pbwdc financial statements - flauditor.gov · $322,323 for the year. • the implementation of gasb...

PALM BEACH WORKFORCE DEVELOPMENT CONSORTIUM

FINANCIAL STATEMENTS AND

COMPLIANCE REPORTS

Year Ended September 30, 2015


YEAR ENDED SEPTEMBER 30, 2015

TABLE OF CONTENTS

Page

Independent Auditors' Report 1 - 2

Management's Discussion and Analysis 3 - 6

Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position 7

Statement of Activities 8

Fund Financial Statements:

Balance Sheet - Governmental Fund 9

Statement of Revenues, Expenditures, andChanges in Fund Balance - Governmental Fund 10

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance ofGovernmental Fund to Statement of Activities 11

Notes to Financial Statements 12 - 31

Required Supplementary Information:

Schedules of Funding Progress and Contributions from Employers 32

Budgetary Comparison Schedule - General Fund 33

Note to Budgetary Comparison Schedule 34

Schedule of Consortium's Proportionate Share of the Net Pension Liability-Florida Retirement System Pension Plan (FRS) 35

Schedule of Consortium's Contributions - Florida Retirement System PensionPlan (FRS) 35

Schedule of Consortium's Proportionate Share of the Net Pension Liability-Health Insurance Subsidy Program (HIS) 36

Schedule of Consortium's Contributions - Health Insurance Subsidy Program(HIS) 36

Compliance Reports:

Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other MattersBased on an Audit of Financial Statements in Accordancewith Government Auditing Standards 37 - 38

Independent Auditors' Management Letter 39 - 41

Independent Accountants' Report 42

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Independent Auditors’ Report

To the Honorable Mayors and County Commissioners Palm Beach Workforce Development Consortium West Palm Beach, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities and the general fund of Palm Beach Workforce Development Consortium, (Consortium) as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the Consortium’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 auditors’ 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.

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Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, and the general fund of the Consortium, as of September 30, 2015, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Implementation of New Accounting Principle

As described further in Note 1 to the accompanying financial statements, the Consortium adopted the recognition and disclosure requirements of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, an amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to The Measurement Date, an amendment of GASB Statement No. 68, effective October 1, 2014. Accordingly, the net position balance of the governmental activities as of October 1, 2014, has been restated. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of funding progress-other post-employment benefit plan, schedule of contributions from employer-other post-employment benefit plan, schedule of Consortium’s proportionate share of the net pension liability-FRS, schedule of the Consortium’s contributions-FRS, schedule of the Consortium’s proportionate share of the net pension liability-HIS, schedule of the Consortium’s contributions-HIS, and budgetary comparison information 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 Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 27, 2016, on our consideration of the Consortium’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 Consortium’s internal control over financial reporting and compliance.

Boca Raton, Florida June 27, 2016


MANAGEMENT’S DISCUSSION AND ANALYSIS

September 30, 2015

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The Palm Beach Workforce Development Consortium (Consortium) is a special district governmental entity that began operations November 1, 2007. The Consortium provides personnel and acts as the employer of record for CareerSource Palm Beach County, Inc. staff. This section of Palm Beach Workforce Development Consortium's annual financial report presents our discussion and analysis of the Consortium's financial statements. FINANCIAL HIGHLIGHTS • The Consortium's net position increased by $124,337. The increase is directly attributable to a

net reduction in pension expense recorded during the fiscal year based on Consortium’s allocated activity in the Florida Retirement System.

• The Consortium has no capital assets. • The Consortium's revenue from billings to CareerSource Palm Beach County, Inc. decreased

$322,323 for the year. • The implementation of GASB Statement No. 68 resulted in a net pension liability of

approximately $3,500,000 at September 30, 2015, which is further explained in Notes 1 and 3 to the financial statements and in certain schedules included in the required supplementary information. The net pension liability is not due and payable in the current period and is not reported as a liability in the governmental fund financial statements.

USING THIS ANNUAL REPORT This annual report consists of three components: management's discussion and analysis (this section), the basic financial statements, and required supplementary information. The financial statements include the Statement of Position and the Statement of Activities for the Consortium as a whole, the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balance for the Governmental Fund, and Notes to the Financial Statements. REPORTING THE CONSORTIUM AS A WHOLE The Statement of Net Position and the Statement of Activities report information about the financial position of the Consortium as a whole and its activities during the year. These statements include all assets and liabilities using the accrual basis of accounting. The current year's revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the Consortium's net position and the changes in net position. An increase, or decrease, in net position can be an indication of a change in the organization's financial health.



September 30, 2015

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USING THIS ANNUAL REPORT (CONTINUED) The financial statements are presented as required by Governmental Accounting Standards Board (GASB) 34 for a special purpose governmental entity engaged in a single governmental program. The governmental program is to provide personnel services to CareerSource Palm Beach County, Inc. CareerSource Palm Beach County, Inc. is Regional Workforce Board #21. The region covered is Palm Beach County. REPORTING THE CONSORTIUM'S GOVERNMENTAL FUND The fund financial statements provide detailed information on the Consortium's only fund, the general fund. The governmental fund Balance Sheet and Statement of Revenue, Expenditures, and Changes in the Fund Balance are reported using the modified accrual accounting method. These statements focus on the flow of cash and other assets that can be readily converted to cash. Governmental fund information can indicate if there are enough resources available to cover the program expenditures. Since the Consortium invoices and is paid by CareerSource Palm Beach County, Inc. for all actual costs incurred, the Consortium has adequate resources to cover all expenditures. The differences between both sets of financial statements are presented in a reconciliation beneath the fund financial statement (page 9) and in a schedule that follows the financial statements (page 11). The only reconciling items are the expenditures for compensated absences, deferred outflows and inflows related to pensions, and other post-employment benefits expenses, which are excluded, as expenditures in the governmental statements. The expenditure for compensated absences has been billed and paid by CareerSource Palm Beach County, Inc. The revenue is recognized in both the total governmental activities and the fund balance since the cash was received, but the expenditures are not due and payable so they are excluded from the fund expenditures.



