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COMPREHENSIVE ANNUAL BUDGET FISCAL YEAR 2014
(October 1, 2013 - September 30, 2014)
David A. Rosow, Town Council President Robert N. Wildrick, Town Council President Pro-Tem
William J. Diamond, Town Council Member Richard M. Kleid, Town Council Member Michael J. Pucillo, Town Council Member
Prepared by the Finance Department Jane Struder, Finance Director
(561) 838-5400
www.townofpalmbeach.com
IONAL STRUCTURE
CITIZENS OF PALM BEACH
Gail A. Coniglio
William J. Diamond Richard M. Kleid Michael J. Pucillo
ADVISORY BOARD AND COMMISSIONS
RECREATION AND SPECIAL PROJECTS DIRECTOR
Jay Boodheshwar
PLANNING, ZONING AND BUILDING DIRECTOR
H. Paul Brazil
Thomas G. Bradford
The following information might be helpful to the reader in finding information in the budget document for programs, services and financial information. The Town of Palm Beach Budget compiles financial and service delivery data in a single source document for easy reference. This guide explains the budget format and will assist in locating information which may be of particular interest. The budget is intended to serve four purposes.
As a policy document, the Budget indicates what services the Town of Palm Beach will provide during the upcoming fiscal year, and the reasons for these services. The Budget provides goals and objectives for each organizational unit in the Town of Palm Beach as well as the performance measures upon which programs will be monitored for the forthcoming fiscal year. All Town of Palm Beach funds are described in detail in their respective sections.
THE BUDGET AS AN OPERATIONS GUIDE
As an operations guide, the budget indicates how departments and funds are organized to provide services that will be delivered to the community. The Departments’ budget sections provide a mission statement, goals and objectives, organization chart, authorized personnel, revenue and expenditure summaries with descriptions, and performance measures for each Town of Palm Beach Department.
THE BUDGET AS A FINANCIAL PLAN
As a financial plan, the budget outlines the cost of the Town of Palm Beach services and how they will be funded. The Revenues and Expenditures Section provides an overview of the Budget including major revenue and expenditure breakdowns and categories for the following Funds: General, Debt Service, Capital, Enterprise, Internal Service Activity and Trust & Agency. The introductory section includes a budget message, a discussion of the Town of Palm Beach accounting structure and financial policies, a description of the budget preparation process and the financial structure. The budget summary section details the approved budget as well as a comparison of financial activity over a multi-year period with an analysis of the Town reserves.
THE BUDGET AS A COMMUNICATIONS DEVICE
The Budget is designed to be user friendly with summary information in text, charts, tables and graphs. A glossary of financial budget terms is included for your reference. In addition to the reader’s guide, the table of contents provides a listing of sections in the order in which they appear in this document. The statistical section includes miscellaneous information relevant to the Town of Palm Beach. Should you have a question about the Town of Palm Beach that this document does not answer, please feel free to call The Finance Department at (561) 838-5444. A Budget in Brief is also available from the Finance Department on the Town’s web site, www.townofpalmbeach.com or by mail at, 360 South County Road, Palm Beach, Florida 33480.
Given its size and the variety of information it contains, the budget document can be an overwhelming undertaking to review. The purpose of this section is to provide the reader with a guide to the document’s contents: where and how to find the information and how to understand or use the information.
The budget document has been prepared in a summary format intended to be easily understood by the general public. The following describes each of its major sections:
The budget message or transmittal letter is the best place to start. It is most important in understanding where we have been and where we are going in the upcoming year. The letter provides a broad perspective of services provided and discusses taxes and millage rates, changes in operations, significant differences in revenues and expenditures, and the focus and direction of the budget year.
The introduction section also includes general information about the Town, its budget philosophy and process, financial policies (which form the foundation of the Town’s budget development and financial management processes), and other general information.
Budget Summary, General Fund, Revenues, Expenditures, Departmental tabs and Other
The Budget Summary, General Fund, Revenues, Expenditures including Departmental and Other tabs include various presentations of the general fund budget. The Budget Summary section includes summary budget information for all funds and an analysis of Town reserves. The General Fund section includes a financial trend analysis of Revenues and Expenditures. The Revenues tab includes a detailed five-year general fund revenue history, as well as narrative and charts regarding major general fund revenue history. The Expenditures tab includes an exhibit containing four years of expenditure history by program, as well as summary budget charts.
An overview of each department/program, the largest portion of the General Fund budget, is included in this section. Each department’s section may include the following: a revenue and expenditure summary, personnel complements, an organizational chart, mission statement, goals and objectives, performance measures and workload indicators.
Debt Service, Capital, Enterprise, Internal Service and Trust & Agency Funds
These sections include budget summaries, program descriptions, trend analyses and income statement analyses for the Town’s governmental (other than general), enterprise, internal service and trust & agency funds.
The appendix includes property tax and millage rate schedules, donation reserve account detail, financial policies, historical staffing levels, and other exhibits that may be helpful to the reader.
We sincerely hope this “how-to” has aided in finding and understanding information contained in the Town’s budget. If any point is unclear, or if additional information is necessary, please call the Finance Department at (561)838-5444. Should the same requests repeatedly occur, we will make an effort to incorporate clarifications in next year’s budget document.
The Government Finance Officers Association of the United States and Canada (GFOA) presented an award of Distinguished Presentation to the Town of Palm Beach for its annual budget for the fiscal year beginning October 1, 2012.
In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communication device.
The award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award.
Budget Message 1
Strategic Planning and Key Results Measurement 16
Town Overview/Demographics 24
Assessed Valuation and Millage Rate 25
Town History 29
Financial Policies 31
Budget Preparation Process 36
Budget Calendar 44
Financial Structure 42
Fund Budget Overview 47
Budget Summary by Fund Type, Revenues and Expenditures 48
Summary of Major Revenues by Fund Type 50
Summary of Expenditure Classifications by Fund Type 52
Reserve Analysis 55
Capital Expenditures 61
General Fund Revenues and Expenditures Budget Comparison 63
General Fund Revenues 65
Major Revenue Sources 69
General Fund Expenditures 79
Legislative (111) 83
General Government (113) 85
Town Manager’s Office Organization Chart 88
Administrative Management (121) 90
Advice and Litigation (122) 91
Information Systems (125) 93
Human Resources Organization Chart 98
Human Resources (123) 101
Finance Organization Chart 108
Finance Department Revenue and Expenditure Summary 110
Records Management (131) 111
Financial Management (141) 113
Purchasing (144) 116
Planning, Zoning and Building Organization Chart 120
Planning, Zoning and Building Department Revenue and Expenditure Summary 122
Planning and Zoning (211) 124
Permit Issuance (212) 126
Inspection and Compliance (213) 129
Landmarks Preservation (214) 131
Fire Prevention (215) 133
Code Enforcement (216) 135
Fire-Rescue Department Organization Chart 138
Fire-Rescue Department Revenue and Expenditure Summary 141
Fire Administration (411) 143
Operations (417) 145
Training (418) 150
Ocean Rescue (419) 152
Police Department Organization Chart 156
Police Department Revenue and Expenditure Summary 159
Administrative Management (421) 161
Organized Crime Vice and Narcotics – OCVAN (422) 164
Records Information System Unit (423) 166
Training and Community Relations Unit – TCR (424) 167
Communications Unit (425) 170
Crime Scene/Evidence Unit (426) 172
Patrol (428) 174
Criminal Investigation Unit (429) 178
Parking Control Unit (430) 180
Public Works Department Organization Chart 184
Public Works Department Revenue and Expenditure Summary 189
Administrative Management (511) 191
Street Repair and Maintenance (521) 192
Traffic Control (523) 194
Street Lighting (524) 196
Storm Sewer Maintenance (531) 198
Sanitary Sewer Maintenance (532) 201
Sanitary Sewage Treatment (533) 204
Residential Collection (541) 205
Commercial Collection (542) 207
Refuse Disposal (543) 209
Yard Trash Collection (544) 210
Recycling (545) 212
Beach Cleaning (546) 214
Landscape Maintenance (551) 215
Facility Maintenance (554) 217
Meter Maintenance and Collection (558) 219
General Engineering Services (561) 220
Right of Way Inspections (565) 223
Equipment Operation and Maintenance (571) 224
Coastal Management (581) 226
Library Services (321) 230
Transfers to Other Funds (611 to 625) 231
Emergency Management (710) 232
Contingent Appropriations (711) 233
Debt Administration 235
2010A CIP Revenue Bond (Fund 205) 240
2010B Worth Avenue Revenue Bond (Fund 206) 241
Capital Funds 243
Capital Improvement Fund (Fund 307)
Five Year Capital Improvement Pay-as-you-go/Facilities Program 245
Pay-as-you-go Capital Improvement Fund 246
Comprehensive Coastal Management Plan Bond Proceeds Construction Fund (Fund 309)
CCMP FY12 Accomplishments and FY13 Action Plan 247
Comprehensive Coastal Management Project Fund 259
Shore Protection Board FY13 Proposed Coastal Management Program Budget 260
Town Facilities Project Fund (Fund 310)
Town Facilities Fund 261
Worth Avenue Assessment District (Fund 311)
Worth Avenue Maintenance 263
Accelerated Capital Fund (Fund 312)
2010A Accelerated Capital Projects Fund 265
Accelerated Capital Improvement Program Budget Report 266
Pump Station A-7 Inline Booster Station 267
Pump Stations A-39 & A-41 Improvements 268
Pump Stations A-42 & A-43 Improvements 269
Ejector Pump Stations Upgrades 270
Pump Station S-2 Inline Booster Station 271
Pump Stations A-5 & A-6 Improvements 272
Pump Stations A-39, A-41 & A-43 Emergency Generators 273
E-6 Pump Station Improvements 274
A-42 to A-41 & Par 3 to A-39 Force Main Replacement 275
A-7 to Hammon Avenue Force Main Replacement 276
Pinewalk Force Main Replacement 277
E-3, Garden Rd to Cherry Ln & E-2, El Pueblo Way to Monterey Rd, Force Main Lining 278
E-6, Bradley Park to Tangier Avenue, Force Main Lining 279
North Flagler Drive Force Main 280
23rd Street and Currie Park Force Main Improvements 281
Sanitary Gravity Main Replacement Program 282
A-6 to Royal Poincianna Way Force Main Lining 283
Barton Avenue to Bradley Park Force Main Replacement 284
A-6, Cocoanut Row to South Ocean Blvd, Force Main Replacement 285
D-4 Pump Station Improvements 286
Stormwater Corrugated Pipe Replacement Program 287
D-3 & D-4 Pump Stations Electrical Upgrades 288
Ocean Outfall Junction Box Rehabilitation 289
Traffic Signal Improvements 290
Subaqueous Force Main Crossing 291
North Lake Way & Tangier Avenue Infrastructure Improvements 292
North Lake Way & Laurian Lane Infrastructure Improvements 293
D-4 Pipe Repair 294
D-15 (D-6 & D-7) Pump Station Rehabilitation 295
A-39 to A-7 Force Main Replacement 296
Street Lighting Improvements 297
D-10 Pump Station Improvements 298
Telemetry System Improvements 299
Worth Avenue Construction Fund (Fund 313)
2010B Worth Avenue Project Fund 301
Recreation Enterprise Fund (Fund 403)
Recreation Enterprise Fund Organization Chart 304
Recreation Enterprise Fund Revenue and Expenditure Summary 306
Golf Course 311
Recreation Center 321
Capital Program 325
Depreciation Program 326
Equipment Replacement 327
Self Insurance – Risk
Self Insurance Fund – Risk Management (Fund 501) 329
Self Insurance – Health
Self Insurance Fund – Health Benefit (Fund 502) 333
Equipment Replacement Fund (Fund 320) 335
Retirement Fund 339
Employees Retirement System (Fund 600)
Employees Retirement Fund 347
Health Insurance Trust (Fund 610)
Health Insurance Trust 349
Retiree Sliding Scale Insurance Premium Rates 2014 353
Authorized Positions 357
Donation Reserve Account Summary 362
Fund Balance 363
Contingency Reserve – General Fund 369
Designation of General Fund Balance - Liability Related to Compensated Absences Leave Balances 370
Reserve for Encumbrances, Continuing Appropriations, and Prepaid Expenses 371
Contingency Reserve – Capital Fund 372
Equipment Replacement Reserve 373
Contingency Reserve – Equipment Replacement Fund 374
Recreation Enterprise Fund Reserve 375
Dock Replacement Reserve – Recreation Enterprise Fund 376
Contingency Reserve – Recreation Enterprise Fund 377
Contingency Reserve – Recreation Enterprise Fund – Capital Fund 378
Equipment Replacement Reserve – Recreation Enterprise Fund 379
Reserve for Catastrophic Exposures/Emergencies – Risk Fund 380
Contingency Reserve – Risk Fund 381
Contingency Reserve – Health Insurance Fund 382
Budgetary Control 383
Debt Management Policy 384
Revenue Shortfall Plan 385
Index… 397
Dear Honorable Mayor, Town Council
and Citizens of the Town of Palm Beach
I am pleased to present the Comprehensive Annual Budget for the Town of Palm Beach for fiscal year beginning October 1, 2013, and ending September 30, 2014, in accordance with Section 2-541 of the Town’s Code of Ordinances and Chapter 95-495 of the laws of the State of Florida. The budget was prepared to comply with generally accepted accounting principles (GAAP) and all applicable Town, State, and Federal requirements. After extensive public participation and careful review by the Mayor and Town Council in several public meetings, formal citizen input was invited at two (2) public hearings. The final budget adoption occurred on September 18, 2013.
