 (26,209) Net Borrowing (Repayments)Proceeds from Debt - 3,500,000 - Principal Paid on Capital Debt (5,401,989) (3,299,383) - Interest Paid on Capital Debt (3,461,008) (893,517) - Other Debt Service Costs 149,785 - -

Capital Contributions 583,167 7,506,805 21,563 Net cash provided (used) by capital and related financing activities (20,120,011) 1,236,099 (1,262,002)

Okaloosa County, FloridaSTATEMENT OF CASH FLOWS

Business-type Activities


Exhibit IV



10,847,645$ 60,544,439$ 17,744,039$ (7,067,482) (22,974,527) (21,259,296) (1,871,782) (13,678,410) (1,642,393)

- 493,357 607,210

1,908,381 24,384,859 (377,667)

- 1,122,191 - 164,123 476,402 -

- 33,000 400,000 - - (1,400,000) - (44,676) -

164,123 1,586,917 (1,000,000)

(202,891) (22,647,602) (118,318) - 3,585,726 -

7,027 14,675 40,018

- 3,500,000 - - (8,701,372) - - (4,354,525) - - 149,785 - - 8,111,535 26,168

(195,864) (20,341,778) (52,132)

Continued…

- Enterprise Funds

34

GovernmentalActivities --


Water and Sewer


Enterprise Fund


Enterprise Fund




NET CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Sale and Maturities of Investments 2,078,048 1,461,645 (4,678) Interest Income 398,670 218,716 25,403 Net Cash Provided (Used) by Investing Activities 2,476,718 1,680,361 20,725

6,079,180 2,282,157 (430,175)

Cash and Cash Equivalents - Beginning of Year 30,688,273 14,869,202 2,292,487

Cash and Cash Equivalents - End of Year 36,767,453$ 17,151,359$ 1,862,312$

Cash and Cash Equivalents at End of Year Consist of:Current assets 26,525,100$ 7,559,751$ 1,862,312$ Restricted assets 10,242,353 9,591,608 -

Total 36,767,453$ 17,151,359$ 1,862,312$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating ActivitiesOperating Income (Loss) 10,894,722$ (2,773,632)$ 293,315$

Depreciation/Amortization 6,823,005 4,110,123 447,262 Other revenue 440,865 52,492 - Decrease (Increase) in Assets Accounts Receivable (247,171) (869,178) (1,376,023) Due from Other Elected Officials - - - Due from Other Governments 219,638 (791,617) - Due from Other Funds - - - Inventories 75,403 (17,574) - Prepaid Expenses 26,543 1,128 (2,977) Deferred Outflows 720,508 (930,416) (2,282,158)

Net Increase (Decrease) in Cash and Cash Equivalents

Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities

Exhibit IV



- Enterprise FundsGovernmentalActivities --


(4,903) 3,530,112 (6,383) 24,355 667,144 23,961 19,452 4,197,256 17,578

1,896,092 9,827,254 (1,412,221)

1,381,289 49,231,251 6,133,035

3,277,381$ 59,058,505$ 4,720,814$

3,251,873$ 39,199,036$ 4,720,814$ 25,508 19,859,469 -

3,277,381$ 59,058,505$ 4,720,814$

1,223,718$ 9,638,123$ 43,262$

262,851 11,643,241 74,771 - 493,357 607,210

51,748 (2,440,624) (367,027) 2,546 2,546 106

- (571,979) 310,313 - - (48,310) - 57,829 4,382 - 24,694 (421,319)

(456,432) (2,948,498) -

Continued…

35

Water and Sewer


Enterprise Fund


Enterprise Fund




Adjustments to Reconcile Operating Income to Net CashProvided (Used) by Operating Activities - ContinuedIncrease (Decrease) in Liabilities Accounts Payable 147,431 12,512 4,558 Service Contracts Payable 1,939,860 (232,253) 29,572 Due to Other Funds 26 - - Due to Other Elected Officials 103 (236) 76 Due to Other Governments (4,572) (382,141) (5,965) Compensated Absences Payable (80,067) (3,008) (38,918) Closure Cost Payable - - - Claims and Judgments Payable - - - Other Accrued Liabilities (101,387) (19,137) (100,267) Deposits 17,521 - - Unearned Revenue 105,090 (68,209) (19,872) Other Post Employment Benefits 30,048 12,442 30,517 Net Pension Liability 3,377,174 1,398,360 3,429,941 Deferred Inflows (747,824) (309,647) (759,508) Total Adjustments 12,742,194 1,963,641 (643,762)

Net Cash Provided (Used) by Operating Activities 23,636,916$ (809,991)$ (350,447)$

SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS:Amortization of Loan Costs and Refunding Losses 304,651$ -$ -$

Exhibit IV





41,971 206,472 (8,490) 611,743 2,348,922 (823,616)

- 26 (380,000) (118) (175) (87)

(26,814) (419,492) 1,872 873 (121,120) 48,602

(297,374) (297,374) - - - (163,923)

(34,578) (255,369) (18,177) - 17,521 -

(11,942) 5,067 (2,602) 6,103 79,110 272,365

685,987 8,891,462 633,219 (151,901) (1,968,880) (140,218) 684,663 14,746,736 (420,929)

1,908,381$ 24,384,859$ (377,667)$

-$ 304,651$ -$

36


Exhibit X

Agency Funds

Cash and Cash Equivalents 7,805,993$ Accounts Receivable 10,177 Due from Other Funds 690 Due from Other Elected Officials 370

Total Assets 7,817,230

Due to Other Funds 24,157$ Due to Other Elected Officials 145,214 Due to Other Governments 735,371 Due to Depositors 5,021,394 Taxes Collected in Advance for Other Governments 1,891,094

Total Liabilities 7,817,230

NET POSITION -$

September 30, 2016

Okaloosa County, FloridaSTATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

37


ASSETS

LIABILITIES

Okaloosa County, Florida NOTES TO FINANCIAL STATEMENTS

Fiscal Year Ended September 30, 2016

38

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of Okaloosa County, Florida (hereinafter referred to as County) have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. The County uses the Uniform Accounting System mandated by Chapter 218.33, Florida Statutes.

The following is a summary of the more significant accounting policies of the County.

A. The Reporting Entity

Okaloosa County is a political subdivision of the State of Florida, governed by a five member Board of County Commissioners, each elected by the citizenry at large for four-year terms. The Board has no powers other than those expressly vested in it by State Statute and their governmental powers cannot be delegated. In addition, the Clerk of the Circuit Court, Sheriff, Tax Collector, Property Appraiser and Supervisor of Elections are elected by the citizenry at-large and function independently of the Board.

As required by accounting principles generally accepted in the United States of America, these financial statements present the Board of County Commissioners of Okaloosa County (the primary government). In evaluating the Board as a reporting entity, management has considered all potential component units for which the Board may or may not be financially accountable and, as such, be included within the Board's financial statements. Management utilized criteria set forth in GASB No. 61 for determining financial accountability of potential component units in evaluating all potential component units. In accordance with GASB No. 61, the Board (primary government) is financially accountable if it appoints a voting majority of the potential component unit's governing board and 1) it is able to impose its will on the organization or 2) there is a potential for the organization to provide specific financial benefit to or impose specific financial burden on the Board. In addition, component units can be other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The Board evaluated the Emerald Coast Bridge Authority (authority) in accordance with GASB No. 61. The Authority has been dormant for several years. The Board does not believe it is financially accountable with respect to the Authority or that financial burden relationship exists based on an evaluation of GASB No. 61. As such, the Authority is not included as part of the Board’s reporting entity.

B. Government-Wide and Fund Financial Statements

1. Government-Wide Statements The government-wide financial statements include the statement of net position and the statement of

activities. These statements display information on all of the non-fiduciary activities of the primary government and its component unit. The primary government and the component unit are reported separately with the focus of the statements being the primary government. Individual funds are not displayed. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other non-exchange transactions, are reported separately from business-type activities,which rely to a significant extent on fees and charges for support.

The statement of activities presents a comparison between direct expenses and program revenues for each function of the County’s governmental activities and for the different business-type activities of the County. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to report the expenses and program revenues associated with a



39

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

B. Government-Wide and Fund Financial Statements - Continued

1. Government-Wide Statements - Continued distinct functional activity. Direct expenses are those that are clearly identifiable with a specific function or segment. The County does not allocate indirect expenses to functions in the statement of activities.

Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by the programs of the County and 2) grants and contributions that are restricted to meeting the operational activities or the construction, acquisition, or rehabilitation of capital assets required by a particular program. These revenues are subject to externally imposed restrictions to these program uses. The determining factor for identifying to which function program revenue pertains is which function generated the revenue in the case of charges for service. For grants and contributions, the determining factor is to which function the revenues are restricted.

Taxes and other items not properly included among program revenues are reported instead as general revenues of the County. The comparison of direct expense with program revenues in the statement of activities identifies the extent to which each governmental function and each business activity is self-financing and how much they draw from the general revenues of the County.

2. Fund Financial Statements During the year, transactions related to certain functions or activities are segregated into separate funds in order to aid financial management and to demonstrate legal compliance. A fund is a fiscal and accounting entity with a self-balancing set of accounts. The fund financial statements are designed to present detail information about the County’s financial activities. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

1. Exchange and Non-exchange Transactions Exchange transactions are those in which each party receives and gives up essentially equal values.

An example of an exchange transaction is a charge for service, rent, in exchange for a specific service, use of a County building. Non-exchange transactions are those in which the County gives (or receives) value without directly receiving (or giving) equal value in exchange. An example of a non-exchange transaction is property tax revenue received by the County which is used to fund various general governmental services. The revenue from these exchange and non-exchange transactions is recognized in the financial statements in varying ways depending on the basis of accounting used.

2. Government-Wide and Fiduciary Fund Financial Statements

The government-wide financial statements are reported using the economic resources measurement focus. All assets and all liabilities associated with the operation of the County are included on the statement of net position. The statement of activities reports all revenues and expenses. Fiduciary funds are excluded from the government-wide financial statements. The statement of fiduciary assets and liabilities reports all assets and liabilities associated with the agency funds of the County. Agency funds are the only type of fiduciary fund used by the County.



40


C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation - Continued

2. Government-Wide and Fiduciary Fund Financial Statements - ContinuedGovernment-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The agency funds of the County use the accrual basis of accounting to recognize the receivables and payables recorded in those funds.

The effect of interfund activity has been eliminated from the government-wide financial statements except for interfund services provided and used. Elimination of those charges would distort the direct costs and program revenues reported for the various functions concerned on the statement of activities.

3. Governmental Fund Financial Statements

All governmental funds are accounted for using a flow of current financial resources measurementfocus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the government-wide financial statements are prepared. Governmental fund financial statements therefore include reconciliations with brief explanations to better identify the relationship between the government-wide statements and the governmental fund statements.

Governmental fund financial statements are reported using the modified accrual basis of accounting.Under this method, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Those revenues susceptible to accrual are sales tax, gasoline taxes and other intergovernmental revenues collected and held by the state at year end on behalf of the County, special assessments, licenses, interest revenue and charges for service. Current year property taxes uncollected at the end of the fiscal year are generally immaterial in amount and highly susceptible to uncollectibility and are not recorded as a receivable on the balance sheet. All other revenue items are considered to be measurable and available only when the government receives cash.

Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made in the following year. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

4. Proprietary Fund Financial Statements The proprietary fund financial statements are reported using the economic resources measurement

focus. Under this measurement focus, all assets and all liabilities associated with the operation of the fund are included on the balance sheet. The statement of revenue, expenses and changes in equity reports revenues and expenses. The proprietary funds are reported using the accrual basis of



41


C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation – Continued

4. Proprietary Fund Financial Statements - Continued accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are

incurred, regardless of when the related cash flows take place.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. The principal operating revenues for the proprietary funds are fees and charges for water and sewer, airports, solid waste, inspection services, emergency medical services, convention center, self-insurance, compensated absence debt service and fleet internal service operations. Operating expenses for the enterprise funds, and the internal service funds, include the cost of sales and services, administrative expenses and depreciation of capital assets.

Non-operating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. They include property taxes, grants, entitlements, donations and capital contributions. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Contributions of capital in proprietary fund financial statements arise from internal and external contributions of capital assets or from grants or outside contribution of resources restricted to capital acquisition and construction.

5. Other Financial Statement Presentation Information The County currently employs an indirect allocation system. An administrative service fee is charged

by the General Fund, at the direction of the Board of County Commissioners, to several special revenue and enterprise funds to address General Fund services (finance, personnel, purchasing, legal, technology management, etc.) provided.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. An exception to this general rule is the charge back of services, such as insurance costs, vehicle maintenance, and central costs. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

The County reports the following major governmental funds:

General Fund This is the County’s primary operating fund. It accounts for all financial resources of the

general government, except those required to be accounted for in another fund. Tourist Development Special Revenue Fund

This fund is used to account for funds received from imposition of the 5% tourist development tax for the purpose of improving Okaloosa County’s tourist industry as authorized by 125.0104, F.S., and Okaloosa County Ordinance No. 89-23 as amended by 91-20, 92-52, 95-10, 99-07, 07-58, 12-21, 13-19, 13-20, 14-08, and 16-13.



42


C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation – Continued

5. Other Financial Statement Presentation Information – Continued

Capital Outlay Constructions Trust Fund This fund is used to account for proceeds of bond issues, federal and state grants, and local

appropriations for major capital projects. At the end of the fiscal year, completed projects are capitalized and reported on the government-wide financial statements of Okaloosa County, Florida.

The County reports the following major enterprise funds:

Water and Sewer Enterprise Fund This fund is used to account for the user charges and expenses associated with the provision of

water and sewer services to residents of the unincorporated areas of Okaloosa County. Airport Enterprise Fund

This fund is used to account for the operation of three Okaloosa County airports. Revenue sources include federal and state grants, fees from concessionaires and other fees and charges for services to tenants and airport users.

Emergency Medical Services Fund This fund is used to account for the operation of a county-wide emergency medical technician

and paramedic service. Revenue sources include ad valorem property tax subsidy, user charges, and private donations.

The County reports the following fund types: Internal Service Funds

These funds account for insurance coverage (including other post-employment benefits for retirees), fleet management services, and funding of compensated absence debt provided to other departments or agencies of the government, or to other governments, on a cost reimbursement basis.

Agency Funds These funds account for monies held on behalf of individuals and companies that use the

County as a depository; property taxes, fines, court costs, licenses and fees collected on behalf of other governments; and surety bonds and performance deposits.

D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Balance 1. Deposits and Investments

Sections 28.33, 218.415, and 219.075, Florida Statutes, require the investment of surplus public funds and prescribe the instruments in which those investments are authorized, specifically the State of Florida Local Government Surplus Funds Trust Fund; SEC registered money market funds with the highest credit quality rating; interest-bearing time deposits or savings accounts in qualified public depositories as defined in s. 280.02; direct obligations of the United States Treasury, federal agencies and instrumentalities; and securities of or other interest in certain investment companies or investment trusts the portfolio of which is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such obligations. Because the County has adopted written investment policies as provided in subsection (1) through (15) of s. 218.415, other investments may be authorized by resolution or ordinance. Currently authorized are investments in term repurchase agreements with primary broker/dealers collateralized in the County’s name by securities of the United States Government or any agency or instrumentality thereof; overnight repurchase agreements with collateral held by the custodian bank or its trust



43


D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Balance - Continued

1. Deposits and Investments - Continueddepartment; tax exempt bonds, notes or obligations rated in the two highest classifications; inventory-based domestic bankers’ acceptances eligible to qualify for use as collateral at the Federal Reserve Bank; SEC registered open-end mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities; and Florida Local Government Investment Trust. The County adheres strictly to the provisions of those cited Statutes and investments authorized by resolution or ordinance, as well as with Chapter 517, Florida Statutes, which establishes registration procedures for securities and dealers.

The Board of County Commissioners maintains a cash and investment pool available for use by all funds of the Board. Earnings from such investments are allocated to the respective funds based on applicable cash participation by each fund. In addition, certificates of deposits, money market accounts and debt securities can be separately maintained by several Board funds. Other elected officials maintain similar pooled cash accounts or individual cash accounts through which their office activities are managed.

Each fund’s portion of the pooled cash and individual deposit type investments are displayed on the balance sheet as “cash and cash equivalents.” For purposes of these statements, all highly liquid investments (including restricted assets) with maturity of ninety days or less when purchased are considered to be cash equivalents.

The Day to Day fund is a “2a-7 like” fund. The fund is carried at amortized cost, which includes accrued income and is a method of calculating an investment’s value by adjusting its acquisition cost for amortization of discount or premium over the period from purchase to maturity. Thus, the value in the fund approximates fair value. A “2a-7 like” fund is not registered with the SEC as an investment company but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a-7 of the Investment Company Act of 1940, which comprises the rules governing money market funds. The Day to Day fund is reported at fair value, determined by the fair value per share of the pool’s underlying portfolio.

Unlike the Day to Day fund, the Short-Term Bond fund is accounted for as a fluctuating Net Asset Value (NAV) pool, not a “2a-7 like” money market fund. Accounting valuations reflect estimates of the market value of the securities rather than their amortized cost. Securities listed on generally recognized securities exchanges are valued at the last sales price as reported by such exchanges on the date of valuation. If no sale has been reported, the securities are valued at the average of the bid and ask price for the date of valuation. If neither a sale nor bid and ask price have been reported, then the most recent sales price is used. Securities not listed on generally recognized securities exchanges are valued at the most recent published bid quotation if market quotations are available. Other investments are valued based on quotations obtained from one or more recognized broker/dealers regularly dealing in such securities.

The fair value of investments of both the Short-Term Bond Fund and Day to Day Fund is determined on a daily basis.

U.S. Treasury and agency obligations with maturities of one year or less when purchased are reported on the balance sheet at their amortized cost. Nonparticipating investment contracts, generally certificates of deposit, are reported at cost. All other investments are reported at fair value. The State



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED


1. Deposits and Investments - Continued of Florida provides regulatory oversight for the external investment pools in which the County invests.

The pools either meet the “2A-7 like” criteria of GASB 31 or value investments at fair value. Therefore, fair value of the position in these pools is the same as the value of the pool shares.

The County maintains a cash and investment management pool in which each fund participates on a dollar equivalent and daily transaction basis. The County’s cash and investment management pool is considered to be cash equivalent for reporting purposes because it is an internally managed fund, which allows individual funds to, at any time, deposit additional cash or make withdrawals without prior notice or penalty. The County’s cash and investment management pool includes pooled cash maintained in interest-bearing demand deposit accounts, certificates of deposit, and pooled investments of the Local Government Surplus Trust Fund. Interest income (which includes unrealized gains and losses) is distributed monthly based on balance at date of distribution.

2. Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods

provided or services rendered. These receivables and payables are classified as “due from other funds or elected officials” or “due to other funds or elected officials” on the fund statement balance sheets. Short-term interfund loans are also classified as “interfund receivables/payables.” Non-current portions of long-term interfund loan receivables are reported as advances and are offset equally by a non-spendable fund balance account that indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

The Emergency Medical Services Enterprise, Airport, and Water and Sewer Enterprise Funds are the only funds of Okaloosa County that provide for an allowance for doubtful accounts for trade accounts receivables. All other funds accounts receivable write offs are insignificant.

Property taxes attach as an enforceable lien on property as of the date of assessment and remain in effect until discharge by payment. Taxes are payable when levied (on November 1, or as soon thereafter as the assessment roll becomes available to the Tax Collector). The County bills and collects its own property taxes, as well as taxes for the County School District and taxes for municipalities and special districts within the County in accordance with the laws of the State of Florida. No accrual has been made for 2015 ad valorem taxes because property taxes are not legally due until subsequent to the end of the fiscal year. Collection of taxes and remittance of them to other governmental agencies are accounted for in the Disbursements Agency Fund of the Tax Collector.

The following is the current property tax calendar.

Lien Date January 1, 2016 Levy Date November 1, 2016 Due Date November 1, 2016 Delinquent Date April 1, 2017

Discounts of 1% for each month taxes are paid prior to March 2017 are granted.

Revenue recognition criteria for property taxes under the Governmental Accounting Standards Board requires that property taxes expected to be collected within 60 days of the current period be accrued.



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED


2. Receivables and Payables - Continued Current year taxes that are uncollected as of the end of the fiscal year are generally immaterial in

amount and highly susceptible to uncollectibility and, therefore, are not recorded as a receivable on the balance sheet date.

3. Inventories and Prepaid Items Inventory is valued at cost (first-in, first-out) in the governmental funds and at lower of cost (first-in,

first-out) or market in the proprietary funds. The consumption method is used to account for the inventory. Under the consumption method, inventory items are recorded as expenditures during the period inventory is used.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The consumption method is used to account for the prepaid items. Under the consumption method, prepaid items are recorded as expenditures during the period in which they are used.

4. Restricted Assets Certain proceeds of the Water and Sewer System Enterprise Fund revenue bonds, the Airport Enterprise Fund revenue bonds, and the Governmental Sales Tax Revenue Bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. In addition, restricted assets include funds set aside for repayment of customer deposits in several enterprise funds.

5. Capital Assets Capital assets are not capitalized in the governmental funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in governmental funds, and the related assets are reported on the government-wide statement of net position of Okaloosa County. Capital assets acquired by proprietary funds are reported in those funds.

Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. The County’s capitalization levels are $1,000 on tangible personal property and $5,000 on buildings, improvements other than buildings and infrastructure. The Sheriff maintains a tangible personal property inventory and uses a $1,000 capitalization level. Other costs incurred for repairs and maintenance are expensed as incurred. General infrastructure assets acquired prior to July 1, 1980 are included in the capital asset inventory and are reported at estimated historical cost using deflated replacement cost.

Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives:

Assets YearsBuildings 10-50

Improvements Other Than Buildings 7-25Intangibles 5Equipment 3-7Vehicles 2-15

Roads and Bridges 10-75Wastewater Lines and Pump Stations 10-50

Other Infrastructure 10-50



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D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Balance – Continued

6. Compensated Absences The liability for compensated absences reported in the government-wide and proprietary fund

statements consists of unpaid, accumulated annual and sick leave or compensatory time balances. The liability is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds financial statements only if they have matured, for example, as a result of employee resignations and retirements.

7. Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities and long-term obligations are reported in the government-wide

financial statements and the proprietary fund financial statements.

In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of these funds. However, compensated absences and claims that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they are “due for payment” during the current year. Bonds and capital leases are recognized as a liability in the governmental fund financial statements when due. At the inception of capital leases reported in governmental funds, expenditures and an “Other Financing Source” of an equal amount are reported at the net present value of future minimum lease payments.

8. Self-insurance Claims Liabilities for reported claims and incurred but not reported claims (IBNR) are estimated based on an actuarial review of claims pending and historical experience.

9. Landfill Closure and Post Closure Care Payable The County recognizes municipal solid waste landfill closure and post closure care costs under the State of Florida’s Solid Waste Management Act of 1988, regulations of the Federal Environmental Protection agency and the GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Post Closure Care Costs. The County is required to place a final cover on closed landfills and to provide long-term care for up to thirty years after final cover. These obligations for closure and post closure are recognized in the Solid Waste Fund over the active life of the landfill, based on landfill capacity used to date.

10. Net Pension Liability For purposes of measuring the net pension liability, deferred outflows/inflows of resources related to

pensions, and pension expense, information about the fiduciary net position of the Florida Retirement System (FRS) and Health Insurance Subsidy (HIS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by FRS. For this purpose, benefit payments (including refunds of employee contributions, if any) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

11. Bond Premiums, Discounts and Issuance CostsOn the government-wide statement of net position and the proprietary fund type statement of net position, bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Unamortized losses on bonds are presented as deferred outflows.



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11. Bond Premiums, Discounts and Issuance Costs - Continued In the fund financial statements, governmental fund types recognize bond premiums and discounts,

as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

12. Deferred Outflows/Inflows of Resources In addition to assets, deferred outflows of resources represent a consumption of fund balance that

applies to a future period(s) and will not be recognized as an outflow of resources (expenditure) until then. The Board has $2,967,552 of deferred outflows on Water and Sewer, Series 2015 bonds, and $37,527,489 of deferred outflows for pension as of September 30, 2016.

In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The Board has $2,881,673 of deferred inflows for pension as of September 30, 2016.

No other such material items were applicable to the County as of September 30, 2016.

13. Fund Balance In the fund financial statements, GASB Statement 54 establishes fund balance classifications that

comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed up on the use of the resources reported in governmental funds. Fund balance classifications under GASB 54 are nonspendable, 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.

Nonspendable – Comprised of amounts that are (a) not in spendable form or (b) legally or contractually required to be maintained intact. “Not in spendable form” includes items that are not expected to be converted to cash (such as inventories and prepaid amounts) and items such as long-term amount of loans and notes receivable, as well as property acquired for resale. The corpus (or principal) of a permanent fund is an example of an amount that is legally or contractually required to be maintained intact.

Restricted – Component consists of amounts constrained for a specific purpose by external parties, constitutional provision, or enabling legislation.

Committed – Component consists of amounts that can be used only for the specific purposes

determined by a formal action, in the form of ordinances, of the Board, the highest level of decision making authority. Commitments may be changed or lifted only by the board taking the same formal

action that imposed the constraint originally.

Assigned – Component consists of amounts that are constrained by the County’s intent to be used for specific purposes, but are neither restricted nor committed. Intent is expressed by (a) the Board of County Commissioners or (b) a body (for example: a budget or finance committee) or official to which the County has delegated the authority to assign amounts to be used for specific purposes. This indicates that resources in those funds are at a minimum, intended to be used for the purposes of that



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13. Fund Balance – Continued fund. The Board has delegated to the County Administrator and Finance Officer in accordance with

the County’s fund balance policy.

Unassigned – Unassigned fund balance is the residual classification of the general fund. This classification represents spendable fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes.

When both restricted and unrestricted resources are available for use, it is the policy of the Board to use restricted resources first, and then unrestricted resources as they are needed. In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. The County does not have a formal minimum fund balance policy. However, the Board does target 10% of the General Fund budget to set aside for reserves during the annual Budget Policy meeting.

14. Estimates The preparation of financial statements in conformity with 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.

15. Net Position The net positions of proprietary funds, governmental activities and business-type activities are made

up of three components. Net Investment in Capital Assets which represents net capital assets less related long-term liabilities; unspent debt proceeds will increase this amount. The Restricted component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. The restricted component represents assets that are legally restricted. They include reserve funds, special revenues restricted by statute or ordinance, bond proceeds, and other sources restricted for capital or improvements. The unrestricted component of net position is the balance not included in the determination of net investment in capital assets or the restricted component of net position.

NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

A. BUDGETARY INFORMATION

Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for all governmental and proprietary funds; however, budgets for proprietary funds are not required to be reported on and are not included in these financial statements. All appropriations lapse at fiscal year-end. Budgetary data reflected in the financial statements are established by the following Board procedures.

On or about June 1 of each year, proposed budgets are received by the Board of County Commissioners from its department heads, from all other constitutional officers, and from other agencies requesting funding for the ensuing fiscal year. These proposed expenditures, along with all estimated receipts, taxes to be levied,



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NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED

A. BUDGETARY INFORMATION - CONTINUED

and balances expected to be brought forward are considered by the Board of County Commissioners in a series of workshops beginning on or after July 15. The Board of County Commissioners requires such changes as deemed necessary, sets proposed millages and establishes dates for tentative and final public budget hearings as prescribed by Florida Statutes. Proposed budgets are advertised in a newspaper of general circulation in the County. Public hearings are conducted in Crestview and Shalimar for the purpose of receiving input, responding to complaints and providing reasons and explanations for intended actions to all citizens participating.

In the event the final budget has not been adopted by October 1, the beginning of the fiscal year, Florida Statutes provide for expenditures based on the adopted tentative budget or the Board re-adopts its prior year’s adopted final budget, as amended, and expends monies based on that budget until such time as its tentative budget is adopted pursuant to law. The final appropriations budget is adopted by resolution of the Board of County Commissioners.

Florida Statutes require that the individual budgets of several of the constitutional officers must be approved by the State of Florida. The “fee” portion of these budgets is not a part of the appropriations budget passed by the Board of County Commissioners. The budgetary information shown in these financial statements includes the entire budget for each constitutional office. The level of budgetary control (that is the level at which expenditures cannot legally exceed appropriations) has been established at the fund level. The County Administrator is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must approve any revisions that alter the total expenditures of any fund. Each constitutional officer is authorized to make line item transfers but must request approval from the Board for increases in appropriations.

Budget amounts are originally adopted amounts as amended by action of the Board of County Commissioners by revision of fund totals. Supplemental budgetary appropriations of $95,612,795 representing a 31.92% increase over the original adopted budget were necessary during the fiscal year. All amendments to originally adopted amounts were made in a legally permissible manner.

Encumbrance accounting, under which purchase orders, encumber contracts and other commitments for the expenditure of resources are recorded in order to reserve that portion of the applicable appropriation, is employed in the governmental funds. Encumbrances at fiscal year-end do not constitute expenditures since the commitments will be honored during the subsequent year.

B. DEFICIT FUND BALANCE/NET POSITION

The Debt Service Fund reported a deficit fund balance of $2,649,542 as of September 30, 2016. This is a result of advance payment of debt due October 1, 2016. The deficit will be cured by FY2016- 2017 budgeted revenue from State Revenue Sharing Proceeds and budgeted transfers from the Tourist Development Special Revenue Fund and Additional Court Cost Special Revenue Fund.

The Solid Waste Enterprise Fund reported deficit net position of $841,910 as of September 30, 2016. The deficit is caused by changes in reporting closure costs and long-term care costs for the solid waste landfills of the County and implementation of GASB 68, Accounting and financial Reporting for Pensions – an amendment to Statement No. 27. Further description of these costs and methods of funding them are discussed in Note 8.



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NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY – CONTINUED

B. DEFICIT FUND BALANCE/NET POSITION - CONTINUED

The Self Insurance Internal Service Fund reported deficit net position of $2,093,932. Claim liabilities for workers’ compensation, general and automobile liabilities and property damage are funded by actuarially projected budget requirements for expected yearly cash payouts. This funding method results in a deficit fund equity which will be charged back to the other funds over a reasonable period of time so that service fund revenues and expenses will be equal. Additionally, the implementation of GASB 68, Accounting and financial Reporting for Pensions – an amendment to Statement No. 27, contributed to the deficit.

The Garage Services Internal Service Fund reported a deficit net position of $976,919. Vehicle maintenance and centralized distribution of gasoline and special fuel are funded by monthly billing of services. This funding method results in a deficit fund equity which will be charged back to the other funds so that service fund revenues and expenses will be equal. The deficit is caused by implementation of GASB 68, Accounting and financial Reporting for Pensions – an amendment to Statement No. 27 contributed to the deficit.

The Sheriff’s Self-Insurance Fund is reflecting a deficit net position of $2,428,151. This is the result of the implementation of GASB 45 which requires the unfunded liability for future employee benefits (OPEB) to be recorded at September 30, 2016.

NOTE 3 – DEPOSITS AND INVESTMENTS

At September 30, 2016, the County’s carrying value of cash and cash equivalents totaled $141,373,835, which is presented as $133,567,842 in the statement of net position and $7,805,993 in the statement of fiduciary net position.

The County maintains a cash and investment management pool in which each fund participates on a dollar equivalent and daily transaction basis. The County’s cash and investment management pool is considered to be cash equivalent for reporting purposes because it is an internally managed fund, which allows individual funds to, at any time, deposit additional cash or make withdrawals without prior notice or penalty. The County’s cash and investment management pool includes pooled cash maintained in interest-bearing demand

deposit accounts, certificates of deposit, and pooled investments of the Local Government Surplus Trust Fund. Interest income (which includes unrealized gains and losses) is distributed monthly based on balance at date of distribution.

Custodial Credit Risk. The County maintains its deposits only with qualified public depositories as defined in Chapter 280, Florida Statutes. The provisions of this statute generally require public funds to be deposited in a bank or savings association designated by the State Chief Financial Officer as a “Qualified Public Depository”. All qualified public depositories must maintain deposit insurance. They also must place with or in the name of the Chief Financial Officer of the State of Florida, collateral in the amount of the greater of the average daily balance of public deposits multiplied by the average monthly balance of public deposits or 125 percent of the average daily balance of public deposits greater than capital. Collateral requirements may be increased according to statute if specified conditions exist. Eligible collateral includes federal, federally-guaranteed, state and local government obligations and corporate bonds. In the event of default by a qualified public depository excess losses over insurance and collateral will be recovered through assessments to all qualified public depositories of the same type as the depository in default. Under this method, all County deposits, including certificates of deposit, are considered fully insured.

The County’s cash deposits are held by banks that qualify as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. At September 30, 2016, the carrying amount of the County’s cash deposits totaled $7,799,523, cash in money market funds totaled $4,450,629, the County’s investment in the Florida Local Government Investment Trust totaled $107,618,153, and the County’s investment in the State Board Local Government Surplus Trust Fund totaled $21,505,530.



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NOTE 3 – DEPOSITS AND INVESTMENTS – CONTINUED

Investments State Statutes and the formal investments and portfolio policies adopted by the Board of County Commissioners restrict the types of investments that can be made by the County. A description of the requirements and the types of investments allowed as well as information about valuation and other investment policies can be found in Note 1.D.1.

The investment policy manual details the methods used to manage the risks inherent to the investment process. The authority for investment of County funds rests with the Clerk of the Circuit Court who has delegated management of the investment program to the Finance Director. Investments can only be made by majority vote of the investment committee appointed by the Clerk. Although the policies allow investments in many types of instruments, the investment committee has chosen to limit investment risks by investing mainly in allowed investment pools. The pools are 2a7-like investment pools and manage interest rate risk by limiting the weighted average maturity of their portfolios, manage credit risk by investing in mainly governmental and other highly rated securities, manage concentration of credit risk by limiting investment in any one issuer to less than 5% of the portfolio and manage custodial credit risk by requiring collateral for investments held by counterparties.

Interest rate risk. In accordance with the investment policy, the exposure to declines in fair value of investments outside of the pools is managed by matching the investments to a specific cash flow requirement.

Credit risk. As of September 30, 2016, Standard & Poor’s rated the investment in Florida Local Government Investment Trust investment pool AAAf, Florida Local Government Investment Day to Day AAAm, and Florida Local Government Surplus Fund Trust AAAm. As of September 30, 2016, all U.S. Instrumentalities held by the County were rated AAA. The investment policies of the County manage credit risk by limiting investments in U. S. Instrumentalities to the two highest ratings issued by nationally recognized statistical rating organization.

Concentration of credit risk. The investment policies of the County diversify the portfolio by limiting the maximum percentage of various types of investments that can be purchased. The investment policy maximum percentages for the current portfolio are 50% for U.S. agencies and instrumentalities and 50% for repurchase agreements. More than 5% of the County’s investments are in the Federal Home Loan Bank, Federal National Mortgage Association, and Government National Mortgage Association. These investments are 1%, 29%, and 1% respectively, of the County’s total investments.

Custodial credit risk. STI Classic Institutional Cash Management, U.S. Treasury bills, and U.S. instrumentalities are held by the County’s agent in the County’s name in accordance with the Okaloosa County Investment Policy requiring third party custody and safekeeping.

The County had the following investment types by issuer and effective duration presented in terms of years:

Security Type Fair ValueWeighted Average

Duration (Years)CreditRating

Percentageof Portfolio

Long Term Investments:United States Treasury Securities 13,319,546$ 0.523 AAA 31.00% Total long term investments 13,319,546 31.00%

Total Fair Value 13,319,546$ 31.00%

Portfolio Weighted Average Duration 0.523



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NOTE 4 – FAIR VALUE OF INVESTMENTS

The County measures and records its investments using fair value measurements guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarch as follow:

Level 1 – Quoted prices (unadjusted) for identical assets in active markets that a government can access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for an asset, either directly or indirectly.

Level 3 – Unobservable inputs for an asset.

Okaloosa County has the following recurring fair value measurements as of September 30, 2016.

Short-Term Bond Fund- FLGIT – Maximum of 75% of the total investment portfolio. Valued at the daily closing price as reported by the fund. These funds are required to publish their daily net asset value (NAV) and to transact at that price. These funds held by FLGIT are deemed to be actively traded.

US Treasuries/Agencies/Instrumentalities – Maximum of 75% of the total investment portfolio. Valued at market prices for similar assets in active markets.

At September 30, 2016, Okaloosa County had the following recurring fair value measurements.

Fair Value Level 1 Level 2 Level 3Investments by fair value levelFederal Home Loan Bank 492,578$ -$ 492,578$ -$ Federal National Mortgage Assoc. 12,197,322 - 12,197,322 - Government National Mortgage Assoc. 629,646 - 629,646 - Total investments 13,319,546$ -$ 13,319,546$ -$

Investments measured at the net asset value (NAV)Florida Local Government Investment Trust investment pool 29,251,809$ Total investments measured at NAV 29,251,809 Total investment measured at fair value 42,571,355$



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NOTE 5 – RECEIVABLES / UNEARNED AND UNAVAILABLE REVENUE

Receivables as of September 30, 2016 for the government’s individual major funds and nonmajor, internal service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:

Due From Less: Net TotalAccounts Other Total Allowance for Receivables

Funds Receivable Governments Receivables Doubtful Accounts Sept. 30, 2016General 257,311$ 5,090,684$ 5,347,995$ -$ 5,347,995$ Tourist Development 3,363,682 73,710 3,437,392 - 3,437,392 Capital Outlay 323 - 323 - 323 Water and Sewer 3,097,917 91,812 3,189,729 (256,072) 2,933,657 Airport 2,194,191 2,945,560 5,139,751 (408,101) 4,731,650 Emergency Medical Services 9,882,202 - 9,882,202 (5,136,484) 4,745,718 Nonmajor and Other Funds 1,094,760 2,858,536 3,953,296 - 3,953,296 Total 19,890,386$ 11,060,302$ 30,950,688$ (5,800,657)$ 25,150,031$

Governmental funds report unavailable revenue in connection with receivables that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources received, but not yet earned. At September 30, 2016, the various components of unearned/unavailable revenue were as follows:

UnearnedGeneral Fund Grant Revenue 435,400$ Other 25,652 Tourist Development Event Revenue 48,060 Nonmajor Funds Grant Revenue 1,453,552 Other 526,429 Total unearned/unavailable revenue for governmental funds 2,489,093$



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NOTE 6 – CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2016 was as follows:

Beginning Transfers and EndingBalance Increases Decreases Adjustments Balance

Governmental activities:Capital assets, not being depreciated/amortized:Land 11,558,076$ 245,829$ -$ -$ 11,803,905$Intangibles 1,146,905 - - - 1,146,905 Construction in progress 15,701,058 3,073,800 - (14,026,453) 4,748,405 Works of Art 29,195 - - - 29,195 Total capital assets, not being depreciated/amortized 28,435,234 3,319,629 - (14,026,453) 17,728,410

Capital assets, being depreciated/amortized:Buildings 95,815,887 1,254,419 (160,085) 12,538,941 109,449,162Improvements other than buildings 35,748,056 423,360 - 626,447 36,797,863 Intangibles 2,016,748 190,007 - - 2,206,755 Machinery and equipment 52,039,030 6,012,975 (4,961,431) 1,394,652 54,485,226 Machinery and equipment under - - capital lease - - - - - Infrastructure 151,000,644 2,623,533 - 848,601 154,472,778Total capital assets being depreciated/amortized 336,620,365 10,504,294 (5,121,516) 15,408,641 357,411,784

Less accumulated depreciation/amortization for:Buildings (32,522,627) (2,803,591) 5,336 - (35,320,882)Improvements other than buildings (11,025,404) (975,870) - 1,933 (11,999,341)Intangibles (1,794,000) (86,912) - - (1,880,912) Machinery and equipment (40,834,072) (3,948,498) 4,643,494 (1,140,187) (41,279,263)Infrastructure (84,895,634) (2,143,201) - - (87,038,835)Total accumulated depreciation/amortization (171,071,737) (9,958,072) 4,648,830 (1,138,254) (177,519,233)

Total capital assets, being depreciated/amortized, net 165,548,628 546,222 (472,686) 14,270,387 179,892,551

Governmental activities capital assets, net 193,983,862$ 3,865,851$ (472,686)$ 243,934$ 197,620,961$

Business-type activitiesCapital assets, not being depreciated/amortized:Land 13,126,406$ 1,638,755$ -$ -$ 14,765,161$Construction in progress 9,916,849 16,504,343 - (5,162,259) 21,258,933 Works of art 69,865 - - - 69,865 Total capital assets, not being depreciated/amortized 23,113,120 18,143,098 - (5,162,259) 36,093,959



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NOTE 6 – CAPITAL ASSETS - CONTINUED


Business-type activities - ContinuedCapital assets, being depreciated/amortized:Buildings 73,359,583 89,971 - 25,673 73,475,227 Improvements other than buildings 276,776 - - - 276,776 Intangibles 896,080 36,425 - - 932,505 Machinery and equipment 20,753,514 2,396,753 (831,967) (1,353,850) 20,964,450 Infrastructure 339,318,326 1,986,005 (24,133) 5,134,799 346,414,997Total capital assets being depreciated/amortized 434,604,279 4,509,154 (856,100) 3,806,622 442,063,955

Less accumulated depreciation/amortization for:Buildings (18,255,030) (1,844,492) - - (20,099,522)Improvements other than buildings (173,765) (9,226) - - (182,991) Intangibles (834,686) (21,408) - - (856,094) Machinery and equipment (15,249,366) (1,476,245) 789,168 1,329,747 (14,606,696)Infrastructure (118,486,854) (8,291,870) - - (126,778,724)Total accumulated depreciation/amortization (152,999,701) (11,643,241) 789,168 1,329,747 (162,524,027)Total capital assets, being depreciated/amortized, net 281,604,578 (7,134,087) (66,932) 5,136,369 279,539,928

Business-type activities capital assets, net 304,717,698$ 11,009,011$ (66,932)$ (25,890)$ 315,633,887$

Depreciation expense was charged to functions/programs as follows. Depreciation Amortization

Governmental activities:General government 2,463,774$ 54,237$ Public safety 2,371,708 - Physical environment 111,442 - Transportation, including depreciation of general infrastructure assets 3,166,442 1,547 Economic environment 42,531 - Human services 296,073 - Culture and recreation 1,212,066 1,960 Court related 132,353 29,168

Capital assets held by the government's internal service funds are charged to the various functions based on their usage of the assets 74,771 -

Total depreciation expense - governmental activities 9,871,160$ 86,912$



56

6 – CAPITAL ASSETS – CONTINUED Depreciation Amortization

Business-type activities:Water and sewer 6,801,597$ 21,408$ Airport 4,110,123 - Emergency Medical Services 447,262 - Other enterprise funds 262,851 -

Total depreciation expense - business-type activities 11,621,833$ 21,408$

Construction Commitments

Crestview Courthouse Remodel The Board initially entered into contract to design and remodel the Crestview Courthouse. After

consideration, the Board direction changed to full redevelopment of the parcel with estimated costs of $26 million. The contract in place at September 30, 2016 totals $23,654,196. Cumulative expenditures total $1,442,445, with $22,211,751 remaining liability outstanding at September 30, 2016.

Road and Other Infrastructure Improvements The Board has entered into contracts to improve infrastructure at various locations throughout the County. The contracts total $1,689,652. Cumulative expenditures total $449,256, with $1,240,396 remaining liability outstanding at September 30, 2016.

Water and Sewer Expansion and Renovation The Water and Sewer System is continuing significant expansion and renovations throughout the

County. Based on the fiscal year 2017 capital budget, total expenditures will approximate $21,700,000 on projects, which includes $9,000,000 for Arbennie expansion, $3,500,000 for diversion, and multiple smaller projects.

Airport Destin Control Tower The Airport has a contract for a Destin air traffic control tower project. The project is to include the

construction, equipping, roadway, and utilities. The contract totals $4,824,940. Cumulative expenditures total $3,277,589, with $1,547,351 remaining liability outstanding at September 30, 2016.

Airport Checked Baggage Area The Airport contracted with separate professional architect and construction company to replace the

existing baggage screening devices with new devices and associated changes in the belt system. The combined project totals $4,241,151. Cumulative expenditures total $3,627,869, with $613,282 remaining liability outstanding at September 30, 2016.

Airport Foy Shaw Parkway The Airport has entered contract for development and design of Foy Shaw Parkway. The contract totals

$1,110,782. Cumulative expenditures total $1,082,320, with $28,462 remaining liability outstanding at September 30, 2016.



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NOTE 7 – COMPENSATED ABSENCES

Each constitutional officer’s policy for compensated absences is summarized below.

Board of County Commissioners and Supervisor of Elections

The policy of the Board of County Commissioners and the Supervisor of Elections for annual and sick leave and compensatory time is as follows:

Employees may accrue an unlimited amount of annual and sick leave. The employees earn leave at varying rates per month based on their work schedules.

Years of 40 hours/ 45 hours/ 24 hours on/Service week week 48 hours off

Annual LeaveFull time employees 0-5 8 hours 9 hours 11 hours

6-10 10 hours 11 hours 14 hours11-15 12 hours 14 hours 17 hours16-20 14 hours 16 hours 20 hours21-25 16 hours 18 hours 22 hours26+ 18 hours 20 hours 25 hours

Part time employees 1 4 hoursMaximum amount paid uponseparation from service 240 hours 270 hours 336 hoursSick LeaveFull time employees 8 hours 9 hours 11 hoursPart time employees 0 hours

Unused sick leave will be paid to employees having ten consecutive years of service upon termination or retirement at varying percentages based on the total unused hours: 50% for the first 480 hours; 25% for the second 480 hours and 20% for all hours over 960.

Compensatory Time

Compensatory time is available only to hourly (non-exempt) employees. Most employees may accrue up to 240 hours except for law enforcement and correctional officers who can accrue up to 480 hours. Unused amounts will be paid upon termination or retirement.

Clerk of the Circuit Court

The policy of the Clerk for annual and sick leave was changed June 1, 2015 to Paid Time Off (PTO). An employee can now accumulate and carry forward 1,000 hours of PTO from year to year. Any PTO in excess of 1,000 hours will be forfeited after the first pay period of the calendar year. PTO is accrued based on the schedule below. Upon retirement or termination, the employee may be paid up to a maximum of the following schedule.

Years of Service

Hours Earned per Pay Period (26)

Years of Service

Balance Paid Upon Separation

0 – 1 6.25 2 – 5 20% of PTO 2 – 5 7.00 6 – 10 25% of PTO

6 – 10 7.75 11 – 15 30% of PTO 11 – 15 8.50 16 – 20 40% of PTO 16 – 20 9.25 21+ 50% of PTO

21+ 10.00



58

NOTE 7 – COMPENSATED ABSENCES – CONTINUED

Sheriff

The Sheriff maintains a policy providing for annual vacation and sick leave pay for all full-time non-exempt employees. Employees are allowed to accumulate unlimited time; however, upon separation the employee will receive compensation only for any unused annual leave up to a maximum of 240 hours. Annual vacation leave for full-time non-exempt employees is calculated as follows:

Years of Service Accrual Rate

Less than five (5) years (8) hours per calendar monthFive (5) to ten (10) years (10) hours per calendar monthTen (10) and more years (12) hours per calendar month

Sick leave for non-exempt employees is accrued at eight hours per month. Unused accrued leave is carried over from year to year. Employees terminating after ten years of service are compensated for unused sick leave up to a maximum of 100 hours. Certain employees are also eligible to bank over time hours for future leave up to 120 hours.

Vacation leave for exempt employees is accrued at 176 hours annually and sick leave for exempt employees is accrued at 104 hours annually.

An employee who meets eligibility requirements receives up to 12 weeks of leave, paid and /or unpaid in accordance with the federal Family Medical Leave Act of 1993 guidelines.

Tax Collector

The policy of the Tax Collector for Paid Time Off (PTO) is that employees are entitled to accrue leave each pay period based on an employee’s hire date. Below is a breakdown of how leave will be earned:

Years of Service(based on hire date) Weeks PTO

# Hours Earnedper Pay Period

1 year 3 weeks 4.622 - 5 years 4.4 weeks 6.776 - 10 years 5.4 weeks 8.3111 - 15 years 6 weeks 9.2316 - 20 years 6.5 weeks 10.00

21+ years 7 weeks 10.77 Upon separation of employment form the Tax Collector, the maximum unused hours paid at

termination are based upon years of service. Maximum unused hours paid for employees with 1 – 10 years of service or in DROP are 300 hours and 500 hours for 10 plus years of service.

Property Appraiser

The Property Appraiser’s policy provides for “paid days off” (a combination of sick and annual leave) which may be used at the employee’s discretion. Paid days off accumulate ratably during each year of employment at the following rates based on years of employment.

1 to 5 years 192 hours per year 5 to 10 years 216 hours per year Over 10 years 240 hours per year



59

NOTE 7 – COMPENSATED ABSENCES – CONTINUED

Property Appraiser - Continue

Employees are allowed to accumulate up to 360 hours of paid days off for which they will be paid upon termination of employment. Paid days off accumulated in excess of 360 hours at the end of the calendar year are lost except for employees planning retirement. Employees planning retirement within the following year may increase the accrued paid days off to a maximum of 500 hours.

The total amounts of accumulated annual leave and other compensated absences for all elected officials as of September 30, 2016 follow:

Elected Official Current Portion Long -Term Portion TotalsBoard of County Commissioners 2,415,137$ 1,813,450$ 4,228,587$ Clerk of the Circuit Court 153,801 300,872 454,673Sheriff 1,024,617 1,444,340 2,468,957Tax Collector 103,173 170,799 273,972Property Appraiser 55,204 65,060 120,264Supervisor of Elections 64,602 68,564 133,166 Totals 3,816,534$ 3,863,085$ 7,679,619$

The total current and long-term portions of compensated absences are shown on the face of the government wide statement of net position using the full accrual method of accounting.

NOTE 8 - LANDFILL CLOSURE AND POST CLOSURE CARE COSTS

The Board is required to study, estimate, and certify to the U.S. Environmental Protection Agency through the Florida Department of Environmental Protection the estimated cost to close and to perform certain maintenance and monitoring functions at Baker Landfill and Wright Landfill for thirty years after closure and Niceville Landfill for twenty years after closure. One hundred percent of the landfill capacity has been used in the landfills and they have all been permanently closed.

The Board is required by state and federal laws and regulations to develop its estimates using rates normal to

commercial contracting firms and is based on the amount of the landfill capacity used to date, 100%. The landfill closure and post closure costs are reevaluated each year. The estimate is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. The effect of this change in estimates has been reflected in the operations of the Solid Waste Enterprise Fund and has increased net income by $297,374. The estimated liability for landfill closure and post closure care costs has a balance of $4,026,280 as of September 30, 2016.



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NOTE 9 – INTERFUND BALANCES AND ACTIVITY

The composition of interfund balances as of September 30, 2016 is as follows:

Receivable from Other Payable to Other FundsMajor Fund

General Fund 22,453$ 172,728$ Tourist Development 646,676 - Capital Outlay 3,023,324 -

Non-major FundsSpecial Revenue Funds 186,738 2,759,354 Internal Service Funds 96,358 1,020,000 Fiduciary Funds 690 24,157

3,976,239$ 3,976,239$

Receivable from Other Elected Official

Payable to Other Elected Official

Major FundGeneral Fund 1,108,010$ 1,208,259$ Tourist Development Special Revenue Fund 52 441 Capital Outlay Construction Trust Fund 124,244 19 Water and Sewer Enterprise Fund - 140 Airport Enterprise Fund - 44 Emergency Medical Services - 151

Non-major FundsSpecial Revenue Funds 121,442 228 Internal Service Funds 480 102 Fiduciary Funds 370 145,214

1,354,598$ 1,354,598$

Interfund receivables at the fund and elected official level result primarily from revenue accrued in certain funds that are transferred to other funds. Interfund receivables and payables at the fund level also include short term cash advances.



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NOTE 9 – INTERFUND BALANCES AND ACTIVITY - CONTINUED

Interfund transfers and transfers among Constitutional Officers:

Transfer In Transfer Out Amount PurposeGeneral Tourist Development 526,259$ Lifeguard fundingGeneral Tourist Development 843,950 Tourist parksGeneral Capital Outlay 252,454 Telecommunication projects and buildingGeneral Nonmajor Governmental 36,347 Defray costs of Domestic ViolenceGeneral Nonmajor Governmental 1,101,528 Library Cooperative funding General Nonmajor Governmental 67,014 Life and health insuranceGeneral Nonmajor Governmental 28,000 Racing monies allocationGeneral Emergency Medical Services 44,676 Life and health insuranceGeneral Internal Service 1,400,000 Insurance rebateTourist Development General 52 Excess feesCapital Outlay Tourist Development 11,111 Pole barn fundingNonmajor Governmental General 336 Excess feesNonmajor Governmental General 340,720 Tax increment funding for PJ AdamsNonmajor Governmental General 68,000 Seminole Community CenterNonmajor Governmental Tourist Development 312,808 Debt service for West Destin NoteNonmajor Governmental Tourist Development 357,985 Debt service for West Destin NoteNonmajor Governmental Nonmajor Governmental 529,795 Debt service for judicial buildingNonmajor Governmental Nonmajor Governmental 1,262,342 Stormwater unincorporated taxNonmajor Governmental Nonmajor Governmental 1,654,162 Non gas tax supportNonmajor Governmental Nonmajor Governmental 4,000 Racing monies allocationInternal Service Capital Outlay 400,000 Settlement fundingEmergency Medical Services Nonmajor Governmental 33,000 Racing monies allocationTotal 9,274,539$

NOTE 10 - LEASES

Operating Leases – Lessor

The Board of County Commissioners leases three county-owned parks and park buildings located on Okaloosa Island to outside parties. Capitalized investment in these assets is $6,588,730. Accumulated depreciation of $2,646,418 has been recorded as of September 30, 2016. All of the leases were for a 25-year period. However, two of the leases have been renegotiated and the period extended to thirty years. Three of the leases contain a 20% rent increase every five years. The first renegotiated lease contains a fixed rental through 2039. In 2016, one of the leases was renegotiated to have incremental increases from 2% to 3.5% for five (5) year periods through 2039.The second renegotiated lease contains a contingent rent fee of 15% of gross revenue if that amount is greater than the set rent amount. To date, the contingent rent option has not been needed. The remaining terms of the leases range from 1 to 23 years.

The Board of County Commissioners leases land and a building to a convenience store company. Capitalized investment in the building is $132,488. Accumulated depreciation of $57,963 has been recorded as of September 30, 2016. The lease was renegotiated to a five year lease with four five-year renewals beginning in 2008. The rent will increase at the beginning of each option period by the consumer price index. These option periods extend through 2032.



62

NOTE 10 – LEASES - CONTINUED

Operating Leases – Lessor - Continued

The Board of County Commissioners leases space in a building to six (6) lessees. Capitalized investment in the building is $546,688. In 2014, new leases were negotiated for one (1) year with two (2) one year renewals through 2017. Rental fees total $3,099 monthly.

The Board of County Commissioners has leased space on a water tower to a wireless communication company. The five year lease can be renewed for five five-year periods through 2038. Monthly rental fees begin at $833 and increase at each renewal to an amount equal to one hundred two percent of the monthly rent in effect immediately prior. There is no capitalized investment related to this lease.

The Board of County Commissioners has entered into operating leases with various lessees and concessionaires for lease of space and facilities at the Okaloosa County Air Terminal, the Bob Sikes Airport and the Destin Airport. Lease periods vary with expiration dates through 2036. Capitalized investment in assets associated with these leases is $45,021,832. Accumulated depreciation of $10,683,423 has been recorded as of September 30, 2016.

The Board of County Commissioners leases land on Okaloosa Island to a company to operate a marine life center. The 10 year lease can be renewed for four (4) optional 10 year periods through 2062. Annual rental fees begin at $75,000 with annual consumer price index increase.

The Board of County Commissioners leases land on Okaloosa Island to a company to operate a Wild Willy's Adventure Island. The 10-year lease can be renewed for four (4) optional 10 year periods through 2042. Annual rental fees begin at $65,000 with annual consumer price index increase.

The Board of County Commissioners leases office space at the Fort Walton Beach Water and Sewer building. Capitalized investment in these assets is $2,995,873. Accumulated depreciation of $1,685,383 has been recorded as of September 30, 2016. The one year lease expires in June 2016 with optional three (3) one (1) year extensions. Rental fees total $18,563 annually.

The Board of County Commissioners leases office space at Fort Walton Beach Water and Sewer building. Capitalized investment in these assets is $2,995,873. Accumulated depreciation of $1,760,280 has been recorded as of September 30, 2016. The one year lease expired in June 2016 with optional three (3) one (1) year extensions, which was extended for one (1) year. Rental fees begin at $18,563 and increase annually.

The Tax Collector leases space in its Niceville building to third parties under lease agreements with varying terms. Lease income earned during the year ending September 30, 2016 was $79,893. Future minimum rents to be earned under the terms of the lease agreements are $121,007.

Total minimum future rentals for material operating leases in which the Board of County Commissioners is the lessor are as follows:

Fiscal Year Ended September 302017 6,276,845$ 2018 6,284,256 2019 6,235,419 2020 6,244,017 2021 6,234,217 Thereafter 38,113,691

$ 69,388,445



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Operating Leases – Lessee

1. The Board of County Commissioners leases the land on which the airport facilities are located from the United States Government under a thirty-year lease agreement expiring in February 2031. The lease was renegotiated in 2008 adding an additional 22.6 acres for the rental car facilities under a twenty-five year lease expiring in September 2032. The land lease agreement contains a built in rent increase of for annual escalation factor. The lease has an option for renewal at the end of the current lease period. The future minimum lease payments total $8,363,453 over the life time of the lease. Lease expense for fiscal year 2016 was $402,833.

2. The Board of County Commissioners leases the land on which Water and Sewer's Water Reclamation Facility is located from the United States Government under a 30 year lease agreement expiring in September 2037. The lease agreement contains a built in rent increase of 3% for annual escalation factor. The lease has an option of renewal at the end of the current lease period. The future minimum lease payments total $10,603,065 over the life time of the lease. Lease expense for fiscal year 2016 was $380,789.

3. The Board of County Commissioners leases eight (8) Volvo G930 Motor Graders used by public works department for the Board through January 2017. The two three (3) year leases are based on monthly payments of $5,326 with a balloon payment of $595,868 in October 2016 and $595,868 in January 2017. Future lease payments total $26,630 for the remaining term of the lease. Lease expenditure for fiscal year 2016 was $127,813.

4. The Board of County Commissioners leases 10 Airport fleet vehicles from Enterprise Leasing under a lease agreement which expired in December 2014. In August 2014, the leases were renegotiated to closed-end walkaway. The lease rates range from $387 to $619 per vehicle per month. Lease expenditure for fiscal year 2016 was $45,301.

5. The Board of County Commissioners leases cardiac monitors from Phillips Medical Capital LLC under a lease agreement which expires March 2019. The three (3) year lease are based on monthly payments of $8,505. Future lease payment total $255,150 for the remaining term of the lease. Lease expenditure for fiscal year 2016 was $52,848.

6. The Clerk leases copier equipment under a non-cancelable operating lease effective for 48 months. Monthly payments under the lease are $4,414 thru 10/30/16. The new contract monthly payment will be $4,014 effective 11/1/16. Future minimum lease payments for the equipment lease total $60,610 through December 2017. Lease expenditure for the fiscal year ended September 30, 2016 was $52,968.

7. The Clerk leases postal equipment for the Crestview office under an operating lease effective for 60 months. Monthly payments under the lease were $395. Future minimum lease payments for the equipment lease totals $11,850 through December 2019. Total lease expenditure for fiscal year ended September 30, 2016 was $4,740.

8. The Clerk of the Circuit Court entered a new lease January 30, 2015 for postal equipment for the Fort Walton Beach office under an operating lease effective for five years. Monthly payments under the lease are $376. Future minimum lease payments for the equipment leases total $15,792 through December 2019. Total lease expenditure for fiscal year ending September 30, 2016 were $3,384.

9. The Tax Collector rents office space for a decentralized location to accommodate residents in a certain area of the County. The original twenty-year lease was due to expire in September 2025; however, the Tax Collector purchased a new building on John Sims Parkway and the existing lease on Highway 85 terminated on December 31, 2015. Total lease expenditure for fiscal year ended September 30, 2016 was $71,102.



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NOTE 10 – LEASES – CONTINUED


Total lease expenditure/expense for material operating leases in which the County is the lessee for fiscal year ended September 30, 2016 amounted to $1,141,778. Future minimum lease payments for these leases are as follows:

Fiscal Year Ended September 302017 $ 990,9612018 946,8922019 902,1952020 866,6992021 887,4162022-2026 4,785,3662027-2031 5,424,3782032-2036 3,366,8002037-2038 1,165,843

$ 19,336,550

NOTE 11 – LONG-TERM DEBT

Primary Government The following debt issues are outstanding for September 30, 2016.

Governmental Activities:

REVENUE BONDS$26,615,000 Sales Tax Revenue Bonds, Series 2009, serial and term bonds with statedinterest rates ranging from 3.0 percent to 6.375 percent compounded semi-annuallythrough October 1, 2039; issued in denominations of $5,000 maturity value due in annual installments of $315,000 to $1,495,000 from October 1, 2011 through October 1, 2039.Sales tax revenues along with any direct federal subsidy payments received with respectto the Taxable Series 2009B Bonds (Direct Payment Build America Bonds) are pledgedfor payment of the bonds. Proceeds of the bonds were used to finance the constructionof a new judicial center complex in the County. This issue is subject to federal arbitrageregulations. $23,220,000

$3,600,000 Capital improvement Revenue Bond, Series 2011, serial bonds with statedinterest rate of 3.72 percent compounded semi-annually through October 1, 2030; issuedin denominations of $5,000 maturity value due in annual installments of $133,000 to$259,000 from October 1, 2012 through October 1, 2030. General governmentalrevenues are pledged for the payment of the bonds. Proceeds of the bonds have beenused to finance the purchase of the Newman C. Brackin Building to be used for officespace. This issue is subject to federal arbitrage regulations. 3,037,000



65

NOTE 11 – LONG-TERM DEBT - CONTINUED

Primary Government - Continued

Governmental Activities - Continued:

REVENUE BONDS - CONTINUED$22,165,000 Sales Tax Revenue Bonds, Series 2014, serial and term bonds with statedinterest rates ranging from 3.0 percent to 5.0 percent compounded semi-annually through October 1, 2034; issued in dominations of $5,000 maturity value due in annualinstallments of $760,000 to $1,720,000 from October 1, 2016 through October 1, 2034and interest only payments October 1, 2015 - September 30, 2016. Sales tax revenueswere pledged for payment of the bonds. Proceeds of the bonds will be used to financethe construction of Crestview courthouse, Administration building and refunding theSales Tax Revenue Bond Anticipation Note, Series 2014. The issue is subject to federalarbitrage regulations. 21,405,000

$12,960,000 Sales Tax Revenue Bonds, Series 2016, serial and term bonds with statedinterest rates ranging from 3.0 percent to 5.0 percent compounded semi-annually through October 1, 2046; issued in dominations of $5,000 maturity value due in annualinstallments of $235,000 to $715,000 from October 1,2017 through October 1, 2046.Sales tax revenues were used for payment of the bonds. Proceeds of the bonds will beused to finance the acquistion and construction of imprvements to County facilities,including additional improvements to the Crestview courthouse. The issue is subject tofederal arbitrage regulations. 12,960,000 Total Governmental Activities Revenue Bonds 60,622,000$

LOANS AND NOTES$5,000,000 Private Bank Loan from Hancock Bank with fixed interest rate of 1.79percent compounded semi-annually through October 1, 2020; principal due in annualinstallments of $591,000 and $664,000 from October 1, 2013 to October 1, 2020. Theloan finances the County's portion of a joint beach renourishment project with the Cityof Destin and is payable from a special assessment levied for beach renourishment aswell as Tourist Development taxes. 2,586,000

$2,300,000 Private Bank Loan from Summit Bank with fixed rate of interest of 4.25%through February 25, 2025; principal and interest of $17,372 due beginning March 26,2015, with a final balloon payment of $953,676 due at maturity. Collateral for loan isspecific revenue within the Tax Collector’s annual budget earmarked for loan repayment,until loan is paid in full. Proceeds used for the purchase of a building to serve customersin Niceville, Florida. 1,904,979 Total Governmental Activities Loans and Notes 4,490,979$



66

NOTE 11 – LONG-TERM DEBT – CONTINUED

Primary Government – Continued

Business-type Activities:

Airport$9,980,000 Taxable Airport Revenue Bonds, Series 2007, term bonds with statedinterest rates ranging from 6.0 percent to 7.0 percent compounded semi-annually through October 1, 2030; issued in denominations of $5,000 maturity value due in annualinstallments of $220,000 to $830,000 from October 1, 2009 through October 1, 2030.Net revenue derived from the operation of the Airport System and the Customer Facility Charges imposed per rental car transaction day at the Northwest Florida RegionalAirport are pledged for payment of the bonds. Proceeds from the bonds were used tofinance a portion of the cost of the East Side Development Program. This issue is notsubject to federal arbitrage regulations. 8,130,000$

$8,920,000 Taxable Airport Revenue Refunding Bonds, Series 2014, due in annualinstallments of $360,000 to $740,000 through October 1, 2028; interest rate of 3.15percent per annuam. Proceeds from the bond were used to refund Airport RevenueRevenue Bonds, Series 2003 and Commercial Paper Loan. This issue is not subject tofederal arbitrage regulations. 8,060,000

Water and SewerThe following parity bonds are secured by a pledge of the net revenues from theoperation of the water and sewer system.

$67,595,000 Water and Sewer Revenue Bonds, Series 2015, due in annual installments of$760,000 to $3,940,000 through July 1, 2036; interest ranging from 2.00 percent to 3.75percent per annum. Proceeds from the bond were used to refund Water and SewerRevenue Bonds, Series 2004; Water and Sewer Revenue Bonds, Series 2006; and Waterand Sewer Revenue Note, Series 2012, as well as constructing additions to the water andsewer system. This issue is subject to federal arbitrage regulations. 65,085,000

Total Business-type Revenue Bonds 81,275,000$

LOANS - STATE OF FLORIDA$1,768,312 State of Florida Department of Environmental Protection Revolving LoanFund; semi-annual payments including capitalized interest of $59,870 at 2.63% and2.99% beginning September 15, 1999 reducing to $56,219 beginning September 15, 1999through March 15, 2017. 55,465

$351,895 State of Florida Department of Environmental Protection Revolving LoanFund; semi-annual payments including capitalized interest of $23,204 at 3.18%beginning February 15, 2000 reducing to $11,073 beginning February 15, 2001 throughAugust 15, 2019. 62,892

$8,168,888 State of Florida Department of Environmental Protection Revolving LoanFund; semi-annual payments including capitalized interest of $291,598 at 2.71% and3.00% beginning June 15, 2007 reducing to $263,938 beginning December 15, 2008through December 15, 2023. 4,779,740 Total Loans - State of Florida 4,898,097

The following loans from the State of Florida were obtained for construction of extensions and improvements to the County sewer system. Water and Sewer revenue net of operating costs and debt service are pledged for repayment of these loans.



