FY2015 – FY2025


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Town of Palm Beach Long Term Financial Plan


PREPARED BY: FINANCE DEPARTMENT

360 SOUTH COUNTY ROAD, PALM BEACH, FL 33480 | www.townofpalmbeach.com Presentation at the April 14, 2015, Town Council Meeting


TABLE OF CONTENTS


Table of Contents


Executive Summary………………………………………………………………..1

General Fund Revenue and Expenditure Trend Analysis…………………………10

General Fund Forecast Summary…………………………………………………20

General Fund Revenue Forecast Details………………………………………. 34

General Fund Expenditure Forecast Details………………………………………35

Recreation Enterprise Fund Trend Analysis……………………………………. 36

Recreation Enterprise Fund Forecast Summary…………………………………..42

Other Funds……………………………………………………………………...46

Reserve Analysis………………………………………………………………….56


Long Term Financial Plan Overview and Executive Summary


The National Advisory Council on State and Local Budgeting (NACSLB) and the Government Finance Officers Association (GFOA) both recommend that governments establish a financial planning process that assesses the long-term financial implications of current and proposed policies, programs, and assumptions, and that develops appropriate strategies to achieve its goals.


The Town of Palm Beach has prepared a Long Term Financial Plan every year since 2003 except in 2008, when a more extensive Comprehensive Review of Town Operations (CRTO) was completed. From 2003, through 2007 a five year plan was prepared. In 2009, we prepared the first 10 year plan and have looked forward ten years in each year thereafter. The Long Term Financial Plan (LTFP) is intended to serve as a tool, providing the Mayor, Town Council and staff with the insight required to address issues impacting the Town’s financial condition. This plan consists of the following sections:


$1,471,382.


More detail regarding revenue and expenditure trends can be found in the section titled General Fund Trends


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Town of Palm Beach | 2


General Fund Forecast


The forecast summary can be found on page 5. The General Fund forecast assumptions can be found under the section titled Forecast. These assumptions were used to create the forecast.

Property tax revenue has been forecasted to increase at 3% per year. On the expenditure side, additional funds were added to the Transfer to Capital Improvement Fund in FY18. We expect all ACIP bond funds to be spent by the end of FY17 and then return to pay-as-you-go funding for future projects. We plan to build up the reserves in this fund over the next few years in anticipation of future pay-as-you-go funding for capital projects. Overall, expenditure increases range from 2.18% to 3.54% throughout the forecast period.


The General Fund forecast summary shows surpluses through FY22 and then small manageable deficits thereafter. The FY16 budget shows a surplus of $428,422. We expect to recommend at the FY16 budget meeting that any surplus achieved in the FY16 budget process, be added to the transfer to the coastal protection fund to begin to add funds to the coastal program for future programs.


Recreation Enterprise Fund


The Recreation Enterprise Fund Trend and Forecast details can be found later in this document under the Recreation Enterprise Fund tab. A summary of the forecasted revenues and expenditures can be found on pages 6 - 8. The summary identifies growth in revenues in 2016 due to the recent success of the Par 3 Golf Course and for the future steady revenue growth at the Town Docks.

Expenses increase in 2016 to meet the growing volume of business at the Par 3 Golf Course then taper off to a growth rate from 1.9% to 3% per year.


In the future, the docks at the Marina are expected to be replaced in a multi-year project and there are plans to evaluate the Recreation Center for modernization. A master plan/structural assessment is scheduled for the Town Docks in FY2017. A Dock Replacement Fund was established in 2002 and has been funded with an amount equal to the annual depreciation on the docks. The current amount in the Dock Replacement Reserve is $2,715,680. This reserve will not be sufficient to completely finance the anticipated costs of the dock replacement.


Other Funds


Other Funds included in this document are the Risk Insurance Fund, the Health Insurance Fund, the OPEB Trust fund and the Debt Service Funds. Trend and forecast information can be found later in this document under the section marked “Other Funds”.


The Risk Fund includes additional funding for the stop loss reserve. We project an increase from

$780,000 in FY14, $900,000 in FY15 to $1.1 million in FY18 based upon recommendations by our insurance carrier due to our claims history. The Health Fund and OPEB Trust fund forecast a 5% increase in health insurance costs in FY16 and then 7% thereafter. The Debt Service fund identifies



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Town of Palm Beach | 3



future debt service on the 2010 and 2013 bond and does not anticipate any additional revenue bond debt.


Reserve Status


The final section of this document contains an update of the status of Town Reserves as of September 30, 2014. The reserve balances exceed all of the policy minimums that have been established. The General Fund unassigned fund balance exceeds the required minimum by

$6,669,094. This balance will likely be needed for the coastal management program.



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Town of Palm Beach | 4

Town of Palm Beach

Revenue and Expenditure History FY2006 - FY2015


FY06 Actual

FY07 Actual

FY08 Actual

FY09 Actual

FY10 Actual

FY11 Actual

FY12 Actual

FY13 Actual

FY14 Actual

FY15 Budget

Revenues


39,008,774


43,096,605


41,457,250


42,887,216


41,508,570


36,635,343


36,662,916


37,473,108


39,110,926


43,424,300

Ad Valorem Taxes

Non Ad Valorem Taxes

6,961,865

6,945,297

7,281,836

7,386,397

7,371,330

7,189,368

7,315,317

7,533,859

7,946,097

7,937,500

Licenses & Permits

6,473,831

7,104,528

7,773,244

5,543,034

4,777,557

6,382,545

6,498,207

7,572,518

8,053,581

6,835,600

Intergovernmental

4,222,145

1,329,328

1,248,316

1,485,128

1,101,206

1,319,119

1,051,432

990,715

1,071,413

1,079,750

Charges for Services

2,487,444

2,449,038

2,808,506

3,278,180

3,215,943

3,461,766

4,081,259

3,576,156

3,741,183

3,573,600

Fines and Forefeitures

770,067

1,541,448

1,183,318

1,152,807

594,473

1,297,226

1,106,435

1,253,760

1,924,182

1,210,000

Investment Earnings

1,902,793

2,287,127

1,368,751

1,923,224

1,168,997

495,649

495,311

32,425

383,726

578,694

Miscellaneous and Transfers

762,856

829,587

924,286

801,901

1,930,162

2,774,498

1,534,738

1,871,043

1,584,625

1,106,000

Total Operating Revenues

62,589,775

65,582,958

64,045,507

64,457,887

61,668,238

59,555,514

58,745,615

60,303,584

63,815,733

65,745,444

Transfers from Fund Balance

1,549,900

Total Revenues

62,589,775

65,582,958

64,045,507

64,457,887

61,668,238

59,555,514

58,745,615

60,303,584

63,815,733

67,295,344


Expenditures


24,318,537


24,543,973


25,280,657


27,346,557


26,359,064


24,396,538


23,627,363


22,943,974


23,152,224


24,927,999

Salaries and Wages

Pension Benefits

4,921,942

6,535,666

7,218,551

6,621,068

7,303,519

8,771,681

3,180,126

3,831,588

4,977,617

5,455,247

DC Plan Benefits

-

-

222,307

537,532

1,088,013

1,227,368

Other Employee Benefits

6,168,763

6,303,985

6,323,368

7,285,058

6,913,472

6,601,573

6,616,971

6,736,760

6,741,912

6,893,910

Contractual

9,321,512

6,966,503

8,120,662

8,709,551

7,070,741

6,963,078

7,139,390

7,224,092

7,603,154

8,565,388

Commodities

2,116,950

1,860,397

2,051,710

1,748,218

1,627,774

1,484,765

1,547,738

1,554,104

1,642,397

1,753,846

Equipment Replacement

1,852,144

2,040,499

3,282,121

2,723,701

2,518,060

2,547,679

1,881,319

2,033,744

2,097,896

1,876,644

Library Services

235,000

247,000

259,350

272,400

272,400

272,400

272,400

288,989

297,659

306,580

Other

98,176

94,999

116,392

55

(2,075)