This budget document is a financial plan that sets forth the policy framework of the Town and provides the Mayor, Town Council, interested citizens, and staff with information supporting the adopted policies. The document includes aggregate financial and organizational data as well as individual program descriptions and expenditure information for every functional area of our Town government.
In preparing this budget, staff started with the long term financial plan forecast for FY14 as a baseline and then identified hundreds of thousands of dollars of additional savings while maintaining all current levels of service and addressing short term coastal funding needs. During the review of the proposed budget, Town Council decided to proceed with Phase 2 of the Accelerated Capital Improvement Program (requiring the issuance of bonds and first year debt service of $2.6 million, but reducing the long term cost to Town taxpayers) and to add an annual discretionary contribution to employees’ 401(a) retirement accounts. Together these two items added approximately $3.2 million to the FY14 budget. Overall, the budget reflects an increase of 9.5% over FY13.
Information regarding the Townwide Vision, Goals and Performance Measures can be found in the section immediately following the budget message.
Since FY08, the Town’s elected officials and staff have worked diligently to reduce costs and improve efficiencies wherever possible. The FY14 General Fund budget is well below ($1,929,107) the FY09 peak even after a large transfer to coastal protection and the additional debt service for the second phase of the Accelerated Capital Improvement Program. In an “apples to apples” comparison of the operating budget, excluding coastal transfers, expenditures for FY14 are 6.32% less than in the FY09 budget.
The chart below shows the total budget and property tax history for FY07 - FY14.
The tables below and on the following page compare the FY09 Budget to the FY14 Budget.
FY09 vs. FY14
$42,543,000
$38,647,700
($3,895,300)
5,612,900
3,552,275
(775,927)
Transfers From Reserves – Contingency/Compensated Absences
(675,500)
65,335,600
61,406,493
(3,929,107)
Fund Balance Transfer – Coastal Protection
$67,335,600
$65,406,493
($1,929,107)
$28,624,800
$24,298,881
($4,325,919)
6,173,015
(476,685)
9,166,730
8,415,555
(751,175)
7,588,890
8,472,843
883,953
1,698,390
1,701,960
2,804,666
(794,086)
8,802,424
10,133,659
1,331,235
$65,335,600
$61,206,493
($4,129,107)
The large reduction of operating expenses and small increase of non ad valorem revenues has significantly improved the Town’s long term financial forecasts. The 2009 Long Term Financial Plan (LTFP) showed deficits beginning in FY12 and increasing dramatically over time. The current forecast shows deficits beginning in FY15, but they are small and manageable. We will be able to reduce future budgets in order to eliminate the projected deficits.
The three tables below and on the next page represent:
The “original” LTFP forecast presented in April 2009
The LTFP forecast from April 2013
The forecast updated with the FY14 budget
LTFP Forecast as of April 2009
71,388,922
73,565,312
75,625,541
77,746,505
79,930,774
82,179,515
84,495,429
77,238,099
81,876,195
86,140,002
90,562,822
95,221,633
100,114,031
104,748,413
(5,849,177)
(8,310,883)
(10,514,460)
(12,816,317)
(15,290,859)
(17,934,516)
(20,252,980)
LTFP Forecast as of April 2013
61,189,945
62,799,558
64,547,059
66,497,729
68,137,014
69,935,026
71,765,404
58,932,172
60,963,433
62,479,278
64,436,551
67,399,311
70,589,837
72,896,927
2,257,773
1,836,125
2,067,782
2,061,178
737,703
(654,810)
(1,131,522)
65,406,493
67,608,271
69,655,287
71,850,971
73,653,150
75,636,418
77,640,360
68,083,367
69,782,065
71,903,679
73,970,263
76,232,173
78,665,882
(317,113)
(595,754)
(1,025,523)
FY2014 Budget Highlights
The FY14 General Fund budget is summarized on the next several pages. For details regarding the specific budget for each individual department, please see the pages following the applicable tab later in this budget binder.
In the General Fund, total revenues are expected to increase by $5,695,213 (9.54%) from the adopted FY13 budget. The increase is due to a $4,000,000 transfer from “excess” fund balance to the Coastal Protection Fund and an increase in property taxes of
$1,782,300. The changes by revenue type are shown on the table below.
FY13 vs. FY14
$36,865,400
3,652,116
(475,127)
Transfers For Contingency and Compensated Absences
1,157,033
59,711,280
1,695,213
Transfer from “Excess” Fund Balance For Coastal Protection
Total Revenues and Fund Balance Transfer
$59,711,280
$5,695,213
The LTFP called for property taxes to increase by 3% from FY13 to FY14. To provide additional funding for debt service, property taxes were actually increased by 4.83%. A millage rate of 3.2468 was approved for FY14. This rate is slightly less (.13%) than the FY13 millage rate of 3.2512, because property values in Palm Beach increased by 5.16% for FY14.
Non Ad Valorem Revenue
Total non ad valorem revenues (excluding transfers of fund balance) are anticipated to decrease by $389,654 from the FY13 revenue budget. The differences by revenue type are described in detail, as follows:
Non ad valorem taxes are expected to decrease by $110,000 (-1.47%), due to decreases in franchise fees.
Licenses and Permits are expected to increase by $385,900 (6.22%). This is primarily due to an improvement in building permit revenue and an increase in business tax receipt fees.
Intergovernmental Revenues are expected to increase by $31,550 (3.09%), due to an EMS grant and $12.50 citation revenues.
Charges for Services are expected to decrease by $99,841 (-2.73%), primarily due to a reduction in public safety revenues and projected parking meter revenues.
Fines and Forfeitures are expected to decrease by $118,000 (-9.8%) due to lower than expected revenue from the increase in parking ticket fine rates.
Interest Earnings on the Town’s invested funds are expected to decrease $475,127 (-52.76%) from the FY13 budget. The budget is based on the expectations that the current low interest rate environment will continue through FY14 and that any increase in rates may lead to losses in the bond funds held by the Town.
Miscellaneous Revenue is expected to decrease by $4,136 (-1.64%).
Interfund transfers represent the transfer from the Recreation Enterprise Fund for services provided by the General Fund. This transfer remains stable at $885,000 for FY14.
The transfer from fund balance is $5,459,600. A total of $4,000,000 is to be transferred from “excess” unassigned fund balance for coastal protection. The balance of the transfer is $860,000 for contingency funding and $599,600 from the designated reserve for compensated absences to provide for the payment of accrued leave, both in compliance with the Town’s adopted financial policies.
Total General Fund expenditures of $65,406,493 represent a 9.54% increase from FY13
operating expenditures. A $4,200,000 transfer to the Coastal Protection Fund, an increase of $2,600,000 for estimated debt service for bonds expected to be issued in FY14, and a $1,666,151 increase in pension costs are the main reasons for the increase.
Highlights of the overall changes by category of expenses for FY13 vs. FY14 are set forth on the table below:
$24,464,929
($166,048)
4,506,864
8,579,186
(163,631)
8,258,348
7,524,769
2,608,890
$56,946,181
$4,260,312
2,765,099
1,434,901
The total cost of salaries and wages is reduced by $191,048 for FY14. The majority of this savings is due to the elimination of 5 General Fund positions, partially offset by the cost of providing pay-for-performance increases to eligible employees.
Some expenditures included within the salary and wages category are partially or fully offset by non-tax revenues. These expenditures include special assignment overtime, education incentive pay, and Telecommunicator salary reimbursement through County 911 Funding. The revenue offset from these sources is budgeted for $795,000.
The increase in pension benefits ($1,666,151) is due primarily to an increase in retirement activity and the final year of “smoothing” the 2008 investment losses. In addition, the Town Council approved a modification to the required employee contributions.
Beginning on 10/1/2013, all non-union employees will contribute the same amount of 2.47% to the defined benefit pension plan and have a 4% mandatory minimum contribution to the 401(a) defined contribution plan. The cost of this change is
$152,515. The Town Council also approved a discretionary 4% Employer Contribution costing $587,902.
The decrease in the cost of non-pension employee benefits reflects the impact of a
$263,000 decrease in the actuarially determined transfer to the retiree health insurance
(OPEB) trust fund and a slight decrease in active employee health insurance funding.
Total contractual costs are increasing by $214,495 mostly due to the following specific increases: $83,800 for digital scanning of records, $67,500 for landfill maintenance and equipment rental costs, $55,000 for holiday decorations, and $14,280 for employee recruiting costs.
The $173,889 increase in commodities is due to increases in minor computer equipment ($38,523), fuel ($27,585), uniforms ($20,042), equipment maintenance supplies ($18,640), minor computer software ($17,750), office equipment ($12,125),
pre-employment testing ($4,850), and other miscellaneous supplies throughout all Town departments ($25,669).
The decrease in capital expenditures of $73,434 is due to reduced depreciation costs.
The Other category includes transfers to other funds (including the Capital Improvement Fund, Debt Service Fund, and the Risk Insurance Fund) and funding for the Four Arts Library. Also included in this category is the General Fund Contingency.
The transfer for debt service increased $2,600,000 in anticipation of the bond issue for the second phase of the Accelerated Capital Improvement Program.
Funding for the Risk Insurance program decreased by $16,780.
The Pay As You Go portion of the capital improvement program has been level funded at $1,000,000 to cover the cost of small capital projects not included in the Accelerated Capital Improvement Program.