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Business-type Activities - Continued:

OTHER LOANS$3,500,000 Commercial Paper Loan from the Florida Local Governmnet FinanceCommission Pooled Commercial Paper Loan Program; interest and fee payments aremade monthly beginning October 1, 2015; the entire principal balance of the loan is dueon March 1, 2020. The loan finances construction of the Destin Air Traffic ControlTower and the Foy Shaw Access Road at Bob Sikes Airport and is payable from netrevenues of the Airport. 3,500,000

Total Buisness-type Loans and Notes 8,398,097$

CAPITAL LEASES

The County has entered into a lease agreement for financing the acquisition of election equipment for the Supervisor of Elections. The lease agreement qualifies as capital lease for accounting purposes as a result of the transfer of title or bargain purchase option and therefore have been recorded at the present value of the future minimum lease payments as of the inception date in the General Fund.

The assets acquired through capital leases are as follows:

AssetsGovenmental

ActivitiesElection equipment 570,100$ Accumulated depreciation (32,821) Assets acquired by lease, net 537,279$

The following is a summary of the changes in long-term debt of the Board of County Commissioners for the fiscal year ended September 30, 2016.

Balance Due Balance DueOctober September Due Within1, 2015 Increases Decreases 30, 2016 One Year

Governmental Activities:Revenue Bonds Sales Tax Revenue Bonds, Series 2009 24,510,000$ -$ (1,290,000)$ 23,220,000$ -$ Series 2011 3,186,000 - (149,000) 3,037,000 154,000 Series 2014 22,165,000 - (760,000) 21,405,000 - Series 2016 - 12,960,000 - 12,960,000 - Less deferred amounts For issuance discounts/premiums 2,858,870 1,200,121 (781,477) 3,277,514 - Total Revenue Bonds 52,719,870 14,160,121 (2,980,477) 63,899,514 154,000Loans and Notes Private bank note 3,812,000 - (1,226,000) 2,586,000 - Private bank note, 2015 2,210,211 - (305,232) 1,904,979 120,708

Total Notes 6,022,211 - (1,531,232) 4,490,979 120,708



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Balance Due Balance DueOctober September Due Within1, 2015 Increases Decreases 30, 2016 One Year


Capital leases - 624,438 (208,146) 416,292 208,146Accrued compensated absences 6,297,327 591,793 (875,004) 6,014,116 2,900,167Estimated claims payable 4,137,905 - (163,923) 3,973,982 1,364,384Other post employment benefits 5,048,712 606,290 (174,788) 5,480,214 - Net Pension Liability 38,488,921 30,869,467 - 69,358,388 -

Total Governmental Activit ies 112,714,946$ 46,227,671$ (5,725,424)$ 153,217,193$ 4,539,259$

Business-type Activities:Revenue Bonds Airport Taxable Revenue Bonds, Series 2007 8,445,000$ -$ (315,000)$ 8,130,000$ 330,000$ Series 2014 8,560,000 - (500,000) 8,060,000 510,000 Water and Sewer Revenue, Series 2015 66,835,000 - (1,750,000) 65,085,000 2,705,000Less deferred amounts - - - For issuance discounts/premiums 9,366,915 - (430,555) 8,936,360 - Total Revenue Bonds 93,206,915 - (2,995,555) 90,211,360 3,545,000

Loans and Notes State of Florida Revolving Loan Fund, April 1, 2001 through October 1, 2016 168,879 - (168,879) - - State of Florida Revolving Loan Fund, September 15, 1999 through March 15, 2017 164,170 - (108,705) 55,465 55,465 State of Florida Revolving Loan Fund, February 15, 2001 through August 15, 2019 82,568 - (19,676) 62,892 20,306 State of Florida Revolving Loan Fund, beginning June 15, 2007 through December 15, 2023 5,166,917 - (387,177) 4,779,740 397,992 State Infrastructure Bank Loan 485,719 - (485,719) - - State Infrastructure Bank Loan 1,944,179 - (1,944,179) - - Airport Commercial Paper Loan - 3,500,000 - 3,500,000 - Total Loans and Notes 8,012,432 3,500,000 (3,114,335) 8,398,097 473,763

Accrued compensated absences 1,786,625 28,126 (149,248) 1,665,503 916,367Estimated closure costs payable 4,323,654 - (297,374) 4,026,280 357,905Other post employment benefits 356,000 159,820 (80,710) 435,110 - Net Pension Liability 16,361,489 8,891,463 - 25,252,952 - Total Business-type Activities 124,047,115$ 12,579,409$ (6,637,222)$ 129,989,302$ 5,293,035$



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Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At year-end, $1,357,385 of internal service funds compensated absences, $3,973,982 of estimated claims, $4,446,331 of other post-employment benefits, and $1,815,976 of net pension liability are included in the above amounts.

Compensated absences and other post-employment benefits are liquidated in the general and other governmental funds. Claims liabilities are liquidated in the internal service fund.

Debt service requirements to maturity on long-term debt at September 30, 2016 are as follows.

Principal Interest Principal InterestYear Ending September 30,

2017 154,000 574,112 328,854 87,7602018 1,850,000 2,950,597 963,159 123,1152019 1,911,000 2,874,022 772,551 106,2092020 1,977,000 2,792,819 789,127 89,0622021 2,049,000 2,701,519 807,360 71,0512022-2026 11,621,000 11,891,948 1,246,220 163,5372027-2031 14,420,000 8,594,461 - - 2032-2036 14,580,000 4,769,430 - - 2037-2040 8,235,000 1,668,078 - - 2042-2046 3,110,000 523,763 - - 2047 715,000 17,875 - -

60,622,000$ 39,358,624$ 4,907,271$ 640,734$

Revenue Bonds Loans, Notes, and LeasesGovernmental Activities

Principal Interest Principal Interest Principal InterestYear Ending

September 30,2017 3,545,000 3,914,503 473,763 134,214 357,905 - 2018 3,665,000 3,795,413 430,066 121,691 357,905 - 2019 3,820,000 3,643,880 442,166 109,597 357,905 2020 3,995,000 3,456,712 3,932,285 96,323 357,905 2021 4,195,000 3,257,572 444,362 83,514 357,905 2022-2026 24,295,000 12,922,888 2,415,131 224,248 1,538,933 - 2027-2031 19,845,000 7,089,576 260,324 3,613 697,822 - 3032-2036 17,915,000 2,528,250 - - - -

81,275,000$ 40,608,794$ 8,398,097$ 773,200$ 4,026,280$ -$

Revenue Bonds Landfill ClosureCostsBusiness-type Activities

Loans and Notes

NOTE 12 - CONDUIT DEBT

Since 1984, the Okaloosa County has authorized eight industrial development revenue bond issues that are still outstanding. The original issues totaled $55,814,025 and as of September 30, 2016, $24,789,025 was the principal liability. These bonds do not constitute an indebtedness of the County and are not a charge against its general credit or taxing powers. The bonds are payable solely from revenues of the respective industries to which these bond proceeds were remitted.



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NOTE 13 - FUND BALANCES/RESTRICTED BALANCE

A schedule of the governmental fund balances for September 30, 2016 is provided below.

GeneralFund

TouristDevelopment

CapitalOutlay Other Total

Fund Balnces:Nonspendable:

Prepaids 439,248$ 17,342$ -$ 133,647$ 590,237$ Restricted for:

Tourist Development BP Projects - 8,423 - - 8,423 Tourist Development 1st Cent - 15,807,449 - - 15,807,449 Tourist Development 2nd Cent - 2,374,794 - - 2,374,794 Tourist Development 3rd Cent - 4,530,950 - - 4,530,950 Tourist Development 4th Cent - 13,504,359 - - 13,504,359 Tourist Development 5th Cent - 4,351,022 - - 4,351,022 Florida Boating Improvements - - 603,695 - 603,695 Capital Projects - - 24,868,938 - 24,868,938 Emergency and Disaster Relief - - - 936,723 936,723 Housing and Urban Development - - - 315,140 315,140 E-911 Operations - - - 952,647 952,647 Radio Communications - - - 122,666 122,666 Law Enforcement Trust Fund - - - 141,438 141,438 Police Academy - - - 50,502 50,502 Park Projects - - - 3,908,904 3,908,904 Prisoner Benefit Fund - - - 850,125 850,125 Judicial Innovations - - - 390,776 390,776 Law Library - - - 16,386 16,386 Teen Court - - - 85,980 85,980 Drug Abuse Trust Fund - - - 59,339 59,339 Domestic Violence Trust Fund - - - 2,930 2,930 Family Mediation - - - 5,255 5,255 Traffic Education - - - 207,742 207,742 Public Records - - - 914,641 914,641 Transportation Projects - - - 10,396,166 10,396,166

Committed to:Planning Projects 32,229 - - - 32,229 Park Development Projects - - 6,721 - 6,721 Municipal Benefits Service Units - - - 577,781 577,781

Assigned to:FY 2017 Budget Appropriations 3,739,233 - - - 3,739,233 Transportation Projects - - - 3,338,389 3,338,389 Emergency and Disaster Relief - - 81,654 81,654 Health Department - - - 974 974

Unassigned:Unassigned 4,404,725 (17,342) - (2,776,677) 1,610,706

Total Fund Balances 8,615,435$ 40,576,997$ 25,479,354$ 20,713,128$ 95,384,914$

Major Funds

The proprietary fund balance sheet contains the line item “Net Position Restricted for Other Purposes”. Following is a list of the detail balances contained in that line item for September 30, 2016.



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NOTE 13 - FUND BALANCES/RESTRICTED BALANCE - CONTINUED

Fund Amount PurposeAirport Enterprise Fund 8,739,202$ Passenger Facility Charges ProgramAirport Enterprise Fund 3,455,256 Customer Facility Charges ProgramTotal Net Position Restricted for Other Purposes 12,194,458$

NOTE 14 - DEFERRED OUTFLOWS OF RESOURCES

The County defers losses resulting from the refunding of debt issues and amortizes the losses over the lesser of the remaining life of the refunded debt or the life of the new debt. Unamortized deferred losses on debt refunding are presented as deferred outflows of resources within the Statement of Net Position. As of September 30, 2016, the unamortized deferred outflow on refunding totaled $2,967,552, consisting of unamortized losses associated with the 2015 advanced refunding. Amortization expense of the deferred outflow totaled $304,651 for the year ended September 30, 2016, and is included in interest expense on the Statements of Revenues, Expenses and Changes in Net Position.

NOTE 15 – ENCUMBRANCES

The amount of encumbrances outstanding as of September 30, 2016, is as follows:

AmountGovernmental Funds

General Fund 348,156$ Tourist Development 76,802Capital Outlay 78,909Other Governmental 32,055

Total 535,922$

Encumbrances at year end do not constitute expenditures or liabilities; therefore, they are not reflected in the financial statements.

NOTE 16 - PENSION PLAN

The County participates in the Florida Retirement System (FRS) which is a cost sharing multiple employercontributory retirement system administered by the State of Florida (State). The FRS was established in 1970 by Chapter 121, Florida Statutes. In 2002 the FRS was amended to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. Chapter 112, Florida Statutes established the Retiree Health Insurance Subsidy (HIS) Program, a cost–sharing multiple employer defined benefit pension plan to assist retired members of any state- administered retirement system in paying the cost of health insurance.

The State of Florida Retirement System issues a publicly available stand-alone financial report (CAFR)which includes financial statements and required supplementary information. Also available are the pension systems actuarial reports to support the schedules of employer allocations and schedules of pension amounts by employer. These reports are available on the division’s website at http://www.dms.myflorida.com or by email at [email protected] . The CAFR and actuarial reports may also be obtained by contacting the Division of Retirement at:



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NOTE 16 - PENSION PLAN - CONTINUED

State of Florida Division of Retirement Department of Management ServicesBureau of Research and Member Contributions

P.O. Box 9000Tallahassee, FL 32315-9000

850-907-6500 or toll free 844-377-1888

There are six classes of membership applicable to the County. Members are eligible for normal retirementwhen they have met the requirements listed below. Early retirement may be taken any time after vestingwithin 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each yearprior to the normal retirement age.

Regular Class, Senior Management Service Class, and Elected Officers’ Class Members – Formembers initially enrolled in the FRS before July 1, 2011, six or more years of creditable service and age 62, or the age after completing six years of creditable service if after age 62. Thirty years of creditable service regardless of age before age 62. For members initially enrolled in the FRS on or after July 1, 2011, eight or more years of creditable service and age 65, or the age after completing eight years of creditable service if after age 65. Thirty-three years of creditable service regardless of age before age 65.

Special Risk Class and Special Risk Administrative Support Class Members – For members initially enrolled in the FRS before July 1, 2011, six or more years of Special Risk Class service and age 55, or the age after completing six years of Special Risk Class service if after age 55. Twenty- five years of special risk service regardless of age before age 55. A total of 25 years of service including special risk service and up to four years of active duty wartime service and age 52. Without six years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class. For members initially enrolled in the FRS on or after July 1, 2011, eight or more years of Special Risk Class service and age 60, or the age after completing eight years of Special Risk Class service if after age 60. Thirty years of special risk service regardless of age before age 60. Without eight years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class.

The Deferred Retirement Option Program (DROP) is available under the FRS Pension Plan when the member first reaches eligibility for normal retirement. The DROP allows a member to retire whilecontinuing employment for up to 60 months.

FRS Membership and Plan Benefits - The FRS Pension Plan provides retirement and disability benefits,death benefits and survivor’s benefits. Members are also eligible for in-line-of-duty or regular disabilitybenefits if permanently disabled and unable to work. Benefits are established by State Statutes. Retirement benefits are based on a formula comprised of age, average compensation, length of FRS service, and membership class. Average compensation is computed as the average of an individual’s five highest years of earnings for employees hired before July 1, 2011 or eight highest years of earnings for employees hired on or after July 1, 2011. The amount of benefit payments is also affected by the retirement income option chosen by the plan participant.

Pension plan participants may choose to receive benefit in retirement under one of four options which willinclude a 3% cost-of-living adjustment each July (adjustments are only applicable for FRS service earnedprior to July 1, 2011).

If a pension plan participant leaves FRS-covered employment, the pension plan benefit is frozen until theemployee returns to FRS-covered employment or begins receiving early or normal retirement benefit.



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HI S Membership and Plan Benefits - The HIS membership is available to all members within the FRS anddefined contribution Investment Plan. The benefit is a monthly payment to assist retirees of the state-administered retirement systems in paying their health insurance costs. Eligible retirees and beneficiariesreceive 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 $160 per month, pursuant to section Florida Statutes. To be eligible to receive a HIS benefit, a retiree under one of the state- administered retirements systems must provide proof of eligible health insurance coverage, which can include Medicare.

Contribution Requirements -The County is required to contribute at an actuarially determined rate; theserates are a percent of annual covered payroll. Employees are required to contribute 3% of their annualsalary, while members participating in DROP are not required to make the 3% contribution. The County’scontractually required contribution rate includes the HIS contribution, .06% administrative and educationalfee and any applicable unfunded actuarial liability “UAL” rates. The HIS required contribution rate is1.66% for the 2015 and 2016 FRS plan years. This contribution when combined with the employee contribution is expected to finance the cost of the benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Descriptions and contribution rates in effect during the period ended September 30, 2016 and two preceding FRS fiscal years are as follows:

September 30, 2016

June 30, 2016

June 30, 2015

June 30, 2014

Regular Class 7.52% 7.26% 7.37% 6.95% Senior Management 21.77% 21.43% 21.14% 18.31% Elected Officials 42.47% 42.27% 43.23% 33.03% Deferred Retirement Option Program 12.99% 12.88% 12.28% 12.84% Special Risk Regular 22.57% 22.04% 19.82% 19.06% Special Risk Administrative Support 28.06% 32.95% 42.07% 35.96%

For the years ending September 30, 2016, 2015, 2014, the County contributed $8,820,596, $7,451,964 and$6,770,760 respectively, equal to 100% of the required contributions for each year.

The Florida Legislature has the authority for establishing or amending retirement legislation and related bills of significance to members of the Florida Retirement System (FRS). Passed bills are presented to the Governor and approved before they may be enacted into law.

Net pension liability, deferred outflows/inflows of resources and pension expense related to theCounty defined benefit pension plan

At September 30, 2016, the County reported a liability of $94,611,340 for its proportionate share of thenet pension liability. The net pension liability was measured as of June 30, 2016, and the total pensionliability used to calculate the net pension liability was determined by an actuarial valuation as of that date.The County’s proportion of the net pension liability was based on the County’s long-term share of contributions to the FRS relative to the contributions of all participating governments. At June 30, 2016, the County’s change in proportion was an increase from its proportion measured as of June 30, 2015. The following table presents the information on the County’s proportionate share of the FRS and HIS:



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FRS HIS County TotalPropronate share of Net Pension Liability at June 30, 2016 71,598,556$ 23,012,784$ 94,611,340$

County's proportion at June 30, 2016 0.00283557756 0.00197456901County's proportion at June 30, 2015 0.00269702499 0.00196252961

Change in proportion during current year 0.00013855257 0.00001203940

For the fiscal year ended September 30, 2016, the County recognized pension expense of $1,078,216.

At September 30, 2016, the County reported deferred outflows of resources and deferred inflows ofresources related to pensions from the following sources:

County TotalDeferredOutflow

DeferredInflow

DeferredOutflow

DeferredInflow

Deferred Outflow(Deferred Inflow)

Differences between expected and actual experience 5,482,136$ 666,631$ -$ 52,415$ 4,763,090$ Changes in assumptions 4,331,498 - 3,611,291 - 7,942,789 Net difference between projected and actual earnings on pension plan investments 18,507,354 - 11,636 - 18,518,990 Changes in proportion and differences betweeen County contributions and proportionate share of contributions 2,949,588 2,052,143 322,505 121,320 1,098,630 County contributions subsequent to the mearsurement date 2,049,268 - 273,052 - 2,322,320

33,319,844$ 2,718,774$ 4,218,484$ 173,735$ 34,645,819$

FRS HIS

$2,322,320 reported as deferred outflows related to pensions resulting from the County’s contributionssubsequent to the measurement date will be recognized as a reduction of the net pension liability in theyear ended September 30, 2017. Other amounts reported as deferred outflows and inflows of resourcesrelated to pensions will be recognized in pension expense as follows:



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NOTE 16 - PENSION PLAN – CONTINUED

Reporting yearEnding June 30, FRS HIS

County TotalDeferred Outflow(Deferred Inflow)

2017 3,870,733$ 676,832$ 4,547,565$ 2018 3,870,733 676,832 4,547,565 2019 11,086,048 674,617 11,760,665 2020 7,814,952 673,553 8,488,505 2021 1,430,986 580,267 2,011,253

Thereafter 478,350 489,596 967,946 Totals 28,551,802$ 3,771,697$ 32,323,499$

The total FRS pension liability in the June 30, 2016 actuarial valuation was determined based on the discount rate using the following actuarial assumptions, applied to all periods included in the measurement. The total pension liability is calculated using the Individual Entry A ge Normal cost allocation method, which differs from the Ultimate Entry Age Normal cost allocation method used in the funding valuation for the system.

FRS actuarial methods and assumptions are:

Actuarial cost allocation method Individual Entry Age Cost Amortization method Level Percentage of Pay, Closed Equivalent single amortization period 30 years Asset valuation method Fair market value Actuarial Assumptions: Discount rate 7.60%

Long Term expected rate of return, net of investment expanse, including inflation 7.60% Municipal bond rate N/A Inflation 2.60% Salary increases including inflation 3.25% Cost of living adjustment 3.00% Morality rates were based on Generational RP-2000 with projections scale

HIS actuarial methods and assumptions are:

Actuarial Assumptions: Discount rate 7.65% Long Term expected rate of return, net of investment expanse, including inflation N/A Municipal bond rate 2.85% Inflation 2.60% Salary increases including inflation 3.25% Morality rates were based on Generational RP-2000 with projections scale

The Actuarial assumptions that determined the total pension liability as of June 30, 2016 were based on the results of an actuarial experience study for the period of July 1, 2008 – June 30, 2013.



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The discount rate used for calculating the total FRS pension liability was 7.60%, The FRS plan’s fiduciarynet position was projected to be available to make all projected future benefit payments of current activeand inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to thelong term expected rate of return. The discount rate used for calculating the total HIS pension liability isequal to the single rate that results in the same actuarial present value as would be calculated by using two different discount rates for the discount at the long-term expected rate of return for benefit payments prior to the projected depletion of the fiduciary net pension (trust assets) and the discount at a municipal bond rate for benefit payments after the projected depletion date. 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 plan sponsor.

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 returns for each major asset class are summarized in the following table:

Asset ClassTarget

Allocation (1)

AnnualArithmetic

Return

Compound Annual

(Geometric)StandardDeviation

Cash 1.0% 3.0% 3.0% 1.7%Fixed income 18.0% 4.7% 4.6% 4.6%Global equity 53.0% 8.1% 6.8% 17.2%Real estate (property) 10.0% 6.4% 5.8% 12.0%Private equity 6.0% 11.5% 7.8% 30.0%Strategic investments 12.0% 6.1% 5.6% 11.1%

100.0%Assumed Inflation - Mean 2.6% 1.9%(1) As outlined in the Plan's investment policy

Sensitivity of the County’s proportionate share of the pension liability to changes in the discount rate iscalculated using discount rate for the respective plans, as well as what the County’s proportionate share ofthe net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

FRS Net Pension Liability HIS Net Pension Liability 1% Decrease Current

Discount Rate 1% Increase 1% Decrease Current

Discount Rate 1% Increase

6.60% 7.60% 8.60% 1.85% 2.85% 3.85% $131,817,789 $71,598,556 $21,473,997 $26,400,891 $23,012,784 $20,200,839

Detailed information about the pension plan’s fiduciary net position is available in the separately issuedFRS financial report.

1



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NOTE 17 - POSTEMPLOYMENT BENEFITS

Board of County Commissioners

Plan Description In addition to providing the pension benefits described, the Board of County Commissioners and all other

elected officials except for the Sheriff (County) provides post-employment health care and dental insurance benefits (OPEB) for eligible retired employees and their spouses through a single-employer defined benefit plan administered by Blue Cross Blue Shield of Florida (BCBSFL). Pursuant to the provision of Section 112.0801, Florida Statues, employees who retire from the County and eligible dependents, may continue to participate in the group insurance plan. Retirees and their eligible dependents shall be offered the same

health and hospitalization insurance coverage as is offered to active employees at a premium cost of no more than the premium cost applicable to active employees. The County subsidizes the premium rates paid by the retirees by allowing them to participate in the plan at blended group (implicitly subsidized) premium

rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the plan on average than those of active employees. Benefits, benefit levels, employee contributions and employer contributions are governed and amended through its personnel manual by the County’s Self Insurance Fund with approval by the Board. The plan does not issue a separate report.

Benefits Provided The County provides post-employment health care and dental benefits to its retirees. To be eligible for benefits an employee must retire under the County’s retirement plan and must have been covered under the medical plan as an active employee immediately prior to retirement. Elected officials are not eligible for benefits if they qualify for retirement.

All health care benefits are provided through the County’s health care provider, BCBSFL. The benefit levels are the same as those afforded to active employees. Benefits include general inpatient and outpatient medical services; dental care; and prescriptions. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the County’s plan becomes secondary.

Membership At September 30, 2016, membership consisted of:

Retirees and Beneficiaries Currently Receiving Benefits 28 Terminated Employees Entitled to Benefits But Not Yet Receiving Them - Active Employees 722 Total 750 Participating Employers 1

Funding Policy The County contracted Insurance Broker negotiates the premium rates with BCBSFL. The County has not advance-funded or established a funding methodology for the annual OPEB costs or the net OPBE obligation. Rather, the required contribution is based on pay-as-you-go financing requirements. Retirees and beneficiaries currently receiving benefits are required to contribute 100% of their current premium costs which for fiscal year 2016 was $378,102. The County contributes the remainder to cover the costs of providing the benefits to the retirees via the insured plan. Active employees do not contribute to the plan until retirement.

Annual OPEB Costs and Net OPEB Obligation The County annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC) amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost



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NOTE 19 - POSTEMPLOYMENT BENEFITS - CONTINUED

Board of County Commissioners - Continued

Annual OPEB Costs and Net OPEB Obligation - Continued each year and amortize any unfunded actuarial liabilities (or funding excess) over a closed period not to

exceed 30 years. The following shows the components of the County’s net OPEB obligation:

Annual Required Contribution 521,722$ Interest on Prior Year Net OPEB Obligation 50,128 Adjustment to Annual Required Contribution (72,472) Annual OPEB Costs 499,378 Estimated Employer Contributions made (252,188) Increase (Decrease) in Net OPEB Obligation 247,190 Net OPEB Obligation , Beginning of Year 1,253,195 Estimated Net OPEB Obligation, End of Year 1,500,385$

The County had an actuarial valuation performed for the plan as of September 30, 2016 to determine the employer’s ARC for the fiscal year ended September 30, 2016. The County’s annual OPEB cost (expense) of $499,378 was equal to the ARC for the fiscal year, as the transition liability was set at zero as of October 31, 2007. The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2014 and the prior two (2) years were as follows:

FiscalYear Ended

AnnualOPEB Costs

Percentage ofOPEB CostContributed

Net OPEBObligation

Annual Covered Payroll

UAAL as a Percentage of

Covered Payroll9/30/2014 $ 439,677 62.90% $1,110,717 31,812,521$ 14.21%9/30/2015 $ 450,001 68.30% $1,253,195 31,944,218$ 14.45%9/30/2016 $ 499,378 50.50% $1,500,385 32,818,887$ 14.06%

Funded Status and Funding Progress As of September 30, 2016, the most recent actuarial valuation date, the plan was 0% funded. The actuarial accrued liability (AAL) for benefits was $4,613,497 and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $4,613,497. Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARCs of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to financial statements in the government-wide financial statements of Okaloosa County, Florida, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and 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. The actuarial methods and assumptions used include techniques that are designed to reduce the



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NOTE 19 - POSTEMPLOYMENT BENEFITS - CONTINUED

Board of County Commissioners - Continued

Actuarial methods and Assumptions - Continuedeffects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the September 30, 2016, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.0% investment rate of return, which is a blended rate of the expected long-term investment returns on the employer’s own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 4.5% initially, increased by increments to an ultimate rate of 5.2% in 2026. The assumed inflation rate is 2.3% compounded annually. The Unfunded Actuarial Liability (UAAL) is being amortized using an open amortization period of 30 level annual payments. The remaining amortization period at September 30, 2016, was 21 years.

Sheriff

Background Certain Other Post-Employment Benefits (OPEB) are available to all employees eligible for disability, early

or normal retirement after terminating employment with Okaloosa County Sheriff’s Office (OCSO). The OPEB benefits include lifetime coverage for the retiree and dependents in the medical/prescription plans as well as participation in the dental group plan sponsored by the Sheriff’s Office for employees. Beginning in fiscal year 2008, the Sheriff implemented Governmental Accounting Standards Board (GASB) Statement No. 45 for the OPEB offered to retirees. This standard addresses how local governments should account for and report their costs related to post-employment health care and other non-pension benefits, such as the Sheriff’s retiree health benefit subsidy. Historically, the Sheriff’s subsidy was funded on a pay-as-you-go basis but GASB 45 requires the Sheriff to accrue the cost of the retiree health subsidy and other post-employment benefits during the period of employees’ active employment, while the benefits are being earned, and disclose the unfunded actuarial accrued liability in order to accurately account for the total future cost of post-employment benefits and the financial impact on the Sheriff.

Plan Description The OCSO administers a single-employer defined benefit healthcare plan (“the Plan”). The Plan provides

healthcare insurance for eligible retirees and their spouses through the Sheriff’s group health insurance plan, which covers both active and retired members. Employer contribution rates for retirees vary based on the type of retirement, years of service, and type of coverage. The Plan does not issue a publicly available financial report but OPEB expenses are reflected in the Sheriff’s internal service fund within the County’s Comprehensive Annual Financial Report (CAFR).

Benefits Provided Eligible retirees may choose among the same medical plan options available for active employees of the employer. Dependents of retirees may be covered, at the retiree’s option, the same as dependents of active employees. Prescription drug coverage is automatically extended to retirees and their dependents who continue coverage under any one of the medical plan options. Covered retirees and their dependents are subject to all the same medical and prescription benefits and rules for coverage as are active employees. Retirees and their dependents are eligible to participate in the employer-sponsored dental plans. Retirees may elect any combination of plans (i.e. only dental, medical/prescription, etc.). Retirees and their dependents that are over age 65 must enroll for Parts A and B under Medicare in order to remain covered under the program. All post-65 medical coverage is secondary to Medicare.



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NOTE 19 – POST EMPLOYMENT BENEFITS – CONTINUED

Sheriff – Continued

Membership At September 30, 2016, membership consisted of: Retirees and Beneficiaries Currently Receiving Benefits 41 Terminated Employees Entitled to Benefits But Not Yet Receiving Them - Active Employees 388 Total 429 Participating Employers 1

Funding Policy Retirees and beneficiaries currently receiving medical/prescription benefits are required to make monthly

premium contributions in order to maintain their coverage. The single retiree premium is paid by the OCSO for retirees with at least 20 years of service, until the retiree reaches age 65. Effective October 1, 2010 that benefit is no longer available except to retirees that met the criteria as of September 30, 2010. Effective June 2011 the OCSO instituted a policy whereby retiring members with thirty years of service with the agency will receive a 50% premium subsidy on their retired employee coverage. This subsidy is limited to five years from their retirement date or until they reach age 65, whichever comes first. Dependent coverage is paid by the retiree. The amount of the premium contribution may change from time to time. Surviving spouses of retirees are eligible to continue coverage under the plan, but must continue to pay the full premium. However, the premiums for health coverage for surviving spouses and any dependent children of officers who had sustained catastrophic injuries or death in the line of duty are paid fully by the OCSO as prescribed by FS Sec 112.19(g) and 112.19(h)1.

Annual OPEB Costs and Net OPEB Obligation The Sheriff’s annual OPEB cost (expense) is the actuarially required contribution (ARC) of the employer determined in accordance with the provisions of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a closed period not to exceed 25 years. The following shows the components of the Sheriff’s net OPEB obligation as of September 30, 2016:


The Sheriff’s annual OPEB cost (expense) was $464,845 for the year ended September 30, 2016. The Sheriff’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2016 and the prior two (2) years were as follows:



81


Sheriff – Continued

Annual OPEB Costs and Net OPEB Obligation - Continued

FiscalYear Ended

AnnualOPEB Costs

EstimatedAmount

Contributed

Percentage of

OPEB CostContributed

Net OPEBObligation


UAAL as a Percentage of Covered

Payroll9/30/2014 $356,813 $178,290 49.96% $4,006,350 $17,466,290 22.94%9/30/2015 $377,890 $236,031 62.46% $4,148,209 $17,466,290 23.75%9/30/2016 $464,845 $198,113 42.62% $4,414,940 $14,482,863 30.48%

Funded Status and Funding Progress As of July 1, 2013, the most recent actuarial valuation date, the actuarial accrued liability of benefits of $3,400,380 was unfunded. Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARCs of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to financial statements in the government-wide financial statements of Okaloosa County, Florida, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and 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. 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.

In the July 1, 2013, actuarial valuation, the individual entry age normal cost method was used. The actuarial assumptions included a 4.0% investment rate of return, which is a blended rate of the expected long-term investment returns on the employer’s own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 7.3% initially, reduced by decrements to reach 5% in 2018 and increase to the ultimate level of 5.5% in 2023. The Unfunded Actuarial Liability (UAAL) is being amortized assuming 30 level annual payments. The remaining amortization period at September 30, 2016, was 23 years.

NOTE 20 - RISK MANAGEMENT

The County is exposed to risk of loss for claims and judgments for public liability, workers’ compensation, employee medical benefits and other special risks. The County uses the Self Insurance Internal Services Fund to account for all risks from workers’ compensation loss, general liability, and medical benefit claims for all County employees except those of the Sheriff, from catastrophic damage to real and tangible property and from special risk policies for the Board. A mixture of commercial insurance coverage and

self-insurance, which is described below, manages the risk to the County. There has been no significant reduction in insurance coverage from the prior fiscal year, and insurance coverage has been sufficient to cover all claims made in the prior three fiscal years.



82


A. Method of Risk Management

Public Liability Florida Statutes 768.28(5) limits the maximum County liability for claims and judgments by

any one person and any one incident to $200,000 and $300,000, respectively. The County self-insures public liability claims for automobile, general and professional liability. A third party administrator manages claims. Currently, the County retains the risk for the first $50,000 for automobile liability, and $100,000 for general and professional liability for each claim or incident. A third party administrator manages the claims.

The Sheriff maintains a commercial insurance policy for public liability and bears no risk of loss under this type of coverage.

Property Insurance The County self-insures the risk of physical loss to its real property, business property and

equipment. The County retains the risk of the first $100,000 of physical damage to County property. In the case of a named storm, the self-insurance retention changes to a 5% deductible on each structure with a minimum deductible of $100,000 on all damaged structures for a capped deductible of $5,000,000 per storm. Effective October 2015, the County insures vehicles valued at $25,000 and above and retains the risk for the first $10,000 of physical damage.

Workers’ Compensation The County contracts with a Third Party Administrator to have its workers’ compensation

claims processed. The County retains risk for all claims up to $500,000 per incident. Excess insurance is purchased to cover losses up to a statutory limit for workers’ compensation and

$1,000,000 for employers’ liability.

The Sheriff participates in the Florida Sheriff’s Association Workers’ Compensation Program. It is a fully insured, guaranteed cost program with a deductible trust fund and insurance with a commercial carrier. The Sheriff retains no risk.

Employee Medical Benefits The Board of County Commissioners and all other elected officials of Okaloosa County, except

the Sheriff, use a fully insured commercial insurance plan to fund employee medical benefits. The Board of County Commissioners or elected official pays the premiums for the employees while the individual pays for dependent and retiree coverage. The County bears no risk of loss under this type of coverage.

The Sheriff utilizes a self-funded health plan to provide comprehensive medical benefits to the employees, retirees and their dependents. It is funded by contributions from the Sheriff’s Office and employees. In compliance with Florida Statute, Section 112.08, an actuarial review of the Plan demonstrates that the current rate structure of the Plan plus the current net position available for benefits appears adequate to support current outstanding claims as well as those projected claims and expenses for the next plan year.

Excess insurance is purchased from a commercial carrier to provide a specific claim and aggregate limits coverage. Specific claim coverage benefits the covered individual by providing unlimited coverage to begin when a specific claim exceeds $105,000 plus an



83

NOTE 20 - RISK MANAGEMENT - CONTINUED

A. Method of Risk Management Employee Medical Benefits - Continued additional corridor of $296,500. Aggregate limits coverage limits the Sheriff’s total risk

exposure. This coverage provides the Sheriff with an additional $1,000,000 in coverage for the coverage year when total claims paid less the total paid under the specific claim excess coverage exceeds 125% of the expected claims for the current plan year.

The Sheriff uses an internal service fund to account for risks from medical benefit claims. Claim expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. At September 30, 2016, the amount of these liabilities was $505,955. This liability has been determined based on an actuarial evaluation of all claims reported and all claims incurred but not reported (IBNR) as of September 30, 2016. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors.

Reconciliation of Claims Liablities for Medical Benefits As of As of

Okaloosa County Sheriff September 30, 2016 September 30, 2015

Unpaid claims and adjustment expenses at

beginning of year $ 587,412 $ 735,652

Incurred claims and claim adjustment expenses

A) Provision for insured events of current

fiscal year 4,372,346 4,333,541

B) Increases (decreases) in provision for insured

events of prior fiscal years - -

Total incurred claims and claim adjustment expenses 4,959,758 5,069,193

Payments

A) Claims and claim adjustment expenses

attributable to insured events of current

fiscal year 4,453,803 4,481,781

B) Claims and claim adjustment expenses attributable to insured events of prior fiscal year - -

Total payments 4,453,803 4,481,781

Unpaid claims and claim adjustment at end of year $ 505,955 $ 587,412

Special Risk Policies The Board of County Commissioners purchases commercial crime coverage against theft of

money and securities with a $25,000 deductible. All of the other elected officials, except the Sheriff, are covered under the policy. Florida Statute requires certain classes of employees (law enforcement) be provided with a special death and disability benefit. The Board of



84


A. Method of Risk Management Special Risk Policies - Continued County Commissioners purchases a commercial policy. The County bears no risk of loss under

this type of coverage. The Sheriff insures this exposure separately.

B. Claim Liabilities for Retained Risk

Claim liabilities for workers’ compensation, general liabilities (including errors and omissions), and auto liability (both bodily injury and property damage) have been determined based on an actuarial evaluation of all claims reported and all claims incurred but not reported (IBNR) as of September 30, 2016. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The actuarial estimation of ultimate losses does not include any future recoveries from the Florida Special Disability Fund, subrogation or third party liens, etc. except to the degree they are implicitly included in the trending process of estimating ultimate losses. The ultimate loss calculation does take into consideration specific excess reinsurance recoverable. Claims liabilities recognized in the Self Insurance Fund of the Board of County Commissioners at September 30, 2016 were as follows:

Current Long-term TotalWorkers' compensation 730,702$ 2,317,984$ 3,048,686$ General liability 116,751 279,682 396,433Automobile liability 10,976 11,932 22,908Total claims liability recognized 858,429$ 2,609,598$ 3,468,027$

C. Funding of Claims Liabilities

The Self Insurance Fund charges the other funds of the Board and other participating elected officials for the cost of claim liabilities based on actuarially projected budget requirements for expected yearly cash payouts. This funding method results in a deficit fund balance that will be charged back to the other funds over a reasonable period of time so that service fund revenues and expenses will be approximately equal.

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86

NOTE 21 – COMMITMENTS AND CONTINGENCIES

Wastewater Service Interlocal Agreement with Fort Walton BeachIn 2009, the Board adopted the Wastewater Service Interlocal Agreement with the City of Fort Walton Beach (Agreement). The Agreement outlines a long-term association for the treatment of the City’s influent wastewater flow at a set percentage of the County’s base sewer rate plus a locked-in annual rate escalator. The agreement provides other ancillary benefits to the City such as the provision of “no cost” tertiary treated effluent for use as irrigation water at the City’s 36-hole municipal Golf Club. The Agreement is effective for 30 years and can be automatically extended for up to two additional terms for a period of ten years for each extension term.

The City will be billed monthly at a rate equal to $2.46 per each 1,000 gallons of wastewater flow.

Additionally, the City will pay to the County the Sewer Readiness to Serve Fee, which is equal to $3,750 per month. Beginning March 2011, and each year thereafter, the Readiness to Serve Fee will increase by 3% annually. Service to the City began March 2010. Fees of $2,915,545 paid by the City during 2016 are reflected as Charges for Services in the Water and Sewer fund. The minimum commitment to the County under the Agreement is as follows:

Fiscal Year Ending September 30, Payment2017 54,537$ 2018 56,173 2019 57,858 2020 59,594 2021 61,382 2022-2026 335,662 2027-2031 389,130 2032-2036 451,112 2037-2039 304,460 Total 1,769,908$

Customer Facility Charge Agreement As of December 1, 2004, the County entered into a Customer Facility Charge Agreement with the on-airport rental car companies. In accordance with Ordinance No. 04-64, the County imposes and the rental car companies collect on behalf of the County, a Customer Facility Charge (CFC). Effective July 2007, Ordinance 04-64 was amended to increase the CFC charge from two dollars and fifty cents ($2.50) to three dollars and twenty-five cents ($3.25) per rental car transaction day on all rental car contracts. In December 2010, Ordinance 10-16 was implemented increasing the CFC charge from three dollars and twenty-five cents ($3.25) to three dollars and seventy-five cents ($3.75). CFC revenue will be utilized by the County to construct, operate and maintain facilities and services for the rental car operators and their customers at the Northwest Florida Regional Airport. The facilities were completed and began operations in fiscal year 2009. CFC collections for the year ended September 30, 2016 were $1,829,063 and will be used for debt service on the Series 2007 taxable airport revenue bonds. In fiscal year 2016, the Airport used $481,229 of CFC revenue generated from the rental car companies for abatement of certain facility rent.

Grants Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies,

principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Board expects such amount, if any, to be immaterial.



87

NOTE 21 – COMMITMENTS AND CONTINGENCIES - CONTINUED Lawsuits

The Board is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the Board’s management that resolution of most of these matters will not have a material adverse effect on the financial condition of the Board. Arbitrage RebateSection 148(f) of the Internal Revenue Code of 1986, as amended, and the proposed and temporary regulations issued by the Internal Revenue Service on May 15, 1989, and made final effective May 18, 1992, require the rebate to the United States government of the excess of earnings on non-purpose investments over earnings which would have been made on such investments if they had been made at bond yield, together with earnings on all future rebate amounts. Although rebates need not be remitted until five years after issuance of the bonds and each five (5) years thereafter, computations must be made annually to show financial position at fiscal year-end. Okaloosa County has five (5) bond issues and one note falling within the purview of the above directives - $26,615,000 Sales Tax Revenue Bonds, Series 2009; $3,600,000 Capital Improvement Revenue Bond, Series 2011; $22,165,000 Sales Tax Revenue Bonds, Series 2014; $67,595,000 Water and Sewer Revenue Bonds, Series 2015; and $12,960,000 Sales Tax Revenue Bonds, Series 2016.

According to the calculations, the Board has no rebate liability with respect to the bonds at September 30, 2016. This determination reflects the liability on that date only and does not represent any amount that may be due at the end of the five-year period from the delivery date of the bonds.

Medicaid County Billing Retrospective In accordance with section 409.915, F.S., Okaloosa County must contribute a portion of the cost for State Medicaid for county “resident” Medicaid patients. House Bill 5301 pledged the Agency for Health Care Administration (AHCA) would certify and identify the county costs of unpaid retroactive amounts owed from November 2001 thru April 2012 and allow the County to either pay or petition for hearing. July

NOTE 21 – COMMITMENTS AND CONTINGENCIES - CONTINUED

Medicaid County Billing Retrospective - Continued2012, AHCA certified open claims of $839,540 with net payments, credits, and transfers of $562,436 resulting in a preliminary certification of $277,104. After final certifications, AHCA certified the County’s portion of the retroactive amounts to be $265,850. The Board approved the final certification of $265,850 resulting in reduction of the State Revenue Sharing of $6,277 per month for 2013 and $3,139 per month for the following four (4) year period.

NOTE 22– RELATED ORGANIZATION

Library Cooperative The Okaloosa County Board of County Commissioners entered into an inter-local agreement with six (6)

municipalities located within Okaloosa County, Florida to provide for operation of a countywide public library system. The governing body of the cooperative is the Okaloosa County Public Library Cooperative Board made up of one appointee from each municipality and the County. Capital assets remain the property of the participating municipalities. Under the agreement, the County agreed to provide annual funding to the cooperative.

The current agreement was entered January 2016 and shall end or be renewed December 2016. The Okaloosa County Board of County Commissioners’ contribution to the library cooperative for the year ended September 30, 2016 was $619,135. In addition, approximately $83,153 of allocable indirect costs was charged to the fund. These charges were treated as an in-kind contribution by the County during the year ended September 30, 2016. The future commitment to the library cooperative in 2017 is $670,957.

Required Supplementary Information

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Okaloosa County, FloridaNOTES TO REQUIRED SUPPLEMENTARY INFORMATION

The following changes in actuarial assumptions occurred in 2016:

FRS: There were no changes in actuarial assumptions. The inflation rate assumption remained at 2.60%, the real payroll growth assumption remained

HIS: The municipal rate used to determine total pension liability was decreased from 3.5% to 2.85%

This fund is used to account for the $85 surcharge imposed on domestic violence offenses and is used toprovide additional training to law enforcement personnel in combating domestic violence.

Prisoner Benefit Fund

Domestic Violence Trust Fund

This fund is used to account for profits from the detention facility's commissary and expenses involved in thecommissary operation.

Additional Court Cost FundThis fund is used to account for the $65 additional court costs imposed by the County to fund innovations,legal aid, law library, and teen court operations.

Drug Abuse Trust FundThis fund is used to account for an additional assessment collected for the purpose of providing assistance foralcohol and other drug abuse treatment or education programs.

Nonmajor Governmental FundsSPECIAL REVENUE FUNDS


E-911 Operations FundThis fund is used to account for E911 revenues collected exclusively for costs associated with developingand maintaining E911 systems and networks.

Radio Communications FundThis fund is used to account for surcharges collected to fund the acquisition of equipment, software, andengineering, administrative, and maintenance services to construct, operate, and maintain a statewide radiosystem.

Law Enforcement Trust FundThis fund is used to account for the revenues received as a result of criminal or forfeiture proceedings andused for school resource officer, crime prevention, safe neighborhood, drug abuse education and preventionsprograms, or for other law enforcement purposes.

Natural Disaster Fund

Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.

County Public Health Fund

Municipal Services Benefit Units Fund

This fund is used to account for ad valorem tax proceeds levied on property in the unincorporated areas ofOkaloosa County for the maintenance of parks in those areas.

This fund is used to account for the assessments levied against benefiting properties for providing streetlighting, street and drainage improvements and maintenance.

This fund is used to account for funds appropriated by Okaloosa County for or on behalf of the county publichealth unit, such as capital projects costs.

This fund is used to account for disaster funding and expenditures not considered normal recurring operatingactivity of the County.

Unincorporated County Parks Fund

Local Housing Assistance Trust FundThis fund is used to account for funds received from the State Housing Initiatives Partnership Program forimplementing and administrating the local housing assistance plan.

Police Academy FundThis fund is used to account for an additional $2 assessed by the County for criminal justice education degreeprograms and training courses.

County Transportation Trust FundThis fund is used to account for maintenance and in-house construction of Okaloosa County roads. Theseactivities include road maintenance, traffic control, engineering, right-of-way acquistion, and construction ofnew roadways. Funds are provided from state shared revenue and certain gasoline taxes collected anddistributed by the State of Florida.

Traffic Education Trust FundThis fund is used to account for the additional $5 surcharge imposed on each traffic penalty and is used tofund driver education programs in public and non-public schools.



CAPITAL PROJECTS FUNDS

Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financedby proprietary funds

Clerk of Circuit CourtCourts Special Revenue Fund

This fund is used to account for the statutory fines, fees, service charges and costs collected by the Clerkrelated to the performance of court-related activities. All excess funds over the amount of the Clerk’soperating budget for this fund, approved by the Clerks of Court Operations Corporation, are remitted to theFlorida Department of Revenue.

Public Records Modernization Trust FundThis fund is used to account for recording fees collected by the Clerk under Florida Statute 28.24(12)(d).The fund is used exclusively for equipment, personnel training, and technical assistance in modernizing thepublic records system.

Public Records Courts Special Revenue FundThis fund is used to account for recording fees collected by the Clerk under Florida Statute 28.24(12)(e).The fund is used exclusively for court-related technology needs.

Public Records 10% Fine Special Revneu FundThis fund is used to account for recroding fees collecte by the Clerk of the Circuit Court under FloridaStatute 28.24(12)(e). The fund is used exclusively for court-related technology needs.

Nonmajor Governmental Funds (Continued)SPECIAL REVENUE FUNDS (Continued)

Board of County Commissioners (Continued)

This fund is used to account for constitutional gasoline tax revenues and balances on hand, as well as a

portion of the County's Local Option Gasoline Tax revenue, all available for capital improvements. All

improvements from this fund are restricted to the construction of roads and bridges within Okaloosa County.

DEBT SERVICE FUND

This fund is used to account for accumulation of resources and payment of bond debt for Sales Tax RevenueBonds, Series 2009, 2011, 2014, and 2016 and Toursit Development note.

Debt Service funds are used to account for the accumulation of resources and payment of special obligation bond principal andinterest from governmental resources when Okaloosa County is obligated in some manner for the payment.

Okaloosa Debt Service Fund

Road and Bridge Construction Fund

Second Dollar Program FundThis fund is used to account for revenues restricted from local County moving violation tickets and isexpended to support a new safety program for teen drivers. Funds cannot be used for normal operatingexpenses.

SheriffFederal Law Enforcement Trust Fund

This fund is used to account for confiscated merchandise and funds and is expended for Law EnforcementPurposes. Funds cannot be used for normal operating expenses.

Teen Challenge Driver FundThis fund is used to account for revenues restricted by the Florida Sheriffs Association and its expended tosupport a new safety program for teen drivers. Funds cannot be used for normal operating expenses.

CountyTransportationTrust Special Revenue Fund

NaturalDisaster

Special Revenue Fund

Local Housing Assistance Trust

Fund

E-911Operations

SpecialRevenue Fund

Cash and Cash Equivalents 2,711,686$ 538,112$ 1,047,678$ 589,547$Investments 16,693 46,636 359,442 367,566Accounts Receivable - - - -Due from Other Funds - - - -Due from Other Elected Officials - - - -Due from Other Governments 971,823 936,723 - -Prepaids 6,512 - - 115,198

Total Assets 3,706,714$ 1,521,471$ 1,407,120$ 1,072,311$

LiabilitiesAccounts Payable 132,373$ -$ -$ -$Contracts Payable 58,513 123,246 18,276 157Other Accrued Liabilities 109,561 - - 7,044Due to Other Funds - - - 109,346Due to Other Elected Officials 89 - - -Due to Other Governments 882 - - 3,117Due to Depositors 60,395 - - -Unearned Revenue - 379,848 1,073,704 -

Total Liabilities 361,813 503,094 1,091,980 119,664

Fund Balances Nonspendable 6,512 - - 115,198Restricted - 936,723 315,140 952,647Committed - - - -Assigned 3,338,389 81,654 - -Unassigned - - - (115,198)

Total Fund Balances 3,344,901 1,018,377 315,140 952,647

3,706,714$ 1,521,471$ 1,407,120$ 1,072,311$


Okaloosa County, FloridaCOMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDSSeptember 30, 2016

ASSETS


Statement A-1

RadioCommunicationsSpecial Revenue

Fund

LawEnforcementTrust Special Revenue Fund

Police Academy Special Revenue

Fund

CountyPublic Health

SpecialRevenue Fund

MunicipalServices Benefit

Unit Special Revenue Fund

813$ 134,041$ 47,853$ 50,311$ 538,631$46 1,647 897 676 45,536

- - - 125 -109,346 - - - -

6,609 5,750 1,752 - 43- - - - 18,566

5,852 - - - -

122,666$ 141,438$ 50,502$ 51,112$ 602,776$

-$ -$ -$ -$ 1,849$- - - 50,138 23,146- - - - -- - - - -- - - - -- - - - -- - - - -- - - - -

- - - 50,138 24,995

5,852 - - - -122,666 141,438 50,502 - -

- - - - 577,781- - - 974 -

(5,852) - - - -

122,666 141,438 50,502 974 577,781

122,666$ 141,438$ 50,502$ 51,112$ 602,776$

Continued…

92



UnincorporatedCounty Parks


Prisoner Benefit Special Revenue

Fund

Additional Court Cost Special

Revenue Fund

Drug Abuse Trust Special Revenue Fund

Cash and Cash Equivalents 1,791,081$ 430,404$ 46,244$ 57,748$Investments 2,136,750 506,794 427,296 693Accounts Receivable 1,795 69 - -Due from Other Funds - - - -Due from Other Elected Officials 293 - 97,485 1,220Due from Other Governments - - 3,394 -Prepaids - - 85 -

Total Assets 3,929,919$ 937,267$ 574,504$ 59,661$

LiabilitiesAccounts Payable 10,438$ 1,368$ 13,766$ 322$Contracts Payable 285 29,596 26,588 -Other Accrued Liabilities 10,094 3,058 6,225 -Due to Other Funds - - - -Due to Other Elected Officials 68 - - -Due to Other Governments 130 13,453 34,783 -Due to Depositors - 39,667 - -Unearned Revenue - - - -

Total Liabilities 21,015 87,142 81,362 322

Fund Balances Nonspendable - - 85 -Restricted 3,908,904 850,125 493,142 59,339Committed - - - -Assigned - - - -Unassigned - - (85) -

Total Fund Balances 3,908,904 850,125 493,142 59,339

3,929,919$ 937,267$ 574,504$ 59,661$

ASSETS



Statement A-1

DomesticViolence Trust


TrafficEducation


Courts Special Revenue Fund

Public Records ModernizationTrust Special Revenue Fund

Public Records Courts Special Revenue Fund

3,469$ 201,122$ 376,092$ 253,607$ 549,382$2,016 1,030 - - -

- - - - -- - 1,704 10,639 65,049

2,700 5,590 - - -- - - - -- - 6,000 - -

8,185$ 207,742$ 383,796$ 264,246$ 614,431$

-$ -$ -$ -$ -$- - - - -- - 54,652 - -- - 8 - -- - - - -- - 46,709 - -- - - - -- - 282,427 - -

- - 383,796 - -

- - 6,000 - -8,185 207,742 - 264,246 614,431

- - - - -- - - - -- - (6,000) - -

8,185 207,742 - 264,246 614,431

8,185$ 207,742$ 383,796$ 264,246$ 614,431$

Continued…

93



Public Records 10% Fine Special

Revenue Fund

Federal Law EnfocementTrust Special Revenue Fund

Teen Driver Challenge


Second Dollar Program Special Revenue Fund

Cash and Cash Equivalents 35,964$ 244,002$ -$ -$Investments - - - -Accounts Receivable - - - -Due from Other Funds - - - -Due from Other Elected Officials - - - -Due from Other Governments - - - -Prepaids - - - -

Total Assets 35,964$ 244,002$ -$ -$

LiabilitiesAccounts Payable -$ -$ -$ -$Contracts Payable - - - -Other Accrued Liabilities - - - -Due to Other Funds - - - -Due to Other Elected Officials - - - -Due to Other Governments - - - -Due to Depositors - - - -Unearned Revenue - 244,002 - -

Total Liabilities - 244,002 - -

Deferred Inflow of Resources Unavailable Revenue - - - -

Fund Balances Nonspendable

Nonspendable - - - -Spendable

Restricted 35,964 - - -Committed - - - -Assigned - - - -Unassigned - - - -

Total Fund Balances 35,964 - - -

35,964$ 244,002$ -$ -$

ASSETS

LIABILITIES, DEFERRED INFLOWS,


Statement A-1


Road and Bridge Construction


Total Nonmajor Governmental

Funds(Exhibit III-A)

525$ 2,262,631$ 11,910,943$233 8,505,029 12,418,980- 41 2,030- - 186,738- - 121,442- 394,587 2,325,093- - 133,647

758$ 11,162,288$ 27,098,873$

300$ 18,792$ 179,208$- 744,759 1,074,704- - 190,634

2,650,000 - 2,759,354- 71 228- - 99,074- 2,500 102,562- - 1,979,981

2,650,300 766,122 6,385,745

- - -

- - 133,647

- 10,396,166 19,357,360- - 577,781- - 3,421,017

(2,649,542) - (2,776,677)

(2,649,542) 10,396,166 20,713,128

758$ 11,162,288$ 27,098,873$

94

County Transportation Trust Special Revenue Fund

NaturalDisaster



Fund

E-911 Operations Special

Revenue FundRevenuesTaxes 4,569,849$ -$ -$ -$Licenses and Permits - - - -Intergovernmental 2,050,393 409,621 931,529 949,964Charges for Services 442,893 - - 6,803Fines - - - -Miscellaneous 24,082 151,269 16,160 13,060

Total Revenues 7,087,217 560,890 947,689 969,827

ExpendituresCurrentGeneral Government - - - -Public Safety - 56,685 - 806,844Physical Environment 870,175 - - -Transportation 7,259,491 - - -Economic Environment - - 944,816 -Human Services - - - -Culture and Recreation - - - -Court-Related - - - -

Capital Outlay 1,129,121 623,880 - 613,663Debt ServicePrincipal - - - -Interest - - - -Other Debt Service Costs - - - -

Total Expenditures 9,258,787 680,565 944,816 1,420,507

Excess (Deficiency) of RevenuesOver (Under) Expenditures (2,171,570) (119,675) 2,873 (450,680)

Other Financing Sources (Uses)Transfers In 2,916,504 - - -Transfers Out (67,014) - - -Transfers Among Constitutional Officers - - - -Issuance of Debt - - - -Original Issue Premium - - - -

Total Other Financing Sources (Uses) 2,849,490 - - -

Net Change in Fund Balances 677,920 (119,675) 2,873 (450,680)

Fund Balances - Beginning 2,666,981 1,138,052 312,267 1,403,327

Fund Balances - Ending 3,344,901$ 1,018,377$ 315,140$ 952,647$

Okaloosa County, FloridaCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDSFor the Fiscal Year Ended September 30, 2016

Statement A-2

Radio Communications Special Revenue

Fund

Law Enforcement Trust Special Revenue Fund


Fund

CountyPublic Health

SpecialRevenue Fund

Municipal Services Benefit


-$ -$ -$ 595,519$ -$- - - - 489,933- - - - 17,360- - 25,222 - -

95,529 148,526 - - -1,023 1,072 389 91,668 18,706

96,552 149,598 25,611 687,187 525,999

- - - - -77,740 - 12,451 - -

- - - - -- - - - 449,107- - - - -- - - 601,661 -- - - - -- - - - -

58,782 - - 89,563 -

- - - - -- - - - -- - - - -

136,522 - 12,451 691,224 449,107

(39,970) 149,598 13,160 (4,037) 76,892

- - - 4,000 -- - - - -- (47,050) - - 43- - - - -- - - - -

- (47,050) - 4,000 43

(39,970) 102,548 13,160 (37) 76,935

162,636 38,890 37,342 1,011 500,846

122,666$ 141,438$ 50,502$ 974$ 577,781$Continued…

95



Unincorporated County Parks



Fund


Revenue Fund

Drug Abuse Trust Special Revenue

FundRevenuesTaxes 2,044,392$ -$ -$ -$Licenses and Permits - - - -Intergovernmental - - - -Charges for Services 16,810 927,510 1,263,026 -Fines - - - 10,500Miscellaneous 14,267 8,350 78,988 514

Total Revenues 2,075,469 935,860 1,342,014 11,014

ExpendituresCurrentGeneral Government - - - -Public Safety - 766,076 - -Physical Environment - - - -Transportation - - - -Economic Environment - - - -Human Services - - - -Culture and Recreation 957,068 - - -Court-Related - - 865,062 6,421

Capital Outlay 125,703 - - -Debt ServicePrincipal - - - -Interest - - - -Other Debt Service Costs - - - -

Total Expenditures 1,082,771 766,076 865,062 6,421

Excess (Deficiency) of RevenuesOver (Under) Expenditures 992,698 169,784 476,952 4,593

Other Financing Sources (Uses)Transfers In 68,000 - - -Transfers Out (1,262,342) - (529,795) -Transfers Among Constitutional Officers 293 - - -Issuance of Debt - - - -Original Issue Premium - - - -

Total Other Financing Sources (Uses) (1,194,049) - (529,795) -

Net Change in Fund Balances (201,351) 169,784 (52,843) 4,593

Fund Balances - Beginning 4,110,255 680,341 545,985 54,746

Fund Balances - Ending 3,908,904$ 850,125$ 493,142$ 59,339$

Statement A-2

Domestic Violence Trust


Traffic Education Special Revenue

FundCourts Special Revenue Fund

Public Records Modernization Trust Special Revenue Fund

Public Records Courts Special Revenue Fund

-$ -$ -$ -$ -$- - - - -- - - - -- - 2,923,967 114,499 347,593

32,733 78,751 859,347 - -228 6,645 - 739 1,125

32,961 85,396 3,783,314 115,238 348,718

- - - 260,366 -- - - - -- - - - -- - - - -- - - - -- - - - -- - - - -- - 3,783,314 - 526,434- - - 209,024 77,743

- - - - -- - - - -- - - - -

- - 3,783,314 469,390 604,177

32,961 85,396 - (354,152) (255,459)

- - - - -(36,347) - - - -

- (32,300) - - -- - - - -- - - - -

(36,347) (32,300) - - -

(3,386) 53,096 - (354,152) (255,459)

11,571 154,646 - 618,398 869,890

8,185$ 207,742$ -$ 264,246$ 614,431$Continued…

96



Public Records 10% Fine Special

Revenue Fund

Federal Law Enforcement Trust Special Revenue Fund

Teen Driver Challenge Special

Revenue Fund

Second Dollar Program Special Revenue Fund

RevenuesTaxes -$ -$ -$ -$Licenses and Permits - - - -Intergovernmental - 120,699 - -Charges for Services - - - -Fines 187,318 - - -Miscellaneous - - - -

Total Revenues 187,318 120,699 - -

ExpendituresCurrentGeneral Government - - - -Public Safety - 121,849 32,300 -Physical Environment - - - -Transportation - - - -Economic Environment - - - -Human Services - - - -Culture and Recreation - - - -Court-Related 207,340 - - -

Capital Outlay - 45,900 - -Debt ServicePrincipal - - - -Interest - - - -Other Debt Service Costs - - - -

Total Expenditures 207,340 167,749 32,300 -

Excess (Deficiency) of RevenuesOver (Under) Expenditures (20,022) (47,050) (32,300) -

Other Financing Sources (Uses)Transfers In - - - -Transfers Out - - - -Transfers Among Constitutional Officers - 47,050 32,300 -Issuance of Debt - - - -Original Issue Premium - - - -

Total Other Financing Sources (Uses) - 47,050 32,300 -

Net Change in Fund Balances (20,022) - - -

Fund Balances - Beginning 55,986 - - -

Fund Balances - Ending 35,964$ -$ -$ -$

Statement A-2





Funds(Exhibit IV-A)

-$ 1,849,602$ 9,059,362$- - 489,933

5,122,390 2,254,492 11,856,448- - 6,068,323- - 1,412,704

452,949 81,009 962,243

5,575,339 4,185,103 29,849,013

190,750 - 451,116- - 1,873,945- - 870,175- 2,196,903 9,905,501- - 944,816- - 601,661- - 957,068- - 5,388,571- 3,715,818 6,689,197

3,425,000 - 3,425,0004,038,562 - 4,038,562

150,124 - 150,124

7,804,436 5,912,721 35,295,736

(2,229,097) (1,727,618) (5,446,723)

1,200,588 340,720 4,529,812(2,820,690) - (4,716,188)

- - 336- - -

160,121 - 160,121

(1,459,981) 340,720 (25,919)

(3,689,078) (1,386,898) (5,472,642)

1,039,536 11,783,064 26,185,770

(2,649,542)$ 10,396,166$ 20,713,128$

97

Schedule A-3

Original Final Actual AmountsRevenuesTaxes -$ -$ 264$ 264$ Intergovernmental 120,000 120,000 124,244 4,244 Charges for Services - 361,657 289,326 (72,331) Miscellaneous 60,000 127,619 149,318 21,699

Total Revenues 180,000 609,276 563,152 (46,124)

ExpendituresCurrentPublic Safety 43,000 110,619 - 110,619 Culture and Recreation 525,298 605,484 76,836 528,648

Capital Outlay 12,987,827 27,155,679 1,917,075 25,238,604

Total Expenditures 13,556,125 27,871,782 1,993,911 25,877,871 Excess (Deficiency) ofRevenues Over (Under) Expenditures (13,376,125) (27,262,506) (1,430,759) 25,831,747

Other Financing Sources (Uses)Transfers In 15,000 15,000 11,111 (3,889) Transfers Out (257,950) (303,950) (652,454) 348,504 Issuance of Debt - 14,000,000 12,960,000 1,040,000 Original Issue Premium - - 1,040,000 (1,040,000)

(242,950) 13,711,050 13,358,657 1,384,615


Fund Balance - Beginning 13,619,075 13,551,456 13,551,456 -


98


Budgeted Amounts


Positive(Negative)


Okaloosa County, FloridaCAPITAL OUTLAY CONSTRUCTION TRUST CAPITAL PROJECTS FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL

Schedule A-4

Original Final Actual AmountsRevenuesTaxes 4,400,000$ 4,400,000$ 4,569,849$ 169,849$ Intergovernmental 1,707,719 2,331,065 2,050,393 (280,672) Charges for Services 281,495 281,495 442,893 161,398 Miscellaneous 5,000 5,000 24,082 19,082

Total Revenues 6,394,214 7,017,560 7,087,217 69,657

ExpendituresCurrentPhysical Environment 1,323,849 1,411,692 870,175 541,517 Transportation 8,245,179 8,222,996 7,259,491 963,505

Capital Outlay 1,391,690 2,899,343 1,129,121 1,770,222

Total Expenditures 10,960,718 12,534,031 9,258,787 3,275,244 Excess (Deficiency) of Revenues Over (Under) Expenditures (4,566,504) (5,516,471) (2,171,570) 3,344,901

Other Financing Sources (Uses)Transfers In 2,916,504 2,916,504 2,916,504 - Transfers Out - (67,014) (67,014) -

2,916,504 2,849,490 2,849,490 -

Net Change in Fund Balance (1,650,000) (2,666,981) 677,920 3,344,901




Positive(Negative)


99

Okaloosa County, FloridaCOUNTY TRANSPORTATION TRUST SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts

Schedule A-5

Original Final Actual AmountsRevenuesIntergovernmental -$ 1,169,776$ 409,621$ (760,155)$ Miscellaneous - - 151,269 151,269

Total Revenues - 1,169,776 560,890 (608,886)

ExpendituresCurrentPublic Safety - 965,340 56,685 908,655 Economic Environment - - - -

Capital Outlay - 1,342,488 623,880 718,608

Total Expenditures - 2,307,828 680,565 1,627,263 Excess (Deficiency) of Revenues Over (Under) Expenditures - (1,138,052) (119,675) 1,018,377

Other Financing Sources (Uses)Transfers In - - - -

- - - -

Net Change in Fund Balance - (1,138,052) (119,675) 1,018,377

Fund Balance - Beginning - 1,138,052 1,138,052 -


100

Okaloosa County, FloridaNATURAL DISASTER SPECIAL REVENUE FUND



Budgeted Amounts


Positive(Negative)


Schedule A-6

Original Final Actual AmountsRevenuesIntergovernmental -$ 3,193,711$ 931,529$ (2,262,182)$ Miscellaneous 2,500 46,645 16,160 (30,485)

Total Revenues 2,500 3,240,356 947,689 (2,292,667)

ExpendituresCurrentEconomic Environment 312,115 3,552,623 944,816 2,607,807

Total Expenditures 312,115 3,552,623 944,816 2,607,807 Excess (Deficiency) of Revenues Over (Under) Expenditures (309,615) (312,267) 2,873 315,140

Net Change in Fund Balance (309,615) (312,267) 2,873 315,140

309,615 312,267 312,267 -

Fund Balance - Ending -$ -$ 315,140$ 315,140$

Okaloosa County, FloridaLOCAL HOUSING ASSISTANCE TRUST FUND



Positive(Negative)

101


Budgeted Amounts


Schedule A-7

Original Final Actual AmountsRevenuesIntergovernmental 930,000$ 930,000$ 949,964$ 19,964$ Charges for Services 3,250 3,250 6,803 3,553 Miscellaneous 10,000 10,000 13,060 3,060

Total Revenues 943,250 943,250 969,827 26,577

ExpendituresCurrentPublic Safety 1,618,250 2,028,450 806,844 1,221,606

Capital Outlay 125,000 318,126 613,663 (295,537)

Total Expenditures 1,743,250 2,346,576 1,420,507 926,069

Excess (Deficiency) of Revenues Over (Under) Expenditures (800,000) (1,403,326) (450,680) 952,646

Net Change in Fund Balance (800,000) (1,403,326) (450,680) 952,646

800,000 1,403,326 1,403,327 1


Okaloosa County, FloridaE-911 OPERATIONS SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

102


Budgeted Amounts


Positive(Negative)


Schedule A-8

Original Final Actual AmountsRevenuesFines 110,000$ 110,000$ 95,529$ (14,471)$ Miscellaneous 1,000 1,000 1,023 23

Total Revenues 111,000 111,000 96,552 (14,448)

ExpendituresCurrentPublic Safety 146,000 146,000 77,740 68,260

Capital Outlay 30,000 127,636 58,782 68,854

Total Expenditures 176,000 273,636 136,522 137,114 Excess (Deficiency) of Revenues Over (Under) Expenditures (65,000) (162,636) (39,970) 122,666

Net Change in Fund Balance (65,000) (162,636) (39,970) 122,666

65,000 162,636 162,636 -


Okaloosa County, FloridaRADIO COMMUNICATIONS SPECIAL REVENUE FUND


103


Budgeted Amounts


Positive(Negative)


Schedule A-9

Original Final Actual AmountsRevenuesFines -$ 139,770$ 148,526$ 8,756$ Miscellaneous - - 1,072 1,072

Total Revenues - 139,770 149,598 9,828

ExpendituresCurrentPublic Safety - - - -

Total Expenditures - - - - Excess (Deficiency) of Revenues Over (Under) Expenditures - 139,770 149,598 9,828

Other Financing Sources (Uses)

(3,000) (178,660) (47,050) 131,610

(3,000) (178,660) (47,050) 131,610


3,000 38,890 38,890 -


Okaloosa County, FloridaLAW ENFORCEMENT TRUST FUND SPEACIAL REVENUE FUND



104


Budgeted Amounts


Positive(Negative)



Schedule A-10

Original Final Actual AmountsRevenuesCharges for Services 25,000$ 25,000$ 25,222$ 222$ Miscellaneous 350 350 389 39

Total Revenues 25,350 25,350 25,611 261


Total Expenditures 8,350 17,522 12,451 5,071 Excess (Deficiency) of Revenues Over (Under) Expenditures 17,000 7,828 13,160 5,332


(30,000) (45,170) - 45,170

(30,000) (45,170) - 45,170


13,000 37,342 37,342 -


Okaloosa County, FloridaPOLICE ACADEMY SPECIAL REVENUE FUND



105


Budgeted Amounts


Positive(Negative)



Schedule A-11

Original Final Actual AmountsRevenuesTaxes 595,661$ 595,661$ 595,519$ (142)$ Miscellaneous 2,000 91,563 91,668 105

Total Revenues 597,661 687,224 687,187 (37)

ExpendituresCurrentHuman Services 601,661 602,671 601,661 1,010

Capital Outlay - 89,563 89,563 -

Total Expenditures 601,661 692,234 691,224 1,010 Excess (Deficiency) of Revenues Over (Under) Expenditures (4,000) (5,010) (4,037) 973

Other Financing Sources (Uses)Transfers In 4,000 4,000 4,000 -

4,000 4,000 4,000 -

Net Change in Fund Balance - (1,010) (37) 973

Fund Balance - Beginning - 1,010 1,011 1

Fund Balance - Ending -$ -$ 974$ 974$

Okaloosa County, FloridaCOUNTY PUBLIC HEALTH SPECIAL REVENUE FUND



Positive(Negative)


106


Budgeted Amounts

Schedule A-12

Original Final Actual AmountsRevenuesLicenses and Permits 478,287$ 494,896$ 489,933$ (4,963)$ Intergovernmental - 97,680 17,360 (80,320) Miscellaneous - 12,167 18,706 6,539

Total Revenues 478,287 604,743 525,999 (78,744)

ExpendituresCurrentTransportation 946,583 1,105,565 449,107 656,458

Total Expenditures 946,583 1,105,565 449,107 656,458 Excess (Deficiency) of Revenues Over (Under) Expenditures (468,296) (500,822) 76,892 577,714


- - 43 43

- - 43 43


Fund Balance - Beginning 468,296 500,822 500,846 24


Okaloosa County, FloridaMUNICIPAL SERVICES BENEFIT UNIT SPECIAL REVENUE FUND



Positive(Negative)



107


Budgeted Amounts

Schedule A-13

Original Final Actual AmountsRevenuesTaxes 2,041,577$ 2,041,577$ 2,044,392$ 2,815$ Charges for Services 7,500 7,500 16,810 9,310 Miscellaneous 90,000 90,000 14,267 (75,733)

Total Revenues 2,139,077 2,139,077 2,075,469 (63,608)

ExpendituresCurrentCulture and Recreation 3,830,718 3,937,117 957,068 2,980,049

Capital Outlay 1,046,017 1,117,872 125,703 992,169

Total Expenditures 4,876,735 5,054,989 1,082,771 3,972,218 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,737,658) (2,915,912) 992,698 3,908,610

Other Financing Sources (Uses)Transfers In - 68,000 68,000 - Transfers Out (1,262,342) (1,262,342) (1,262,342) -

- - 293 293

(1,262,342) (1,194,342) (1,194,049) 293

Net Change in Fund Balance (4,000,000) (4,110,254) (201,351) 3,908,903



Okaloosa County, FloridaUNINCORPORATED COUNTY PARKS SPECIAL REVENUE FUND



Positive(Negative)



108


Budgeted Amounts

Schedule A-14

Original Final Actual AmountsRevenuesCharges for Services 672,000$ 672,000$ 927,510$ 255,510$ Miscellaneous 5,600 5,600 8,350 2,750

Total Revenues 677,600 677,600 935,860 258,260

ExpendituresCurrentPublic Safety 1,277,600 1,357,941 766,076 591,865

Capital Outlay - - - -

Total Expenditures 1,277,600 1,357,941 766,076 591,865 Excess (Deficiency) of Revenues Over (Under) Expenditures (600,000) (680,341) 169,784 850,125


600,000 680,341 680,341 -


Okaloosa County, FloridaPRISONER BENEFIT SPECIAL REVENUE FUND



Positive(Negative)

109


Budgeted Amounts


Schedule A-15

Original Final Actual AmountsRevenuesCharges for Services 1,340,200$ 1,408,168$ 1,263,026$ (145,142)$ Miscellaneous 42,000 42,000 78,988 36,988

Total Revenues 1,382,200 1,450,168 1,342,014 (108,154)

ExpendituresCurrentCourt-Related 1,559,150 1,773,309 865,062 908,247

Total Expenditures 1,559,150 1,776,309 865,062 911,247 Excess (Deficiency) of Revenues Over (Under) Expenditures (176,950) (326,141) 476,952 803,093

Other Financing Sources (Uses)Transfers Out (675,000) (675,000) (529,795) (145,205)

(675,000) (675,000) (529,795) 145,205


851,950 1,001,141 545,985 (455,156)


Okaloosa County, FloridaADDITIONAL COURT COST SPECIAL REVENUE FUD



Positive(Negative)


110


Budgeted Amounts


Schedule A-16

Original Final Actual AmountsRevenuesFines 13,000$ 13,000$ 10,500$ (2,500)$ Miscellaneous 300 300 514 214

Total Revenues 13,300 13,300 11,014 (2,286)

ExpendituresCurrentCourt-Related 58,300 68,046 6,421 61,625

Total Expenditures 58,300 68,046 6,421 61,625 Excess (Deficiency) of Revenues Over (Under) Expenditures (45,000) (54,746) 4,593 59,339


45,000 54,746 54,746 -


Okaloosa County, FloridaDRUG ABUSE TRUST SPECIAL REVENUE FUND



Positive(Negative)

111


Budgeted Amounts


Schedule A-17

Original Final Actual AmountsRevenuesFines 27,000$ 32,733$ 32,733$ -$ Miscellaneous - - 228 228

Total Revenues 27,000 32,733 32,961 228

ExpendituresCurrentCourt-Related 5,255 5,255 - 5,255

Total Expenditures 5,255 5,255 - 5,255 Excess (Deficiency) of Revenues Over (Under) Expenditures 21,745 27,478 32,961 5,483


(27,000) (39,048) (36,347) 2,701


5,255 11,570 11,571 1


Okaloosa County, FloridaDOMESTIC VIOLENCE TRUST SPECIAL REVENUE FUND



Positive(Negative)


112


Budgeted Amounts


Schedule A-18

Original Final Actual AmountsRevenuesFines 90,000$ 90,000$ 78,751$ (11,249)$ Miscellaneous 750 5,750 6,645 895

Total Revenues 90,750 95,750 85,396 (10,354)


Total Expenditures 105,500 182,197 - 182,197 Excess (Deficiency) of Revenues Over (Under) Expenditures (14,750) (86,447) 85,396 171,843


(95,250) (68,199) (32,300) 35,899

(95,250) (68,199) (32,300) 35,899


110,000 154,646 154,646 -


113

Okaloosa County, FloridaTRAFFIC EDUCATION SPECIAL REVENUE FUND



Budgeted Amounts


Positive(Negative)




Schedule A-19

Original Final Actual AmountsRevenuesIntergovernmental -$ 21,907$ -$ (21,907)$ Charges for Services 2,836,000 2,684,924 2,923,967 239,043 Fines 740,975 740,975 859,347 118,372

Total Revenues 3,576,975 3,447,806 3,783,314 335,508

ExpendituresCurrentCourt-Related 3,576,975 3,447,806 3,783,314 (335,508)

Total Expenditures 3,576,975 3,447,806 3,783,314 (335,508) Excess (Deficiency) of Revenues Over (Under) Expenditures - - - -

Net Change in Fund Balance - - - -

Fund Balance - Beginning - - - -

Fund Balance - Ending -$ -$ -$ -$

114

Okaloosa County, FloridaCOURTS SPECIAL REVENUE FUND



Budgeted Amounts


Positive(Negative)

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual expenditures exceed legally budgeted amounts at September 30, 2016 due to amounts were funded from revenues that exceeded budgeted amounts.