9,172

12,932

29,863

4,251

Transfer to Capital Improvement

3,835,063

3,378,801

2,096,000

1,817,000

4,828,957

500,000

1,000,000

1,000,000

1,000,000

1,000,000

Transfer to Coastal Protection

-

2,000,000

1,046,900

3,090,000

3,960,000

4,765,099

7,200,000

4,777,000

Transfer to Equipment Replacement

4,205,523

-

-

Debt Service

3,402,060

3,529,000

3,652,000

3,790,000

3,922,000

3,500,000

3,500,000

3,500,000

6,100,000

6,100,000

Retiree Health

919,137

993,700

1,466,000

1,649,000

1,550,000

1,533,000

1,493,000

1,769,000

1,506,000

1,577,000

Transfer to Risk Insurance Fund

2,390,000

2,220,201

2,392,000

1,918,000

1,904,463

1,896,226

1,791,507

1,892,780

1,876,000

1,925,362

Contingency

-

-

909,000

Total Expenditures

63,784,807

58,714,724

62,258,811

65,880,608

65,315,275

61,566,112

56,245,053

58,107,525

65,287,123

67,295,344

Surplus/(Deficit)

(1,195,032)

6,868,234

1,786,696

(1,422,721)

(3,647,037)

(2,010,598)

2,500,562

2,196,059

(1,471,390)



Page 5

Town of Palm Beach

Revenue and Expenditure Forecast LTFP FY2015 - FY2025


FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25

Revenues


43,424,300


44,727,029


46,068,840


47,450,905


48,874,432


50,340,665


51,850,885


53,406,412


55,008,604


56,658,862


58,358,628

Ad Valorem Taxes

Non Ad Valorem Taxes

7,937,500

8,056,725

8,295,296

8,540,961

8,793,932

9,054,428

9,322,671

9,598,895

9,883,335

10,176,239

10,477,858

Licenses & Permits

6,835,600

6,964,000

6,996,025

6,996,025

7,029,651

7,029,651

7,064,959

7,064,959

7,102,032

7,140,958

7,181,831

Intergovernmental

1,079,750

1,075,440

1,103,698

1,132,799

1,162,768

1,193,630

1,225,413

1,258,144

1,291,851

1,326,564

1,362,312

Charges for Services

3,573,600

3,673,458

3,738,440

3,804,778

3,889,601

3,960,327

4,033,086

4,107,939

4,184,946

4,264,170

4,345,676

Fines and Forefeitures

1,210,000

1,225,000

1,249,500

1,249,500

1,274,490

1,278,007

1,299,980

1,305,318

1,310,815

1,316,476

1,322,306

Investment Earnings

578,694

825,500

1,000,500

1,150,500

1,275,500

1,425,500

1,525,500

1,625,500

1,725,500

1,825,500

1,925,500

Miscellaneous and Transfers

1,106,000

1,093,500

1,095,150

1,096,850

1,098,600

1,100,403

1,102,260

1,104,173

1,106,143

1,108,172

1,110,263

Total Operating Revenues

65,745,444

67,640,652

69,547,449

71,422,318

73,398,974

75,382,611

77,424,754

79,471,340

81,613,226

83,816,941

86,084,374

Transfers from Fund Balance

1,549,900

1,552,872

1,799,107

1,717,256

1,631,466

1,659,366

1,693,176

1,730,207

1,767,087

1,807,168

1,845,889

Total Revenues

67,295,344

69,193,524

71,346,556

73,139,574

75,030,440

77,041,977

79,117,930

81,201,547

83,380,313

85,624,109

87,930,263


Expenditures


24,927,999


25,368,563


26,053,697


26,388,599


26,912,072


27,449,927


28,324,600


29,298,667


30,254,085


31,297,653


32,374,946

Salaries and Wages

Pension Benefits

5,455,247

5,910,719

6,620,910

6,666,286

6,854,644

7,149,491

7,444,168

7,761,451

8,086,694

8,434,834

8,793,007

DC Plan Benefits

1,227,368

1,259,097

1,286,938

1,315,105

1,346,743

1,383,098

1,428,550

1,478,187

1,526,498

1,579,650

1,634,481

Other Employee Benefits

6,893,910

7,049,083

7,410,131

7,709,791

8,038,236

8,431,035

8,878,371

9,363,693

9,835,561

10,373,433

10,941,868

Contractual

8,565,388

8,799,570

8,985,711

9,158,305

9,352,067

9,589,944

9,792,863

10,000,092

10,211,723

10,427,849

10,648,567

Commodities

1,753,846

1,789,377

1,826,954

1,868,420

1,900,157

1,940,060

1,980,801

2,022,398

2,064,868

2,108,230

2,152,503

Equipment Replacement

1,876,644

2,023,893

2,065,469

2,107,917

2,151,256

2,195,506

2,240,685

2,286,812

2,333,908

2,381,993

2,431,088

Library Services

306,580

315,777

325,251

335,008

345,058

355,410

366,073

377,055

388,366

400,017

412,018

Other

Transfer to Capital Improvement

1,000,000

1,000,000

1,000,000

1,100,000

1,123,100

1,146,685

1,170,765

1,195,352

1,220,454

1,246,083

1,272,251

Transfer to Coastal Protection

4,777,000

4,919,905

5,067,502

5,219,527

5,376,113

5,537,397

5,703,519

5,874,624

6,050,863

6,232,389

6,232,389

Debt Service

6,100,000

6,265,462

6,275,412

6,266,687

6,274,162

6,266,337

6,267,587

6,268,212

6,263,087

6,266,837

6,266,837

Retiree Health

1,577,000

1,180,000

1,244,000

1,313,000

1,386,000

1,464,000

1,549,000

1,639,000

1,735,000

1,838,000

1,949,000

Transfer to Risk Insurance Fund

1,925,362

1,986,734

2,108,841

2,185,841

2,215,739

2,253,949

2,297,891

2,376,663

2,458,967

2,545,000

2,634,922

Contingency

909,000

1,014,622

1,049,107

1,067,256

1,091,466

1,119,366

1,153,176

1,190,207

1,227,087

1,267,168

1,305,889

Total Expenditures

67,295,344

68,882,802

71,319,923

72,701,742

74,366,813

76,282,205

78,598,049

81,132,413

83,657,161

86,399,136

89,049,766

Surplus/(Deficit)

310,722

26,633

437,832

663,627

759,772

519,881

69,134

(276,848)

(775,027)

(1,119,503)