September 30, 2015

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FINANCIAL ANALYSIS Implementation of Governmental Accounting Standards No 68., Accounting and Financial Reporting for Pensions, an amendment of GASB Statement No. 27 (“GASB 68”) reduced beginning net position by $3,635,614. Consortium’s net position at September 30, 2015 and 2014 (as restated) is as follows:

Total assets $ 664,357 $ 571,545

Pension related* 774,054 570,988 Total deferred outflows of resources 774,054 570,988

Liabilities - current 604,346 509,534 Liabilities - long-term* 3,555,510 2,691,449 Total liabilities 4,159,856 3,200,983

Pension related* 789,821 1,577,153 Total deferred inflows of resources 789,821 1,577,153

Total net position, unrestricted $ (3,511,266) $ (3,635,603)

*Restated f or implementation of GASB 68-increased def erred outf lows of resources, liabilities - long-term, def erred inf lows of

resources by $570,988, $2,629,449, and $1,577,153, respectiv ely , and decreased net position, unrestricted, by $3,635,614.

Palm Beach Workforce Development Consortium's Net Position

Government-wide Activities

2015 2014Restated*

The revenue received from the employment contract with CareerSource Palm Beach County, Inc. was $7,389,363 for 2015 and $7,711,686 for 2014.

Employment contract revenues $ 7,389,363 $ 7,711,686

Employment contract expenses (7,265,026) (7,711,686)

Change in net position, unrestricted 124,337 -

Net position, beginning of year (3,635,603) 11

Cummulative effect to implementing GASB No. 68 and No. 71 - (3,635,614)

Net position, end of year $ (3,511,266) $ (3,635,603)

*Restated f or adjustment to net position f or implemtation of GASB No. 68 ($3,635,614)

Palm Beach Workforce Development Consortium's Revenue and Expenses

Government-wide Activities

2015 2014Restated*



September 30, 2015

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FINANCIAL ANALYSIS (CONTINUED) The Statement of Activities reports expenses of $7,265,026 as compared to the Revenues, Expenditures and Changes in Fund Balance with expenditures of $7,332,056. This difference represents an increase in the compensated absences liability of $59,307, a decrease in the OPEB liability and a net OPEB expense of ($2,000), and pension expense of $124,337. The compensated absences, OPEB liabilities, and pension expense existing at year end are excluded from the governmental fund financial statements because they are not currently payable and do not require the use of current resources.

ACTUAL VERSUS FINAL BUDGET A comparison of the actual compared to the final budget is presented in the required supplementary information. The difference is due to employment contract expenses. Actual net revenues were $57,307 more than employment contract expenses.

CAPITAL ASSET AND DEBT ADMINISTRATION The Consortium did not invest in capital assets and did not incur debt or have any outstanding debt during and through the end of fiscal year 2015. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET

The availability of fund resources for the Consortium is entirely dependent upon the budgetary resources available through the primary funding source, CareerSource Palm Beach County, Inc. The fiscal year 2016 budget for CareerSource Palm Beach County, Inc. has been approved with expectations of similar levels of revenue as the previous year. These indicators were considered when adopting the Consortium’s fiscal 2016 budget. Consortium’s fiscal 2016 budget projects that fiscal 2016 revenues will approximate amounts reported for fiscal 2015.

REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Consortium's finances to all those with an interest in the Consortium's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Ms. Erica Scarpati, Palm Beach Workforce Development Consortium, 3400 Belvedere Road, West Palm Beach, Florida 33406.


STATEMENT OF NET POSITION

September 30, 2015

See Notes to Financial Statements

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ASSETS

Cash 392,951$ Accounts receivable 271,406

Total Assets 664,357

DEFERRED OUTFLOWS OF RESOURCES

Pension 774,054 Total deferred outflows of resources 774,054

LIABILITIES

Current Liabilites:Accounts payable 39,681 Accrued expenses 322,249 Compensated absenses payable 242,416

604,346 Long Term Liabilities:

Other post-employment benefits 60,000 Net pension liability 3,495,510 Total Liabilities 4,159,856

DEFERRED INFLOWS OF RESOURCES

Pension 789,821 Total deferred inflows of resources 789,821

NET POSITION

Net Position - Unrestricted (3,511,266)$

Governmental Activities


STATEMENT OF ACTIVITIES



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TotalEXPENSES:

Human resources for affiliate: Salaries and wages 5,488,930$ Taxes and fringe benefits 1,688,861 Professional fees 87,060 Other 175

Total Expenses 7,265,026

PROGRAM REVENUES:

Employment contract revenues 7,389,363

Change in net position 124,337

Net position - beginning of year, restated (3,635,603)

Net position - end of year (3,511,266)$


BALANCE SHEET

GOVERNMENTAL FUND

September 30, 2015


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ASSETS

Cash 392,951$ 392,951$ Accounts receivable 271,406 271,406

Total Assets 664,357$ 664,357

LIABILITIES AND FUND BALANCE

Liabilities:Accounts payable 39,681$ 39,681$ Accrued expenses 322,249 322,249

361,930 361,930 Fund Balance:

Unreserved 302,427 302,427

Total Liabilities and Fund Balance 664,357

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

Liabilities for compensated absences are not due and payable in the current period and therefore are not reported in the govenmental fund financial statements. (242,416)

Net pension liability is not due and payable in the current period and is not reported as a liability in the governmental fund financial statements. (3,495,510)

The OPEB obligation resulting from contributions in amounts less than the annual required contribution in previous years is not due and payable in the current period and therefore is not reported in the governmental fund financial statements. (60,000)

774,054

(789,821)

Net position of governmental activities -$ (3,511,266)$

Deferred outflows of resources related to pensions are recorded in the statement of net position.

Deferred inflows of resources related to pensions are recorded in the statement of net position.