Schedule A-20

Original Final Actual AmountsRevenuesCharges for Services 100,000 100,000 114,499 14,499 Miscellaneous 619,500 619,500 739 (618,761)

Total Revenues 719,500 719,500 115,238 (604,262)

ExpendituresCurrentGeneral Government - 249,400 260,366 (10,966)

Capital Outlay 719,500 470,100 209,024 261,076

Total Expenditures 719,500 719,500 469,390 250,110 Excess (Deficiency) of Revenues Over (Under) Expenditures - - (354,152) (354,152)

Net Change in Fund Balance - - (354,152) (354,152)

Fund Balance - Beginning - - 618,398 618,398


115

Okaloosa County, FloridaPUBLIC RECORDS MODERNIZATION TRUST SPECIAL REVENUE FUND



Budgeted Amounts


Positive(Negative)

Schedule A-21

Original Final Actual AmountsRevenuesCharges for Services 315,000$ 315,000$ 347,593$ 32,593$ Miscellaneous 867,300 867,300 1,125 (866,175)

Total Revenues 1,182,300 1,182,300 348,718 (833,582)

ExpendituresCurrentCourt-Related - 537,925 526,434 11,491

Capital Outlay 1,182,300 644,375 77,743 566,632

Total Expenditures 1,182,300 1,182,300 604,177 578,123 Excess (Deficiency) of Revenues Over (Under) Expenditures - - (255,459) (255,459)




116

Okaloosa County, FloridaPUBLIC RECORDS COURTS SPECIAL REVENUE FUND



Budgeted Amounts


Positive(Negative)

Schedule A-22

Original Final Actual AmountsRevenuesFines 165,000$ 165,000$ 187,318$ 22,318 Miscellaneous 42,340 42,340 - (42,340)

Total Revenues 207,340 207,340 187,318 (20,022)

ExpendituresCurrentCourt-Related - 207,340 207,340 -

Capital Outlay 207,340 - - -

Total Expenditures 207,340 207,340 207,340 - Excess (Deficiency) of Revenues Over (Under) Expenditures - - (20,022) (20,022)




117

Okaloosa County, FloridaPUBLIC RECORDS 10% FINE SPECIAL REVENUE FUND



Budgeted Amounts


Positive(Negative)

Schedule A-23

Original Final Actual AmountsRevenuesMiscellaneous 120,000$ 120,000$ 120,699$ 699$

Total Revenues 120,000 120,000 120,699 699


Capital Outlay 45,900 45,900 45,900 -



55,949 55,949 47,050 (8,899)

55,949 55,949 47,050 (8,899)





118

Okaloosa County, FloridaFEDERAL LAW ENFORCEMENT TRUST FUND



Budgeted Amounts


Positive(Negative)


Schedule A-24

Original Final Actual AmountsRevenuesIntergovernmental -$ -$ -$ -$

Total Revenues - - - -




66,090 66,090 32,300 (33,790)

66,090 66,090 32,300 (33,790)





119

Okaloosa County, FloridaTEEN DRIVER CHALLENGE FUND



Budgeted Amounts


Positive(Negative)

Transfers AmongConstitutional Officers

Schedule A-25




Total Expenditures - - - - Excess (Deficiency) of Revenues Over (Under) Expenditures - - - -


- - - -

- - - -





120

Okaloosa County, FloridaSECOND DOLLAR PROGRAM FUND



Budgeted Amounts


Positive(Negative)


Schedule A-26

Original Final Actual AmountsRevenuesIntergovernmental 5,046,500$ 5,046,500$ 5,122,390$ 75,890$ Miscellaneous 486,148 486,148 452,949 (33,199)

Total Revenues 5,532,648 5,532,648 5,575,339 42,691

ExpendituresCurrentGeneral Government 590,750 1,103,622 190,750 912,872

Debt ServicePrincipal 1,392,000 1,392,000 3,425,000 (2,033,000) Interest 2,524,501 2,609,786 4,038,562 (1,428,776) Other Debt Service Costs 500 160,621 150,124 10,497

Total Expenditures 4,507,751 5,266,029 7,804,436 (2,538,407) Excess (Deficiency) of Revenues Over (Under) Expenditures 1,024,897 266,619 (2,229,097) (2,495,716)

Other Financing Sources (Uses)Transfers In 1,345,793 1,354,415 1,200,588 153,827 Transfers Out (2,820,690) (2,820,690) (2,820,690) - Original Issue Premium - 160,121 160,121 -

(1,474,897) (1,306,154) (1,459,981) (153,827)

Net Change in Fund Balance (450,000) (1,039,535) (3,689,078) (2,649,543)

Fund Balance - Beginning 450,000 1,039,535 1,039,536 1

Fund Balance - Ending -$ -$ (2,649,542)$ (2,649,542)$

Okaloosa County, FloridaOKALOOSA DEBT SERVICE FUND



Positive(Negative)


121


Budgeted Amounts

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual Expenditures exceed legally budgeted amounts at September 30, 2016 due to the prepayment of the October 1st debt service.

Schedule A-27

Original Final Actual AmountsRevenuesTaxes 1,800,000$ 1,800,000$ 1,849,602$ 49,602$ Intergovernmental 1,950,000 4,397,922 2,254,492 (2,143,430) Miscellaneous 90,000 119,995 81,009 (38,986)

Total Revenues 3,840,000 6,317,917 4,185,103 (2,132,814)

ExpendituresCurrentTransportation 2,099,839 4,108,113 2,196,903 1,911,210

Capital Outlay 12,490,161 14,333,588 3,715,818 10,617,770

Total Expenditures 14,590,000 18,441,701 5,912,721 12,528,980 Excess (Deficiency) of Revenues Over (Under) Expenditures (10,750,000) (12,123,784) (1,727,618) 10,396,166

Other Financing Sources (Uses)Transfers In - 340,720 340,720 -

- 340,720 340,720 -

Net Change in Fund Balance (10,750,000) (11,783,064) (1,386,898) 10,396,166



122

Okaloosa County, FloridaROAD AND BRIDGE CONSTRUCTION CAPITAL PROJECTS FUND



Budgeted Amounts


Positive(Negative)


This fund accounts for certain common area maintenance charges billed to all tenants whooccupy space in the building in Niceville, Florida in which the Tax Collector is landlord. Thecommon area maintenance fees accumulated for future repairs and maintenance to thebuilding are accounted for in this fund.


Tax Collector

This fund is used to account for the revenues and expenses associated withthe provision of solid waste management within Okaloosa County.

This fund is used to account for the license, permit and inspection fees and related expensesfor the provision of inspection and code enforcement services to residents of theunincorporated areas of Okaloosa County.

Enterprise Funds are used to account for operations that are financed and operated in a manner similar toprivate business enterprises - where the intent of the Board of County Commissioner of Okaloosa County isthat the costs of providing goods or services to the general public on a continuing basis be financed orrecovered primarily through user charges; or where the Board has decided that periodic determination of netincome is appropriate for accountability purposes.

NONMAJOR ENTERPRISE FUNDS

Inspection and Code Enforcement Fund

Solid Waste Fund

Building Maintenance Fund

Statement B-1

Inspectionand

CodeEnforcement

SolidWaste

Tax CollectorBuilding

Maintenance

NonmajorEnterprise

Funds(Exhibit VII)

Current AssetsCash and Cash Equivalents 648,351$ 2,560,540$ 42,982$ 3,251,873$ Investments 173,892 520,464 - 694,356 Receivables, Net of Allowance

for UncollectibleDue from Other Governments - 1,176 - 1,176 Prepaids 295 - - 295 Restricted Assets

Cash and Cash EquivalentsCustomer Deposits - 25,508 - 25,508

Total Restricted Assets - 25,508 - 25,508

Total Current Assets 917,936 3,698,511 42,982 4,659,429

Capital AssetsLand - 133,301 - 133,301 Buildings - 115,363 - 115,363 Improvements Other Than Buildings - 276,776 - 276,776 Intangible 42,425 - - 42,425 Machinery and Equipment 356,173 3,432,489 - 3,788,662

Less Accumulated Depreciation/Amortizati (336,443) (2,517,223) - (2,853,666) Total Capital Assets (Net of Accumulated Depreciation/Amortization) 62,155 1,440,706 - 1,502,861

Total Noncurrent Assets 62,155 1,440,706 - 1,502,861

Total Assets 980,091$ 5,139,217$ 42,982$ 6,162,290$

Deferred Charges Related to Pensions 330,035$ 385,043$ -$ 715,078$

Total Deferred Outflows of Resources 330,035$ 385,043$ -$ 715,078$

Continued…


ASSETS

-

Okaloosa County, FloridaCOMBINING STATEMENT ON NET POSITION

NONMAJOR ENTERPRISE FUNDSPROPRIETARY FUNDS


123

95,398 590,823 686,221

Statement B-1

Inspectionand

CodeEnforcement

SolidWaste


Maintenance

NonmajorEnterprise

Funds(Exhibit VII)


Okaloosa County, FloridaCOMBINING STATEMENT ON NET POSITION

NONMAJOR ENTERPRISE FUNDSPROPRIETARY FUNDS

LiabilitiesCurrent Liabilities

Accounts Payable 7,205$ 51,730$ -$ 58,935$ Contracts Payable 2,660 987,387 - 990,047 Accrued Liabilities

Compensated Absences 87,893 62,116 - 150,009 Closure Costs Payable - 357,905 - 357,905 Other Accrued Liabilities 18,539 18,577 - 37,116

Due to Other Elected Officials - - - - Due to Other Governments 21,533 497 - 22,030 Unearned Revenue 13,797 - - 13,797

Current Liabilities Payable fromRestricted AssetsCustomer Deposits Payable - 25,508 - 25,508


Total Current Liabilities 151,627 1,503,720 - 1,655,347

Noncurrent LiabilitiesCompensated Absences 82,461 50,046 - 132,507 Closure Costs Payable - 3,668,375 - 3,668,375 Other Post Employment Benefits 18,865 19,506 - 38,371 Net Pension Liability 907,989 1,059,321 - 1,967,310 Total Noncurrent Liabilities 1,009,315 4,797,248 - 5,806,563

Total Liabilities 1,160,942$ 6,300,968$ -$ 7,461,910$

Deferred Charges Related to Pensions 55,888$ 65,202$ -$ 121,090$ Total Deferred Inflows of Resources 55,888$ 65,202$ -$ 121,090$

Net Investment in Capital Assets 62,155$ 1,440,706$ -$ 1,502,861$ Unrestricted (Deficit) 31,141 (2,282,616) 42,982 (2,208,493)

Total Net Position (Deficit) 93,296 (841,910) 42,982 (705,632) Total Liabilities and Net Position (Deficit) 1,310,126$ 5,524,260$ 42,982$ 6,877,368$

124

NET POSITION


- 25,508 - 25,508

LIABILITIES

Statement B-2

Inspectionand

CodeEnforcement

SolidWaste


Maintenance

TotalNonmajorEnterprise

Funds(Exhibit VIII)

Operating RevenuesLicenses and Permits 1,790,600$ -$ -$ 1,790,600$ Charges for Services 237,563 8,736,334 - 8,973,897 Miscellaneous 255 105 42,982 43,342

Total Operating Revenues 2,028,418 8,736,439 42,982 10,807,839

Operating ExpensesPersonal services 1,063,918 857,916 - 1,921,834 Contractual Services 496,895 6,354,018 - 6,850,913 Supplies 25,518 79,777 - 105,295 Utilities - 12,836 - 12,836 Other Operating Expenses 66,691 363,701 - 430,392 Depreciation/Amortization 18,069 244,782 - 262,851

Total Operating Expenses 1,671,091 7,913,030 - 9,584,121

Operating Income (Loss) 357,327 823,409 42,982 1,223,718

Nonoperating Revenues (Expenses)Intergovernmental - 143,060 - 143,060 Investment Income 5,940 18,400 - 24,340 Gain/Loss on Disposal of Capital Assets - 7,027 - 7,027

Total Nonoperating Revenues (Expenses) 5,940 168,487 - 174,427 Income (Loss) BeforeContributions and Transfers

Capital Contributions - - - - Transfers In - - - - Transfers Out - - - -

Change in Net Position 363,267 991,896 42,982 1,398,145

Total Net Position (Deficit) (269,971) (1,833,806) - (2,103,777)

Total Net Position (Deficit) - Ending 93,296$ (841,910)$ 42,982$ (705,632)$


125

363,267 991,896 1,398,145

COMBINING STATEMENT OF REVENUES, EXPENSES,AND CHANGE IN NET POSITION


NONMAJOR ENTERPRISE FUNDSFor the Fiscal Year Ended September 30, 2016

42,982

Statement B-3

TotalInspection Tax Collector Nonmajor and Code Solid Building Enterprise Funds

Enforcement Waste Maintenance (Exhibit IV)CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Customers 1,956,078$ 8,848,585$ 42,982$ 10,847,645$Payments to Suppliers (615,628) (6,451,854) - (7,067,482) Payments to Employees (1,045,047) (826,735) - (1,871,782)

Net Cash Provided (Used) by Operating Activities 295,403 1,569,996 42,982 1,908,381

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESOperating Subsidy - Intergovernmental Revenue - 164,123 - 164,123 Net Cash Provided (Used) by Non-capital Financing Activities - 164,123 - 164,123

CASH FLOWS FROM CAPITAL AND RELATED FINANCINGACTIVITIESPurchase of Capital Assets (45,648) (157,243) - (202,891) Proceeds from Disposal of Capital Assets - 7,027 - 7,027 Net cash provided (used) by capital and related financing activities (45,648) (150,216) - (195,864)

NET CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Sale and Maturities of Investments (1,187) (3,716) - (4,903) Interest Income 5,955 18,400 - 24,355

4,768 14,684 - 19,452

254,523 1,598,587 42,982 1,896,092

Cash and Cash Equivalents - Beginning of Year 393,828 987,461 - 1,381,289

Cash and Cash Equivalents - End of Year 648,351$ 2,586,048$ 42,982$ 3,277,381$

Continued…

Board of County CommissionersOkaloosa County, Florida

COMBINING STATEMENT OF CASH FLOWSNONMAJOR ENTERPRISE FUNDS



126

Net Cash Provided (Used) by Investing Activities


Statement B-3

TotalInspection Tax Collector Nonmajor and Code Solid Building Enterprise Funds

Enforcement Waste Maintenance (Exhibit IV)





Cash and Cash Equivalents at End of Year Consist of:Current assets 648,351$ 2,560,540$ 42,982$ 3,251,873$ Restricted assets - 25,508 - 25,508

Total 648,351$ 2,586,048$ 42,982$ 3,277,381$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating ActivitiesOperating Income (Loss) 357,327$ 823,409$ 42,982$ 1,223,718$

Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating ActivitiesDepreciation/Amortization 18,069 244,782 - 262,851

Decrease (Increase) in Assets Accounts Receivables (58,398) 110,146 - 51,748 Due from Other Elected Officials 2,546 - - 2,546 Deferred Outflows (210,660) (245,772) - (456,432) Increase (Decrease) in Liabilities Accounts Payable (577) 42,548 - 41,971 Service Contracts Payable (1,298) 613,041 - 611,743 Due to Other Elected Officials - (118) - (118) Due to Other Governments (27,195) 381 - (26,814) Compensated Absences Payable 2,650 (1,777) - 873 Other Accrued Liabilities (22,438) (12,140) - (34,578) Closure Costs Payable - (297,374) - (297,374) Unearned Revenue (13,942) 2,000 - (11,942) Other Post Employment Benefits 2,817 3,286 - 6,103 Net Pension Liability 316,610 369,377 - 685,987 Deferred Inflows (70,108) (81,793) - (151,901)

Net Cash Provided (Used) by Operating Activities 295,403$ 1,569,996$ 42,982$ 1,908,381$

127

Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the Board of County Commissioners of Okaloosa County andto other government units, on a cost reimbursement basis.

INTERNAL SERVICE FUNDS

Self Insurance

Garage Service Fund

This fund is used to account for premiums and claims associated with the provision of self-insurance of health benefits for the Sheriff and to record the liability for other postemployment benefits provided to the retirees of the Sheriff.


Clerk of Circuit Court

Compensated Absences FundThis fund is used to accumulate and fund the short-term portion of compensated absenceliability for the Clerk of Circuit Court.

Sheriff

Compensated Absences FundThis fund is used to accumulate and fund the short-term portion of compensated absenceliability for the Sheriff.

Health Benefits Self Insurance Fund

This fund is used to account for user charges and expenses associated with vehiclemaintenance and the centralized distribution of gasoline and special fuel to various OkaloosaCounty Departments as well as other County agencies.

This fund is used to account for premiums and claims associated with the provision of self-insurance programs for Okaloosa County.

Self-Insurance

GarageServices

Clerk of CourtCompensated

Absences

Current AssetsCash and Cash Equivalents 1,515,451$ 1,503$ 153,801$ Investments 38,510 - - Receivables, Net of Allowance

for UncollectibleDue from Other Funds - - - Due from Other Elected Officials - 480 - Due from Other Governments - 532,267 - Inventory - 254,015 - Prepaids - 7,428 -

Total Current Assets 1,575,646 799,396 153,801

Noncurrent AssetsCapital Assets

Land - 316,861 - Buildings - 900,466 - Improvements Other Than Buildings - 257,345 - Machinery and Equipment 12,726 2,494,134 -

Less Accumulated Depreciation/Amortization (7,832) (3,267,826) - Total Capital Assets (Net of Accumulated Depreciation/Amortization) 4,894 700,980 -

Total Noncurrent Assets 4,894 700,980 -

Total Assets 1,580,540$ 1,500,376$ 153,801$

Deferred Charges Related to Pensions 82,509$ 577,560$ -$

Total Deferred Outflows of Resources 82,509$ 577,560$ -$

Governmental

21,685 3,703

ASSETS

-


Okaloosa County, FloridaCOMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDSSeptember 30, 2016

Statement C-1

SheriffCompensated

Absences

SheriffHealth BenefitsSelf Insurance

TotalInternal Service

Funds(Exhibit VII)

928,259$ 2,121,800$ 4,720,814$ - - 38,510

96,358 - 96,358 - - 480 - - 532,267 - - 254,015 - - 7,428

1,024,617 2,492,744 6,046,204

- - 316,861 - - 900,466 - - 257,345 - - 2,506,860 - - (3,275,658)

- - 705,874

- - 705,874

1,024,617$ 2,492,744$ 6,752,078$

-$ -$ 660,069$

-$ -$ 660,069$

Continued…

Activities

396,332 -

128

370,944

Self-Insurance

GarageServices


Absences

Governmental

Okaloosa County, FloridaCOMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDSSeptember 30, 2016


Accounts Payable 2,901$ 95,028$ -$ Contracts Payable 2,991 34,444 - Accrued Liabilities

Compensated Absences 9,616 89,863 153,801 Claims and Judgments 858,429 - - Other Accrued Liabilities 4,027 29,427 -

Due to Other Funds - 1,020,000 - Due to Other Elected Officials 90 12 - Due To Other Governments 8,188 516 - Deferred Revenue 8,075 - -

Total Current Liabilities 894,317 1,269,290 153,801

Noncurrent LiabilitiesCompensated Absences 7,918 71,570 - Claims and Judgments 2,609,598 - - Other Post Employment Benefits 4,180 27,211 - Net Pension Liability 226,996 1,588,980 -

Total Noncurrent Liabilities 2,848,692 1,687,761 -

Total Liabilities 3,743,009$ 2,957,051$ 153,801$

Deferred Charges Related to Pensions 13,971$ 97,803$ -$

Total Deferred Inflows of Resources 13,971$ 97,803$ -$

Net Investment in Capital Assets 4,894$ 700,980$ -$ Unrestricted (Deficit) (2,098,825) (1,677,898) -

Total Net Position (Deficit) (2,093,931) (976,918) - Total Liabilities and Net Position (Deficit) 1,663,049$ 2,077,936$ 153,801$


NET POSITION

LIABILITIES

Statement C-1

SheriffCompensated

Absences


TotalInternal Service

Funds(Exhibit VII)

Activities

-$ -$ 97,929$ - - 37,435

1,024,617 - 1,277,897 - 505,955 1,364,384 - - 33,454 - - 1,020,000 - - 102 - - 8,704 - - 8,075

1,024,617 505,955 3,847,980

- - 79,488 - - 2,609,598 - 4,414,940 4,446,331 - - 1,815,976

- 4,414,940 8,951,393

1,024,617$ 4,920,895$ 12,799,373$

-$ -$ 111,774$

-$ -$ 111,774$

-$ -$ 705,874$ - (2,428,151) (6,204,874)

- (2,428,151) (5,499,000) 1,024,617$ 2,492,744$ 7,412,147$

129

Self-Insurance

GarageServices


Absences

Operating RevenuesCharges for Services 11,810,536$ 4,585,413$ 31,019$ Miscellaneous 1,116,963 2,082 -

Total Operating Revenues 12,927,499 4,587,495 31,019

Operating ExpensesPersonal Services 203,505 1,391,802 31,019Contractual Services 90,864 1,828 -Supplies 8,941 2,767,470 -Insurance Premiums and Claims 12,021,022 - -Utilities - 4,572 -Other Operating Expenses 10,454 326,645 -Depreciation/Amortization 1,218 73,553 -

Total Operating Expenses 12,336,004 4,565,870 31,019

Operating Income (Loss) 591,495 21,625 -

Nonoperating Revenues (Expenses)Investment Income (Loss) 35,419 (14,819) -Other Non-Operating Revenue 607,210 - -Gain/Loss on Disposal of Capital Assets - 50,108 -

Total Nonoperating Revenues (Expenses) 642,629 35,289 -


Capital Contributions - 26,168 -Operating Transfers In 400,000 - -Operating Transfers Out (1,400,000) - -

Change in Net Position 234,124 83,082 -

Total Net Position (Deficit) - Beginning (2,328,055) (1,060,000) -

Total Net Position (Deficit)- Ending (2,093,931)$ (976,918)$ -$

Okaloosa County, FloridaCOMBINING STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN NET POSITIONINTERNAL SERVICE FUNDS


1,234,124 56,914

Governmental

-

Statement C-2

SheriffCompensated

Absences


Total Internal Service

Funds(Exhibit VIII)

38,679$ 4,427,454$ 20,893,101$ - - 1,119,045

38,679 4,427,454 22,012,146

38,679 266,731 1,931,736- 358,235 450,927- - 2,776,411- 4,372,346 16,393,368- - 4,572- - 337,099- - 74,771

38,679 4,997,312 21,968,884

- (569,858) 43,262

- 5,699 26,299- - 607,210- - 50,108

- 5,699 683,617

- - 26,168- - 400,000- - (1,400,000)

- (564,159) (246,953)

- (1,863,992) (5,252,047)

-$ (2,428,151)$ (5,499,000)$ 130

726,879

Activities

- (564,159)

Self-Insurance

GarageServices


Absences

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Customers 12,846,300$ 4,897,739$ -$Receipts from Interfund Services Provided - - 58,469Payments to Suppliers (12,895,218) (3,545,172) -Payments to Employees (194,728) (1,358,177) (89,488)Payments for Other Revenues 607,210 - -

Net Cash Provided (Used) by Operating Activities 363,564 (5,610) (31,019)

CASH FLOWS FROM NON-CAPITAL FINANCINGACTIVITIESTransfers In 400,000 - -Transfers Out (1,400,000) - -

Net Cash Provided (Used) by Non-capital Financing Activities (1,000,000) - -

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESPurchase of Capital Assets (2,333) (115,985) -Proceeds from Disposal of Capital Assets - 40,018 -Capital Contributions - 26,168 -

Net Cash Provided (Used) by Capital and Related Financing Activities (2,333) (49,799) -

CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Sale and Maturities of Investments (6,314) (69) -Interest Income 33,012 (14,750) -

26,698 (14,819) -

(612,071) (70,228) (31,019)Cash and Cash Equivalents - Beginning of Year 2,127,522 71,731 184,820

Cash and Cash Equivalents - End of Year 1,515,451$ 1,503$ 153,801$

Governmental


Okaloosa County, FloridaCOMBINING STATEMENT OF CASH FLOWS




Statement C-3

SheriffCompensated

Absences


Total Internal Service Funds

(Exhibit IV)

-$ -$ 17,744,039$57,679 4,056,625 4,172,773

- (4,818,906) (21,259,296)- - (1,642,393)- - 607,210

57,679 (762,281) (377,667)

- - 400,000- - (1,400,000)

- - (1,000,000)

- - (118,318)- - 40,018- - 26,168

- - (52,132)

- - (6,383)- 5,699 23,961

- 5,699 17,578

57,679 (756,582) (1,412,221)870,580 2,878,382 6,133,035

928,259$ 2,121,800$ 4,720,814$

Continued…

Activities

131

Self-Insurance

GarageServices


Absences

Governmental


Okaloosa County, FloridaCOMBINING STATEMENT OF CASH FLOWS


Cash and Cash Equivalents at End of Year Consist of:Current assets 1,515,451$ 1,503$ 153,801$

Total 1,515,451$ 1,503$ 153,801$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating ActivitiesOperating Income (Loss) 591,495$ 21,625$ -$

Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating ActivitiesDepreciation/Amortization 1,218 73,553 -Other revenue 607,210 - -

Decrease (Increase) in AssetsAccounts Receivable 3,870 (68) -Due from Other Elected Officials - 106 -Due from Other Governments - 310,313 -Due from Other Funds - (9,631) -Inventories 11,810 (7,428) -Prepaid Expenses (52,665) (368,654) -Deferred Outflows - - -

Increase (Decrease) in LiabilitiesAccounts Payable 1,089 (2,711) -Service Contracts Payable (778,203) (45,413) -Due to Other Funds - (380,000) -Due to Other Elected Officals (88) 1 -Due to Other Governments 1,454 418 -Compensated Absences Payable (691) (16,046) (31,019)Claims and Judgments Payable (82,466) - -Other Accrued Liabilities (195) (17,982) -Unearned Revenue (2,602) - -Other Post Employment Benefits 704 4,930 -Net Pension Liability 79,152 554,067 -Deferred Inflows (17,528) (122,690) -Total Adjustments (227,931) (27,235) (31,019)

363,564$ (5,610)$ (31,019)$Net Cash Provided (Used) by Operating Activities

Statement C-3

SheriffCompensated

Absences



(Exhibit IV)

Activities

928,259$ 2,121,800$ 4,720,814928,259$ 2,121,800$ 4,720,814$

-$ (569,858)$ 43,262

- - 74,771- - 607,210

- (370,829) (367,027)- - 106- - 310,313

(38,679) - (48,310)- - 4,382- - (421,319)- - -

- (6,868) (8,490)- - (823,616)- - (380,000)- - (87)- - 1,872

96,358 - 48,602- (81,457) (163,923)- - (18,177)- - (2,602)- 266,731 272,365- - 633,219- - (140,218)

57,679 (192,423) (420,929)

57,679$ (762,281)$ (377,667)$

132

Agency Funds Agency funds are used to account for assets held by the Okaloosa County as agent for individuals, private organizations, other governments, and/or other funds.

Clerk of Circuit Court Fine and Forfeiture Fund

This fund is used to account for the collection and disbursement of fines and court costs to Okaloosa County, State of Florida,and Municipalities. These fines and costs sources are generated from traffic, misdemeanor, felony and court ordered probation.

Jury and Witness Fund This fund is used to account for the juror and witness payments received from Okaloosa County and State of Florida and subsequent disbursement to jurors and witnesses for court services.

Tax Deed Fund This fund is used to account for the collection and disbursement of child support and alimony payments, pursuant to orders of the court.

Support Fund This fund is used to account for the collection and disbursement of child support and alimony payments, pursuant to orders of the court.

Registry of Court Fund This fund is used to account for court ordered deposits that are held pending litigation and disbursed based on final dispositionby the court.

Board of County Commissioners Trust Fund This fund is used to account for collection of recording fees collected by the Clerk’s office and remitted to the Board of County Commissioners to fund judicial information technology.

State Trust Fund This fund is used to account for various taxes, fees and service charges collected by the Clerk’s office and remitted to the State of Florida.

Probation Fee Trust Fund This fund is used to account for collection of certain court costs on traffic and misdemeanor cases and their subsequent disbursement to either JCS or Bridgeway Center, Inc., as applicable, to fund education costs.

Escrow Trust Fund This fund is used to account for deposits from title companies and is used to pay for monthly copy usage. These accounts are reconciled monthly and copy revenue earned is transferred to the Clerk’s General Fund. This fund also accounts for escrow funds from Circuit and County Court cases.

Juvenile Trust Fund This fund is used to account for the collection and disbursement of Juvenile Restitution payments, pursuant to orders of the court. These funds are disbursed to the victim in each case.

Foreclosure Escrow Trust Fund This fund is used to account for court ordered deposits from foreclosure sales until final certificates of disbursement are issued.

Cash Bond Trust Fund This fund is used to account for the receipt and disbursement of cash bond monies as directed by the court.

SheriffIndividual Depositors Fund

This fund is used to account for the collection and disbursement of statutory fees for services performed by the Sheriff. Suspense (Levies) Fund

This fund is used to account for monies collected and disbursed pursuant to levies.

Tax CollectorDisbursements Fund

This fund is used to account for collection of current and delinquent property tax assessments; business tax receipts for Okaloosa County, municipalities and other taxing districts; automobile and boat tags, titles and other related fees for the Florida Department of Motor Vehicles; and, to account for the collection of hunting and fishing licenses fees for the Florida Department of Natural Resources.

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Statement D-2

BalancesOctober 1,

2015 Additions Deletions

BalancesSeptember 30,

2016

FINE AND FORFEITURE AGENCY FUND

Cash and Cash Equivalents 458,025$ 5,407,877$ 5,461,433$ 404,469$ Accounts Receivable - 372 372 - Due from Other Elected Officials 110 370 110 370

Total Assets 458,135$ 5,408,619$ 5,461,915$ 404,839$

Due to Other Elected Officials 108,594$ 1,354,884$ 1,358,666$ 104,812$ Due to Other Governments 349,541 3,840,241 3,889,755 300,027

Total Liabilities 458,135$ 5,195,125$ 5,248,421$ 404,839$

JURY AND WITNESS AGENCY FUND

Cash and Cash Equivalents 39,816$ 566$ 8,355$ 32,027$

Due to Depositors 39,816$ 566$ 8,355$ 32,027$

TAX DEED AGENCY FUND

Cash and Cash Equivalents 664,650$ 919,499$ 398,624$ 1,185,525$

Due to Depositors 664,650$ 919,499$ 398,624$ 1,185,525$

SUPPORT AGENCY FUND

Cash and Cash Equivalents 97,387$ 3,635,627$ 3,616,357$ 116,657$ Accounts Receivable 3,727 1,615 1,665 3,677

Total Assets 101,114$ 3,637,242$ 3,618,022$ 120,334$

Due to Other Funds 6,885$ 18,343$ 2,775$ 22,453$ Due to Other Governments 459 7,128 6,596 991 Due to Depositors 93,770 3,586,483 3,583,363 96,890


Continued…

LIABILITIES

135

ASSETS

ASSETS

ASSETS

ASSETS

LIABILITIES

LIABILITIES


Okaloosa County, FloridaCOMBINING STATEMENT OF CHANGES IN NET POSITION

AGENCY FUNDS

LIABILITIES

Statement D-2

BalancesOctober 1,



2016



AGENCY FUNDS

REGISTRY OF COURT AGENCY FUND

Cash and Cash Equivalents 2,016,464$ 11,749,633$ 11,726,477$ 2,039,620$ Due from Other Funds - 550 - 550

Total Assets 2,016,464$ 11,750,183$ 11,726,477$ 2,040,170$

Due to Other Funds 3,413$ 156,102$ 158,483$ 1,032$ Due to Depositors 2,013,051 11,905,735 11,879,648 2,039,138

Total Liabilities 2,016,464$ 12,061,837$ 12,038,131$ 2,040,170$

BOARD OF COUNTY COMMISSIONERS TRUST AGENCY FUND

Cash and Cash Equivalents 31,492$ 394,360$ 391,340$ 34,512$

Due to Other Elected Officials 31,492$ 394,360$ 391,340$ 34,512$

STATE TRUST AGENCY FUND

Cash and Cash Equivalents 293,770$ 22,464,097$ 22,338,262$ 419,605$

Due to Other Governments 293,770$ 22,464,097$ 22,338,262$ 419,605$

PROBATION FEE TRUST FUND

Cash and Cash Equivalents -$ 1,419$ 1,269$ 150$

Due to Depositors -$ 1,419$ 1,269$ 150$

ESCROW TRUST AGENCY FUND


Due to Depositors 151,412$ 565,746$ 536,443$ 180,715$ Continued…

ASSETS

ASSETS

136

LIABILITIES

ASSETS

ASSETS

ASSETS

LIABILITIES

LIABILITIES

LIABILITIES

LIABILITIES

Statement D-2

BalancesOctober 1,



2016



AGENCY FUNDS

JUVENILE TRUST AGENCY FUND

Cash and Cash Equivalents 1,816$ 5,837$ 7,523$ 130$

Due to Depositors 1,816$ 5,837$ 7,523$ 130$

FORECLOSURE ESCROW TRUST AGENCY FUND

Cash and Cash Equivalents 943,365$ 9,749,833$ 9,691,228$ 1,001,970$ Accounts Receivable 140 - - 140 Due from Other Funds - 140 - 140

943,505$ 9,749,973$ 9,691,228$ 1,002,250$

Due to Other Funds -$ 672$ -$ 672$ Due to Depositors 943,505 9,749,833 9,691,760 1,001,578

943,505$ 9,750,505$ 9,691,760$ 1,002,250$

CASH BOND TRUST AGENCY FUND

Cash and Cash Equivalents 197,930$ 1,034,560$ 789,738$ 442,752$

Due to Depositors 197,930$ 1,034,560$ 789,738$ 442,752$

INDIVIDUAL DEPOSITORS AGENCY FUNDASSETS

Cash and Cash Equivalents 7,230$ -$ 1,340$ 5,890$

LIABILITIESDue to Other Elected Officials 7,230$ -$ 1,340$ 5,890$

SUSPENSE (LEVIES) AGENCY FUNDASSETS


LIABILITIESDue to Depositors 10,451$ -$ 6,042$ 4,409$

Continued…137

ASSETS

ASSETS

LIABILITIES

LIABILITIES

LIABILITIES

ASSETS

Statement D-2

BalancesOctober 1,



2016



AGENCY FUNDS

DISBURSEMENTS AGENCY FUND

Cash and Cash Equivalents 1,728,745$ 256,087,531$ 255,878,714$ 1,937,562$ Accounts Receivable 4,493 6,360 4,493 6,360

Total Assets 1,733,238$ 256,093,891$ 255,883,207$ 1,943,922$

Due to Other Funds -$ 185,149,057$ 185,149,057$ -$ Due to Other Elected Officials - 5,999,750 5,999,750 - Due to Other Governments 23,881 61,234,703 61,243,836 14,748 Due to Depositors 40,757 38,080 40,757 38,080 Taxes Collected in Advance 1,668,600 3,672,301 3,449,807 1,891,094


TOTAL - ALL AGENCY FUNDS

Cash and Cash Equivalents 6,642,553$ 312,016,585$ 310,853,145$ 7,805,993$ Accounts Receivable 8,360 8,347 6,530 10,177 Due from Other Funds - 690 - 690 Due from Other Elected Officials 110 370 110 370

Total Assets 6,651,023$ 312,025,992$ 310,859,785$ 7,817,230$

Due to Other Funds 10,298$ 185,324,174$ 185,310,315$ 24,157$ Due to Other Elected Officials 147,316 7,748,994 7,751,096 145,214 Due to Other Governments 667,651 87,546,169 87,478,449 735,371 Due to Depositors 4,157,158 27,807,758 26,943,522 5,021,394 Taxes Collected in Advance 1,668,600 3,672,301 3,449,807 1,891,094


138

ASSETS

LIABILITIES

LIABILITIES

ASSETS

STATISTICAL SECTION

This part of Okaloosa County, Florida's comprehensive annual financial report presents detailed information as a context ofunderstanding what the information in the financial statements, note disclosures, and required supplementary information saysabout the government's overall financial health. The following types of schedules are included.

Statistical Section

These schedules contain service and infrastructure data to help the reader understand how the information in thegovernment's financial report relates to the services the government provides and the activities it performs.

These schedules offer demographic and economic indicators to help the reader understand the environment withinwhich the government's financial activities take place.

These schedules present information to help the reader assess the affordability of the government's current levels ofoutstanding debt and the government's ability to issue additional debt in the future.

Debt Capacity

Demographic and Economic Information

Financial Trends

Revenue CapacityThese schedules contain information to help the reader assess the government's most significant local revenue source,the property tax.

These schedules contain trend information to help the reader understand how the government's financial performanceand well-being have changed over time.

Operating Information

The statistical schedule mandated by the GASB's Codification, Section 2800, concerning legal debt margin is omittedbecause the County has no established debt limitation.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financialreports for the relevant year.

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140

UNAUDITED SCHEDULE 2

(amounts in thousands) 2008 2009 2010 2011 2012 2013 2014 2015 2016EXPENSESGOVERNMENTAL ACTIVITIES: GENERAL GOVERNMENT $34,777 $31,008 $32,146 $31,726 $30,552 $28,715 $29,543 $30,449 $33,975 PUBLIC SAFETY 49,963 53,499 47,995 45,335 46,360 45,296 47,804 49,096 52,621 PHYSICAL ENVIRONMENT 1,138 867 2,594 2,148 933 1,502 1,178 1,139 1,376 TRANSPORTATION 17,229 18,901 18,922 17,728 16,245 14,632 13,712 14,349 17,224 ECONOMIC ENVIRONMENT 6,471 7,456 8,980 9,290 5,563 4,983 6,174 6,432 8,501 HUMAN SERVICES 4,964 5,110 4,672 4,454 4,352 4,500 4,277 4,535 4,931 CULTURE AND RECREATION 5,069 4,500 5,031 4,007 5,902 11,997 7,521 7,317 8,238 COURT-RELATED 9,088 8,082 7,390 7,118 6,634 7,589 7,406 8,154 8,147 INTEREST AND FISCAL CHARGES 181 116 1,138 1,531 1,692 1,745 1,526 2,659 2,471TOTAL GOVERNMENTAL EXPENSES $128,880 $129,539 $128,868 $123,337 $118,233 $120,959 $119,141 $124,130 $137,484

BUSINESS-TYPE ACTIVITIES: WATER AND SEWER $25,057 $24,067 $25,752 $27,124 $26,149 $27,657 $25,122 $26,444 $26,004 AIRPORT 8,363 9,804 10,575 12,527 12,928 12,450 13,223 12,415 13,966 SOLID WASTE 9,757 8,404 7,757 6,874 7,438 7,684 8,566 7,155 7,913 INSPECTIONS 1,582 1,245 7,561 1,149 1,600 1,588 1,541 1,678 1,671 EMERGENCY MEDICAL SERVICES 7,326 7,504 1,241 7,495 6,933 7,234 7,587 7,440 8,553 CONFERENCE CENTER 4,556 4,817 4,424 3,754 4,301 3,153 0 0 0TOTAL BUSINESS-TYPE EXPENSES $56,641 $55,841 $57,310 $58,923 $59,349 $59,766 $56,039 $55,132 $58,107

TOTAL PRIMARY GOVERNMENT EXPENSES $185,521 $185,380 $186,178 $182,260 $177,582 $180,725 $175,180 $179,262 $195,591

PROGRAM REVENUES - GOVERNMENTAL ACTIVITIES: CHARGES FOR SERVICES GENERAL GOVERNMENTAL $11,996 $10,590 $10,488 $11,002 $12,364 $11,378 $11,482 $12,538 $12,124 OTHER 17,218 17,359 12,287 15,752 13,332 14,090 11,829 13,423 13,338 OPERATING GRANTS AND CONTRIBUTIONS 6,167 10,843 9,867 7,675 8,354 5,845 7,379 6,738 8,959 CAPITAL GRANTS AND CONTRIBUTIONS 579 7,611 4,287 2,611 6,240 1,249 1,716 1,393 984TOTAL GOVERNMENT PROGRAM REVENUE $35,960 $46,403 $36,929 $37,040 $40,290 $32,562 $32,406 $34,092 $35,405

BUSINESS-TYPE ACTIVITIES: CHARGES FOR SERVICES WATER & SEWER $24,207 $22,662 $24,107 $25,686 $26,025 $26,778 $28,746 $28,239 $33,038 OTHER 25,857 25,613 26,086 27,742 28,186 29,176 25,461 25,255 29,401 OPERATING GRANTS AND CONTRIBUTIONS 771 584 797 548 338 528 264 272 455 CAPITAL GRANTS AND CONTRIBUTIONS 9,204 6,226 9,027 18,035 10,292 4,720 18,962 10,860 11,697TOTAL BUSINESS-TYPE PROGRAM REVENUE $60,039 $55,085 $60,017 $72,011 $64,841 $61,202 $73,433 $64,626 $74,591

TOTAL PRIMARY GOVERNMENT PROGRAM REVENUES $95,999 $101,488 $96,946 $109,051 $105,131 $93,764 $105,839 $98,718 $109,996

NET (EXPENSE)/REVENUEGOVERNMENT ACTIVITIES ($92,920) ($83,136) ($91,939) ($86,297) ($77,943) ($88,397) ($86,735) ($90,038) ($102,079)BUSINESS-TYPE ACTIVITIES $3,398 ($756) $2,707 $13,088 $5,492 $1,436 $17,394 $9,494 $16,484TOTAL PRIMARY GOVERNMENT NET EXPENSE ($89,522) ($83,892) ($89,232) ($73,209) ($72,451) ($86,961) ($69,341) ($80,544) ($85,595)

GENERAL REVENUESGOVERNMENTAL ACTIVITIES: TAXES $76,704 $68,952 $64,567 $61,192 $58,759 $58,010 $68,740 $73,101 $77,192 STATE SHARED REVENUE 17,573 16,130 15,801 16,880 17,041 17,801 22,673 23,228 24,643 GRANT AND CONTRIBUTIONS NOT RESTRICTED 2,033 256 1,725 6,622 360 124 146 3 3 OTHER 3,710 3,783 5,734 4,137 4,241 4,785 2,951 5,831 3,527TOTAL GOVERNMENTAL ACTIVITIES $100,020 $89,121 $87,827 $88,831 $80,401 $80,720 $94,510 $102,163 $105,365

BUSINESS-TYPE ACTIVITIES: TAXES $6,869 $5,825 $4,830 $6,810 $6,780 $6,709 $1,111 $1,504 $1,122 STATE SHARED REVENUE 0 0 0 0 0 0 0 0 0 GRANT AND CONTRIBUTIONS NOT RESTRICTED 96 25 0 0 0 0 0 0 0 OTHER 3,039 (6,594) 786 823 (1,151) 287 927 3,641 1,752TOTAL BUSINESS-TYPE ACTIVITIES $10,004 ($744) $5,616 $7,633 $5,629 $6,996 $2,038 $5,145 $2,874

CHANGES IN NET POSITIONGOVERNMENTAL ACTIVITIES $7,100 $5,985 ($4,112) $2,534 $2,458 ($7,677) $7,775 $12,125 $3,286BUSINESS-TYPE ACTIVITIES $13,402 ($1,500) $8,323 $20,721 $11,121 $8,432 $19,432 $14,639 $19,358TOTAL PRIMARY GOVERNMENT $20,502 $4,485 $4,211 $23,255 $13,579 $755 $27,207 $26,764 $22,644

CHANGES IN NET POSITION - LAST NINE FISCAL YEARS * - (ACCRUAL BASIS OF ACCOUNTING)

141

$

$50.0

$100.0

$150.0

$200.0

$250.0

2008 2009 2010 2011 2012 2013 2014 2015 2016

206.0

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205.5

191.2

181.5

202.4206.0

218.2

185.5 185.4 186.2182.3

177.6180.7

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195.6

Changes in Net Position Primary GovernmentLast Ten Fiscal Years

Primary Govt Revenue Primary Govt Expense

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Millions

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Real

Prop

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Pers

onal

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Cent

rally

Asse

ssed

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150

2007

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2009

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CO

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3.4308

0.2990

7.2790

$

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

Coun

tyw

ide

(BO

CC)G

ener

alRe

venu

eU

ninc

orpo

rate

dAr

ea(B

OCC

)MST

UCo

unty

wid

eSc

hool

Boar

d

Dollars

Prop

erty

TaxMillageRa

tes

LastTenFisacalYears

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

152

UNAUDITED

PERCENTAGE PERCENTAGE OF TOTAL OF TOTAL

TAXABLE TAXABLE TAXABLE TAXABLEASSESSED ASSESSED ASSESSED ASSESSED

TAXPAYER VALUE VALUE VALUE VALUEGULF POWER COMPANY $145,159,830 0.93% $42,301,993 0.24%

FLORIDA GAS TRANSMISSON $74,695,618 0.48% $28,129,715 0.16%

EMERALD GRANDE INC $54,227,300 0.35%

EMBARQ CORP $45,790,554 0.29%

DESTIN COMMONS LTD $34,562,451 0.22%

CHOCTAWHATCHEE ELECTRIC CO $31,553,084 0.20% $21,934,790 0.12%

COXCOM INC $29,024,958 0.19%

SRM-SPE LLC $27,517,960 0.18%

WALMART STORES EAST LP $24,944,494 0.16% $28,369,468

BEACH RESORT INVESTMENT LLC $22,140,373 0.14%

SPRINT FLORIDA INC $49,880,702 0.28%

SANTA ROSA MALL LLC $29,427,670 0.16%

FT WALTON BEACH MEDICAL CENTER $28,147,712 0.16%

VALPARAISO REALTY $25,607,986 0.14%

TOLBERT ENTERPRISES $24,010,000 0.13%

FRENCH QUARTER II LLC $19,844,793 0.11%

TOTAL PRINCIPAL TAXPAYER VALUE $489,616,622 3.12% $297,654,829 1.66%

TOTAL OTHER TAXPAYER VALUE $15,195,306,852 96.88% $17,601,713,257 98.34%

TOTAL TAXABLE ASSESSED VALUE $15,684,923,474 100.0% $17,899,368,086 100.0%

SOURCE: OKALOOSA COUNTY PROPERTY APPRAISER

SCHEDULE 8

PRINCIPAL PROPERTY TAX PAYERS - LAST FISCAL YEAR COMPARED TO THE FISCAL YEAR NINE YEARS EARLIER

2016 2007

153

Principal Tax Payers3.12%

Taxable Assessed Value96.88%

Principal Property Tax PayersCurrent Year 2016

Principal Tax Payers1.66%

Taxable Assessed Value98.34%

Principal Property Tax PayersYear 2007

154

TA

XE

S L

EV

IED

CO

LL

EC

TIO

NS

FISC

AL

FO

R T

HE

PE

RC

EN

TA

GE

IN

SU

BSE

QU

EN

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EN

TA

GE

Y

EA

RFI

SCA

L Y

EA

RA

MO

UN

TO

F L

EV

YY

EA

RS

AM

OU

NT

OF

LE

VY

2007

$65,

531,

728

$63,

181,

930

96.4

%$1

00,6

57$6

3,28

2,58

796

.6%

2008

$63,

123,

125

$62,

249,

498

98.6

%$1

73,1

01$6

2,42

2,59

998

.9%

2009

$57,

679,

952

$56,

797,

501

98.5

%$1

98,9

07$5

6,99

6,40

898

.8%

2010

$53,

408,

513

$52,

477,

263

98.3

%$1

37,3

94$5

2,61

4,65

798

.5%

2011

$47,

862,

708

$46,

941,

453

98.1

%$2

35,8

56$4

7,17

7,30

998

.6%

2012

$45,

434,

311

$44,

537,

852

98.0

%$2

83,8

94$4

4,82

1,74

698

.7%

2013

$44,

715,

750

$43,

934,

031

98.3

%$1

68,9

91$4

4,10

3,02

298

.6%

2014

$47,

418,

367

$46,

623,

220

98.3

%$2

10,6

73$4

6,83

3,89

398

.8%

2015

$51,

479,

158

$49,

506,

421

96.2

%$1

62,3

14$4

9,66

8,73

596

.5%

2015

$53,

794,

633

$51,

776,

803

96.2

%$6

2,99

4$5

1,83

9,79

796

.4%

SOU

RC

E:

OK

AL

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SA C

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NT

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AR

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TO

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155

$

$10.

0

$20.

0

$30.

0

$40.

0

$50.

0

$60.

0

$70.

0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2015

Millions

Year

Prop

erty

TaxLevies

andCo

llections

LastTenFiscalYears

Levi

edCo

llect

ed

156

SPE

CIA

LC

OM

ME

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$0$1

51,5

78$0

$98,

525,

577

$9,8

41,9

83$9

76,3

97$1

2,28

0,00

0$0

$123

,790

,290

1.73

%$6

42

2008

$857

,792

$0$0

$3,5

80,0

00$9

5,29

5,29

6$2

0,73

5,15

6$7

40,8

69$1

2,01

0,00

0$0

$135

,027

,617

1.81

%$6

87

2009

$530

,526

$0$0

$3,3

60,0

00$9

2,04

8,96

0$2

0,63

2,24

9$4

46,4

75$1

2,01

0,00

0$0

$130

,426

,566

1.75

%$6

63

2010

$182

,412

$25,

749,

919

$0$3

,140

,000

$88,

476,

519

$20,

283,

475

$153

,221

$11,

725,

000

$0$1

51,7

51,0

572.

03%

$772

2011

$0$2

9,39

1,61

5$0

$2,7

40,0

00$8

4,70

0,70

1$2

2,69

3,01

8$0

$3,4

90,0

00$0

$143

,838

,719

1.92

%$7

32

2012

$0$1

9,15

3,19

8$0

$0$9

5,98

4,44

1$2

3,99

5,40

7$0

$1,6

85,0

00$0

$151

,569

,848

2.03

%$7

71

2013

$0$2

8,51

0,20

3$0

$4,9

73,3

93$8

4,86

3,51

2$2

2,23

5,62

3$0

$155

,000

$0$1

37,0

70,5

121.

83%

$697

2014

$0$2

8,29

0,65

9$0

$6,0

59,0

00$8

8,56

6,87

0$2

0,24

9,58

2$0

$0$0

$143

,166

,111

1.92

%$7

28

2015

$0$5

2,71

9,87

0$0

$6,0

22,2

11$8

1,98

4,31

2$1

9,23

5,03

5$0

$0$0

$159

,961

,428

1.77

%$7

96

2016

$0$6

3,89

9,51

4$4

16,2

92$4

,490

,979

$79,

094,

314

$19,

515,

143

$0$0

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16,2

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apita

l Im

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4, S

tate

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nclu

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0

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157

$1,312,836

$4,437,792

$3,890,526

$29,072,331

$32,131,615

$19,153,198

$33,483,596

$34,349,659

$58,742,081

$68,806,785

$121,623,957

$128,781,321

$125,137,684

$120,638,215

$110,883,719

$121,664,848

$107,254,135

$108,816,452

$101,219,347

$98,609,457

$0

$20,

000,

000

$40,

000,

000

$60,

000,

000

$80,

000,

000

$100

,000

,000

$120

,000

,000

$140

,000

,000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Debt

byType

LastTenFiscalYears

Gove

rnm

entD

ebt

Busin

ess

type

Debt

$642

$687

$663

$772

$732

$771

$697

$728

$796

$822

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

PerC

apita

Debt

LastTenFiscalYEars

158

SCH

ED

UL

E 1

1

FISC

AL

G

ross

Ope

ratin

gD

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t Ope

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2012

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TA

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2010

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2011

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2012

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2010

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2010

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2011

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Other Reports

170

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED

ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Chairman and Members of theBoard of County Commissioners and Other Elected Officials


We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements (hereinafter referred to as “financial statements”) of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Okaloosa County, Florida (the County) as of and for the year ended September 30, 2016, which collectively comprise the County’s basic financial statements and have issued our report thereon dated March 31, 2017.

Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the County’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances, for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs that we consider to be a significant deficiency. [2016-1]

171

Compliance and Other Matters As part of obtaining reasonable assurance about whether the County’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Okaloosa County, Florida’s Response to Findings The Board of County Commissioners’ response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal controls and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal and compliance. Accordingly, this communication is not suitable for any other purpose.


172

INDEPENDENT ACCOUNTANTS’ REPORT ON EXAMINATION OF COMPLIANCE REQUIREMENTS IN ACCORDANCE WITH CHAPTER 10.550,

RULES OF THE AUDITOR GENERAL

Honorable Chairman and the Members of the Board of County Commissioners and Other Elected Officials Okaloosa County, Florida

We have examined Okaloosa County, Florida’s (hereinafter referred to as the “County”) compliance with the following requirements for the year ended September 30, 2016:

(1) Florida Statute 218.415 in regards to investments

(2) Florida Statutes 28.36 in regards to certain court-related functions

(3) Florida Statute 288.8018 in regards to the Deepwater Horizon Oil spill receipts and expenditures.

(4) Florida Statute 365.172 and 365.173 in regards to the E911 revenues and expenditures.

Management is responsible for the County’s compliance with those requirements. Our responsibility is to express an opinion on the County’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Board’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Board’s compliance with specified requirements.

In our opinion, Okaloosa County, Florida complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016.


173

INDEPENDENT AUDITORS’ REPORT ON THE SCHEDULE OF RECEIPTS AND EXPENDITURES OF FUNDS RELATED TO THE DEEPWATER HORIZON OIL SPILL

Honorable Chairman and the Members of the Board of County Commissioners and Other Elected Officials Okaloosa County, Florida

We have audited the financial statements of Okaloosa County, Florida as of and for the year ended September 30, 2016, and have issued our report thereon dated March 31, 2017 which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole.

The Schedule of Receipts and Expenditures of Funds related to the Deepwater Horizon Oil Spill on page 175 is presented for the purpose of additional analysis as required by Florida Statute 288.8018 and the Rules of the Auditor General Chapter 10.557(3)(f), and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America.

In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.


174

Okaloosa County, Florida SCHEDULE OF RECEIPTS AND EXPENDITURES OF FUNDS

RELATED TO DEEPWATER HORIZON OIL SPILL For the Fiscal Year Ended September 30, 2016

Amounts Received Amounts Expended in the 2015-2016 in the 2015-2016Source Fiscal Year Fiscal Year

British Petroleum:

Litigation Settlement $ 0 $1,699,847

Funds relating to proceeds specified for advertising and tourist related media campaigns $ 39,581 $156,792

Note: This does not include funds related to the Deepwater Horizon Oil Spill that are considered Federal awards or State financial assistance. The Schedule of Expenditures of Federal Awards and State Financial Assistance includes $12,007 of expenditures of State financial assistance (included for CSFA # 37.082), that are related to the Deepwater Horizon Oil Spill.

175

MANAGEMENT LETTER

To the Honorable Chairman and Members of the Board of County Commissioners and Other Elected Officials Okaloosa County, Florida

Report on the Financial Statements We have audited the financial statements of Okaloosa County, Florida (hereinafter referred to as “County”) as of and for the fiscal year ended September 30, 2016, and the related notes to the financial statements, and have issued our report thereon dated March 31, 2017.

Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and Chapter 10.550, Rules of the Florida Auditor General.

Other Reports and Schedules We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project and Report on Internal Control over Compliance and Compliance with Requirements Applicable to the Passenger Facility Charge Program; Schedule of Findings and Questioned Costs; Schedule of Receipts and Expenditures of Funds Related to Deepwater Horizon Oil Spill, Independent Accountants’ Report on Examination of Compliance Requirements in Accordance with Chapter 10.550, Rules of the Florida Auditor General, and Independent Auditors’ Report on the Schedule of Receipts and Expenditures of Funds Related to Deepwater Horizon Oil Spill. Disclosures in those reports which are dated March 31, 2017, should be considered in conjunction with this management letter.

Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations in the preceding annual financial report except as noted in the table below.

Tabulation of Uncorrected Audit Findings Current Year

Finding # 2014-15 FY Finding # 2013-14 FY

Finding # 2016-1 2015-2 N/A 2016-2 N/A N/A

176

Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name of official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. Okaloosa County, Florida is a political subdivision of the State of Florida organized under Title VIII, Section 1(e) of the Florida constitution. The primary government includes the Board of County Commissioners, the Clerk of the Circuit Court and Comptroller, the Sheriff, the Tax Collector, the Property Appraiser, and the Supervisor of Elections. As of September 30, 2016, Okaloosa County had no component units, as defined by GASB 61, with a significant operational or financial relationship with the County.

Financial Condition Sections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether or not Okaloosa County, Florida has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that Okaloosa County, Florida did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management’s responsibility to monitor Okaloosa County, Florida’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.

Annual Financial Report Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for Okaloosa County, Florida for the fiscal year ended September 30, 2016, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2016. In connection with our audit, we determined that these two reports were in agreement.

Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit see comments 2016-2.

2016-2 AIRPORT FINANCIAL OPERATIONS

CriteriaThe airport enterprise operation is required to adhere to Board of County Commissioner’s policy on disbursements requests and to invoice its leaseholders in accordance with contact terms.

ConditionDuring our testing at the airport we observed that sufficient documentation underlying expenses for advertising were not obtained prior to submission and payment of invoices. The documentation needed to support the invoices was obtained for auditor inspection upon request with no exceptions noted.

177

Two leaseholders selected for testing were not billed in accordance with lease terms; however the billing differences were not material or significant.

CausePrevious airport administration did not build a strong financial foundation as noted in previous audit findings. New airport management spent considerable time and effort in FY 16 focusing on improving airport financial operations and significant progress was made; however not all financial improvement objectives were able to be completed during the year under audit.

EffectThere was no significant impact to the financial position of the Airport; however opportunities to enhance the internal control framework exist.

RecommendationWe recommend management continue to strengthen financial operations at the airport as outlined in management’s response.