Transfers include $4,200,000 to the Coastal Protection Fund, including $4,000,000 from “excess” unassigned fund balance.
Funding for the Four Arts Library totals $297,659 which represents a 3% increase from FY13 in accordance with prior Town Council direction.
The General Fund Contingency for FY14 is funded at 1.5% (860,000) of total General Fund operating expenditures, per Town policy.
As of September 30, 2012, the Town’s unassigned General Fund balance was
$21,424,261. The Town Council authorized a transfer of $2,000,000 from the unassigned General Fund balance to the Coastal Protection Fund during FY13, leaving a
balance of $19,424,261. Town policy requires that the General Fund maintain an unassigned fund balance of 25% of budgeted operating expenditures. This requires a minimum unassigned fund balance of $15,301,623 for the FY14 budget. The budget includes a transfer of $4,860,000 from fund balance reserves to fund the following items: coastal protection ($4,000,000) and contingency reserve ($860,000). This will re-set the unassigned fund balance to almost exactly the 25% minimum set forth in the Town’s financial policies. The budget also includes a $599,600 transfer from the compensated absence reserve of the General Fund balance to provide the required funding for compensated absence payouts.
The total personnel complement (for all funds Townwide) for FY14 is 348.44 full-time equivalent personnel (FTEP), which is a decrease of 5.0 FTEP from the adopted FY13 budget. This includes elimination of the following positions: 3 firefighters, a medical billing specialist, and a crime prevention specialist. As with all prior reductions in Town staffing, the elimination of these positions will be implemented without laying off any existing Town employees.
In total, since peaking in FY07, Town staffing has decreased by 66.79 FTEP (16%) with no material reduction in the level or quality of service provided to Palm Beach residents. The Town now has fewer employees than in 1986. A chart of the FTEP by department is shown below.
Department/Fund
Kruesler Park
The inventory of parts, supplies, fuel and materials on hand as of October 1, 2013, was
$460,434 and the total fixed asset inventory (which includes machinery, equipment, and vehicles with a value over $2,500 and computer equipment with a value over $1,500) was
$18,538,094.
Below are highlights from the budgets for other Town funds. Additional information can be found in the back of the document after the General Fund information. The Town’s other funds include: Debt Service, Capital Improvement Funds, Recreation Enterprise Fund, Internal Service Funds (Health, Risk, Equipment Replacement), and Trust Funds (Pension and OPEB Trust).
Debt Service Funds (205, 206)
The Debt Service Funds provide for the payment of principal and interest on the Town’s outstanding bonds. During FY10, the Town authorized the issuance of $57,035,000 for a portion of the Town’s Accelerated Capital Improvement Program and refunding all of the Town’s existing debt. In addition, bonds totaling $14,770,000 were issued for the Worth Avenue Commercial District Project.
The Town’s outstanding debt as of September 30, 2013 is shown below:
Outstanding Principal Year Balance @ September Issued 30, 2013
$53,025,000
Finance the ACIP and refund outstanding debt.
$12,130,000
Worth Avenue Commercial District Project
$65,155,000
As of September 30, 2013, the Town’s net bonded debt will amount to only 10.4% of the legal limit of $626,486,157 (5% of preliminary FY14 taxable value of $12,529,723,136).
The Town’s credit ratings were reevaluated with the issuance of the 2010 bonds. Moody’s Investors Service issued a rating of Aa1 for the Revenue Bonds and a Aaa issuer rating.
Standard and Poor’s credit rating on the Revenue Bonds is AA+ and the issuer credit rating is AAA. These are the highest ratings these two services issue and represent the highest quality investment grade debt. Standard and Poor’s recently reaffirmed the Town’s AAA and AA+ ratings. The S&P report is included with the fund balance survey report later in this document.
The 2010A Series Revenue Bonds total debt service appropriation of $3,626,800 is funded from non-ad valorem revenues, including $126,300 funded through the Recreation Enterprise Fund for the Town’s portion of the Par 3 Renovation. The non-ad valorem revenue transfer from the General Fund for FY14 is $3,500,000 and interest earnings are estimated at $500.
The 2010B Series Revenue Bonds debt service appropriation of $775,000 is funded through non ad valorem assessments on the property owners within the Worth Avenue Assessment District.
The Town Council authorized an additional $2,600,000 appropriation in the FY14 budget for debt service for the upcoming issuance of debt for the second phase of the Accelerated Capital Improvement Program.
Capital Improvement Funds (307, 309, 310, 311, 312, 313)
For FY14 the following are included in the Pay As You Go capital budget:
Storm water improvements - $100,000
Sanitary sewer improvements - $150,000 o Milling & Resurfacing Program - $490,000 o Roadway Rebuilding - $10,000
Bulkheads and Seawalls - $50,000
Water Main Improvements (WPB) - $800,000 (Reimbursed by West Palm Beach)
Landfill Site Maintenance - $100,000
General Building Maintenance - $350,000
Projects that are to be funded in FY14 from the Bond Proceeds Fund for the ACIP program are listed under the Capital Funds tab. The budget does not include expenditures for the second phase of the Accelerated Capital Improvement Program, as that list of projects will be finalized later this year.
The CCMP Construction Fund (309) is used to fund the construction costs of the coastal projects. The total FY14 budget for coastal protection approved by the Town Council is
$22,844,000. Of this amount, administrative costs are paid out of the Public Works budget in the General Fund, leaving a budget requirement for FY14 of $22,136,000 for the CCMP Fund.
The table below summarizes the Coastal Protection Funding for FY14:
Current Coastal Protection Reserves
$11,324,632
Transfer from the FY14 General Fund Budget
Transfer from Reserves of Risk Insurance Fund
Transfer from Reserves of Equipment Replacement Fund
2,858,913
Total Available Funding for FY14
$20,383,545
The North Ocean Boulevard Seawall is a bondable project that is included in the FY14 Coastal budget at a cost of $5,600,000. The Town intends to fund the project from Phase 2 bond proceeds for the Accelerated Capital Improvement Projects.
At the October 8, 2013, Town Council meeting, the Town Council approved a funding plan for coastal management program that includes appropriation of $4,776,607 in FY15 and increasing at 3% per year thereafter. Town Council also decided to use ad valorem taxes to fund the coastal program. The Town’s long term financial forecasts have been updated to reflect these decisions.
Recreation Enterprise Fund (403)
The Recreation Enterprise Fund (REF) comprises all municipal recreational activities and facilities in the Town, including the Par 3 Golf Course, the Seaview Park and Phipps Ocean Park Tennis Centers, the Recreation Center, and the Town Docks.
Staff continues to take a conservative approach to projecting recreation revenue for FY14, with an overall increase in revenue of 1.27% from the FY2013 projections. The budget contains decreases for nonresident tennis fees, increases for most dockage rates, and no changes to the golf and recreation center fees. The growth of participation at all facilities continues to be the primary strategy for increasing REF revenue.
Tennis revenue projections are slightly lower for FY14. In an effort to grow participation and to increase level of competition (as requested by our current customers), the adult and family nonresident annual fees will be decreased approximately 15%, with minor adjustments made to other nonresident fees (annual junior and daily drop-in rates).
Recreation Center revenues are also expected to be slightly lower. Although several new and enhanced programs have been planned and recently implemented, FY13 revenues were over estimated. Modest fee increases to individual activities will be in effect for the upcoming fiscal year, but staff is not recommending changes to building rental rates.
Projected Town Docks revenues for FY2014 are lower to correct for an over estimation in FY2013. A 2% increase has been included for most fees, with the exception of annual and seasonal 50’ and 60’ rates, which will remain at the FY13 levels. While the Town Docks has not attained 100% occupancy in recent years, the fee increases will maintain our place in the area market and will not hinder our pursuit of achieving 100% occupancy with long-term leases in the coming years.
There are no increases for the Par 3 Golf Course fees (which was increased in FY13). It is expected with the addition of the new clubhouse, play will increase, which in turn will increase
revenue. The food and beverage operations in the clubhouse will also be a new source of revenue.
The FY14 REF budget represents an increase of 8.38% from the FY13 budget. Administration expenses will increase due to the re-classification of a .75 FTE Equipment Operator position to an Office Assistant I position. In addition, $100,000 has been included in the FY14 budget for various repairs to the shore power electrical conduit at the Town Docks and $50,000 for various repairs and non-routine maintenance at the Par 3 Golf Course. The Par 3 Golf Course repairs are to be paid for from the Par 3 Maintenance and Improvement Reserve. The Tennis and the Recreation Center budgets will see minor increases from FY13. The transfer of fund profits to the General Fund is budgeted at $885,000, the same as in FY13.
Details regarding each of the programs of the REF can be found in the Recreation Enterprise Fund section of this document.
Internal Service Funds (501, 502, 520)
The transfer to the Risk Fund (501) has decreased by $16,780 from FY13 to FY14.
The employer contribution for FY14 to the Health Insurance Fund (502) has remained the same as in FY13 due to expected savings from the new wellness program and the modifications to the 3-tier insurance program. A more complete health insurance update is provided behind the Internal Service Funds tab under the Health Insurance Fund section.
The Equipment Replacement Fund (520) contains the accumulated depreciation of all fixed assets over the established thresholds of $2,500 for capital equipment and $1,500 for computer equipment. The annual depreciation transfer for FY14 is $1,879,535. This amount represents a decrease of $91,434. Of the total depreciation for FY14, $235,920 represents the annual depreciation for computer equipment and $1,643,615 represents the annual depreciation for other fixed assets. In FY14, the total expenditures for equipment purchases will be $2,977,895. A detailed listing of planned equipment purchases is located in the Internal Service Funds section of this budget document. The Town Council authorized a transfer of $2,858,913 to the Coastal Protection Fund from the excess reserves of the Equipment Replacement Fund. The excess reserves had been accumulated from equipment that was not replaced and interest earned on the fund.
Trust Funds - Retirement (600)
The FY14 actuarially determined contribution to the defined benefit plan totals $5,916,828. A portion of the increase is caused by a change in the investment and wage inflation assumptions ($930,690). This amount is being offset by a transfer from the prepaid contribution reserve in the Retirement Fund. The Town accumulated a prepaid reserve in the Retirement Fund due to the “overpayment” to the fund by systematically contributing the actuarial determined amount rather than the State required amount (which was calculated as
a percent of payroll). A total of $2,169,323 has been reserved as a prepaid contribution in the Retirement Fund. The employer contribution for FY14 after the prepaid offset is
$4,986,138. The remainder of the FY14 increase is caused primarily by accelerated employee retirements and the final year of “smoothing” the investment losses from 2008.
As described earlier, the Town Council approved a change in employee contribution requirements so that all non-union employees contribute the same 2.47% of their salaries to the defined benefit pension plan. The cost of the change is $152,515, which has been included in the FY14 budget.