Page 6


Summary of Operating Revenue

Long‐term Financial Plan


2015

Budget

2016

Budget

2017

Budget

2018

Budget

2019

Budget

2020

Budget

2021

Budget

2022

Budget

2023

Budget

2024

Budget

2025

Budget

Revenues


325,000


331,500


338,130


344,893


351,790


358,826


366,003


373,323


380,789


388,405


396,173

Youth Program Fees

Adult Program Fees

29,000

29,580

30,172

30,775

31,391

32,018

32,659

33,312

33,978

34,658

35,351

Facility Rental Fees

1,000

1,030

1,061

1,093

1,126

1,159

1,194

1,230

1,267

1,305

1,344

Seaview Park Concession

1,300

1,339

1,379

1,421

1,463

1,507

1,552

1,599

1,647

1,696

1,747

Promotional Merchandise

1,400

1,442

1,485

1,530

1,576

1,623

1,672

1,722

1,773

1,827

1,881

Tennis Mixers

4,000

4,000

4,120

4,244

4,371

4,502

4,637

4,776

4,919

5,067

5,219

Tennis Program Fee

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

Tennis 12 Play Pass

22,000

25,000

25,750

26,523

27,318

28,138

28,982

29,851

30,747

31,669

32,619

Tennis Daily Court Fees

41,000

42,230

43,497

44,802

46,146

47,530

48,956

50,425

51,938

53,496

55,101

Tennis Annual Pass Fees

55,000

55,000

56,650

58,350

60,100

61,903

63,760

65,673

67,643

69,672

71,763

Tennis Pro Admin Fees

13,200

13,200

14,400

14,400

15,600

15,600

15,600

15,600

15,600

15,600

15,600

Tennis Maintenance & Imp Fee

8,000

8,240

8,487

8,742

9,004

9,274

9,552

9,839

10,134

10,438

10,751

Tennis Facility Rentals

5,000

4,500

4,635

4,774

4,917

5,065

5,217

5,373

5,534

5,700

5,871

Tennis Merchandise

3,100

3,193

3,289

3,387

3,489

3,594

3,702

3,813

3,927

4,045

4,166

Tennis Teaching Services

56,000

57,680

59,410

61,193

63,028

64,919

66,867

68,873

70,939

73,067

75,259

Annual Leases

2,499,000

2,548,980

2,625,449

2,704,213

2,785,339

2,868,899

2,954,966

3,043,615

3,134,924

3,228,972

3,325,841

Seasonal Leases

254,800

259,896

267,693

275,724

283,995

292,515

301,291

310,329

319,639

329,228

339,105

Transient

468,000

477,360

491,681

506,431

521,624

537,273

553,391

569,993

587,093

604,705

622,847

Electricity

95,000

95,000

97,000

97,000

97,000

97,000

97,000

100,000

100,000

100,000

100,000

Waiting List Fee

500

500

500

500

500

500

500

500

500

500

500

Ice Sales

300

306

315

325

334

344

355

365

376

388

399

Replacement Reserve

0

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

Sales Tax Commissions ‐Other

400

408

420

433

446

459

473

487

502

517

532

Misc Revenue Docks

400

408

420

433

446

459

473

487

502

517

532

Golf Pro Administrative Fee

0

12,000

12,000

13,200

13,200

13,200

13,200

13,200

13,200

13,200

13,200

Golf Resident Pass Fees

20,000

20,000

20,600

21,218

21,855

22,510

23,185

23,881

24,597

25,335

26,095

Golf Non‐Res. Pass Fees

6,500

6,500

6,695

6,896

7,103

7,316

7,535

7,761

7,994

8,234

8,481

Golf 12 Play Passes

21,500

16,000

16,480

16,974

17,484

18,008

18,548

19,105

19,678

20,268

20,876

Greens Fees

552,000

629,000

641,580

654,412

667,500

680,850

694,467

708,356

722,523

736,974

751,713

Golf Riding Cart Rental

139,000

169,000

174,070

179,292

184,671

190,211

195,917

201,795

207,849

214,084

220,507

Golf Pull Cart Rental

25,000

29,600

30,488

31,403

32,345

33,315

34,315

35,344

36,404

37,496

38,621

Golf Driving Range

105,700

104,000

107,120

110,334

113,644

117,053

120,565

124,181

127,907

131,744

135,696

Golf Maint & Improve Fee

69,500

72,000

74,160

76,385

78,676

81,037

83,468

85,972

88,551

91,207

93,944

Club Rentals

30,000

35,000

36,050

37,132

38,245

39,393

40,575

41,792

43,046

44,337

45,667


Page 7


Golf Teaching Services

28,000

28,000

28,560

29,131

29,714

30,308

30,914

31,533

32,163

32,806

33,463

Golf Merchandise

125,000

175,000

178,500

182,070

185,711

189,426

193,214

197,078

201,020

205,040

209,141

Golf F&B Revenue (Restaurant)

200,000

235,000

250,000

250,000

250,000

250,000

255,000

260,000

265,000

270,000

270,000

Programs & Events

12,000

15,000

15,450

15,914

16,391

16,883

17,389

17,911

18,448

19,002

19,572

Golf Outings

25,000

25,750

26,523

27,318

28,138

28,982

29,851

30,747

31,669

32,619

33,598

Gift Certificates

0

6,000

6,120

6,242

6,367

6,495

6,624

6,757

6,892

7,030

7,171

Interest Earnings

14,400

25,000

25,000

25,000

25,000

25,000

25,000

25,000

25,000

25,000

25,000

Vending Machine Comm Golf

0

0

0

0

0

0

0

0

0

0

0

Sales Tax Commissions ‐ Golf

300

309

318

328

338

348

358

369

380

391

403

Misc Revenue ‐ Golf

1,500

1,575

1,654

1,736

1,823

1,914

2,010

2,111

2,216

2,327

2,443

TOTAL REVENUES

5,259,800

5,567,526

5,729,311

5,878,166

6,031,208

6,187,357

6,352,938

6,526,078

6,700,910

6,880,569

7,060,194

‐0.6%

5.9%

2.9%

2.6%

2.6%

2.6%

2.7%

2.7%

2.7%

2.7%

2.6%


Page 8


Summary of Operating Expenses


2015

Budget

2016

Budget

2017

Budget

2018

Budget

2019

Budget

2020

Budget

2021

Budget

2022

Budget

2023

Budget

2024

Budget

2025

Budget

Expenses


1,330,642


1,366,253


1,405,465


1,426,547


1,464,921


1,506,085


1,554,581


1,604,638


1,649,087


1,702,517


1,756,998

Salaries/Wages

Pension Benefits ‐ DB

132,131

143,085

157,880

153,680

154,756

158,779

162,479

167,548

171,988

177,750

183,385

Pension Benefits ‐ DC

72,738

74,704

76,848

78,001

80,099

82,350

85,002

87,739

90,169

93,091

96,070

Other Employee Benefits

336,028

344,933

362,421

378,549

395,470

414,887

437,001

460,992

486,808

513,533

541,778

Contractual

1,328,687

1,430,056

1,460,087

1,490,749

1,522,055

1,554,018

1,586,653

1,619,972

1,653,992

1,688,726

1,724,189

Commodities

286,531

369,150

376,902

384,817

392,899

401,149

409,574

418,175

426,956

435,922

445,077

Capital Outlay

0

0

0

0

0

0

0

0

0

0

0

TOTAL OPERATING EXPENSES

3,486,757

3,728,181

3,839,603

3,912,343

4,010,199

4,117,269

4,235,288

4,359,064

4,479,000

4,611,539

4,747,495


Operating Revenues

5.1%

6.9%

3.0%

1.9%

2.5%

2.7%

2.9%

2.9%

2.8%

3.0%

2.9%

over/(under) Expenses

1,773,043

1,839,345

1,889,708

1,965,823

2,021,009

2,070,087

2,117,649

2,167,014

2,221,910

2,269,030

2,312,699

Capital Expenses

(99,500)

(105,000)

(400,000)

(77,000)

(110,000)

(48,000)

(25,000)

(25,000)

(25,000)

(25,000)

(25,000)

Depreciation*

(725,182)

(740,411)

(755,959)

(771,835)

(788,043)

(804,592)

(821,488)

(838,740)

(856,353)

(874,337)

(892,698)

Depreciation (Credited to show cash)

725,182

740,411

755,959

771,835

788,043

804,592

821,488

838,740

856,353

874,337

892,698

Transfer to General Fund

(885,000)

(885,000)

(885,000)

(885,000)

(885,000)

(885,000)

(885,000)

(885,000)

(885,000)

(885,000)

(885,000)

Debt Service

(202,200)

(204,100)

(200,500)

(201,800)

(202,875)

(203,350)

(203,225)

(202,850)

(207,100)

(205,975)

(199,725)

Contingency (5% operating expenses)

(272,100)

(186,409)

(191,980)

(195,617)

(200,510)

(205,863)

(211,764)

(217,953)

(223,950)

(230,577)

(237,375)