View of responsible official and planned corrective action Airport management is in process or completed several financial objectives to include written accounting policy and procedures. Significant resources and efforts have been accomplished to train new and existing financial staff however, much more work is required. Management has taken an aggressive approach to addressing financial repairs on a priority basis. A full legal review of all leases to standardize contract language has been accomplished in order to decrease the amount of billing complexities and increase transparency and oversight. A hangar inspection program was developed to annually inspect hangars at the Crestview and Destin airports and new appraisals were accomplished to standardize the leases. Financial consultants have provided training and PROPworks provided an in-house training course for airport finance staff. The Airline-Use and Rental Car Agreements, which are the highest priority agreements, previously extended over the years, were renegotiated and completed for lengthy terms and methodologies that provide significant revenue returns. Negotiations are currently well underway with the Air Force on the Enhanced Use Lease and Joint Use Agreements, which is paramount to ensure the airport and operations can thrive and grow and further continue to receive FAA funding.

Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties

We greatly appreciate the assistance and cooperation extended us during our audit.


178

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE

REQUIRED BY THE UNIFORM GUIDANCE AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL AND COMPLIANCE WITH REQUIREMENTS APPLICABLE TO THE

PASSENGER FACILITY CHARGE PROGRAM

To the Honorable Chairman and Members of theBoard of County Commissioners and Other Elected Officials


Report on Compliance for Each Major Federal Program, State Project and Passenger Facility Charge Program We have audited the compliance of Okaloosa County, Florida (hereinafter referred to as “County”), with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement; the requirements described in the Florida Department of Financial Services’ State Projects Compliance Supplement and the compliance requirements described in the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal Aviation Administration, that are could have a direct and material effect on each of County’s major federal programs, state projects and passenger facility charge program for the year ended September 30, 2016. The County’s major federal programs and state projects are identified in the summary of auditor results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility Management is responsible for compliance with federal and state statutes, regulations, and the terms and conditions of its federal and state awards applicable to it its federal programs, state projects and passenger facility charge program.

Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of the County’s major federal programs, state projects, and passenger facility charge program based on the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance); Chapter 10.550, Rules of the Auditor General, and the Federal Aviation Administration. Those standards, the Uniform Guidance and Chapter 10.550, Rules of the Auditor General, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the County’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

179

We believe that our audit provides a reasonable basis for our opinion on compliance for each major program, state project, and passenger facility charge program. However, our audit does not provide a legal determination of the County’s compliance with those requirements.

Opinion on Each Major Federal Program, State Project, and Passenger Facility Charge ProgramIn our opinion, the County complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs, state projects and passenger facility charge program for the fiscal year ended September 30, 2016.

Report on Internal Control Over ComplianceManagement of the County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the County’s internal control over compliance with requirements that could have a direct and material effect on each major federal program, state project or the passenger facility charge program, to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program, state project, or passenger facility charge program and to test and report on internal control over compliance in accordance with the Uniform Guidance, Florida Department of Financial Services State Projects Compliance Supplement, and the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal Aviation Administration, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program, state project or the passenger facility charge program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program, state project or the passenger facility charge program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement for a federal program, state project or the passenger facility charge program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

180

Purpose of this Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance, Chapter 10.550 Rules of the Auditor General, and the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal Aviation Administration. Accordingly, this report is not suitable for any other purpose.


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Federal/State Agency, Pass-through Entity, Federal Program/State Project

CFDA/ CSFA Number

Contract or Grant Number Expenditures Passed Through

To Subreceipients

FEDERAL AWARDS

U.S. Department of Agriculture

Passed Through Florida Department of Agriculture & Consumer Services Food Distribution Program 10.550 82002 1,605

School Breakfast Program 10.553 01-0303 2,652

National School Lunch Program 10.555 01-0303 4,149

Total U.S. Department of Agriculture 8,406 -

U.S. Department of Defense

Department of the Army

Planning Assistance to States 12.110 N/A 82,500

Defense Human Resources Activity

Electronic Absentee Systems for Elections (EASE) 12.217 H98210-12-1-0007 80,000

Electronic Absentee Systems for Elections (EASE) 12.219 H98210-13-1-0007 135,600

Total U.S. Department of Defense 298,100 -

U.S. Department of Housing and Urban Development

Passed Through Florida Department of Economic Opportunity Community Development Block Grants 14.228 10DB-4X-01-56-01-F18 850,987

Total U.S. Department of Housing and Urban Development 850,987 -

U.S. Department of Justice

State Criminal Alien Assistance Program 16.606 2015-AP-BX-0515 3,659

Supervised Visitation, Safe Havens for Children 16.527 2011-CW-AX-K021 2,132 153,208

"ARRA" Public Safety Partnership and Community Policing Grants 16.710 2013-DJ-BX-0013 459,051

Edward Byrne Memorial Justice Assistance Grant Program 16.738 2013-DJ-BX-1067 5,370



Equitable Sharing Program 16.922 N/A 120,699

Passed Through Florida Department of Law Enforcement Edward Byrne Memorial Justice Assistance Grant Program 16.738 2016-JAGC-OKAL-2-H3-172 12,800 Edward Byrne Memorial Justice Assistance Grant Program 16.738 2016-JAGC-OKAL-3-H3-214 24,617

Passed Through Florida Coalition Against Domestic Violence"ARRA" Violence Against Women Grants 16.588 16-8019-LE-ENH 49,863

Total U.S. Department of Justice 694,229 177,825

U.S. Department of Transportation Direct Programs Federal Aviation Administration

Airport Improvement Program 20.106 3-12-0020-017-2014 1,569,023 Airport Improvement Program 20.106 312-0081-025-2013 973,857 Airport Improvement Program 20.106 3-12-0081-026-2014 3,356

Federal Transit Administration

Federal Transit Capital Improvement Grants 20.507 FL-90-X680-00 6,663 Federal Transit Capital Improvement Grants 20.507 FL-90-X715-00 200,597 Federal Transit Capital Improvement Grants 20.507 FL-90-X716-00 79,590 Federal Transit Capital Improvement Grants 20.507 FL-90-X761-00 300,450

Okaloosa County, FloridaSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE


182


CFDA/ CSFA Number


To Subreceipients



Federal Transit Capital Improvement Grants 20.507 FL-90-X795-00 842,617 Federal Transit Capital Improvement Grants 20.507 FL-90-X815-00 780,364 79,962 Federal Transit Capital Improvement Grants 20.507 FL-90-X867-00 12,774 Program Generated Income (FTA funded programs) 20.507 Equipment/Insurance Proceeds 441,779

Indirect Programs Passed Through Florida Department of Transportation Highway Planning and Construction 20.205 ANZ38, 409797-1-88-01 214,491

Highway Planning and Construction 20.205ARB68, 433572-1-38-01 FN 8886-

341-A 26,156

Highway Planning and Construction 20.205ARN38, 429675-2-58-01/ 429675-2-

68-01 FN 8886-500-A 539

Highway Planning and Construction 20.205ARR40, 430038-2-38-01 FN 8886-

623-A 29,923

Highway Planning and Construction 20.205G0E05, 433572-1-58-01/ 433572-1-

68-01 FN 8886-518-A 239

Formula Grants for Rural Areas 20.509 AQD91, 421365-2-84-31 25,868 Formula Grants for Rural Areas 20.509 ARM72, 421365-2-84-34 208,051 3,090

National Priority Safety Programs 20.616 G0466, M5HVE-16-06-21 58,299

Total U.S. Department of Transportation 5,774,636 83,052

U. S. Department of Environmental Protection

Passed Through Florida Department of EnvironmentalProtection Nonpoint Source Implementation Grants 66.460 G0326 193,129

Total U.S. Department of Environmental Protection 193,129 -

Election Assistance Commission

Passed Through Florida Department of State Help America Vote Act Requirements Payments 90.401 MOA # 2013-2014-0001-R 8,873 Help America Vote Act Requirements Payments 90.401 MOA #2014-2015-0001-OKA 21,800

Total Election Assistance Commission 30,673 -

U.S. Department of Health & Human Services

Passed Through Florida Department of Revenue Child Support Enforcement 93.563 CST46 13,490 Child Support Enforcement 93.563 COC46 753,423 Child Support Enforcement 93.563 N/A 2,671

Passed Through Florida Department of Children and Families Block Grants for Community Mental Health Services 93.958 AH105 15,259

Matching 124,164 Block Grants for Prevention and Treatment of Substance Abuse 93.959 AH105 12,998

Matching 13,798 Total U.S. Department of Health & Human Services 797,841 - Sub-Total Florida Matching 137,962 -

U.S. Department of Homeland Security

Checked Baggage Screening Design Services Project - (OTA) N/A HSTS04-13-H-CT1161 3,919,695

Law Enforcement Officer Reimbursement Agreement Program - (OTA) 97.090 HSTS02-13-H-SLR205 55,800 Law Enforcement Officer Reimbursement Agreement Program - (OTA) N/A HSTS02-16-H-SLR794 65,540

Passed Through Florida Division of Emergency Management Disaster Grants-Public Assistance (Presidentially Declared Disasters) 97.036 15-SP-8Z-01-56-02-530 228,556 Disaster Grants-Public Assistance (Presidentially Declared Disasters) Matching 15-SP-8Z-01-56-02-530 38,093

Hazard Mitigation Grant 97.039 16HM-H4-01-56-01-300 17,360

Emergency Management Performance Grants 97.042 16-FG-5A-01-56-01-113 71,983 Emergency Management Performance Grants 97.042 17-FG-P9-01-56-01-120 14,196

183


CFDA/ CSFA Number


To Subreceipients



Homeland Security Grant Program 97.067 15-DS-P4-01-56-01-327 139,100 Homeland Security Grant Program 97.067 16-DS-P9-01-56-01-209 91,135 Homeland Security Grant Program 97.067 16-DS-T9-01-56-01-296 20,555 Homeland Security Grant Program 97.067 16-DS-U8-01-56-01-396 64,909

Passed Through Florida Department of Law Enforcement Agency Homeland Security Grant Program 97.067 2016-LETP-OKA-1-L9-009 13,141

Total U.S. Department of Homeland Security 4,701,970 - Subtotal Florida Matching Funds 38,093 -

TOTAL FLORIDA MATCHING FUNDS 176,055 - TOTAL FEDERAL AWARDS 13,349,971 260,877

STATE FINANCIAL ASSISTANCE

Executive Office of the Governor

Passed Through Enterprise Florida, Inc.

Enterprise Florida, Inc. 31.003 DIG 11-03 500,000

Passed Through Florida Division of Emergency Management Emergency Management Programs 31.063 16-BG-83-01-56-01-046 92,360 Emergency Management Programs 31.063 17-BG-83-01-56-01-053 6,372

Emergency Management Projects 31.067 16-CP-11-01-56-01-163 9,816

Total Executive Office of the Governor 608,548 -

Florida Dept. of Environmental Protection

Cooperative Collection Center Grant 37.007 S0834 143,924

Statewide Surface Water Restoration and Wastewater Projects 37.039 LP46042 12,541 Statewide Surface Water Restoration and Wastewater Projects 37.039 LP46041 34,337

Stormwater Projects/Deepwater Horizon Oil Spill 37.082 SO697 12,007

Total Florida Department of Environmental Protection 202,809 -

Florida Department of Economic Opportunity Enterprise Florida

Enterprise Florida, Inc. 40.003 DIG 13-04 32,600

Total Florida Department of Economic Opportunity 32,600 -

Florida Department of Agriculture & Consumer Services

Mosquito Control 42.003 021299 9,649 Mosquito Control 42.003 022257 2,976

Total Florida Department of Agriculture & Consumer Services 12,625 -

Florida Department of State

State Library Grant None 14-SP-01 19,683 State Aid to Libraries 45.030 14-ST-47 44,915

Total Florida Department of State 64,598 -

Florida Housing Finance Corporation

State Housing Initiatives Partnership (SHIP) Program 40.901 2012/2013 1,726 State Housing Initiatives Partnership (SHIP) Program 40.901 2013/2014 156,725 State Housing Initiatives Partnership (SHIP) Program 40.901 2014/2015 399,148 State Housing Initiatives Partnership (SHIP) Program 40.901 2015/2016 387,218

184


CFDA/ CSFA Number


To Subreceipients



Total Florida Housing Finance Corporation - 944,817

Florida Department of Transportation

Commission For the Transportation Disadvantaged Trip and Equipment 55.001 GO270,43202718401/43202818401 270,523 Grant Program 134,569 Commission For the Transportation Disadvantaged Trip and Equipment 55.001 G0B89,43202718401/43202818401 Grant Program Aviation Development Grants 55.004 AR859, 42561729401 322,102 Aviation Development Grants 55.004 AQJ14, 42390729401 175,688 Aviation Development Grants 55.004 AQW81, 42390629401 771,092 Aviation Development Grants 55.004 AR741, 42561619401 46,529 Aviation Development Grants 55.004 AR742, 42561819401 9,136 Aviation Development Grants 55.004 ARC12, 42561519401 236,613 Aviation Development Grants 55.004 ARE15, 42561719401 161 Aviation Development Grants 55.004 ARQ66, 42230329401 25,157

Commuter Assistance/Rideshare Grants 55.007 ARN13, 420315-2-84-01 3,340

Public Transit Block Grant Program Block Grant 55.010 ARN27, 422253-1-84-01 161,530

Transit Corridor Program 55.013 ARN14, 422256-1-84-01 210,000

Transportation Regional Incentive Program (TRIP) 55.026ARB51,421997-33801.34801,

43801,44801,53801,63801 184,554 Total Florida Department of Transportation 2,550,994 -

Florida Department of Health

County Grant Awards 64.005 C3046 19,881 County Grant Awards 64.005 C4046 31,270

Total Florida Department of Health 51,151 -

Florida Fish and Wildlife Conservation Commission

Artificial Reef Grants Program 77.007 FWC-13243 140,000

Total Florida Department of Health 140,000 -

TOTAL STATE FINANCIAL ASSISTANCE 3,663,325 944,817

TOTAL FEDERAL AND STATE FINANCIAL ASSISTANCE 17,189,351 1,205,694

185

Okaloosa County, Florida NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

AND STATE FINANCIAL ASSISTANCE Fiscal Year Ended September 30, 2016

186

NOTE 1. BASIS OF PRESENTATION

The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance (the Schedule) presents the activity of all federal funded programs and state funded projects of Okaloosa County, Florida for the year ended September 30, 2016. All federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included on the schedule. Funds received and expended as state financial assistance reported on the schedule include only those state funds provided from state resources to carry out state projects. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations(CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and Chapter 10.550, Rules of the Auditor General. Because the Schedule presents only a selected portion of the operations of Okaloosa County, Florida, it is not intended to, and does not, present the financial position, changes in net position, or cash flows of Okaloosa County, Florida.

NOTE 2. BASIS OF ACCOUNTING

The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance is presented using the modified accrual basis of accounting for all governmental fund grants and the accrual basis of accounting for all proprietary fund grants. The basis of accounting is described in Note 1 C to the County’s financial statements. Okaloosa County, Florida has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

Okaloosa County, Florida SCHEDULE OF FINDINGS AND QUESTIONED COSTS


187

1. Summary of Auditor Results

Financial Statements Type of auditors’ report issued: Unmodified Opinion

Internal control over financial reporting:

Material weakness identified? Yes X No

Significant deficiencies identified that are not considered to be material weakness? X Yes None

reported

Non-compliance material to financial statements noted?

Yes X No

Federal Awards and State Projects Internal control over major programs:

Material weakness identified?

Yes X No

Significant deficiency identified that is/ not considered to be material weakness?

Yes X Nonereported

Type of auditor’s report issues on compliance for major programs: Unmodified opinion

Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance and Chapter 10.550, Rules of the Auditor General?

Yes X No

Identification of Major Programs

Federal: CFDA # Name of Federal Program or Cluster

14.22820.106

N/A

Community Development Block Grants Airport Improvement Program Checked Baggage Screening Design Services Project



188

State: CSFA # Name of State Project

31.00355.00455.00755.01377.007

Enterprise Florida, Inc. Aviation Development Grants Commuter Assistance/Rideshare Grants Transit Corridor Program Artificial Reef Grants Program

1. Identification of Major Programs

Dollar threshold used to distinguish between Type A and B programs for Federal Awards

$ 750,000

Dollar threshold used to distinguish between Type A and B programs for State Projects

$ 300,000

Auditee qualified as low-risk auditee? X Yes No

2. Findings Related to the Financial Statements which are Required to be Reported in Accordance with Generally Accepted Governmental Auditing Standards (GAGAS)

FINDING 2016-1 PUBLIC WORKS AND FACILITY MAINTENANCE INVENTORY (BCC)

CriteriaThe public works department to include its divisions of Engineering, Traffic Operations, Roads, Environmental Services, Parks Division and Administrative services and its subsidiary facility maintenance division, has substantial amounts of inventory on hand in order to fulfill its mission to internal and external customers. The inventory is not counted and reconciled on a routine basis to perpetual inventory records. The inventory has also not been physically recorded in the general ledger as its value was assumed to be immaterial. Costs are allocated to projects based on work order systems, but the value of any residual inventory has not been captured in the accounting records. In a properly designed system of internal control surrounding inventory, key controls should be in place for existence, completeness, rights or obligations, valuation, and classification and accuracy of significant inventory balances.

Condition The following conditions exist:

Physical counts of the inventory is not performed routinely The nature of the inventory is diverse since public works serves many different

functions Physical custody of assets is not segregated from the recordkeeping function Two separate platforms are used to account for work orders and inventory, an off the

shelf package used by Public Works and an internally developed software used by Facilities Maintenance



189

FINDING 2016-1 PUBLIC WORKS AND FACILITY MAINTENANCE INVENTORY (BCC) (CONTINUED)

Condition (continued) The valuation of inventory at year end per the reports generated indicate the residual

balances may be significant; however due to controls lacking in other areas, there is limited confidence in the quantities reported and valuation of inventory due to concerns of potential items that could be slow moving or obsolete.

CauseThe system of internal control surrounding this inventory is not properly designed.

EffectFraud or errors in reporting could occur with respect to this inventory and not be detected in a timely manner.

RecommendationManagement should evaluate the current design of the system of internal control and personnel available to ensure key controls are in place for the assertions outlined above.

Views of responsible officials and planned corrective action: We agree with the recommendation and certain changes were implemented to segregate the inventory ordering function from receiving of goods into the inventory system. The comprehensive remediation plan involves the following steps:

Evaluation of inventory and work order operational processes in both public works and facility maintenance to develop a consistent approach.

Evaluation of a single software application that could be used by both public works and facility maintenance for inventory and work order functions. The current software applications used have not been updated and lack necessary functionality. In addition one software application would promote consistency in processes and allow for cross staffing between the functions.

Combining public works and facility maintenance inventory in the North End of the County to one facility as part of a short term plan. The ultimate goal would be one supply warehouse to house both public works and facility maintenance inventory in one building for North County. Due to travel time, the need for separate inventory stores in North and South County is needed.

Further evaluation of the segregation of duties to include physical count functions to determine if additional personnel is warranted. One additional hire is already planned for FY 17.

While these efforts are currently underway, a complete remediation will not be accomplished until FY 17.



190

3. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL PROGRAMS

There were no findings which were required to be reported in accordance with the Uniform Guidance.

4. FINDINGS AND QUESTIONED COSTS - MAJOR STATE FINANCIAL ASSISTANCE

There were no findings which were required to be reported in accordance with Chapter 10.550, Rules of the Auditor General.

BOARD OF COUNTYCOMMISSIONERS

Page


INTRODUCTORY SECTIONTable of Contents i

FINANCIAL SECTIONIndependent Auditors' Report 1Basic Financial Statements


5 II

7 III8 IV9 V

12 VI14 VII

Notes to Financial Statements 17Combining and Individual Fund Statements and Schedules:


58 A-2

60 A-3County Transportation Trust Special Revenue Fund 61 A-4Natural Disaster Special Revenue Fund 62 A-5Local Housing Assistance Trust Special Revenue Fund 63 A-6E-911 Operations Special Revenue Fund 64 A-7Radio Communications Special Revenue Fund 65 A-8

i

Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual:



General Fund

TABLE OF CONTENTS

FISCAL YEAR ENDED SEPTEMBER 30, 2016BOARD OF COUNTY COMMISSIONERS

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental FundsStatement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual


Combining Statement of Revenues, Expenditures, and Changes inFund Balances - Nonmajor Governmental Funds

Tourist Development Special Revenue FundStatement of Net Position - Proprietary Funds


Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds


TABLE OF CONTENTS

FISCAL YEAR ENDED SEPTEMBER 30, 2016BOARD OF COUNTY COMMISSIONERS

Combining and Individual Fund Statements and Schedules: Page


Law Enforcement Trust Special Revenue Fund 66 A-9Police Academy Special Revenue Fund 67 A-10County Public Health Special Revenue Fund 68 A-11Municipal Services Benefit Unit Special Revenue Fund 69 A-12Unincorporated County Parks Special Revenue Fund 70 A-13Prisoner Benefit Special Revenue Fund 71 A-14Additional Court Cost Special Revenue Fund 72 A-15Drug Abuse Trust Special Revenue Fund 73 A-16Domestic Violence Trust Special Revenue Fund 74 A-17Traffic Education Special Revenue Fund 75 A-18Okaloosa Debt Service Fund 76 A-19Road and Bridge Construction Capital Projects Fund 77 A-20

78 B-1


85 C-2Combining Statement of Cash Flows - Internal Service Funds 86 C-3

OTHER REPORTS

88

90

91

92

9396

Auditor General Compliance:

Deepwater Horizon Oil Spill:


Combining Statement of Net Position - Nonmajor Enterprise Funds

Combining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service Funds

Independent Accountants' Report on Examination of Compliance Requirements in Accordance with Chapter 10.550, Rules of the Auditor General

Combining Statement of Revenues, Expenses, and Changes in Net Position - Nonmajor Enterprise Funds


Schedule of Findings and Responses

ii

Auditor General Management Letter:Management Letter

1

Honorable Chairman and the Members of the Board of County Commissioners Okaloosa County, Florida


Report on the Financial Statements We have audited the accompanying special-purpose financial statements of each major fund and the aggregate remaining fund information of the Board of County Commissioners of Okaloosa County, Florida, (“Board of County Commissioners”) as of and for the year ended September 30, 2016, as listed in the table of contents, and the related notes to the financial statements. 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 Board of County Commissioners’ 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 Board of County Commissioners’ internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. OpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund and the aggregate remaining fund information of the Board of County Commissioners, as of September 30, 2016, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund and the Tourist Development Special Revenues Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America.

2

Emphasis of Matter As discussed in Note 1 to the financial statements, the financial statements referred to above have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida. In conformity with the Rules, the accompanying financial statements are intended to present the financial position and changes in financial position of each major fund, and aggregate reaming fund information, only for that portion of the major funds, and the aggregate remaining fund information, of Okaloosa County, Florida that is attributable to the Board of County Commissioners. They do not purport to, and do not, present fairly the financial positon of Okaloosa County, Florida as of September 30, 2016 and the changes in its financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America.

Other Matters Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Schedule of Proportionate Share of Net Pension Liability for the Florida Retirement System and Health Insurance Subsidy, and Schedule of Contributions for the Florida Retirement System and Health Insurance Subsidy, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Board of County Commissioners’ financial statements. The accompanying combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Schedule of Receipts and Expenditures of Funds Related to the Deepwater Horizon Oil Spill is presented for the purposes of additional analysis as required by the Florida Auditor General Rule 10.557(3)(m) and is not a required part of the basic financial statements of the Board of County Commissioners.Such information is the responsibility of management and was derived from and related directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated March 31, 2017, on our consideration of the Board of County Commissioners’ internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters included under the heading “Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed

3

in Accordance with Government Auditing Standards”. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Board of County Commissioners’ internal control over financial reporting and compliance. Restriction on Use

This report is intended solely for the information and use of the Board of County Commissioners, the Okaloosa County Board of County Commissioners, and the State of Florida Office of Auditor General and is not intended to be and should not be used by anyone other than these specified parties.



Cash and Cash Equivalents 3,618,711$ 30,290,954$Investments 1,178,638 8,042,130Accounts Receivable 257,010 3,363,682Due from Other Funds - 646,676Due from Other Elected Officials 1,068,242 52Due from Other Governments 4,707,157 73,710Prepaids 344,161 17,342

Total Assets 11,173,919$ 42,434,546$

LiabilitiesAccounts Payable 338,966$ 77,810$Contracts Payable 930,549 1,651,433Other Accrued Liabilities 571,084 45,499Due to Other Funds - -Due to Other Elected Officials 39,014 441Due to Other Governments 264,127 34,306Due to Depositors 3,880 -Unearned Revenue 410,864 48,060

Total Liabilities 2,558,484 1,857,549

Fund Balances Nonspendable 344,161 17,342Restricted - 40,576,997Committed 32,229 -Assigned 3,739,233 -Unassigned 4,499,812 (17,342)

Total Fund Balances 8,615,435 40,576,997

11,173,919$ 42,434,546$


BALANCE SHEETGOVERNMENTAL FUNDS

September 30, 2016

ASSETS



Exhibit I



OtherGovernmental

Funds

TotalGovernmental

Funds

21,984,077$ 10,451,896$ 66,345,638$378,412 12,418,980 22,018,160

323 2,030 3,623,0453,023,324 109,346 3,779,346

124,244 121,442 1,313,980- 2,325,093 7,105,960- 127,647 489,150

25,510,380$ 25,556,434$ 104,675,279$

31,007$ 179,208$ 626,991$- 1,074,704 3,656,686- 135,982 752,565- 2,759,346 2,759,34619 228 39,702

- 52,365 350,798- 102,562 106,442- 1,453,552 1,912,476

31,026 5,757,947 10,205,006

- 127,647 489,15025,472,633 18,442,719 84,492,349

6,721 577,781 616,731- 3,427,529 7,166,762- (2,777,189) 1,705,281

25,479,354 19,798,487 94,470,273

25,510,380$ 25,556,434$ 104,675,279$


4


RevenuesTaxes 50,054,190$ 18,078,187$ Licenses and Permits 14,000 361,552 Intergovernmental 20,480,906 330,140 Charges for Services 8,913,630 838,077 Fines 11,846 6,969 Miscellaneous 1,725,069 470,023

Total Revenues 81,199,641 20,084,948

ExpendituresCurrentGeneral Government 16,246,045 - Public Safety 15,966,469 - Physical Environment 341,746 - Transportation 3,731,893 210,000 Economic Environment 1,613,772 5,908,305 Human Services 3,772,840 - Culture and Recreation 1,629,556 4,250,758 Court-Related 800,173 -

Capital Outlay 721,827 506,279 Debt ServicePrincipal 208,146 - Interest - - Other Debt Service Costs - -


Excess (Deficiency) of RevenuesOver (Under) Expenditures 36,167,174 9,209,606


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS


Exhibit II



OtherGovernmental

Funds

TotalGovernmental

Funds

264$ 9,059,362$ 77,192,003$ - 489,933 865,485

124,244 11,735,749 32,671,039 289,326 2,682,264 12,723,297

- 366,039 384,854 149,318 960,379 3,304,789

563,152 25,293,726 127,141,467

- 190,750 16,436,795 - 1,719,796 17,686,265 - 870,175 1,211,921 - 9,905,501 13,847,394 - 944,816 8,466,893 - 601,661 4,374,501

76,836 957,068 6,914,218 - 871,483 1,671,656

1,917,075 6,356,530 9,501,711

- 3,425,000 3,633,146 - 4,038,562 4,038,562 - 150,124 150,124

1,993,911 30,031,466 87,933,186

(1,430,759) (4,737,740) 39,208,281

Continued…

5





Other Financing Sources (Uses)Transfers In 4,300,228 - Transfers Out (408,720) (2,052,113) Transfers Among Constitutional Officers (41,436,118) 52 Issuance of Debt - - Original Issue Premium - -

Total Other Financing Sources (Uses) (37,544,610) (2,052,061)

Net Change in Fund Balances (1,377,436) 7,157,545

Fund Balances - Beginning 9,992,871 33,419,452

Fund Balances - Ending 8,615,435$ 40,576,997$

Exhibit II



OtherGovernmental

Funds

TotalGovernmental

Funds

11,111 4,529,812 8,841,151 (652,454) (4,716,188) (7,829,475)

- (79,014) (41,515,080) 12,960,000 - 12,960,000 1,040,000 160,121 1,200,121

13,358,657 (105,269) (26,343,283)

11,927,898 (4,843,009) 12,864,998

13,551,456 24,641,496 81,605,275

25,479,354$ 19,798,487$ 94,470,273$

6


Exhibit III

Original Final Actual AmountsRevenuesTaxes 50,019,742$ 50,019,742$ 50,054,190$ 34,448$ Licenses and Permits 13,500 13,500 14,000 500Intergovernmental 14,494,570 26,404,938 20,480,906 (5,924,032)Charges for Services 7,192,355 8,537,708 8,913,630 375,922Fines 4,500 4,663 11,846 7,183Miscellaneous 1,444,783 2,456,501 1,725,069 (731,432)

Total Revenues 73,169,450 87,437,052 81,199,641 (6,237,411)

ExpendituresCurrentGeneral Government 16,123,467 17,109,517 16,246,045 863,472Public Safety 22,890,322 23,004,057 15,966,469 7,037,588Physical Environment 369,180 361,734 341,746 19,988Transportation 224,612 7,180,241 3,731,893 3,448,348Economic Environment 1,635,523 1,620,631 1,613,772 6,859Human Services 3,770,733 3,788,555 3,772,840 15,715Culture and Recreation 1,629,739 2,008,424 1,629,556 378,868Court-Related 631,683 799,139 800,173 (1,034)

Capital Outlay 497,775 3,707,794 721,827 2,985,967Debt ServicePrincipal - 208,147 208,146 1

Total Expenditures 47,773,034 59,788,239 45,032,467 14,755,772Excess (Deficiency) of Revenues Over (Under) Expenditures 25,396,416 27,648,813 36,167,174 8,518,361

Other Financing Sources (Uses)Transfers In 4,065,485 4,429,490 4,300,228 (129,262)Transfers Out - (408,720) (408,720) -

(40,306,478) (42,514,160) (41,436,118) 1,078,042

(36,240,993) (38,493,390) (37,544,610) 948,780


10,844,577 10,844,577 9,992,871 (851,706)Fund Balance - Ending -$ -$ 8,615,435$ 8,615,435$


GENERAL FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES



7


Budgeted Amounts


Positive(Negative)



Exhibit IV

Original Final Actual AmountsRevenuesTaxes 15,000,000$ 15,000,000$ 18,078,187$ 3,078,187$Licenses and Permits 360,000 360,000 361,552 1,552Intergovernmental - 2,185,150 330,140 (1,855,010)Charges for Services 810,750 810,750 838,077 27,327Fines - - 6,969 6,969Miscellaneous 136,225 175,806 470,023 294,217

Total Revenues 16,306,975 18,531,706 20,084,948 1,553,242

ExpendituresCurrentTransportation - 210,000 210,000 -Economic Environment 9,235,689 11,293,113 5,908,305 5,384,808Culture and Recreation 29,764,485 31,903,808 4,250,758 27,653,050

Capital Outlay 4,322,840 6,399,713 506,279 5,893,434

Total Expenditures 43,323,014 49,806,634 10,875,342 38,931,292

Excess (Deficiency) of Revenues Over (Under) Expenditures (27,016,039) (31,274,928) 9,209,606 40,484,534

Other Financing Sources (Uses)Transfers Out (2,136,800) (2,145,422) (2,052,113) 93,309

900 900 52 (848)

(2,135,900) (2,144,522) (2,052,061) 92,461





TOURIST DEVELOPMENT SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES




8


Budgeted Amounts


Positive(Negative)




Fund

Current AssetsCash and Cash Equivalents 20,162,760$ 7,556,361$ 1,862,312$Investments 11,695,677 2,257,113 7,358Receivables, Net of Allowance for Uncollectible

Due from Other Elected Officials - - -Due from Other Governments 91,812 2,945,560 -Inventory 1,763,793 94,723 -Prepaids 90,688 2,847 6,470Restricted AssetsCash and Cash Equivalents 13,731,036 9,594,998 -

Customer Deposits 1,355,846 - -Other Deposits 1,517,811 - -

Investments - 5,860,182 -Total Restricted Assets 16,604,693 15,455,180 -Total Current Assets 53,251,268 30,097,874 6,621,858

Capital AssetsLand 8,180,379 6,451,481 -Buildings 6,163,100 67,196,764 -

- - -Intangibles 765,530 94,400 30,150Machinery and Equipment 10,900,009 1,971,743 4,304,036Construction in Progress 10,648,214 10,610,719 -Infrastructure 260,432,524 85,982,473 -Works of Art - 69,865 -

(115,619,898) (41,697,358) (2,353,105)Total Capital Assets (Net of Accumulated Depreciation/Amortization) 181,469,858 130,680,087 1,981,081

Total Noncurrent Assets 181,469,858 130,680,087 1,981,081Total Assets 234,721,126$ 160,777,961$ 8,602,939$

4,745,7181,786,090

Business-type

2,841,845

Less Accumulated Depreciation/Amortization


September 30, 2016


STATEMENT OF NET POSITIONPROPRIETARY FUNDS

ASSETS

Exhibit V



3,208,891$ 32,790,324$ 1,516,954$694,356 14,654,504 38,510

- - 4801,176 3,038,548 532,267

- 1,858,516 254,015295 100,300 7,428

- 23,326,034 -25,508 1,381,354 -

- 1,517,811 -- 5,860,182 -

25,508 32,085,381 -4,616,447 94,587,447 2,375,042

133,301 14,765,161 316,861115,363 73,475,227 900,466

276,776 276,776 257,34542,425 932,505 -

3,788,662 20,964,450 2,506,860- 21,258,933 -- 346,414,997 -- 69,865 -

(2,853,666) (162,524,027) (3,275,658)

1,502,861 315,633,887 705,8741,502,861 315,633,887 705,8746,119,308$ 410,221,334$ 3,080,916$

Continued…



686,221 25,388

9

Activities

10,059,874




Fund

Business-type

September 30, 2016



Deferred Charges Related to Pensions 3,480,588$ 1,447,706$ 3,575,389$Deferred Charges on Refunding 2,967,552 - -

Total Deferred Outflows of Resources 6,448,140$ 1,447,706$ 3,575,389$

Current LiabilitiesAccounts Payable 520,205$ 106,889$ 24,178$Contracts Payable 2,797,604 2,074,538 77,684Accrued Liabilities

Compensated Absences 469,213 122,179 174,966Closure Costs Payable - - -Claims and Judgments - - -Other Accrued Liabilities 147,816 62,577 165,535

Due to Other Funds - - -Due to Other Elected Officials 140 44 151Due to Other Governments 27,851 134,122 46,546Notes Payable - - -Unearned Revenue 1,920,041 130,394 -

Current Liabilities Payable fromRestricted AssetsCustomer Deposits Payable 1,355,846 - -Interest Payable 825,366 395,726 -Loan - State of Florida 473,763 - -Revenue Bonds Payable 2,705,000 840,000 -


Total Current Liabilities 11,242,845 3,866,469 489,060

1,235,7265,359,975


LIABILITIES

-

Exhibit V





Activities

715,078$ 9,218,761$ 660,069$- 2,967,552 -

715,078$ 12,186,313$ 660,069$

58,935$ 710,207$ 97,929$990,047 5,939,873 37,435

150,009 916,367 99,479357,905 357,905 -

- - 858,42937,116 413,044 33,454

- - 1,020,000- 335 102

22,030 230,549 8,704- - -

13,797 2,064,232 8,075

25,508 1,381,354 -- 1,221,092 -- 473,763 -- 3,545,000 -

1,655,347 17,253,721 2,163,607

Continued…

6,621,209 -

10

25,508




Fund

Business-type

September 30, 2016



Noncurrent LiabilitiesCompensated Absences 435,221 96,406 85,002Closure Costs Payable - - -Claims and Judgments - - -Notes Payable

(Net of Unamortized Discounts)Loan- State of Florida

(Net of Unamortized Discounts)Revenue Bonds Payable

(Net of Unamortized Discounts

Other Post Employment Benefits 179,943 49,572 167,224Net Pension Liability 9,488,091 3,961,003 9,836,548



Net Investment in Capital Assets 108,737,885$ 112,235,046$ 1,981,081$Restricted for Debt Service 4,882,378 954,894 -Restricted for Other Purposes - 12,194,458 -Unrestricted (Deficit) 29,733,216 9,956,340 (986,037)

Total Net Position (Deficit) 143,353,479 135,340,738 995,044

241,169,266$ 162,225,667$ 12,178,328$Total Liabilities and Net Position (Deficit)

-

15,175,143

NET POSITION

4,424,334

71,491,217

-

and Premiums)


-

3,500,000 -

-

Exhibit V





Activities

132,507 749,136 79,4883,668,375 3,668,375 -

- - 2,609,598

38,371 435,110 31,3911,967,310 25,252,952 1,815,976

5,806,563 124,696,267 4,536,4537,461,910$ 141,949,988$ 6,700,060$

121,090$ 1,517,012$ 111,774$

1,502,861$ 224,456,873$ 705,874$- 5,837,272 -- 12,194,458 -

(2,251,475) 36,452,044 (3,776,723)

(748,614) 278,940,647 (3,070,849)

6,834,386$ 422,407,647$ 3,740,985$

-

-

86,666,360

-

-

11


4,424,334

- 3,500,000

-




FundOperating RevenuesLicenses and Permits -$ -$ -$ Charges for Services 33,037,831 9,865,161 8,771,416Miscellaneous 524,337 25,605 21,036


Operating ExpensesPersonal services 6,534,635 2,623,038 6,275,608Contractual Services 3,323,966 2,629,914 463,762Supplies 713,842 490,648 683,309Insurance Premiums and Claims - - -Utilities 1,786,612 862,304 33,825Other Operating Expenses 3,485,386 1,948,371 595,371Depreciation/Amortization 6,823,005 4,110,123 447,262


Operating Income (Loss) 10,894,722 (2,773,632) 293,315

Nonoperating Revenues (Expenses)Taxes - - 1,122,191Intergovernmental 85,557 175,688 51,034Investment Income (Loss) 408,944 182,784 25,125Other Non-Operating Revenue 440,865 52,492 -Interest Expenses (3,301,015) (1,222,520) -Other Debt Services Costs (1,125) (79,491) -

(26,931) 265 (53,858)

- 3,585,726 -

(2,393,705) 2,694,944 1,144,492



STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITIONPROPRIETARY FUNDS


8,501,017 (78,688)

Business-type

Gain/(Loss) on Disposal of Capital Assets

Total nonoperating Revenues (Expenses)

1,437,807

Passenger and Customer Facility Charges

Exhibit VI



1,790,600$ 1,790,600$ -$ 8,973,897 60,648,305 16,395,949

360 571,338 1,119,045

10,764,857 63,010,243 17,514,994

1,921,834 17,355,115 1,595,3076,850,913 13,268,555 92,692

105,295 1,993,094 2,776,411- - 12,021,022

12,836 2,695,577 4,572430,392 6,459,520 337,099262,851 11,643,241 74,771

9,584,121 53,415,102 16,901,874

1,180,736 9,595,141 613,120

- 1,122,191 -143,060 455,339 -

24,340 641,193 20,600- 493,357 607,210- (4,523,535) -- (80,616) -

7,027 (73,497) 50,108

- 3,585,726 -

174,427 1,620,158 677,918

Continued…



1,291,0381,355,163 11,215,299

12




Fund




Business-type

Capital Contributions 583,167 7,506,805 21,563Transfers In - - 33,000Transfers Out - - (44,676)

Change in Net Position 9,084,184 7,428,117 1,447,694

134,269,295 127,912,621 (452,650)

Total Net Position (Deficit) - Ending 143,353,479$ 135,340,738$ 995,044$

Total Net Position (Deficit) - Beginning

Exhibit VI





- 8,111,535 26,168- 33,000 400,000- (44,676) (1,400,000)

1,355,163 19,315,158 317,206

(2,103,777) 259,625,489 (3,388,055)

(748,614)$ 278,940,647$ (3,070,849)$

13


Water and Sewer


Enterprise Fund


Enterprise Fund

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Customers 33,657,246$ 8,642,991$ 7,396,557$ Payments to Suppliers (7,125,012) (7,031,030) (1,751,003) Payments to Employees (3,336,183) (2,474,444) (5,996,001) Payments for Other Revenues 440,865 52,492 -

Net Cash Provided (Used) by Operating Activities 23,636,916 (809,991) (350,447)

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESOperating Subsidy - Taxes - - 1,122,191 Operating Subsidy - Intergovernmental Revenue 85,557 175,688 51,034 Transfers In - - 33,000 Transfers (Out) - - - Net Interfund Activity - - (44,676) Net Cash Provided (Used) by Non-capital Financing Activities 85,557 175,688 1,161,549

CASH FLOWS FROM CAPITAL AND RELATED FINANCINGACTIVITIESPurchase of Capital Assets (11,997,639) (9,189,716) (1,257,356) Passenger and Customer Facility Charges - 3,585,726 - Proceeds from Disposal of Capital Assets 7,673 26,184 (26,209) Net Borrowing (Repayments)Proceeds from Debt - 3,500,000 - Principal Paid on Capital Debt (5,401,989) (3,299,383) - Interest Paid on Capital Debt (3,461,008) (893,517) - Other Debt Service Costs (1,125) - -

Capital Contributions 583,167 7,506,805 21,563 Net cash provided (used) by capital and related financing activities (20,270,921) 1,236,099 (1,262,002)


STATEMENT OF CASH FLOWS



Exhibit VII



10,804,663$ 60,501,457$ 17,744,039$ (7,067,482) (22,974,527) (16,440,390) (1,871,782) (13,678,410) (1,552,905)

- 493,357 607,210

1,865,399 24,341,877 357,954

- 1,122,191 - 164,123 476,402 -

- 33,000 400,000 - - (1,400,000) - (44,676) -

164,123 1,586,917 (1,000,000)

(202,891) (22,647,602) (118,318) - 3,585,726 -

7,027 14,675 40,018

- 3,500,000 - - (8,701,372) - - (4,354,525) - - (1,125) - - 8,111,535 26,168

(195,864) (20,492,688) (52,132)

Continued…

- Enterprise Funds

14



Water and Sewer


Enterprise Fund


Enterprise Fund





NET CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Sale and Maturities of Investments 2,078,048 1,461,645 (4,678) Interest Income 549,580 218,716 25,403 Net Cash Provided (Used) by Investing Activities 2,627,628 1,680,361 20,725

6,079,180 2,282,157 (430,175)

Cash and Cash Equivalents - Beginning of Year 30,688,273 14,869,202 2,292,487

Cash and Cash Equivalents - End of Year 36,767,453$ 17,151,359$ 1,862,312$

Cash and Cash Equivalents at End of Year Consist of:Current assets 20,162,760$ 7,556,361$ 1,862,312$ Restricted assets 16,604,693 9,594,998 -

Total 36,767,453$ 17,151,359$ 1,862,312$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating ActivitiesOperating Income (Loss) 10,894,722$ (2,773,632)$ 293,315$

Depreciation/Amortization 6,823,005 4,110,123 447,262 Other revenue 440,865 52,492 - Decrease (Increase) in Assets Accounts Receivable (247,171) (869,178) (1,376,023) Due from Other Elected Officials - - - Due from Other Governments 219,638 (791,617) - Inventories 75,403 (17,574) - Prepaid Expenses 26,543 1,128 (2,977) Deferred Outflows 720,508 (930,416) (2,282,158)


Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities

Exhibit VII





(4,903) 3,530,112 (6,383) 24,355 818,054 18,262 19,452 4,348,166 11,879

1,853,110 9,784,272 (682,299)

1,381,289 49,231,251 2,199,253

3,234,399$ 59,015,523$ 1,516,954$

3,208,891$ 32,790,324$ 1,516,954$ 25,508 26,225,199 -

3,234,399$ 59,015,523$ 1,516,954$

1,180,736$ 9,595,141$ 613,120$

262,851 11,643,241 74,771 - 493,357 607,210

51,748 (2,440,624) 3,802 2,546 2,546 106

- (571,979) 310,313 - 57,829 (9,631) - 24,694 4,382

(456,432) (2,948,498) (421,319)

Continued…

15

Water and Sewer


Enterprise Fund


Enterprise Fund





Adjustments to Reconcile Operating Income to Net CashProvided (Used) by Operating Activities - ContinuedIncrease (Decrease) in Liabilities Accounts Payable 147,431 12,512 4,558 Service Contracts Payable 1,939,860 (232,253) 29,572 Due to Other Funds 26 - - Due to Other Elected Officials 103 (236) 76 Due to Other Governments (4,572) (382,141) (5,965) Compensated Absences Payable (80,067) (3,008) (38,918) Closure Cost Payable - - - Claims and Judgments Payable - - - Other Accrued Liabilities (101,387) (19,137) (100,267) Deposits 17,521 - - Unearned Revenue 105,090 (68,209) (19,872) Other Post Employment Benefits 30,048 12,442 30,517 Net Pension Liability 3,377,174 1,398,360 3,429,941 Deferred Inflows (747,824) (309,647) (759,508) Total Adjustments 12,742,194 1,963,641 (643,762)

Net Cash Provided (Used) by Operating Activities 23,636,916$ (809,991)$ (350,447)$

SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS:Amortization of Loan Costs and Refunding Losses 304,651$ -$ -$

Exhibit VII





41,971 206,472 (1,622) 611,743 2,348,922 (823,616)

- 26 (380,000) (118) (175) (87)

(26,814) (419,492) 1,872 873 (121,120) (16,737)

(297,374) (297,374) - - - (82,466)

(34,578) (255,369) (18,177) - 17,521 -

(11,942) 5,067 (2,602) 6,103 79,110 5,634

685,987 8,891,462 633,219 (151,901) (1,968,880) (140,218) 684,663 14,746,736 (255,166)

1,865,399$ 24,341,877$ 357,954$

-$ 304,651$ -$

16


Board of County Commissioners Okaloosa County, Florida

NOTES TO FINANCIAL STATEMENTS Fiscal Year Ended September 30, 2016


Okaloosa County is a political subdivision of the State of Florida, governed by a five (5) member Board of County Commissioners (Board), each elected at large for four-year terms. The Board has no powers other than those expressly vested in it by State Statute and their governmental powers cannot be delegated.

The financial statements of the Board have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. The Board uses the Uniform Accounting System mandated by Chapter 218.33, Florida Statutes. The following is a summary of the more significant accounting policies of the Board of County Commissioners of Okaloosa County, Florida.


The reporting entity is comprised of the primary government, component units and other organizations that are included to ensure that the financial statements are not misleading. The primary government of the Board consists of all funds, departments, boards and agencies of the Board that are not legally separate from the Board. Component units are legally separate organizations for which the Board is financially accountable.

The Board is financially accountable for an organization if the Board appoints a voting majority of the organization’s governing board and (1) the Board is able to significantly influence the programs or services performed or provided by the organization; or (2) the Board is legally entitled to or can otherwise access the organization’s resources; the Board is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization; or the Board is obligated for the debt of the organization.

Component units are presented either as “blended” or “discretely presented”. If blended, it is reported as if it was a fund of the Board throughout the year and is included at both the government-wide and fund financial reporting levels. Discretely presented component units are reported only at the government-wide reporting level.

The Board is part of the legal entity of Okaloosa County, Florida and is, therefore, reported as part of the primary government. The Board’s individual financial statements do not purport to reflect the financial position or the results of operations of the primary government of Okaloosa County, Florida taken as a whole. The combined financial statements of the primary government of Okaloosa County, Florida include the individual statements of the following elected officials and those of separately administered organizations that are controlled by or are dependent upon the County.

Board of County Commissioners Clerk of the Circuit Court Sheriff Tax Collector Property Appraiser Supervisor of Elections.

As required by accounting principles generally accepted in the United States of America, these financial statements present the Board of County Commissioners of Okaloosa County (the primary government). In evaluating the Board as a reporting entity, management has considered all potential component units for which the Board may or may not be financially accountable and, as such, be included within the Board's financial statements. Management utilized criteria set forth in GASB No. 61 for determining financial accountability of potential component units in evaluating all potential component units. In accordance with GASB No. 61, the Board (primary government) is

17



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

A. The Reporting Entity – Continued

financially accountable if it appoints a voting majority of the potential component unit's governing board and 1) it is able to impose its will on the organization or 2) there is a potential for the organization to provide specific financial benefit to or impose specific financial burden on the Board. In addition, component units can be other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The Board evaluated the Emerald Coast Bridge Authority (authority) in accordance with GASB No. 61. The Authority has been dormant for several years. The Board does not believe it is financially accountable with respect to the Authority or that financial burden relationship exists based on an evaluation of GASB No. 61. As such, the Authority is not included as part of the Board’s reporting entity.

B. Basis of Presentation – Fund Financial Statements

These financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of the fund level only financial statements and permit omission of entity-wide full accrual financial statements and management’s discussion and analysis. Therefore, these financial statements are intended to present only the financial position of changes in financial position of that portion of Okaloosa County, Florida, that relate to transactions of the Board and are not intended to present the financial position and changes in financial position of Okaloosa County, Florida

The Board segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. A fund is a fiscal and accounting entity with a self-balancing set of accounts. Separate financial statements are provided for governmental funds and proprietary funds of the Board. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.


1. Exchange and Non-exchange Transactions Exchange transactions are those in which each party receives and gives up essentially equal values. An example

of an exchange transaction is a charge for service, rent, in exchange for a specific service, use of a County building. Non-exchange transactions are those in which the Board gives (or receives) value without directly receiving (or giving) equal value in exchange. An example of a non-exchange transaction is property tax revenue received by the County which is used to fund various general governmental services. The revenue from these exchange and non-exchange transactions is recognized in the financial statements in varying ways depending on the basis of accounting used.

2. Governmental Fund Financial StatementsAll governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. Governmental fund financial statements are reported using the modified accrual basis of accounting. Under this method, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Board considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. Those revenues susceptible to accrual are sales tax, gasoline taxes and other

18





2. Governmental Fund Financial Statements – Continued intergovernmental revenues collected and held by the state at year-end on behalf of the Board, special

assessments, licenses, interest revenue and charges for service. Current year property taxes uncollected at the end of the fiscal year are generally immaterial in amount and highly susceptible to uncollectibility and are not recorded as a receivable on the balance sheet. All other revenue items are considered to be measurable and available only when the government receives cash.

Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made in the following year. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

3. Proprietary Fund Financial Statements The proprietary fund financial statements are reported using the economic resources measurement focus. Under

this measurement focus, all assets and all liabilities associated with the operation of the fund are included on the balance sheet. The statement of revenue, expenses and changes in equity reports revenues and expenses. The proprietary funds are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.


Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. The principal operating revenues for the proprietary funds are fees and charges for water and sewer, airports, solid waste, inspection services, emergency medical services, convention center, self-insurance, and fleet internal service operations. Operating expenses for the enterprise funds, and the internal service funds, include the cost of sales and services, administrative expenses and depreciation of capital assets.

Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. They include property taxes, grants, entitlements, donations and capital contributions. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Contributions of capital in proprietary fund financial statements arise from internal and external contributions of capital assets or from grants or outside contribution of resources restricted to capital acquisition and construction.

4. Other Financial Statement Presentation Information The Board currently employs an indirect allocation system. An administrative service fee is charged by the

General Fund, at the direction of the Board of County Commissioners, to several special revenue and enterprise funds to address General Fund services (finance, personnel, purchasing, legal, technology management, etc.) provided.

19





4. Other Financial Statement Presentation Information - Continued The Board reports the following major governmental funds:

General Fund This is the Board’s primary operating fund. It accounts for all financial resources of the general

government, except those required to be accounted for in another fund.

Tourist Development Fund This fund is used to account for funds received from imposition of the 5% tourist development tax for

the purpose of improving Okaloosa County’s tourist industry as authorized by 125.0104, F.S., and Okaloosa County Ordinance No. 89-23 as amended by 91-20, 92-52, 95-10, 99-07, 07-58, 12-21, 13-19, 13-20, and 14-08.

Capital Outlay Constructions Trust Fund This fund is used to account for proceeds of bond issues, federal and state grants, and local appropriations

for major capital projects. At the end of the fiscal year, completed projects are capitalized and reported on the government-wide financial statements of Okaloosa County, Florida.

The Board reports the following major enterprise funds:

Water and Sewer Fund This fund is used to account for the user charges and expenses including debt service associated with the

provision of water and sewer services to residents of the unincorporated areas of Okaloosa County.

Airport Enterprise Fund This fund is used to account for the operation of three Okaloosa County airports including debt service.

Revenue sources include federal and state grants, fees from concessionaires and other fees and charges for services to tenants and airport users.

Emergency Medical Services Fund This fund is used to account for the operation of a county-wide emergency medical technician and

paramedic service. Revenue sources include ad valorem property tax subsidy, user charges, and private donations.

The Board reports the following fund type:

Internal Service Funds These funds account for insurance coverage and fleet management services provided to other

departments or agencies of the government, or to other governments, on a cost reimbursement basis.

D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Balance

1. Deposits and Investments Sections 28.33, 218.415, and 219.075, Florida Statutes, require the investment of surplus public funds and prescribe the instruments in which those investments are authorized, specifically the State of Florida Local Government Surplus Funds Trust Fund; SEC registered money market funds with the highest credit quality rating; interest-bearing time deposits or savings accounts in qualified public depositories as defined in s. 280.02; direct obligations of the United States Treasury, federal agencies and instrumentalities; and securities of or other interest in certain investment companies or investment trusts the portfolio of which is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such obligations. Because the County has adopted written investment policies as provided in subsection (1) through (15) of s. 218.415, other investments may be authorized by resolution or ordinance. Currently authorized are investments in term repurchase agreements with primary

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1. Deposits and Investments - Continuedbroker/dealers collateralized in the County’s name by securities of the United States Government or any agency or instrumentality thereof; overnight repurchase agreements with collateral held by the custodian bank or its trust department; tax exempt bonds, notes or obligations rated in the two highest classifications; inventory-based domestic bankers’ acceptances eligible to qualify for use as collateral at the Federal Reserve Bank; SEC registered open-end mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities; and Florida Local Government Investment Trust. The County adheres strictly to the provisions of those cited Statutes and investments authorized by resolution or ordinance, as well as with Chapter 517, Florida Statutes, which establishes registration procedures for securities and dealers.

The Board of County Commissioners maintains a cash and investment pool available for use by all funds of the Board. Earnings from such investments are allocated to the respective funds based on applicable cash participation by each fund. In addition, certificates of deposits, money market accounts and debt securities can be separately maintained by several Board funds. Other elected officials maintain similar pooled cash accounts or individual cash accounts through which their office activities are managed.

Each fund’s portion of the pooled cash and individual deposit type investments are displayed on the balance sheet as “cash and cash equivalents.” For purposes of these statements, all highly liquid investments (including restricted assets) with maturity of ninety days or less when purchased are considered to be cash equivalents.

The Day to Day fund is a “2a-7 like” fund. The fund is carried at amortized cost, which includes accrued income and is a method of calculating an investment’s value by adjusting its acquisition cost for amortization of discount or premium over the period from purchase to maturity. Thus, the value in the fund approximates fair value. A “2a-7 like” fund is not registered with the SEC as an investment company but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a-7 of the Investment Company Act of 1940, which comprises the rules governing money market funds. The Day to Day fund is reported at fair value, determined by the fair value per share of the pool’s underlying portfolio.

Unlike the Day to Day fund, the Short-Term Bond fund is accounted for as a fluctuating Net Asset Value (NAV) pool, not a “2a-7 like” money market fund. Accounting valuations reflect estimates of the market value of the securities rather than their amortized cost. Securities listed on generally recognized securities exchanges are valued at the last sales price as reported by such exchanges on the date of valuation. If no sale has been reported, the securities are valued at the average of the bid and ask price for the date of valuation. If neither a sale nor bid and ask price have been reported, then the most recent sales price is used. Securities not listed on generally recognized securities exchanges are valued at the most recent published bid quotation if market quotations are available. Other investments are valued based on quotations obtained from one or more recognized broker/dealers regularly dealing in such securities.

The fair value of investments of both the Short-Term Bond Fund and Day to Day Fund is determined on a daily basis.

U.S. Treasury and agency obligations with maturities of one year or less when purchased are reported on the balance sheet at their amortized cost. Nonparticipating investment contracts, generally certificates of deposit, are reported at cost. All other investments are reported at fair value. The State of Florida provides regulatory oversight for the external investment pools in which the County invests. The pools either meet the “2A-7 like” criteria of GASB 31 or value investments at fair value. Therefore, fair value of the position in these pools is the same as the value of the pool shares.

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1. Deposits and Investments - ContinuedThe County maintains a cash and investment management pool in which each fund participates on a dollar equivalent and daily transaction basis. The County’s cash and investment management pool is considered to be cash equivalent for reporting purposes because it is an internally managed fund, which allows individual funds to, at any time, deposit additional cash or make withdrawals without prior notice or penalty. The County’s cash and investment management pool includes pooled cash maintained in interest-bearing demand deposit accounts, certificates of deposit, and pooled investments of the Local Government Surplus Trust Fund. Interest income (which includes unrealized gains and losses) is distributed monthly based on balance at date of distribution.

2. Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or

services rendered. These receivables and payables are classified as “due from other funds or elected officials” or “due to other funds or elected officials” on the balance sheet. Short-term interfund loans are also classified as “interfund receivables/payables.” If applicable, non-current portions of long-term interfund loan receivables are reported as advances and are offset equally by a non-spendable fund balance account, which indicates that they do not constitute expendable available financial resources, and therefore are not available for appropriation.

The Emergency Medical Services Enterprise Fund, the Airport Fund, and the Water and Sewer Enterprise Fund are the only funds of the Board that provide for an allowance for doubtful accounts for trade accounts receivables. All other funds accounts receivable write offs are insignificant.

Property taxes attach as an enforceable lien on property as of the date of assessment and remain in effect until discharge by payment. Taxes are payable when levied (on November 1, or as soon thereafter as the assessment roll becomes available to the Tax Collector).

The following is the current property tax calendar:

Lien Date January 1, 2016 Levy Date November 1, 2016 Due Date November 1, 2016 Delinquent Date April 1, 2017 Discounts of 1% for each month taxes are paid prior to March 2017 are granted.

Revenue recognition criteria for property taxes under the GASB requires that property taxes expected to be collected within 60 days of the current period be accrued. Current year taxes that are uncollected as of the end of the fiscal year are generally immaterial in amount and highly susceptible to uncollectibility and, therefore, are not recorded as a receivable on the balance sheet date.

3. Inventories and Prepaid Items Inventory presented by the Board in the proprietary funds is supplies and parts used in operations and are valued

at lower of cost (first-in, first-out) or market. The consumption method is used to account for the inventory. Under the consumption method, inventory items are recorded as expenditures during the period inventory is used.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the fund financial statements. The consumption method is used to account for the prepaid items. Under the consumption method, prepaid items are recorded as expenditures during the period in which they are used.

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4. Restricted Assets Certain proceeds of the Water and Sewer System Enterprise Fund revenue bonds and the Airport Enterprise Fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. In addition, restricted assets include funds set aside for repayment of customer deposits in several enterprise funds.

5. Capital Assets Capital assets are not capitalized in the governmental funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in governmental funds, and the related assets are reported on the government-wide statement of net assets of Okaloosa County. Capital assets acquired by proprietary funds are reported in those funds.

Property, plant, and equipment purchased or acquired is carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. The Board’s capitalization levels are $1,000 on tangible personal property and $5,000 on buildings, improvements other than buildings, intangibles, and infrastructure. Other costs incurred for repairs and maintenance is expensed as incurred. General infrastructure assets acquired prior to July 1, 1980 are included in the capital asset inventory and are reported at estimated historical cost using deflated replacement cost.

Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives:

Assets YearsBuildings 10-50

Improvements Other Than Buildings 7-25Intangibles 5Equipment 3-7Vehicles 2-15

Roads and Bridges 10-75Wastewater Lines and Pump Sations 10-50

Other Infrastructure 10-50 6. Compensated Absences The liability for compensated absences reported in the governmental and proprietary fund statements consists

of unpaid, accumulated annual and sick leave or compensatory time balances. A liability for these amounts is reported in governmental funds financial statements only if they have matured, for example, as a result of employee resignations and retirements. The liability is accrued when incurred in the proprietary fund financial statements.

7. Accrued liabilities and Long-Term ObligationsProprietary fund types report long-term debt such as capital leases and other long-term obligations as liabilities in the proprietary fund type balance sheet.

In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of these funds. However, compensated absences and claims that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they are “due for payment” during the current year. Bonds and capital leases are recognized as a liability in the governmental fund financial statements when due. At the inception of capital leases reported in governmental funds, expenditures and an “Other Financing Source” of an equal amount are reported at the net present value of future minimum lease payments.

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8. Self-insurance Claims Liabilities for reported claims and incurred but not reported claims (IBNR) are estimated based on an actuarial review of claims pending and historical experience.

9. Landfill Closure and Post Closure Care Payable The County recognizes municipal solid waste landfill closure and post closure care costs under the State of Florida’s Solid Waste Management Act of 1988, regulations of the Federal Environmental Protection agency and the GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Post Closure Care Costs. The County is required to place a final cover on closed landfills and to provide long-term care for up to thirty years after final cover. These obligations for closure and post closure are recognized in the Solid Waste Fund over the active life of the landfill, based on landfill capacity used to date.

10. Net Pension LiabilityFor purposes of measuring the net pension liability, deferred outflows/inflows of resourcesrelated to pensions, and pension expense, information about the fiduciary net position of the Florida Retirement System (FRS) and Health Insurance Subsidy (HIS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by FRS. For this purpose, benefit payments (including refunds of employee contributions, if any) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

11. Bond Premiums, Discounts and Issuance Costs In fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

In the proprietary fund type statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Unamortized losses on bonds are presented as deferred outflows.

12. Deferred Outflows/Inflows of Resources In addition to assets, deferred outflows of resources represent a consumption of fund balance that applies to a

future period(s) and will not be recognized as an outflow of resources (expenditure) until then. The Board has $2,967,552 of deferred outflows on Water and Sewer, Series 2015 bonds, and $37,527,489 of deferred outflows for pension as of September 30, 2016.

In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The Board has $2,881,673 of deferred inflows for pension as of September 30, 2016.

13. Fund Balance In the fund financial statements, GASB Statement 54 establishes fund balance classifications that comprise a

hierarchy based primarily on the extent to which a government is bound to observe constraints imposed up on the use of the resources reported in governmental funds. Fund balance classifications under GASB 54 are nonspendable, restricted, committed, assigned and unassigned.


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D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Balance - Continued 13. Fund Balance - Continued Nonspendable – Comprised of amounts that are (a) not in spendable form or (b) legally or contractually required

to be maintained intact. “Not in spendable form” includes items that are not expected to be converted to cash (such as inventories and prepaid amounts) and items such as long-term amount of loans and notes receivable, as well as property acquired for resale. The corpus (or principal) of a permanent fund is an example of an amount that is legally or contractually required to be maintained intact.

Restricted – Component consists of amounts constrained for a specific purpose by external parties, constitutional provision, or enabling legislation.

Committed – Component consists of amounts that can be used only for the specific purposes determined by a formal action, in the form of ordinances, of the Board, the highest level of decision making authority. Commitments may be changed or lifted only by the board taking the same formal action that imposed the constraint originally. Assigned – Component consists of amounts that are constrained by the County’s intent to be used for specific purposes, but are neither restricted nor committed. Intent is expressed by (a) the Board of County Commissioners or (b) a body (for example: a budget or finance committee) or official to which the County has delegated the authority to assign amounts to be used for specific purposes. This indicates that resources in those funds are at a minimum, intended to be used for the purposes of that fund. The Board has delegated to the County Administrator and Finance Officer in accordance with the County’s fund balance policy.

Unassigned – Unassigned fund balance is the residual classification of the general fund. This classification represents spendable fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes.

When both restricted and unrestricted resources are available for use, it is the policy of the Board to use restricted resources first, and then unrestricted resources as they are needed. In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. The Board does not have a formal minimum fund balance policy. However, the Board does target 10% of the General Fund budget to set aside for reserves during the annual Budget Policy meeting.

14. Estimates The preparation of financial statements in conformity with 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.

15. Net Position The net positions of proprietary funds activities are made up of three components. Net Investment in Capital

Assets which represents net capital assets less related long-term liabilities; unspent debt proceeds will increase this amount. The Restricted component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. The restricted component represents assets that are legally restricted. They include reserve funds, special revenues restricted by statute or ordinance, bond proceeds, and other sources restricted for capital or improvements. The unrestricted component of net position is the balance not included in the determination of net investment in capital assets or the restricted component of net position.

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A. BUDGETARY INFORMATION

Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for all governmental and proprietary funds; however, budgets for proprietary funds are not required to be reported on and are not included in these financial statements. All appropriations lapse at fiscal year-end.

Budgetary data reflected in the financial statements are established by the following Board procedures:

On or about June 1 of each year, proposed budgets are received by the Board of County Commissioners from its department heads, from all other elected officials, and from other agencies requesting funding for the ensuing fiscal year. These proposed expenditures, along with all estimated receipts, taxes to be levied, and balances expected to be brought forward are considered by the Board of County Commissioners in a series of workshops beginning on or after July 15. The Board of County Commissioners requires such changes as deemed necessary, sets proposed millages and establishes dates for tentative and final public budget hearings as prescribed by Florida Statutes.

Proposed budgets are advertised in a newspaper of general circulation in the County. Public hearings are conducted in Crestview and Fort Walton Beach for the purpose of receiving input, responding to complaints and providing reasons and explanations for intended actions to all citizens participating.

In the event the final budget has not been adopted by October 1, the beginning of the fiscal year, Florida Statutes provide for expenditures based on the adopted tentative budget or the Board re-adopts its prior year’s adopted final budget, as amended, and expends monies based on that budget until such time as its tentative budget is adopted pursuant to law. The final budget is adopted by resolution of the Board of County Commissioners.

The level of budgetary control (that is the level at which expenditures cannot legally exceed appropriations) has been established at the fund level. The County Administrator is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must approve any revisions that alter the total expenditures of any fund. Each elected official is authorized to make line item transfers but must request approval from the Board for increases in appropriations.

Budget amounts are originally adopted amounts as amended by action of the Board of County Commissioners by revision of fund totals. Supplemental budgetary appropriations of $94,696,828, representing a 28.58% increase over the original adopted budget, were necessary during the fiscal year. All amendments to originally adopted amounts were made in a legally permissible manner.

Encumbrance accounting, under which purchase orders, encumber contracts and other commitments for the expenditure of resources are recorded in order to reserve that portion of the applicable appropriation, is employed in the governmental funds. Encumbrances at fiscal yearend do not constitute expenditures since the commitments will be honored during the subsequent year.

B. DEFICIT FUND BALANCE/NET POSITION

The Debt Service Fund reported a deficit fund balance of $2,649,542 as of September 30, 2016. This is a result of advance payment of debt due October 1, 2016. The deficit will be cured by FY2016- 2017 budgeted revenue from State Revenue Sharing Proceeds and budgeted transfers from the Tourist Development Special Revenue Fund and Additional Court Cost Special Revenue Fund.

The Solid Waste Enterprise Fund reported deficit net position of $841,910 as of September 30, 2016. The deficit is caused by changes in reporting closure costs and long-term care costs for the solid waste landfills of the County and implementation of GASB 68, Accounting and financial Reporting for Pensions – an amendment to Statement No. 27.Further description of these costs and methods of funding them are discussed in Note 8.