The Town contribution comparison for FY13 vs. FY14 is shown in the table below:
$1,850,688
$626,819
1,881,949
624,842
2,040,491
$3,976,907
$5,916,828
1,939,921
Less: Prepaid Contribution
($930,690)
Plus: Contribution Change
Amount included in FY14 Budget
$5,138,653
Employer Defined Benefit Funding for Employee Pensions
$2,507,174
$2,927,020
$651,882
2,261,552
2,828,758
2,647,210
3,189,802
$7,525,246
$9,093,955
$3,516,400
The Town contributes a match of up to 4% to the Defined Contribution (DC) plan. In addition, the Town Council approved a discretionary contribution of up to 4% per year, to be decided each year depending upon economic and budgetary conditions. For FY14, the Town Council approved a 4% discretionary DC contribution. Contributions to the DC plan began with the
implementation of the hybrid plan on May 1, 2012. The Town contributions to the DC plan are shown below:
Employer Defined Contribution Funding
$706,505
$1,282,682
Health Insurance (OPEB) Trust (610)
The actuarially determined transfer to the OPEB trust from the General Fund in the FY14 budget is $1,506,000. This amount is $263,000 less than FY13. The trust was established to account for and fund the liability for retiree health benefits. The contributions are funded like pension benefits, taking into account the accrued cost for current employee benefits as well as the costs of retired employee benefits. The Town’s balance in the OPEB fund continues to be well ahead of other government agencies across the country.
Worth Avenue Special Assessment District
The budget for the Worth Avenue Special Assessment District is included in the Capital Funds and the Debt Service section of the budget document. The budget includes funding for maintenance and debt service. These costs are fully offset by the assessments charged to property owners within the district.
The Town has 18 formally adopted financial policies. The establishment of specific reserve policies is an important part of prudent financial management and the practice is strongly recommended by the Government Finance Officers Association (GFOA) and the National Advisory Committee on State and Local Budgeting (NACSLB).
Copies of the Town’s financial policies can be found in the back of this document in the appendix.
Preparation of this budget was a team effort involving the Mayor and Town Council, all Town departments, and the staff of the Town Manager’s Office. I am particularly grateful for the dependably sound advice of Finance Director Jane Struder who, along with Assistant Finance Director Cheryl Somers and Accounting Supervisor Amy Wood, provided overall leadership and coordination on this project.
Peter B. Elwell Town Manager
cc: Department Directors
Thomas G. Bradford, Deputy Town Manager
Strategic Planning and Performance Measurement‌
In 2003, the Town of Palm Beach developed and adopted a strategic plan. The development of the strategic plan involved input from elected officials, citizens, the business community, and staff. In conjunction with the Town’s strategic plan, staff developed an organizational vision statement which included input from all employees. Both the strategic plan and the vision statement, in addition to annually adopted Townwide goals, help us to form our department and program goals. Outlined in the following pages is a summary of our strategic plan, organizational vision, and departmental goals for FY14.
In 2001, the Town Council formed a Strategic Planning Board comprised of then Mayor Lesly Smith and four other Town residents. The board held a series of meetings and community forums to receive input from citizens, the business community, staff and others. The strategic plan was formally approved by the Town Council in 2003. The strategic plan is summarized below:
Palm Beach is a fully developed community, world renowned for its extraordinary beauty, quality of life, and small-town character. Our permanent and seasonal residents love our barrier island community and are determined to preserve our legacy. We do not seek to change Palm Beach, but rather to protect our community’s assets, correct any deficiencies, and to manage inevitable change so as to maintain our tradition of excellence.
As we envision our future ten years from now, we see Palm Beach remaining true to the inspired legacy of our founders, a Mediterranean-style mecca of stunning architecture and natural beauty, acclaimed shopping, restaurants and hotels, a cosmopolitan culture, and an involved citizenry committed to civic and philanthropic causes and excellence in Town Government.
Quality and Responsive Town Government
Town government is supported by a respected Mayor and Town Council, a skilled and dedicated staff, and by the active volunteer participation of many citizens.
Palm Beach provides residents with the highest level of safety and security through its vigilance and commitment to high quality training and state-of-the-art equipment. The Town has maintained its fiscal strengths with resourceful budgeting and prudent management.
In the future, we envision...
Continued high quality services and facilities provided in a responsive, resourceful manner. A structure of government guided by clear mandates and performance goals for Town administration and for appointed boards and commissions, continued technological innovation, and excellent internal and external communication.
Pro-active initiatives and continuous vigilance to anticipate and avert threats to public safety, enabling Palm Beachers to live secure in safe neighborhoods.
Solid fiscal strength and strong alliances with state and federal partners. Actions will be taken and communicated to residents to instill confidence that optimum services are provided for taxes paid.
While completely developed, the Town of Palm Beach recognizes a number of redevelopment challenges and functional deficiencies among its current capital facilities. Traffic has increased and parking is at a premium. Beach erosion has become severe, threatening oceanfront property and diminishing a key scenic and recreational asset. Drainage deficiencies and occasional water shortages continue to pose a threat.
In the future we envision...
Beaches fully restored and maintained for the protection of oceanfront property, enjoyment of residents, and scenic enhancement.
Modernized, reliable infrastructure systems, including improved facilities for water distribution and storm drainage. Capital projects will be completed expeditiously and with an effort to limit the disruption they inevitably will cause to adjacent property owners.
Convenient network of roads and parking, less hampered by congestion and sufficient to meet local needs without encouraging additional traffic or visitation.
Character and Quality of Life
While Palm Beach is built out, growth continues in the form of redevelopment and changes in use raising questions and concerns about over-development, scale, and our historic legacy. The Town is proud of its lush landscaped setting, its historic architecture, and its array of shopping and other amenities, but concerns are expressed about expanded tourism, visitation and traffic, straining our limited service capacity. The Town recognizes that among our greatest resources are our people and their involvement in civic groups, charities, cultural activities, and faith- based organizations.
A community that has guarded against over- development, encouraging redevelopment consistent in scale with existing neighborhoods, reflective of our heritage.
A town with a rich menu of cultural choices, enabling Palm Beach to continue to combine the intimacy and convenience of small town life with the cultural sophistication and variety of a city.
Palm Beach will remain a friendly community which embraces its diversifying population, nurtures young families and children, and welcomes new residents and visitors. Palm Beachers will continue their heritage of support to worthy causes and their involvement in civic affairs creating new opportunities for all to participate fully in the life of the community.
Town Staff Vision
In 2005, Town staff developed and implemented an organizational vision and values statement. A Visioning Committee of 20 employees representing each department and every level of authority developed the draft vision and values statement that was reviewed by all Town employees. The final vision and values statement is shown on the following page:
The Town of Palm Beach delivers the highest quality service by continuously improving and always striving to be the standard by which others are measured.
Our Town Rich in history… Rich in service…
The employees of the Town of Palm Beach commit to and are guided by the following values:
Respect for everyone Highest ethical standards Cooperation and teamwork Commitment to quality Spirit of innovation
Open, timely communication Personal responsibility and accountability
This is a commitment by the employees of the Town of Palm Beach.
Our success as a team is dependent upon our actions being consistent with the vision & values we profess.
The Vision/Strategic Plan/Performance Measurement Process
The Townwide vision and strategic plan developed by the Strategic Planning Board and the organizational vision developed by Town staff complement each other. The Staff recognizes the Town’s rich history and commitment to excellence that has made the Town an exceptional place to live and work.
The strategic plan and organizational vision guide the decision making process as the elected officials and staff develop annual Townwide, department and program goals, and the annual budget. We then use KRM’s to track our progress in achieving the goals that have been set.
The process is depicted in a flowchart on the following page and elements of the process are described in greater detail in this section. The department and program performance measurement methodology are described in greater detail in the department sections of this document.
The Vision/Strategic Plan/Goals and Performance Measurement Process
Townwide Budget Priorities for FY2014
The Town Council’s annual budget priorities for FY2014 are outlined below. These priorities were developed with input from the Mayor and Town Council, Town Manager, Department Directors, and staff at the March 14, 2013, Town Council meeting.
Once the Mayor and Town Council set the FY2014 priorities, the Departments developed goals and objectives that would accomplish the priorities. In addition, the Departments developed other major initiatives for the year. The Council priorities and Departmental goals will be reviewed on a continual basis throughout the fiscal year.
The following is a breakdown of the Town Council Priorities and a listing of the departmental objectives that address the Council’s agenda. The table below shows the linkage between the Council’s priorities and the Department objectives that will be implemented during the year. A detailed listing of all departmental objectives and performance measurements can be found in the Department sections of this document.
Town Council Priority #1
Begin implementation of a long term coastal protection plan (consistent with scope and funding decisions to be made during the remainder of FY13).
Work with the Town Council and advisors to develop a coastal protection financing plan that is both cost effective and equitable.
Work with Public Works and others to accomplish all approved FY14 coastal protection projects.
Develop Financing Plan for the Coastal Protection Program.
Participate in Cost Allocation Modeling to Determine Funding Process.
Continue to Pursue Required Permits in Accordance with BMA.
Town Council Priority #2
Decide the scope and timing of Phase 2 of the Accelerated Capital Improvement Program, and if appropriate, begin implementation by issuing bonds to fund the program and designing projects to be constructed during FY15.
Work with the Town Council and advisors to develop a cost effective financing plan for Phase 2 of the ACIP.
Work with Public Works and others to accomplish all “year 1” projects for Phase 2 of the ACIP.
Develop Financing Plan for the Accelerated Capital Improvement Program.
Complete and close out Phase 1 projects from ACIP program.
Initiate Design Scopes of Services for Phase 2 Projects.
Participate in assisting with bond issuance with input as required.
Town Council Priority #3
Monitor the ongoing effects from the closure of the Flagler Memorial Bridge. Promote public safety and the efficient movement of traffic, take action to mitigate impacts to residents and the business community, and maximize communication with FDOT on the course of construction and completion timeline.
Closely monitor progress of both the repair of the existing bridge and the construction of the new bridge.
If necessary, immediately implement traffic/safety contingency plans by direct Town action and by collaboration with FDOT, Palm Beach County, and others.
Expand use of the Townwide Camera and Security System to mitigate construction and traffic issues impacting residents, business community, and visitors.
Develop and utilize Emergency Operations Plans and other pro-active measures to allocate resources to allow sufficient traffic flow during rush hour and for all emergency vehicles.
Attend all FDOT Flagler Bridge meetings and communicate any logistics issues/information to appropriate staff/units for action.
Attend periodic meetings with FDOT/contractor project teams.
Coordinate negative traffic impacts with other Town departments as well as affected residents/businesses, assist in developing mitigation strategies.
Attend all FDOT meetings and communicate any logistic issues/information to the appropriate staff/units for action.
Work with FDOT on implementation of a traffic preemption system that will preempt traffic lights in advance of the approaching fire and EMS units for intersections affected by the bridge construction project.
Closely coordinate our response and transports to the hospital with the Police Department, utilizing police officers to clear intersections for high priority calls.
Utilize the Trauma Hawk helicopter to transport seriously ill patients to the hospital if delays are created by the bridge construction project.
The Town Departments have adopted goals and performance measures representing the most critical targets for their operations. The other department and program specific results are shown in the department section of the budget document.
Location FY2014
Palm Beach is located on a barrier island east of West Palm Beach, Florida in Palm Beach County. The land area of the Town is approximately 3.77 square miles with
12.1 miles of coastline on the Atlantic Ocean. The Town is also bound on the west by 15.9 miles of Intracoastal frontage (Lake Worth), on the north by the Palm Beach Inlet, and on the south by the Town of South Palm Beach.
Date of Incorporation April 17, 1911
Land Area 3.77 Square Miles
FY2014 General Fund Budget $65.4 Million
Taxable Property Valuation $12.5 Billion
Town of Palm Beach Demographics
2012 (Univ of Florida Est)
2011 (Univ of Florida Est)
2010 (Census) (a)
Marina (88 slips)
66.6 yrs.