TOTAL REVENUES

OVER/(UNDER) EXPENSES


314,243


458,836


212,228


606,406


622,624


727,874


792,660


836,210


880,860


922,478


965,599



image


Projected Surplus/ Deficit


Due to the deep cuts in expenditures the projection of the annual surplus/deficit has changed dramatically since the 2009 forecast. Deficits were originally forecast to begin in 2012 and continue throughout the forecast period, peaking at $20.2 million in 2020. Compared to the 2013 forecast, the 2015 forecast contains smaller projected surpluses in the early years due to the appropriations for the Coastal Protection Program and debt service on the 2013 Revenue bond. However, even after accounting for these increases, the longer-term forecast has improved since 2014 due to additional cost savings measures and improved revenues in the FY15 budget. The 2015 forecast show small deficits beginning in 2023, whereas the 2014 forecast had deficits beginning in 2017.


image

Town of Palm Beach | 32


image


Planning for the FY16 Budget


The Long Term Financial Plan is a baseline forecast. It is not a budget. Staff currently is preparing the FY16 proposed budget to reflect exact needs and specific proposals, and we intend to submit a proposed budget that is in line with the forecast.


image

33 | Town of Palm Beach

Town of Palm Beach Revenue Forecast FY15 - FY25


Analysis of Revenues by Category Revenue Sources

2015

Budget

2016

Estimated

2017

Estimated

2018

Estimated

2019

Estimated

2020

Estimated

2021

Estimated

2022

Estimated

2023

Estimated

2024

Estimated

2025

Estimated


Ad Valorem Revenues


43,424,300


44,727,029


46,068,840


47,450,905


48,874,432


50,340,665


51,850,885


53,406,412


55,008,604


56,658,862


58,358,628

% Increase

11.03%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

$ Increase

4,313,374

1,302,729

1,341,811

1,382,065

1,423,527

1,466,233

1,510,220

1,555,527

1,602,192

1,650,258

1,699,766

Non Ad Valorem Taxes

7,937,500

8,056,725

8,295,296

8,540,961

8,793,932

9,054,428

9,322,671

9,598,895

9,883,335

10,176,239

10,477,858

% Increase

-0.11%

1.50%

2.96%

2.96%

2.96%

2.96%

2.96%

2.96%

2.96%

2.96%

2.96%

-8,597

119,225

238,571

245,665

252,971

260,495

268,244

276,223

284,441

292,904

301,619

Licenses and Permits

6,835,600

6,964,000

6,996,025

6,996,025

7,029,651

7,029,651

7,064,959

7,064,959

7,102,032

7,140,958

7,181,831

% Increase

-15.12%

1.88%

0.46%

0.00%

0.48%

0.00%

0.50%

0.00%

0.52%

0.55%

0.57%

$ Increase

-1,217,981

128,400

32,025

0

33,626

0

35,308

0

37,073

38,927

40,873

Intergovernmental Revenue

1,079,750

1,075,440

1,103,698

1,132,799

1,162,768

1,193,630

1,225,413

1,258,144

1,291,851

1,326,564

1,362,312

% Increase

0.78%

-0.40%

2.63%

2.64%

2.65%

2.65%

2.66%

2.67%

2.68%

2.69%

2.69%

$ Increase

8,337

-4,310

28,258

29,101

29,969

30,862

31,783

32,731

33,707

34,713

35,748

Charges for Services

3,573,600

3,673,458

3,738,440

3,804,778

3,889,601

3,960,327

4,033,086

4,107,939

4,184,946

4,264,170

4,345,676

% Increase

-4.48%

2.79%

1.77%

1.77%

2.23%

1.82%

1.84%

1.86%

1.87%

1.89%

1.91%

$ Increase

-167,585

99,858

64,982

66,338

84,823

70,726

72,760

74,853

77,007

79,224

81,506

Fines and Forefeitures

1,210,000

1,225,000

1,249,500

1,249,500

1,274,490

1,278,007

1,299,980

1,305,318

1,310,815

1,316,476

1,322,306

% Increase

-32.67%

1.24%

2.00%

0.00%

2.00%

0.28%

1.72%

0.41%

0.42%

0.43%

0.44%

$ Increase

-587,015

15,000

24,500

0

24,990

3,517

21,973

5,338

5,497

5,661

5,830

Interest Income

578,694

825,500

1,000,500

1,150,500

1,275,500

1,425,500

1,525,500

1,625,500

1,725,500

1,825,500

1,925,500

% Increase

50.81%

42.65%

21.20%

14.99%

10.86%

11.76%

7.02%

6.56%

6.15%

5.80%

5.48%

$ Increase

194,968

246,806

175,000

150,000

125,000

150,000

100,000

100,000

100,000

100,000

100,000

Miscellaneous and Transfers

1,106,000

1,093,500

1,095,150

1,096,850

1,098,600

1,100,403

1,102,260

1,104,173

1,106,143

1,108,172

1,110,263

% Increase

-30.20%

-1.13%

0.15%

0.16%

0.16%

0.16%

0.17%

0.17%

0.18%

0.18%

0.19%

$ Increase

-478,625

-12,500

1,650

1,700

1,750

1,803

1,857

1,913

1,970

2,029

2,090

Transfers from Fund Balance

1,549,900

1,552,872

1,799,107

1,717,256

1,631,466

1,659,366

1,693,176

1,730,207

1,767,087

1,807,168

1,845,889

% Increase

0.00%

0.19%

15.86%

-4.55%

-5.00%

1.71%

2.04%

2.19%

2.13%

2.27%

2.14%

$ Increase

1,549,900

2,972

246,235

-81,851

-85,790

27,900

33,810

37,031

36,880

40,081

38,722

Total Revenues

67,295,344

69,193,524

71,346,556

73,139,574

75,030,441

77,041,977

79,117,931

81,201,546

83,380,313

85,624,109

87,930,262

% Increase

5.66%

2.82%

3.11%

2.51%

2.59%

2.68%

2.69%

2.63%

2.68%

2.69%

2.69%

$ Increase

3,606,776

1,898,180

2,153,032

1,793,019

1,890,866

2,011,536

2,075,954

2,083,615

2,178,767

2,243,796

2,306,153


Page 34

Town of Palm Beach Expenditure Forecast FY15 - FY25


Analysis of Expenses by Category Expenditure Categories

2015

Estimated

2016

Estimated

2017

Estimated

2018

Estimated

2019

Estimated

2020

Estimated

2021

Estimated

2022

Estimated

2023

Estimated

2024

Estimated

2025

Estimated


Salaries/Wages


24,927,999


25,368,563


26,053,697


26,388,599


26,912,072


27,449,927


28,324,600


29,298,667


30,254,085


31,297,653


32,374,946

% Increase

2.59%

1.77%

2.70%

1.29%

1.98%

2.00%

3.19%

3.44%

3.26%

3.45%

3.44%

$ Increase

629,118

440,564

685,134

334,902

523,473

537,855

874,673

974,068

955,417

1,043,569

1,077,293

Pension Benefits

5,455,247

5,910,719

6,620,910

6,666,286

6,854,644

7,149,491

7,444,168

7,761,451

8,086,694

8,434,834

8,793,007

% Increase

9.60%

8.35%

12.02%

0.69%

2.83%

4.30%

4.12%

4.26%

4.19%

4.31%

4.25%

$ Increase

477,630

455,472

710,191

45,376

188,359

294,847

294,676

317,284

325,242

348,140

358,173

DC Plan

1,227,368

1,259,097

1,286,938

1,315,105

1,346,743

1,383,098

1,428,550

1,478,187

1,526,498

1,579,650

1,634,481

% Increase

2.67%

2.59%

2.21%

2.19%

2.41%

2.70%

3.29%

3.47%

3.27%

3.48%

3.47%

$ Increase

31,970

31,729

27,842

28,166

31,639

36,354

45,452

49,637

48,311

53,153

54,831

Other Employee Benefits

6,893,910

7,049,083

7,410,131

7,709,791

8,038,236

8,431,035

8,878,371

9,363,693

9,835,561

10,373,433

10,941,868

% Increase

-0.23%

2.25%

5.12%

4.04%

4.26%

4.89%

5.31%

5.47%

5.04%

5.47%

5.48%

$ Increase

-15,645

155,173

361,048

299,660

328,445

392,799

447,335

485,323

471,867

537,872

568,435

Contractual

8,565,388

8,799,570

8,985,711

9,158,305

9,352,067

9,589,944

9,792,863

10,000,092

10,211,723

10,427,849

10,648,567

% Increase

1.09%

2.73%

2.12%

1.92%

2.12%

2.54%

2.12%

2.12%

2.12%

2.12%

2.12%

$ Increase

92,545

234,182

186,141

172,593