Total Governmental

FundGeneral Fund


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUND



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Employment contract revenues 7,389,363$ 7,389,363$

EXPENSES:

Salaries and wages 5,488,930$ 5,488,930$ Taxes and fringe benefits 1,755,891 1,755,891 Professional fees 87,060 87,060 Other 175 175

Total Expenditures 7,332,056 7,332,056

Excess revenues over expenditures 57,307 57,307

Fund Balance - beginning of year 245,120 245,120

Fund Balance - end of year 302,427$ 302,427$

Total Governmental

FundGeneral Fund


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE OF GOVERNMENTAL

FUND TO STATEMENT OF ACTIVITIES



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Net change in fund balance - total governmental fund 57,307$

The increase in the unpaid portion of earned annual leave, whichis reported in the Statement of Activities, does not require the use of current financial resources and therefore is not reported asexpenditures in the governmental fund. (59,307)

Portion of pension expense in the statement of activities that doesnot require the use of current financial resources is not reported asexpenditures in the governmental fund. 124,337

The decrease in the unpaid portion of the other post-employmentbenefits obligation, which is reported in the Statement of Activities,does not require the use of current financial resources and thereforeis not reported as an expenditure in the governmental fund. 2,000

Change in net position of governmental activitiy 124,337$


NOTES TO THE FINANCIAL STATEMENTS

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( 1 ) Summary of significant accounting policies

The accounting and reporting policies of Palm Beach Workforce Development Consortium (the Consortium) conform in all material respects to accounting principles generally accepted in the United States of America (GAAP) applicable to local governments. The following is a summary of the more significant polices. Basis of presentation - The accompanying financial statements of the Consortium have been prepared in conformity with GAAP as prescribed by the Government Accounting Standards Board (GASB). GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles for units of local government. Financial reporting entity - The Consortium was organized on November 1, 2007, pursuant to Chapter 189, Florida Statutes as an independent special district and specifically created by an interlocal agreement pursuant to Chapter 163, Florida Statutes, in order to provide the Board of County Commissioners of Palm Beach County with a means of carrying out their individual responsibilities as required by the Workforce Florida Act of 1996 as amended.

In accordance with GAAP, the Consortium has determined that there are no potential component units that it must include within its financial statements.

Government-wide and fund financial statements:

The government-wide financial statements (i.e. the statement of net position and the statement of activities) report information on all of the activities of the Consortium. The Consortium has only governmental activities and does not engage in any business-type activities. Also, the Consortium has neither fiduciary funds nor component units that are fiduciary in nature. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges for services provided to its affiliate. Fund financial statements are presented for the General Fund.

Measurement focus, basis of accounting and financial statement presentation:

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Consortium considers revenues to be available if they are collected within 60 days of the end of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to compensated absences are recorded only when payment is due.



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( 1 ) Summary of significant accounting policies (continued) Measurement focus, basis of accounting and financial statement presentation (continued):

The Consortium reports the following major governmental fund:

General Fund - Accounts for all financial resources not required to be accounted for in another fund.

Budgets and budgetary accounting:

Budgets are prepared annually for the General Fund in accordance with the Consortium's procedures. The Consortium is not required to submit its budget to any regulatory agencies. Appropriations are controlled at the object level (salaries, payroll taxes, and fringe benefits) within each activity (e.g. personnel services and administration) and may be amended at any Board meeting prior to the due date of the annual financial report. Budgets are prepared using the same modified accrual basis as is used to account for actual transactions.

Recently adopted accounting pronouncement – In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions made subsequent to the measurement date which were adopted by the Consortium effective October 1, 2014. The Consortium participates in the Florida Retirement System (FRS) defined benefit pension plan and the Health Insurance Subsidy (HIS) defined benefit plan administered by the Florida Division of Retirement. As a participating employer, GASB 68, requires employers participating in cost-sharing multiple-employer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities and related pension amounts of the defined benefit pension plans. The effect of the accounting change on net position as previously reported for fiscal year 2014 and prior years is a reduction of approximately $3,636,000 and is adjusted as of September 30, 2014 as follows:

Net Position, previously reported $ 11

Adjustment for FRS (1,599,185) Adjustment for HIS (2,036,429)

Total pension related adjustment (3,635,614)

Net Position, restated $ (3,635,603)

Governmental Activity



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( 1 ) Summary of significant accounting policies (continued) Relationship with affiliate - The Consortium, pursuant to Section 163.01(7) of Chapter 163, Florida Statutes, provides all of the personnel and acts as the employer of record for the employees of its affiliate, CareerSource Palm Beach County, Inc., a non-profit Florida corporation and 501 (c)(3) organization. These employment contract transactions comprise all of the Consortium's financial activities for the year ended September 30, 2015. CareerSource Palm Beach County, Inc., whose fiscal year ends June 30, operates and implements workforce and welfare programs as well as related programs in Palm Beach County, Florida. CareerSource Palm Beach County, Inc. has been designated by the Consortium as the grant recipient and administrative entity for all WIOA (Workforce Innovation and Opportunity Act), Wagner-Peyser, and TANF (Temporary Assistance for Needy Families) grants and other job training related grants for Regional Workforce Board # 21. Use of estimates - The preparation of financial statements in conformity with GAAP 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.

Deferred outflows/inflows of resources - In addition to assets, the statement of net position has a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expenses/expenditure) until then. In accordance with GASB 68, the Consortium restated beginning balances and reports pension related deferred outflows of resources and deferred inflows of resources on its financial statements. As of September 30, 2015, all deferred outflows of resource relate to the FRS and HIS pension. Deferred outflows of resources activity for the year ended September 30, 2015 are as follows:

Deferred Outflows of Resources

Pension related - FRS $ 486,439 $ 606,131 $ 486,439 $ 606,131 Pension related - HIS 84,549 167,923 84,549 167,923

$ 570,988 $ 774,054 $ 570,988 $ 774,054

(Restated)Ending Balance

September 30, 2014

EndingBalance

September 30, 2015Increase Decrease

In addition to liabilities, the statement of net position has a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The Consortium has one item, deferred amounts related to pensions which are reported as a deferred inflow of resources. A deferred inflow of resources related to pension results from differences between expected and actual experience, these amounts are deferred and included in pension expense.



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( 1 ) Summary of significant accounting policies (continued) Deferred outflows/inflows of resources (continued) - Deferred inflows of resources activity for the year ended September 30, 2015 are as follows:

Deferred Inflows of Resources

Deferred Inflows of Resources Pension related - FRS $ 1,321,673 $ 432,722 $ 1,321,673 $ 432,722 Pension related - HIS 255,480 357,099 255,480 357,099

$ 1,577,153 $ 789,821 $ 1,577,153 $ 789,821

September 30, 2014

(Restated)Ending Balance

Increase Decrease September 30, 2015

EndingBalance

Recently issued accounting pronouncements – In June 2015, GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, will be effective for the Consortium beginning with its year ending September 30, 2017. This Statement will establish rules on reporting by OPEB plans that administer benefits on behalf of governments. Management is currently evaluating the impact of the adoption of this statement on the Consortium’s financial statements.

In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, will be effective for the Consortium beginning with its year ending September 30, 2018. This Statement outlines reporting by governments that provide OPEB to their employees and for governments that finance OPEB for employees of other governments. Management is currently evaluating the impact of the adoption of this statement on the Consortium’s financial statements.