Racial Composition Bradley Park 4.5 acres
Caucasian & Other Races 94.5% Kaplan Park .3 acres Hispanic/Latino 3.9% Special Use Parks
African American .6% Public Park on Beach 3.0 acres
Asian 1.0% Municipal Beach 5.60 acres Peruvian/So. County Road .24 acres
Bond Ratings Southern Blvd. Causeway 9.60 acres
2010 Revenue Bond
Nature Islands 39 acres
Moody’s Aa1 Aaa
S&P AA+ AAA Registered Voters 8,237
(a) Under Review by Census Count Resolution Program
Taxable Value and Millage Rate
The Town Council approved a millage rate of 3.2468 for FY14, a slight decrease from the FY13 millage rate of 3.2512 that had been in place since FY09. Taxable value increased 5.16% to $12,529,723,136 for FY14. Ad Valorem revenue of
$38,647,700 is included in the FY14 budget. Town adopted final millage rate is above rollback but below maximum millage rates. The increase in tax revenue from the rollback rate is $1,765,520. The chart below identifies the millage rate options available to the Town and the Town’s adopted final millage rate.
Rollback Millage Rate
$36,882,180
Majority Vote Maximum Millage Rate
$45,257,297
2/3 Vote Maximum Millage Rate
$49,782,908
Town Adopted Final Millage Rate
$36,647,700
The majority maximum millage rate is the prior year rolled-back rate adjusted to the rolled back rate if the prior year majority vote rate had been levied. This newly calculated rolled-back rate is then adjusted by the percentage change in per capita Florida personal income to arrive at the current year majority vote rate. This year the percentage change is Florida personal income was 1.69%. The 2/3 vote maximum rate is 110% of the majority maximum rate.
Taxable value peaked in FY09 at $13.68 billion. Since FY09, the Town’s taxable value has declined by 12.8% through FY13. For FY14, the taxable value increased by 5.16%. Due to the decline and the stable millage rate, property tax revenue has declined by $3,895,300 since the FY09 peak. The tax revenue trend is shown on the chart on the following page.
The Town millage rate represents 17.99% of the total tax bill. The table below illustrates the difference between the FY13 vs. FY14 total tax bill by taxing district for a Palm Beach property owner with a taxable value of $1 million.
Impact on owner of $1 million property
FY14 Tax Change Per
18.3348
The chart below shows the 10 year trend in millage rates for all taxing authorities.
The Town’s total millage rate is the second lowest in Palm Beach County as shown below.
Property Breakdown by Number of Parcels
The Town has a total of 9,482 total parcels. Residential units total 8,947 or 94% of all parcels. Condominiums and Cooperatives represent the greatest percentage of total parcels in the Town at 68% or 6,413 parcels. Single family residential parcels are the second largest group at 2,309 parcels or 24% of the total. Commercial and industrial parcels total 404 and the balance is made up of multi-family, government, institutional and miscellaneous parcels.
Properties with a Homestead exemption represent 38% of the total parcels in the Town.
Property Breakdown by Taxable Value
The taxable value of parcels in the Town totals $12.4 billion. Residential parcels represent 92% of the total value of parcels and single family residential represents 64% of the total value.
Commercial and industrial properties represent 7.6% of the total value of parcels. Properties with a homestead exemption represent $5.58 billion (45%) of the total taxable value.
Historical Single Family Building Permits
Beginning in 2008, building permit revenue declined due to the downturn in the economy. For the past three years, permit revenue and permit activity increased. A total of 8,345 permits were issued in FY11, 8,424 permits were issued in FY12 and 9,275 permits were issued in FY13, compared to 7,727 for FY10. Total permit valuation for FY11 was $179,215,325, $191,604,640 for FY12, and $223,157,589 for FY13 compared to $117,361,908 for FY10.
The monthly trend for permit activity and permit valuation for the past five years is shown on the charts below.
We expect permit activity to continue at high levels for FY14. The improvement in permit activity and new construction has resulted in an improvement of the Town’s taxable value.
According to early settler accounts, Palm Beach received its name from a shipwreck named the “Providencia”. The ship washed ashore in January of 1878 with a load of coconuts bound from Havana to Barcelona. Early settlers lost no time claiming salvage and planting the coconuts which were not native to South Florida in an effort to launch tropical South Florida on a commercial coconut industry.
In 1893 millionaire industrialist Henry M. Flagler and his second wife honeymooned in St. Augustine. Impressed with the beauty and history of the area, he envisioned an “American Riviera”. Flagler left home at age 14 with an eighth-grade education. Later, with John D. Rockefeller and Samuel Adams, he founded Standard Oil, and the rest is history. Having invested large sums in
several hotels in the St.
Augustine area, Flagler
extended his holdings
southward. He bought and
improved existing railways
anticipating the tremendous
potential for South Florida.
His railway was named the
Flagler’s agents soon were
buying acres of land on the
island of Palm Beach. Many
found themselves very wealthy,
as orders had been given to
buy “at any price”.
Ground was broken May 1,
1893, and on February 11,
1894, the Royal Poinciana
Hotel, the largest wood structure
in the world, opened in
Palm Beach and welcomed 17
guests. A month after the
opening, the first train pulled
from the station on Loftin
Street (later used as an office
and warehouse by the Town of
Palm Beach) in West Palm
Beach on the newly built
bridge across Lake Worth to
deliver vacationing residents, some in their own private railway cars, to the new hotel. Henry Flagler built his own house in 1902, Whitehall, as a wedding present for his third wife, Mary Lily Kenan. Whitehall is now the Henry Morrison Flagler Museum and is open to the public.
Flagler continued to develop the Royal Poinciana Hotel property and built a second hotel, the Palm Beach Inn, on the beachfront portion of the Royal Poinciana’s property. When the Palm Beach Inn burned in 1903 the first Breakers Hotel was built. Destroyed by a fire in
1925, it was rebuilt as the splendid hotel it is today. The Breakers is listed in the National Register of Historic Places.
On April 17, 1911, a meeting of the registered and qualified voters of Palm Beach, Florida, was held at the Palm Beach Hotel for the purpose of incorporating the Town of Palm Beach. Thirty-four qualified voters voted to incorporate the Town.
In 1918, before the end of World War I, Addison Mizner, an established New York architect who was born in California and studied in Spain, accepted an invitation from Paris Singer to recuperate from a leg injury in Palm Beach. As Mizner’s health improved his boredom turned into creativity, and he transformed Singer’s bungalow into a Chinese villa. The conversion was a success, but Singer looked forward to a larger project. Having established two hospitals in France, Paris Singer decided to build a convalescent home in Palm Beach for service men returning from the war. The buildings were completed, but before the opening of the club house in January 1919, the “Touchstone Convalescent Club” had been transformed into the exclusive Everglades Club on Worth Avenue where it still is today.
Mizner’s era had begun and was to continue along the southeast Florida coast through the 1920's.
The Town of Palm Beach soon began long range plans to develop and protect this island paradise, and the beauty which Town residents now enjoy is due to the efforts of several generations of planning activity. In 1929, the Garden Club of Palm Beach joined the Town and formally sponsored the preparation of a Town Plan. The overall goal of the 1929 Plan stated the following:
“One attractive and well managed public bath and beach, the concentration of general traffic upon a limited number of streets, beautification without especial reference to main arteries of travel, and a system of leisurely and convenient byways free from automobiles, punctuated with gardens: this is a plan which will localize recreation seeking crowds, discourage trespassing, and provide safety and quiet for residents of Palm Beach.”
Also included in the plan was the following statement:
“There are many communities which can be said to be beautiful. The places in which charm is the additional attribute are very few. The element of charm is the thing which lifts a community out of the ordinary and makes it distinctive. The attribute of charm may be produced by an intelligent development of physical advantages in an unusual way.”
Today’s Comprehensive Plan in Palm Beach builds on the early foundation as an effort to preserve the quality and beauty of Palm Beach.
The Town of Palm Beach has 8,137 registered voters in 2012 with approximately 8,358 full time residents. The population swells to approximately 25,000 during “season” which is from November to April. Residents and visitors enjoy the very best in dining, shopping, and luxurious surroundings. Worth Avenue shops attract visitors worldwide.
In 2011, the Town celebrated its Centennial with a season full of activities and events. A Centennial Commission was formed in August 2009 to engage with the community, residents and businesses alike, to identify ways to celebrate the 100th anniversary of the Town's incorporation on April 17, 2011. After more than a year of planning, dozens of events marked the Centennial year, culminating with a weekend of celebration from April 15-17, 2011.
Financial Policies ‌
The Town of Palm Beach financial policies, compiled below, set forth the basic framework for the overall financial management of the Town. These policies assist the Town Council’s decision-making process and provide guidelines for evaluating both current activities and proposals for future programs. Copies of Town Council adopted policies are located in the appendix section of this document.
Annually prepare a budget, submit it to the Town Council for approval and publicly issue a budget document.
Identify costs and funding sources before recommending approval of capital and operating budgets.
Provide for sound financial planning, the best possible bond rating, funding of depreciation and adequate working capital in all funds.
Take measures to protect against catastrophic losses through a combination of insurance, funded self insurance, and cash reserves.
Follow the Town of Palm Beach Charter when preparing the Town’s budget.
Estimate and review the long-term costs associated with proposed new programs or services.
Assign all program costs as accurately as practical (including interfund transfers when necessary) utilizing intergovernmental service funds where indicated.
Annually review all existing programs to determine whether a recommendation to the Town Council to maintain, decrease, or increase service levels is appropriate.
Review annually all administrative policies governing accounting procedures, billing, purchasing, asset use and control, and risk management.
Pay for all current year operating expenses with current year revenues and/or available fund balances.
Provide for adequate funding of all pension plans, as determined by the Town’s actuary.
Make all purchases in an impartial, economical, efficient, and competitive manner, in accordance with all Federal, State and municipal laws and coordinated through the Purchasing Division.
The budget will be controlled at the program level within each department by the applicable department head. Budget amendment requests and transfers of funds
between programs will originate from the applicable department head and the Finance Director and shall be subject to the approval of the Town Manager.
The Town Manager may authorize transfers between departments if the action is deemed necessary to meet the obligations of the Town.
Issue a Comprehensive Annual Budget Document after adoption.
Evaluate the relative merit of each capital project according to the Town Council’s goals and priorities.
Rely on internally generated funds and/or grants to finance its capital needs. Debt will be issued for a capital project only in the case of an emergency, or when inclusion of a project in the Town’s pay-as-you-go Capital program will preclude the construction of smaller necessary capital improvements.
Thoroughly evaluate and update the Capital Improvement Program on an annual basis providing detailed information regarding operational impacts.
Levy taxes to provide the desired level of service.
Annually review all revenue schedules, including taxes, rates, licenses, user fees, and other charges, to insure compliance with Town Council’s approved policies.
Maintain a diversified revenue base to help mitigate the effects of short-term fluctuations in any one revenue source.
Conservatively estimate annual revenues utilizing established industry standards along with historical trend information.
Annually review user fees for the Recreation Enterprise Fund and set same at a level that fully supports all direct and indirect costs of the fund.
Review new sources of revenue to fund operating and capital costs consistent with the Town Councils’ goals and priorities.
Prepare a cash flow analysis of all funds on a regular basis. Disbursement, collection and deposit of all funds will be scheduled to insure cash availability.
Deposit funds only in financial institutions which are insured by the Federal Deposit Insurance Corporation or are approved for full collateralization by the public deposit protection act or other state statutes.
Pool cash from all legally permitted funds for investment purposes.