193,762

237,877

202,919

207,229

211,631

216,126

220,718

Commodities

1,753,846

1,789,377

1,826,954

1,868,420

1,900,157

1,940,060

1,980,801

2,022,398

2,064,868

2,108,230

2,152,503

% Increase

3.05%

2.03%

2.10%

2.27%

1.70%

2.10%

2.10%

2.10%

2.10%

2.10%

2.10%

$ Increase

51,886

35,531

37,577

41,466

31,737

39,903

40,741

41,597

42,470

43,362

44,273

Equipment Replacement

1,876,644

2,023,893

2,065,469

2,107,917

2,151,256

2,195,506

2,240,685

2,286,812

2,333,908

2,381,993

2,431,088

% Increase

-6.66%

7.85%

2.05%

2.06%

2.06%

2.06%

2.06%

2.06%

2.06%

2.06%

2.06%

$ Increase

-133,937

147,249

41,575

42,448

43,340

44,250

45,179

46,127

47,096

48,085

49,095

Library Services

306,580

315,777

325,251

335,008

345,058

355,410

366,073

377,055

388,366

400,017

412,018

% Increase

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

$ Increase

8,921

9,197

9,473

9,758

10,050

10,352

10,662

10,982

11,312

11,651

12,001

TRANSFER TO OTHER FUNDS

CAPITAL IMPROV. FUND (307)

1,000,000

1,000,000

1,000,000

1,100,000

1,123,100

1,146,685

1,170,765

1,195,352

1,220,454

1,246,083

1,272,251

COASTAL PROTECTION FUND (309)

4,777,000

4,919,905

5,067,502

5,219,527

5,376,113

5,537,397

5,703,519

5,874,624

6,050,863

6,232,389

6,232,389

DEBT SERVICE FUND (203)

6,100,000

6,265,462

6,275,412

6,266,687

6,274,162

6,266,337

6,267,587

6,268,212

6,263,087

6,266,837

6,266,837

RETIREE HEALTH INS.(OPEB) (610)

1,577,000

1,180,000

1,244,000

1,313,000

1,386,000

1,464,000

1,549,000

1,639,000

1,735,000

1,838,000

1,949,000

RISK-W/C, LIAB.PROP. (501)

1,925,362

1,986,734

2,108,841

2,185,841

2,215,739

2,253,949

2,297,891

2,376,663

2,458,967

2,545,000

2,634,922

CONTINGENT APPROP.

909,000

1,014,622

1,049,107

1,067,256

1,091,466

1,119,366

1,153,176

1,190,207

1,227,087

1,267,168

1,305,889

Total Transfers and Other

16,288,362

16,366,723

16,744,862

17,152,311

17,466,580

17,787,735

18,141,939

18,544,058

18,955,458

19,395,477

19,661,288

% Increase

4.80%

0.48%

2.31%

2.43%

1.83%

1.84%

1.99%

2.22%

2.22%

2.32%

1.37%

$ Increase

746,362

78,361

378,139

407,449

314,269

321,155

354,204

402,119

411,400

440,019

265,811

Total Expenditures

67,295,344

68,882,801

71,319,923

72,701,741

74,366,814

76,282,205

78,598,049

81,132,414

83,657,160

86,399,138

89,049,767

% Increase

2.89%

2.36%

3.54%

1.94%

2.29%

2.58%

3.04%

3.22%

3.11%

3.28%

3.07%

$ Increase

1,888,851

1,587,457

2,437,121

1,381,818

1,665,073

1,915,391

2,315,844

2,534,365

2,524,746

2,741,978

2,650,629


page 35

Recreation Enterprise Fund Trends


Marina


Revenues

2005 - 2008: Revenue increases reflect strategic increases in rates and growth in transient business. 2010 - 2011: Decrease in revenue is attributed to continuing slow economy and boating/yacht market, and not achieving 100% occupancy.

2012 - 2013: Revenue increases from growth in business as yachting industry improves.

2014: Revenue increases due to increased occupancy and minor increases in dockage rates and electrical charges.

2015: Revenue increases are due to an increase in fees and anticipated increases in occupancy.


Expenses

2009: Increased expenses are attributed to minor facility improvements.

2010: Decreased expenses are due to an unfilled vacancy of the Assistant Dockmaster position for most of the fiscal year.

2011: Decreased expenses due to the elimination of Assistant Dockmaster position, reduction in private security contract costs, and Dockmaster vacancy for a large part of the fiscal year.

2012: Increased expenses due to fully funded Dockmaster position and partial reallocation of an Assistant Director’s salary.

2013: Increased expenses due to minor facility improvements.

2014: Increased expenses are due to upgraded shore power and minor facility improvements. 2015: Increased expenses are due to increased use of part-time no benefits and contractual employees and minor facility improvements and repairs.


image


image

Town of Palm Beach | 36


Par 3 Golf Course


Revenues

2008: Decreased revenue is attributed to downturn in play due to slumping economy. 2009: The Par 3 closed for renovation starting in April 2009.

2010: The Par 3 remained closed until mid-December. Also, unseasonable weather negatively impacted play from December - March. Along with the weather challenges, the overall economic conditions had a lasting effect on golf play.

2010 - 2011: Revenue increases reflect re-positioning efforts of the golf course, through enhanced marketing approaches, new price structures, and growth in play.

2012: Revenue decreases due to rainier than normal season and A1A road closure. 2013: Revenue increases from growth in business and improved golf economy.

2014: Revenue increases from growth in rounds played and merchandise sales, as well as new revenue associated with the restaurant vendor agreement.

2015: Budgeted revenue was conservatively estimated and exceeding expectations through March. It is anticipated revenue will surpass the estimate and FY14 actual.


Expenses

2008: Decrease in expenses can be attributed to the elimination of Registration Clerk II position. 2010: Expenses reflect the use of contract labor to establish and maintain a higher level of maintenance standards which offset the elimination of a full-time Equipment Operator position. 2011: Eliminated the Pro-Manager leadership model and a Golf Manager model was implemented. 2013: Increase in expenses due mostly to purchase of new golf cart fleet.

2014: Increase in expenses attributed to additional staff needed to meet increased play and pro-shop business, as well as operating costs for the new clubhouse.

2015: Expense increase due to increases in personnel to handle the volume of business and increase in investment in pro shop sales inventory.


image


image

37 | Town of Palm Beach

Tennis Programs & Facilities


Revenues

2009: Revenue increase is attributed to pricing increases for annual passes and daily play rates. 2010 - 2013: Revenue increase due to growth in income share from the teaching contract, and increased participation.

2014: Revenue increase is attributed to increased overall participation.

2015: Revenue is estimated to increase over the 2014 actual levels due to increased participation.


Expenses

2008: Decrease reflects the elimination of the Pro-Manager position.

2009: Increase can be attributed to a partial re-allocation of an Assistant Director salary to match responsibilities, additional PT staff hours, equipment purchases to maintain the new courts, and new furniture/fixtures.

2011 - 2012: Decrease attributed to elimination of one Facility Supervisor and Maintenance Worker positions.

2013: Increase attributed to minor facility improvements and increased cost of employee benefits. 2014: Increase in expenses attributed to increases in contractual items.