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NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY – CONTINUED

B. DEFICIT FUND BALANCE/NET POSITION - CONTINUED

The Self Insurance Internal Service Fund reported deficit net position of $2,093,932. Claim liabilities for workers’ compensation, general and automobile liabilities and property damage are funded by actuarially projected budget requirements for expected yearly cash payouts. This funding method results in a deficit fund equity which will be charged back to the other funds over a reasonable period of time so that service fund revenues and expenses will be equal. Additionally, the implementation of GASB 68, Accounting and financial Reporting for Pensions – an amendment to Statement No. 27, contributed to the deficit.

The Garage Services Internal Service Fund reported a deficit net position of $976,919. Vehicle maintenance and centralized distribution of gasoline and special fuel are funded by monthly billing of services. This funding method results in a deficit fund equity which will be charged back to the other funds so that service fund revenues and expenses will be equal. Additionally, the implementation of GASB 68, Accounting and financial Reporting for Pensions – an amendment to Statement No. 27, contributed to the deficit.


At September 30, 2016, the County’s carrying value of cash and cash equivalents totaled $126,878,115.

The County maintains a cash and investment management pool in which each fund participates on a dollar equivalent and daily transaction basis. The County’s cash and investment management pool is considered to be cash equivalent for reporting purposes because it is an internally managed fund, which allows individual funds to, at any time, deposit additional cash or make withdrawals without prior notice or penalty. The County’s cash and investment management pool includes pooled cash maintained in interest-bearing demand

deposit accounts, certificates of deposit, and pooled investments of the Local Government Surplus Trust Fund. Interest income (which includes unrealized gains and losses) is distributed monthly based on balance at date of distribution.

Custodial Credit Risk. The County maintains its deposits only with qualified public depositories as defined in Chapter 280, Florida Statutes. The provisions of this statute generally require public funds to be deposited in a bank or savings association designated by the State Chief Financial Officer as a “Qualified Public Depository”. All qualified public depositories must maintain deposit insurance. They also must place with or in the name of the Chief Financial Officer of the State of Florida, collateral in the amount of the greater of the average daily balance of public deposits multiplied by the average monthly balance of public deposits or 125 percent of the average daily balance of public deposits greater than capital. Collateral requirements may be increased according to statute if specified conditions exist. Eligible collateral includes federal, federally-guaranteed, state and local government obligations and corporate bonds. In the event of default by a qualified public depository excess losses over insurance and collateral will be recovered through assessments to all qualified public depositories of the same type as the depository in default. Under this method, all County deposits, including certificates of deposit, are considered fully insured.

The County’s cash deposits are held by banks that qualify as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. At September 30, 2016, the carrying amount of the County’s cash deposits totaled $6,926,822, cash in money market funds totaled $4,450,629, the County’s investment in the Florida Local Government Investment Trust totaled $7,645,699, and the County’s investment in the State Board Local Government Surplus Trust Fund totaled $107,854,965.

Investments State Statutes and the formal investments and portfolio policies adopted by the Board of County Commissioners restrict the types of investments that can be made by the County. A description of the requirements and the types of investments allowed as well as information about valuation and other investment policies can be found in Note 1.D.1.

The investment policy manual details the methods used to manage the risks inherent to the investment process. The authority for investment of County funds rests with the Clerk of the Circuit Court who has delegated management of

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NOTE 3 – DEPOSITS AND INVESTMENTS - CONTINUED

the investment program to the Finance Director. Investments can only be made by majority vote of the investment committee appointed by the Clerk. Although the policies allow investments in many types of instruments, the investment committee has chosen to limit investment risks by investing mainly in allowed investment pools. The pools are 2a7-like investment pools and manage interest rate risk by limiting the weighted average maturity of their portfolios, manage credit risk by investing in mainly governmental and other highly rated securities, manage concentration of credit risk by limiting investment in any one issuer to less than 5% of the portfolio and manage custodial credit risk by requiring collateral for investments held by counterparties.

Interest rate risk. In accordance with the investment policy, the exposure to declines in fair value of investments outside of the pools is managed by matching the investments to a specific cash flow requirement.

Credit risk. As of September 30, 2016, Standard & Poor’s rated the investment in Florida Local Government Investment Trust investment pool AAAf, Florida Local Government Investment Day to Day AAAm, and Florida Local Government Surplus Fund Trust AAAm. As of September 30, 2016, all U.S. Instrumentalities held by the County were rated AAA. The investment policies of the County manage credit risk by limiting investments in U. S. Instrumentalities to the two highest ratings issued by nationally recognized statistical rating organization.

Concentration of credit risk. The investment policies of the County diversify the portfolio by limiting the maximum percentage of various types of investments that can be purchased. The investment policy maximum percentages for the current portfolio are 50% for U.S. agencies and instrumentalities and 50% for repurchase agreements. More than 5% of the County’s investments are in the Federal Home Loan Bank, Federal National Mortgage Association, and Government National Mortgage Association. These investments are 1%, 29%, and 1% respectively, of the County’s total investments.

Custodial credit risk. STI Classic Institutional Cash Management, U.S. Treasury bills, and U.S. instrumentalities are held by the County’s agent in the County’s name in accordance with the Okaloosa County Investment Policy requiring third party custody and safekeeping.

The County had the following investment types by issuer and effective duration presented in terms of years:

Security Type Fair ValueWeighted Average

Duration (Years)CreditRating

Percentageof Portfolio

Long Term Investments:United States Treasury Securities 13,319,546$ 0.523 AAA 31.00% Total long term investments 13,319,546 31.00%

Total Fair Value 13,319,546$ 31.00%

Portfolio Weighted Average Duration 0.523

NOTE 4 – FAIR VALUE OF INVESTMENTS

The County measures and records its investments using fair value measurements guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarch as follow:

Level 1 – Quoted prices (unadjusted) for identical assets in active markets that a government can access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for an asset, either directly or indirectly.

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NOTE 4 – FAIR VALUE OF INVESTMENTS - CONTINUED

Level 3 – Unobservable inputs for an asset.

Okaloosa County has the following recurring fair value measurements as of September 30, 2016.

Short-Term Bond Fund- FLGIT – Maximum of 75% of the total investment portfolio. Valued at the daily closing price as reported by the fund. These funds are required to publish their daily net asset value (NAV) and to transact at that price. These funds held by FLGIT are deemed to be actively traded.

US Treasuries/Agencies/Instrumentalities – Maximum of 75% of the total investment portfolio. Valued at market prices for similar assets in active markets.

At September 30, 2016, Okaloosa County had the following recurring fair value measurements.

NOTE 5 – RECEIVABLES/UNEARNED AND UNAVAILABLE REVENUE

Receivables as of September 30, 2016 for the government’s individual major funds and nonmajor and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:

FundsAccountsReceivable

Due FromOther

GovernmentsTotal

Receivables

Less:Allowance for

Doubtful Accounts

Net TotalReceivables

Sept. 30, 2016General 257,010$ 4,707,157$ 4,964,167$ -$ 4,964,167$ Tourist Development 3,363,682 73,710 3,437,392 - 3,437,392 Capital Outlay 323 - 323 - 323 Water and Sewer 3,097,917 91,812 3,189,729 (256,072) 2,933,657 Airport 2,194,191 2,945,560 5,139,751 (408,101) 4,731,650 Emergency Mngmt. 9,882,202 - 9,882,202 (5,136,484) 4,745,718 Nonmajor 713,639 2,858,536 3,572,175 - 3,572,175 Total 19,508,964$ 10,676,775$ 30,185,739$ (5,800,657)$ 24,385,082$

Governmental funds report unavailable revenue in connection with receivables that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources received, but not yet earned. At September 30, 2016, the various components of unearned/unavailable revenue were as follows:

Fair Value Level 1 Level 2 Level 3Investments by fair value levelFederal Home Loan Bank 492,578$ -$ 492,578$ -$ Federal National Mortgage Assoc. 12,197,322 - 12,197,322 - Government National Mortgage Assoc. 629,646 - 629,646 - Total investments 13,319,546$ -$ 13,319,546$ -$

Investments measured at the net asset value (NAV)Florida Local Government Investment Trust investment pool 29,251,809$ Total investments measured at NAV 29,251,809$ Total investment measured at fair v 42,571,355$

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NOTE 5 – RECEIVABLES/UNEARNED AND UNAVAILABLE REVENUE – CONITUEDUnearned

General Fund Grant revenue 403,856$ Rent/Commissions Received in Advance 7,008 Tourist Development Fund Event Revenue 48,060 Nonmajor Funds Grant revenue 1,453,552 Total unavailable/unearned revenue for governmental funds 1,912,476$


Rules of the Auditor General of the State of Florida, Chapter 10.550 requires that notes to the financial statements of a county agency include disclosures related to capital assets, regardless of whether or not government-wide financial statements are presented for the county agency. The following capital asset activity for the Board of County Commissioners of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016.


Governmental activities:Capital assets, not being depreciated/amortized:Land 11,558,076$ 245,829$ -$ -$ 11,803,905$ Intangibles 1,146,905 - - - 1,146,905 Construction in progress 15,701,058 3,073,800 - (14,026,453) 4,748,405 Works of Art 29,195 - - - 29,195 Total capital assets, not being depreciated/amortized 28,435,234 3,319,629 - (14,026,453) 17,728,410

Capital assets, being depreciated/amortized:Buildings 92,487,831 1,033,587 - 12,538,941 106,060,359 Improvements other than buildings 35,748,056 423,360 - 626,447 36,797,863 Intangibles 524,311 - - - 524,311 Machinery and equipment 31,075,585 2,219,920 (2,941,577) 1,544,093 31,898,021 Infrastructure 151,000,644 2,623,533 - 848,601 154,472,778 Total capital assets being depreciated/amortized 310,836,427 6,300,400 (2,941,577) 15,558,082 329,753,332

Less accumulated depreciation/amortization for:Buildings (32,459,224) (2,699,614) - - (35,158,838) Improvements other than buildings (11,025,404) (975,870) - 1,933 (11,999,341) Intangibles (460,639) (17,274) - - (477,913) Machinery and equipment (24,318,952) (2,090,107) 2,904,262 (1,519,621) (25,024,418) Infrastructure (84,895,634) (2,143,201) - - (87,038,835) Total accumulated depreciation/amortization (153,159,853) (7,926,066) 2,904,262 (1,517,688) (159,699,345)Total capital assets, being depreciated/amortized, net 157,676,574 (1,625,666) (37,315) 14,040,394 170,053,987 Governmental activities capital assets, net 186,111,808$ 1,693,963$ (37,315)$ 13,941$ 187,782,397$

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NOTE 6 – CAPITAL ASSETS – CONTINUED


Business - type activities:Capital assets, not being depreciated/amortized:Land 13,126,406$ 1,638,755$ -$ -$ 14,765,161 Construction in progress 9,916,849 16,504,343 - (5,162,259) 21,258,933 Works of art 69,865 - - - 69,865 Total capital assets not being depreciated/amortized 23,113,120 18,143,098 - (5,162,259) 36,093,959

Capital assets, being depreciated/amortized:Buildings 73,359,583 89,971 - 25,673 73,475,227 Improvement other than buildings 276,776 - - - 276,776 Intangibles 896,080 36,425 - - 932,505 Machinery and equipment 20,753,514 2,396,753 (831,967) (1,353,850) 20,964,450 Infrastructure 339,318,326 1,986,005 (24,133) 5,134,799 346,414,997 Total capital assets being depreciated/amortized 434,604,279 4,509,154 (856,100) 3,806,622 442,063,955

Less accumulated depreciation/amortization for:Buildings (18,255,030) (1,844,492) - - (20,099,522) Improvements other than buildings (173,765) (9,226) - - (182,991) Intangibles (834,686) (21,408) - - (856,094) Machinery and equipment (15,249,366) (1,476,245) 789,168 1,329,747 (14,606,696) Infrastructure (118,486,854) (8,291,870) - - (126,778,724)Total accumulated depreciation/amortization (152,999,701) (11,643,241) 789,168 1,329,747 (162,524,027)

Total capital assets, being depreciated/amortized, net 281,604,578 (7,134,087) (66,932) 5,136,369 279,539,928 Business-type activities capital assets, net 304,717,698$ 11,009,011$ (66,932)$ (25,890)$ 315,633,887$

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Depreciation expense was charged to functions/programs as follows:

Depreciation AmortizationGovernment activities: General government 1,939,918$ 11,817$ Public safety 1,034,277 - Physical environment 111,442 - Transportation, including depreciation of general infrastructure assets 3,166,442 1,547 Economic environment 42,531 - Human services 296,073 - Culture and recreation 1,212,066 1,960 Court related 31,272 1,950Capital assets held by the government's internal service funds are charged to the various functions based on their usage of the assets 74,771 - Total depreciation expense - governmental activities 7,908,792$ 17,274$

Business - type activities: Water and sewer 6,801,597$ 21,408$ Airport 4,110,123 - Emergency Management Services 447,262 - Other enterprise funds 262,851 - Total depreciation expense - business - type activities 11,621,833$ 21,408$

Construction Commitments

Crestview Courthouse Remodel The Board initially entered into contract to design and remodel the Crestview Courthouse. After

consideration, the Board direction changed to full redevelopment of the parcel with estimated costs of $26 million. The contract in place at September 30, 2016 totals $23,654,196. Cumulative expenditures total $1,442,445, with $22,211,751 remaining liability outstanding at September 30, 2016.

Road and Other Infrastructure Improvements The Board has entered into contracts to improve infrastructure at various locations throughout the County. The contracts total $1,689,652. Cumulative expenditures total $449,256, with $1,240,396 remaining liability outstanding at September 30, 2016.

Water and Sewer Expansion and Renovation The Water and Sewer System is continuing significant expansion and renovations throughout the County. Based

on the fiscal year 2017 capital budget, total expenditures will approximate $21,700,000 on projects, which includes $9,000,000 for Arbennie expansion, $3,500,000 for diversion, and multiple smaller projects.

Airport Destin Control Tower The Airport has a contract for a Destin air traffic control tower project. The project is to include the

construction, equipping, roadway, and utilities. The contract totals $4,824,940. Cumulative expenditures total $3,277,589, with $1,547,351 remaining liability outstanding at September 30, 2016.

Airport Checked Baggage Area The Airport contracted with separate professional architect and construction company to replace the existing

baggage screening devices with new devices and associated changes in the belt system. The combined project totals $4,241,151. Cumulative expenditures total $3,627,869, with $613,282 remaining liability outstanding at September 30, 2016.

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Airport Foy Shaw Parkway The Airport has entered contract for development and design of Foy Shaw Parkway. The contract totals

$1,110,782. Cumulative expenditures total $1,082,320, with $28,462 remaining liability outstanding at September 30, 2016.


The policy of the Board of County Commissioners for annual and sick leave and compensatory time is as follows.

Employees may accrue an unlimited amount of annual and sick leave. The employees earn leave at varying rates per month based on their work schedules.

Group A Group B Group CYears of 40 hours/ 45 hours/ 24 hours on/Service week week 48 hours off

Annual LeaveFull time employees 0-5 8 hours 9 hours 11 hours

6-10 10 hours 11 hours 14 hours11-15 12 hours 14 hours 17 hours16-20 14 hours 16 hours 20 hours21-25 16 hours 18 hours 22 hours26+ 18 hours 20 hours 25 hours

Part time employees 1 4 hoursMaximum amount paid uponseparation from service 240 hours 270 hours 336 hours

Sick LeaveFull time employees 8 hours 9 hours 11 hoursPart time employees 0 hoursUnused sick leave will be paid to employees having ten consecutive years of service upon termination or retirement at varying percentages based on the total unused hours: 50% for the first 480 hours; 25% for the second 480 hours and 20% for all hours over 960.

Compensatory Time Compensatory time is available only to hourly (non-exempt) employees. Most employees may accrue up to 240 hours except for law enforcement and correctional officers who can accrue up to 480 hours. Unused amounts will be paid upon termination or retirement.

The total amounts of accumulated compensated absences for the funds of the Board of County Commissioners as of September 30, 2016 are as follows:

Currrent Long-TermPortion Portion Totals

Compensated Absences 2,415,137$ 1,813,451$ 4,228,588$

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NOTE 8 - LANDFILL CLOSURE AND POST CLOSURE CARE COSTS

The Board is required to study, estimate, and certify to the U.S. Environmental Protection Agency through the Florida Department of Environmental Protection the estimated cost to close and to perform certain maintenance and monitoring functions at Baker Landfill and Wright Landfill for 30 years after closure and Niceville Landfill for 20 years after closure. One hundred percent of the landfill capacity has been used in the landfills and they have all been permanently closed.

The Board is required by state and federal laws and regulations to develop its estimates using rates normal to

commercial contracting firms and is based on the amount of the landfill capacity used to date, which is at 100% capacity as of September 30, 2016. The landfill closure and post closure costs are reevaluated each year. The estimate is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. The effect of this change in estimates has been reflected in the operations of the Solid Waste Enterprise Fund and has increased net income by $297,374. The estimated liability for landfill closure and post closure care costs has a balance of $4,026,280 as of September 30, 2016.

NOTE 9 – INTERFUND BALANCES AND ACTIVITY The composition of interfund balances as of September 30, 2016 is as follows:

Payable Fund Amount PurposeOther Funds

Tourist Development Nonmajor Governmental 646,676$ Interfund loanCapital Outlay Nonmajor Governmental 2,003,324 Interfund loanCapital Outlay Internal Service 1,020,000 Interfund loanNonmajor Governmental Nonmajor Governmental 109,346 Interfund loan

Total 3,779,346$

Other Elected OfficialsGeneral Clerk of Courts 23,967$ Excess feesGeneral Clerk of Courts 412 Fines and feesGeneral Sheriff 524,497 Grant revenue and service feesGeneral Tax Collector 63,151 Excess fees and interestGeneral Property Appraiser 443,017 Fines and feesGeneral Supervisor of Elections 13,198 Excess appropriationsTourist Development Tax Collector 52 Excess fees and interestCapital Outlay Tax Collector 124,244 Florida Boating ImprovementNonmajor Governmental Sheriff 5,750 Excess appropriationsNonmajor Governmental Clerk of Courts 115,357 Excess appropriationsNonmajor Governmental Tax Collector 335 Excess fees and interestInternal Service Clerk of Courts 480 Prepaid occupancy and bank feesClerk of Courts General (698) Service feesClerk of Courts Tourist Development (441) Grant revenueClerk of Courts Capital Outlay (19) Postage and feesClerk of Courts Nonmajor Governmental (228) Commissions and registration feesClerk of Courts Water and Sewer (140) Recording feesClerk of Courts Airport (44) Recording feesClerk of Courts Emergency Medical (151) Commissions and registration feesClerk of Courts Internal Service (102) AppropriationsSheriff General (37,746) Excess feesTax Collector General (570) Recording fees

Total 1,274,321$

Receivable Fund

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NOTE 9 – INTERFUND BALANCES AND ACTIVITY -CONTINUED

Interfund transfers:

Transfer Out Amount PurposeOther Funds

General Tourist Development 526,259$ Lifeguard fundingGeneral Tourist Development 843,950 Tourist parksGeneral Capital Outlay 252,454 Telecommunication projects and building pGeneral Nonmajor Governmental 36,347 Defray costs of Domestic ViolenceGeneral Nonmajor Governmental 1,101,528 Library Cooperative fundingGeneral Nonmajor Governmental 67,014 Life and health insuranceGeneral Nonmajor Governmental 28,000 Racing monies allocationGeneral Emergency Medical Services 44,676 Life and health insuranceGeneral Internal Service 1,400,000 Insurance rebateCapital Outlay Tourist Development 11,111 Pole barn fundingInternal Service Capital Outlay 400,000 Settlement fundingNonmajor Governmental General 340,720 Tax increment funding for P.J. AdamsNonmajor Governmental General 68,000 Seminole Community CenterNonmajor Governmental Tourist Development 312,808 Debt service for West Destin NoteNonmajor Governmental Tourist Development 357,985 Debt service for West Destin NoteNonmajor Governmental Nonmajor Governmental 529,795 Debit service for judicial builingNonmajor Governmental Nonmajor Governmental 1,262,342 Stormwater unincorporated taxNonmajor Governmental Nonmajor Governmental 1,654,162 Non gas tax supportNonmajor Governmental Nonmajor Governmental 4,000 Racing monies allocationEmergency Medical Services Nonmajor Governmental 33,000 Racing monies allocation

Total 9,274,151$

Other Elected OfficialsGeneral Clerk of Courts (412)$ Excess feesGeneral Tax Collector (23,371) Excess fees and interestTourist Development Tax Collector (52) Excess fees and interestNonmajor Governmental Tax Collector (336) Excess fees and interestClerk of Courts General 1,491,258 AppropriationsSheriff General 35,340,726 AppropriationsSheriff Nonmajor Governmental 79,350 AppropriationsProperty Appraiser General 2,779,024 AppropriationsSupervisor of Elections General 1,848,893 Appropriations

Total 41,515,080$

Transfer In

NOTE 10 - LEASES

Operating Leases – Lessor

The Board of County Commissioners leases three county-owned parks and park buildings located on Okaloosa Island to outside parties. Capitalized investment in these assets is $6,588,730. Accumulated depreciation of $2,646,418 has been recorded as of September 30, 2016. All of the leases were for a 25-year period. However, two of the leases have been renegotiated and the period extended to thirty years. Three of the leases contain a 20% rent increase every five years. In 2016, one of the leases was renegotiated to have incremental increases from 2% to 3.5% for five (5) year periods 2039. The second renegotiated lease contains a contingent rent fee of 15% of gross revenue if that amount is greater than the set rent amount. To date, the contingent rent option has not been needed. The remaining terms of the leases range from 1 to 23 years.

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Operating Leases – Lessor - Continued

The Board of County Commissioners leases land and a building to a convenience store company. Capitalized investment in the building is $132,488. Accumulated depreciation of $57,963 has been recorded as of September 30, 2016. The lease was renegotiated to a five year lease with four five-year renewals beginning in 2008. The rent will increase at the beginning of each option period by the consumer price index. These option periods extend through 2032.

The Board of County Commissioners leases space in a building to six (6) lessees. Capitalized investment in the building is $546,688. In 2014, new leases were negotiated for one (1) year with two (2) one year renewals through 2017. Rental fees total $3,099 monthly.

The Board of County Commissioners has leased space on a water tower to a wireless communication company. The five year lease can be renewed for five five-year periods through 2038. Monthly rental fees begin at $833 and increase at each renewal to an amount equal to one hundred two percent of the monthly rent in effect immediately prior. There is no capitalized investment related to this lease.

The Board of County Commissioners has entered into operating leases with various lessees and concessionaires for lease of space and facilities at the Okaloosa County Air Terminal, the Bob Sikes Airport and the Destin Airport. Lease periods vary with expiration dates through 2036. Capitalized investment in assets associated with these leases is $45,021,832. Accumulated depreciation of $10,683,423 has been recorded as of September 30, 2016.

The Board of County Commissioners leases land on Okaloosa Island to a company to operate a marine life center. The 10 year lease can be renewed for four (4) optional 10 year periods through 2062. Annual rental fees begin at $75,000 with annual consumer price index increase.

The Board of County Commissioners leases land on Okaloosa Island to a company to operate a Wild Willy's Adventure Island. The 10 year lease can be renewed for four (2) optional 10 year periods through 2042. Annual rental fees begin at $65,000 with annual consumer price index increase.

The Board of County Commissioners leases office space at the Fort Walton Beach Water and Sewer building. Capitalized investment in these assets is $2,995,873. Accumulated depreciation of $1,760,280 has been recorded as of September 30, 2016. The one year lease expires in June 2016 with optional three (3) one (1) year extensions. Rental fees begin at $18,563 and increase annually.

Total minimum future rentals for material operating leases in which the Board of County Commissioners is the lessor are as follows:

Fiscal Year Ended September 302017 6,221,745$ 2018 6,242,349 2019 6,211,419 2020 6,244,017 2021 6,234,217 Thereafter 38,113,691

69,267,438$

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1. The Board of County Commissioners leases the land on which the airport facilities are located from the United States Government under a thirty-year lease agreement expiring in February 2031. The lease was renegotiated in 2008 adding an additional 22.6 acres for the rental car facilities under a twenty-five year lease expiring in September 2032. The land lease agreement contains a built in rent increase of 3% for annual escalation factor. The lease has an option for renewal at the end of the current lease period. The future minimum lease payments total $8,363,453 over the life time of the lease. Lease expense for fiscal year 2016 was $402,833.

2. The Board of County Commissioners leases the land on which Water and Sewer's Water Reclamation Facility is located from the United States Government under a 30 year lease agreement expiring in September 2037. The lease agreement contains a built in rent increase of 3% for annual escalation factor. The lease has an option of renewal at the end of the current lease period. The future minimum lease payments total $10,603,065 over the life time of the lease. Lease expense for fiscal year 2016 was $380,789.

3. The Board of County Commissioners leases eight Volvo G930 Motor Graders used by public works department for the Board through January 2017. The two three (3) year leases are based on monthly payments of $5,326 with a balloon payment of $595,868 in October 2016 and $595,868 in January 2017. Future lease payments total $26,630 for the remaining term of the lease. Lease expenditure for fiscal year 2016 was $127,813.

4. The Board of County Commissioners leases 10 Airport fleet vehicles from Enterprise Leasing under a lease agreement which expired in December 2014. In August 2014, the leases were renegotiated to closed-end walkaway. The lease rates range from $387 to $619 per vehicle per month. Lease expenditure for fiscal year 2016 was $45,301.

5. The Board of County Commissioners leases cardiac monitors from Phillips Medical Capital LLC under a lease agreement which expires March 2019. The three (3) year lease are based on monthly payments of $8,505. Future lease payment total $255,150 for the remaining term of the lease. Lease expenditure for fiscal year 2016 was $52,848.

Total lease expenditure/expense for material operating leases in which the Board of County Commissioners is the lessee for fiscal year ended September 30, 2016 was $1,009,584. Future minimum lease payments for these leases are as follows:


Rules of the Auditor General of the State of Florida, Chapter 10.550 requires notes to the financial statements of a county agency include disclosures related to long-term liabilities, regardless of whether or not government-wide financial statements are presented for the county agency. The following long-term debt activity for the Board of County Commissioners of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016.

Fiscal Year Ended September 302017 932,013$ 2018 925,598 2019 895,313 2020 865,571 2021 887,416 2022-2026 4,785,366 2027-2031 5,424,378 3032-3036 3,366,800 3037-3038 1,165,843

19,248,298$

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Primary Government

The following debt issues are outstanding for September 30, 2016.


REVENUE BONDS$26,615,000 Sales Tax Revenue Bonds, Series 2009, serial and term bonds with statedinterest rates ranging from 3.0 percent to 6.375 percent compounded semi-annuallythrough October 1, 2039; issued in denominations of $5,000 maturity value due in annual installments of $315,000 to $1,495,000 from October 1, 2011 through October 1, 2039.Sales tax revenues along with any direct federal subsidy payments received with respectto the Taxable Series 2009B Bonds (Direct Payment Build America Bonds) were pledged for payment of the bonds. Proceeds of the bonds were used to finance the constructionof a new judicial center complex in the County. This issue is subject to federal arbitrageregulations. $23,220,000

$3,600,000 Capital improvement Revenue Bond, Series 2011, serial bonds with statedinterest rate of 3.72 percent compounded semi-annually through October 1, 2030; issuedin denominations of $5,000 maturity value due in annual installments of $133,000 to$259,000 from October 1, 2012 through October 1, 2030. General governmentalrevenues are pledged for the payment of the bonds. Proceeds of the bonds have beenused to finance the purchase of the Newman C. Brackin Building to be used for officespace. This issue is subject to federal arbitrage regulations. 3,037,000

$22,165,000 Sales Tax Revenue Bonds, Series 2014, serial and term bonds with statedinterest rates ranging from 3.0 percent to 5.0 percent compounded semi-annually through October 1, 2034; issued in dominations of $5,000 maturity value due in annualinstallments of $760,000 to $1,720,000 from October 1, 2016 through October 1, 2034and interest only payments October 1, 2015 - September 30, 2016. Sales tax revenueswere pledged for payment of the bonds. Proceeds of the bonds will be used to financethe construction of Crestview courthouse, Administration building and refunding theSales Tax Revenue Bond Anticipation Note, Series 2014. The issue is subject to federalarbitrage regulations. 21,405,000

$12,960,000 Sales Tax Revenue Bonds, Series 2016, serial and term bonds with statedinterest rates ranging from 3.0 percent to 5.0 percent compounded semi-annually through October 1, 2046; issued in dominations of $5,000 maturity value due in annualinstallments of $235,000 to $715,000 from October 1, 2017 through October 1, 2046.Sales tax revenues were pledged for payment of the bonds. Proceeds of the bonds willbe used to finance the acquistion and construction of improvements to County facilities,including additional improvements to the Crestview courthouse. The issue is subject tofederal arbitrage regulations. 12,960,000

Total Governmental Activities Revenue Bonds 60,622,000$

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Primary Government - Continued

Governmental Activities: - ContinuedLOANS AND NOTES

$5,000,000 Private Bank Loan from Hancock Bank with fixed interest rate of 1.79percent compounded semi-annually through October 1, 2020; principal due in annualinstallments of $591,000 and $664,000 from October 1, 2013 to October 1, 2020. Theloan finances the County's portion of a joint beach renourishment project with the Cityof Destin and is payable from a special assessment levied for beach renourishment aswell as Tourist Development taxes. 2,586,000$ Total Governmental Activities Loans and Notes 2,586,000$

Business-type Activities: REVENUE BONDS

Airport$9,980,000 Taxable Airport Revenue Bonds, Series 2007, term bonds with statedinterest rates ranging from 6.0 percent to 7.0 percent compounded semi-annually through October 1, 2030; issued in denominations of $5,000 maturity value due in annualinstallments of $220,000 to $830,000 from October 1, 2009 through October 1, 2030.Net revenue derived from the operation of the Airport System and the Customer Facility Charges imposed per rental car transaction day at the Northwest Florida RegionalAirport are pledged for payment of the bonds. Proceeds from the bonds were used tofinance a portion of the cost of the East Side Development Program. This issue is notsubject to federal arbitrage regulations 8,130,000$

$8,920,000 Taxable Airport Revenue Refunding Bonds, Series 2014, due in annualinstallments of $360,000 to $740,000 through October 1, 2028; interest rate of 3.15percent per annuam. Proceeds from the bond were used to refund Airport RevenueRevenue Bonds, Series 2003 and Commercial Paper Loan. This issue is not subject tofederal arbitrage regulations 8,060,000

Water and Sewer

The following parity bonds are secured by a pledge of the net revenues from theoperation of the water and sewer system.

$67,595,000 Water and Sewer Revenue Bonds, Series 2015, due in annual installments of$760,000 to $3,940,000 through July 1, 2036; interest ranging from 2.00 percent to 3.75percent per annum. Proceeds from the bond were used to refund Water and SewerRevenue Bonds, Series 2004; Water and Sewer Revenue Bonds, Series 2006; and Waterand Sewer Revenue Note, Series 2012, as well as constructing additions to the water andsewer system. This issue is subject to federal arbitrage regulations. 65,085,000

Total Business-type Revenue Bonds 81,275,000$

The following loans from the State of Florida were obtained for construction of extensions and improvements to the County sewer system. Water and Sewer revenue net of operating costs and debt service are pledged for repayment of these loans.

LOANS - STATE OF FLORIDA

$1,768,312 State of Florida Department of Environmental Protection Revolving LoanFund; semi-annual payments including capitalized interest of $59,870 at 2.63% and2.99% beginning September 15, 1999 reducing to $56,219 beginning September 15, 1999through March 15, 2017. 55,465$

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Business-type Activities - Continued:

LOANS - STATE OF FLORIDA - CONTINUED

$351,895 State of Florida Department of Environmental Protection Revolving LoanFund; semi-annual payments including capitalized interest of $23,204 at 3.18%beginning February 15, 2000 reducing to $11,073 beginning February 15, 2001 throughAugust 15, 2019. 62,892

$8,168,888 State of Florida Department of Environmental Protection Revolving LoanFund; semi-annual payments including capitalized interest of $291,598 at 2.71% and3.00% beginning June 15, 2007 reducing to $263,938 beginning December 15, 2008through December 15, 2023. 4,779,740

Total Loans - State of Florida 4,898,097

OTHER LOANS

$3,500,000 Commercial Paper Loan from the Florida Local Governmnet FinanceCommission Pooled Commercial Paper Loan Program; interest and fee payments aremade monthly beginning October 1, 2015; the entire principal balance of the loan is dueon March 1, 2020. The loan finances construction of the Destin Air Traffic ControlTower and the Foy Shaw Access Road at Bob Sikes Airport and is payable from netrevenues of the Airport. 3,500,000

Total Business-type Loans and Notes 8,398,097$

The following is a summary of the changes in long-term debt of the Board of County Commissioners for the fiscal year ended September 30, 2016.

Balance Due Balance DueOctober September Due Within1. 2015 Increases Decreases 30, 2016 One Year


Revenue Bonds Sales Tax Revenue Bonds, Series 2009 24,510,000$ -$ (1,290,000)$ 23,220,000$ -$ Series 2011 3,186,000 - (149,000) 3,037,000 154,000 Series 2014 22,165,000 - (760,000) 21,405,000 - Series 2016 - 12,960,000 - 12,960,000 - Less deferred amounts For issuance discounts/premiums 2,858,870 1,200,121 (781,477) 3,277,514 - Total Revenue Bonds 52,719,870 14,160,121 (2,980,477) 63,899,514 154,000

Loans and Notes Private bank note 3,812,000 - (1,226,000) 2,586,000 -

Total Loans and Notes 3,812,000 - (1,226,000) 2,586,000 -

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Primary Government – Continued Balance Due Balance Due

October September Due Within1, 2015 Increases Decreases 30, 2016 One Year


Accrued compensated absences 2,917,840 106,473 (461,228) 2,563,085 1,498,770Estimated claims payable 3,550,493 - (82,466) 3,468,027 858,429Other post employment benefits 623,262 263,205 (136,230) 750,237 - Net pension liability 38,488,921 30,869,467 - 69,358,388 -

Total Governmental Activities 102,112,386$ 45,399,266$ (4,886,401)$ 142,625,251$ 2,511,199$

Business-type Activities:Revenue Bonds Airport Taxable Revenue Bonds, Series 2007 8,445,000$ -$ (315,000)$ 8,130,000$ 330,000$ Airport Revenue Bonds, Series 2014 8,560,000 - (500,000) 8,060,000 510,000

Water & Sewer Revenue, Series 2015 66,835,000 - (1,750,000) 65,085,000 2,705,000Less deferred amounts For issuance discounts/premiums 9,366,915 - (430,555) 8,936,360 - Total Revenue Bonds 93,206,915 - (2,995,555) 90,211,360 3,545,000

Loans and Notes State of Florida Revolving Loan Fund, April 1, 2001 through October 1, 2016 168,879 - (168,879) - - State of Florida Revolving Loan Fund, September 15, 1999 through March 15, 2017 164,170 - (108,705) 55,465 55,465 State of Florida Revolving Loan Fund, February 15, 2001 through August 15, 2019 82,568 - (19,676) 62,892 20,306 State of Florida Revolving Loan Fund, beginning June 15, 2007 through December 15, 2023 5,166,917 - (387,177) 4,779,740 397,992 State Infrastructure Bank Loan 485,719 - (485,719) - - State Infrastructure Bank Loan 1,944,179 - (1,944,179) - - Airport Commercial Paper Loan - 3,500,000 - 3,500,000 - Total Loans and Notes 8,012,432 3,500,000 (3,114,335) 8,398,097 473,763

Accrued compensated absences 1,786,625 28,126 (149,248) 1,665,503 916,367Estimated closure costs payable 4,323,654 - (297,374) 4,026,280 357,905Other post employment benefits 356,000 159,820 (80,710) 435,110 - Net Pension Liability 16,361,489 8,891,463 - 25,252,952 - Total Business-type Activities 124,047,115$ 12,579,409$ (6,637,222)$ 129,989,302$ 5,293,035$

Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At year-end, $178,967 of internal service funds compensated absences, $3,468,027 of estimated claims, $31,391 of other post-employment benefits, $1,815,976 of net pension liability are included in the above amounts.

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Compensated absences and other post-employment benefits are liquidated in the general and other governmental funds. Claims liabilities are liquidated in the internal service fund.


Principal Interest Principal InterestYear Ending September 30,

2017 154,000 574,112 - - 2018 1,850,000 2,950,597 629,000 40,660 2019 1,911,000 2,874,022 641,000 29,293 2020 1,977,000 2,792,819 652,000 17,721 2021 2,049,000 2,701,519 664,000 5,943 2022-2026 11,621,000 11,891,948 - - 2027-2031 14,420,000 8,594,461 - - 2032-2036 14,580,000 4,769,430 - - 2037-2041 8,235,000 1,668,078 - - 2042-2046 3,110,000 523,763 - - 2047 715,000 17,875 - -

60,622,000$ 39,358,624$ 2,586,000$ 93,617$

Revenue Bonds Loans and NotesGovernmental Activities

Principal Interest Principal Interest Principal InterestYear Ending

September 30,2017 3,545,000 3,914,503 473,763 134,214 357,905 - 2018 3,665,000 3,795,413 430,066 121,691 357,905 - 2019 3,820,000 3,643,880 442,166 109,597 357,905 - 2020 3,995,000 3,456,712 3,932,285 96,323 357,905 - 2021 4,195,000 3,257,572 444,362 83,514 357,905 - 2022-2026 24,295,000 12,922,888 2,415,131 224,248 1,538,933 - 2027-2031 19,845,000 7,089,576 260,324 3,613 697,822 - 2032-2036 17,915,000 2,528,250 - - - -

81,275,000$ 40,608,794$ 8,398,097$ 773,200$ 4,026,280$ -$

Revenue Bonds Landfill ClosureCostsBusiness-type Activities

Loans and Notes

NOTE 12 - CONDUIT DEBT

Since 1984, the Board has authorized eight industrial development revenue bond issues that are still outstanding. The original issues totaled $55,814,025 and as of September 30, 2016, $24,789,025 was the principal liability. These bonds do not constitute an indebtedness of the County and are not a charge against its general credit or taxing powers. The bonds are payable solely from revenues of the respective industries to which these bond proceeds were remitted.

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NOTE 13 - FUND BALANCES/RESTRICTED NET ASSETS

A schedule of the governmental fund balances for September 30, 2016 is provided below.

GeneralFund

TouristDevelopment

CapitalOutlay Other Total

Fund Balances:Nonspendable:

Prepaids 344,161$ 17,342$ -$ 127,647$ 489,150$ Restricted for:

Tourist Development 1st Cent - 15,807,449 - - 15,807,449 Tourist Development 2nd Cent - 2,374,794 - - 2,374,794 Tourist Development 3rd Cent - 4,530,950 - - 4,530,950 Tourist Development 4th Cent - 13,504,359 - - 13,504,359 Tourist Development 5th Cent - 4,351,022 - - 4,351,022 Tourist Development BP Projects - 8,423 - - 8,423 Florida Boating Improvements - - 603,695 - 603,695 Capital Projects - - 24,868,938 - 24,868,938 Emergency and Disaster Relief - - - 936,723 936,723 Housing and Urban Development - - - 315,140 315,140 E-911 Operations - - - 952,647 952,647 Radio Communications - - - 122,666 122,666 Law Enforcement T rust Fund - - - 141,438 141,438 Police Academy - - - 50,502 50,502 Park Projects - - - 3,908,904 3,908,904 Prisoner Benefit Fund - - - 850,125 850,125 Judicial Innovations - - - 390,776 390,776 Law Library - - - 16,386 16,386 Teen Court - - - 85,980 85,980 Drug Abuse Trust Fund - - - 59,339 59,339 Domestic Violence Trust Fund - - - 2,930 2,930 Family Mediation - - - 5,255 5,255 Traffic Education - - - 207,742 207,742 Transportation Projects - - - 10,396,166 10,396,166

Committed to:Planning Projects 32,229 - - - 32,229 Park Development Projects - - 6,721 - 6,721 Municipal Benefits Service Units - - - 577,781 577,781

Assigned to:FY 2017 Budget Appropriation 3,739,233 - - - 3,739,233 Transportation Projects - - - 3,344,901 3,344,901 Emergency and Disaster Relief - - - 81,654 81,654 Health Department - - - 974 974

Unassigned:Unassigned 4,499,812 (17,342) - (2,777,189) 1,705,281

Total Fund Balances 8,615,435$ 40,576,997$ 25,479,354$ 19,798,487$ 94,470,273$

Major Funds

The proprietary fund balance sheet contains the line item “Net Position Restricted for Other Purposes”. Following is a list of the detail balances contained in that line item for September 30, 2016.

Fund Amount PurposeAirport Enterprise Fund 8,739,202$ Passenger Facility ChargesAirport Enterprise Fund 3,455,256 Customer Facility ChargesTotal Net Assets Restricted for Other Purposes 12,194,458$

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NOTE 14 - DEFERRED OUTFLOWS OF RESOURCES

The County defers losses resulting from the refunding of debt issues and amortizes the losses over the lesser of the remaining life of the refunded debt or the life of the new debt. Unamortized deferred losses on debt refunding are presented as deferred outflows of resources within the Statement of Net Position. As of September 30, 2016, the unamortized deferred outflow on refunding totaled $2,967,552, consisting of unamortized losses associated with the 2015 advanced refunding. Amortization expense of the deferred outflow totaled $304,651 for the year ended September 30, 2016, and is included in interest expense on the Statements of Revenues, Expenses and Changes in Net Position.

NOTE 15 – ENCUMBRANCES

The amount of encumbrances outstanding as of September 30, 2016, is as follows:

AmountGovernmental Funds

General Fund 348,156$ Tourist Development 76,802 Capital Outlay 78,909 Other Governmental 32,055

Total 535,922$

Encumbrances at year end do not constitute expenditures or liabilities; therefore, they are not reflected in the financial statements.


The County participates in the Florida Retirement System (FRS) which is a cost sharing multiple employer contributory retirement system administered by the State of Florida (State). The FRS was established in 1970 by Chapter 121, Florida Statutes. In 2002 the FRS was amended to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. Chapter 112, Florida Statutes established the Retiree Health Insurance Subsidy (HIS) Program, a cost–sharing multiple employer defined benefit pension plan to assist retired members of any state- administered retirement system in paying the cost of health insurance.

The State of Florida Retirement System issues a publicly available stand-alone financial report (CAFR) which includes financial statements and required supplementary information. Also available are the pension systems actuarial reports to support the schedules of employer allocations and schedules of pension amounts by employer. These reports are available on the division’s website at http://www.dms.myflorida.com or by email at [email protected] . The CAFR and actuarial reports may also be obtained by contacting the Division of Retirement at:

State of Florida Division of Retirement Department of Management ServicesBureau of Research and Member Contributions

P.O. Box 9000Tallahassee, FL 32315-9000

850-907-6500 or toll free 844-377-1888

There are six classes of membership applicable to the County. Members are eligible for normal retirement when they have met the requirements listed below. Early retirement may be taken any time after vesting within 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each year prior to the normal retirement age.

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Regular Class, Senior Management Service Class, and Elected Officers’ Class Members – For members initially enrolled in the FRS before July 1, 2011, six or more years of creditable service and age 62, or the age after completing six years of creditable service if after age 62. Thirty years of creditable service regardless of age before age 62. For members initially enrolled in the FRS on or after July 1, 2011, eight or more years of creditable service and age 65, or the age after completing eight years of creditable service if after age 65. Thirty-three years of creditable service regardless of age before age 65.

Special Risk Class and Special Risk Administrative Support Class Members – For members initially enrolled in the FRS before July 1, 2011, six or more years of Special Risk Class service and age 55, or the age after completing six years of Special Risk Class service if after age 55. Twenty- five years of special risk service regardless of age before age 55. A total of 25 years of service including special risk service and up to four years of active duty wartime service and age 52. Without six years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class. For members initially enrolled in the FRS on or after July 1, 2011, eight or more years of Special Risk Class service and age 60, or the age after completing eight years of Special Risk Class service if after age 60. Thirty years of special risk service regardless of agebefore age 60. Without eight years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class.

The Deferred Retirement Option Program (DROP) is available under the FRS Pension Plan when the member first reaches eligibility for normal retirement. The DROP allows a member to retire while continuing employment for up to 60 months.

FRS Membership and Plan Benefits - The FRS Pension Plan provides retirement and disability benefits, death benefits and survivor’s benefits. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are established by State Statutes. Retirement benefits are based on a formula comprised of age, average compensation, length of FRS service, and membership class. Average compensation is computed as the average of an individual’s five highest years of earnings for employees hired before July 1, 2011 or eight highest years of earnings for employees hired on or after July 1, 2011. The amount of benefit payments is also affected by the retirement income option chosen by the plan participant.

Pension plan participants may choose to receive benefit in retirement under one of four options which will include a 3% cost-of-living adjustment each July (adjustments are only applicable for FRS service earned prior to July 1, 2011).

If a pension plan participant leaves FRS-covered employment, the pension plan benefit is frozen until the employee returns to FRS-covered employment or begins receiving early or normal retirement benefit.

HI S Membership and Plan Benefits - The HIS membership is available to all members within the FRS and defined contribution Investment Plan. The benefit is a monthly payment to assist retirees of the state- administered retirement systems 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 $160 per month, pursuant to section Florida Statutes. To be eligible to receive a HIS benefit, a retiree under one of the state- administered retirements systems must provide proof of eligible health insurance coverage, which can include Medicare.

Contribution Requirements -The County is required to contribute at an actuarially determined rate; these rates are a percent of annual covered payroll. Employees are required to contribute 3% of their annual salary, while members participating in DROP are not required to make the 3% contribution. The County’s contractually required contribution rate includes the HIS contribution, .06% administrative and educational fee and any applicable unfunded actuarial liability “UAL” rates. The HIS required contribution rate is

45




1.66% for the 2015 and 2016 FRS plan years. This contribution when combined with the employee contribution is expected to finance the cost of the benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Descriptions and contribution rates in effect during the period ended September 30, 2016 and two preceding FRS fiscal years are as follows:

September 30, 2016

June 30, 2016

June 30, 2015

June 30, 2014


For the years ending September 30, 2016, 2015, 2014, the County contributed $4,081,852, $3,197,438 and $2,902,132 respectively, equal to 100% of the required contributions for each year.


Net pension liability, deferred outflows/inflows of resources and pension expense related to the County defined benefit pension plan

At September 30, 2016, the County reported a liability of $94,611,340 for its proportionate share of the net pension liability. 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 that date. The County’s proportion of the net pension liability was based on the County’s long-term share of contributions to the FRS relative to the contributions of all participating governments. At June 30, 2016, the County’s change in proportion was an increase from its proportion measured as of June 30, 2015. The following table presents the information on the County’s proportionate share of the FRS and HIS:

FRS HIS County TotalPropronate share of Net Pension Liability at June 30, 2016 71,598,556$ 23,012,784$ 94,611,340$

County's proportion at June 30, 2016 0.00283557756 0.00197456901 County's proportion at June 30, 2015 0.00269702499 0.00196252961

Change in proportion during current year 0.00013855257 0.00001203940

For the fiscal year ended September 30, 2016, the County recognized pension expense of $1,078,216.

At September 30, 2016, the County reported deferred outflows of resources and deferred inflows of resourcesrelated to pensions from the following sources:

46




County TotalDeferredOutflow

DeferredInflow

DeferredOutflow

DeferredInflow

Deferred Outflow(Deferred Inflow)

Differences between expected and actual experience 5,482,136$ 666,631$ -$ 52,415$ 4,763,090$ Changes in assumptions 4,331,498 - 3,611,291 - 7,942,789 Net difference between projected and actual earnings on pension plan investments 18,507,354 - 11,636 - 18,518,990 Changes in proportion and differences betweeen County contributions and proportionate share of contributions 2,949,588 2,052,143 322,505 121,320 1,098,630 County contributions subsequent to the mearsurement date 2,049,268 - 273,052 - 2,322,320

33,319,844$ 2,718,774$ 4,218,484$ 173,735$ 34,645,819$

FRS HIS

$2,322,320 reported as deferred outflows related to pensions resulting from the County’s 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 and inflows of resources related to pensions will be recognized in pension expense as follows:

Reporting yearEnding June 30, FRS HIS

County TotalDeferred Outflow(Deferred Inflow)

2017 3,870,733$ 676,832$ 4,547,565$ 2018 3,870,733 676,832 4,547,5652019 11,086,048 674,617 11,760,6652020 7,814,952 673,553 8,488,5052021 1,430,986 580,267 2,011,253

Thereafter 478,350 489,596 967,946Totals 28,551,802$ 3,771,697$ 32,323,499$

The total FRS pension liability in the June 30, 2016 actuarial valuation was determined based on the discount rate using the following actuarial assumptions, applied to all periods included in the measurement. The total pension liability is calculated using the Individual Entry A ge Normal cost allocation method, which differs from the Ultimate Entry Age Normal cost allocation method used in the funding valuation for the system.

FRS actuarial methods and assumptions are:

Actuarial cost allocation method Individual Entry Age Cost Amortization method Level Percentage of Pay, Closed Equivalent single amortization period 30 years Asset valuation method Fair market value Actuarial Assumptions: Discount rate 7.60%

47




Long Term expected rate of return, net of investment expanse, including inflation 7.60% Municipal bond rate N/A Inflation 2.60% Salary increases including inflation 3.25% Cost of living adjustment 3.00% Morality rates were based on Generational RP-2000 with projections scale

HIS actuarial methods and assumptions are:

Actuarial Assumptions: Discount rate 7.65% Long Term expected rate of return, net of investment expanse, including inflation N/A Municipal bond rate 2.85% Inflation 2.60% Salary increases including inflation 3.25% Morality rates were based on Generational RP-2000 with projections scale

The Actuarial assumptions that determined the total pension liability as of June 30, 2016 were based on the results of an actuarial experience study for the period of July 1, 2008 – June 30, 2013.

The discount rate used for calculating the total FRS pension liability was 7.60%, The FRS 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. The discount rate used for calculating the total HIS pension liability is equal to the single rate that results in the same actuarial present value as would be calculated by using two different discount rates for the discount at the long-term expected rate of return for benefit payments prior to the projected depletion of the fiduciary net pension (trust assets) and the discount at a municipal bond rate for benefit payments after the projected depletion date. 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 plan sponsor.

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 returns for each major asset class are summarized in the following table:

Asset ClassTarget

Allocation (1)

AnnualArithmetic

Return

Compound Annual(Geometric)

ReturnStandardDeviation

Cash 1.0% 3.0% 3.0% 1.7%Fixed income 18.0% 4.7% 4.6% 4.6%Global equity 53.0% 8.1% 6.8% 17.2%Real estate (property) 10.0% 6.4% 5.8% 12.0%Private equity 6.0% 11.5% 7.8% 30.0%Strategic investments 12.0% 6.1% 5.6% 11.1%

100.0%Assumed Inflation - Mean 2.6% 1.9%(1) As outlined in the Plan's investment policy

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Sensitivity of the County’s proportionate share of the pension liability to changes in the discount rate is calculated using discount rate for the respective plans, as well as what the County’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

FRS Net Pension Liability HIS Net Pension Liability 1% Decrease Current

Discount Rate 1% Increase 1% Decrease Current

Discount Rate 1% Increase

6.60% 7.60% 8.60% 1.85% 2.85% 3.85% $131,817,789 $71,598,556 $21,473,997 $26,400,891 $23,012,784 $20,200,839

Detailed information about the pension plan’s fiduciary net position is available in the separately issued FRSfinancial report.

NOTE 17 – POST EMPLOYMENT BENEFITS

Plan Description In addition to providing the pension benefits described, the Board of County Commissioners and all other elected

officials except for the Sheriff (County) provides post-employment health care and dental insurance benefits (OPEB) for eligible retired employees and their spouses through a single-employer defined benefit plan administered by Blue Cross Blue Shield of Florida (BCBSFL). Pursuant to the provision of Section 112.0801, Florida Statues, employees who retire from the County and eligible dependents, may continue to participate in the group insurance plan. Retirees and their eligible dependents shall be offered the same health and hospitalization insurance coverage as is offered to active employees at a premium cost of no more than the premium cost applicable to active employees. The County subsidizes the premium rates paid by the retirees by allowing them to participate in the plan at blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the plan on average than those of active employees. Benefits, benefit levels, employee contributions and employer contributions are governed and amended through its personnel manual by the County’s Self Insurance Fund with approval by the Board. The plan does not issue a separate report.

Benefits Provided The County provides post-employment health care and dental benefits to its retirees. To be eligible for benefits an employee must retire under the County’s retirement plan and must have been covered under the medical plan as an active employee immediately prior to retirement. Elected officials are not eligible for benefits if they qualify for retirement.

All health care benefits are provided through the County’s health care provider, BCBSFL. The benefit levels are the same as those afforded to active employees. Benefits include general inpatient and outpatient medical services; dental care; and prescriptions. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the County’s plan becomes secondary.

Membership At September 30, 2016, membership consisted of: Retirees and Beneficiaries Currently Receiving Benefits 28Terminated Employees Entitled to Benefits But Not Yet Receiving Them -Active Employees 722Total 750Participating Employers 1

49




Funding Policy The County contracted Insurance Broker negotiates the premium rates with BCBSFL. The County has not advance-funded or established a funding methodology for the annual OPEB costs or the net OPEB obligation. Rather, the required contribution is based on pay-as-you-go financing requirements. Retirees and beneficiaries currently receiving benefits are required to contribute 100% of their current premium costs which for fiscal year 2016 was $378,102. The County contributes the remainder to cover the costs of providing the benefits to the retirees via the insured plan. Active employees do not contribute to the plan until retirement.

Annual OPEB Costs and Net OPEB Obligation The County annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC) amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a closed period not to exceed 30 years. The following shows the components of the County’s net OPEB obligation:


The County had an actuarial valuation performed for the plan as of September 30, 2016 to determine the employer’s ARC for the fiscal year ended September 30, 2016. The County’s annual OPEB cost (expense) of $499,378 was equal to the ARC for the fiscal year, as the transition liability was set at zero as of October 31, 2007. The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2016 and the prior two (2) years were as follows:

FiscalYear Ended

AnnualOPEB Costs


Net OPEBObligation



Covered Payroll

9/30/2014 $ 439,677 62.90% $1,110,717 31,812,521$ 14.21%9/30/2015 $ 450,001 68.30% $ 1,253,195 31,944,218$ 14.45%9/30/2016 $ 499,378 50.50% $ 1,500,385 32,818,887$ 14.06%

Funded Status and Funding Progress As of September 30, 2016, the most recent actuarial valuation date, the plan was 0% funded. The actuarial accrued liability (AAL) for benefits was $4,613,497 and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $4,613,497. Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARCs of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to financial statements in the government-wide financial statements of Okaloosa County, Florida, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

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In the September 30, 2016, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.0% investment rate of return, which is a blended rate of the expected long-term investment returns on the employer’s own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 4.5% initially, increased by increments to an ultimate rate of 5.2% in 2026. The assumed inflation rate is 2.3% compounded annually. The Unfunded Actuarial Liability (UAAL) is being amortized using an open amortization period of 30 level annual payments. The remaining amortization period at September 30, 2016, was 21 years.


The Board is exposed to risk of loss for claims and judgments for public liability, workers’ compensation, employee medical benefits and other special risks. The Board uses the Self Insurance Internal Services Fund to account for all risks from workers’ compensation loss, general liability and medical benefit claims for the County with the exception of those of the Sheriff. A mixture of commercial insurance coverage and self-insurance, which is described below, manages the risk to the Board. There has been no significant reduction in insurance coverage from the prior fiscal year except as noted below, and insurance coverage has been sufficient to cover all claims made in the prior three fiscal years.

A. Method of Risk Management

Public Liability Florida Statutes 768.28(5) limits the maximum County liability for claims and judgments by any one

person and any one incident to $200,000 and $300,000, respectively. The County self-insures public liability claims for automobile, general and professional liability. A third party administrator manages claims. Currently, the County retains the risk for the first $50,000 for automobile liability, and $100,000 for general and professional liability for each claim or incident. A third party administrator manages the claims.

Property Insurance The County self-insures the risk of physical loss to its real property, business property and equipment.

The County retains the risk of the first $100,000 of physical damage to County property. In the case of a named storm, the self-insurance retention changes to a 5% deductible on each structure with a minimum deductible of $100,000 on all damaged structures for a capped deductible of $5,000,000 per storm. Effective October 2015, the County insures vehicles valued at $25,000 and above and retains the risk for the first $10,000 of physical damage.

Workers’ Compensation The County contracts with a Third Party Administrator to have its workers’ compensation claims

processed. The County retains risk for all claims up to $500,000 per incident. Excess insurance is purchased to cover losses up to a statutory limit for workers’ compensation and $1,000,000 for employers’ liability.

Employee Medical Benefits The Board of County Commissioners and all other elected officials of Okaloosa County, except the

Sheriff, use a fully insured commercial insurance plan to fund employee medical benefits. The Board of County Commissioners or elected official pays the premiums for the employees while the individual pays for dependent and retiree coverage. The County bears no risk of loss under this type of coverage.

51




A. Method of Risk Management - Continued

Special Risk Policies The Board of County Commissioners purchases commercial crime coverage against theft of money and

securities with a $25,000 deductible. All of the other elected officials, except the Sheriff, are covered under the policy. Florida Statute requires certain classes of employees (law enforcement) be provided with a special death and disability benefit. The Board of County Commissioners purchases a commercial policy. The County bears no risk of loss under this type of coverage. The Sheriff insures this exposure separately.

B. Claim Liabilities for Retained Risk

Claim liabilities for workers’ compensation, general liabilities (including errors and omissions), and auto liability (both bodily injury and property damage) have been determined based on an actuarial evaluation of all claims reported and all claims incurred but not reported (IBNR) as of September 30, 2016. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The actuarial estimation of ultimate losses does not include any future recoveries from the Florida Special Disability Fund, subrogation or third party liens, etc. except to the degree they are implicitly included in the trending process of estimating ultimate losses. The ultimate loss calculation does take into consideration specific excess reinsurance recoverable. Claims liabilities recognized in the Self Insurance Fund at September 30, 2016 were as follows.

Current Long-term TotalWorkers' compensation 730,702$ 2,317,984$ 3,048,686$ General liability 116,751 279,682 396,433 Automobile liability 10,976 11,932 22,908

Total claims liability recognized 858,429$ 2,609,598$ 3,468,027$

C. Funding of Claims Liabilities

The Self Insurance Fund charges the other funds of the Board and other participating elected officials for the cost of claim liabilities based on actuarially projected budget requirements for expected yearly cash payouts. This funding method results in a deficit fund balance that will be charged back to the other funds over a reasonable period of time so that service fund revenues and expenses will be approximately equal.

52

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53



NOTE 19 – COMMITMENTS AND CONTINGENCIES

Wastewater Service Interlocal Agreement with Fort Walton Beach

In 2009, the Board adopted the Wastewater Service Interlocal Agreement with the City of Fort Walton Beach (Agreement). The Agreement outlines a long-term association for the treatment of the City’s influent wastewater flow at a set percentage of the County’s base sewer rate plus a locked-in annual rate escalator. The agreement provides other ancillary benefits to the City such as the provision of “no cost” tertiary treated effluent for use as irrigation water at the City’s 36-hole municipal Golf Club. The Agreement is effective for 30 years and can be automatically extended for up to two additional terms for a period of ten years for each extension term.

The City will be billed monthly at a rate equal to $2.46 per each 1,000 gallons of wastewater flow. Additionally, the City will pay to the County the Sewer Readiness to Serve Fee, which is equal to $3,750 per month. Beginning March 2011, and each year thereafter, the Readiness to Serve Fee will increase by 3% annually. Service to the City began March 2010. Fees of $2,915,545 paid by the City during 2016 are reflected as Charges for Services in the Water and Sewer fund. The minimum commitment to the County under the Agreement is as follows: Fiscal Year Ending September 30, Payment2017 54,537$ 2018 56,173 2019 57,858 2020 59,594 2021 61,382 2022-2026 335,662 2027-2031 389,130 2032-2036 451,112 2037-2039 304,460 Total 1,769,908$

Customer Facility Charge Agreement

As of December 1, 2004, the County entered into a Customer Facility Charge Agreement with the on-airport rental car companies. In accordance with Ordinance No. 04-64, the County imposes and the rental car companies collect on behalf of the County, a Customer Facility Charge (CFC). Effective July 2007, Ordinance 04-64 was amended to increase the CFC charge from two dollars and fifty cents ($2.50) to three dollars and twenty-five cents ($3.25) per rental car transaction day on all rental car contracts. In December 2010, Ordinance 10-16 was implemented increasing the CFC charge from three dollars and twenty-five cents ($3.25) to three dollars and seventy-five cents ($3.75). CFC revenue will be utilized by the County to construct, operate and maintain facilities and services for the rental car operators and their customers at the Northwest Florida Regional Airport. The facilities were completed and began operations in fiscal year 2009. CFC collections for the year ended September 30, 2016 were $1,829,063 and will be used for debt service on the Series 2007 taxable airport revenue bonds. In fiscal year 2016, the Airport used $481,229 of CFC revenue generated from the rental car companies for abatement of certain facility rent.

Grants

Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Board expects such amount, if any, to be immaterial.

54



NOTE 19 – COMMITMENTS AND CONTINGENCIES - CONTINUED

Lawsuits

The Board is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the Board’s management that resolution of most of these matters will not have a material adverse effect on the financial condition of the Board.

Arbitrage Rebate

Section 148(f) of the Internal Revenue Code of 1986, as amended, and the proposed and temporary regulations issued by the Internal Revenue Service on May 15, 1989, and made final effective May 18, 1992, require the rebate to the United States government of the excess of earnings on non-purpose investments over earnings which would have been made on such investments if they had been made at bond yield, together with earnings on all future rebate amounts. Although rebates need not be remitted until five years after issuance of the bonds and each five (5) years thereafter, computations must be made annually to show financial position at fiscal year-end. Okaloosa County has four (4) bond issues and one note falling within the purview of the above directives - $26,615,000 Sales Tax Revenue Bonds, Series 2009; $3,600,000 Capital Improvement Revenue Bond, Series 2011; $22,165,000 Sales Tax Revenue Bonds, Series 2014; $67,595,000 Water and Sewer Revenue Bonds, Series 2015; and $12,960,000 Sales Tax Revenue Bonds, Series 2016.

According to the calculations, the Board has no rebate liability with respect to the bonds at September 30, 2016. This determination reflects the liability on that date only and does not represent any amount that may be due at the end of the five-year period from the delivery date of the bonds.

Medicaid County Billing Retrospective

In accordance with section 409.915, F.S., Okaloosa County must contribute a portion of the cost for State Medicaid for county “resident” Medicaid patients. House Bill 5301 pledged the Agency for Health Care Administration (AHCA) would certify and identify the county costs of unpaid retroactive amounts owed from November 2001 thru April 2012 and allow the County to either pay or petition for hearing. July 2012, AHCA certified open claims of $839,540 with net payments, credits, and transfers of $562,436 resulting in a preliminary certification of $277,104. After final certifications, AHCA certified the County’s portion of the retroactive amounts to be $265,850. The Board approved the final certification of $265,850 resulting in reduction of the State Revenue Sharing of $6,277 per month for 2013 and $3,139 per month for the following four (4) year period.

NOTE 20 – RELATED ORGANIZATION

Library Cooperative

The Okaloosa County Board of County Commissioners entered into an inter-local agreement with six (6) municipalities located within Okaloosa County, Florida to provide for operation of a countywide public library system. The governing body of the cooperative is the Okaloosa County Public Library Cooperative Board made up of one appointee from each municipality and the County. Capital assets remain the property of the participating municipalities. Under the agreement, the County agreed to provide annual funding to the cooperative of not less than the following amounts for the term of the agreement.

The current agreement was entered into January 2016 and shall end or be renewed December 2016. The Okaloosa County Board of County Commissioners’ contribution to the library cooperative for the year ended September 30, 2016 was $619,135. In addition, approximately $83,153 of allocable indirect costs was charged to the fund. These charges were treated as an in-kind contribution by the County during the year ended September 30, 2016. The future commitment to the library cooperative in 2017 is $670,957.

55

Prisoner Benefit FundThis fund is used to account for profits from the detention facility's commissary andexpenses involved in the commissary operation.

Nonmajor Governmental FundsSPECIAL REVENUE FUNDS


E-911 Operations FundThis fund is used to account for E911 revenues collected exclusively for costs associatedwith developing and maintaining E911 systems and networks.

Radio Communications FundThis fund is used to account for surcharges collected to fund the acquisition of equipment,software, and engineering, administrative, and maintenance services to construct, operate,and maintain a statewide radio system.

Law Enforcement Trust FundThis fund is used to account for the revenues received as a result of criminal or forfeitureproceedings and used for school resource officer, crime prevention, safe neighborhood,drug abuse education and preventions programs, or for other law enforcement purposes.

Natural Disaster Fund

Special revenue funds are used to account for specific revenues that are legally restricted to expenditure forparticular purposes.

County Public Health Fund

Municipal Services Benefit Units Fund

This fund is used to account for ad valorem tax proceeds levied on property in theunincorporated areas of Okaloosa County for the maintenance of parks in those areas.

This fund is used to account for the assessments levied against benefiting properties forproviding street lighting, street and drainage improvements and maintenance.

This fund is used to account for funds appropriated by Okaloosa County for or on behalfof the county public health unit, such as capital projects costs.

This fund is used to account for disaster funding and expenditures not considered normalrecurring operating activity of the County.

Unincorporated County Parks Fund

Local Housing Assistance Trust FundThis fund is used to account for funds received from the State Housing InitiativesPartnership Program for implementing and administrating the local housing assistance

Police Academy FundThis fund is used to account for an additional $2 assessed by the County for criminaljustice education degree programs and training courses.

County Transportation Trust FundThis fund is used to account for maintenance and in-house construction of OkaloosaCounty roads. These activities include road maintenance, traffic control, engineering,right-of-way acquistion, and construction of new roadways. Funds are provided fromstate shared revenue and certain gasoline taxes collected and distributed by the State of

Traffic Education Trust FundThis fund is used to account for the additional $5 surcharge imposed on each trafficpenalty and is used to fund driver education programs in public and non-public schools.

This fund is used to account for the $85 surcharge imposed on domestic violence offensesand is used to provide additional training to law enforcement personnel in combatingdomestic violence.



CAPITAL PROJECTS FUNDSCapital projects funds are used to account for the acquisition and construction of major capital facilities otherthan those financed by proprietary funds

Nonmajor Governmental Funds (Continued)SPECIAL REVENUE FUNDS (Continued)

Board of County Commissioners (Continued)

Domestic Violence Trust Fund

Additional Court Cost FundThis fund is used to account for the $65 additional court costs imposed by the County tofund innovations, legal aid, law library, and teen court operations.

Drug Abuse Trust FundThis fund is used to account for an additional assessment collected for the purpose ofproviding assistance for alcohol and other drug abuse treatment or education programs.

This fund is used to account for constitutional gasoline tax revenues and balances onhand, as well as a portion of the County's Local Option Gasoline Tax revenue, allavailable for capital improvements. All improvements from this fund are restricted to theconstruction of roads and bridges within Okaloosa County.

DEBT SERVICE FUND

This fund is used to account for accumulation of resources and payment of bond debt forSales Tax Revenue Bonds, Series 2009, 2011, 2014, and 2016 and Toursit Developmentnote.