Maximize the investment rate of return. Adhere to lawful investment options. Safety of the principal shall be the dominant requirement, followed by sufficient liquidity to meet operating requirements, and then yield.
Insure timely deposit of all collected revenues.
Periodically approve the issuance of Debt Obligations on behalf of the Town to finance the construction or acquisition of infrastructure and other assets for the purpose of meeting its governmental obligations to its residents.
Approve the issuance of Debt Obligations to refund outstanding debt when market conditions indicate or for management considerations.
Assure that such Debt Obligations are issued and administered in such a manner as to ensure and sustain the long-term financial integrity of the Town, to achieve the highest possible credit rating and to preserve and enhance the quality of life, safety and welfare of its citizens.
Assure that such Debt Obligations shall not be issued or debt proceeds used to finance current operations of the Town except as provided herein.
Issue Debt Obligations if necessary to minimize the impact of construction or acquisition of infrastructure and other assets on the budget of the Town.
Consider long-term financing for the acquisition, maintenance, replacement, or expansion of physical assets (including land) only if they have an economic/useful life of at least five years.
Not issue debt for periods exceeding the useful life or average useful lives of the project or projects to be financed.
Normally rely on internally generated funds and/or grants to finance its capital needs.
Debt will be issued for a capital project only in the case of an emergency, or when inclusion of a project in the Town’s pay-as-you-go capital program will preclude the construction of smaller necessary capital improvements.
Keep outstanding debt within the limits prescribed by Section 7.01 of the Town Charter.
Accounting, Auditing and Reporting Policies
Establish and maintain a high degree of accounting competency. Financial accounting and reporting will be done in accordance with methods prescribed by the Governmental Accounting Standards Board and the Government Finance Officers Association, or their equivalents.
Present monthly and annual reports to the Town Council summarizing financial activity.
Maintain financial systems to monitor expenditures, revenues and performance of all municipal programs on an ongoing basis.
Provide full disclosure in annual financial statements and bond representations.
Use an independent certified public accounting firm to perform an annual audit.
Publicly issue a Comprehensive Annual Financial Report.
Comply with all required reporting requirements related to bond issuance terms.
Maintain a contingency reserve in the General Fund equal to 1.5% of the proposed General Fund budget to address unexpected needs that occur throughout the year, subject to the formal affirmative vote of the Town Council.
Maintain a contingency reserve in the Capital Fund equal to 10% of the proposed Capital Fund budget to address unexpected needs that occur throughout the year, subject to the formal affirmative vote of the Town Council.
Maintain an assigned fund balance in the General Fund equal to a minimum of 25% of current year General Fund budgeted expenditures.
Maintain a contingency reserve for the Equipment Replacement Fund of $500,000 to address unexpected needs that occur throughout the year, subject to the formal affirmative vote of the Town Council.
Maintain a contingency reserve in the Recreation Enterprise Fund equal to 5% of the proposed Recreation Enterprise Fund operating expense budget to address unexpected needs that occur throughout the year, subject to the formal affirmative vote of the Town Council.
Maintain a contingency reserve for Recreation capital projects equal to 5% of the budget expenses to address unexpected needs that occur throughout the year, subject to the formal affirmative vote of the Town Council.
Maintain a contingency reserve in the Self-Insurance Risk Fund of $500,000 to address unexpected needs that occur throughout the year, subject to the formal affirmative vote of the Town Council.
Maintain a contingency reserve in the Self-Insurance Health Fund of $500,000 to address unanticipated expenditures and/or to meet unexpected increases in health insurance costs and claims exposure.
Establish a reserve to designate fund balance in the amount equal to the Town’s unpaid obligations, unfinished projects and prepaid expenses that carry over from one fiscal year into the next.
Maintain minimum Net Asset levels equal to 25% of the proposed budgeted revenues in the Enterprise Fund.
Maintain a minimum reserve of $2,500,000 for the Risk Fund designated as a reserve for catastrophic exposures/emergencies.
Maintain a reserve for funding the replacement costs of General Fund existing equipment, vehicles, and computers when they reach the end of their useful lives. The reserve will be maintained at a rate of 100% of accumulated depreciation (calculated at replacement cost) of the existing equipment.
Maintain a reserve for funding the replacement costs of Recreation Fund existing equipment, vehicles, and computers when they reach the end of their useful lives. The reserve will be maintained at a rate of 100% of accumulated depreciation (calculated at replacement cost) of the existing equipment.
Maintain a reserve for funding a dock replacement fund. The reserve will be maintained at a rate of 100% of accumulated depreciation of the current docks.
Maintain a commitment of fund balance in the General Fund for payment of the liability related to compensated absences. This commitment will be funded at a rate of 100% of the fiscal year end accrued balance.
Maintain a commitment of fund balance in the General Fund equal to the Town’s portion of the future debt service on the 1993 loan for the improvements to the East Central Regional Wastewater Treatment Facility. The reserve will be adjusted annually to reflect the outstanding debt service.
The accounting policies and reporting practices of the Town conform to generally accepted accounting principles as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of significant policies and practices.
For financial reporting purposes, management has defined the reporting entity in accordance with criteria set forth in generally accepted accounting principles. The basic criterion for including a potential component unit within the reporting entity is the governing body's ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations, and accountability for fiscal matters. A second criterion used in evaluating potential component units is the scope of public service. Application of this criterion involves considering whether the activity benefits the government and/or its citizens, or whether the activity is conducted within the geographic boundaries of the government and is generally available to its citizens. A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the government is able to exercise oversight responsibilities. Based upon the application of these criteria, the following is a brief review of each potential component unit addressed in defining the Town's reporting entity.
Included within the reporting entity:
The Town of Palm Beach Employees' Retirement System
The Town and the Systems’ participants are obligated to fund the costs based upon actuarial valuations. The Employee’s Retirement Board recommends and the Town Council is authorized to establish benefit levels and to approve the actuarial assumptions used in the determination of contribution levels.
Excluded from the reporting entity:
East Central Regional Wastewater Treatment Facility ("Facility")
The Town participates in an interlocal agreement with Palm Beach County and the Cities of West Palm Beach, Riviera Beach and Lake Worth to provide wastewater treatment. The facility is governed by a Board of Directors comprised of one member from each participating entity. The Board of Directors has the authority to accept and disburse funds, approve an annual budget, transact business, enter into contracts and decide all other matters related to the Facility. The Town reimburses the Facility based upon usage and also provides funds for renewal and replacement costs. The Town does not exercise significant oversight responsibility nor can the Town significantly influence the Facility's operations and, therefore, the Facility has not been included as part of the reporting entity.
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.
All Governmental Funds are accounted for using the modified accrual basis of accounting. Their revenues are recognized in the period in which they become susceptible to accrual, that is when they become measurable and available to pay liabilities of the current period.
Property taxes, utility and franchise taxes, intergovernmental revenues and charges for services are susceptible to accrual when collected in the current year or within sixty days subsequent to September 30th, provided that amounts received pertained to billings through the fiscal year just ended. Further, property taxes are recognized as revenue in the fiscal year for which they are levied. Investment earnings are recorded as earned since they are measurable and available. Permits, fines, forfeitures and contributions are not susceptible to accrual because, generally, they are not measurable until received in cash.
Revenues collected in advance of the year to which they apply are recorded as deferred revenues.
Expenditures under the modified accrual basis of accounting are generally recognized when the related fund liability is incurred and expected to be liquidated with available resources. Exceptions to this general rule include principal and interest on general long-term debt which are recognized when due.
All Proprietary Fund types and the Pension and Nonexpendable Trust Funds are accounted for using the accrual basis of accounting. Revenue is recognized when earned, and expenses are recognized when they are incurred.
The Agency Funds are custodial in nature and do not involve measurement of results of operations. They are accounted for under the modified accrual basis of accounting. Assets and liabilities are recognized on the modified accrual basis.
The budgets of general government type funds are prepared on a modified accrual basis. Briefly, this means that obligations of the Town are budgeted as expenses, but revenues are recognized only when they are actually received. Unencumbered appropriations lapse at fiscal year end.
The enterprise funds, on the other hand, are budgeted on a full accrual basis. Not only are expenditures recognized when a commitment is made but revenues are also recognized when they are obligated to the town.
The Comprehensive Annual Financial Report (CAFR) shows the status of the Town’s finances on the basis of “generally accepted accounting principles” (GAAP) and fund expenditures/revenues on both a GAAP basis and budget basis for comparison purposes.
Budgets and Budgetary Requirements
The Town follows these procedures in establishing the budgetary data reflected in the financial statements:
Under the Laws of the State of Florida and the Town Code, prior to July 31, the Town Manager submits to the Mayor and Town Council a proposed Annual Budget and Financial Plan for the fiscal year, commencing the following October 1st. The Annual Budget and Financial Plan is prepared by fund, function and activity and includes proposed expenditures and the means of financing them.
Two Public hearings are conducted to obtain taxpayer comments.
Prior to October 1st, the budget is legally enacted by the Town Council through passage of a resolution.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the General Fund and Capital Projects Funds. On a Non-GAAP budgetary basis, encumbrances are recorded as expenditures of the current year. On a GAAP basis, encumbrances at year-end are reported as reservations of fund balance for subsequent-year expenditures.
Budgets are adopted each fiscal year for the General, Debt Service, Capital Projects, Enterprise, Internal Service, and Trust Funds. Budgets are adopted on a basis consistent with generally accepted accounting principles except that budgetary comparisons for the General Fund and Capital Projects include encumbrances as expenditures.
All annual unencumbered appropriations lapse at fiscal year end.
Changes or amendments to the budgeted amounts at the fund level must be approved by Ordinance by the Town Council; however, changes within a function or activity may be approved at the administrative level.
The budget and property tax rate adoption process is governed by the State Statute known as TRIM (truth in millage). In Florida, properties are assessed by the County Property Appraiser and property taxes are collected by the County Tax Collector. Property owners are eligible to receive a homestead exemption of $50,000 on their principal place of residence. All property is assessed at 85% of market value.
By State Law, the Town is required to hold two public hearings for adoption of a property tax rate and budget. The first public hearing is advertised by the Property Appraiser's mailing to each property owner a TRIM notice. In addition to notification of this first public hearing the TRIM notice contains the following information:
The new assessed value and the assessed value for the prior year and any exemptions on the property;
The prior year property taxes;
The tax bill if the rolled-back rate is levied for the new year (the rolled-back rate is that property tax rate which would derive the same amount of revenue based on the new assessed values as was raised in the prior year at the old assessed values); and
The property tax bill if the proposed budget is adopted.
The second public hearing is advertised by means of a newspaper advertisement which must be published not more than 5 days but not less than 2 days prior to the second public hearing. Accompanying this advertisement is a summary of the revenues and expenditures contained within the budget tentatively approved at the first public hearing.