( 2 ) Cash on deposit

Monies placed on deposit with a financial institution in the form of a demand deposit account are defined as public deposits. All of the Consortium's public deposits are held in a qualified public depository pursuant to State of Florida Statutes, Chapter 280, "Florida Security for Public Deposits Act" and covered by federal depository insurance and, for the amount in excess of such federal depository insurance, by the Act.

( 3 ) Florida retirement system (FRS)

The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. The defined contribution pension plan is the FRS Investment Plan. 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 costs of health insurance. Essentially all regular employees of the Consortium are eligible to enroll as members of the FRS.



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( 3 ) Florida retirement system (FRS) (continued) Provisions relating to the FRS are established by Florida Statutes; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of the two cost-sharing, multiple-employer defined benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ Website (www.dms.myflorida.com) or may be obtained by writing to the State of Florida, Division of Retirement, P.O. Box 9000, Tallahassee, Florida 32315-9000. At September 30, 2015, the Consortium has recognized a long-term liability of $3,495,510 representing its allocated portion of the FRS’s net pension liability, resulting primarily from the initial year adoption of GASB 68. As in prior years, the Consortium has made all contractually required contributions to the plan as required under Florida Statutes. There have been no significant changes to the contribution rates as of September 30, 2015 and through the date of the independent auditors’ report. According to the Florida Retirement System Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015, as of July 1, 2015, the date of the latest actuarial valuation, the FRS’ funded ratio was 86.5% on the valuation funding basis. Pension Expense and Deferred Outflows/Inflows of Resources In accordance with GASB 68, changes in the net pension liability are recognized in pension expense in the current measurement period, except as indicated below. For each of the following, a portion is recognized in pension expense in the current measurement period, and the balance is amortized as deferred outflows or deferred inflows of resources using a systematic and rational method over a closed period, as defined below:

Differences between expected and actual experience with regard to economic and demographic factors – amortized over the average expected remaining service life of all employees that are provided with pensions through the pension plan (active and inactive employees).

Changes of assumptions or other inputs – amortized over the average expected remaining service life of all employees that are provided with pensions through the pension plan (active and inactive employees).

Differences between expected and actual earnings on pension plan investments

– amortized over five years.



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( 3 ) Florida retirement system (FRS) (continued) The average expected remaining service life of all employees provided with pensions through the pension plans at June 30, 2015, was 6.3 years for FRS and 7.2 years for HIS. The Consortium’s pension expense in the governmental funds totaled $350,051 for the fiscal year ended September 30, 2015. Pension Plan Plan Description - The FRS Pension Plan (the “Plan”) is a cost-sharing multiple-employer defined benefit pension plan, with a Deferred Retirement Option Program (“DROP”) for eligible employees. The general classes of membership are as follows: Regular Class – Members of the FRS who do not qualify for membership in the other

classes.

Senior Management Service Class (SMSC) – Members in senior management level positions in state and local governments as well as assistant state attorneys, assistant statewide prosecutors, assistant public defenders, assistant attorneys general, deputy court administrators, assistant capital collateral representatives, and judges of compensation claims. Members of the Elected Officers’ Class may elect to withdraw from the FRS or participate in the SMSC in lieu of the Elected Officers’ Class.

Special Risk Class – Members who are employed as law enforcement officers,

firefighters, firefighter trainers, fire prevention officers, state fixed-wing pilots for aerial firefighting surveillance, correctional officers, emergency medical technicians, paramedics, community-based correctional probation officers, youth custody officers (from July 1, 2001, through June 30, 2014), certain health-care related positions within state forensic or correctional facilities, or specified forensic employees of a medical examiner’s office or a law enforcement agency, and meet the criteria to qualify for this class.

Special Risk Administrative Support Class – Former Special Risk Class members

who are transferred or reassigned to nonspecial risk law enforcement, firefighting, emergency medical care, or correctional administrative support positions within an FRS special risk-employing agency.

Elected Officers’ Class (EOC) – Members who are elected state and county officers and the elected officers of cities and special districts that choose to place their elected officials in this class.

The Consortium’s employees belong to either the Regular or Senior Management Service membership classes.



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( 3 ) Florida retirement system (FRS) (continued)

Pension Plan (continued) Beginning July 1, 2001, through June 30, 2011, the Plan provided for vesting of benefits after six years of creditable service for members initially enrolled during this period. Members not actively working in a position covered by the FRS on July 1, 2001, must return to covered employment for up to one work year to be eligible to vest with less service than was required under the law in effect before July 1, 2001. Members initially enrolled on or after July 1, 2011, vest after eight years of creditable service. 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. Regular Class and Senior Management Service Class - 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. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.

DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate, except that certain instructional personnel may participate for up to 96 months. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.

Benefits Provided - The Florida Legislature establishes and amends the contribution requirements and benefit terms of the FRS Pension Plan. Benefits are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement plan and/or class to which the member belonged when the service credit was earned. Members are eligible for in-line-of-duty or regular disability and survivors’ benefits.



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Pension Plan (continued) If the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3 percent per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3 percent determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3 percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

Contributions - The Florida Legislature establishes contribution rates for participating employers and employees. Employer contribution rates (% of gross salary) in effect during the year ended September 30, 2015 for the Consortium’s member classes were as follows:

10/1/14-6/30/15 7/1/15-9/30/15

Regular Class - Members not qualifying for the other class 7.37% 7.26%

Senior Management Class - Members of senior management 21.14% 21.43%

Employer Contribution Ratesin Effect for the Periods (1)

(1) Rate includes 1.26% (10/1/14-6/30/15) and 1.66% (7/1/15-9/30/15) f or the postemploy ment health insurance subsidy . Rate also

includes .04% f or administrativ e costs of the Inv estment Plan.

Individual employees are required to contribute 3% of their gross salary to the Plan.

The Consortium’s contributions to the Plan totaled $562,605 (which includes $162,655 of employee contributions, resulting in a net employer contribution to the Plan of $399,950) for the fiscal year ended September 30, 2015. This excludes the HIS defined benefit pension plan contributions.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At September 30, 2015, the Consortium reported a liability of approximately $1,648,000 for its proportionate share of the Plan’s net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2015. The Consortium’s proportionate share of the net pension liability was based on the fiscal year ended June 30, 2015 contributions relative to the contributions of all participating members for the same fiscal year. At June 30, 2015, the Consortium’s proportionate share was .0128 percent, which was an increase of .0002 percent from its proportionate share measured as of June 30, 2014.