2015: Increase in expenses attributed to increases in part time no benefits and contractual employee support and increases in commodities costs.


image


image

Town of Palm Beach | 38


Recreation Center


Revenues

2010 - 2011: Revenues increased due to program growth, price increases, and additional offerings. 2012 - 2013: Revenues flat due to a leveling off of programming offerings and limited activity space. 2014: Revenue increase due to participation growth through additional offerings.

2015: Revenue increase due to anticipated participation growth through additional offerings.


Expenses

2007: Recreation Supervisor position added to meet programming needs (offset by elimination of Tennis Manager), and new furniture/equipment was purchased for the facility.

2009: Seaview Park and Recreation Center building maintenance expenses were moved from the Administration program to the newly re-named “Recreation Center” program allowing for a more accurate description (financially and programmatically) of expenses. Also had a few periodic expenses, such as painting of the facility, new air handler installation, and re-finishing of floors.

2010: Decrease in expenses is attributed to the elimination of periodic expenses from the prior year. 2012: Decrease attributed to elimination of Maintenance Worker position.

2013: Increase attributed to the addition of part-time no benefits staff support to perform functions of the Maintenance Worker position eliminated in FY12. Increase also attributed to increased cost of certain employee benefits and minor facility improvements.

2014: Increase due to contractual services and commodities in an effort to repair and/or complete minor improvements to the aging Recreation Center.

2015: Increase is due to estimated increases in contractual and commodity costs and minor building improvements and repairs.


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39 | Town of Palm Beach

Recreation Administration


2009: Expenses decreased due to transfer of Seaview Park and Recreation Center maintenance from this program to the Recreation Center program.

2012: Expenses decreased due to partial reallocation of an Assistant Director’s salary to other programs.

2013: Expenses decreased due to elimination of an Assistant Director position.

2014: Expenses increased due to addition of a 0.75 FTE Office Assistant II position to provide administrative support.

2015: Expenses increased due to the increase of the Office Assistant II to full time administrative support.


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Transfer to General Fund


Due to the cuts and efficiencies found in all areas of the Recreation Department, the transfer to the General fund increased in FY11, FY12 and FY13 and has been maintained at $885,000.



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Town of Palm Beach | 40


Full Time Positions


2007: Added Recreation Supervisor and increased part-time positions to more adequately respond to programming needs.

2008: Eliminated Tennis Pro-Manager position (duties shifted to Assistant Director and Tennis Facility Supervisors) and Tennis Assistant position. The remaining reduction in total FTE resulted from minor part-time staff reductions across all divisions.

2010: Eliminated Equipment Operator position. 2011: Eliminated Assistant Dockmaster position.

2012: Eliminated one Tennis Facility Supervisor position and the General Maintenance position. 2013: Eliminated one Assistant Director Position.

2014: A 0.75 FTE Office Assistant II position was added to provide administrative support for the Department.

2015: Increase the Office Assistant II position from .75 to 1.00, added a Pro Shop Assistant at the golf course and balance is a reduction in various part time and temporary positions.


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41 | Town of Palm Beach



Marina

Recreation Enterprise Fund Forecast


Gradual growth in revenue is based on continued improvement in the local economy, increasing occupancy with long-term leases, strategic price increases for dockage and electrical charges, and growth in transient business. Expenses gradually increase for costs of goods, services, facility improvements, and salaries/benefits.


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Par 3 Golf Course


Revenue projections are based on an improved economy, strategic price increases, growth in play and increased merchandise sales all due to the recent success of the new clubhouse and restaurant agreement and course redesign. Expenses increase for additional staff needed to meet increased play and pro-shop business, operating costs for the new clubhouse, and gradual increases for costs of goods, services, and salaries/benefits.


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Town of Palm Beach | 42


Tennis Programs & Facilities

Gradual revenue growth is based on an improving economy, strategic price decreases for nonresidents to foster growth in overall play. Expenses gradually increase for costs of goods, services, and salaries/benefits.


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Recreation Center


Gradual revenue growth is based on an improving economy and participation growth due to increased program offerings. Expenses gradually increase for costs of goods and services, mostly related to minor facility repair and upkeep, and increase in salaries/benefits.


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43 | Town of Palm Beach


Recreation Administration


Expenses gradually increase for costs of goods, services, and salaries/benefits.


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Total Recreation Enterprise Operating Fund


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Town of Palm Beach | 44


Recreation Enterprise Fund Profits (after Transfer to General Fund, Capital Expenses and Debt Service)


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The net profits realized after the annual transfer of $885,000 to the General Fund, payments for any capital expenses, and payment for debt service will be used to build the enterprise fund’s net asset balance.


In FY17, $400,000 is forecasted for a master plan and structural assessment of the docks and scheduled replacement of golf equipment. These items cause the 2017 forecasted profit to be significantly less than the prior year and future years.


Growth of net assets will provide a revenue source for future major capital projects, such as the rebuilding of the Town Docks. Although fund balance may not be able to cover the entire costs of future projects, having a significant balance to draw from would minimize the Town’s borrowing needs.



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45 | Town of Palm Beach


Self-Insurance Fund – Risk Management


The Risk Management program is under the direction of the Town Manager’s Office. Responsibility includes insurance management for workers' compensation, property and casualty, general liability, automobile liability, and public officials and employment practices insurance. Other responsibilities include: claims investigation and administration; contract review regarding hold harmless agreements, indemnification and insurance requirements of vendors; safety, loss prevention and control programs; and review of proposed legislation which could impact the Town.


The Office of Risk Management and the Town’s insurance programs are funded by an annual transfer from the General Fund and interest earned on the retained earnings within the fund.


The 10 year trend in revenues and expenditures is shown below.


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The 2007 and 2010 expenditures included increases to the retention levels which caused adjustments to the reserves for worker’s compensation claims. In 2012, the retention levels were lowered which caused a decrease in expense. The increase in expense in 2013 was due to abnormally high claims for the year. Risk expenses in 2014 were lower than expected due to lower claims. In 2015 we increased funding for the stop loss from $780,000 to $900,000.


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Town of Palm Beach | 46



The Net Assets of the fund have been used to fund uninsured losses. In FY14 a transfer from the excess Net Assets of the Risk Fund was made to the Coastal Protection Fund of $2,000,000 to fund coastal projects.


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The Risk Insurance Fund forecast assumes annual increases of 5% for property and liability insurance and 3% for workers’ compensation insurance. The stop loss reserves have been increased from $780,000 in 2014, $900,000 in 2015 to $1,100,000 in 2018 based upon the recommendation by our insurance carrier based upon the Town’s claims history.


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47 | Town of Palm Beach


Self-Insurance Fund – Health


The Health Insurance program consists of medical, dental, life, long-term disability, accidental death and dismemberment, supplemental life insurance, specific reinsurance, aggregate reinsurance, medical conversion, COBRA, network access fees, utilization review, consulting services, flexible spending program, Retirement Health Savings Accounts, and claims administration. This program is funded by a transfer from the General Fund as well as interest income earned on the net assets and payroll deductions of Town employees.


The 10 year trend in health revenues and expenditures is shown below.


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In 2007, revenues and expenditures associated with retiree health insurance costs were transferred out to the newly established OPEB trust. In 2010, a review of the health insurance program was completed and adjustments to employee contributions and insurance coverage produced savings for the fund. Health claims in 2012, 2013 and 2014 were below expectations due to cost containment measures that were implemented.


Prior to the establishment of the OPEB trust in 2007, the Health Fund accumulated reserves in anticipation of the liability associated with retiree health insurance. A total of $16,000,000 was transferred from the Health Insurance Fund reserves to the OPEB trust to offset the accrued liability and reduce the annual required contribution. Since that time the reserves of the Health Fund Reserves have been improving and can be used in case of claims in excess of coverage.


The trend in the net assets of the health fund is shown in the chart on the following page.


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Town of Palm Beach | 48


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The Health Fund forecast assumes an increase in FY16 of 5% and then annual increases of 7% for health insurance costs through the remainder of the forecast period. Town staff believes we can continue to manage this benefit proactively to contain future costs increases to lower than market levels, as we have done in the past.