FY2014 Approved Budget Calendar
Task Date Task Date
Finance to distribute FY14 Budget instructions
Town Manager’s Review of Risk Management and Human Resources Budget
Submit initial CIP request forms to Public Works
Town Manager’s Review of Town Manager and Finance Budgets
Public Works reviews CIP requests with Departments
Property Appraiser Issues Preliminary Property Values
Public Works Forwards CIP requests to Finance
Final Budget Document Pages Returned to Finance
Department’s Budget Requests are due to Finance
Notice from Property Appraiser of Preliminary Certification of Taxable Value
Town Council Meeting – Discussion of Long Term Financial Plan
Special Town Council Meeting to Consider Proposed FY14 Budget and Initial Resolutions(s) Adopting Special Non‐Ad Valorem Assessments
Town Manager’s Review of Information Systems and Fire‐Rescue Budgets
Notice of Proposed Property Taxes is mailed from Palm Beach Property Appraiser
Town Manager’s Review of Recreation Enterprise Fund Budget
Town Council Meeting – First Public Hearing to Approve Tentative Budget and Proposed Tax Rate for FY14 and Final Resolution(s) Adopting Special Non‐Ad Valorem Assessments
Town Manager’s Review of Police Budget and Planning, Zoning and Building Budget
Town Council Meeting – Second Public Hearing to Adopt FY14 Budget and Tax Rate
Town Manager’s Review of Public Works and Capital Budgets
Resolution Adopting Final Millage Rate is Forwarded to Property Appraiser and Tax Collector and Certificate of Compliance sent to Department of Revenue
S M T W TH F S 1 2 3 4 5 6
S M T W TH F S 1 2 3 4 5 6 7
Description of Funds and Fund Types
For accounting purposes a state or local government is not treated as a single, integral entity. Rather, a government is viewed instead as a collection of smaller, separate entities known as “funds”. The Governmental Accounting Standards Board’s (GASB) Codification of Governmental Accounting and Financial Reporting Standards (Codification), Section 1300, defines a fund as:
A fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.
All of the funds used by a government must be classified into one of seven “fund types.” Four of these fund types are used to account for a state or local government’s “governmental-type” activities and are known as “governmental funds”. Two of these fund types are used to account for a government’s “business-type” activities and are known as “proprietary funds”. Finally, the seventh fund type is reserved for a government’s “fiduciary activities”.
Four fund types are used to account for governmental-type activities. These are the general fund, special revenue funds, debt service funds, and capital projects funds.
The General Fund is used to account for most of the day-to-day operations of the Town, which are financed from property taxes, fees, licenses, permits, fines and forfeitures, intergovernmental and other general revenue. There can only be one general fund.
Activities financed by the General Fund include the following:
Includes expenditures for Compensated Absences and other Town-wide items.
Includes expenditures for the Mayor and Town Council.
The budget of the Town Manager includes expenditures for administrative expenses relating to the Town Manager’s Office, Advice and Litigation expenses for the Town Attorney and outside counsel and Information Systems.
The Human Resources Department is responsible for the recruitment, screening, and selection of employees to serve the Town. The Department is also responsible for employee benefits administration and compensation analysis. The Town’s Occupational Health Clinic is operated under this Department. The Human Resources Director is also the Plan Administrator for the Town’s General Employee Retirement System.
The Finance Department is responsible for the administration, development and monitoring of the operating and capital budgets, preparation of the comprehensive financial reports, investments, debt management, cash management, and the maintenance of accurate financial reporting systems to meet all of the Town needs. The Department also is responsible for the operation and management of the purchasing, payroll and accounts payable functions.
In FY05, the Town Clerk’s Office became a division of the Finance Department. The Town Clerk’s Office is responsible for the records of the Town as well as conducting elections held within the Town. The Department also processes permits for charitable solicitations, special events, commercial motion picture-making, going- out-of-business sales, and door-to-door solicitations.
The Planning, Zoning and Building Department is responsible for zoning changes and the issuance of permits for building, mechanical, plumbing, electrical, gas, energy, and coastal construction. The Department also assists residents, businesses, and the construction industry in code compliance. The Department strives to preserve the aesthetic, historical, and economic values of Palm Beach.
The Fire-Rescue Department provides fire suppression, fire prevention education, rescue and emergency medical care and ocean rescue functions to the citizens and visitors to the Town. The Department conducts education programs on injury, heart attack and stroke prevention.
The Police Department is responsible for the prevention of crime, preservation of peace, enforcement of laws and ordinances. This is accomplished through the patrol services, organized crime, vice and narcotics (OCVAN), crime scene/evidence, parking control enforcement and communications.
The Public Works Department is responsible for the repair, maintenance, and cleaning of streets within the Town, the maintenance of storm sewers and sanitary sewers, the collection and disposal of residential and commercial garbage and yard trash, beach cleaning, the maintenance of the Town parks and buildings, coastal management, and providing the general engineering services for the Town.
Under this classification are expenditures relating to the Four Arts Library, disaster response expenditures and contingent appropriations.
This classification includes transfers to the capital, risk insurance, OPEB Trust, and debt service funds.
Special Revenue Funds are used to account for revenues derived from specific taxes or other earmarked revenue sources which, by law, are designated to finance particular
functions or activities of government and which therefore cannot be diverted to other uses. The Town has the following special revenue funds for which an annual budget is not adopted:
(101) State Forfeiture Fund - Accounts for State confiscated property through the Police Department per Florida State Statutes Section 932.
(102) Federal Forfeiture Fund - Accounts for federally confiscated property through the Police Department. An annual report is submitted to the United States Department of Justice by November 30th of each year.
(103) Donations Fund - The Town of Palm Beach receives substantial donations each year from its residents. Most donations are earmarked for specific departments and/or purposes.
(110) Grant Fund – Accounts for grants received by the Town.
(120) Underground Utility Assessment Fund – Accounts for assessment projects relating to undergrounding utilities in various assessment areas in the Town.
The Debt Service Funds are used to account for the payment of interest and principal on general and special obligation debts other than those payable from special assessments and debt issued for and serviced by a governmental enterprise. The sources of revenues in these funds are transfer of non ad valorem revenue from the General Fund and transfers of assessment revenue from the Worth Avenue Assessment Area Improvement Fund.
(205)Revenue Bond Series 2010A – This fund accounts for the accelerated storm water and sanitary sewer construction programs.
(206)Revenue Bond Series 2010B – This fund accounts for the Worth Avenue Special Assessment District Construction Project.
The Capital Projects Funds account for all resources used for the acquisition and/or construction of capital infrastructure by the Town except those financed by Enterprise and Internal Service Funds. The sources of revenue in these funds are revenue bonds, transfers from other funds and grants.
(307) Capital Improvement Fund - This fund accounts for various construction projects undertaken by the Town. Any unexpended amounts at fiscal year end, are rolled over to the new fiscal year. A five year Capital plan is presented during the budget process, of which only the first year is adopted by the Town Council. This fund is financed on a pay-as-you go basis from the General Fund.
(309) Comprehensive Coastal Management Plan (CCMP) Construction Fund - This fund was created during Fiscal Year 2000 to account for the Beach Restoration Project construction costs financed with proceeds from the 2000 Revenue Bond.
(310) Town Facilities Project Fund - This fund was created during Fiscal Year 2003 to account for the construction costs of the new Central Fire-Rescue station and the renovation of Town Hall.
(311) Worth Avenue Assessment Area Improvement Fund - This fund was created during Fiscal Year 2010 to account for pre-construction and ongoing maintenance costs for Worth Avenue Improvements.
(312) Accelerated Capital Program Fund – This fund was established as a result of the 2010A Bond Issue to fund Sanitary Sewer and Storm Water projects for the Town.
(313) Worth Avenue Special Assessment District Fund – This fund was established as a result of the 2010B Bond Issue to fund the Worth Avenue Renovation Project.
Two fund types are used to account for a government’s business-type activities (activities that receive a significant portion of their funding through user fees). These are the enterprise funds and the internal service funds.
Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises; where the intent of the government’s board is that the costs of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the government’s board has decided that periodic determination of net income is appropriate for accountability purposes.
(403) Recreation Enterprise Fund - This fund was created in FY2004 and comprises of all recreation activities in the Town. These include: Golf, Tennis, Recreation activities and Marina services. The fund also includes capital projects and the equipment replacement program for the enterprise fund.
Internal Service Funds are used to account for the financing of goods or services provided by one department or agency of a government to other department or agencies on a cost reimbursement basis. Accounting for Internal Service Funds as a proprietary fund type is designed to accumulate the total cost (including depreciation) of providing a particular service. Costs for services are reimbursed by the departments or agencies to which the services are provided.
(501) Risk Management Self Insurance Fund - This fund was established to account for the Town’s Property, Liability and Worker’s Compensation Insurance costs. Monthly funding transfers are made from the General Fund to the Risk Fund.
(502) Health Insurance Self Insurance Fund - This fund was established to account for the Town’s health insurance costs which include medical, dental, life, long-term disability accidental death/dismemberment and supplemental life insurance. Monthly funding transfers are made from the General Fund to the Health Fund.
(320) Equipment Replacement Fund - This reserve was established to fund the replacement cost of existing equipment, vehicles and computers when they reach the end of their useful lives. The reserve will significantly reduce the budgetary fluctuation due to purchases of equipment and establish the fixed asset inventory and depreciation schedule required by GASB 34.
These funds are used when a government holds or manages financial resources in an agent or fiduciary capacity. This single type is subdivided into four “sub-fund types” to account for various types of fiduciary obligations. These are the pension trust fund, nonexpendable trust fund, expendable trust fund, and agency funds.
Pension trust funds are used when governments manage pension plans. The sources of revenues in these funds are transfers from other funds, interest earnings and employee contributions.
(600) Employees Retirement Fund - This fund accounts for the Town’s defined benefit retirement program for General, Lifeguard, Police Officers and Firefighter employees.
(610) Other Post Employment Benefits (OPEB) Trust Fund - This fund was established by Ordinance 9-06 to fund the portion of health care benefits paid by the Town for retirees.
Non-Expendable and Expendable Trust Funds
These consist of resources received from non-Town sources and held by the Town as trustee to be expended or invested in accordance with the conditions of the trust. In a non- expendable trust, the government typically is only permitted to spend the investment earnings and not the assets. The Town does not have non-expendable and expendable trust funds at the present time.
Trust funds typically involve some degree of financial management. Agency funds are used when the government plays a more limited role by just collecting funds on behalf of a third party. The Town does not have an Agency Fund at the present time.