For the fiscal year ended September 30, 2015, the Consortium recognized pension expense of approximately $19,000 related to the Plan. In addition, the Consortium reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



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Pension Plan (continued)

Description

Differences between expected and actual experience $ 174,029 $ (39,097)

Change in assumptions 109,414 -

Net difference between projected and actual earnings on FRS pension plan investments - (393,625)

Change in proportion and differences between Consortium FRS contributions and proportionate share of contributions 254,938 -

Consortium FRS contributions subsequent to the measurement date 67,750 -

$ 606,131 $ (432,722)

Deferred Outflowsof Resources

Deferred Inflowsof Resources

The deferred outflows of resources related to pensions, totaling $67,750, resulting from the Consortium’s contributions to the Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending September 30,

$ (72,510) (72,510) (72,510) 252,243 59,302 11,644

$ 105,659 Thereafter

2020

Amount

2016201720182019



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Pension Plan (continued) Actuarial Assumptions - The total pension liability in the July 1, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.60 percent

Salary increases including inflation 3.25 percent

Investment rate of return 7.65 percent, net of pension plan investment expense,

including inflation

Mortality rates were based on the Generational RP-2000 with Projection Scale BB.

The actuarial assumptions used in the July 1, 2015, valuation were based on the results of an actuarial experience study for the period July 1, 2008, through June 30, 2013.

The long-term expected rate of return on pension plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions, and includes an adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table:

Target Arithmetic (Geometric) Standard Asset Class Allocation (1) Return Return Deviation

Cash 1.00% 3.11% 3.10% 1.65%Intermediate-Term Bonds 18.00% 4.18% 4.05% 5.15%High Yield Bonds 3.00% 6.79% 6.25% 10.95%Broad US Equities 26.50% 8.51% 6.95% 18.90%Developed Foreign Equities 21.20% 8.66% 6.85% 20.40%Emerging Market Equities 5.30% 11.58% 7.60% 31.15%Private Equity 6.00% 11.80% 8.11% 30.00%Hedge Funds / Absolute Return 7.00% 5.81% 5.35% 10.00%Real Estate (Property) 12.00% 7.11% 6.35% 13.00%

Total 100.00%

Assumed inflation - Mean 2.60% 2.00%

Note (1) As outlined in the Plan's investment policy.



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Pension Plan (continued)

Discount Rate - The discount rate used to measure the total pension liability was 7.65 percent. The Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return.

Sensitivity of the Consortium’s Proportionate Share of the Net Position Liability to Changes in the Discount Rate - The following presents the Consortium’s proportionate share of the net pension liability calculated using the discount rate of 7.65 percent, as well as what the Consortium’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.65 percent) or 1-percentage-point higher (8.65 percent) than the current rate:

1% Current 1%

Decrease Discount Rate Increase(6.65%) (7.65%) (8.65%)

Consortium's proportionate share of the net pension liability 4,271,539 1,648,463 (534,368)

Pension Plan Fiduciary Net Position - Detailed information about the Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

Payables to the Pension Plan - At September 30, 2015, the Consortium has accrued $29,821 for the outstanding amount of contributions to the Plan required for the fiscal year ended September 30, 2015.

HIS Pension Plan Plan Description - The Retiree Health Insurance Subsidy (HIS) Program (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established and administered in accordance with section 112.363, Florida Statutes. The Florida Legislature establishes and amends the contribution requirements and benefit terms of the HIS Plan. The benefit is a monthly payment to assist retirees of the state-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.

Benefits Provided. For the fiscal year ended June 30, 2015, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under a state administered retirement system must provide proof of health insurance coverage, which may include Medicare.



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HIS Pension Plan (continued)

Contributions - The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. Employer contribution rates (% of gross salary) in effect during the year ended September 30, 2015 for Consortium were as follows:

10/1/14-6/30/15 7/1/15-9/30/15

HIS Plan contribution rates 1.26% 1.66%

Employer Contribution Ratesin Effect for the Periods

HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.

The Consortium’s contributions to the HIS Plan totaled $74,429 for the fiscal year ended September 30, 2015.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At September 30, 2015, the Consortium reported a net pension liability of approximately $1,847,000 for its proportionate share of the HIS Plan’s net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2015. The Consortium’s proportionate share of the net pension liability was based on the Consortium’s contributions for the fiscal year ended June 30, 2015 relative to the total contributions of all participating members for that fiscal year. At June 30, 2015, the Consortium’s proportionate share was .01811 percent, which was a decrease of .00184 percent from its proportionate share measured as of June 30, 2014.

For the fiscal year ended September 30, 2015, the Consortium recognized pension expense of approximately $74,000 related to the HIS Plan. In addition, the Consortium reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



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Description

Change in assumptions $ 145,314 $ -

Net difference between projected and actual earnings on FRS pension plan investments 1,000 -

Change in proportion and differences between Consortium FRS contributions and proportionate share of contributions - (357,099)

Consortium FRS contributions subsequent to the measurement date 21,609 -

$ 167,923 $ (357,099)

of Resources of ResourcesDeferred Outflows Deferred Inflows

The deferred outflows of resources related to pensions, totaling $21,609 resulting from the Consortium’s contributions to the HIS Plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending September 30,

$ (38,937) (38,937) (38,937) (39,140) (39,238) (15,596)

$ (210,785)

2020Thereafter

Amount

2016201720182019

Actuarial Assumptions - Actuarial valuations for the HIS Plan are conducted biennially. The July 1, 2014 HIS Plan valuation is the most recent actuarial valuation which was used to develop the liabilities for June 30, 2015. Liabilities originally calculated as of the actuarial valuation date have been recalculated as of a later GASB measurement date using a standard actuarial roll-forward technique. The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on the discount rate and actuarial assumptions below, and was then projected to the measurement date. Because the HIS Plan is funded on a pay-as-you-go basis, no experience study has been completed for the HIS Plan. The actuarial assumptions that determined the total pension liability for the HIS Plan were based on certain results of the most recent experience study for the FRS Pension Plan.