Debt Service funds are used to account for the accumulation of resources and payment of special obligationbond principal and interest from governmental resources when Okaloosa County is obligated in some mannerfor the payment.


Road and Bridge Construction Fund

County Transportation Trust Special Revenue Fund

NaturalDisaster



Fund

E-911 Operations


Cash and Cash Equivalents 2,711,686$ 538,112$ 1,047,678$ 589,547$Investments 16,693 46,636 359,442 367,566Accounts Receivable - - - -Due from Other Funds - - - -Due from Other Elected Officials - - - -Due from Other Governments 971,823 936,723 - -Prepaids 6,512 - - 115,198

Total Assets 3,706,714$ 1,521,471$ 1,407,120$ 1,072,311$

LiabilitiesAccounts Payable 132,373$ -$ -$ -$Contracts Payable 58,513 123,246 18,276 157Other Accrued Liabilities 109,561 - - 7,044Due to Other Funds - - - 109,346Due to Other Elected Officials 89 - - -Due to Other Governments 882 - - 3,117Due to Depositors 60,395 - - -Unearned Revenue - 379,848 1,073,704 -

Total Liabilities 361,813 503,094 1,091,980 119,664

Fund Balances Nonspendable 6,512 - - 115,198Restricted - 936,723 315,140 952,647Committed - - - -Assigned 3,344,901 81,654 - -Unassigned (6,512) - - (115,198)

Total Fund Balances 3,344,901 1,018,377 315,140 952,647

3,706,714$ 1,521,471$ 1,407,120$ 1,072,311$


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS

September 30, 2016

ASSETS



Statement A-1

Radio Communications Special Revenue

Fund



Fund

CountyPublic Health

SpecialRevenue Fund

Municipal Services Benefit


Unincorporated County Parks


813$ 134,041$ 47,853$ 50,311$ 538,631$ 1,791,081$46 1,647 897 676 45,536 2,136,750

- - - 125 - 1,795109,346 - - - - -

6,609 5,750 1,752 - 43 293- - - - 18,566 -

5,852 - - - - -

122,666$ 141,438$ 50,502$ 51,112$ 602,776$ 3,929,919$

-$ -$ -$ -$ 1,849$ 10,438$- - - 50,138 23,146 285- - - - - 10,094- - - - - -- - - - - 68- - - - - 130- - - - - -- - - - - -

- - - 50,138 24,995 21,015

5,852 - - - - -122,666 141,438 50,502 - - 3,908,904

- - - - 577,781 -- - - 974 - -

(5,852) - - - - -

122,666 141,438 50,502 974 577,781 3,908,904

122,666$ 141,438$ 50,502$ 51,112$ 602,776$ 3,929,919$

Continued…

56


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS

September 30, 2016


Fund


Revenue Fund

Drug Abuse Trust Special Revenue Fund

Domestic Violence Trust


Cash and Cash Equivalents 430,404$ 46,244$ 57,748$ 3,469$Investments 506,794 427,296 693 2,016Accounts Receivable 69 - - -Due from Other Funds - - - -Due from Other Elected Officials - 97,485 1,220 2,700Due from Other Governments - 3,394 - -Prepaids - 85 - -

Total Assets 937,267$ 574,504$ 59,661$ 8,185$

LiabilitiesAccounts Payable 1,368$ 13,766$ 322$ -$Contracts Payable 29,596 26,588 - -Other Accrued Liabilities 3,058 6,225 - -Due to Other Funds - - - -Due to Other Elected Officials - - - -Due to Other Governments 13,453 34,783 - -Due to Depositors 39,667 - - -Unearned Revenue - - - -

Total Liabilities 87,142 81,362 322 -

Fund Balances Nonspendable - 85 - -Restricted 850,125 493,142 59,339 8,185Committed - - - -Assigned - - - -Unassigned - (85) - -

Total Fund Balances 850,125 493,142 59,339 8,185

937,267$ 574,504$ 59,661$ 8,185$

ASSETS



Statement A-1


FundOkaloosa Debt Service Fund




Funds(Exhibit I)

201,122$ 525$ 2,262,631$ 10,451,896$1,030 233 8,505,029 12,418,980

- - 41 2,030- - - 109,346

5,590 - - 121,442- - 394,587 2,325,093- - - 127,647

207,742$ 758$ 11,162,288$ 25,556,434$

-$ 300$ 18,792$ 179,208$- - 744,759 1,074,704- - - 135,982- 2,650,000 - 2,759,346- - 71 228- - - 52,365- - 2,500 102,562- - - 1,453,552

- 2,650,300 766,122 5,757,947

- - - 127,647207,742 - 10,396,166 18,442,719

- - - 577,781- - - 3,427,529- (2,649,542) - (2,777,189)

207,742 (2,649,542) 10,396,166 19,798,487

207,742$ 758$ 11,162,288$ 25,556,434$

57

CountyTransportationTrust Special Revenue Fund

NaturalDisaster



Fund

E-911 Operations Special

Revenue FundRevenuesTaxes 4,569,849$ -$ -$ -$Licenses and Permits - - - -Intergovernmental 2,050,393 409,621 931,529 949,964Charges for Services 442,893 - - 6,803Fines - - - -Miscellaneous 24,082 151,269 16,160 13,060

Total Revenues 7,087,217 560,890 947,689 969,827

ExpendituresCurrentGeneral Government - - - -Public Safety - 56,685 - 806,844Physical Environment 870,175 - - -Transportation 7,259,491 - - -Economic Environment - - 944,816 -Human Services - - - -Culture and Recreation - - - -Court-Related - - - -

Capital Outlay 1,129,121 623,880 - 613,663Debt ServicePrincipal - - - -Interest - - - -Other Debt Service Costs - - - -

Total Expenditures 9,258,787 680,565 944,816 1,420,507

Excess (Deficiency) of RevenuesOver (Under) Expenditures (2,171,570) (119,675) 2,873 (450,680)

Other Financing Sources (Uses)Transfers In 2,916,504 - - -Transfers Out (67,014) - - -Transfers Among Constitutional Officers - - - -Original Issue Premium - - - -

Total Other Financing Sources (Uses) 2,849,490 - - -


Fund Balances - Beginning 2,666,981 1,138,052 312,267 1,403,327

Fund Balances - Ending 3,344,901$ 1,018,377$ 315,140$ 952,647$


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDS


Statement A-2

RadioCommunicationsSpecial Revenue

Fund



Fund

CountyPublic Health

SpecialRevenue Fund

MunicipalServices Benefit


UnincorporatedCounty Parks


-$ -$ -$ 595,519$ -$ 2,044,392$- - - - 489,933 -- - - - 17,360 -- - 25,222 - - 16,810

95,529 148,526 - - - -1,023 1,072 389 91,668 18,706 14,267

96,552 149,598 25,611 687,187 525,999 2,075,469

- - - - - -77,740 - 12,451 - - -

- - - - - -- - - - 449,107 -- - - - - -- - - 601,661 - -- - - - - 957,068- - - - - -

58,782 - - 89,563 - 125,703

- - - - - -- - - - - -- - - - - -

136,522 - 12,451 691,224 449,107 1,082,771

(39,970) 149,598 13,160 (4,037) 76,892 992,698

- - - 4,000 - 68,000- - - - - (1,262,342)- (47,050) - - 43 293- - - - - -

- (47,050) - 4,000 43 (1,194,049)

(39,970) 102,548 13,160 (37) 76,935 (201,351)

162,636 38,890 37,342 1,011 500,846 4,110,255

122,666$ 141,438$ 50,502$ 974$ 577,781$ 3,908,904$Continued…

58


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDS



Fund


Revenue Fund

Drug Abuse Trust Special Revenue

Fund

DomesticViolence Trust


RevenuesTaxes -$ -$ -$ -$Licenses and Permits - - - -Intergovernmental - - - -Charges for Services 927,510 1,263,026 - -Fines - - 10,500 32,733Miscellaneous 8,350 78,988 514 228

Total Revenues 935,860 1,342,014 11,014 32,961

ExpendituresCurrentGeneral Government - - - -Public Safety 766,076 - - -Physical Environment - - - -Transportation - - - -Economic Environment - - - -Human Services - - - -Culture and Recreation - - - -Court-Related - 865,062 6,421 -

Capital Outlay - - - -Debt ServicePrincipal - - - -Interest - - - -Other Debt Service Costs - - - -


Excess (Deficiency) of RevenuesOver (Under) Expenditures 169,784 476,952 4,593 32,961

Other Financing Sources (Uses)Transfers In - - - -Transfers Out - (529,795) - (36,347)Transfers Among Constitutional Officers - - - -Original Issue Premium - - - -

Total Other Financing Sources (Uses) - (529,795) - (36,347)


Fund Balances - Beginning 680,341 545,985 54,746 11,571

Fund Balances - Ending 850,125$ 493,142$ 59,339$ 8,185$

Statement A-2


FundOkaloosa Debt Service Fund




Funds(Exhibit II)

-$ -$ 1,849,602$ 9,059,362$- - - 489,933- 5,122,390 2,254,492 11,735,749- - - 2,682,264

78,751 - - 366,0396,645 452,949 81,009 960,379

85,396 5,575,339 4,185,103 25,293,726

- 190,750 - 190,750- - - 1,719,796- - - 870,175- - 2,196,903 9,905,501- - - 944,816- - - 601,661- - - 957,068- - - 871,483- - 3,715,818 6,356,530

- 3,425,000 - 3,425,000- 4,038,562 - 4,038,562- 150,124 - 150,124

- 7,804,436 5,912,721 30,031,466

85,396 (2,229,097) (1,727,618) (4,737,740)

- 1,200,588 340,720 4,529,812- (2,820,690) - (4,716,188)

(32,300) - - (79,014)- 160,121 - 160,121

(32,300) (1,459,981) 340,720 (105,269)

53,096 (3,689,078) (1,386,898) (4,843,009)

154,646 1,039,536 11,783,064 24,641,496

207,742$ (2,649,542)$ 10,396,166$ 19,798,487$

59

Schedule A-3

Original Final Actual AmountsRevenuesTaxes -$ -$ 264$ 264$Intergovernmental 120,000 120,000 124,244 4,244Charges for Services - 361,657 289,326 (72,331)Miscellaneous 60,000 127,619 149,318 21,699

Total Revenues 180,000 609,276 563,152 (46,124)

ExpendituresCurrentPublic Safety 43,000 110,619 - 110,619Culture and Recreation 525,298 605,484 76,836 528,648

Capital Outlay 12,987,827 27,155,679 1,917,075 25,238,604

Total Expenditures 13,556,125 27,871,782 1,993,911 25,877,871Excess (Deficiency) ofRevenues Over (Under) Expenditures (13,376,125) (27,262,506) (1,430,759) 25,831,747

Other Financing Sources (Uses)Transfers In 15,000 15,000 11,111 (3,889)Transfers Out (257,950) (303,950) (652,454) (348,504)Issuance of Debt - 14,000,000 12,960,000 1,040,000Original Issue Premium - - 1,040,000 (1,040,000)

(242,950) 13,711,050 13,358,657 (352,393)





CAPITAL OUTLAY CONSTRUCTION TRUST CAPITAL PROJECTS FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

60


Budgeted Amounts


Positive(Negative)


Schedule A-4

Original Final Actual AmountsRevenuesTaxes 4,400,000$ 4,400,000$ 4,569,849$ 169,849$Intergovernmental 1,707,719 2,331,065 2,050,393 (280,672)Charges for Services 281,495 281,495 442,893 161,398Miscellaneous 5,000 5,000 24,082 19,082

Total Revenues 6,394,214 7,017,560 7,087,217 69,657

ExpendituresCurrentPhysical Environment 1,323,849 1,411,692 870,175 541,517Transportation 8,245,179 8,222,996 7,259,491 963,505

Capital Outlay 1,391,690 2,899,343 1,129,121 1,770,222


Other Financing Sources (Uses)Transfers In 2,916,504 2,916,504 2,916,504 -Transfers Out - (67,014) (67,014) -

2,916,504 2,849,490 2,849,490 -

Net Change in Fund Balance (1,650,000) (2,666,981) 677,920 3,344,901




Positive(Negative)


61


COUNTY TRANSPORTATION TRUST SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts

Schedule A-5

Original Final Actual AmountsRevenuesIntergovernmental -$ 1,169,776$ 409,621$ (760,155)$Miscellaneous - - 151,269 151,269

Total Revenues - 1,169,776 560,890 (608,886)

ExpendituresCurrentPublic Safety - 965,340 56,685 908,655

Capital Outlay - 1,342,488 623,880 718,608

Total Expenditures - 2,307,828 680,565 1,627,263Excess (Deficiency) of Revenues Over (Under) Expenditures - (1,138,052) (119,675) 1,018,377

Other Financing Sources (Uses)Transfers In - - - -

- - - -

Net Change in Fund Balance - (1,138,052) (119,675) 1,018,377

Fund Balance - Beginning - 1,138,052 1,138,052 -


62


NATURAL DISASTER SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)


Schedule A-6

Original Final Actual AmountsRevenuesIntergovernmental -$ 3,193,711$ 931,529$ (2,262,182)$Miscellaneous 2,500 46,645 16,160 (30,485)

Total Revenues 2,500 3,240,356 947,689 (2,292,667)

ExpendituresCurrentEconomic Environment 312,115 3,552,623 944,816 2,607,807

Total Expenditures 312,115 3,552,623 944,816 2,607,807Excess (Deficiency) of Revenues Over (Under) Expenditures (309,615) (312,267) 2,873 315,140


309,615 312,267 312,267 -



LOCAL HOUSING ASSISTANCE TRUST FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCE - BUDGET AND ACTUAL


Positive(Negative)

63


Budgeted Amounts


Schedule A-7

Original Final Actual AmountsRevenuesIntergovernmental 930,000$ 930,000$ 949,964$ 19,964$Charges for Services 3,250 3,250 6,803 3,553Miscellaneous 10,000 10,000 13,060 3,060

Total Revenues 943,250 943,250 969,827 26,577

ExpendituresCurrentPublic Safety 1,618,250 2,028,450 806,844 1,221,606

Capital Outlay 125,000 318,126 613,663 (295,537)


Excess (Deficiency) of Revenues Over (Under) Expenditures (800,000) (1,403,326) (450,680) 952,646


800,000 1,403,326 1,403,327 1



E-911 OPERATIONS SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

64


Budgeted Amounts


Positive(Negative)


Schedule A-8

Original Final Actual AmountsRevenuesFines 110,000$ 110,000$ 95,529$ (14,471)$Miscellaneous 1,000 1,000 1,023 23

Total Revenues 111,000 111,000 96,552 (14,448)


Capital Outlay 30,000 127,636 58,782 68,854

Total Expenditures 176,000 273,636 136,522 137,114Excess (Deficiency) of Revenues Over (Under) Expenditures (65,000) (162,636) (39,970) 122,666


65,000 162,636 162,636 -



RADIO COMMUNICATIONS SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

65


Budgeted Amounts


Positive(Negative)


Schedule A-9

Original Final Actual AmountsRevenuesMiscellaneous - - 1,072 1,072

Total Revenues - 139,770 149,598 9,828


Total Expenditures - - - -Excess (Deficiency) of Revenues Over (Under) Expenditures - 139,770 149,598 9,828


(3,000) (178,660) (47,050) 131,610

(3,000) (178,660) (47,050) 131,610


3,000 38,890 38,890 -




66


LAW ENFORCEMENT TRUST FUND SPEACIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Budgeted Amounts


Positive(Negative)

Schedule A-10

Original Final Actual AmountsRevenuesCharges for Services 25,000$ 25,000$ 25,222$ 222$Miscellaneous 350 350 389 39

Total Revenues 25,350 25,350 25,611 261


Total Expenditures 8,350 17,522 12,451 5,071Excess (Deficiency) of Revenues Over (Under) Expenditures 17,000 7,828 13,160 5,332


(30,000) (45,170) - 45,170

(30,000) (45,170) - 45,170


13,000 37,342 37,342 -



POLICE ACADEMY SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES


67


Budgeted Amounts


Positive(Negative)



Schedule A-11

Original Final Actual AmountsRevenuesTaxes 595,661$ 595,661$ 595,519$ (142)$Miscellaneous 2,000 91,563 91,668 105

Total Revenues 597,661 687,224 687,187 (37)

ExpendituresCurrentHuman Services 601,661 602,671 601,661 1,010

Capital Outlay - 89,563 89,563 -

Total Expenditures 601,661 692,234 691,224 1,010Excess (Deficiency) of Revenues Over (Under) Expenditures (4,000) (5,010) (4,037) 973

Other Financing Sources (Uses)Transfers In 4,000 4,000 4,000 -

4,000 4,000 4,000 -

Net Change in Fund Balance - (1,010) (37) 973

Fund Balance - Beginning - 1,010 1,011 1

Fund Balance - Ending -$ -$ 974$ 974$


COUNTY PUBLIC HEALTH SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)


68


Budgeted Amounts

Schedule A-12

Original Final Actual AmountsRevenuesLicenses and Permits 478,287$ 494,896$ 489,933$ (4,963)$Intergovernmental - 97,680 17,360 (80,320)Miscellaneous - 12,167 18,706 6,539

Total Revenues 478,287 604,743 525,999 (78,744)

ExpendituresCurrentTransportation 946,583 1,105,565 449,107 656,458

Total Expenditures 946,583 1,105,565 449,107 656,458Excess (Deficiency) of Revenues Over (Under) Expenditures (468,296) (500,822) 76,892 577,714


- - 43 43

- - 43 43


Fund Balance - Beginning 468,296 500,822 500,846 24



MUNICIPAL SERVICES BENEFIT UNIT SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)



69


Budgeted Amounts

Schedule A-13

Original Final Actual AmountsRevenuesTaxes 2,041,577$ 2,041,577$ 2,044,392$ 2,815$Charges for Services 7,500 7,500 16,810 9,310Miscellaneous 90,000 90,000 14,267 (75,733)

Total Revenues 2,139,077 2,139,077 2,075,469 (63,608)

ExpendituresCurrentCulture and Recreation 3,830,718 3,937,117 957,068 2,980,049

Capital Outlay 1,046,017 1,117,872 125,703 992,169

Total Expenditures 4,876,735 5,054,989 1,082,771 3,972,218Excess (Deficiency) of Revenues Over (Under) Expenditures (2,737,658) (2,915,912) 992,698 3,908,610

Other Financing Sources (Uses)Transfers In - 68,000 68,000 -Transfers Out (1,262,342) (1,262,342) (1,262,342) -

- - 293 293

(1,262,342) (1,194,342) (1,194,049) 293

Net Change in Fund Balance (4,000,000) (4,110,254) (201,351) 3,908,903




UNINCORPORATED COUNTY PARKS SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)



70


Budgeted Amounts

Schedule A-14

Original Final Actual AmountsRevenuesCharges for Services 672,000$ 672,000$ 927,510$ 255,510$Miscellaneous 5,600 5,600 8,350 2,750

Total Revenues 677,600 677,600 935,860 258,260

ExpendituresCurrentPublic Safety 1,277,600 1,357,941 766,076 591,865

Capital Outlay - - - -

Total Expenditures 1,277,600 1,357,941 766,076 591,865Excess (Deficiency) of Revenues Over (Under) Expenditures (600,000) (680,341) 169,784 850,125


600,000 680,341 680,341 -



PRISONER BENEFIT SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)

71


Budgeted Amounts


Schedule A-15

Original Final Actual AmountsRevenuesCharges for Services 1,340,200$ 1,408,168$ 1,263,026$ (145,142)$Miscellaneous 42,000 42,000 78,988 36,988

Total Revenues 1,382,200 1,450,168 1,342,014 (108,154)

ExpendituresCurrentCourt-Related 1,559,150 1,773,309 865,062 908,247

Total Expenditures 1,559,150 1,776,309 865,062 911,247Excess (Deficiency) of Revenues Over (Under) Expenditures (176,950) (326,141) 476,952 803,093


(675,000) (675,000) (529,795) 145,205


851,950 1,001,141 545,985 (455,156)



ADDITIONAL COURT COST SPECIAL REVENUE FUDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)


72


Budgeted Amounts


Schedule A-16

Original Final Actual AmountsRevenuesFines 13,000$ 13,000$ 10,500$ (2,500)$Miscellaneous 300 300 514 214

Total Revenues 13,300 13,300 11,014 (2,286)

ExpendituresCurrentCourt-Related 58,300 68,046 6,421 61,625

Total Expenditures 58,300 68,046 6,421 61,625Excess (Deficiency) of Revenues Over (Under) Expenditures (45,000) (54,746) 4,593 59,339


45,000 54,746 54,746 -



DRUG ABUSE TRUST SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)

73


Budgeted Amounts


Schedule A-17

Original Final Actual AmountsRevenuesFines 27,000$ 32,733$ 32,733$ -$Miscellaneous - - 228 228

Total Revenues 27,000 32,733 32,961 228


Total Expenditures 5,255 5,255 - 5,255Excess (Deficiency) of Revenues Over (Under) Expenditures 21,745 27,478 32,961 5,483


(27,000) (39,048) (36,347) 2,701


5,255 11,570 11,571 1



DOMESTIC VIOLENCE TRUST SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)


74


Budgeted Amounts


Schedule A-18

Original Final Actual AmountsRevenuesFines 90,000$ 90,000$ 78,751$ (11,249)$Miscellaneous 750 5,750 6,645 895

Total Revenues 90,750 95,750 85,396 (10,354)


Total Expenditures 105,500 182,197 - 182,197Excess (Deficiency) of Revenues Over (Under) Expenditures (14,750) (86,447) 85,396 171,843


(95,250) (68,199) (32,300) 35,899

(95,250) (68,199) (32,300) 35,899


110,000 154,646 154,646 -


75


TRAFFIC EDUCATION SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)




Schedule A-19

Original Final Actual AmountsRevenuesIntergovernmental 5,046,500$ 5,046,500$ 5,122,390$ 75,890$Miscellaneous 486,148 486,148 452,949 (33,199)

Total Revenues 5,532,648 5,532,648 5,575,339 42,691

ExpendituresCurrentGeneral Government 590,750 1,103,622 190,750 912,872

Debt ServicePrincipal 1,392,000 1,392,000 3,425,000 (2,033,000)Interest 2,524,501 2,609,786 4,038,562 (1,428,776)Other Debt Service Costs 500 160,621 150,124 10,497

Total Expenditures 4,507,751 5,266,029 7,804,436 (2,538,407)Excess (Deficiency) of Revenues Over (Under) Expenditures 1,024,897 266,619 (2,229,097) (2,495,716)

Other Financing Sources (Uses)Transfers In 1,345,793 1,354,415 1,200,588 153,827Transfers Out (2,820,690) (2,820,690) (2,820,690) -Original Issue Premium - 160,121 160,121 -

(1,474,897) (1,306,154) (1,459,981) (153,827)

Net Change in Fund Balance (450,000) (1,039,535) (3,689,078) (2,649,543)

Fund Balance - Beginning 450,000 1,039,535 1,039,536 1

Fund Balance - Ending -$ -$ (2,649,542)$ (2,649,542)$


OKALOOSA DEBT SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES



Positive(Negative)


76


Budgeted Amounts

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual Expenditures exceed legally budgeted amounts at September 30, 2016 due to the prepayment of the October 1st debt service.

Schedule A-20

Original Final Actual AmountsRevenuesTaxes 1,800,000$ 1,800,000$ 1,849,602$ 49,602$Intergovernmental 1,950,000 4,397,922 2,254,492 (2,143,430)Miscellaneous 90,000 119,995 81,009 (38,986)

Total Revenues 3,840,000 6,317,917 4,185,103 (2,132,814)

ExpendituresCurrentTransportation 2,099,839 4,108,113 2,196,903 1,911,210

Capital Outlay 12,490,161 14,333,588 3,715,818 10,617,770


Other Financing Sources (Uses)Transfers In - 340,720 340,720 -

- 340,720 340,720 -




77


ROAD AND BRIDGE CONSTRUCTION CAPITAL PROJECTS FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)


This fund is used to account for the revenues and expenses associated withthe provision of solid waste management within Okaloosa County.

This fund is used to account for the license, permit and inspection fees and related expensesfor the provision of inspection and code enforcement services to residents of theunincorporated areas of Okaloosa County.

Enterprise Funds are used to account for operations that are financed and operated in a manner similar toprivate business enterprises - where the intent of the Board of County Commissioner of Okaloosa County isthat the costs of providing goods or services to the general public on a continuing basis be financed orrecovered primarily through user charges; or where the Board has decided that periodic determination of netincome is appropriate for accountability purposes.

NONMAJOR ENTERPRISE FUNDS

Inspection and Code Enforcement Fund

Solid Waste Fund

Statement B-1

Inspection andCode

EnforcementSolidWaste

TotalNonmajor

Enterprise Funds(Exhibit V)

Current AssetsCash and Cash Equivalents 648,351$ 2,560,540$ 3,208,891$Investments 173,892 520,464 694,356Receivables, Net of Allowance

for UncollectibleDue from Other Governments - 1,176 1,176Prepaids 295 - 295Restricted Assets

Customer Deposits - 25,508 25,508Total Restricted Assets - 25,508 25,508

Total Current Assets 917,936 3,698,511 4,616,447

Capital AssetsLand - 133,301 133,301Buildings - 115,363 115,363Improvements Other Than Buildings - 276,776 276,776Intangible 42,425 - 42,425Machinery and Equipment 356,173 3,432,489 3,788,662

Less Accumulated Depreciation/Amortization (336,443) (2,517,223) (2,853,666)Total Capital Assets (Net of Accumulated Depreciation/Amortization) 62,155 1,440,706 1,502,861

Total Noncurrent Assets 62,155 1,440,706 1,502,861

Total Assets 980,091$ 5,139,217$ 6,119,308$


Total Deferred Outflows of Resources 330,035$ 385,043$ 715,078$

Continued…

78



COMBINING STATEMENT ON NET POSITION

95,398 590,823 686,221

NONMAJOR ENTERPRISE FUNDSSeptember 30, 2016


ASSETS

Statement B-1

Inspection andCode


TotalNonmajor

Enterprise Funds(Exhibit V)


COMBINING STATEMENT ON NET POSITIONNONMAJOR ENTERPRISE FUNDS

September 30, 2016


Current LiabilitiesAccounts Payable 7,205$ 51,730$ 58,935$Contracts Payable 2,660 987,387 990,047Accrued Liabilities

Compensated Absences 87,893 62,116 150,009Closure Costs Payable - 357,905 357,905Other Accrued Liabilities 18,539 18,577 37,116

Due to Other Governments 21,533 497 22,030Deferred Revenue 13,797 - 13,797

Current Liabilities Payable fromRestricted AssetsCustomer Deposits Payable - 25,508 25,508

Total Current Liabilities Payable from Restricted AssetsTotal Current Liabilities 151,627 1,503,720 1,655,347

Noncurrent LiabilitiesCompensated Absences 82,461 50,046 132,507Closure Costs Payable - 3,668,375 3,668,375Other Post Employment Benefits 18,865 19,506 38,371Net Pension Liability 907,989 1,059,321 1,967,310


Deferred Charges Related to Pensions 55,888$ 65,202$ 121,090$Total Deferred Inflows of Resources 55,888$ 65,202$ 121,090$

Net Investment in Capital Assets 62,155$ 1,440,706$ 1,502,861$Unrestricted (Deficit) 31,141 (2,282,616) (2,251,475)Total Net Position (Deficit) 93,296 (841,910) (748,614)Total Liabilities and Net Position (Deficit) 1,310,126$ 5,524,260$ 6,834,386$

NET POSITION

79

- 25,508 25,508

LIABILITIES


Statement B-2

Inspection andCode


TotalNonmajor

Enterprise Funds(Exhibit VI)

Operating RevenuesLicenses and Permits 1,790,600$ -$ 1,790,600$Charges for Services 237,563 8,736,334 8,973,897Miscellaneous 255 105 360


Operating ExpensesPersonal services 1,063,918 857,916 1,921,834Contractual Services 496,895 6,354,018 6,850,913Supplies 25,518 79,777 105,295Utilities - 12,836 12,836Other Operating Expenses 66,691 363,701 430,392Depreciation/Amortization 18,069 244,782 262,851


Operating Income (Loss) 357,327 823,409 1,180,736

Nonoperating Revenues (Expenses)Intergovernmental - 143,060 143,060Investment Income 5,940 18,400 24,340Gain/Loss on Disposal of Capital Assets - 7,027 7,027

Total Nonoperating Revenues (Expenses) 5,940 168,487 174,427Income (Loss) BeforeContributions and Transfers

Change in Net Position 363,267 991,896 1,355,163

Total Net Position - Beginning (269,971) (1,833,806) (2,103,777)

Total Net Position (Deficit) - Ending 93,296$ (841,910)$ (748,614)$


80

363,267 991,896 1,355,163

COMBINING STATEMENT OF REVENUES, EXPENSES,AND CHANGE IN NET POSITION


NONMAJOR ENTERPRISE FUNDSFor the Fiscal Year Ended September 30, 2016

Statement B-3

TotalInspection Nonmajor and Code Solid Enterprise Funds

Enforcement Waste (Exhibit VII)CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Customers 1,956,078$ 8,848,585$ 10,804,663$ Payments to Suppliers (615,628) (6,451,854) (7,067,482) Payments to Employees (1,045,047) (826,735) (1,871,782)

Net Cash Provided (Used) by Operating Activities 295,403 1,569,996 1,865,399

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESOperating Subsidy - Intergovernmental Revenue - 164,123 164,123 Transfers In - - - Net Interfund Activity - - - Net Cash Provided (Used) by Non-capital Financing Activities - 164,123 164,123

CASH FLOWS FROM CAPITAL AND RELATED FINANCINGACTIVITIESPurchase of Capital Assets (45,648) (157,243) (202,891) Proceeds from Disposal of Capital Assets - 7,027 7,027 Net cash provided (used) by capital and related financing activities (45,648) (150,216) (195,864)

NET CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Sale and Maturities of Investments (1,187) (3,716) (4,903) Interest Income 5,955 18,400 24,355 Net Cash Provided (Used) by Investing Activities 4,768 14,684 19,452

Net Increase (Decrease) in Cash and Cash Equivalents 254,523 1,598,587 1,853,110

Cash and Cash Equivalents - Beginning of Year 393,828 987,461 1,381,289

Cash and Cash Equivalents - End of Year 648,351$ 2,586,048$ 3,234,399$

Continued…





81

Statement B-3

TotalInspection Nonmajor and Code Solid Enterprise Funds

Enforcement Waste (Exhibit VII)





Cash and Cash Equivalents at End of Year Consist of:Current assets 648,351$ 2,560,540$ 3,208,891$ Restricted assets - 25,508 25,508

Total 648,351$ 2,586,048$ 3,234,399$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating ActivitiesOperating Income (Loss) 357,327$ 823,409$ 1,180,736$

Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating ActivitiesDepreciation/Amortization 18,069 244,782 262,851

Decrease (Increase) in Assets Accounts Receivables (58,398) 110,146 51,748 Due from Other Elected Officials 2,546 - 2,546 Deferred Outflows (210,660) (245,772) (456,432) Increase (Decrease) in Liabilities Accounts Payable (577) 42,548 41,971 Service Contracts Payable (1,298) 613,041 611,743 Due to Other Elected Officials - (118) (118) Due to Other Governments (27,195) 381 (26,814) Compensated Absences Payable 2,650 (1,777) 873 Other Accrued Liabilities (22,438) (12,140) (34,578) Closure Costs Payable - (297,374) (297,374) Unearned Revenue (13,942) 2,000 (11,942) Other Post Employment Benefits 2,817 3,286 6,103 Net Pension Liability 316,610 369,377 685,987 Deferred Inflows (70,108) (81,793) (151,901)

Net Cash Provided (Used) by Operating Activities 295,403$ 1,569,996$ 1,865,399$

82

This fund is used to account for user charges and expenses associated with vehiclemaintenance and the centralized distribution of gasoline and special fuel to various OkaloosaCounty Departments as well as other County agencies.

This fund is used to account for premiums and claims associated with the provision of self-insurance programs for Okaloosa County.

Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the Board of County Commissioners of Okaloosa County andto other government units, on a cost reimbursement basis.


Self Insurance

Garage Service Fund

Statement C-1

Self Insurance Garage Services


(Exhibit V)

Current AssetsCash and Cash Equivalents 1,515,451$ 1,503$ 1,516,954$Investments 38,510 - 38,510Receivables, Net of Allowance

for UncollectibleDue from Other Elected Officials - 480 480Due from Other Governments - 532,267 532,267Inventory - 254,015 254,015Prepaids - 7,428 7,428

Total Current Assets 1,575,646 799,396 2,375,042

Noncurrent AssetsCapital Assets

Land - 316,861 316,861Buildings - 900,466 900,466Improvements Other Than Buildings - 257,345 257,345Machinery and Equipment 12,726 2,494,134 2,506,860

Less Accumulated Depreciation/Amortization (7,832) (3,267,826) (3,275,658)Total Capital Assets (Net of Accumulated Depreciation/Amortization) 4,894 700,980 705,874

Total Noncurrent Assets 4,894 700,980 705,874

Total Assets 1,580,540$ 1,500,376$ 3,080,916$


Total Deferred Outflows of Resources 82,509$ 577,560$ 660,069$

Continued…

September 30, 2016

Governmental Activities

25,388



COMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDS

21,685 3,703

ASSETS

83

Statement C-1



(Exhibit V)

September 30, 2016



COMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDS

Current LiabilitiesAccounts Payable 2,901$ 95,028$ 97,929$Contracts Payable 2,991 34,444 37,435Accrued Liabilities

Compensated Absences 9,616 89,863 99,479Claims and Judgments 858,429 - 858,429Other Accrued Liabilities 4,027 29,427 33,454

Due to Other Funds - 1,020,000 1,020,000Due to Other Elected Officials 90 12 102Due To Other Governments 8,188 516 8,704Deferred Revenue 8,075 - 8,075

Total Current Liabilities 894,317 1,269,290 2,163,607

Noncurrent LiabilitiesCompensated Absences 7,918 71,570 79,488Claims and Judgments 2,609,598 - 2,609,598Other Post Employment Benefits 4,180 27,211 31,391Net Pension Liability 226,996 1,588,980 1,815,976

Total Noncurrent Liabilities 2,848,692 1,687,761 4,536,453

Total Liabilities 3,743,009$ 2,957,051$ 6,700,060$


Total Deferred Inflows of Resources 13,971$ 97,803$ 111,774$

Net Investment in Capital Assets 4,894$ 700,980$ 705,874$Unrestricted (Deficit) (2,098,825) (1,677,898) (3,776,723)

Total Net Position (Deficit) (2,093,931) (976,918) (3,070,849)

Tota Liablities and Net Position (Deficit) 1,663,049$ 2,077,936$ 3,740,985$

NET POSITION

84

DEFERRED INFLOWS OR RESOURCES

LIABILITIES

Statement C-2


Total Internal Service Funds (Exhibit VI)

Operating RevenuesCharges for Services 11,810,536$ 4,585,413$ 16,395,949$Miscellaneous 1,116,963 2,082 1,119,045


Operating ExpensesPersonal Services 203,505 1,391,802 1,595,307Contractual Services 90,864 1,828 92,692Supplies 8,941 2,767,470 2,776,411Insurance Premiums and Claims 12,021,022 - 12,021,022Utilities - 4,572 4,572Other Operating Expenses 10,454 326,645 337,099Depreciation/Amortization 1,218 73,553 74,771


Operating Income (Loss) 591,495 21,625 613,120

Nonoperating Revenues (Expenses)Investment Income (Loss) 35,419 (14,819) 20,600Other Non-Operating Revenue 607,210 - 607,210Gain/Loss on Disposal of Capital Assets - 50,108 50,108Passenger Facility Charges - - -Administrative Charges - - -

Total Nonoperating Revenues (Expenses) 642,629 35,289 677,918


Capital Contributions - 26,168 26,168Operating Transfers In 400,000 - 400,000Operating Transfers Out (1,400,000) - (1,400,000)

Change in Net Position 234,124 83,082 317,206

Total Net Position (Deficit) - Beginning (2,328,055) (1,060,000) (3,388,055)

Total Net Position (Deficit) - Ending (2,093,931)$ (976,918)$ (3,070,849)$


COMBINING STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITION


85


1,234,124 56,914 1,291,038


Statement C-3

TotalInternal

Self- Garage Service FundsInsurance Services (Exhibit VII)

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Customers 12,846,300$ 4,897,739$ 17,744,039$ Payments to Suppliers (12,895,218) (3,545,172) (16,440,390) Payments to Employees (194,728) (1,358,177) (1,552,905) Payments for Other Revenues 607,210 - 607,210

Net Cash Provided (Used) by Operating Activities 363,564 (5,610) 357,954

CASH FLOWS FROM NON-CAPITAL FINANCINGACTIVITIESTransfers In 400,000 - 400,000 Transfers Out (1,400,000) - (1,400,000)

Net Cash Provided (Used) by Non-capital Financing Activities (1,000,000) - (1,000,000)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESPurchase of Capital Assets (2,333) (115,985) (118,318) Proceeds from Disposal of Capital Assets - 40,018 40,018 Capital Contributions - 26,168 26,168

Net Cash Provided (Used) by Capital and Related Financing Activities (2,333) (49,799) (52,132)

CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Sale and Maturities of Investments (6,314) (69) (6,383) Interest Income 33,012 (14,750) 18,262

26,698 (14,819) 11,879

(612,071) (70,228) (682,299) Cash and Cash Equivalents - Beginning of Year 2,127,522 71,731 2,199,253

Cash and Cash Equivalents - End of Year 1,515,451$ 1,503$ 1,516,954$ Continued…





COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDS

86


Statement C-3

TotalInternal

Self- Garage Service FundsInsurance Services (Exhibit VII)



COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDS


Cash and Cash Equivalents at End of Year Consist of:Current assets 1,515,451$ 1,503$ 1,516,954$

Total 1,515,451$ 1,503$ 1,516,954$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating ActivitiesOperating Income (Loss) 591,495$ 21,625$ 613,120$

Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating ActivitiesDepreciation/Amortization 1,218 73,553 74,771 Other revenue 607,210 - 607,210

Decrease (Increase) in AssetsAccounts Receivable 3,870 (68) 3,802 Due from Other Elected Officials - 106 106 Due from Other Governments - 310,313 310,313 Inventories - (9,631) (9,631) Prepaid Expenses 11,810 (7,428) 4,382 Deferred Outflows (52,665) (368,654) (421,319)

Increase (Decrease) in LiabilitiesAccounts Payable 1,089 (2,711) (1,622) Service Contracts Payable (778,203) (45,413) (823,616) Due to Other Funds - (380,000) (380,000) Due to Other Elected Officals (88) 1 (87) Due to Other Governments 1,454 418 1,872 Compensated Absences Payable (691) (16,046) (16,737) Claims and Judgments Payable (82,466) - (82,466) Other Accrued Liabilities (195) (17,982) (18,177) Unearned Revenues (2,602) - (2,602) Other Post Employment Benefits 704 4,930 5,634 Net Pension Liability 79,152 554,067 633,219 Deferred Inflows (17,528) (122,690) (140,218) Total Adjustments (227,931) (27,235) (255,166)

363,564$ (5,610)$ 357,954$ 87

Net Cash Provided (Used) by Operating Activities

Other Reports

88

To the Honorable Chairman and the Members of the Board of County Commissioners Okaloosa County, Florida

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

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States, the financial statements (hereinafter referred to as “financial statements”) of each major fund and the aggregate remaining fund information of the Board of County Commissioners of Okaloosa County, Florida (hereinafter referred to as the “Board of County Commissioners”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Board of County Commissioners’ financial statements, and have issued our report thereon dated March 31, 2017.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Board of County Commissioners’ internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Board of County Commissioners’ internal control. Accordingly, we do not express an opinion on the effectiveness of the Board of County Commissioners’ internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significantdeficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs that we consider to be a significant deficiency. [2016-1]

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Board of County Commissioners’ financial statements are free from material misstatement, we performed tests of its compliance with certain

89

provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

As required by the provisions of Chapter 10.550, Rules of the Auditor General, we have issued a separate management letter dated March 31, 2017 which should be considered in assessing the results of our audit.

Response to Findings

The Board of County Commissioners’ responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The Board of County Commissioners’ responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal controls and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Board of County Commissioners’ internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Board of County Commissioners’ internal and compliance. Accordingly, this report is not suitable for any other purpose.


90


RULES OF THE AUDITOR GENERAL


We have examined the Board of County Commissioners of Okaloosa County, Florida’s (hereinafter referred to as the “Board”) compliance with the following requirements for the year ended September 30, 2016:

(1) Florida Statute 218.415 in regards to investments

(2) Florida Statute 288.8018 in regards to the Deepwater Horizon Oil spill receipts and expenditures

(3) Florida Statute 365.12 and 365.173 in regards to the E911 revenues and expenditures

Management is responsible for the Board’s compliance with those requirements. Our responsibility is to express an opinion on the Board’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Board’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Board’s compliance with specified requirements.

In our opinion, the Board complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016.


91

INDEPENDENT AUDITORS’ REPORT ON THE SCHEDULE OF RECEIPTS AND EXPENDITURES OF FUNDS RELATED TO THE DEEPWATER HORIZON OIL SPILL


We have audited the financial statements of Board of County Commissioners of Okaloosa County, Florida as of and for the year ended September 30, 2016, and have issued our report thereon dated March 31, 2017 which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole.

The Schedule of Receipts and Expenditures of Funds related to the Deepwater Horizon Oil Spill on page 92 is presented for the purpose of additional analysis as required by Florida Statute 288.8018 and the Rules of the Auditor General Chapter 10.557(3)(f), and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America.

In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.



OTHER SUPPLEMENTARY INFORMATION SCHEDULE OF RECEIPTS AND EXPENDITURES OF FUNDS

RELATED TO DEEPWATER HORIZON OIL SPILL For the Fiscal Year Ended September 30, 2016

92

Amounts Received Amounts Expended in the 2015-2016 in the 2015-2016Source Fiscal Year Fiscal Year

British Petroleum:

Litigation Settlement $ 0 $1,699,847

Funds relating to proceeds specified for advertising and tourist related media campaigns $ 39,581 $156,792

Note: This does not include funds related to the Deepwater Horizon Oil Spill that are considered Federal awards or State financial assistance. The Schedule of Expenditures of Federal Awards and State Financial Assistance includes $12,007 of expenditures of State financial assistance (included for CSFA # 37.082), that are related to the Deepwater Horizon Oil Spill.

93

MANAGEMENT LETTER

To the Honorable Chairman and the Members of the Board of County Commissioners Okaloosa County, Florida

Report on the Financial Statements We have audited the financial statements of the major funds and aggregate remaining fund information of the Board of County Commissioners of Okaloosa County, Florida (hereinafter referred to as “Board”) as of and for the fiscal year ended September 30, 2016, and the related notes to the financial statements, and have issued our report thereon dated March 31, 2017.

Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Florida Auditor General.

Other Reports and Schedule We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; Schedule of Receipts and Expenditures of Funds Related to Deepwater Horizon Oil Spill; and Independent Accountants’ Report on an Examination Conducted in Accordance with Chapter 10.550, Rules of the Auditor General, and Independent Auditors’ Report on the Schedule of Receipts and Expenditures of Funds Related to Deepwater Horizon Oil Spill. Disclosures in those reports and schedule, which are dated March 31, 2017, should be considered in conjunction with this management letter.

Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations in the preceding annual financial report except as noted below under the heading Prior Year Findings and Recommendations.

Tabulation of Uncorrected Audit Findings Current Year

Finding # 2014-15 FY Finding # 2013-14 FY

Finding # 2016-1 2015-2 N/A 2016-2 N/A N/A

94

Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name of official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Board of County Commissioners, Okaloosa County, Florida was established by the Constitution of the State of Florida, Article VIII, Section 1(e), as part of the primary government of Okaloosa County, Florida. As of September 30, 2016, the Board of County Commissioners of Okaloosa County, Florida, had no component units, as defined by GASB 61, with a significant operational or financial relationship with the County.

Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit see comments 2016-2.

2016-2 AIRPORT FINANCIAL OPERATIONS

CriteriaThe airport enterprise operation is required to adhere to Board of County Commissioner’s policy on disbursements requests and to invoice its leaseholders in accordance with contact terms.

ConditionDuring our testing at the airport we observed that sufficient documentation underlying expenses for advertising were not obtained prior to submission and payment of invoices. The documentation needed to support the invoices was obtained for auditor inspection upon request with no exceptions noted.

Two leaseholders selected for testing were not billed in accordance with lease terms; however the billing differences were not material or significant.

CausePrevious airport administration did not build a strong financial foundation as noted in previous audit findings. New airport management spent considerable time and effort in FY 16 focusing on improving airport financial operations and significant progress was made; however not all financial improvement objectives were able to be completed during the year under audit.

EffectThere was no significant impact to the financial position of the Airport; however opportunities to enhance the internal control framework exist.

RecommendationWe recommend management continue to strengthen financial operations at the airport as outlined in management’s response.

View of responsible official and planned corrective action Airport management is in process or completed several financial objectives to include written accounting policy and procedures. Significant resources and efforts have been accomplished to train new and existing financial staff however, much more work is required. Management has taken an aggressive approach to addressing financial repairs on a priority basis. A full legal review of all leases to standardize contract language has been accomplished in order to decrease the amount of billing complexities and increase transparency and oversight. A hangar inspection program was developed to annually inspect hangars at the Crestview and Destin airports and new appraisals were accomplished to standardize the leases. Financial consultants have provided training and PROPworks provided an in-house training course for airport finance staff. The Airline-Use and Rental Car Agreements, which are the highest priority agreements, previously extended over the years, were renegotiated and completed for lengthy terms and methodologies that provide significant revenue returns. Negotiations are currently well underway with the Air Force on the Enhanced Use Lease and Joint Use Agreements, which is paramount to ensure the airport and operations can thrive and grow and further continue to receive FAA funding.

95

Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Okaloosa County Board of County Commissioners, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties

We greatly appreciate the assistance and cooperation extended us during our audit.



SCHEDULE OF FINDINGS AND RESPONSES Fiscal Year Ended September 30, 2016

96

Findings Related to the Financial Statements which are Required to be Reported in Accordance with Generally Accepted Governmental Auditing Standards (GAGAS)

FINDING 2016-1 PUBLIC WORKS AND FACILITY MAINTENANCE INVENTORY

CriteriaThe public works department to include its divisions of Engineering, Traffic Operations, Roads, Environmental Services, Parks Division and Administrative services and its subsidiary facility maintenance division, has substantial amounts of inventory on hand in order to fulfill its mission to internal and external customers. The inventory is not counted and reconciled on a routine basis to perpetual inventory records. The inventory has also not been physically recorded in the general ledger as its value was assumed to be immaterial. Costs are allocated to projects based on work order systems, but the value of any residual inventory has not been captured in the accounting records. In a properly designed system of internal control surrounding inventory, key controls should be in place for existence, completeness, rights or obligations, valuation, and classification and accuracy of significant inventory balances.

Condition The following conditions exist:

Physical counts of the inventory is not performed routinely The nature of the inventory is diverse since public works serves many different functions Physical custody of assets is not segregated from the recordkeeping function Two separate platforms are used to account for work orders and inventory, an off the shelf package

used by Public Works and an internally developed software used by Facilities Maintenance The valuation of inventory at year end per the reports generated indicate the residual balances may

be significant; however due to controls lacking in other areas, there is limited confidence in the quantities reported and valuation of inventory due to concerns of potential items that could be slow moving or obsolete.

CauseThe system of internal control surrounding this inventory is not properly designed.

EffectFraud or errors in reporting could occur with respect to this inventory and not be detected in a timely manner.

Recommendation Management should evaluate the current design of the system of internal control and personnel available to ensure key controls are in place for the assertions outlined above.

Views of responsible officials and planned corrective action: We agree with the recommendation and certain changes were implemented to segregate the inventory ordering function from receiving of goods into the inventory system. The comprehensive remediation plan involves the following steps:

Evaluation of inventory and work order operational processes in both public works and facility maintenance to develop a consistent approach.

Evaluation of a single software application that could be used by both public works and facility maintenance for inventory and work order functions. The current software applications used have not been updated and lack necessary functionality. In addition, one software application would promote consistency in processes and allow for cross staffing between the functions.


SCHEDULE OF FINDINGS AND RESPONSES Fiscal Year Ended September 30, 2016

97

FINDING 2016-1 PUBLIC WORKS AND FACILITY MAINTENANCE INVENTORY (CONTINUED)

Views of responsible officials and planned corrective action (continued):

Combining public works and facility maintenance inventory in the North End of the County to one facility as part of a short term plan. The ultimate goal would be one supply warehouse to house both public works and facility maintenance inventory in one building for North County. Due to travel time, the need for separate inventory stores in North and South County is needed.

Further evaluation of the segregation of duties to include physical count functions to determine if additional personnel is warranted. One additional hire is already planned for FY 17.

While these efforts are currently underway, a complete remediation will not be accomplished until FY 17.

CLERK OF THECIRCUIT COURT

PageExhibit/

Statement


Table of Contents i

FINANCIAL SECTION




4 II


10 VIII

11 IX12 X13 XI



27 A-1Combining Statement of Changes in Net Position - Agency Funds 29 A-2

OTHER REPORTS

32

34


Courts Special Revenue FundGeneral Fund

Combining Statement of Fiduciary Net Position - Agency Funds

Statement of Cash Flows - Proprietary Fund

Public Records Modernization Trust Special Revenue FundPublic Records Courts Special Revenue FundPublic Records 10% Fine Special Revenue Fund

i


Statement of Net Position - Proprietary FundStatement of Revenues, Expenses, and Changes in Net Position - Proprietary Fund



OKALOOSA COUNTY, FLORIDACLERK OF THE CIRCUIT COURT

Budget and Actual

Governmental Funds

TABLE OF CONTENTS





1

INDEPENDENT AUDITORS’ REPORT Honorable JD Peacock II Clerk of the Circuit Court and Comptroller Okaloosa County, Florida Report on the Financial Statements We have audited the accompanying financial statements of each major fund and the aggregate remaining fund information of the Office of the Clerk of the Circuit Court and Comptroller of Okaloosa County, Florida, (“Clerk”) as of and for the year ended September 30, 2016, as listed in the table of contents, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Clerk’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Clerk’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

2

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund and the aggregate remaining fund information of the Clerk, as of September 30, 2016, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund, the Courts Special Revenue Fund, the Public Records Modernization Trust Special Revenue Fund, and the Public Records Courts Special Revenue Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, the financial statements referred to above have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida. In conformity with the Rules, the accompanying financial statements are intended to present the financial position and changes in financial position of each major fund, and aggregate reaming fund information, only for that portion of the major funds, and the aggregate remaining fund information, of Okaloosa County, Florida that is attributable to the Clerk. They do not purport to, and do not, present fairly the financial positon of Okaloosa County, Florida as of September 30, 2016 and the changes in its financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Other Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements. The accompanying combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and related directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the special-purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special-purpose financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report on our consideration of the Clerk’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters included under the heading “Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards”. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Clerk’s internal control over financial reporting and compliance.


General FundCourts


Cash and Cash Equivalents 89,337$ 376,092$Accounts Receivable 301 -Due from Other Funds 22,453 1,704Due from Other Elected Officials 1,453 -Due from Other Governments 110,953 -Prepaids - 6,000

Total Assets 224,497$ 383,796$

LiabilitiesAccounts Payable 6,018$ -$Accrued Liabilities 139,058 54,652Due to Other Funds 76,370 8Due to Other Elected Officials 892 -Due to Other Governments 1,726 46,709Due to Depositors 433 -Unearned Revenue - 282,427

Total Liabilities 224,497 383,796

Fund BalanceNonspendable - 6,000

SpendableRestricted - -Unassigned - (6,000)

Total Fund Balances - -

Total Liabilities and Fund Balances 224,497$ 383,796$


ASSETS

LIABILITIES AND FUND BALANCES

September 30, 2016GOVERNMENTAL FUNDS

BALANCE SHEETOkaloosa County, Florida

Exhibit I

Public RecordsModernization Trust


Public RecordsCourts


Public Records10% Fine


TotalGovernmental

Funds

253,607$ 549,382$ 35,964$ 1,304,382$- - - 301

10,639 65,049 - 99,845- - - 1,453- - - 110,953- - - 6,000

264,246$ 614,431$ 35,964$ 1,522,934$

-$ -$ -$ 6,018$- - - 193,710- - - 76,378- - - 892- - - 48,435- - - 433- - - 282,427

- - - 608,293

- - - 6,000

264,246 614,431 35,964 914,641- - - (6,000)

264,246 614,431 35,964 914,641

264,246$ 614,431$ 35,964$ 1,522,934$


3

General FundCourts

Special Revenue FundRevenuesIntergovernmental 753,423$ -$ Charges for Services 1,225,308 2,923,967 Fines - 859,347 Miscellaneous 6,640 -

Total Revenues 1,985,371 3,783,314

ExpendituresCurrentGeneral Government 3,131,935 - Human Services 264,675 - Court-Related - 3,783,314

Capital Outlay 79,607 -


Excess (Deficiency) of RevenuesOver (Under) Expenditures (1,490,846) -

Other Financing Sources (Uses)Transfers Among Constitutional Officers 1,490,846 -

Total Other Financing Sources (Uses) 1,490,846 -

Net Change in Fund Balances - -

Fund Balances - Beginning - -

Fund Balances - Ending -$ -$


Clerk of the Circuit CourtOkaloosa County, Florida


Exhibit II

Public RecordsModernization Trust


Public RecordsCourts


Public Records10% Fine


TotalGovernmental

Funds

-$ -$ -$ 753,423$ 114,499 347,593 - 4,611,367

- - 187,318 1,046,665 739 1,125 - 8,504

115,238 348,718 187,318 6,419,959

260,366 - - 3,392,301 - - - 264,675 - 526,434 207,340 4,517,088

209,024 77,743 - 366,374

469,390 604,177 207,340 8,540,438

(354,152) (255,459) (20,022) (2,120,479)

- - - 1,490,846

- - - 1,490,846

(354,152) (255,459) (20,022) (629,633)

618,398 869,890 55,986 1,544,274

264,246$ 614,431$ 35,964$ 914,641$

4


Exhibit III

Original Final Actual AmountsRevenuesIntergovernmental 760,000$ 760,000$ 753,423$ (6,577)$ Charges for Services 1,142,200 1,225,200 1,225,308 108 Miscellaneous 300 300 6,640 6,340

Total Revenues 1,902,500 1,985,500 1,985,371 (129)

ExpendituresCurrentGeneral Government 3,104,623 3,116,202 3,131,935 (15,733) Human Services 271,935 275,359 264,675 10,684

Capital Outlay 17,200 85,197 79,607 5,590

Total Expenditures 3,393,758 3,476,758 3,476,217 541

Excess (Deficiency) of Revenues Over (Under) Expenditures (1,491,258) (1,491,258) (1,490,846) 412


1,491,258 1,491,258 1,490,846 (412)

1,491,258 1,491,258 1,490,846 (412)





5




Budgeted Amounts


Positive(Negative)



Exhibit IV

Original Final Actual AmountsRevenuesIntergovernmental -$ 21,907$ -$ (21,907)$Charges for Services 2,836,000 2,684,924 2,923,967 239,043 Fines 740,975 740,975 859,347 118,372

Total Revenues 3,576,975 3,447,806 3,783,314 335,508

ExpendituresCurrentCourt-Related 3,576,975 3,447,806 3,783,314 (335,508)

Total Expenditures 3,576,975 3,447,806 3,783,314 (335,508)

Excess (Deficiency) of Revenues Over (Under) Expenditures - - - -





6


Budgeted Amounts


Positive(Negative)

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual expenditures exceed legally budgeted amounts at September 30, 2016 due to amounts were funded from revenues that exceeded budgeted amounts.


COURTS SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Exhibit V

Original Final Actual AmountsRevenuesCharges for Services 100,000$ 100,000$ 114,499$ 14,499$Miscellaneous 619,500 619,500 739 (618,761)

Total Revenues 719,500 719,500 115,238 (604,262)

ExpendituresCurrentGeneral Government - 249,400 260,366 (10,966)

Capital Outlay 719,500 470,100 209,024 261,076

Total Expenditures 719,500 719,500 469,390 250,110

Excess (Deficiency) of Revenues Over (Under) Expenditures - - (354,152) (354,152)





7


PUBLIC RECORDS MODERNIZATION TRUST SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)

Exhibit VI

Original Final Actual AmountsRevenuesCharges for Services 315,000$ 315,000$ 347,593$ 32,593$Miscellaneous 867,300 867,300 1,125 (866,175)

Total Revenues 1,182,300 1,182,300 348,718 (833,582)

ExpendituresCurrentCourt-Related - 537,925 526,434 11,491

Capital Outlay 1,182,300 644,375 77,743 566,632

Total Expenditures 1,182,300 1,182,300 604,177 578,123






8


PUBLIC RECORDS COURTS SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)

Exhibit VII

Original Final Actual AmountsRevenuesFines 165,000$ 165,000$ 187,318$ 22,318$ Miscellaneous 42,340 42,340 - (42,340)

Total Revenues 207,340 207,340 187,318 (20,022)

ExpendituresCurrentCourt-Related - 207,340 207,340 -

Capital Outlay 207,340 - - -






Budgeted Amounts


Positive(Negative)


9


PUBLIC RECORDS 10% FINE SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Exhibit VIII


CompensatedAbsences

Internal Service Fund

Cash and Cash Equivalents 153,801$

Total Assets 153,801

LiabilitiesAccrued Compensated Absences 153,801

Net PositionUnrestricted -

Total Liabilities and Net Position 153,801$


10

LIABILITIES AND NET POSITION

September 30, 2016


STATEMENT OF NET POSITIONPROPRIETARY FUND

ASSETS

Exhibit IX


CompensatedAbsences

Internal Service Funds

Operating RevenuesCharges for Services 31,019$

Total Operating Revenues 31,019

Operating ExpensesPersonal services 31,019

Total Operating Expenses 31,019

Operating Income (Loss) -

Net Position - Beginning -

Net Position - Ending -$

11


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITIONPROPRIETARY FUND



EXHIBIT X


Compensated Absences


CASH FLOWS FROM OPERATING ACTIVITIESPayments for Interfund Services Provided (31,019)$

Net Cash Provided (Used) by Operating Activities (31,019)

Net Increase (Decrease) in Cash and Cash Equivalents (31,019)

Cash and Cash Equivalents - Beginning of Year 184,820

Cash and Cash Equivalents - End of Year 153,801$

Reconciliation of Operating Income (Loss) to Net CashProvided (Used) by Operating Activities

Operating Income (Loss) -$

Adjustments to Reconcile Operating Income (Loss) to Net CashProvided (Used) by Operating Activities

Increase (Decrease) in LiabilitiesCompensated Absences Payable (31,019)

Net Cash Provided (Used) by Operating Activities (31,019)$


12


PROPRIETARY FUNDFor the Fiscal Year Ended September 30, 2016


Exhibit XI

Agency Funds

Cash and Cash Equivalents 5,858,132$ Accounts Receivable 3,817 Due from Other Funds 690 Due from Other Elected Officials 370

Total Assets 5,863,009

LiabilitiesDue to Other Funds 24,157 Due to Other Elected Officials 139,324 Due to Other Governments 720,623 Due to Depositors 4,978,905


NET POSITION -$

13

ASSETS

LIABILITIES


September 30, 2016FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITIONOkaloosa County, Florida


Clerk of the Circuit Court Okaloosa County, Florida


14


The Clerk of the Circuit Court (Clerk) is an elected official established pursuant to the Constitution of the State of Florida. The Clerk is elected by the citizenry at-large and functions independently of the Board of County Commissioners of Okaloosa County, Florida.

The financial statements of the Clerk have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. The Clerk uses the Uniform Accounting System (UAS) mandated by Chapter 218.33, Florida Statutes.

The following is a summary of the more significant accounting policies of the Clerk.


The Clerk is part of the legal entity of Okaloosa County, Florida and is, therefore, reported as part of the primary government. The Clerk’s individual financial statements do not purport to reflect the financial position or the results of operations of the primary government of Okaloosa County, Florida taken as a whole. The combined financial statements of the primary government of Okaloosa County, Florida include the individual statements of the following elected officials and those of separately administered organizations that are controlled by or are dependent upon the County:

Board of County Commissioners Clerk of the Circuit Court Sheriff Tax Collector Property Appraiser Supervisor of Elections

Financial activities of other component units that form the reporting entity of the primary government of Okaloosa County are not included in these financial statements.


The financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of the fund level only financial statements and permit omission of entity-wide full accrual financial statements and management’s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Okaloosa County, Florida, that relate to transactions of the Clerk and are not intended to present the financial position and changes in financial position of Okaloosa County, Florida.

The Clerk segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. A fund is a fiscal and accounting entity with a self-balancing set of accounts. Separate financial statements are provided for governmental funds, the proprietary fund and the fiduciary funds of the Clerk. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.



15



1. Exchange and Non-exchange Transactions Exchange transactions are those in which each party receives and gives up essentially equal values.

An example of an exchange transaction is a charge for service, a fee, in exchange for a specific service, recording a document. Non-exchange transactions are those in which the Clerk gives (or receives) value without directly receiving (or giving) equal value in exchange. An example of a non-exchange transaction is the Title IV-D funds received by the Clerk which are used to fund the support, collection and distribution function of the Clerk. The revenue from these exchange and non-exchange transactions is recognized in the financial statements in varying ways depending on the basis of accounting used.

2. Governmental Fund Financial StatementsGovernmental funds are accounted for using a flow of current financial resources measurement focus.With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. Governmental fund financial statements are reported using the modified accrual basis of accounting. Under this method, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Clerk considers all revenues reported in the governmental funds to be available if the revenues are collected within 30 days after year-end as the Clerk must remit excess appropriations and fees back to the Board of County Commissioners by October 31. Those revenues susceptible to accrual are interest, charges for service, and intergovernmental.

Expenditures are recorded when the related fund liability is incurred. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

3. Proprietary and Fiduciary Fund Financial Statements The proprietary fund financial statement is reported using the economic resources measurement focus.

Under this measurement focus, all assets and all liabilities associated with the operation of the fund are included on the balance sheet. The statement of revenue, expenses and changes in equity reports revenues and expenses. The proprietary fund is reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.


Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. The principal operating revenues for the proprietary fund are charges to the general fund for funding the operating expenses of the fund which are for accrual of the short term portion of the Clerk’s compensated absence liability.



16



3. Proprietary and Fiduciary Fund Financial Statements - ContinuedNon-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. The Clerk’s proprietary fund usually does not have this type of revenue.

The only fiduciary funds of the Clerk are agency funds and as such do not record revenues and expenses.

4. Financial Statement Presentation

The Clerk reports the following major governmental funds:

General Fund This is the Clerk’s primary operating fund. It accounts for all financial resources of the general


Courts Special Revenue Fund This fund is used to account for the statutory fines, fees, service charges and costs collected by

the Clerk related to the performance of court-related activities. All excess funds over the amount of the Clerk’s operating budget for this fund, approved by the Clerks of Court Operations Corporation, are remitted to the Florida Department of Revenue.

Public Records Modernization Trust Special Revenue Fund This fund is used to account for recording fees collected by the Clerk under Florida Statute

28.24(12)(d). The fund is used exclusively for equipment, personnel training, and technical assistance in modernizing the public records system.

Public Records Courts Special Revenue Fund This fund is used to account for recording fees collected by the Clerk under Florida Statute

28.24(12)(e). The fund is used exclusively for court-related technology needs.

Public Records 10% Fine Special Revenue Fund This fund is used to account for 10% of the base fines collected by the Clerk as per Florida Statute 28.37(2) to be used exclusively for additional clerk court-related operational needs and program enhancements.

The Clerk reports the following fund types:

Internal Service Fund This fund accounts for the funding of short-term compensated absence debt provided to the

general fund of the Clerk on a cost reimbursement basis.

Agency Funds These funds account for monies held on behalf of individuals and companies that use the Clerk

as a depository; fines, court costs, licenses and fees collected on behalf of other governments; and surety bonds and performance deposits.



17

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Assets or Balance

1. Deposits and Investments Sections 28.33, 218.415, and 219.075, Florida Statutes, require the investment of surplus public funds

and prescribe the instruments in which those investments are authorized, specifically the State of Florida Local Government Surplus Funds Trust Fund; Security and Exchange Commission (SEC) registered money market funds with the highest credit quality rating; interest-bearing time deposits or savings accounts in qualified public depositories as defined in s.280.02; direct obligations of the United States Treasury, federal agencies and instrumentalities; and securities of or other interest in certain investment companies or investment trusts the portfolio of which is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such obligations. Because the County has adopted written investment policies as provided in subsection (1) through (15) of s. 218.415, other investments may be authorized by resolution or ordinance. Currently authorized are investments in term repurchase agreements with primary broker/dealers collateralized in the County’s name by securities of the United States Government or any agency or instrumentality thereof; overnight repurchase agreements with collateral held by the custodian bank or its trust department; tax exempt bonds, notes or obligations rated in the two highest classifications; inventory-based domestic bankers’ acceptances eligible to qualify for use as collateral at the Federal Reserve Bank; SEC registered open-end mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities; and Florida Local Government Investment Trust. The Clerk adheres strictly to the provisions of those cited Statutes and investments authorized by resolution or ordinance, as well as with Chapter 517, Florida Statutes, which established registration procedures for securities and dealers. Investments are reported at fair value.

The Clerk maintains a pooled cash account available for use by all funds. Some agency funds maintain individual deposit type investment accounts. Each fund’s portion of the pooled cash and individual deposit type investments are displayed on the balance sheet as “cash and cash equivalents.” For purposes of these statements and the cash flows statement of the internal service fund, all highly liquid investments with maturity of 90 days or less when purchased are considered to be cash equivalents.

2. Receivables and Payables During the course of operations, numerous transactions occur between individual funds or elected

officials for goods provided or services rendered. These receivables and payables are classified as “due to/from other funds” or “due to/from other elected officials” on the balance sheet. Short-term interfund loans are also classified as “interfund receivables/payables.”

The Clerk maintains no allowance for uncollectible trade accounts. Accounts receivable write offs are insignificant.

3. Prepaid ItemsCertain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the fund financial statements.

4. Capital Assets Capital assets are not capitalized in the governmental funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in governmental funds, and the related assets are reported on the government-wide statement of net assets of Okaloosa County.



18


D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Assets or Balance - Continued

4. Capital Assets Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical

cost. Contributed assets are recorded at fair market value as of the date received. The Clerk’s capitalization levels are $1,000 on tangible personal property and $5,000 on intangible assets. Costs incurred for repairs and maintenance is expensed as incurred. Depreciation/amortization on all assets is provided on the government-wide statement of activities of Okaloosa County using the straight-line basis over the following estimated useful lives:

Assets YearsIntangibles 3Equipment 3 - 7Vehicles 2 - 15

5. Compensated Absences The liability for compensated absences consisting of unpaid accumulated Paid Time Off (PTO)

balances is reported on the government-wide statement of net assets of Okaloosa County and the proprietary fund statement of the Clerk. The liability is accrued when incurred in the government-wide and proprietary fund financial statements. The Clerk uses an internal service fund to accumulate the resources to fund the short-term portion of this compensated absences liability. Long-term liability is reported on the government-wide statement of net assets of Okaloosa County. A liability for these amounts is reported in governmental funds financial statements of the Clerk only if they have matured, for example, as a result of employee resignations and retirements.