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49 | Town of Palm Beach


The Health Insurance Trust (OPEB)


In compliance with the requirements of applicable State Statutes, the Town makes post-employment health care benefits available to retirees and funds a portion of the retiree health insurance benefits. In FY2007, the Town established a Health Insurance Trust to comply with GASB 43 and 54, which required the establishment of a liability for actuarially determined costs of retiree health benefits.

The trust was established with an initial deposit of $16,000,000 transferred from the reserves from the Health Insurance Fund. The Town’s Investment Advisory Committee oversees the investment of the assets of this trust.


The bi-annual actuarial valuation of the retiree health plan was conducted as of September 30, 2014. The Town’s Actuarial Accrued Liability as of September 30, 2014 was determined to be $35,537,572. The annual budgeted contribution for FY15 is $1,577,000. In 2013, the Investment Advisory Committee approved a reduction in the interest rate assumption from 8% to 7.5%. The actuary most recent report includes the new interest rate assumption.


The trend in revenues and expenditures since 2007 is shown below.


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In 2010, modifications were made to the health plan and retiree contributions were increased to stabilize the growth in expenditures. The increase in revenue in 2013 was due to better than expected investment performance. Performance for 2014 continued to be strong as the fund returned an 8.5% return for the 1 year period ending September 30, 2014.


The Trust’s net assets declined in 2008 due to the decline in the stock market. Contributions and improved returns in the market have improved the net asset reserves for this fund.


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Town of Palm Beach | 50


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The 10 year forecast assumes a 5% increase for FY16 and then a 7% annual increase thereafter in health insurance costs. Town staff believes we can continue to manage this benefit proactively to contain future costs increases to lower than market levels, as we have done in the past. The Town’s contribution estimates were based upon actuarial estimates for the next 10 year period.


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The Health Insurance reserves are forecasted to increase from $27.6 million to $50.6 million during the forecast period. The increase is derived from the annual surplus (revenues over expenditures) and investment income at 7.5% per year.


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51 | Town of Palm Beach


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Town of Palm Beach | 52


Debt Service Fund


During 2010, the Town issued 2010A Public Improvement Revenue and Refunding Bonds in the principal amount of $57,035,000, and 2010B Worth Avenue Commercial District Project bonds in the principal amount of $14,770,000.


The 2010A bonds refunded the 2003B bonds ($5,310,000), the 2008 Revenue Note ($10,000,000), and a 2009 Line of Credit ($600,000) which was issued for the Worth Avenue Project. The balance of the proceeds funded a portion of the Town’s Accelerated Capital Improvement Program totaling

$41,232,000 and $1,740,844 was used to reimburse the Town’s portion of the Par 3 Golf Course Project.


The 2010B bonds were used to fund the Worth Avenue Commercial District streetscape project. The Town imposed a capital special assessment against real property in the Worth Avenue Commercial District to pay the costs of the Worth Avenue Projects. The assessments are payable over a thirty year period.


On January 1, 2012, the Town exercised a pro rata extraordinary mandatory redemption in the amount of $1,485,000 for the 2010B Worth Avenue Commercial District Bonds. Excess funds were remaining after the project was completed and were used for this redemption.


In December 2013, the Town issued bonds totaling $55,590,000 for the second phase of the Accelerated Capital Improvement Program, the “bondable” portion of the Coastal Protection Program, and to refund the Recreation Enterprise Fund for the Town’s share of the Par 3 Clubhouse. The transfer from the General Fund to the Debt Service Fund for FY14 was increased by $2,600,000 to cover the first year debt service on the new bonds.


The debt service trend as a percent of General Fund Expenditures is shown below:


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53 | Town of Palm Beach



Total debt outstanding as a percent of taxable value trend is shown below:


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The forecasted total annual debt service for the period of FY15 through FY25 is shown in the chart below:


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Town of Palm Beach | 54



The total principal debt outstanding for the all debt recorded as of this forecast for FY15 through FY25 is shown in the chart below:


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The Per Capita debt utilizing the current census population of 8,358 for the period of 2015 through 2025 is shown below:


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55 | Town of Palm Beach


Town of Palm Beach Reserves


The Town Council has adopted eighteen financial policies, fifteen of which address reserves. The reserve policies serve to safeguard the Town’s financial resources and ensure fiscal stability. The size of a municipality’s fund balance can affect its ability to withstand financial emergencies. Reserves can also be used to accumulate funds for capital purchases or capital projects without having to borrow.


Unassigned Fund Balance - General Fund


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Pursuant to adopted policy, the unassigned fund balance for the General Fund is to be maintained at a minimum level of 25% of current year General Fund budgeted expenditures. This minimum level is to be maintained to protect the Town against economic downturns, temporary revenue shortfalls, unpredicted one-time expenditures, and for tax rate stabilization purposes. Twenty-five percent of the FY15 General Fund operating budget (General Fund budget less coastal transfer) is $15,629,586.

The FY14 ending fund balance was $22,298,680. The unassigned fund balance exceeds the minimum requirement by $6,669,094.


The General Fund Undesignated Fund Balance has consistently exceeded the required minimum level of 25%. The chart details the General Fund Undesignated Fund Balance and the percent of budgeted expenditures the balance represents. For the FY15 budget, a transfer of $909,000 from fund balance was used to fund the contingency reserve as directed by policy.


Reserves - Risk Fund


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The total reserve balance for the Risk Fund was

$7,297,409 as of September 30, 2014. Out of this reserve balance, the Town funds the Reserve for Catastrophic Exposures/Emergencies - Risk Fund in the amount of $2,500,000 and the Contingency Reserve for $500,000. The trend for the Risk Fund Reserve is shown in the table. In 2014 the Town Council approved a transfer of $2,000,000 from the reserves of the Risk Fund to the Coastal Protection Fund.


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Town of Palm Beach 56


Reserve for Catastrophic Exposures/Emergencies - Risk Fund


The Reserve for Catastrophic Exposures/Emergencies for the Risk Fund is funded at a minimum of

$2,500,000. This reserve was established to set aside emergency funds to protect the Town against the potential financial impacts large judgments in excess of insurance coverage and the financial impacts of response to and recovery from a man-made or natural emergency situation. In addition, the reserve can be used in response to increases in premium rates and/or loss fund increases. This reserve is funded with a budget appropriation from the Net Asset reserves of the Risk Fund.


Recreation Enterprise Fund Reserves


The Recreation Enterprise Fund reserve is to be maintained at a minimum level of 25% of budgeted revenues totaling $1,314,950 for FY15. The purpose of the reserve is to provide an adequate level of net assets for unanticipated financial impacts as well as to provide for one-time expenditures to improve the facilities.


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The Town’s enterprise fund includes the operations of the Town Docks, the Par 3 Golf Course, tennis activities and youth and adult

recreation programs.


At the end of FY14, the net asset balance for the Recreation Enterprise Fund (REF) was $4,645,148.

Separate reserves have been set aside from this amount for the dock replacement, Par 3 Improvements, tennis improvements and equipment replacement.


At the end of FY14, $2,715,680 had been set aside in the Dock Replacement Reserve. The Dock

Replacement reserve was created to fund the replacement cost of the construction of the Town’s docks whenever it is determined they must be replaced. The replacement reserve is to be maintained at 100% of accumulated depreciation plus accumulated interest earned on the reserve.


The Par 3 Golf Course charges an additional $2 per round to fund a maintenance and improvement reserve. At the end of FY14, the balance is $279,252.


In FY10, a maintenance and improvement fee was implemented for the Tennis program. This reserve at the end of FY14 is $38,459 and has been set aside for improvements to the tennis centers.


The Recreation Enterprise Fund’s equipment replacement reserve allows for the purchase of capital equipment and is funded with accumulated replacement cost depreciation from Recreation Net Assets. The balance in the REF Equipment Replacement Fund for FY14 is $472,319.