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Inflation 2.60 percent

Salary increases including inflation 3.25 percent

Because the HIS Plan uses a pay-as-you-go funding structure, a municipal bond rate of 3.80% was used to determine the total pension liability for the program (Bond Buyer General Obligation 20-Bond Municipal Bond Index). A rate of 4.29% was used in the prior year.

Mortality rates were based on the Generational RP-2000 with Projection Scale BB.

Discount Rate - The discount rate used to measure the total pension liability was 3.80 percent. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS Plan benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the HIS Plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.

Sensitivity of the Consortium’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following presents the Consortium’s proportionate share of the net pension liability calculated using the discount rate of 3.80 percent, as well as what the Consortium’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.80 percent) or 1-percentage-point higher (4.80 percent) than the current rate:

1% Current 1%

Decrease Discount Rate Increase(2.80%) (3.80%) (4.80%)

Consortium's proportionate share of the net pension liability 2,104,624 1,847,047 1,632,266

Pension Plan Fiduciary Net Position - Detailed information about the HIS Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

Payables to the Pension Plan - At September 30, 2015, the Consortium has accrued $5,247 for the outstanding amount of contributions to the HIS Plan required for the fiscal year ended September 30, 2015.



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FRS Investment Plan

The Consortium contributes to the FRS Investment Plan (Investment Plan), a defined contribution pension plan, for its eligible employees electing to participate in the Investment Plan, as provided in Section 121.4501, Florida Statutes, in lieu of the FRS defined-benefit plan. Consortium employees participating in DROP are not eligible to participate in the Investment Plan. The State Board of Administration (SBA) administers the Investment Plan. The Florida Legislature establishes and amends the benefit terms of the plan. Retirement benefits are based upon the value of the member’s account upon retirement. The Investment Plan provides vesting after one year of service regardless of membership class. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the FRS Investment Plan, the years of service required for vesting under the Pension Plan (including the service credit represented by the transferred funds) is required to be vested for these funds and the earnings on the funds. Information regarding the Investment Plan is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report. The Investment Plan is funded with the same employer and employee contribution rates as the FRS Pension Plan. Effective July 1, 2011, there is a mandatory employee contribution of 3.00%. The FRS Investment Plan member directs the investment from the options offered under the plan. Costs of administering the plan are funded through an employer assessment of 0.04% of payroll and by forfeited benefits of plan members. After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the FRS Investment Plan, receive a lump-sum distribution, or leave the funds invested for future distribution. Disability coverage is provided; the employer pays an employer contribution to fund the disability benefit which is deposited in the FRS Trust Fund. The member may either transfer the account balance to the FRS Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan, or remain in the FRS Investment Plan and rely upon that account balance for retirement income.

The Consortium’s Investment Plan pension expense totaled approximately $257,000 for the fiscal year ended September 30, 2015. Payables to the Investment Plan - At September 30, 2015, the Consortium reported an accrual of $41,042 for the outstanding amount of contributions to the Investment Plan required for the fiscal year ended September 30, 2015.



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( 4 ) Deferred compensation plan The Consortium has a deferred compensation plan, created in accordance with Section 457 of the Internal Revenue Code, and in which all employees may voluntarily elect to participate. The plan permits eligible participants to defer a portion of their salary until future years. Effective December 1, 2015, participants are eligible on the first day of the month following 60 days of service. Prior to this, participants were eligible three months after service. There are no employer contributions made to the 457 plan. The deferred compensation is not available to participating employees until termination, retirement, death, or unforeseeable emergency. Because the plan assets are held in trust for the exclusive benefit of plan participants and their beneficiaries, the plan is not accounted for in the Consortium's financial statements. During the year ended September 30, 2015, employees contributed approximately $55,000 to the plan.

( 5 ) Other post-employment benefits

Effective October 1, 2009, the Consortium implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions. This statement improves the relevance and usefulness of financial reporting by requiring systematic, accrual-basis measurement and recognition of other post-employment benefits (OPEB) costs (expenses) over a period that approximates employees' years of service and provides information about actuarial accrued liabilities associated with OPEB, and whether, and to what extent, progress is being made in funding the OPEB plan. In addition to the relevant disclosures within this note related to GASB Statement No. 45, the financial statements reflect a long-term liability of $60,000 and ($2,000) of related expenses in governmental activities. In accordance with Florida Statutes Section 112.0801, the Consortium makes continuation of group health insurance through the Consortium's current provider available to retirees and eligible dependents provided certain service requirements and normal age retirement requirements have been met. This benefit had no cost to the Consortium other than the implicit cost of including retirees in the group calculation. All premiums are paid by the retiree. The Consortium has chosen pay-as-you-go funding, but is recording the liability in the financial statements. This plan does not issue stand-alone financial statements. Plan description - The Consortium provides a defined benefit healthcare plan (the Retiree Health Plan). The Retiree Health Plan provides healthcare insurance for eligible retirees and their spouses and dependents. Benefit provisions are established by the Board of Directors. The Florida Health Insurance Coverage Continuation Act provides that retirees may elect within 60 days after the effective date of retirement to participate in the coverage and at the option of the retiree, the spouse and any unmarried children under 18 years of age.

The actuarial report for the Retiree Health Plan was prepared as of September 30, 2014 and has not been updated since that time. The Consortium elected to defer an updated actuarial valuation under the provision of Florida Statutes which permit a triennial valuation under certain conditions.



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( 5 ) Other post-employment benefits (continued) Funding policy - The Consortium's Board of Directors will not be funding the plan in the current year. The Board will review the funding requirements and the policy annually.

Annual OPEB Cost and Net OPEB obligation - All health plan participants are on a group plan rate. The difference between the group plan rate that the retiree must pay and the actual or estimated individually rated premium is the implicit rate subsidy (because the employee continues to participate in the group plan, an implicit rate subsidy exists on the part of the employer). The subsidy amount would be calculated under the Default Factors for Calculating Age-Adjusted Premiums for Ages 65 or older.

The Consortium's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over the remaining period of 20 years. The following table shows the components of the Consortium's annual OPEB costs for the year, the amount actually contributed to the Retiree Health Plan, and changes in its net OPEB obligation to Retiree Health Plan:

Annual required contribution $ 4,000 Interest on net OPEB obligation 2,000 Adjustment to annual required contribution (7,000) Total annual OPEB cost (1,000)

Contributions made (1,000) *

Decrease in net OPEB obligation (2,000)

Net OPEB obligation - beginning of year 62,000

Net OPEB obligation - end of year $ 60,000

* Reflects a contribution credit for the implied subsidy.