Fund Budget Overview
Projects Enterprise
4,981,300
6,751,500
15,285,075
Bond/Loan Proceeds
7,171,638
15,919,169
16,493,542
1,218,535
6,254,863
10,283,913
20,805,776
59,946,893
7,030,863
23,603,574
4,984,400
25,527,497
129,819,227
Appropriations from
5,459,600
24,030,534
13,884,776
43,802,564
$7,035,063
$47,634,108
$5,404,607
$22,610,776
$25,530,744
$173,621,791
$25,834,476
13,082,570
5,099,727
21,237,357
1,626,943
18,279,100
29,969,411
1,954,015
33,532,165
3,010,895
36,755,905
1,877,935
6,993,700
8,725,932
24,672,795
1,157,659
5,623,379
34,201,853
5,404,607
22,610,776
20,889,544
155,518,473
Balance/Retained
18,103,318
fund budget 59.09%
Ad Valorem Taxes per
capita (8,358
population) $4,624
per capita (8,358
population) $7,826
Personnel as a
total budget 37.15%
fund budget 0.20%
population) $16
FY14 Budget by Revenue Type All Funds
Appropriations from Fund Balance 25.4%
Ad Valorem Taxes 22.4%
Sales and Use Taxes 4.3%
Charges for Services 8.9%
Fines and ForIfnetieturgroevsernmental
Interest Earnings 9.6%
Revenue 1.2%
FY14 Budget by Expenditure Classification All Funds
Contractual 17.3%
21.2% Depreciation
Debt Service 4.0%
Employee Benefits 12.2%
Personnel 14.9%
Transfer to Fund Balance/Retained Earnings
Summary of Major Revenues by Fund Type
to FY2014 FY2011 FY2012 FY2013 FY2013 FY2014 FY13 Budget %
Actual Actual Budget Projected Budget % Variance of Total
$36,635,343
$36,662,916
$37,473,108
8,093,648
7,984,412
7,950,388
5,749,007
6,959,779
3,461,768
4,081,260
3,623,763
1,325,034
59,856,446
58,554,247
60,123,952
Appropriations from Fund Balanc
e 1,601,861
371.86%
$61,458,307
$58,745,615
$60,123,952
4,480,427
5,973,538
4,469,709
4,407,800
5,979,017
4,413,581
e 128,616
$4,609,116
$5,979,017
$4,471,509
$4,413,581
Grants/Interlocal/Donations
3,531,595
989,815
1,068,135
Loan Proceeds/Contributions
4,664,641
3,939,514
5,965,103
7,869,393
5,992,119
7,187,602
293.91%
12,622,144
34,057,605
5,861,177
$9,444,198
$20,491,537
$40,049,724
$13,048,779
$4,305,704
$4,352,717
$6,152,300
$4,564,380
$4,981,300
7,171,300
6,411,487
Appropriations from Retained Erng 50,495
$4,386,275
$4,525,391
$7,285,658
$6,411,487
$238,343
-$22,598
$1,004,747
10,304,812
8,302,203
8,806,349
8,933,421
10,547,109
9,085,635
9,021,349
9,915,570
Appropriations from Retained Erng 0
7,967,480
$10,547,109
$9,085,635
$16,988,829
$9,915,570
$786,402
1,540,983
16,010,975
Gain/Loss on Investments
27,608,083
13,045,155
2,852,137
3,160,128
10,342,085
6,316,214
4,720,917
13,635,839
37,633,795
24,096,189
23,069,378
e 3,331,156
Total Trust & Agency Funds
$16,966,995
$37,633,795
$24,096,189
$23,069,378
$25,530,794
2,105,521
19,605,284
19,588,317
20,379,765
1,911,278
2,512,552
17,257,675
1,587,590
1,229,915
380.72%
11,184,068
11,942,895
9,294,223
11,257,903
Approp. from Fund Bal/Ret Earngs
5,112,128
12,732,023
43,296,776
43,802,614
$107,412,000
$136,460,990
$152,603,189
$116,982,747
$173,621,841
This table summarizes by fund type, the major revenue categories indicating category percentages of total fund revenues and percent of change from the prior year.
FY14 Budget by Revenue Type ‐ All Funds
Interfund Transfers, 12.0%
Miscellaneous, 0.7%
Gain/(Loss) on Investments, 0.0%
Interest Earnings, 9.5% Contributions, 4.1%
Loan Proceeds/Contributions, 6.9%
Grants/Interlocal/Donations, 0.6%
Approp. from Fund Bal/Ret Earngs, 25.2%
Special Assessment Revenue, 0.6%
Fines and Forfeitures, 0.7%
Charges for Services, 8.8%
Sales and Use Taxes, 4.2%
Ad Valorem Taxes, 22.3%
Intergovernmental Revenue, 0.6%
Licenses and Permits, 3.8%
Summary of Expenditure Classifications by Fund Type FY14 Budget
to FY2014 FY2011 FY2012 FY2013 FY2013 FY2014 FY13 Budget of
Actual Actual Budget Projected Budget % Variance % of Total
$24,396,539
$23,627,368
$22,947,477
$16,906,261
$11,512,417
$13,086,050
$12,878,534
$13,082,570
6,839,969
8,807,800
8,987,461
1,493,951
1,511,708
2,040,617
8,570,619
7,265,099
9,265,099
2,183,908
3,024,769
61,458,307
56,245,101
57,919,885
2,500,514
$4,485,001
$5,940,135
$4,397,600
$4,397,494
$6,993,700
4,609,116
5,944,685
4,401,294
$7,413,267
$18,100,837
$38,863,446
$12,068,975
$33,743,290
1,041,709
9,353,071
20,491,537
39,905,155
13,048,779
9191.24%
$1,226,627
$1,245,692
$1,296,582
$625,654
1,024,504
1,192,040
1,148,650
2,881,648
798,238
4,386,275
4,525,391
7,285,658
6,266,229
5,404,307
$5,404,307
5,612,399
4,858,572
5,129,808
4,120,570
1,655,304
-487,448
1,691,791
2,500,116
1,566,887
1,158,703
1,473,442
3,012,495
4,867,019
8,922,503
6,627,280
16,988,829
9,396,201
519,369
Total Internal Sevice Funds
$18,142,840
$19,138,090
$19,613,211
$20,889,544
19,490,955
4,958,099
3,456,167
Description Actual Actual Budget Projected Budget % Variance % of Total
Total: All Funds
$25,741,294
$25,002,055
$25,898,164
$24,284,975
$25,737,079
$23,144,314
$16,795,507
$18,694,336
$17,469,699
$18,724,610
26,486,772
27,655,232
30,236,879
32,398,194
32,368,730
1,700,524
1,832,071
11,971,768
22,072,550
44,987,811
17,649,301
39,444,465
4,610,339
6,066,135
4,525,494
7,119,700
9,784,068
11,759,557
14,058,827
12,229,903
24,546,495
Transfer to Fund Bal/Ret Earnin
1,715,733
5,165,077
6,337,148
250.49%
2,257,188
793,727
7,271,869
Subtotal All Funds
$173,621,491
Transfer to Fund Bal/Ret Earnings
Interfund Transfers 14.1%
Debt Service 4.1%
Capital Outlay 22.7%
Contractual 18.6%
Employee Benefits 10.8%
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 FY14 General Fund operating budget (General Fund budget less coastal transfer) is $15,301,623. The FY12 ending fund balance was $21,424,261.
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
Fund Balance 20,980,277 18,394,714 18,155,941 21,424,261 16,000,000
% of budget 33.39% 30.60% 31.02% 35.88% 26.14%
the FY14 budget, a transfer of $860,000 from fund balance was used to fund the contingency reserve as directed by policy. During FY13, the Town Council approved a budget amendment transferring $2,000,000 from the undesignated fund balance to the coastal protection fund for future coastal projects and the FY14 budget contains an additional transfer of $4,000,000 to the coastal protection fund. The estimated FY13 ending fund balance is $16,000,000 which is 26.14% of the FY14 operating expenditure budget.
Risk Fund Reserve
The total reserve balance for the Risk Fund was $7,990,553 as of September 30, 2012. 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 estimated balance at the end of FY13 is
$8,528,465. Included in the FY14 budget is a Town Council authorized the transfer of
Reserves 7,620,642 6,669,596 6,863,675 7,990,553 8,528,465
$2,000,000 of the excess Risk Fund reserves to the Coastal Protection Fund. The trend for the Risk Fund Reserve is shown in the table.
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.
Enterprise Fund Reserves
The Recreation Enterprise Fund reserve is to be maintained at a minimum level of 25% of budgeted revenues totaling $1,246,100 for FY14. 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.
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 FY12, the net asset balance for the Recreation Enterprise Fund (REF) was $3,697,167.
M&I Tennis M&I Golf
2,555,723
At the end of FY13, an
estimated $2,555,723 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 FY13, the estimated balance is $212,375.
In FY10, a maintenance and improvement fee was implemented for the Tennis program. This reserve at the end of FY13 is estimated at $31,075 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 estimated balance in the REF Equipment Replacement Fund for FY13 is $410,000.
The Townwide 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.
The estimated balance in the Equipment
Replacement Fund for year-end FY13 is $13,059,804. For FY14, income including the depreciation transfer will total $1,959,535 and expenditures for capital equipment are budgeted at $3,010,895. An analysis of the reserves identified an excess balance of
$2,858,913 caused by interest earned by the fund and equipment that will not be replaced. The Town Council authorized a transfer of this excess reserve to the coastal protection fund for FY14.
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, 2013, was $3,390,226. The FY14 appropriation for the pay-out of eligible accrued vacation, sick and compensatory time from this reserve is $599,600.
The balance of the reserve in the Health Fund at the end FY13 is estimated to be
$3,516,903. 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.
Health Fund Reserves
1,845,717
The Town’s OPEB Trust Fund was established 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 is overseen by the Town’s Investment Advisory Committee. The estimated net asset balance in this trust is $21,986,340 as of September 30, 2013. The actuarially determined transfer from the General Fund for the OPEB liability for FY14 is $1,506,000. The Town continues to be well ahead of other government agencies in funding this liability.
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 fund at the end of FY12 were $187,286,530. The estimated balance at the end of FY13 is $190,711,900.
15,898,539
21,986,340
2009 2010 2011 2012 2013 Est.
Retirement Funds 163,129,393 174,544,804 170,564,741 187,286,530 190,711,900
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 FY14 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 on the following page identifies the contingency balances appropriated in the FY13 and the FY14 budgets:
Contingency Reserves FY2013 and FY2014
Undesignated Fund Balance/Retained Earnings Summary
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. The rating agencies look closely at the fund balance levels and the financial policies in place when rating a municipality. In 2010, the rating agencies reviewed the Town’s credit ratings in preparation for the issuance of the 2010 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 Revenue Bonds and confirmed the Town’s Aaa issuer credit rating. Standard and Poor’s issued a AA+ credit rating on the 2010 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. During 2013, Standard and Poor’s reaffirmed the Town’s AA+ Revenue Bond rating and the AAA issuer credit rating.
The table and the chart on the following page summarize the trend of the unassigned fund balance, net asset balances, compensated absence, and replacement reserve balances for FY09 through estimated FY13.
Reserve Balances Fiscal Years 2009 – 2013
20,980,277
3,333,242
10,840,088
13,059,804
1,050,115
7,620,642
8,528,465
163,129,393
190,711,900
225,246,199
237,296,836
236,972,759
262,749,495
260,565,805
2,867,062
3,315,215
3,697,167
3,447,167
Per Town of Palm Beach policy, capital expenditures for tangible property are defined as having a useful life of more than one year and meeting the following threshold values:
Infrastructure - $50,000
Machinery, Equipment (other than computers), Vehicles and Office Furniture - $2,500
A summary of FY14 budgeted capital expenditures can be found on the following page.
Infrastructure construction valued at $50,000 and greater is budgeted for in the Capital Improvement Fund. Construction Projects for Beach Restoration are budgeted for in the Comprehensive Coastal Management Fund. Minor construction valued at less than $50,000 is budgeted for in the General Fund ($96,300).
Tangible/Intangible Property
Purchases for new tangible/intangible property are budgeted in the General Fund ($35,545) and purchases for replacement tangible/intangible property are budgeted in the Equipment Replacement Fund (ERF)($3,010,895). The ERF was created on October 1, 2001 and was initially funded with Undesignated General Fund Balance to cover the accumulated depreciation through September 30, 2001 based on the initial purchase price of the property. On September 30, 2006, additional Undesignated General Fund Balance was transferred to the ERF to bring the funding to accumulated depreciation on the replacement value of the property. On an annual basis, depreciation is budgeted within the general fund departmental program budgets and transferred to the ERF. FY2014 budgeted depreciation is $1,879,535.
The Recreation Enterprise Fund budgets for Recreation infrastructure (Town Docks Repairs (100,000), depreciation ($597,900) and tangible property ($80,200).
FY2014 Town-wide Capital Expenditures
Department/ Description
$751,120
Major Computer Equip (>$1,500)