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Town of Palm Beach 57


Equipment Replacement Fund


The Town-wide Equipment Replacement Fund is intended to fund the replacement cost of existing equipment, vehicles and computers when they reach the end of their useful life. This reserve significantly reduces the budgetary fluctuations due to purchases of large pieces of equipment and ensures compliance with the fixed asset inventory and depreciation schedule required by GASB34.


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The balance in the Equipment Replacement Fund for year-end FY14 is $12,232,932. In FY13, the Town Council approved the use of a portion of this reserve for internal financing for small underground utility projects financed by special assessments. To date, a total of

$1,907,019 has been used for these projects.


For FY14, income including the depreciation transfer will total $1,900,202 and expenditures for capital equipment are budgeted at

$1,585,630. An analysis of the reserves determined an excess balance of $2,858,913 from the accumulated interest earned by the fund and identification of equipment that will not be replaced. The Town Council authorized a transfer of this excess amount to the coastal protection fund during FY14.


Designation of General Fund Balance for Payment of Liability Related to Compensated Absences Leave Balances


A Reserve for Compensated Absences reduces the budgetary fluctuations due to the payout of accrued leave time to employees when they leave Town service. This reserve is funded at a rate of 100% of the fiscal year end accrued leave balances. Funds are appropriated annually from this reserve based upon estimates of pay-outs of eligible accrued vacation, sick and compensatory time and the related payroll tax liability. The balance in the reserve as of September 30, 2014, was

$3,456,532. The FY15 appropriation for the pay-out of eligible accrued vacation, sick and compensatory time from this reserve is $640,900.


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Health Insurance Reserve


The balance of the reserve in the Health Fund at the end FY14 is $5,025,134. These reserves guard against any deficiencies in the Town’s self-insurance health fund for active employees’ insurance expenditures. The trend in the reserve balance is shown in the chart.

The balance has been improving over the past 5 years due to good claims experience.


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Town of Palm Beach 58


Capital Improvement Fund


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For many years, the Town funded all of the capital infrastructure improvements through pay-as-you- go financing. In 2010, the Town issued the first of

two bonds for capital improvements to accelerate many large scale capital improvement projects identified in the 20 year plan. The Capital Improvement Fund has received a $1,000,000 transfer from the General Fund each year since 2010 to fund small capital projects that were not included in the 20 year plan. Once the bond proceeds have been spent on the remaining projects, it is proposed to return to pay-as-you-go financing. Additional funding is anticipated to be transferred beginning in FY18 when the bond proceeds are expected to be exhausted.


OPEB (Other Post Employment Benefits) Trust


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The Town’s OPEB Trust Fund was established in 2007 to comply with GASB Statements 43 and 54, which required the establishment of a liability for actuarially determined costs of retiree health benefits. This fund’s investments are overseen by the Town’s Investment Advisory Committee. The net asset balance in this trust is $27,628,798 as of September 30, 2014. The actuarially determined transfer from the General Fund for the OPEB liability for FY15 is

$1,577,000. The Town continues to be well ahead of other government agencies in funding this liability.


Retirement Fund


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The Town provides pension benefits for

General Employees, Lifeguards, Police Officers, and Firefighters. The funds were separately managed by 3 pension boards until the consolidation on April 1, 2012, into the Employee’s Retirement Fund. The Retirement Board oversees all of the Town’s pension assets and retirement programs. The net assets of the consolidated retirement fund at the end of FY14 were $216,001,372.


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Town of Palm Beach 59


Contingency Reserves


Contingency reserves were established for the General Fund, Capital Fund, Equipment Replacement Fund, Recreation Enterprise Fund, Risk Insurance Fund and Health Insurance Fund to provide for unanticipated unbudgeted expenditures of a nonrecurring nature. The amount of the General Fund Contingency has been funded at 1.5% of the FY15 operating budget. The Capital Fund Contingency is appropriated at 10% of the capital budget, while the Equipment Replacement Fund, Risk, and Health Contingency Reserves are appropriated at $500,000 each. The Recreation Enterprise Fund Contingency is funded at 5% of the operating expenses. All of the contingency reserves are annually appropriated in the budget process from the net asset reserves of each of the funds. In most years a small amount from the contingency is allocated for expenditures through an affirmative vote of the Town Council.


The table below identifies the contingency budgets and actual expenditures for the fiscal years 2011 through 2015.

Contingency Reserves FY2011 – FY2015


Contingency

2011

2012

2013

2014

2015

General Fund Budget

929,468

807,397

843,000

860,000

909,000

General Fund Actual

421,302

806,988

556,668

293,800

‐0‐

CIP Budget

186,000

181,000

201,000

205,000

205,000

CIP Actual

45,000

94,000

‐0‐

‐0‐

‐0‐

ERF Budget

500,000

500,000

500,000

500,000

500,000

ERF Actual

51,311

‐0‐

156,528

136,869

‐0‐

Risk Budget

500,000

500,000

500,000

500,000

500,000

Risk Actual

‐0‐

50,000

‐0‐

‐0‐

‐0‐

Health Budget

500,000

500,000

500,000

500,000

500,000

Health Actual

85,000

‐0‐

‐0‐

‐0‐

‐0‐

Recreation Budget

176,700

155,000

235,600

249,220

272,100

Recreation Actual

‐0‐

137,000

35,000

‐0‐

‐0‐


Unassigned Net Position


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All reserves are at or over the policy established minimum. The financial strength of the Town can be measured by the health of its reserves. Bond rating agencies look closely at the reserve levels and the financial policies in place when rating a municipality. In 2010 and 2013, the rating agencies reviewed the Town’s credit ratings in preparation for the issuance of the 2010 and 2013 Bonds.

They cited the Town’s healthy reserves, solid fiscal policies, and conservative management practices as some of the reasons for our exceptional bond ratings. Moody’s Investors Service gave the Town an Aa1 for the 2010 and 2013 Revenue Bonds and confirmed the Town’s Aaa issuer credit rating. Standard and Poor’s issued a AA+ credit rating on the 2010 and 2013 Revenue bonds confirmed the Town’s issuer credit rating of AAA. These Revenue Bond ratings and issuer credit ratings are the highest ratings these two services issue and represent the highest quality investment grade debt.


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Town of Palm Beach 60

The table and the chart below and on the following page summarize the trend of the unassigned net position, net asset balances, compensated absence, and replacement reserve balances for fiscal year ending FY10 through FY14.

Reserve Balances Fiscal Years 2010 – 2014


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Fund

2010

2011

2012

2013

2014

General Fund

18,394,714

18,155,941

21,424,261

20,043,760

22,298,680

Compensated Absence (GF)


3,065,810


3,621,915


3,315,135


3,390,226


3,456,532

Equipment Replacement Fund


11,667,524


13,672,222


14,870,188


12,625,048


12,232,932

Recreation Enterprise Fund


294,764


413,966


707,381


486,466


1,025,665

Recreation ERF

426,749

458,002

397,132

472,319

472,319

Dock Replacement

2,084,181

2,240,125

2,395,723

2,551,321

2,715,680

Par 3 M&I Reserve

50,872

108,722

162,138

212,375

279,252

Tennis M&I Reserve

8,446

16,418

23,867

31,075

38,459

Health Fund

2,565,197

2,683,896

3,234,334

4,025,042

5,025,134

Risk Fund

6,669,596

6,863,675

7,990,553

6,625,018

7,297,409

Capital Improvement Fund


8,039,809


5,393,924


5,623,928


4,990,855


5,670,416

Health - OPEB Trust


17,524,179


18,173,086


20,942,253


24,814,790


27,628,798

Pension Fund

174,544,804

170,564,741

187,286,530

198,460,764

216,001,372

Total

245,336,645

242,366,683

268,373,423

278,729,059

304,142,648


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Town of Palm Beach 61


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Town of Palm Beach 62