The Consortium's annual OPEB cost, the percentage of annual OPEB costs contributed to the Retiree Health Plan, and the net OPEB obligation for the year ended September 30, 2015 and the preceding two years, follows:

Fiscal Percentage ofYear Annual OPEBEnded Cost Contributed

9/30/2013 $ 1,000 0.0% $ 65,000

9/30/2014 (2,000) -50.0% $ 62,000

9/30/2015 (1,000) -100.0% $ 60,000

AnnualOPEB Cost

OPEBNet

Obligation



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( 6 ) Other post-employment benefits (continued) Summary of Actuarial Methods and Assumptions - The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about future employment, mortality and healthcare costs trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the Consortium 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 presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Methods and Assumptions - Projections of benefits for financial reporting purposes are based on a substantive plan (the plan as understood by the Consortium and 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 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 prospective of the calculations. The following simplifying assumptions were made:

Retirement age for active employees - Based on the historical average retirement age for the covered group, active plan members hired prior to July 1, 2011 were assumed to retire at the earlier of age 62, with at least six years of service or at any age with at least 30 years of service. With respect to all other employees, retirement is assumed to occur at the earlier of age 65 or at any age with 33 years of service. Marital status - Marital status of members at the calculation date was assumed to continue throughout retirement.

Mortality - Life expectations at the calculation date are based on sex-distinct mortality rates as set forth in the RP-2000 mortality table for annuitants, projected to 2015 by Scale AA, as published by the Internal Revenue Service (IRS). The calculation of OPEB liability for each year is based on the assumption that all participants will live until their expected age as displayed in the mortality tables.

Future participation rates - 5% of eligible employees were assumed to elect coverage until age 65 upon retirement or disability.

Healthcare cost trend rate - The expected rate of increase in healthcare insurance premiums is based on the following projections: For 2015 - 8.00%; 2016 - 7.50%; 2017 - 7.00%; 2018 - 6.50%; 2019 - 6.00%; 2020 - 5.50%. Then for 2021 and later, 5.00%. Medicare - When employees become eligible for Medicare benefits at age 65, they are no longer eligible to continue on the Consortium's Retiree Health Plan.

Discount rate - The calculation uses an annual discount rate of 4%, (including inflation at 2.75% per year.) This is based on the assumed long-term return on plan assets or employer assets.



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( 6 ) Other post-employment benefits (continued) Actuarial cost method - The projected unit credit cost method was used. The liability for each active employee was assumed to accrue over their working lifetime, based on elapsed time from the date of hire until retirement. The amortization method was a 10-year open period, with level dollar payments.

( 7 ) Related party transactions

During the year ended September 30, 2015, the Consortium earned $7,389,363 of revenue from its affiliate, CareerSource Palm Beach County, Inc.

At September 30, 2015, the total amount due from CareerSource Palm Beach County, Inc. for billed revenues was $269,201. At September 30, 2015, the total amount due to CareerSource Palm Beach County, Inc. for reimbursement of previous advances and other received funds was $28,982.

( 8 ) Economic dependency

The Consortium's only source of revenue is from employment contract activities with its affiliate, CareerSource Palm Beach County, Inc.

( 9 ) Leave policies

All full-time employees accrue leave each pay period based on years of employment. The accrual rate is:

Years of Hours perService Pay Period * Days/Hours per Year **

0 - 5 7.00 hours 21 days/168 hours

6 - 12 8.67 hours 26 days/208 hours

13 and over 10.33 hours 31 days/248 hours

* Calculated based on 24 pay periods per year

** Total hours include one 8 hour floating holiday

At September 30, 2015, a maximum of 120 hours of unused leave could be carried over to the next fiscal year by an employee. A mandatory 40 hour consecutive leave is required by the leave policy. The Chief Executive Officer is permitted to carryforward 500 hours of unused leave. Upon termination of employment from the Consortium, an employee is paid for all unused leave. The liability for unused leave at September 30, 2015, is $242,416.



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( 10 ) Compensated absences

Compensated absences activity for the year ended September 30, 2015 was as follows:

Beginning balance $ 183,109

Additions 479,256

Reductions (419,949)

Ending balance $ 242,416

Amount due within one year $ 242,416

( 11 ) Risk management

The Consortium is exposed to various risks of loss related to torts, errors and omissions, injuries to employees, natural disasters, and property damage. During the year ended September 30, 2015, the Consortium carried insurance through the Florida League of Cities, Inc. or through its relationship with CareerSource Palm Beach County, Inc. with various commercial carriers, to cover potential risks of loss.

( 12 ) Subsequent events

The Consortium has evaluated subsequent events through June 27, 2016, which is the date the financial statements were available to be issued. The Consortium is not aware of any events that have occurred subsequent to the statement of financial position date that would require adjustment to, or disclosure in, the financial statements.

REQUIRED SUPPLEMENTARY INFORMATION




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Retiree Continuation Health Plan

UAAL as aPercentage of

Actuarial Funded CoveredValuation Ratio Payroll

Date (a/b) ((b-a)/c)

1/1/2011 $ - $ 66,000 $ 66,000 0.0% $ N/A N/A

10/1/2012 - 15,000 15,000 0.0% 7,086,000 0.2%

7/1/2014** - 13,000 13,000 0.0% 5,349,000 0.2%

** Most recent actuarial report

Value of Simplified Unfunded Covered

Schedule of Funding Progress

ActuarialAccrued

Actuarial Liability (AAL)-

Assets Entry Age AAL (UAAL) Payroll(a) (b) (b-a) (c)

FiscalYear

Ending

9/30/13 $ 6,000 0.0% $ 65,000

9/30/14 3,000 33.0% 62,000

9/30/15 4,000 25.0% 60,000

Contributions (ARC) ARC Contributed Obligation

Schedule of Contributions from Employer

Annual Required Percentage of Net OPEB


BUDGETARY COMPARISON SCHEDULE – GENERAL FUND


- 33 -

Budgetary Fund Balance, October 1, 2014 $ 100,000 $ 245,120 $ 145,120

Resources (inflows);Employment contract revenues 7,642,500 7,389,363 (253,137)

Amounts available for appropriation 7,742,500 7,634,483 (108,017)

Charges to appropriations (outflows):General government: Personnel and administrative costs 7,642,500 7,332,056 310,444