6. Deferred Outflows/Inflows of ResourcesIn addition to assets, deferred outflows of resources represent a consumption of fund balance that applies to a future period(s) and will not be recognized as an outflow of resources (expenditure) until then.

In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources(revenue) until that time.

No such items were applicable to the Clerk as of September 30, 2016.

7. Fund Balance In the fund financial statements, GASB Statement 54 establishes fund balance classifications that

comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed up on the use of the resources reported in governmental funds. Fund balance classifications under GASB 54 are nonspendable, restricted, committed, assigned and unassigned.


The Clerk has non-spendable fund balance for amounts representing prepaid items. All other fund balance of the Clerk is considered restricted due to spending constraints on the resources imposed by Florida State statues. The Clerk does not have a formal minimum fund balance policy.



19


D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Assets or Balance – Continued

8. Estimates The preparation of financial statements in conformity with 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.

NOTE 2 – LEGAL COMPLIANCE BUDGETS

Appropriated BudgetBudgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for all governmental funds. All appropriations lapse at fiscal year end.


On or about June 1 of each year, proposed budgets are received by the Board of County Commissioners from its department heads, from the Supervisor of Elections and Sheriff, and from other agencies requesting funding for the ensuing fiscal year. These proposed expenditures, along with all estimated receipts, taxes to be levied, and balances expected to be brought forward are considered by the Board of County Commissioners in a series of workshops beginning on or after July 15. The Board of County Commissioners requires such changes as deemed necessary, sets proposed millages and establishes dates for tentative and final public budget hearings as prescribed by Florida Statutes.

The Clerk of Circuit Court's budget is prepared in two parts. The first part, which relates to the state court system functions, is submitted to the Florida Clerks of Court Operations Corporation by June 1 of each year. The second part, which relates to the duties as Clerk to the Board of County Commissioners, County Auditor, Custodian, Treasurer of all County funds and the recording function, is submitted to the Board of County Commissioners.


In the event the final budget has not been adopted by October 1, the beginning of the fiscal year, Florida Statutes provide for expenditures based on the adopted tentative budget or the Board readopts its prior year’s adopted final budget, as amended, and expends monies based on that budget until such time as its tentative budget is adopted pursuant to law. The final budget is adopted by resolution of the Board of County Commissioners.

The level of budgetary control (that is the level at which expenditures cannot legally exceed appropriations) is established at the fund level. The County Administrator is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must approve any revisions that alter the total expenditures of any fund. The Supervisor of Elections and Sheriff is authorized to make line item transfers but must request approval from the Board for increases in appropriations.



20

NOTE 2 – LEGAL COMPLIANCE BUDGETS – CONTINUED

Budget amounts are originally adopted amounts as amended by action of the Board of County Commissioners by revision of fund totals. There were no supplemental budgetary appropriations necessary during the fiscal year for the Clerk.

All excess fees and appropriations received by the Clerk in the funds supported by the Board appropriated budget must be returned to the Okaloosa County Board of County Commissioners by October 31 following the end of the fiscal year.

Court-Related Budget All court-related functions of the Clerk are reported in the Courts Special Revenue Fund. On or before June

1st, a budget is prepared according to Florida Statute 28.36 for that fund for the next fiscal year. It must be prepared and submitted to the Clerks of Court Operations Corporation (CCOC). The CCOC Finance & Budget Committee determines the budget policy for all Clerks and recommends each individual budget amount to the CCOC Executive Council. The CCOC then submits the combined Legislative Budget Request to the Legislative Budget Commission by August 1st. The budgets are then approved or rejected as a whole by October 1st. The Clerks are allowed to retain, to fund operations, 1/12th of the CCOC approved budget monthly from the collection of all court-related fines, fees, costs, and service charges. Any excess over the 1/12th amount must be remitted to the FL Department of Revenue “Clerk Trust Fund” on or before the 10th of the following month. All excess court-related annual collections must be remitted to the Department of Revenue by January 25th following the end of that fiscal year.


The Clerk maintains its deposits only with qualified public depositories as defined in Chapter 280, Florida Statutes. The provisions of this statute generally require public funds to be deposited in a bank or savings association designated by the State Chief Financial Officer as a “Qualified Public Depository”. All qualified public depositories must maintain deposit insurance. They also must place with or in the name of the Chief Financial Officer of the State of Florida, collateral in the amount of the greater of the average daily balance of public deposits multiplied by the average monthly balance of public deposits or 125 percent of the average daily balance of public deposits greater than capital. Collateral requirements may be increased according to statue if specified conditions exist. Eligible collateral includes federal, federally- guaranteed, state and local government obligations and corporate bonds. In the event of default by a qualified public depository excess losses over insurance and collateral will be recovered through assessments to all qualified public depositories of the same type as the depository in default. Under this method, all Clerk deposits, including certificates of deposit, would be considered fully insured.

State Statutes and the formal investments and portfolio policies adopted by the Board of County Commissioners of Okaloosa County restrict the types of investments that can be made. A description of the requirements and the types of investments allowed as well as information about valuation and other investment policies can be found in Note 1.D.1.

The investment policy manual details the methods used to manage the risks inherent to the investment process. The authority for investment of County funds rests with the Clerk who has delegated management of the investment program to the Finance Director. Investments can only be made by majority vote of the investment committee appointed by the Clerk. Investments for Okaloosa County are accounted for in the books and records of the Board of County Commissioners. Individual investment accounts were not maintained in the books of the Clerk during the fiscal year ended September 30, 2016.



21

NOTE 4 – UNEARNED REVENUE

Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unavailable and unearned revenue reported in the governmental funds were as follows.

Unearned

Courts Special Revenue Fund 282,427$


The following capital asset activity for the Clerk of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016:

Beginning

Balance Increases Decreases Transfers EndingBalance

Governmental activites:Capital assets, being depreciated/amortized: Intangibles 1,367,392$ 155,279$ -$ -$ 1,522,671$ Machinery and equipment 2,614,289 211,095 (327,282) (28,015) 2,470,087 Total Capital assets, being depreciated/amortize 3,981,681 366,374 (327,282) (28,015) 3,992,758

Less accumulated depreciation/amortization for: Intangibles (1,233,324) (53,956) - (1,287,280) Machinery and equipment (1,801,879) (286,852) 319,265 28,015 (1,741,451) Total accumulated depreciation/amortization (3,035,203) (340,808) 319,265 28,015 (3,028,731)

Governmental activites capital assets, net 946,478$ 25,566$ (8,017) -$ 964,027$

Depreciation/amortization expense was charged to functions/programs as follows:

Depreciation AmortizationGovernmental activities: General government 185,771$ 26,737$ Court-related 101,081 27,219

Total depreciation/amortization expenses - governmental activities 286,852$ 53,956$


The policy of the Clerk for annual and sick leave was changed June 1, 2015 to Paid Time Off (PTO). An employee can now accumulate and carry forward 1,000 hours of PTO from year to year. Any PTO in excess of 1,000 hours will be forfeited after the first pay period of the calendar year. PTO is accrued based on the schedule below. Upon retirement or termination, the employee may be paid up to a maximum of the following schedule.



22

NOTE 6 – COMPENSATED ABSENCES - CONTINUED

Years of Service

Hours Earned per Pay Period (26)

Years of Service

Balance Paid Upon Separation

0 – 1 6.25 2 – 5 20% of PTO 2 – 5 7.00 6 – 10 25% of PTO

6 – 10 7.75 11 – 15 30% of PTO 11 – 15 8.50 16 – 20 40% of PTO 16 – 20 9.25 21+ 50% of PTO

21+ 10.00

The vested portion of compensated absences for the Clerk as of September 30, 2016 follows:

CurrentPortion

Long-TermPortion Totals

Compensated absences 153,801$ 300,872$ 454,673$



Other Funds General Fiduciary Funds 22,453$ Fees collected Public Records Modernization General 10,639 Restricted fees Public Records Courts General 65,049 Restricted fees Courts Special Revenue Fiduciary Funds 1,704 Deposit Transfer Fiduciary Funds Courts Special Revenue 8 Fees collected Fiduciary Funds General 682 Fees collectedTotal 100,535$

Other Elected Officials Board of County Commissioners Fiduciary Fund (34,513)$ Fees Board of County Commissioners General (412) Excess fees Board of County Commissioners General (480) Fuel and maintenance General Board of County Commissioners 1,453 Fees Collected Board of County Commissioners Fiduciary Fund (104,811) Collected fines and fees Fiduciary Fund Board of County Commissioners 370 FinesTotal (138,393)$

Transfer In Transfer Out Amount PurposeOther Elected Officials General Board of County Commissioners (1,491,258)$ Appropriations Board of County Commissioners General 412 Excess feesTotal (1,490,846)$



23

NOTE 8 – OPERATING LEASES

The Clerk of the Circuit Court leases copier equipment under a non-cancelable operating leases effective for four years. Monthly payments under the lease were $4,414 thru 10/30/16. The new contract monthly payment will be $4,014 effective 11/01/16. Future minimum lease payments for the equipment leases total $60,610 through December 2017. Total lease expenditure for fiscal year ended September 30, 2016 were $52,968.

The Clerk leases postal equipment for the Crestview office under an operating lease effective for 60 months. Monthly payments under the lease are $395. Future minimum lease payments for the equipment lease totals $11,850 through December 2019. Total lease expenditure for fiscal year ended September 30, 2016 was $4,740.

The Clerk of the Circuit Court entered a new lease January 30, 2015 for postal equipment for the Fort Walton Beach office under an operating leases effective for five years. Monthly payments under the lease are $376. Future minimum lease payments for the equipment leases total $15,792. through December 2019. Total lease expenditure for fiscal year ended September 30, 2016 were $3,384.

Total lease expenditure/expense for operating leases in which the Clerk is the lessee for fiscal year ended September 30, 2016 was $61,092. Future minimum lease payments for these leases are as follows:

Fiscal Year Ended September 302017 58,948$ 2018 21,294 2019 6,882 2020 1,128

88,252$


The following long-term debt activity for the Clerk of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016:

Balance DueOctober1, 2015 Increases Decreases

Balance DueSeptember30, 2016

Due WithinOne Year

Governmental Activities:Accrued compsensated absences 555,050$ -$ (100,377)$ 454,673$ 153,801$ Other post employment benefits 128,179 49,322 (24,907) 152,594 - Total Governmental Activities 683,229$ 49,322$ (125,284)$ 607,267$ 153,801$

Internal service funds predominantly serve the governmental funds. Accordingly, liabilities for these funds are included as part of the above totals for governmental activities. Included in the amounts above is $153,801 of internal service fund compensated absences.

Compensated absences typically have been liquidated in the general fund on an interim basis with transfer of activity to the internal service fund at year-end.



24

NOTE 10 - RESTICTED FUND BALANCES

The governmental fund balance sheet contains the line item “Restricted for Other Purposes”. Following is a list of the detail balances contained in that line item for September 30, 2016:

Fund Amount PurposeSpecial Revenue Funds Public Record Modernization 264,246$ General Information Technology Public Records Courts 614,431 Judicial Information Technology Public Records 10% Fine 35,964 Court Related ExpendituresTotal Restricted for Other Purposes 914,641$

NOTE 11 – PENSION PLAN

The Clerk of Courts participates in the Florida Retirement System (FRS) which is a cost sharing multiple employer contributory retirement system administered by the State of Florida (State). The FRS was established in 1970by Chapter 121, Florida Statutes. In 2002 the FRS was amended to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. Chapter 112, Florida Statutes established the Retiree Health Insurance Subsidy (HIS) Program, a cost–sharing multiple employer defined benefit pension plan to assist retired members of any state- administered retirement system in paying the cost of health insurance.

The State of Florida Retirement System issues a publicly available stand-alone financial report (CAFR)which includes financial statements and required supplementary information. Also available are the pension systems actuarial reports to support the schedules of employer allocations and schedules of pension amounts by employer. These reports are available on the division’s website at http://www.dms.myflorida.com or by email at [email protected] . The CAFR and actuarial reports may also be obtained by contacting the Division of Retirement at:

State of Florida Division of Retirement Department of Management Services Bureau of Research and Member Contributions

P.O. Box 9000 Tallahassee, FL 32315-9000

850-907-6500 or toll free 844-377-1888

There are six classes of membership applicable to the Clerk of Courts. Members are eligible for normal retirement when they have met the requirements listed below. Early retirement may be taken any time after vesting within 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each year prior to the normal retirement age.


Special Risk Class and Special Risk Administrative Support Class Members – For members initially enrolled in the FRS before July 1, 2011, six or more years of Special Risk Class service and age 55, or the age after completing six years of Special Risk Class service if after age 55. Twenty- five years of special risk service regardless of age before age 55. A total of 25 years of service including special risk service



25


and up to four years of active duty wartime service and age 52. Without six years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class. For members initially enrolled in the FRS on or after July 1, 2011, eight or more years of Special Risk Class service and age 60, or the age after completing eight years of Special Risk Class service if after age 60. Thirty years of special risk service regardless of age before age 60. Without eight years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class.


FRS Membership and Plan Benefits - The FRS Pension Plan provides retirement and disability benefits,death benefits and survivor’s benefits. Members are also eligible for in-line-of-duty or regular disabilitybenefits if permanently disabled and unable to work. Benefits are established by State Statutes. Retirement benefits are based on a formula comprised of age, average compensation, length of FRS service, and membership class. Average compensation is computed as the average of an individual’s five highest years of earnings for employees hired before July 1, 2011 or eight highest years of earnings for employees hired on or after July 1, 2011. The amount of benefit payments is also affected by the retirement income option chosen by the plan participant.

Pension plan participants may choose to receive benefit in retirement under one of four options which willinclude a 3% cost-of-living adjustment each July (adjustments are only applicable for FRS service earnedprior to July 1, 2011).


HI S Membership and Plan Benefits - The HIS membership is available to all members within the FRS anddefined contribution Investment Plan. The benefit is a monthly payment to assist retirees of the state-administered retirement systems in paying their health insurance costs. Eligible retirees and beneficiariesreceive a monthly HIS payment equal to the number of years of service credited at retirement multipliedby $5. The minimum payment is $30 and the maximum payment is $160 per month, pursuant to section 112.363 Florida Statutes. To be eligible to receive a HIS benefit, a retiree under one of the state- administered retirements systems must provide proof of eligible health insurance coverage, which can include Medicare.

Contribution Requirements -The Clerk of Courts is required to contribute at an actuarially determined rate; these rates are a percent of annual covered payroll. Employees are required to contribute 3% of their annual salary, while members participating in DROP are not required to make the 3% contribution. The Clerk of Courts’ contractually required contribution rate includes the HIS contribution, .06% administrative and educational fee and any applicable unfunded actuarial liability “UAL” rates. The HIS required contribution rate is 1.66% for the 2015 and 2016 FRS plan years. This contribution when combined with the employee contribution is expected to finance the cost of the benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Descriptions and contribution rates in effect during the period ended September 30, 2016 and two preceding FRS fiscal years are as follows:



26


September 30, 2016

June 30, 2016

June 30, 2015

June 30, 2014


For the years ending September 30, 2016, 2015, 2014, the Clerk of Courts contributed $542,082, $497,539and $417,001 respectively, equal to 100% of the required contributions for each year.

The Florida Legislature has the authority for establishing or amending retirement legislation and relatedbills of significance to members of the Florida Retirement System (FRS). Passed bills are presented tothe Governor and approved before they may be enacted into law.

Net Pension Liability – Proportionate Share

The Clerk of Courts has a net FRS pension liability determined in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This long-term liability is only reported in the county-wide financial statements and is not a current liability of the General Fund. All required disclosures and schedules may be found in the county-wide financial statements of Okaloosa County, Florida.

NOTE 12 – POSTEMPLOYMENT BENEFITS

The Clerk has chosen to participate in the Board of County Commissioners’ plan providing post-employment health care and dental insurance benefits (OPEB) for eligible retired employees and their spouses. The OPEB plan provided by the Clerk is adequately disclosed in the footnotes of the government-wide financial statements of Okaloosa County, Florida.


The Clerk is exposed to risk of loss for claims and judgments for public liability, workers’ compensation, and other special risks. Special risks are covered by commercial insurance policies that are accounted for in the Clerk’s general fund. The Clerk bears no risk of loss under this type of coverage. There has been no significant reduction in insurance coverage from the prior fiscal year. Insurance coverage has been sufficient to cover all claims made in the prior three (3) fiscal years.

The Clerk has chosen to participate in a group medical insurance plan along with all other elected official offices of Okaloosa County except for the Sheriff. The plan is administered by the Risk Management Department of the Board of County Commissioners and uses a fully insured commercial insurance policy to fund employee medical benefits. The Clerk bears no risk of loss under this type of coverage.

The Clerk has chosen to participate in the Self-Insurance Internal Service Fund of the Okaloosa County Board of County Commissioners to handle claims for public liability and workers’ compensation. The Self-Insurance Internal Service Fund charges the Clerk a fee to participate based upon actuarially projected budget requirements for expected yearly cash payouts. No claim liability for this self-insurance program is recognized in the financial statements of the Clerk.

Agency Funds Agency funds are used to account for assets held by the Clerk of the Circuit Court (Clerk) of Okaloosa County as agent for individuals, private organizations, other governments, and/or other funds.

Fine and Forfeiture Fund This fund is used to account for the collection and disbursement of fines and court costs to Okaloosa County, State of Florida,and Municipalities. These fines and costs sources are generated from traffic, misdemeanor, felony and court ordered probation.

Jury and Witness Fund This fund is used to account for the juror and witness payments received from Okaloosa County and State of Florida and subsequent disbursement to jurors and witnesses for court services.

Tax Deed Fund This fund is used to account for the collection and disbursement of child support and alimony payments, pursuant to orders of the court.

Support Fund This fund is used to account for the collection and disbursement of child support and alimony payments, pursuant to orders of the court.

Registry of Court Fund This fund is used to account for court ordered deposits that are held pending litigation and disbursed based on final dispositionby the court.

Board of County Commissioners Trust Fund This fund is used to account for collection of recording fees collected by the Clerk’s office and remitted to the Board of County Commissioners to fund judicial information technology.

State Trust Fund This fund is used to account for various taxes, fees and service charges collected by the Clerk’s office and remitted to the State of Florida. The state revenues collected are:

Documentary Stamp taxes are paid by individuals at the time of recording deeds, mortgages and some contracts. Intangible Tax is paid by individuals at the time of recording mortgages and some deeds. Marriage License fees are collected on each marriage license issued and remitted to the State of Florida for funding of dispatched homemaker programs, domestic violence centers and vital statistic collection.Court Education Trust Service Charge is an additional $2.50 service charge for each civil action brought in Circuit or County Court. Civil Action Service Charge is an additional $7.00 service charge for each civil action brought in Circuit Court. Mediation fees are paid in connection with initial divorce filing or divorce modification filings. Of the fees charged, $1.00 in each instance is forwarded to the State Court Administration.

Probation Fee Trust Fund This fund is used to account for collection of certain court costs on traffic and misdemeanor cases and their subsequent disbursement to either JCS or Bridgeway Center, Inc., as applicable, to fund education costs.

Escrow Trust Fund This fund is used to account for deposits from title companies and is used to pay for monthly copy usage. These accounts are reconciled monthly and copy revenue earned is transferred to the Clerk’s General Fund. This fund also accounts for escrow funds from Circuit and County Court cases.

Juvenile Trust Fund This fund is used to account for the collection and disbursement of Juvenile Restitution payments, pursuant to orders of the court. These funds are disbursed to the victim in each case.

Foreclosure Escrow Trust Fund This fund is used to account for court ordered deposits from foreclosure sales until final certificates of disbursement are issued.

Cash Bond Trust Fund This fund is used to account for the receipt and disbursement of cash bond monies as directed by the court.

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Statement A-2

BalancesOctober 1,



2016

FINE AND FORFEITURE AGENCY FUND

Cash and Cash Equivalents 458,025$ 5,407,877$ 5,461,433$ 404,469$Accounts Receivable - 372 372 -Due from Other Elected Officials 110 370 110 370

Total Assets 458,135$ 5,408,619$ 5,461,915$ 404,839$

Due to Other Elected Officials 108,594$ 1,354,884$ 1,358,666$ 104,812$Due to Other Governments 349,541 3,840,241 3,889,755 300,027


JURY AND WITNESS AGENCY FUND

Cash and Cash Equivalents 39,816$ 566$ 8,355$ 32,027$

Due to Depositors 39,816$ 566$ 8,355$ 32,027$

TAX DEED AGENCY FUND

Cash and Cash Equivalents 664,650$ 919,499$ 398,624$ 1,185,525$

Due to Depositors 664,650$ 919,499$ 398,624$ 1,185,525$

SUPPORT AGENCY FUND

Cash and Cash Equivalents 97,387$ 3,635,627$ 3,616,357$ 116,657$Accounts Receivable 3,727 1,615 1,665 3,677

Total Assets 101,114$ 3,637,242$ 3,618,022$ 120,334$

Due to Other Funds 6,885$ 18,343$ 2,775$ 22,453$Due to Other Governments 459 7,128 6,596 991Due to Depositors 93,770 3,586,483 3,583,363 96,890


Continued…

ASSETS

ASSETS

ASSETS

ASSETS

LIABILITIES

LIABILITIES

LIABILITIES

29



COMBINING STATEMENT OF CHANGES IN NET POSITIONAGENCY FUNDS

LIABILITIES

Statement A-2

BalancesOctober 1,



2016




REGISTRY OF COURT AGENCY FUND

Cash and Cash Equivalents 2,016,464$ 11,749,633$ 11,726,477$ 2,039,620$Due from Other Funds - 550 - 550

Total Assets 2,016,464$ 11,750,183$ 11,726,477$ 2,040,170$

Due to Other Funds 3,413$ 156,102$ 158,483$ 1,032$Due to Depositors 2,013,051 11,905,735 11,879,648 2,039,138


BOARD OF COUNTY COMMISSIONERS TRUST AGENCY FUND


Due to Other Elected Officials 31,492$ 394,360$ 391,340$ 34,512$

STATE TRUST AGENCY FUND

Cash and Cash Equivalents 293,770$ 22,464,097$ 22,338,262$ 419,605$

Due to Other Governments 293,770$ 22,464,097$ 22,338,262$ 419,605$

PROBATION FEE TRUST FUND

Cash and Cash Equivalents -$ 1,419$ 1,269$ 150$

Due to Depositors -$ 1,419$ 1,269$ 150$

ESCROW TRUST AGENCY FUND


Due to Depositors 151,412$ 565,746$ 536,443$ 180,715$Continued…

ASSETS

ASSETS

30

LIABILITIES

ASSETS

ASSETS

ASSETS

LIABILITIES

LIABILITIES

LIABILITIES

LIABILITIES

Statement A-2

BalancesOctober 1,



2016




JUVENILE TRUST AGENCY FUND

Cash and Cash Equivalents 1,816$ 5,837$ 7,523$ 130$

Due to Depositors 1,816 5,837 7,523 130

FORECLOSURE ESCROW TRUST AGENCY FUND

Cash and Cash Equivalents 943,365$ 9,749,833$ 9,691,228$ 1,001,970$Accounts Receivable 140 - - 140Due from Other Funds - 140 - 140

943,505$ 9,749,973$ 9,691,228$ 1,002,250$

Due to Other Funds -$ 672$ -$ 672$Due to Depositors 943,505 9,749,833 9,691,760 1,001,578

943,505$ 9,750,505$ 9,691,760$ 1,002,250$

CASH BOND TRUST AGENCY FUND

Cash and Cash Equivalents 197,930$ 1,034,560$ 789,738$ 442,752$

Due to Depositors 197,930$ 1,034,560$ 789,738$ 442,752$

TOTAL - ALL AGENCY FUNDS

Cash and Cash Equivalents 4,896,127$ 55,929,054$ 54,967,049$ 5,858,132$Accounts Receivable 3,867 1,987 2,037 3,817Due from Other Funds - 690 - 690Due from Other Elected Officials 110 370 110 370

Total Assets 4,900,104$ 55,932,101$ 54,969,196$ 5,863,009$

Due to Other Funds 10,298$ 175,117$ 161,258$ 24,157$Due to Other Elected Officials 140,086 1,749,244 1,750,006 139,324Due to Other Governments 643,770 26,311,466 26,234,613 720,623Due to Depositors 4,105,950 27,769,678 26,896,723 4,978,905

Total Liabilities 4,900,104$ 56,005,505$ 55,042,600$ 5,863,009$31

ASSETS

ASSETS

ASSETS

LIABILITIES

LIABILITIES

LIABILITIES

ASSETS

LIABILITIES

Other Reports

32

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASEDON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Honorable JD Peacock II Clerk of the Circuit Court and Comptroller Okaloosa County, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements (hereinafter referred to as “financial statements”) of each major fund and the aggregate remaining fund information of the Office of the Clerk of the Circuit Court and Comptroller of Okaloosa County, Florida (hereinafter referred to as the “Clerk”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Clerk’s financial statements, and have issued our report thereon dated March 24, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Clerk’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Clerk’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Clerk’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

33

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Clerk’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal controls and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal and compliance. Accordingly, this report is not suitable for any other purpose.


34

INDEPENDENT ACCOUNTANTS’ REPORT ON EXAMINATION OF COMPLIANCE REQUIREMENTS IN ACCORDANCE WITH CHAPTER 10.550, RULES OF THE AUDITOR

GENERAL

We have examined the Office of the Clerk of the Circuit Court and Comptroller of Okaloosa County, Florida’s (hereinafter referred to as the “Clerk”) compliance with Florida Statutes 218.415 in regards to investments, Florida Statutes 28.35 and 28.36 in regards to certain court-related functions, and 61.181 in regards to operation of a depository for alimony and child support for the year ended September 30, 2016. Management is responsible for the Clerk’s compliance with those requirements. Our responsibility is to express an opinion on the Clerk’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Clerk’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Clerk’s compliance with specified requirements. In our opinion, the Clerk complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016.


35

MANAGEMENT LETTER

Honorable JD Peacock II Clerk of Circuit Court and Comptroller Okaloosa County, Florida Report on the Financial Statements We have audited the financial statements of each major fund and the aggregate remaining fund information of the Clerk of the Circuit Court and Comptroller of Okaloosa County, Florida (hereinafter referred to as “Clerk”) as of and for the fiscal year ended September 30, 2016, and the related notes to the financial statements, and have issued our report thereon dated March 24, 2017. Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Florida Auditor General. Other Reports We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants’ Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550 Rules of the Florida Auditor General. Disclosures in those reports which are dated March 24, 2017, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name of official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Clerk was established by the Constitution of the State of Florida, Article VIII, Section 1(e), as part of the primary government of Okaloosa County, Florida. There are no component units related to the Clerk.

36

Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Clerk, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. We greatly appreciate the assistance and cooperation extended us during our audit.


SHERIFF

PageExhibit/

Statement


Table of Contents i

FINANCIAL SECTION




4 II

5 III

6 IV

7 V

8 VI9 VII

10 VIII11 IX12 X



27 A-1

28 A-229 A-330 B-131 B-2

OTHER REPORTS

32

34



Combining Statement of Changes in Net Position - Agency Funds

TABLE OF CONTENTS

FISCAL YEAR ENDED SEPTEMBER 30, 2016SHERIFF

Governmental Funds

Budget and Actual - General Fund

Statement of Revenues, Expenses, and Changes in Net Position - Proprietary FundsStatement of Cash Flows - Proprietary FundsStatement of Fiduciary Net Position - Fiduciary Funds

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Law Enforcement Trust Fund

i





Statement of Net Position - Proprietary Funds

Combining Balance Sheet - Internal Service FundsCombining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service FundsCombining Statement of Cash Flows - Internal Service FundsCombining Statement of Fiduciary Net Position - Agency Funds

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Teen Driver Challenge Fund

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Second Dollar Program Fund

Independent Accountants' Report on Examination of ComplianceRequirements Performed in Accordance with Chapter 10.550, Rules of the Auditor General

1


The Honorable Larry Ashley Sheriff Okaloosa County, Florida Report on the Financial Statements We have audited the accompanying financial statements of each major fund, and the aggregate remaining fund information of the Office of the Sheriff of Okaloosa County, Florida (the “Sheriff”), as of and for the fiscal year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Sheriff’s basic financial statements, as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

2

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund, and the aggregate remaining fund information of the Sheriff, as of September 30, 2016, and the respective changes in financial position and cash flows, where applicable, thereof, and the respective budgetary comparison for the General Fund and Special Revenue Funds (Law Enforcement Trust Fund, Teen Driver Challenge Fund, and Second Dollar Program Fund) for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, the financial statements referred to above have been prepared solely for the purpose of complying with Rules of the Auditor General of the State of Florida. In conformity with the Rules, the accompanying financial statements are intended to present the financial position and changes in financial position of each major fund, and the aggregate remaining fund information of Okaloosa County, Florida that is attributable to the Sheriff. They do not purport to, and do not, present fairly the financial positon of Okaloosa County, Florida as of September 30, 2016, and the changes in its financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to these matters. Other Matters Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Sheriff’s financial statements. The accompanying combining and individual non major fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 27, 2017, on our consideration of the Sheriff’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters under the heading “Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards”. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Sheriff’s internal control over financial reporting and compliance.

Fort Walton Beach, Florida February 27, 2017

General FundLaw Enforcement

Trust Fund

Cash and Cash Equivalents 944,726$ 244,002$Due from Other Elected Officials 37,747 -Due from Other Governments 272,574 -

Total Assets 1,255,047$ 244,002$

LiabilitiesAccounts Payable 136,506$ -$Other Accrued Liabilities 328,264 -Due to Other Funds 96,358 -Due to Other Elected Officials 524,357 -Due to Other Governments 150,918 -Unearned Revenue 18,644 244,002

Total Liabilities 1,255,047 244,002

Fund BalanceUnassigned - -

Total Fund Balance - -

Total Liabilities and Fund Balance 1,255,047$ 244,002$

ASSETS

LIABILITIES AND FUND BALANCE

SheriffOkaloosa County, Florida

BALANCE SHEETGOVERNMENTAL FUNDS

September 30, 2016

Exhibit I

Teen Driver Challenge Fund

Second Dollar Program Fund

Total Governmental Funds

-$ -$ 1,188,728$- - 37,747- - 272,574

-$ -$ 1,499,049$

-$ -$ 136,506$- - 328,264- - 96,358- - 524,357- - 150,918- - 262,646

- - 1,499,049

- - -

- - -

-$ -$ 1,499,049$

3


General FundLaw Enforcement

Trust FundRevenuesMiscellaneous -$ 120,699$

Total Revenues - 120,699

ExpendituresCurrentPublic Safety 31,115,031 121,849 Court-Related 1,619,384 -

Capital Outlay 2,606,312 45,900

Total Expenditures 35,340,727 167,749

Excess (Deficiency) of RevenuesOver (Under) Expenditures (35,340,727) (47,050)

Other Financing Sources (Uses)Transfers Among Constitutional Officers 35,340,727 47,050

Total Other Financing Sources (Uses) 35,340,727 47,050

Net Change in Fund Balance - -

Fund Balance - Beginning - -

Fund Balance - Ending -$ -$




Exhibit II

Teen Driver Challenge Fund

Second Dollar Program Fund

Total Governmental Funds

-$ -$ 120,699$

- - 120,699

32,300 - 31,269,180 - - 1,619,384 - - 2,652,212

32,300 - 35,540,776

(32,300) - (35,420,077)

32,300 - 35,420,077

32,300 - 35,420,077

- - -

- - -

-$ -$ -$


4

Exhibit III



ExpendituresCurrentPublic Safety 30,857,215 31,455,539 31,115,031 340,508 Court-Related 1,820,087 1,843,802 1,619,384 224,418

Capital Outlay 1,806,251 2,075,740 2,606,312 (530,572)


Excess (Deficiency) of Revenues Over (Under) Expenditures (34,483,553) (35,375,081) (35,340,727) 34,354


34,483,553 35,375,081 35,340,727 (34,354)

34,483,553 35,375,081 35,340,727 (34,354)





5


Budgeted Amounts


Positive(Negative)






Exhibit IV

Original Final Actual AmountsRevenuesMiscellaneous 120,000$ 120,000$ 120,699$ 699$

Total Revenues 120,000 120,000 120,699 699


Capital Outlay 45,900 45,900 45,900 -


Excess (Deficiency) of Revenues Over (Under) Expenditures (55,949) (55,949) (47,050) 8,899


55,949 55,949 47,050 (8,899)

55,949 55,949 47,050 (8,899)




6


LAW ENFORCEMENT TRUST FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)




Exhibit V





Excess (Deficiency) of Revenues Over (Under) Expenditures (66,090) (66,090) (32,300) 33,790


66,090 66,090 32,300 (33,790)

66,090 66,090 32,300 (33,790)




7


TEEN DRIVER CHALLENGE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)




Exhibit VI




Total Expenditures - - - -

Excess (Deficiency) of Revenues Over (Under) Expenditures - - - -


- - - -

- - - -




8


SECOND DOLLAR PROGRAM FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES


Budgeted Amounts


Positive(Negative)




Exhibit VII



Current AssetsCash and Cash Equivalents 3,050,059$

Receivables, Net of Allowance for Uncollectible

Due from Other Funds 96,358

Total Assets 3,517,361$

Current LiabilitiesAccrued Liabilities

Compensated Absences 1,024,617$ Claims and Judgments 505,955

Total Current Liabilities 1,530,572

Noncurrent LiabilitiesOther Post Employment Benefits 4,414,940

Total Noncurrent Liabilities 4,414,940


Net PositionUnrestricted (Deficit) (2,428,151)

Total Net Position (2,428,151)

Total Liabilities and Net Position 3,517,361$

9

September 30, 2016



370,944

ASSETS



Exhibit VIII



Operating RevenuesCharges for Services 4,466,133$

Total Operating Revenues 4,466,133

Operating ExpensesPersonal Services 305,410 Contractual Services 358,235 Insurance Premiums and Claims 4,372,346

Total Operating Expenses 5,035,991

Operating Income (Loss) (569,858)

Nonoperating Revenues (Expenses)Investment Income 5,699


Change in Net Position (564,159)

Total Net Postion (Deficit) - Beginning (1,863,992)

Total Net Position (Deficit) - Ending (2,428,151)$

10




(564,159)


EXHIBIT IX

GovernmentalActivitiesInternal

Service FundsCASH FLOWS FROM OPERATING ACTIVITIES

Receipts from Interfund Services Provided 4,114,304$Payments to Suppliers (4,818,906)

Net Cash Provided (Used) by Operating Activities (704,602)

CASH FLOWS FROM INVESTING ACTIVITIESInterest Earnings 5,699

Net Increase (Decrease) in Cash and Cash Equivalents (698,903)Cash and Cash Equivalents - Beginning of Year 3,748,962

Cash and Cash Equivalents - End of Year 3,050,059$


Operating Income (Loss) (569,858)$

Adjustments to Reconcile Operating Income (Loss) to Net CashProvided (Used) by Operating Activities

Increase in AssetsReceivables (370,829)Due from General Fund (38,679)

Increase (Decrease) in LiabilitiesAccounts Payable (6,868)Compensated Absences Payable 96,358Claims and Judgments Payable (81,457)Other Post Employment Benefits 266,731

Net Cash Provided (Used) by Operating Activities (704,602)$


11




Exhibit X

Agency Funds


Total Assets 10,299

Due to Other Elected Officials 5,890Due to Depositors 4,409

Total Liabilities 10,299

NET POSITION -$

12

ASSETS

LIABILITIES

Sheriff

September 30, 2016FIDUCIARY FUNDS





13


The Sheriff is an elected official established pursuant to the Constitution of the State of Florida. The Sheriff is elected by the citizenry at-large and functions independently of the Board of County Commissioners of Okaloosa County, Florida.

The financial statements of the Sheriff have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. The Sheriff uses the Uniform Accounting System (UAS) mandated by Chapter 218.33, Florida Statutes.

The following is a summary of the more significant accounting policies of the Sheriff of Okaloosa County, Florida.


The Sheriff is part of the legal entity of Okaloosa County, Florida and is, therefore, reported as part of the primary government. The Sheriff’s individual financial statements do not purport to reflect the financial position or the results of operations of the primary government of Okaloosa County, Florida taken as a whole. The combined financial statements of the primary government of Okaloosa County, Florida include the individual statements of the following elected officials and those of separately administered organizations that are controlled by or are dependent upon the County.



B. Basis of Presentation - Fund Financials Statements

The financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of the fund level only financial statements an permit omission of entity-wide full accrual financial statements and management’s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Okaloosa County, Florida, that relate to transactions of the Sheriff and are not intended to present the financial position and changes in financial position of Okaloosa County, Florida.

The Sheriff segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. A fund is a fiscal and accounting entity with a self-balancing set of accounts. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. The emphasis of fund financial statements is on major governmental funds. The only governmental fund of the Sheriff is the General Fund.

Exchange transactions are those in which each party receives and gives up essentially equal values. An example of an exchange transaction is a purchase of equipment in exchange for cash or in exchange for another asset such as an used car. Non-exchange transactions are those in which the Sheriff gives (or receives) value without directly receiving (or giving) equal value in exchange. An example of a non-exchange transaction is the fines revenue received by the Sheriff from specific citizens which is used to fund various police services provided to the citizens of the County. The revenue from these exchange and non-exchange transactions are recognized in the financial statements in varying ways depending on the basis of accounting used.



14



2. Governmental Fund Financial StatementsGovernmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. Governmental fund financial statements are reported using the modified accrual basis of accounting. Under this method, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Sheriff considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. Those revenues susceptible to accrual are fines, charges for service, and intergovernmental revenue.


3. Proprietary and Fiduciary Fund Financial Statements The proprietary fund financial statements are reported using the economic resources measurement focus. Under

this measurement focus, all assets and all liabilities associated with the operation of the fund are included on the balance sheet. The statement of revenue, expenses and changes in equity reports revenues and expenses. The proprietary funds are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.


Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. The principal operating revenues for the proprietary funds are fees and charges for self-insurance, and compensated absences internal service operations. Operating expenses for the internal service funds include the cost of providing services and administrative expenses.

Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. On an accrual basis, revenue from interest is recorded when earned. The only fiduciary funds of the Sheriff are agency funds and as such do not record revenues and expenses.

4. Financial Statement Presentation The Sheriff reports the following major governmental funds:

General Fund This is the Sheriff’s primary operating fund. It accounts for all financial resources of the general




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Law Enforcement Trust Fund This fund is used to account for confiscated merchandise and funds and is expended for Law

Enforcement Purposes. Funds cannot be used for normal operating expenses.

Teen Challenge Driver Fund This fund is used to account for revenues restricted by the Florida Sheriffs Association and is expended

to support a new safety program for teen drivers. Funds cannot be used for normal operating expenses.

Second Dollar Program Fund This fund is used to account for revenues restricted from local County moving violation tickets and is

expended to support a new safety program for teen drivers. Funds cannot be used for normal operating expenses.

The Sheriff reports the following fund types:

Internal Service Fund These funds account for the funding of short-term compensated absence debt provided to the general

fund of the Sheriff on a cost reimbursement basis and for risks from medical benefit claims of the self-funded health insurance plan.

Agency Funds These funds account for monies held on behalf of individuals and companies. The funds account for the

collection and disbursement of statutory fees for services performed by the Sheriff or monies collected and disbursed pursuant to levies.

D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Balance

1. Deposits and Investments Sections 28.33, 218.415, and 219.075, Florida Statutes, require the investment of surplus public funds and

prescribe the instruments in which those investments are authorized, specifically the State of Florida Local Government Surplus Funds Trust Fund; SEC registered money market funds with the highest credit quality rating; interest-bearing time deposits or savings accounts in qualified public depositories as defined in s. 280.02; direct obligations of the United States Treasury, federal agencies and instrumentalities; and securities of or other interest in certain investment companies or investment trusts the portfolio of which is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such obligations. Because the County has adopted written investment policies as provided in subsection (1) through (15) of s. 218.415, other investments may be authorized by resolution or ordinance. Currently authorized are investments in term repurchase agreements with primary broker/dealers collateralized in the County’s name by securities of the United States Government or any agency or instrumentality thereof; overnight repurchase agreements with collateral held by the custodian bank or its trust department; tax exempt bonds, notes or obligations rated in the two highest classifications; inventory-based domestic bankers’ acceptances eligible to qualify for use as collateral at the Federal Reserve Bank; SEC registered open-end mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities; and Florida Local Government Investment Trust. The Sheriff adheres strictly to the provisions of those cited Statutes and investments authorized by resolution or

ordinance, as well as with Chapter 517, Florida Statutes, which established registration procedures for securities and dealers. Investments are reported at fair value.



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The Sheriff maintains separate cash account available for use by all funds. Each account is displayed on the balance sheet as “cash and cash equivalents.” For purposes of these statements, all highly liquid investments with maturity of ninety days or less when purchased are considered to be cash equivalents.

2. Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or

services rendered. These receivables and payables are classified as “due from other funds or elected officials” or “due to other funds or elected officials” on the balance sheet. Short-term interfund loans are also classified as “inter-fund receivables/payables.”

The Sheriff maintains no allowance for uncollectible trade accounts. Accounts receivable write offs are insignificant.


Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. The Sheriff’s capitalization level is $1,000 on tangible personal property and $5,000 on building improvements. Other costs incurred for repairs and maintenance are expensed as incurred.

Depreciation on all assets is provided on the government-wide statement of activities of Okaloosa County using the straight-line basis over the following estimated useful lives:

Assets YearsEquipment 3-7Vehicles 2-15

Building Improvements 20

4. Compensated Absences The liability for compensated absences reported in the governmental and proprietary fund statements consists

of unpaid, accumulated annual and sick leave balances. A liability for these amounts is reported in governmental funds financial statements only if they have matured, for example, as a result of employee resignations and retirements. The liability is accrued when incurred in the proprietary fund financial statements. The Sheriff uses an internal service fund to accumulate the resources to fund the short-term portion of this compensated absences liability. Long-term liability is reported on the government-wide statement of net assets of Okaloosa County.

5. Unearned Revenues Unearned revenues include amounts collected before revenue recognition criteria are met. Expenditure driven

grants (to include forfeiture funds) are reported as unearned at the end of the fiscal year.



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D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Balance - Continued

6. Deferred outflows/inflows of resources In additions to assets, deferred outflows of resources represent a consumption of fund balance that applies to a

future period(s) and will not be recognized as an outflow of resources (expenditure) until then.

In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

No such items were applicable to the Sheriff as of September 30, 2016.

7. Fund Balance Governmental funds report zero or deficit unassigned fund balance at year end as all excess appropriations must

be returned to the Board of County Commissioners The Sheriff in its general fund presents nonspendable fund balance for prepaid items which is offset by the deficit residual unassigned fund balance. When both restricted and unrestricted resources are available for use, it is the policy of the Sheriff to use restricted resources first, and then unrestricted resources as they are needed.




A. Budget Information

Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for all governmental funds. All appropriations lapse at fiscal year end.


On or about June 1 of each year, proposed budgets are received by the Board of County Commissioners from its department heads, from the Supervisor of Elections and Sheriff, and from other agencies requesting funding for the ensuing fiscal year. These proposed expenditures, along with all estimated receipts, taxes to be levied, and balances expected to be brought forward are considered by the Board of County Commissioners in a series of workshops beginning on or after July 15. The Board of County Commissioners requires such changes as deemed necessary, sets proposed millages and establishes dates for tentative and final public budget hearings as prescribed by Florida Statutes.


In the event the final budget has not been adopted by October 1, the beginning of the fiscal year, Florida Statutes provide for expenditures based on the adopted tentative budget or the Board re-adopts its prior year’s adopted final budget, as amended, and expends monies based on that budget until such time as its tentative budget is adopted pursuant to law. The final budget is adopted by resolution of the Board of County Commissioners.



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NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED

The level of budgetary control (that is the level at which expenditures cannot legally exceed appropriations) has been established at the fund level. The County Administrator is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must approve any revisions that alter the total expenditures of any fund. The Supervisor of Elections and Sheriff is authorized to make line item transfers but must request approval from the Board for increases in appropriations.

Budget amounts are originally adopted amounts as amended by action of the Board of County Commissioners by revision of fund totals. Supplemental budgetary appropriations of $891,528 representing a 2.6% increase over the original adopted budget were necessary during the fiscal year.

B. Deficit Fund Equity

The Sheriff’s Self-Insurance Fund is reflecting a deficit fund equity of $2,428,151. This is the result of the implementation of GASB 45 which requires the unfunded liability for future employee benefits (OPEB) to be recorded at September 30, 2016.


The Sheriff maintains its deposits only with qualified public depositories as defined in Chapter 280, Florida Statutes. The provisions of this statute generally require public funds to be deposited in a bank or savings association designated by the State Chief Financial Officer as a “Qualified Public Depository”. All qualified public depositories must maintain deposit insurance. They also must place with or in the name of the Chief Financial Officer of the State of Florida, collateral in the amount of the greater of the average daily balance of public deposits multiplied by the average monthly balance of public deposits or 125% of the average daily balance of public deposits greater than capital. Collateral requirements may be increased according to statute if specified conditions exist. Eligible collateral includes federal, federally-guaranteed, state and local government obligations and corporate bonds. In the event of default by a qualified public depository excess losses over insurance and collateral will be recovered through assessments to all qualified public depositories of the same type as the depository in default. Under this method, all Sheriff deposits, including certificates of deposit, are considered fully insured.

State Statutes restrict the types of investments that can be made by Okaloosa County and its agencies. A description of the requirements and the types of investments allowed as well as information about valuation and other investment policies can be found in Note 1.D.1. The Sheriff maintained no investment accounts during the fiscal year ended September 30, 2016.


At the end of the current fiscal year, the various components of unearned revenue reported in the governmental funds were as follows:

UnearnedGeneral Fund

Other 18,644$ Nonmajor Fund

Federal Forfeitures 244,002 Total Unearned Revenue 262,646$



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NOTE 5 - CAPITAL ASSETS

The following capital asset activity for the Sheriff of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016.

Beginning EndingBalance Increases Decreases Transfers Balance

Governmental activities:Capital assets, being depreciated:

Building improvements 614,917$ 42,144$ (160,085)$ -$ 496,976$ Machinery and equipment 15,610,260 2,610,068 (897,225) - 17,323,103 Total Capital assets, being depreciated 16,225,177 2,652,212 (1,057,310) - 17,820,079

Less accumulated depreciation for:Building improvements (16,210) (29,029) 5,336 - (39,903)

Machinery and equipment (12,414,226) (1,308,402) 873,796 - (12,848,832) Total accumulated depreciation (12,430,436) (1,337,431) 879,132 - (12,888,735)

Governmental activities capital assets, net 3,794,741$ 1,314,781$ (178,178)$ -$ 4,931,344$


Governmental activities: Public safety 1,337,431$


The Sheriff maintains a policy providing for annual vacation and sick leave pay for all full-time non-exempt employees. Employees are allowed to accumulate unlimited time; however, upon separation the employee will receive compensation only for any unused annual leave up to a maximum of 240 hours. Annual vacation leave for full-time non-exempt employees is calculated as follows:

Years of Service Accrual Rate

Less than five (5) years (8) hours per calendar monthFive (5) to ten (10) years (10) hours per calendar monthTen (10) and more years (12) hours per calendar month

Sick leave for non-exempt employees is accrued at eight hours per month. Unused accrued leave is carried over from year to year. Employees terminating after ten years of service are compensated for unused sick leave up to a maximum of 100 hours. Certain employees are also eligible to bank over time hours for future leave up to 120 hours.

Vacation leave for exempt employees is accrued at 176 hours annually and sick leave for exempt employees is accrued at 104 hours annually.

An employee who meets eligibility requirements receives up to 12 weeks of leave, paid and /or unpaid in accordance with the federal Family Medical Leave Act of 1993 guidelines.

The vested portion of accumulated annual leave for the Sheriff as of September 30, 2016 follows:



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Current Long-TermPortion Portion Totals

Annual Leave 1,024,617$ 1,444,340$ 2,468,957$

The compensated absences internal service fund, established in 2004, was designated to record and accumulate funds for the estimated short term liability related to OCSO compensated absences policies



Receivable Fund Payable Fund Amount PurposeOther Funds Internal Service General 96,358$ Internal servicesOther Elected Officials General Board of County Commissioners 37,747$ Grant revenue Board of County Commissioners General (34,709) Excess appropriations Board of County Commissioners General (489,648) Reimbursements Board of County Commissioners Fiduciary Fund Type (5,890) Court feesTotal (492,500)$

Interfund transfers:Transfer In Transfer Out Amount Purpose

Other Elected Officials General Board of County Commissioners 34,385,708$ Budget appropriations General Board of County Commissioners 955,019 Grant appropriations Law Enforcement Trust Fund Board of County Commissioners 47,050 Appropriations Teen Driver Challenge Board of County Commissioners 32,300 AppropriationsTotal 35,420,077$


The following long-term debt activity for the Sheriff of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016.

Balance DueOctober1, 2015 Increases Decreases

Balance DueSeptember30, 2016

Due WithinOne Year

Governmental Activities: Accrued Compensated Absences 2,320,647$ 148,310$ -$ 2,468,957$ 1,024,617$ Estimated Claims Payable 587,412 - (81,457) 505,955 - Net OPEB Obligation 4,148,209 266,731 - 4,414,940 - Total Governmental Activities Long-Term Debt 7,056,268$ 415,041$ (81,457)$ 7,389,852$ 1,024,617$



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Internal service funds predominantly serve the governmental funds. Accordingly, liabilities for them are included as part of the above totals for governmental activities. At year end $2,468,957 of internal service fund compensated absences, $505,955 of internal service fund estimated claims payable, $4,14,940 of internal service fund net OPEB obligations are included in the above amounts.

The short term portion of compensated absences typically have been liquidated in the general fund while the estimated claims and OPEB obligations are liquidated from the internal service self-insurance fund.


The Sheriff participates in the Florida Retirement System (FRS) which is a cost sharing multiple employer contributory retirement system administered by the State of Florida (State). The FRS was established in 1970 by Chapter 121, Florida Statutes. In 2002 the FRS was amended to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. Chapter 112, Florida Statutes established the Retiree Health Insurance Subsidy (HIS) Program, a cost–sharing multiple employer defined benefit pension plan to assist retired members of any state- administered retirement system in paying the cost of health insurance.




850-907-6500 or toll free 844-377-1888

There are six classes of membership applicable to the Sheriff. Members are eligible for normal retirement when they have met the requirements listed below. Early retirement may be taken any time after vesting within 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each year prior to the normal retirement age.


Special Risk Class and Special Risk Administrative Support Class Members – For members initially enrolled in the FRS before July 1, 2011, six or more years of Special Risk Class service and age 55, or the age after completing six years of Special Risk Class service if after age 55. Twenty- five years of special risk service regardless of age before age 55. A total of 25 years of service including special risk service and up to four years of active duty wartime service and age 52. Without six years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class. For members initially enrolled in the



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FRS on or after July 1, 2011, eight or more years of Special Risk Class service and age 60, or the age after completing eight years of Special Risk Class service if after age 60. Thirty years of special risk service regardless of agebefore age 60. Without eight years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class.


FRS Membership and Plan Benefits - The FRS Pension Plan provides retirement and disability benefits, deathbenefits and survivor’s benefits. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are established by State Statutes. Retirement benefits are based on a formula comprised of age, average compensation, length of FRS service, and membership class. Average compensation is computed as the average of an individual’s five highest years of earnings for employees hired before July 1, 2011 or eight highest years of earnings for employees hired on or after July 1, 2011. The amount of benefit payments is also affected by the retirement income option chosen by the plan participant.



HI S Membership and Plan Benefits - The HIS membership is available to all members within the FRS and defined contribution Investment Plan. The benefit is a monthly payment to assist retirees of the state- administered retirement systems 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 $160 per month, pursuant to section 112.363 Florida Statutes. To be eligible to receive a HIS benefit, a retiree under one of the state- administered retirements systems must provide proof of eligible health insurance coverage, which can include Medicare.

Contribution Requirements -The Sheriff is required to contribute at an actuarially determined rate; these rates are a percent of annual covered payroll. Employees are required to contribute 3% of their annual salary, while members participating in DROP are not required to make the 3% contribution. The Sheriff’s contractually required contribution rate includes the HIS contribution, .06% administrative and educational fee and any applicable unfunded actuarial liability “UAL” rates. The HIS required contribution rate is 1.66% for the 2015 and 2016 FRS plan years. This contribution when combined with the employee contribution is expected to finance the cost of the benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Descriptions andcontribution rates in effect during the period ended September 30, 2016 and two preceding FRS fiscal years are as follows:



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September 30, 2016

June 30, 2016

June 30, 2015

June 30, 2014


For the years ending September 30, 2016, 2015, 2014, the Sheriff contributed $3,452,672, $3,027,745, and $2,755,244 respectively, equal to 100% of the required contributions for each year.



The Sheriff has a net FRS pension liability determined in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This long-term liability is only reported in the county-wide financial statements and is not a current liability of the General Fund. All required disclosures and schedules may be found in the county-wide financial statements of Okaloosa County, Florida.

NOTE 10- POSTEMPLOYMENT BENEFITS

Background Certain Other Post-Employment Benefits (OPEB) are available to all employees eligible for disability, early or normal

retirement after terminating employment with Okaloosa County Sheriff’s Office (OCSO). The OPEB benefits include lifetime coverage for the retiree and dependents in the medical/prescription plans as well as participation in the dental group plan sponsored by the Sheriff’s Office for employees. Beginning in fiscal year 2008, the Sheriff implemented Governmental Accounting Standards Board (GASB) Statement No. 45 for the OPEB offered to retirees. This standard addresses how local governments should account for and report their costs related to post-employment health care and other non-pension benefits, such as the Sheriff’s retiree health benefit subsidy.

Historically, the Sheriff’s subsidy was funded on a pay-as-you-go basis but GASB 45 requires the Sheriff to accrue the cost of the retiree health subsidy and other post-employment benefits during the period of employees’ active employment, while the benefits are being earned, and disclose the unfunded actuarial accrued liability in order to accurately account for the total future cost of post-employment benefits and the financial impact on the Sheriff.

Plan Description The OCSO administers a single-employer defined benefit healthcare plan (“the Plan”). The Plan provides healthcare

insurance for eligible retirees and their spouses through the Sheriff’s group health insurance plan, which covers both active and retired members. Employer contribution rates for retirees vary based on the type of retirement, years of service, and type of coverage. The Plan does not issue a publicly available financial report but OPEB expenses are reflected in the Sheriff’s internal service fund within the County’s Comprehensive Annual Financial Report (CAFR).



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NOTE 10- POSTEMPLOYMENT BENEFITS - CONTINUED

Benefits Provided Eligible retirees may choose among the same medical plan options available for active employees of the employer. Dependents of retirees may be covered, at the retiree’s option, the same as dependents of active employees. Prescription drug coverage is automatically extended to retirees and their dependents who continue coverage under any one of the medical plan options. Covered retirees and their dependents are subject to all the same medical and prescription benefits and rules for coverage as are active employees. Retirees and their dependents are eligible to participate in the employer-sponsored dental plans. Retirees may elect any combination of plans (i.e. only dental, medical/prescription, etc.). Retirees and their dependents that are over age 65 must enroll for Parts A and B under Medicare in order to remain covered under the program. All post-65 medical coverage is secondary to Medicare.

Membership At September 30, 2016, membership consisted of:

Retirees and Beneficiaries Currently Receiving Benefits 41 Terminated Employees Entitled to Benefits But Not Yet Receiving Them - Active Employees 388 Total 429 Participating Employers 1

Funding Policy Retirees and beneficiaries currently receiving medical/prescription benefits are required to make monthly premium

contributions in order to maintain their coverage. The single retiree premium is paid by the OCSO for retirees with at least 20 years of service, until the retiree reaches age 65. Effective October 1, 2010 that benefit is no longer available except to retirees that met the criteria as of September 30, 2010. Effective June 2011 the OCSO instituted a policy whereby retiring members with thirty years of service with the agency will receive a 50% premium subsidy on their retired employee coverage. This subsidy is limited to five years from their retirement date or until they reach age 65, whichever comes first. Dependent coverage is paid by the retiree. The amount of the premium contribution may change from time to time. Surviving spouses of retirees are eligible to continue coverage under the plan, but must continue to pay the full premium. However, the premiums for health coverage for surviving spouses and any dependent children of officers who had sustained catastrophic injuries or death in the line of duty are paid fully by the OCSO as prescribed by FS Sec 112.19(g) and 112.19(h)1.

Annual OPEB Costs and Net OPEB Obligation The Sheriff’s annual OPEB cost (expense) is the actuarially required contribution (ARC) of the employer determined in accordance with the provisions of GASB Statement 45. The ARC represents a level of funding that, if paid on an on-going basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a closed period not to exceed 25 years. The following shows the components of the Sheriff’s net OPEB obligation as of September 30, 2016:

Annual Required Contribution 487,472$ Interest on Prior Year Net OPEB Obligation 165,928 Adjustment to Annual Required Contribution (188,555) Annual OPEB Costs 464,845 Estimated Employer Contributions made 198,114 Increase (Decrease) in Net OPEB Obligation 266,731 Net OPEB Obligation , Beginning of Year 4,148,209 Estimated Net OPEB Obligation, End of Year 4,414,940$



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NOTE 10- POSTEMPLOYMENT BENEFITS - CONTINUED

Annual OPEB Costs and Net OPEB Obligation - Continued The Sheriff’s annual OPEB cost (expense) was $464,845 for the year ended September 30, 2016. The Sheriff’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2016 and the prior two (2) years were as follows:

FiscalYear Ended

AnnualOPEB Costs

Estimated Amount

Contributed


Net OPEBObligation



Covered Payroll

9/30/2014 $356,813 $178,290 49.96% $4,006,350 17,466,290$ 22.94%9/30/2015 $377,890 $236,031 62.46% $4,148,209 17,466,290$ 23.75%9/30/2016 $464,845 $198,113 42.62% $4,414,940 14,482,863$ 30.48%

Funded Status and Funding Progress As of July 1, 2013, the most recent actuarial valuation date, the actuarial accrued liability of benefits of $3,400,380 was unfunded. Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARCs of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to financial statements in the government-wide financial statements of Okaloosa County, Florida, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.


In the July 1, 2013, actuarial valuation, the individual entry age normal cost method was used. The actuarial assumptions included a 4.0% investment rate of return, which is a blended rate of the expected long-term investment returns on the employer’s own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 7.3% initially, reduced by decrements to reach 5% in 2018 and increase to the ultimate level of 5.5% in 2023. The Unfunded Actuarial Liability (UAAL) is being amortized assuming 30 level annual payments. The remaining amortization period at September 30, 2016, was 23 years.


The Sheriff is exposed to risk of loss for claims and judgments for public liability, workers’ compensation, and other special risks. Public liability and special risks are covered by commercial insurance policies which are accounted for in the Sheriff’s general fund. The Sheriff bears no risk of loss under this type of coverage. There has been no significant reduction in insurance coverage from the prior fiscal year. Insurance coverage has been sufficient to cover all claims made in the prior three fiscal years. The Sheriff participates in the Florida Sheriff’s Association Workers’ Compensation Program. It is a fully insured, guaranteed cost program with a deductible trust fund and insurance with a commercial carrier. The Sheriff retains no risk.



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The Sheriff utilizes a self-funded health plan to provide comprehensive medical benefits to the employees, retirees and their dependents. It is funded by contributions from the Sheriff’s Office and employees. In compliance with Florida Statute, Section 112.08, an actuarial review of the Plan demonstrates that the current rate structure of the Plan plus the current net assets available for benefits appears adequate to support current outstanding claims as well as those projected claims and expenses for the next plan year.

Excess insurance is purchased from a commercial carrier to provide a specific claim and aggregate limits coverage. Specific claim coverage benefits the covered individual by providing unlimited coverage to begin when a specific claim exceeds $105,000 plus an additional corridor of $296,500. Aggregate limits coverage limits the Sheriff’s total risk exposure. This coverage provides the Sheriff with an additional $1,000,000 in coverage for the coverage year when the costs of total claims paid less the total paid under the specific claim excess coverage exceeds 125% of the expected claims for the current plan year.

The Sheriff uses an internal service fund to account for risks from medical benefit claims. Claim expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. At September 30, 2016, the amount of these liabilities was $505,955. This liability has been determined based on an actuarial evaluation of all claims reported and all claims incurred but not reported (IBNR) as of September 30, 2016. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors.

Reconciliation of Claims Liablities for Medical Benefits As of As ofSeptember 30, 2016 September 30, 2015

Unpaid claims and adjustment expenses at beginning of year $ 587,412 $ 735,652 Incurred claims and claim adjustment expenses A) Provision for insured events of current fiscal year 4,372,346 4,333,541 B) Increases (decreases) in provision for insured events of prior fiscal years - - Total incurred claims and claim adjustment expenses 4,959,758 5,069,193 Payments A) Claims and claim adjustment expenses attributable to insured events of current fiscal year 4,453,803 4,481,781 B) Claims and claim adjustment expenses attributable to insured events of prior fiscal year - - Total payments 4,453,803 4,481,781 Unpaid claims and claim adjustment expenses at end of year $ 505,955 $ 587,412

This fund is used to accumulate and fund the short-term portion of compensated absenceliability for the Sheriff.

This fund is used to account for premiums and claims associated with the provision of self-insurance of health benefits for the Sheriff and to record the liability for other postemployment benefits provided to the retirees of the Sheriff.

Internal service funds are used to account for the financing of goods or services provided by onedepartment or agency to other departments or agencies of the Sheriff, on a cost reimbursement basis.


Compensated Absences Fund

Health Benefits Self Insurance Fund

Statement A-1

CompensatedAbsences

Health BenefitsSelf Insurance

Total InternalService Funds

Current AssetsCash and Cash Equivalents 928,259$ 2,121,800$ 3,050,059$ Receivables, Net of Allowance

for UncollectibleDue from Other Funds 96,358 - 96,358

Total Current Assets 1,024,617$ 2,492,744$ 3,517,361$


Accounts Payable -$ -$ -$ Accrued Liabilities

Compensated Absences 1,024,617 - 1,024,617 Claims and Judgments - 505,955 505,955

Total Current Liabilities 1,024,617 505,955 1,530,572

Noncurrent LiabilitiesOther Post Employment Benefits - 4,414,940 4,414,940

Noncurrent Liabilities - 4,414,940 4,414,940

Total Liabilities 1,024,617 4,920,895 5,945,512

Net PositionUnrestricted (Deficit) - (2,428,151) (2,428,151)

Total Net Position - (2,428,151) (2,428,151)

Total Liabilities and Net Position 1,024,617$ 2,492,744$ 3,517,361$

370,944

ASSETS


370,944 -

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September 30, 2016


INTERNAL SERVICE FUNDSCOMBINING BALANCE SHEET

Statement A-2

CompensatedAbsences



Operating RevenuesCharges for Services 38,679$ 4,427,454$ 4,466,133$

Total Operating 38,679 4,427,454 4,466,133

Operating ExpensesPersonal Services 38,679 266,731 305,410 Contractual Services - 358,235 358,235 Insurance Premiums and Claims - 4,372,346 4,372,346

Total Operating Expenses 38,679 4,997,312 5,035,991

Operating Income (Loss) - (569,858) (569,858)

Nonoperating Revenues (Expenses)Investment Income - 5,699 5,699


Change in Net Assets - (564,159) (564,159)

Total Net Position (Deficit) - Beginning - (1,863,992) (1,863,992)

Total Net Position (Deficit) - Ending -$ (2,428,151)$ (2,428,151)$

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COMBINING STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET ASSETS


(564,159) (564,159) -


Statement A-3

CompensatedAbsences



CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Interfund Services Provided 57,679$ 4,056,625$ 4,114,304$ Payments to Suppliers - (4,818,906) (4,818,906) Net Cash Provided (Used) by Operating Activities 57,679 (762,281) (704,602)

CASH FLOWS FROM INVESTING ACTIVITIESInterest Income - 5,699 5,699

Net Increase (Decrease) in Cash and Cash Equivalents 57,679 (756,582) (698,903) Cash and Cash Equivalents - Beginning of Year 870,580 2,878,382 3,748,962

Cash and Cash Equivalents - End of Year 928,259$ 2,121,800$ 3,050,059$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating ActivitiesOperating Income (Loss) -$ (569,858)$ (569,858)$

Provided (Used) by Operating ActivitiesIncrease in AssetsReceivables - (370,829) (370,829)Due from General Fund (38,679) - (38,679)

Increase in LiabilitiesAccounts Payable - (6,868) (6,868) Compensated Absences Payable 96,358 - 96,358 Claims and Judgments Payable - (81,457) (81,457) Other Post Employment Benefits - 266,731 266,731

Net Cash Provided (Used) by Operating Activities 57,679$ (762,281)$ (704,602)$

29


INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWS


Adjustments to Reconcile Operating Income (Loss) to Net Cash

This fund is used to account for the collection and disbursement of statutory fees for servicesperformed by the Sheriff.

This fund is used to account for monies collected and disbursed pursuant to levies.

Agency funds are used to account for assets held by the Sheriff of Okaloosa County as agent for individuals, private organizations, other governments, and/or other funds.

AGENCY FUNDS

Individual Depositors Fund

Suspense (Levies) Fund

Statement B-1

IndividualDepositors

Suspense(Levies) Total

Cash and Cash Equivalents 5,890$ 4,409$ 10,299$

Due to Other Elected Officials 5,890 - 5,890 Due to Depositors - 4,409 4,409

Total Liabilities 5,890 4,409 10,299

NET POSITION -$ -$ -$

30

ASSETS

LIABILITIES

Sheriff

September 30, 2016COMBINING STATEMENT OF FIDUCIARY NET POSITION

AGENCY FUNDSOkaloosa County, Florida

Statement B-2

BalancesOctober 1,



2016

INDIVIDUAL DEPOSITORS AGENCY FUNDASSETS


LIABILITIESDue to Other Elected Officials 7,230$ -$ 1,340$ 5,890$

SUSPENSE (LEVIES) AGENCY FUNDASSETS


LIABILITIESDue to Depositors 10,451$ -$ 6,042$ 4,409$

TOTAL - ALL AGENCY FUNDSASSETS


LIABILITIESDue to Other Elected Officials 7,230$ -$ 1,340$ 5,890$ Due to Depositors 10,451 - 6,042 4,409

Total Liabilities 17,681$ -$ 7,382$ 10,299$

31




Other Reports

32

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF


The Honorable Larry Ashley Sheriff Okaloosa County, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of each major fund, and aggregate remaining fund information of the Office of the Sheriff of Okaloosa County, Florida (the “Sheriff”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Sheriff’s basic financial statements, and have issued our report thereon dated February 27, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Sheriff’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Sheriff’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Sheriff’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

33

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Sheriff’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Sheriff’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this report is not suitable for any other purpose.

February 27, 2017 Fort Walton Beach, Florida

34

INDEPENDENT ACCOUNTANTS’ REPORT The Honorable Larry Ashley Sheriff Okaloosa County, Florida We have examined the Office of the Sheriff of Okaloosa County, Florida’s (the “Sheriff”) compliance with Section 218.415, Florida Statutes, in regards to investment policies during the year ended September 30, 2016. Management is responsible for the Sheriff’s compliance with those requirements. Our responsibility is to express an opinion on the Sheriff’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Sheriff’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Sheriff’s compliance with specified requirements. In our opinion, the Sheriff complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016. This report is intended solely for the information and use of the Florida Auditor General and the Sheriff and is not intended to be and should not be used by anyone other than these specified parties.