Budgetary Fund Balance, September 30, 2015 $ 100,000 $ 302,427 $ 202,427

Variance with Final Budget

Positive (Negative)

Budget Amounts

Original and Final

Actual Amounts (Budgetary Basis)

(See Note 1)


NOTE TO BUDGETARY COMPARISON SCHEDULE


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( 1 ) Budget-to-actual reconciliation

Budget-to-actual reconciliation:

Source of inflows of revenues:

Actual amounts (budgetary basis) "available forappropriation" from the budgetary comparison schedule $ 7,634,483

Difference-budget to GAAP: The fund balance at the beginning of the year is a budgetary resource, but is not a current year revenue for financial reporting purposes (245,120)

Total revenues and income as reported on the statement of revenues, expenditures and changes in fund balance-governmental fund $ 7,389,363

General Fund

There were no differences between “total charges to appropriations” from the budgetary comparison schedule and “total expenditures” as reported on the statement of revenues, expenditures and changes in fund balance – governmental fund.



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Schedule of Consortium’s Proportionate Share of the Net Pension Liability – Florida Retirement System Pension Plan (FRS) (1)

Consortium's proportion of the net pensionliability (asset) 0.*********% 0.*********%

Consortium's proportionate share of the net pension liability (asset) $ 1,648,463 $ 763,951

Consortium's covered-employee payroll 5,481,929 5,882,994

Consortium's proportionate share of the net pension liability (asset) as a percentage ofits covered-employee payroll 30.07% 12.99%

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

20142015

(1) Information in this schedule has been determined as of the measurement date (June 30) of the collective net

pension liabil i ty . The schedule is required to present 10 fiscal years, however, since GASB 68 was first effective for

fiscal 2015, only two years are presented.

Schedule of Consortium’s Contributions – Florida Retirement System Pension Plan (FRS) (2)

Contractually required contribution $ 399,950 408,260

Contributions in relation to the contractuallyrequired contribution (399,950) $ (408,260)

Contribution deficiency (excess) $ - $ -

Consortium's covered-employee payroll $ 5,423,041 $ 5,737,499

Contributions as a percentage of covered-employee payroll 7.38% 7.12%

2015 2014

(2) Information in this schedule has been determined as of the Consortium's fiscal year (September 30).

The schedule is required to present 10 fiscal years, however, since GASB 68 was first effective for fiscal

2015, only two years are presented.



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Schedule of the Consortium’s Proportionate Share of the Net Pension Liability – Health Insurance Subsidy Program (HIS) (1)

Consortium's proportion of the net pensionliability (asset) 0.*********% 0.*********%

Consortium's proportionate share of the net pension liability (asset) $ 1,847,047 $ 1,865,498

Consortium's covered-employee payroll 5,481,929 5,882,994

Consortium's proportionate share of the net pension liability (asset) as a percentage ofits covered-employee payroll 33.69% 31.71%

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

(1) Information in this schedule has been determined as of the measurement date (June 30) of the collective net

pension liabil i ty . The schedule is required to present 10 fiscal years, however, since GASB 68 was first effective for

fiscal 2015, only two years are presented.

2015 2014

Schedule of Consortium’s Contributions – Health Insurance Subsidy Program (HIS) (2)

Contractually required contribution $ 74,429 69,808

Contributions in relation to the contractuallyrequired contribution (74,429) $ (69,808)

Contribution deficiency (excess) $ - $ -

Consortium's covered-employee payroll $ 5,423,041 $ 5,737,499

Contributions as a percentage of covered-employee payroll 1.37% 1.22%

(2) Information in this schedule has been determined as of the Consortium's fiscal year (September 30).

The schedule is required to present 10 fiscal years, however, since GASB 68 was first effective for fiscal

2015, only two years are presented.

2015 2014

COMPLIANCE REPORTS

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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 Mayors and County Commissioners Palm Beach Workforce Development Consortium West Palm Beach, Florida

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, and the general fund of Palm Beach Workforce Development Consortium, as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise Palm Beach Workforce Development Consortium’s basic financial statements, and have issued our report thereon dated June 27, 2016.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Palm Beach Workforce Development Consortium’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 Palm Beach Workforce Development Consortium’s internal control. Accordingly, we do not express an opinion on the effectiveness of Palm Beach Workforce Development Consortium’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 Palm Beach Workforce Development Consortium’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


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Independent Auditors’ Management Letter To the Honorable Mayors and County Commissioners Palm Beach Workforce Development Consortium West Palm Beach, Florida Report on the Financial Statements We have audited the financial statements of Palm Beach Workforce Development Consortium as of and for the year ended September 30, 2015, and have issued our report thereon dated June 27, 2016. 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; and Independent Accountants’ Report on an examination conducted in accordance with AICPA Professional Standards, Section 602, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated June 27, 2016, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1, Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations 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. Palm Beach Workforce Development Consortium was established on July 10, 2007 pursuant to Chapter 189, Florida Statutes as a special district and specifically created by an interlocal agreement pursuant to Chapter 163, Florida Statutes. Palm Beach Workforce Development Consortium has no component units related to it.

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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 Palm Beach Workforce Development Consortium has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the Palm Beach Workforce Development Consortium 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 Palm Beach Workforce Development Consortium’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Our assessment was done as of the fiscal year end (September 30, 2015). Annual Financial Report Sections 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 the Palm Beach Workforce Development Consortium for the fiscal year ended September 30, 2015, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2015. In connection with our audit, we determined that these two reports were in agreement. Special District Component Units Section 10.554(1)(i)5.d, Rules of the Auditor General, requires that we determine whether or not a special district that is a component unit of a county, municipality, or special district, provided the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we determined that Palm Beach Workforce Development Consortium has no component units related to it. 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.

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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, members of Palm Beach Workforce Development Consortium, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.


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Independent Accountants’ Report

To the Honorable Mayors and County Commissioners Palm Beach Workforce Development Consortium: We have examined Palm Beach Workforce Development Consortium’s (Consortium) compliance with requirements set forth in Section 218.415, Florida Statutes, during the period ending September 30, 2015. Management is responsible for Consortium’s compliance with those requirements. Our responsibility is to express an opinion on Consortium’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 supporting Consortium’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 Consortium’s compliance with specified requirements. In our opinion, Consortium complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2015.


pbwdc financial statements - flauditor.gov · $322,323 for the year. • the implementation of gasb...

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