35

MANAGEMENT LETTER

The Honorable Larry Ashley Sheriff Okaloosa County, Florida Report on the Financial Statements We have audited the financial statements of the Sheriff of Okaloosa County, Florida (the “Sheriff”), as of and for the fiscal year ended September 30, 2016, and have issued our report thereon dated February 27, 2017. Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and Chapter 10.550, Rules of the Auditor General. Other Reports We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants’ Report on examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated February 27 2017, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. No recommendations were made in the preceding annual report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Sheriff of Okaloosa County, Florida was established by the Constitution of the State of Florida, Article VIII, Section 1(e), as part of the primary government of Okaloosa County, Florida. There are no component units related to the Sheriff of Okaloosa County. Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

36

Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that has occurred, or is likely to have occurred, that has an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Sheriff, and the Okaloosa County Board of County Commissioners, and is not intended to be and should not be used by anyone other than these specified parties. We greatly appreciate the assistance and cooperation extended us during our audit.


TAX COLLECTOR

PageExhibit/

Statement


Table of Contents i

FINANCIAL SECTION




4 II

5 III6 IV

7 V8 VI9 VII


Individual Fund Statements and Schedules

22 A-1

OTHER REPORTS

23

25


Statement of Cash Flows - Proprietary Fund

TAX COLLECTOROKALOOSA COUNTY, FLORIDA

TABLE OF CONTENTS


i

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards




Statement of Fiduciary Net Position - Fiduciary Fund

Statement of Changes in Net Position - Agency Fund

Governmental Fund

Budget and Actual - General Fund


Statement of Net Position- Proprietary FundStatement of Revenues, Expenses, and Changes in Net Position - Proprietary Fund

1


Honorable Benjamin F. Anderson Tax Collector Okaloosa County, Florida Report on the Financial Statements We have audited the accompanying financial statements of each major fund, and the aggregate remaining fund information of the Office of the Tax Collector of Okaloosa County, Florida (“Tax Collector”), as of and for the fiscal year ended September 30, 2016, as listed in the table of contents, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

2

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund, and the aggregate remaining fund information for the Tax Collector as of September 30, 2016, and the respective changes in financial position thereof, and the respective budgetary comparisons for the General Fund for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, the financial statements referred to above have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida. In conformity with the Rules, the accompanying financial statements are intended to present the financial position and changes in financial position of each major fund, and aggregate fund information of Okaloosa County, Florida that is attributable to the Tax Collector. They do not purport to, and do not, present fairly the financial positon of Okaloosa County, Florida as of September 30, 2016 and the changes in its financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements. The accompanying individual non-major fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and related directly to the underlying accounting and other records used to prepare the special-purpose financial statements. The information has been subjected to the auditing procedures applied in the audit of the special-purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special-purpose financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the special-purpose financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report on our consideration of the Tax Collector’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters included under the heading “Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards”. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.


Exhibit I

General Fund

Cash and Cash Equivalents 424,937$ Due from Other Elected Officials 570

Total Assets 425,507$

LiabilitiesAccounts Payable 82,969$ Other Accrued Liabilities 146,432 Due to Other Elected Officials 187,781 Due to Other Governments 3,231 Due to Depositors 5,094


Fund Balance -

Total Liabilities and Fund Balance 425,507$

3

ASSETS



Tax Collector

September 30, 2016GOVERNMENTAL FUND


Exhibit II

General FundRevenues

Charges for Services 6,216,459$Miscellaneous 282,160

Total Revenues 6,498,619

ExpendituresCurrent

General Government 5,749,953 Capital Outlay 326,440 Debt Service

Principal 305,232 Interest 93,236

Total Expenditures 6,474,861

Excess (Deficiency) of RevenuesOver (Under) Expenditures 23,758

Other Financing Sources (Uses)Transfers Among Constitutional Officers (23,758)

Total Other Financing Sources (Uses) (23,758)

Net Change in Fund Balance -

Fund Balance - Beginning -

Fund Balance - Ending -$


4


Tax CollectorOkaloosa County, Florida

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEGOVERNMENTAL FUND

Exhibit III

Original Final Actual AmountsRevenuesCharges for Services 6,155,064$ 6,155,064$ 6,216,459$ 61,395$Miscellaneous 380,000 380,000 282,160 (97,840)

Total Revenues 6,535,064 6,535,064 6,498,619 (36,445)

ExpendituresCurrentGeneral Government 6,094,255 5,752,344 5,749,953 2,391

Capital Outlay 383,000 724,911 326,440 398,471Debt ServicePrincipal - - 305,232 (305,232)Interest - - 93,236 (93,236)


57,809 57,809 23,758 (34,051)


(57,809) (57,809) (23,758) 34,051

(57,809) (57,809) (23,758) 34,051






5

Excess (Deficiency) of Revenues Over (Under) Expenditures


Budgeted Amounts


Positive(Negative)




Exhibit IV

Business-typeActivitiesBuilding

Maintenance Enterprise Fund

Current AssetsCash and Cash Equivalents 42,982$


Unrestricted 42,982$

42,982$

ASSETS


STATEMENT OF NET POSITIONPROPRIETARY FUND

September 30, 2016

6

NET POSITION

Total Liabilities and Net Position


Exhibit V


MaintenanceEnterprise Fund

Operating RevenuesMiscellaneous 42,982$

Total Operating Revenues 42,982

Operating Income 42,982


Capital Contributions -

Change in Net Position 42,982

-

Total Net Position - Ending 42,982$

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION


PROPRIETARY FUNDFor the Fiscal Year Ended September 30, 2016

7

Total Net Position - Beginning

42,982


EXHIBIT VI


MaintenanceEnterprise Fund

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Users 42,982$

Net Cash Provided (Used) by Operating Activities 42,982

Net Increase (Decrease) in Cash and Cash Equivalents 42,982

Cash and Cash Equivalents - Beginning of Year -

Cash and Cash Equivalents - End of Year 42,982$


Operating Income (Loss) 42,982$

Net Cash Provided (Used) by Operating Activities 42,982$

8


STATEMENT OF CASH FLOWSPROPRIETARY FUND



Exhibit VII

DisbursementsAgency Fund

Cash and Cash Equivalents 1,937,562$Accounts Receivable 6,360

Total Assets 1,943,922$

LIABILITIES Due to Other Governments 14,748$Due to Depositors 38,080Taxes Collected in Advance 1,891,094


NET POSITION -$

9

Tax Collector

September 30, 2016FIDUCIARY FUND


ASSETS


Tax Collector Okaloosa County, Florida


10

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Tax Collector is an elected official established pursuant to the Constitution of the State of Florida. The Tax

Collector is elected by the citizenry at-large and functions independently of the Board of County Commissioners of Okaloosa County, Florida. The financial statements of the Tax Collector have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. The Tax Collector uses the Uniform Accounting System (UAS) mandated by Chapter 218.33, Florida Statutes.

The following is a summary of the more significant accounting policies of the Tax Collector.


The Tax Collector is part of the legal entity of Okaloosa County, Florida and is, therefore, reported as part of the primary government. The Tax Collector’s individual financial statements do not purport to reflect the financial position or the results of operations of the primary government of Okaloosa County, Florida taken as a whole. The combined financial statements of the primary government of Okaloosa County, Florida include the individual statements of the following elected officials and those of separately administered organizations that are controlled by or are dependent upon the County:

Board of County Commissioners Clerk of the Circuit Court Sheriff Tax Collector Property Appraiser Supervisor of Elections Financial activities of other component units that form the reporting entity of the primary government of

Okaloosa County are not included in these financial statements.


The financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of the fund level only financial statements and permit omission of entity-wide full accrual financial statements and management’s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Okaloosa County, Florida, that relate to transactions of the Tax Collector and are not intended to present the financial position and changes in financial position of Okaloosa County, Florida.

The Tax Collector segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. A fund is a fiscal and accounting entity with a self-balancing set of accounts. Separate financial statements are provided for governmental funds and fiduciary funds. The emphasis of fund financial statements is on major governmental funds. The only governmental fund of the Tax Collector is the General Fund.


1. Governmental Fund Financial StatementsGovernmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balance report the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. Governmental fund financial statements are reported using the modified accrual basis of accounting. Under this method, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and



11



1. Governmental Fund Financial Statements - Continued available). “Measurable” means the amount of the transaction can be determined and “available” means

collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Tax Collector considers all revenues reported in the governmental fund to be available if the revenues are collected within 60 days after year-end. Those revenues susceptible to accrual are interest revenue and charges for service. Current year property taxes uncollected at the end of the fiscal year are generally immaterial in amount and highly susceptible to uncollectibility and are not recorded as a receivable on the balance sheet.



of an exchange transaction is an auto license, in exchange for a specific license fee. Non-exchange transactions are those in which the Tax Collector gives (or receives) value without directly receiving (or giving) equal value in exchange. An example of a non-exchange transaction is grant revenue received from the federal or state government used to fund governmental services for the citizens of Okaloosa County. The revenue from these exchange and non-exchange transactions is recognized in the financial statements of the Tax Collector using the modified accrual basis of accounting.

3. Fiduciary Fund Financial Statements The proprietary fund financial statements are reported using the economic resources measurement focus. Under this measurement focus, all assets and all liabilities associated with the operation of the fund are included on the balance sheet. The statement of revenue, expenses and changes in equity reports revenues and expenses. The proprietary funds are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.


Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund.

Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. On an accrual basis, revenue from interest is recorded when earned.

The only fiduciary funds of the Tax Collector are agency funds and as such do not record revenues and expenses

4. Financial Statement Presentation The Tax Collector reports the following major governmental fund:

General Fund This is the Tax Collector’s primary operating fund. It accounts for all financial resources of the general




12



4. Financial Statement Presentation - Continued

The Tax Collector reports the following fund types:

Enterprise Fund The Enterprise Fund accounts for certain common area maintenance charges billed to all tenants who

occupy space in the building in Niceville, Florida in which the Tax Collector is the landlord. The common area maintenance fees accumulated for future repairs and maintenance to the building are accounted for in this fund.

Agency Fund The Disbursements Agency Fund accounts for the collection of both current and delinquent property tax

assessments as well as licenses and fees, tourist tax, birth certificate fees, and concealed weapon licenses collected on behalf of Okaloosa County, municipalities other taxing districts, and state agencies.

D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Assets or Balance


prescribe the instruments in which those investments are authorized, specifically the State of Florida Local Government Surplus Funds Trust Fund; Securities and Exchange Commission (SEC) registered money market funds with the highest credit quality rating; interest-bearing time deposits or savings accounts in qualified public depositories as defined in s.280.02; direct obligations of the United States Treasury, federal agencies and instrumentalities; and securities of or other interest in certain investment companies or investment trusts the portfolio of which is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such obligations. Because the County has adopted written investment policies as provided in subsection (1) through (15) of s. 218.415, other investments may be authorized by resolution or ordinance. Currently authorized are investments in term repurchase agreements with primary broker/dealers collateralized in the County’s name by securities of the United States Government or any agency or instrumentality thereof; overnight repurchase agreements with collateral held by the custodian bank or its trust department; tax exempt bonds, notes or obligations rated in the two highest classifications; inventory-based domestic bankers’ acceptances eligible to qualify for use as collateral at the Federal Reserve Bank; SEC registered open-end mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities; and Florida Local Government Investment Trust. The Tax Collector adheres strictly to the provisions of those cited Statutes and investments authorized by resolution or ordinance, as well as with Chapter 517, Florida Statutes, which established registration procedures for securities and dealers. Investments are reported at fair value.

The Tax Collector maintains a pooled cash account available for use by all funds. Each fund’s portion of the pooled cash is displayed on the balance sheet as “cash and cash equivalents.”

2. Receivables and Payables During the course of operations, numerous transactions occur between individual funds or elected officials for

goods provided or services rendered. These receivables and payables are classified as “due from other funds or elected officials” or “due to other funds or elected officials” on the balance sheet. Short-term inter-fund loans are also classified as “interfund receivables/payables.”

The Tax Collector maintains no allowance for uncollectible trade accounts. Accounts receivable write offs are insignificant.



13




Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. The Tax Collector’s capitalization level is $1,000 on tangible personal property and $5,000 on buildings and improvements. Costs incurred for repairs and maintenance is expensed as incurred. Depreciation on all assets is provided on the government-wide statement of activities of Okaloosa County using the straight-line basis over the following estimated useful lives:

Assets Years

Buildings and improvements 15-50Intangibles 3Equipment 3-7Vehicles 2-15

4. Compensated Absences The liability for compensated absences consisting of unpaid, accumulated annual compensatory time balances

is reported on the government-wide statement of net assets of Okaloosa County. The liability is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds financial statements of the Tax Collector under the modified accrual basis of accounting only if they have matured, for example, as a result of employee resignations and retirements.

5. Deferred outflows/inflows of resources In addition to assets, deferred outflows of resources represent a consumption of fund balance that applies to a future period(s) and will not be recognized as an outflow of resources (expenditure) until then. In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

No such items were applicable to the Tax Collector as of September 30, 2016.





14

NOTE 2 - LEGAL COMPLIANCE BUDGETS

The Okaloosa County Tax Collector submits its budget, for approval, to the State of Florida Department of Revenue, and files a copy with the Board of County Commissioners by August 1st of each year for the upcoming budget year. The Florida Department of Revenue sets the Tax Collector’s budget.

The level of budgetary control (that is the level at which expenditures cannot legally exceed appropriations) has been established at the fund level. The Tax Collector may transfer budget amounts between line items within his budget without approval but may not reallocate amounts between personal services, capital outlay and operating expenditures. The Department of Revenue must approve transfer of amounts between these major groups of budgetary items, and any modification of the budget that increases the total of the budget. The Department of Revenue notifies the Board of County Commissioners of all budget modifications approved by the Department. In the current year there were no supplemental budgetary appropriations.

The Department of Revenue directs the Tax Collector to budget the annual debt service principal and interest payments on the Niceville office building as capital outlay expenditures. The actual debt service payments are classified appropriately for financial reporting purposes which results in significant variances in the budget to actual information presented between capital outlay and debt service.

NOTE 3 - DEPOSITS AND INVESTMENTS

The Tax Collector maintains its deposits only with qualified public depositories as defined in Chapter 280, Florida Statutes. The provisions of this statute generally require public funds to be deposited in a bank or savings association designated by the State Chief Financial Officer as a “Qualified Public Depository”. All qualified public depositories must maintain deposit insurance. They also must place with or in the name of the Chief Financial Officer of the State of Florida, collateral in the amount of the greater of the average daily balance of public deposits multiplied by the average monthly balance of public deposits or 125 percent of the average daily balance of public deposits greater than capital. Collateral requirements may be increased according to statue if specified conditions exist. Eligible collateral includes federal, federally-guaranteed, state and local government obligations and corporate bonds. In the event of default by a qualified public depository excess losses over insurance and collateral will be recovered through assessments to all qualified public depositories of the same type as the depository in default. Under this method, all Tax Collector deposits, including certificates of deposit, are considered fully insured.

State Statutes restrict the types of investments that can be made by Okaloosa County and its agencies. A description of the requirements and the types of investments allowed as well as information about valuation and other investment policies can be found in Note 1.D.1. In accordance with Tax Collector’s policy, no investment accounts were held during the fiscal year ended September 30, 2016


The following capital asset activity for the Tax Collector of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016:



15


BeginningBalance Increase Decrease Transfers

EndingBalance

GovernmentalCapital assets, being depreciated/amortized: Buildings and improvements 2,681,339$ 178,688$ -$ -$ 2,860,027$ Machinery and equipment 918,572 113,024 (30,854) (12,742) 988,000 Intangibles 79,469 34,728 - - 114,197 Total Capital assets, being depreciated/amortized 3,679,380 326,440 (30,854) (12,742) 3,962,224Less accumulated depreciation/amortization for: Buildings and improvements (21,345) (70,973) - - (92,318) Machinery and equipment (731,796) (64,449) 30,854 12,471 (752,920) Intangibles (56,240) (13,904) - - (70,144) Total accumulated depreciation/amortization (809,381) (149,326) 30,854 12,471 (915,382)

Governmental activities capital assets, net 2,869,999$ 177,114$ -$ (271)$ 3,046,842$


Depreciation AmortizationGovernmental Activities: General government 135,422$ 13,904$

NOTE 5– COMPENSATED ABSENCES

The policy of the Tax Collector for Paid Time Off (PTO) is that employees are entitled to accrue leave each pay period based on an employee’s hire date. Below is a breakdown of how leave will be earned:

Years of Service(based on hire date) Weeks PTO

# Hours Earnedper Pay Period

1 year 3 weeks 4.622 - 5 years 4.4 weeks 6.776 - 10 years 5.4 weeks 8.31

11 - 15 years 6 weeks 9.2316 - 20 years 6.5 weeks 10.00

21+ years 7 weeks 10.77

Upon separation of employment from the Tax Collector, the maximum unused hours paid at termination are based upon years of service. Maximum unused hours paid for employees with 1 – 10 years of service or in DROP are 300 hours and 500 hours for 10 plus years of service.

The total amounts of accumulated annual leave for the Tax Collector as of September 30, 2016 follow:

Current Portion


Annual Leave 103,173$ 170,799$ 273,972$



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The composition of inter-fund balances as of September 30, 2016 is as follows:

Due to/from other funds and elected officials:

Receivable Fund Payable Fund Amount PurposeOther Elected Officials General Board of County Commissioners (570)$ Delq. Real & TPP, Regist Board of County Commissioners General 38,665 Bank fees Board of County Commissioners General 1,114 Prepaid occupancy Board of County Commissioners General 23,758 Excess fees Board of County Commissioners General 124,244 Vessel commissionsTotal 187,211$


Transfer In Transfer Out Amount PurposeOther Elected Officials Board of County Commissioners General 23,758$ Excess fees

NOTE 7 – OPERATING LEASES

Operating Leases - Lessor The Tax Collector leases space in its Niceville building to third parties under lease agreements with varying terms. Lease income earned during the year ending September 30, 2016 was $79,893. Future minimum rents to be earned under the terms of the lease agreement are as follows:

Fiscal Year Ended September 302017 55,1002018 41,9072019 24,000

121,007$

Operating Leases - Lessee The Tax Collector rents office space for a decentralized location to accommodate residents in a certain area of the County. The original twenty-year lease was due to expire in September 2025; however the Tax Collector purchased a new building on John Sims Parkway and the existing lease on Hwy 85 terminated on 12/31/15. Total lease expenditure for fiscal year ended September 30, 2016 was $71,102.



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Primary Government The following debt issue is outstanding for September 30, 2016:


LOAN $2,300,000 Private Bank Loan from Summit Bank with fixed rate of interest of 4.25% through February 25, 2025;

principal and interest of $17,372 due beginning March 26, 2015, with a final balloon payment of $953,676 due at maturity. Collateral for loan is specific revenue within the Tax Collector’s annual budget earmarked for loan repayment, until loan is paid in full. Total Governmental Activities Loans $ 1,904,980

The following is a summary of the changes in long-term debt of the Tax Collector for fiscal year ended September 30, 2016.

October1, 2015 Increases Decreases

September30, 2016

Due WithinOne Year

Governmental Activities:Notes Payable 2,210,211$ -$ (305,231)$ 1,904,980$ 120,708$ Accrued compensated absences 259,643 327,397 (313,068) 273,972 103,173 Other post employment benefits 85,650 - - 85,650 -

Total Governmental Activities 2,555,504$ 327,397$ (618,299)$ 2,264,602$ 223,881$

Compensated absences typically have been liquidated in the general fund.

Debt service requirements to maturity on long-term debt at September 30, 2016 are as follows:

Year ending September 30, Principal Interest2017 120,708$ 87,760$ 2018 126,013 82,455 2019 131,551 76,916 2020 137,127 71,341 2021 143,360 65,108 2022-2024 1,246,221 163,537 Total 1,904,980$ 547,117$

Loans

The Tax Collector made additional principal payments of $190,000 to reduce the balance on the note payable during the year ended September 30, 2016.

NOTE 9 – RESERVES FOR RENEWAL AND REPLACEMENTS

During fiscal year 2016, the Tax Collector assessed common area maintenance charges to all occupants of the Niceville building designated for future repairs and replacements. Monthly assessments are charged to tenants based on management’s estimate of future replacement costs of the related repairs or replacements. During the year ended September 30, 2016 $24,894 of the assessments were charged to the Tax Collector’s general fund and $18,088 were



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NOTE 9 – RESERVES FOR RENEWAL AND REPLACEMENTS - CONTINUED

assessed to third party tenants. Accumulated funds are held in a separate bank account and reported in the Building Enterprise Fund.

The following is a summary of the financial activity of the assessments during the year:

ComponentOctober1, 2015 Assessments

Chargesto Fund Interest

September30, 2016

Parking Lot Resurface -$ 6,065$ -$ -$ 6,065$ Re-strip and Seal Parking Lot - 2,729 - - 2,729 Building Sealed & Painted - 1,592 - - 1,592 Roof Resurface - 2,275 - - 2,275 Circuit Breakers Panels - 1,055 - - 1,055 HVAC - 11,826 - - 11,826Air Handlers - 2,365 - - 2,365 Elevator Controls - 3,184 - - 3,184 Hot Water Heater - 364 - - 364 Irrigation/Landscaping - 1,737 - - 1,737 VAV Controls - 910 - - 910 Fire Systems - 3,032 - - 3,032 Plumbing - 3,411 - - 3,411 Carpet (all floors) - 2,437 - - 2,437

-$ 42,982$ -$ -$ 42,982$


The Tax Collector participates in the Florida Retirement System (FRS) which is a cost sharing multiple employercontributory retirement system administered by the State of Florida (State). The FRS was established in 1970 by Chapter 121, Florida Statutes. In 2002 the FRS was amended to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. Chapter 112, Florida Statutes established the Retiree Health Insurance Subsidy (HIS) Program, a cost–sharing multiple employer defined benefit pension plan to assist retired members of any state- administered retirement system in paying the cost of health insurance.




850-907-6500 or toll free 844-377-1888



19


There are six classes of membership applicable to the Tax Collector. Members are eligible for normal retirement whenthey have met the requirements listed below. Early retirement may be taken any time after vesting within 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each year prior to the normal retirement age.










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Contribution Requirements -The Tax Collector is required to contribute at an actuarially determined rate; these rates are a percent of annual covered payroll. Employees are required to contribute 3% of their annual salary, while members participating in DROP are not required to make the 3% contribution. The Tax Collector’s contractually required contribution rate includes the HIS contribution, .06% administrative and educational fee and any applicable unfunded actuarial liability “UAL” rates. The HIS required contribution rate is 1.66% for the 2015 and 2016 FRS plan years. This contribution when combined with the employee contribution is expected to finance the cost of the benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Descriptions and contribution rates in effect during the period ended September 30, 2016 and two preceding FRS fiscal years are as follows:

September 30, 2016

June 30, 2016

June 30, 2015

June 30, 2014


For the years ending September 30, 2016, 2015, 2014, the Tax Collector contributed $454,644, $452,326 and $417,820 respectively, equal to 100% of the required contributions for each year.



The Tax Collector has a net FRS pension liability determined in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This long-term liability is only reported in the county-wide financial statements and is not a current liability of the General Fund. All required disclosures and schedules may be found in the county-wide financial statements of Okaloosa County, Florida.


The Tax Collector has chosen to participate in the Board of County Commissioners’ plan providing post-employment health care and dental insurance benefits (OPEB) for eligible retired employees and their spouses. The OPEB plan provided by the Tax Collector is adequately disclosed in the footnotes of the government-wide financial statements of Okaloosa County, Florida. In 2016, the TC no longer participated in the BCC Plan, but with its own plan through United Healthcare. Premiums range from $651.94 (single) to $995.08 (family), with a total estimated monthly premium of $56,925.


The Tax Collector is exposed various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; employee medical benefits and natural disasters. The Tax Collector purchases



21


insurance through commercial carriers. There has been no significant reduction in insurance coverage from the prior fiscal year. Insurance coverage has been sufficient to cover all claims made in the prior three (3) fiscal years.

Special risks and employee medical benefits are covered by commercial insurance policies that are accounted for in the Tax Collector’s general fund. The Tax Collector bears no risk of loss under this type of coverage.

The Tax Collector has chosen to participate in the Self-Insurance Internal Service Fund of the Okaloosa County Board of County Commissioners to handle claims for public liability and workers’ compensation. The Self-Insurance Internal Service fund charges the Tax Collector a fee to participate based upon actuarially projected budget requirements for cash payouts. No claim for this self-insurance program is recognized in the financial statements of the Tax Collector.

This fund is used to account for the collection of current and delinquent tax assessments; business taxreceipts for Okaloosa County, municipalities and other taxing districts; automobile and boat tags, titlesand other related fees for the Florida Department of Motor Vehicles; and, to account for the collection ofhunting and fishing licenses fees for the Florida Department of Natural Resources.

Agency funds are used to account for assets held by the Tax Collector of Okaloosa County as agent forindividuals, private organizations, other governments, and/or other funds.

AGENCY FUNDS

Disbursements Fund

Statement A-1

BalancesOctober 1,



2016

DISBURSEMENTS AGENCY FUNDASSETS

Cash and Cash Equivalents 1,728,745$ 256,087,531$ 255,878,714$ 1,937,562$ Accounts Receivable 4,493 6,360 4,493 6,360

Total Assets 1,733,238$ 256,093,891$ 255,883,207$ 1,943,922$

LIABILITIESDue to Other Funds -$ 185,149,057$ 185,149,057$ -$ Due to Other Elected Officials - 5,999,750 5,999,750 - Due to Other Governments 23,881 61,234,703 61,243,836 14,748 Due to Depositors 40,757 38,080 40,757 38,080 Taxes Collected in Advance 1,668,600 3,672,301 3,449,807 1,891,094


22



STATEMENT OF CHANGES IN NET POSITIONAGENCY FUND

Other Reports

23

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF


Honorable Benjamin F. Anderson Tax Collector Okaloosa County, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements (hereinafter referred to as “financial statements”) of each major fund and aggregate remaining fund information of the Office of the Tax Collector of Okaloosa County, Florida (hereinafter referred to as “Tax Collector”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Tax Collector’s financial statements, and have issued our report thereon dated February 15, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Tax Collector’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Tax Collector’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Tax Collector’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the Tax Collector’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Tax Collector’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this report is not suitable for any other purpose.


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RULES OF THE AUDITOR GENERAL Honorable Benjamin F. Anderson Tax Collector Okaloosa County, Florida We have examined the Office of the Tax Collector of Okaloosa County, Florida’s (hereinafter referred to as the “Tax Collector”) compliance with Florida Statutes 218.415 in regards to investments for the year ended September 30, 2016. Management is responsible for the Tax Collector’s compliance with those requirements. Our responsibility is to express an opinion on the Tax Collector’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Tax Collector’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Tax Collector’s compliance with specified requirements. In our opinion, the Tax Collector complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016.


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MANAGEMENT LETTER

Honorable Benjamin F. Anderson Tax Collector Okaloosa County, Florida Report on the Financial Statements We have audited the financial statements (hereinafter referred to as “financial statements”) of the general fund and the aggregate remaining fund information of the Office of the Tax Collector of Okaloosa County, Florida (hereinafter referred to as “Tax Collector”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, and have issued our report thereon dated February 15, 2017. Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Florida Auditor General. Other Reports and Schedule We have issued our Independent Auditors’ Report on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accodance with Government Auditing Standards; and Independent Accountants’ Report on Examination of Compliance Requirements in Accordance with Chapter 10.550, Rules of Auditor General. Disclosures in those reports, which are dated DATE, should be considered in conjunction with this management letter.

Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. No recommendations were made in the previous annual financial audit report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Tax Collector of Okaloosa County, Florida was established by the Constitution of the State of Florida, Article VIII, Section 1(e), as part of the primary government of Okaloosa County, Florida. There are no component units related to the Tax Collector of Okaloosa County.

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Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Tax Collector, the Okaloosa County Board of County Commissioners, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. We greatly appreciate the assistance and cooperation extended us during our audit.


PROPERTY APPRAISER

Page Exhibit


Table of Contents i

FINANCIAL SECTION







OTHER REPORTS

15

17


FISCAL YEAR ENDED SEPTEMBER 30, 2016PROPERTY APPRAISER


i





TABLE OF CONTENTS


1


Honorable Mack Busbee Property Appraiser Okaloosa County, Florida Report on the Financial Statements We have audited the accompanying financial statements of the General Fund of the Office of the Property Appraiser of Okaloosa County, Florida (“Property Appraiser”) as of and for the year ended September 30, 2016, and the related notes to the financial statements, as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion 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 Property Appraiser’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property Appraiser’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.

2

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the General Fund of the Property Appraiser, as of September 30, 2016, and the respective changes in financial position thereof, and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, the financial statements referred to above have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida. In conformity with the Rules, the accompanying financial statements are intended to present the financial position and changes in financial position of the General Fund of Okaloosa County, Florida that is attributable to the Property Appraiser. They do not purport to, and do not, present fairly the financial positon of Okaloosa County, Florida as of September 30, 2016 and the changes in its financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report on our consideration of the Property Appraiser’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters included under the heading “Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards”. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.


Exhibit I

General Fund



LiabilitiesAccounts Payable 28,055$ Other Accrued Liabilities 5,835 Due to Other Elected Officials 443,017 Due to Other Governments 47,766


Fund Balance -


3

ASSETS


Property Appraiser




Exhibit II

General FundRevenuesCharges for Services 299,633$Miscellaneous 19,218

Total Revenues 318,851

ExpendituresCurrentGeneral Government 2,999,820

Capital Outlay 98,055


Excess (Deficiency) of RevenuesOver (Under) Expenditures (2,779,024)

Other Financing Sources (Uses)Transfers Among Constitutional Officers 2,779,024

Total Other Financing Sources (Uses) 2,779,024





4


Property AppraiserOkaloosa County, Florida


Exhibit III

Original Final Actual AmountsRevenuesCharges for Services 291,535$ 291,535$ 299,633$ 8,098$Miscellaneous - - 19,218 19,218

Total Revenues 291,535 291,535 318,851 27,316


Capital Outlay 101,700 101,700 98,055 3,645


Excess (Deficiency) of Revenues Over (Under) Expenditures (3,235,678) (3,260,117) (2,779,024) 481,093


3,235,678 3,260,117 2,779,024 (481,093)

3,235,678 3,260,117 2,779,024 (481,093)







5


Budgeted Amounts


Positive(Negative)

Property AppraiserOkaloosa County, Florida



Property Appraiser Okaloosa County, Florida


6


The Property Appraiser is an elected official established pursuant to the Constitution of the State of Florida. The Property Appraiser is elected by the citizenry at-large and functions independently of the Board of County Commissioners of Okaloosa County, Florida.

The financial statements of the Property Appraiser have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. The Property Appraiser uses the Uniform Accounting System (UAS) mandated by Chapter 218.33, Florida Statutes.

The following is a summary of the more significant accounting policies of the Property Appraiser.


The Property Appraiser is part of the legal entity of Okaloosa County, Florida and is, therefore, reported as part of the primary government. The Property Appraiser’s individual financial statements do not purport to reflect the financial position or the results of operations of the primary government of Okaloosa County, Florida taken as a whole. The combined financial statements of the primary government of Okaloosa County, Florida include the individual statements of the following elected officials and those of separately administered organizations that are controlled by or are dependent upon the County:




The financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of the fund level only financial statements an permit omission of entity-wide full accrual financial statements and management’s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Okaloosa County, Florida, that relate to transactions of the Property Appraiser and are not intended to present the financial position and changes in financial position of Okaloosa County, Florida.

The Property Appraiser segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. A fund is a fiscal and accounting entity with a self-balancing set of accounts. The emphasis of fund financial statements is on major governmental funds. The only governmental fund of the Property Appraiser is the General Fund.


1. Governmental Fund Financial StatementsGovernmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balance report the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. Governmental fund financial statements are reported using the modified accrual basis of accounting. Under



7



1. Governmental Fund Financial Statements - Continued this method, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and

available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Property Appraiser considers all revenues reported in the governmental fund to be available if the revenues are collected within 60 days after year-end. Those revenues susceptible to accrual are interest revenue and charges for service.



of an exchange transaction is rent, in exchange for a specific service, use of a County building. Non-exchange transactions are those in which the Property Appraiser gives (or receives) value without directly receiving (or giving) equal value in exchange. An example of a non-exchange transaction is tax revenue received by the County and appropriated to the Property Appraiser to be used to fund various general governmental services. The revenue from these exchange and non-exchange transactions is recognized in the financial statements of the Property Appraiser using the modified accrual basis of accounting.

3. Financial Statement Presentation The Property Appraiser reports the following major governmental fund:

General Fund This is the Property Appraiser’s primary operating fund. It accounts for all financial resources of the

general government.



prescribe the instruments in which those investments are authorized, specifically the State of Florida Local Government Surplus Funds Trust Fund; Securities and Exchange Commission (SEC) registered money market funds with the highest credit quality rating; interest-bearing time deposits or savings accounts in qualified public depositories as defined in s.280.02; direct obligations of the United States Treasury, federal agencies and instrumentalities; and securities of or other interest in certain investment companies or investment trusts the portfolio of which is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such obligations. Because the County has adopted written investment policies as provided in subsection (1) through (15) of s. 218.415, other investments may be authorized by resolution or ordinance.

Currently authorized are investments in term repurchase agreements with primary broker/dealers collateralized in the County’s name by securities of the United States Government or any agency or instrumentality thereof; overnight repurchase agreements with collateral held by the custodian bank or its trust department; tax exempt bonds, notes or obligations rated in the two highest classifications; inventory-based domestic bankers’



8



1. Deposits and Investments - Continued acceptances eligible to qualify for use as collateral at the Federal Reserve Bank; SEC registered open-end

mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities; and Florida Local Government Investment Trust. The Property Appraiser adheres strictly to the provisions of those cited Statutes and investments authorized by resolution or ordinance, as well as with Chapter 517, Florida Statutes, which established registration procedures for securities and dealers.

2. Receivables and Payables During the course of operations, numerous transactions occur between individual funds or elected officials for

goods provided or services rendered. These receivables and payables are classified as “due from other funds or elected officials or “due to other funds or elected officials” on the balance sheet. Short-term interfund loans are also classified as “interfund receivables/payables.”


Property, plant, equipment, and intangible assets purchased or acquired is carried at historical cost or estimated

historical cost. Contributed assets are recorded at fair market value as of the date received. The Property Appraiser’s capitalization level is $1,000 on tangible personal property and $5,000 on intangible assets. Costs incurred for repairs and maintenance is expensed as incurred. Depreciation and amortization on all assets is provided on the government-wide statement of activities of Okaloosa County using the straight-line basis over the following estimated useful lives:

4. Compensated Absences

The liability for compensated absences consisting of unpaid, accumulated paid days off balances is reported on the government-wide statement of net assets of Okaloosa County. The liability is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds financial statements of the Property Appraiser under the modified accrual basis of accounting only if they have matured, for example, as a result of employee resignations and retirements.

5. Deferred outflows/inflows of resources

In addition to assets, deferred outflows of resources represent a consumption of fund balance that applies to a future period(s) and will not be recognized as an outflow of resources (expenditure) until then. In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

No such items were applicable to the Property Appraiser as of September 30, 2016.

Assets YearsBuildings and improvements 5

Intangibles 5Equipment 3 - 7Vehicles 2 - 15



9






Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for all governmental funds. All appropriations lapse at fiscal year-end.


On or about June 1 of each year, proposed budgets are received by the Board of County Commissioners from its department heads, from all other elected officials, and from other agencies requesting funding for the ensuing fiscal year. These proposed expenditures, along with all estimated receipts, taxes to be levied, and balances expected to be brought forward are considered by the Board of County Commissioners in a series of workshops beginning on or after July 15. The Board of County Commissioners requires such changes as deemed necessary, sets proposed mileages and establishes dates for tentative and final public budget hearings as prescribed by Florida Statutes.


No later than June 1 of each year, the Property Appraiser submits his budget to the State of Florida Department of Revenue. Tentative approval must be given to the Property Appraiser by July 15. The Department of Revenue issues their approval of the Property Appraiser’s final budget and simultaneously notifies the Board of County Commissioners of their approval no later than August 15.


The level of budgetary control (that is the level at which expenditures cannot legally exceed appropriations) has been established at the fund level. The County Administrator is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must approve any revisions that alter the total expenditures of any fund. Each elected official is authorized to make line item transfers but must request approval from the Board for increases in appropriations.

Budget amounts are originally adopted amounts as amended by action of the Board of County Commissioners by revision of fund totals. Supplemental budgetary appropriations of $24,439 representing a 0.76% increase over the original adopted budget were necessary during the fiscal year for the Property Appraiser. All amendments to originally adopted amounts were made in a legally permissible manner.

NOTE 3 - DEPOSITS AND INVESTMENTS

The Property Appraiser maintains its deposits only with qualified public depositories as defined in Chapter 280, Florida Statutes. The provisions of this statute generally require public funds to be deposited in a bank or savings



10

NOTE 3 - DEPOSITS AND INVESTMENTS - CONTINUED

association designated by the State Chief Financial Officer as a “Qualified Public Depository”. All qualified public depositories must maintain deposit insurance. They also must place with or in the name of the Chief Financial Officer of the State of Florida, collateral in the amount of the greater of the average daily balance of public deposits multiplied by the average monthly balance of public deposits or 125% of the average daily balance of public deposits greater than capital. Collateral requirements may be increased according to statue if specified conditions exist. Eligible collateral includes federal, federally-guaranteed, state and local government obligations and corporate bonds. In the event of default by a qualified public depository excess loss over insurance and collateral will be recovered through assessments to all qualified public depositories of the same type as the depository in default. Under this method, all Property Appraiser deposits, including certificates of deposit, are considered fully insured.

State Statutes restrict the types of investments that can be made by Okaloosa County and its agencies. A description of the requirements and the types of investments allowed as well as information about valuation and other investment policies can be found in Note 1. D.1. The Property Appraiser maintained no investment accounts during the fiscal year ended September 30, 2016.


The following capital asset activity for the Property Appraiser of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016:

BeginningBalance Increases Decreases Transfers

EndingBalance

Governmental activities:

Caital assets, being depreciated/amortized:Buildings and improvements 31,800$ -$ -$ -$ 31,800$ Intangible 45,577 - - - 45,577Machinery and equipment 664,378 98,055 (117,470) (27,163) 617,800

Total capital assets, being depreciated/amortized 741,755 98,055 (117,470) (27,163) 695,177

Less accumulated depreciation/amortization for:Buildings and improvements (25,848) (3,975) - - (29,823)Intangible (43,797) (1,780) - - (45,577)Machinery and equipment (516,669) (48,981) 111,698 26,795 (427,157)

Total accumulated depreciation/amortization (586,314) (54,736) 111,698 26,795 (502,557)

Governmental activities capital assets, net 155,441$ 43,319$ (5,772)$ (368)$ 192,620$

Depreciation/amortization expense was charged to functions/programs as follows:

Depreciation AmortizationGovernmental Activities:

General government 52,956$ 1,780$


The Property Appraiser’s policy for compensated absences provides for “paid days off” (a combination of sick and annual leave) which may be used at the employee’s discretion. Paid days off accumulate ratably during each year of employment at the following rates based on years of employment.



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1 to 5 years 192 hours per year 5 to 10 years 216 hours per year Over 10 years 240 hours per year

Employees are allowed to accumulate up to 360 hours of paid days off for which they will be paid upon termination of employment. Paid days off accumulated in excess of 360 hours at the end of the calendar year are lost except for employees planning retirement. Employees planning retirement within the following year may increase the accrued paid days off to a maximum of 500 hours. The total amounts of accumulated paid days off for the Property Appraiser as of September 30, 2016 follow:

CurrentPortion


Compensated absenses 55,204$ 65,060$ 120,264$

NOTE 6– INTERFUND BALANCES AND ACTIVITY


Due to/from other elected officials:

Receivable Fund Payable Fund Amount Purpose

Board of County Commissioners General 443,017$ Excess appropriations


Transfer In Transfer Out Amount Purpose

General Board of County Commissioners 2,779,024$ Budget appropriations


The following long-term debt activity for the Property Appraiser of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016:

Balance DueOctober 1,

2015 Increases Decreases

Balance DueSeptember 30,

2016Due Within

One YearGovernmental Activities

Accrued compsensated absences 120,594$ -$ (330)$ 120,264$ 55,204$ Other post employment benefit 44,713 19,918 (10,059) 54,572 -

Total Governmental Activities 165,307$ 19,918$ (10,389)$ 174,836$ 55,204$




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The Property Appraiser participates in the Florida Retirement System (FRS) which is a cost sharing multiple employercontributory retirement system administered by the State of Florida (State). The FRS was established in 1970 by Chapter 121, Florida Statutes. In 2002 the FRS was amended to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. Chapter 112, Florida Statutes established the Retiree Health Insurance Subsidy (HIS) Program, a cost–sharing multiple employer defined benefit pension plan to assist retired members of any state- administered retirement system in paying the cost of health insurance.




850-907-6500 or toll free 844-377-1888

There are six classes of membership applicable to the Property Appraiser. Members are eligible for normal retirementwhen they have met the requirements listed below. Early retirement may be taken any time after vesting within 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each year prior to the normal retirement age.






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Contribution Requirements -The Property Appraiser is required to contribute at an actuarially determined rate; theserates are a percent of annual covered payroll. Employees are required to contribute 3% of their annual salary, while members participating in DROP are not required to make the 3% contribution. The Property Appriser’scontractually required contribution rate includes the HIS contribution, .06% administrative and educational fee and any applicable unfunded actuarial liability “UAL” rates. The HIS required contribution rate is 1.66% for the 2015 and 2016 FRS plan years. This contribution when combined with the employee contribution is expected to finance the cost of the benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Descriptions and contribution rates in effect during the period ended September 30, 2016 and two preceding FRS fiscal years are as follows:

September 30, 2016

June 30, 2016

June 30, 2015

June 30, 2014


For the years ending September 30, 2016, 2015, 2014, the Property Appraiser contributed $196,028, $184,293 and$195,186 respectively, equal to 100% of the required contributions for each year.



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The Property Appraiser has a net FRS pension liability determined in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This long-term liability is only reported in the county-wide financial statements and is not a current liability of the General Fund. All required disclosures and schedules may be found in the county-wide financial statements of Okaloosa County, Florida.

NOTE 9 – POST EMPLOYMENT BENEFITS

The Property Appraiser has chosen to participate in the Board of County Commissioners’ plan providing post-employment health care and dental insurance benefits (OPEB) for eligible retired employees and their spouses. The OPEB plan provided by the Property Appraiser is adequately disclosed in the footnotes of the government-wide financial statements of Okaloosa County, Florida.


The Property Appraiser is exposed to risk of loss for claims and judgments for public liability, workers’ compensation, and other special risks. There has been no significant reduction in insurance coverage from the prior fiscal year. Insurance coverage has been sufficient to cover all claims made in the prior three (3) fiscal years.

Special risks are covered by commercial insurance policies that are accounted for in the Property Appraiser’s general fund. The Property Appraiser bears no risk of loss under this type of coverage.

The Property Appraiser has chosen to participate in a group medical insurance plan along with all other elected officials’ offices of Okaloosa County except for the Sheriff. The plan is administered by the Risk Management

Department of the Board of County Commissioners and uses a fully insured commercial insurance policy to fund employee medical benefits. The Property Appraiser bears no risk of loss under this type of coverage.

The Property Appraiser has chosen to participate in the Self-Insurance Internal Service Fund of the Okaloosa County Board of County Commissioners to handle claims for public liability and workers’ compensation. The Self-Insurance Internal Service Fund charges the Property Appraiser a fee to participate based upon actuarially projected budget requirements for expected yearly cash payouts. No claim liability for this self-insurance program is recognized in the financial statements of the Property Appraiser.

Other Reports

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Honorable Mack Busbee Property Appraiser Okaloosa County, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements (hereinafter referred to as “financial statements”) of the General Fund of the Office of the Property Appraiser of Okaloosa County, Florida (hereinafter referred to as “Property Appraiser”), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Property Appraiser’s financial statements, and have issued our report thereon dated February 14, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Property Appraiser’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Property Appraiser’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Property Appraiser’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the Property Appraiser’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Property Appraiser’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this report is not suitable for any other purpose.


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RULES OF THE AUDITOR GENERAL Honorable Mack Busbee Property Appraiser Okaloosa County, Florida We have examined the Office of the Property Appraiser of Okaloosa County, Florida’s (hereinafter referred to as the “Property Appraiser”) compliance with Florida Statutes 218.415 in regards to investments for the year ended September 30, 2016. Management is responsible for the Property Appraiser’s compliance with those requirements. Our responsibility is to express an opinion on the Property Appraiser’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Property Appraiser’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Property Appraiser’s compliance with specified requirements. In our opinion, the Property Appraiser complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016.


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MANAGEMENT LETTER

Honorable Mack Busbee Property Appraiser Okaloosa County, Florida Report on the Financial Statements We have audited the financial statements of the General Fund of the Office of the Property Appraiser of Okaloosa County, Florida (hereinafter referred to as “Property Appraiser), as of and for the fiscal year ended September 30, 2016, and the related notes to the financial statements and have issued our report thereon dated February 14, 2017.

Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Auditor General. Other Reports We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants’ Report on an examination conducted in accordance with AICPA Professional Standards, in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated February 14, 2017, should be considered in conjunction with this management letter.

Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. No recommendations were made in the preceding annual financial audit report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Property Appraiser of Okaloosa County, Florida was established by the Constitution of the State of Florida, Article VIII, Section 1(e), as part of the primary government of Okaloosa County, Florida. There are no component units related to the Property Appraiser of Okaloosa County.

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Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Property Appraiser, Okaloosa County Board of County Commissioners, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. We greatly appreciate the assistance and cooperation extended us during our audit.


SUPERVISOR OF ELECTIONS

Page Exhibit


Table of Contents i

FINANCIAL SECTION







OTHER REPORTS

17

19


i

TABLE OF CONTENTS

FISCAL YEAR ENDED SEPTEMBER 30, 2016SUPERVISOR OF ELECTIONS


Independent Auditors' Report on Internal Control Over FinancialReporting and on Compliance and Other Matters Based on an Audit ofFinancial Statements Performed in Accordance with Government Auditing Standards





1

INDEPENDENT AUDITORS’ REPORT Honorable Paul Lux Supervisor of Elections Okaloosa County, Florida Report on the Financial Statements We have audited the accompanying financial statements of the General Fund of the Office of the Supervisor of Elections of Okaloosa County, Florida (“Supervisor of Elections”), as of and for the year ended September 30, 2016, as listed in the table of contents, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Supervisor of Elections’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Supervisor of Elections’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.

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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the General Fund of the Supervisor of Elections, as of September 30, 2016, and the respective changes in financial position thereof, and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, the financial statements referred to above were prepared solely for the purpose of complying with the Rules of the Auditor General of the State of Florida. In conformity with the Rules, the accompanying financial statements are intended to present the financial position and changes in financial position of the General Fund attributable solely to the operation of the Supervisor of Elections. They do not purport to, and do not, present fairly the financial positon of Okaloosa County, Florida as of September 30, 2015, and the changes in its financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 1, 2017, on our consideration of the Supervisor of Elections’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters included under the heading “Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards”. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

March 1, 2017 Fort Walton Beach, Florida

Exhibit I

General Fund

Cash and Cash Equivalents 165$Prepaids 95,087


LiabilitiesAccounts Payable 25,131$Other Accrued Liabilities 25,326Due to Other Elected Officials 13,198Due to Other Governments 53Unearned Revenue 31,544


Fund Balances

Nonspendable 95,087Unassigned (95,087)

Total Fund Balance -


3

ASSETS


SUPERVISOR OF ELECTIONS




Exhibit II

General FundRevenues

Intergovernmental 246,207$ Charges for Services 12,050 Miscellaneous 1,618

Total Revenues 259,875

ExpendituresCurrent

General Government 1,972,393 Capital Outlay 760,813


Excess (Deficiency) of RevenuesOver (Under) Expenditures (2,473,331)

Other Financing Sources (Uses)Transfers Among Constitutional Officers 1,848,893 Issuance of Debt 624,438

Total Other Financing Sources (Uses) 2,473,331





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SUPERVISOR OF ELECTIONSOkaloosa County, Florida


Exhibit III

Original Final Actual AmountsRevenuesIntergovernmental -$ 1,072,957$ 246,207$ (826,750)$Charges for Services 5,520 5,520 12,050 6,530Miscellaneous - 47 1,618 1,571

Total Revenues 5,520 1,078,524 259,875 (818,649)


Capital Outlay 164,450 434,578 760,813 (326,235)


Excess (Deficiency) of Revenues Over (Under) Expenditures (1,858,491) (1,858,491) (2,473,331) (614,840)


1,858,491 1,858,491 1,848,893 (9,598)Issuance of Debt - - 624,438 624,438

1,858,491 1,858,491 2,473,331 614,840





5

SUPERVISOR OF ELECTIONSOkaloosa County, Florida



Budgeted Amounts


Positive(Negative)



Supervisor of Elections Okaloosa County, Florida


6


The Supervisor of Elections is an elected official established pursuant to the Constitution of the State of Florida. The Supervisor of Elections is elected by the citizenry at-large and functions independently of the Board of County Commissioners of Okaloosa County, Florida.

The financial statements of the Supervisor of Elections have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. The Supervisor of Elections uses the Uniform Accounting System (UAS) mandated by Chapter 218.33, Florida Statutes.

The following is a summary of the more significant accounting policies of the Supervisor of Elections.


The Supervisor of Elections is part of the legal entity of Okaloosa County, Florida and is, therefore, reported as part of the primary government. The Supervisor of Elections’ individual financial statements do not purport to reflect the financial position or the results of operations of the primary government of Okaloosa County, Florida taken as a whole. The combined financial statements of the primary government of Okaloosa County, Florida include the individual statements of the following elected officials and those of separately administered organizations that are controlled by or are dependent upon the County:


Financial statements of other component units that form the reporting entity of the primary government of Okaloosa County are not included in these financial statements.


The financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of the fund level only financial statements an permit omission of entity-wide full accrual financial statements and management’s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Okaloosa County, Florida, that relate to transactions of the Supervisor of Elections and are not intended to present the financial position and changes in financial position of Okaloosa County, Florida.

The Supervisor of Elections segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. A fund is a fiscal and accounting entity with a self-balancing set of accounts. The emphasis of fund financial statements is on major governmental funds. The only governmental fund of the Supervisor of Elections is the General Fund.



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1. Exchange and Non-exchange Transactions Exchange transactions are those in which each party receives and gives up essentially equal values. An

example of an exchange transaction is rent, in exchange for a specific service, use of a County building. Non-exchange transactions are those in which the Supervisor of Elections gives (or receives) value without directly receiving (or giving) equal value in exchange. An example of a non-exchange transaction is grant revenue received from the federal or state government used to fund governmental services for the citizens of Okaloosa County. The revenue from these exchange and non-exchange transactions is recognized in the financial statements of the Supervisor of Elections using the modified accrual basis of accounting.

2. Governmental Fund Financial StatementsGovernmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balance report the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. Governmental fund financial statements are reported using the modified accrual basis of accounting. Under this method, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Supervisor of Elections considers all revenues reported in the governmental fund to be available if the revenues are collected within 60 days after year-end. Those revenues susceptible to accrual are charges for service and intergovernmental revenue.


3. Financial Statement Presentation The Supervisor of Elections reports the following major governmental fund:

General Fund This is the Supervisor of Elections’ only operating fund. It accounts for all financial resources of the

general government.



prescribe the instruments in which those investments are authorized, specifically the State of Florida Local Government Surplus Funds Trust Fund; Securities and Exchange Commission (SEC) registered money market funds with the highest credit quality rating; interest-bearing time deposits or savings accounts in qualified public depositories as defined in s.280.02; direct obligations of the United States Treasury, federal agencies and instrumentalities; and securities of or other interest in certain investment companies or investment trusts the portfolio of which is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such obligations. Because the County has adopted written investment policies as provided in subsection (1) through (15) of s. 218.415, other investments may be authorized by resolution or ordinance. Currently authorized are



8



1. Deposits and Investments - Continued

investments in term repurchase agreements with primary broker/dealers collateralized in the County’s name by securities of the United States Government or any agency or instrumentality thereof; overnight repurchase agreements with collateral held by the custodian bank or its trust department; tax exempt bonds, notes or obligations rated in the two highest classifications; inventory-based domestic bankers’ acceptances eligible to qualify for use as collateral at the Federal Reserve Bank; SEC registered open-end mutual funds whose portfolios consist of United States Government securities and repurchase agreements secured by such securities; and Florida Local Government Investment Trust. The Supervisor of Elections adheres strictly to the provisions of those cited Statutes and investments authorized by resolution or ordinance, as well as with Chapter 517, Florida Statutes, which establishes registration procedures for securities and dealers.

2. Receivables and Payables

During the course of operations, numerous transactions occur between individual funds of the primary government of Okaloosa County for goods provided or services rendered. These receivables and payables are classified as “due from other elected officials” or “due to other elected officials” on the balance sheet of the Supervisor of Elections, if applicable. Short-term interfund loans are also classified as “interfund receivables/payables.”

The Supervisor of Elections maintains no allowance for uncollectible trade accounts. Accounts receivable

write offs are insignificant.


Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost.

Contributed assets are recorded at fair market value as of the date received. The Supervisor of Elections’ capitalization level is $1,000 on tangible personal property. Costs incurred for repairs and maintenance is expensed as incurred. Depreciation on all assets is provided on the government-wide statement of activities of Okaloosa County using the straight-line basis over the following estimated useful lives:

Assets YearsEquipment 3-7Vehicles 2-15

4. Compensated Absences The liability for compensated absences consisting of unpaid, accumulated annual and sick leave and

compensatory time balances is reported on the government-wide statement of net assets of Okaloosa County. The liability is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds financial statements of the Supervisor of Elections under the modified accrual basis of accounting only if they have matured, for example, as a result of employee resignations and retirements.



9


D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Assets or Balance- Continued

5. Deferred outflows/inflows of resources In addition to assets, deferred outflows of resources represent a consumption of fund balance that applies to a future period(s) and will not be recognized as an outflow of resources (expenditure) until then. In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

No such items were applicable to the Supervisor of Elections as of September 30, 2016.

6. Fund Balance Governmental funds report zero or deficit unassigned fund balance at year end as all excess appropriations

must be returned to the Board of County Commissioners. The Supervisor of Elections, in its general fund, presents nonspendable fund balance for prepaid items which is offset by the deficit residual unassigned fund balance. When both restricted and unrestricted resources are available for use, it is the policy of the Supervisor of Elections to use restricted resources first, and then unrestricted resources as they are needed.




Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for all governmental funds. All appropriations lapse at fiscal year-end.


On or about June 1 of each year, proposed budgets are received by the Board of County Commissioners from its department heads, from the Supervisor of Elections and the Sheriff, and from other agencies requesting funding for the ensuing fiscal year. These proposed expenditures, along with all estimated receipts, taxes to be levied, and balances expected to be brought forward are considered by the Board of County Commissioners in a series of workshops beginning on or after July 15. The Board of County Commissioners requires such changes as deemed necessary, sets proposed millages and establishes dates for tentative and final public budget hearings as prescribed by Florida Statutes.



The level of budgetary control (that is the level at which expenditures cannot legally exceed appropriations) has been established at the fund level. The County Administrator is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must



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NOTE 2 – LEGAL COMPLIANCE BUDGETS – CONTINUED

approve any revisions that alter the total expenditures of any fund. The Supervisor of Elections and the Sheriff is authorized to make line item transfers but must request approval from the Board for increases in appropriations.

Budget amounts are originally adopted amounts as amended by action of the Board of County Commissioners by revision of fund totals. No supplemental budgetary appropriations to the original adopted budget were necessary during the fiscal year for the Supervisor of Elections.


The Supervisor of Elections maintains its deposits only with qualified public depositories as defined in Chapter 280, Florida Statutes. The provisions of this statute generally require public funds to be deposited in a bank or savings association designated by the State Chief Financial Officer as a “Qualified Public Depository”. All qualified public depositories must maintain deposit insurance. They also must place with or in the name of the Chief Financial Officer of the State of Florida, collateral in the amount of the greater of the average daily balance of public deposits multiplied by the average monthly balance of public deposits or 125% of the average daily balance of public deposits greater than capital. Collateral requirements may be increased according to statue if specified conditions exist. Eligible collateral includes federal, federally-guaranteed, state and local government obligations and corporate bonds. In the event of default by a qualified public depository excess losses over insurance and collateral will be recovered through assessments to all qualified public depositories of the same type as the depository in default. Under this method, all Supervisor of Elections’ deposits, including certificates of deposit, are considered fully insured.

State Statutes restrict the types of investments that can be made by Okaloosa County and its agencies. A description of the requirements and the types of investments allowed as well as information about valuation and other investment policies can be found in Note 1.D.1.

In accordance with the Supervisor of Elections policy, no investment accounts were held during the fiscal year ended September 30, 2016.


Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unavailable revenue and unearned revenue reported in the governmental fund were as follows:

UnearnedGeneral Fund

Grant revenue 31,544$


The following capital asset activity for the Supervisor of Elections of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016:



11


BeginningBalance Increases Decreases Transfers

EndingBalance

Governmental activities:Capital assets, being depreciated:

Machinery and equipment 1,155,946$ 760,813$ (707,639)$ (20,903)$ 1,188,217$

Less accumulated depreciation (1,050,552) (149,707) 694,871 20,903 (484,485)

Governmental activities capital assets, net 105,394$ 611,106$ (12,768)$ -$ 703,732$


Governmental activites: General government 149,707$


The policy of the Supervisor of Elections for annual and sick leave and compensatory time is as follows. Employees may accrue an unlimited amount of annual and sick leave according to the following schedule.

LeaveYears of AccrualService Per Month

Annual LeaveFull time employees 0-5 8 hours

6-10 10 hours11-15 12 hours16-20 14 hours21-25 16 hours26+ 18 hours

Part time employees - 4 hours

Maximum amount paid upon separation from service 240 hours

LeaveAccrual

Per MonthSick LeaveFull time employees 8 hoursPart time employees 0 hours



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Unused sick leave will be paid to employees having ten consecutive years of service upon termination or retirement at varying percentages based on the total unused hours: 50% for the first 480 hours; 25% for the second 480 hours and 20% for all hours over 960.

Compensatory Time

Compensatory time is available only to hourly (non-exempt) employees. Employees may accrue up to 240 hours. Unused amounts will be paid upon termination or retirement.

The total amounts of accumulated compensated absences for the Supervisor of Elections as of September 30, 2016 follow:

CurrentPortion


Compensated absences 64,602$ 68,564$ 133,166$



Due to/from elected officials:

Receivable Fund Payable Fund Amount PurposeBoard of County Commissioners General Fund (13,198)$ Excess appropriations


Transfer In Transfer Out Amount PurposeGeneral Fund Board of County Commissioners 1,848,893$ Budget appropriations


The following long-term debt activity for the Supervisor of Elections of Okaloosa County, Florida is included in the government-wide financial statements of Okaloosa County, Florida for the year ended September 30, 2016:

CAPITAL LEASES

The County has entered into a lease agreement for financing the acquisition of election equipment for the Supervisor of Elections. The lease agreement qualifies as capital lease for accounting purposes as a result of the transfer of title or bargain purchase option and therefore have been recorded at the present value of the future minimum lease payments as of the inception date in the General Fund.



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The assets acquired through capital leases are as follows:

AssetsGovenmental

ActivitiesElection equipment 570,100$ Accumulated depreciation (32,821) Assets acquired by lease, net 537,279$

Balance DueOctober 1,

2015 Increases Decreases

Balance Due September 30,

2016Due WithinOne Year

Governmental Activities:Capital Lease (1) -$ 624,438$ (208,146)$ 416,292$ 208,146$Accrued compensated absences 123,553 9,613 - 133,166 64,602 Other post employment benefits 18,700 7,114 (3,592) 22,222 -

Total Governmental Activities 142,253$ 641,165$ (211,738)$ 571,680$ 272,748$

(1) Principal payments on the capital lease are made directly by the Board of County Commissioners.



Principal InterestYear Ending September 30,

2017 208,146 - 2018 208,146 -

416,292$ -$

Capital Lease



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The Supervisor of Elections participates in the Florida Retirement System (FRS) which is a cost sharing multiple employer contributory retirement system administered by the State of Florida (State). The FRS was established in1970 by Chapter 121, Florida Statutes. In 2002 the FRS was amended to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. Chapter 112, Florida Statutes established the Retiree Health Insurance Subsidy (HIS) Program, a cost–sharing multiple employer defined benefit pension plan to assist retired members of any state- administered retirement system in paying the cost of health insurance.

The State of Florida Retirement System issues a publicly available stand-alone financial report (CAFR) whichincludes financial statements and required supplementary information. Also available are the pension systems actuarial reports to support the schedules of employer allocations and schedules of pension amounts by employer. These reports are available on the division’s website at http://www.dms.myflorida.com or by email at [email protected] . The CAFR and actuarial reports may also be obtained by contacting the Division of Retirement at:



850-907-6500 or toll free 844-377-1888

There are six classes of membership applicable to the Supervisor of Elections. Members are eligible for normal retirement when they have met the requirements listed below. Early retirement may be taken any time after vesting within 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each yearprior to the normal retirement age.


Special Risk Class and Special Risk Administrative Support Class Members – For members initially enrolled in the FRS before July 1, 2011, six or more years of Special Risk Class service and age 55, or the age after completing six years of Special Risk Class service if after age 55. Twenty- five years of special risk service regardless of age before age 55. A total of 25 years of service including special risk service and up to four years of active duty wartime service and age 52. Without six years of Special Risk Class service, members of the Special Risk Administrative Support Class must meet the requirements of the Regular Class. For members initially enrolled in the FRS on or after July 1, 2011, eight or more years of Special Risk Class service and age 60, or the age after completing eight years of Special Risk Class service if after age 60. Thirty years of special risk service regardless of age before age 60. Without eight years of Special Risk Class service, members of the Special RiskAdministrative Support Class must meet the requirements of the Regular Class.




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FRS Membership and Plan Benefits - The FRS Pension Plan provides retirement and disability benefits, death benefits and survivor’s benefits. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are established by State Statutes. Retirement benefits are based on a formula comprised of age, average compensation, length of FRS service, and membership class. Average compensation is computed as the average of an individual’s five highest years of earnings for employees hired before July 1, 2011 or eight highest years of earnings for employees hired on or after July 1, 2011. The amount of benefit payments is also affected by the retirement income option chosen by the plan participant.




Contribution Requirements -The Supervisor of Elections is required to contribute at an actuarially determined rate; these rates are a percent of annual covered payroll. Employees are required to contribute 3% of their annualsalary, while members participating in DROP are not required to make the 3% contribution. The Supervisor of Elections’ contractually required contribution rate includes the HIS contribution, .06% administrative and educational fee and any applicable unfunded actuarial liability “UAL” rates. The HIS required contribution rate is 1.66% for the 2015 and 2016 FRS plan years. This contribution when combined with the employee contribution is expected to finance the cost of the benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Descriptions and contribution rates in effect during the period ended September 30, 2016 and two preceding FRS fiscal years are as follows:

September 30, 2016

June 30, 2016

June 30, 2015

June 30, 2014


For the years ending September 30, 2016, 2015, 2014, the Supervisor of Elections contributed $93,318, $93,123 and $83,377 respectively, equal to 100% of the required contributions for each year.



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The Supervisor of Elections has a net FRS pension liability determined in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This long-term liability is only reported in the county-wide financial statements and is not a current liability of the General Fund. All required disclosures and schedules may be found in the county-wide financial statements of Okaloosa County, Florida.


The Supervisor of Elections has chosen to participate in the Board of County Commissioners’ plan providing post-employment health care and dental insurance benefits (OPEB) for eligible retired employees and their spouses. The OPEB plan provided by the Supervisor of Elections is adequately disclosed in the footnotes of the government-wide financial statements of Okaloosa County, Florida.


The Supervisor of Elections is exposed to risk of loss for claims and judgments for public liability, workers’ compensation, and other special risks. Special risks are covered by commercial insurance policies that are accounted for in the Supervisor of Elections’ general fund. The Supervisor of Elections bears no risk of loss under this type of coverage. There has been no significant reduction in insurance coverage from the prior fiscal year. Insurance coverage has been sufficient to cover all claims made in the prior three fiscal years. The Supervisor of Elections has chosen to participate in a group medical insurance plan along with all other elected officials’ offices of Okaloosa County except for the Sheriff. The plan is administered by the Risk Management Department of the Board of County Commissioners and uses a fully insured commercial insurance policy to fund employee medical benefits. The Supervisor of Elections bears no risk of loss under this type of coverage.

The Supervisor of Elections has chosen to participate in the Self-Insurance Internal Service Fund of the Okaloosa County Board of County Commissioners to handle claims for public liability and workers’ compensation. The Self-Insurance Internal Service Fund charges the Supervisor of Elections a fee to participate based upon actuarially projected budget requirements for expected yearly cash payouts. No claim liability for this self-insurance program is recognized in the financial statements of the Supervisor of Elections.

Other Reports

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Honorable Paul Lux Supervisor of Elections Okaloosa County, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements (hereinafter referred to as “financial statements”) of the General Fund of the Office of the Supervisor of Elections of Okaloosa County, Florida (hereinafter referred to as “Supervisor of Elections”), as of and for the year ended September 30, 2016, and the notes to the financial statements, which collectively comprise the Supervisor of Elections’s financial statements, and have issued our report thereon dated March 1, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Supervisor of Elections’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Supervisor of Elections’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Supervisor of Election’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal that we consider to be material weaknesses. However, material weaknesses may exit that have not been identified.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the Supervisor of Elections’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal controls and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal and compliance. Accordingly, this report is not suitable for any other purpose.


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RULES OF THE AUDITOR GENERAL Honorable Paul Lux Supervisor of Elections Okaloosa County, Florida We have examined the Office of the Supervisor of Elections of Okaloosa County, Florida’s (hereinafter referred to as the “Supervisor of Elections”) compliance with Florida Statutes 218.415 in regards to investments for the year ended September 30, 2016. Management is responsible for the Supervisor of Elections’s compliance with those requirements. Our responsibility is to express an opinion on the Supervisor of Elections’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Supervisor of Elections’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Supervisor of Elections’s compliance with specified requirements. In our opinion, the Supervisor of Elections complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016.


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MANAGEMENT LETTER

Honorable Paul Lux Supervisor of Elections Okaloosa County, Florida Report on the Financial Statements We have audited the financial statements (“financial statements”) of the General Fund of the Office of the Supervisor of Elections of Okaloosa County, Florida (hereinafter referred to as “Supervisor of Elections”), as of and for the year ended September 30, 2016, and have issued our report thereon dated March 1, 2017. Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Auditor General. Other Reports We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants’ Report on Compliance Requirements in Accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated March 1, 2017, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. No recommendations were made in the preceding annual financial report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Supervisor of Elections, Okaloosa County, Florida was established by the Constitution of the State of Florida, Article VIII, Section 1(e), as part of the primary government of Okaloosa County, Florida. There are no component units related to the Supervisor of Elections.

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Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Supervisor of Elections, Okaloosa County Board of County Commissioners, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. We greatly appreciate the assistance and cooperation extended us during our audit.


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